Lee County Housing Market Remains Bleak
In Lee County and around the state, home builders say the picture looks bleak for the next six months.
The National Association of Home Builders / Wells Fargo index of sentiment in the industry fell to 28 in June, the lowest since February 1991, the association reported Monday.
The Lee County housing market has not been spared in the nationwide housing slump, said Michael Reitmann, executive vice president of the Lee Building Industry Association.
“I can only sense that the mood here probably reflects the national survey,” he said.
Statewide, developers are being squeezed by tighter lending standards for borrowers trying to get Florida mortgage financing.
In response to weak demand, developers are cutting home prices and offering buyer incentives to cope with a mounting supply of unsold homes, the national association said Monday.
In Lee County, statistics show that “there have been dramatic layoffs,” Reitmann said.
“It’s finally being reflected in the unemployment figures. I think it’s a response to the actual market conditions.”
Numbers released Friday by the state showed that the county’s unemployment rose in May to 3.4 percent as losses of construction jobs have mounted over the past few months.
Barbara Hartman, a Career and Service Centers of Southwest Florida - Lee County spokeswoman, said this is a troubling trend because other sectors have started to see a ripple effect as construction money begins draining out of the local economy.
The home construction business locally is a shadow of what it was in the boom years of 2004 and 2005, when Florida home loan demand peaked.
Since December 2005, when the median price of an existing, single-family home resale reached an all-time high of $322,300 according to the Florida Association of Realtors, both the number of sales and the pace of new home construction have dropped sharply.
The median price was $283,200 in April, off 12 percent from the peak.
Meanwhile, the number of single-family permits pulled by Florida real estate developers countywide fell from 1,422 in December 2005 to 424 in May, down 70 percent from December 2005.
Wall Street had expected a reading of 30 for the national index, according to the consensus forecast of Wall Street economists surveyed by Thomson/IFR. Ratings higher than 50 indicate positive sentiment about the market. The seasonally adjusted index has been below 50 since May 2006.
The continuing slump is bad news for housing developers such as Lennar Corp., D.R. Horton Inc., Pulte Homes Inc., Centex Corp. and Toll Brothers Inc., the largest U.S. homebuilders by market value.
All are active in the Southwest Florida housing market, where the climate has become increasingly dominated by national companies in recent years.
The index has been sliding since March as demand for new housing slumped amid a rise in defaults for borrowers with weak, or subprime, credit.
In general, bad credit Florida mortgage borrowers are considered risky by lenders, typically because of problems such as debt or bankruptcy.
To compensate for the risk posed to lenders, subprime borrowers typically pay significantly higher Florida mortgage rates.
“It’s clear that the crisis in the subprime sector has prompted tighter lending standards in much of the mortgage market,” David Seiders, the group’s chief economist, said.
Home sales will continue to decline in the months ahead, Seiders said, and housing starts are not expected to improve until next year as Florida mortgage rates rise.
Sales of new homes, representing about 15 percent of all sales, surged in April, but median prices fell 11 percent from the previous month as home builders slashed prices.
SOURCE: The News-Press
