Florida Real Estate Investors Hurt By Housing Market Slowdown

First quarter profit fell nearly 55 percent at the Florida real estate company Avatar Holdings, as the number of homes it closed on declined by the same amount.

Based out of Coral Gables, just outside the Miami housing market, the real estate firm mostly operates in Florida and Arizona.

During the quarter, Avatar said that it closed on 230 homes, down from 516 homes closed during the first quarter the year before.

Dollar volume fell 43 percent - to $79.6 million from $138.5 million - as the decline in Florida mortgage activity continues to put a damper on the region’s home sale volume as a whole.

Overall, Avatar said its profit fell to $11.1 million, or $1.08 a share, on revenue of $92.4 million for the first quarter.

That’s down from earning $24.6 million, or $2.39 a share, on revenue of $155.2 million for the same period the year before.

Looking forward, Avatar said it saw year-over-year declines in both the dollar volume of contracts signed and the number of those contracts.

The dollar volume shrunk 76 percent, to $38 million from $156.5 million. The number of contracts signed fell 67 percent, to 142 from 428.

Citing deterioration of market conditions and the increase of speculative inventory at a community in Florida, where it and other builders are building homes, Avatar recorded a $2 million loss in the most recent quarter.

The company said it cannot predict the level and duration of the housing downturn and the widespread Florida home mortgage market woes.

However, Avatar said it does anticipate those same South Florida housing market conditions to continue to have adverse effects on earnings for the balance of 2007.

The company said it still does expect to be profitable for the year.

SOURCE: South Florida Business Journal