Inventory of Southwest Florida Homes Can Be Purchased Below Cost
What is the state of the Florida housing market? It may have suffered a fall two years ago, but segments are returning.
Specifically, two segments are at or near the bottom already; in other words: they can only get better from here.
Fence sitters, this is your wake up call! You are being put on notice that the bottom is approaching in the speculative inventory segment, both in entry level markets in Lehigh and Cape Coral and in developments that have unwanted inventory.
Let’s first look at the entry level market, which includes price points below $200,000. It is now possible to purchase a new home in Lehigh or Cape Coral for well below $200,000. Some have even been sold to Florida mortgage applicants in the $160,000 range. That’s roughly 50 percent less than a similar home would have sold for at the peak of the market.
Which sounds better to you: “1/2 off sale” or “Buy one, get one free”?
These deals are a result of lot Florida housing prices falling more than 80 percent in the past 20 months, construction costs becoming more competitive, heavy inventory, and in some cases short sales offered by sellers trying to avoid the foreclosure process.
Currently, Lehigh has more than 300 homes for sale that are 2006 or newer and priced under $200,000, while there are only 87 in Cape Coral. It’s still a buyer’s market in Lehigh, as there are 19 months of inventory in this price range. However, the Cape’s sub-200 market is definitely a seller’s market, as there are only five months of inventory for sale.
Will prices get better in this price range? Yes, they might. Lot inventory is still high, so land prices will soften some, but the bulk of the correction is behind us. The cost of building materials isn’t expected to change much, but labor is getting more competitive. Therefore, you can expect to see some downward pressure on the cost of building a new home.
OK, then why act now? Because you can buy existing inventory below replacement cost! This opportunity does not come around very often, so hesitant Florida mortgage loan borrowers should take advantage of it while you can. Forget about buying wholesale because for a limited time you can buy below cost! How much better can it get?
Remember: timing is everything in real estate. Builders will discount inventory, even if it means selling it at a loss. However, they will not enter into a building contract to build a home knowing it will be for a loss. Therefore, this will be your best opportunity to own new construction at a price that we may never see again.
So, is our market improving? Yes, at least a couple segments are because prices are falling to points that cannot be duplicated. When other segments follow suit, they too will hit bottom, and our market will continue to recover.
SOURCE: Denny Grimes of The Southwest Florida News-Press
