St. Lucie County Housing Market Under Duress

Because of the severe decline, the St. Lucie housing market is officially in recession, an economist told Florida home building industry leaders.

“Housing-related jobs are a major source of employment in Port St. Lucie,” said Mark Zandi, senior economist for Moody’s economy.com, speaking at a Leaders Advantage session of the Southeastern Builders Conference.

Zandi told the group that the Port St. Lucie housing market, one of the nation’s hottest home building markets in the 2001-05 boom, went downhill as sales fell, and so did housing-related employment.

“I’m talking about Realtors, [Florida mortgage] financing people, sales people,” he said, “not just construction workers.”

• St. Lucie County’s jobless rate rose to 4.4 percent in May, from 3.8 percent in the same month a year ago.
• Moreover, South Florida mortgage foreclosures quadrupled, rising in June to 334 in St. Lucie County alone, compared to 79 in June 2006.

The annual conference, sponsored by the Florida Home Builders Association, opened against the backdrop of a steady stream of negative news about the residential housing market.

On Wednesday, the National Association of Realtors said that U.S. home sales and prices will fall further in 2007 and the housing slump will persist into next year as builders curtail production.

It was the seventh straight month that the group reduced its forecast, now saying existing sales will fall 5.6 percent and prices will drop by 1.4 percent in 2007. In 2008, single-family housing starts probably will fall to their lowest since 1995.

Stricter Florida home mortgage standards, a glut of properties and interest rates nearing an 11-month high will stall sales, economists believe.

Next year’s decline also will cut purchases of appliances and home building supplies, trimming residential construction spending 1 percent to $495 billion, the lowest since 2002, some predict.

The Realtors’ bleak forecast followed Tuesday’s announcement by D.R. Horton Inc., one of the nation’s biggest home builders, that the spring selling season was a bust and it will post a loss for its latest quarter after net orders fell 40 percent and it wrote down the value of unsold houses.

As a result, economists such as Zandi, who recently bought a home in Vero Beach, are aiming their most dire forecasts at those housing markets that were at the forefront of the building boom.

That would be Palm Beach County and the Treasure Coast, where sales and prices are wilting under the weight of a burgeoning inventory of homes on the market.

Perhaps seeking to provide builders with some hope, Gov. Charlie Crist followed Zandi at the morning session of housing industry experts, saying that property tax cuts are crucial to the industry.

“Part 2 of property tax reform is in your hands,” Crist said, referring to the proposed voter referendum. “I encourage you to do it.”

The first-term governor also said homeowners insurance rates must come down.

“It’s difficult to sell houses when insurance rates are so high,” he said. “For the first time ever, rates are coming down.”

Before the special session, he said, insurers were getting ready for 70 percent rate increases.

“It’s going to get better and better and better,” Crist assured builders as he dashed off for a bill-signing ceremony in Fort Lauderdale.

But Zandi, one of the nation’s leading housing economists, also had a point to make.

“This is not a happy talk,” he said. “Housing starts peaked in 2005. In Florida, the downdraft has been more severe. Home sales in Florida will be lucky to get 10,000 this year.”

The Sunshine State has two big problems, after all: too much inventory and low Florida mortgage loan affordability.

“It’s impossible to argue that the bottom is at hand,” he said. “It’s at least a year away.”

SOURCE: Palm Beach Post