Housing Starts Free Fall from Heyday
Tuesday, January 12, 2010
By Charlie Hounchell, Esquire
Tampa Bay is experiencing its coldest weather in decades. We have hit below freezing temperatures off and on all week. It even snowed in Florida the other day not far from here. The last time that happened was in 1977. I clearly remember that day.
I also remember the real estate economy in 2005. It was booming and everyone it seemed was making money in real estate by flipping houses, investing in new construction, building spec homes, becoming a developer. That year, Tampa Bay housing starts peaked at 21,438. That was the year that real estate was HOT in Tampa Bay. Developers were the envy of many...imagining their future prospect of mega millions. Oh, those were the daze...
Now? Not so much. It seems that the unusually freezing temperatures in Tampa Bay red flag one more symbol that things just aren't the way that they used to be. Short sales and foreclosures are the norm rather than the extreme. Those hot shot developers are now bankrupt. New construction condominiums remain vacant. Unemployment is remarkably high and housing starts are at their lowest in years.
That's right. No one is chomping at the bit to build a new house these days. In fact, 2009 housing starts (totaling 3,545) represent an 85% nose dive from the housing starts enjoyed by builders in the heyday of 2005.
Are you surprised? I'm not. The good news is that there HAS to be a light at the end of this very dark tunnel. If you hold your breath and stand still while squinting your eyes, you can almost see it. By the end of 2009, vacant homes totalled 1,931, down from 2,655 in 2008. That's a positive. The other HUGE positive is that there a thousands of great buys out there in "A" class neighborhoods.
The negative is that mortgage borrowing remains extremely difficult. So much so that most buyers won't be able to take advantage of the bargain basement 4.8 percent interest rates because the banks now require 20 percent down if you don't pursue an FHA loan. With that said, if you've got cash, you've got plenty of opportunity in today's real estate market.
Remember, new homes still have to compete with those 28,000 existing homes currently for sale in Tampa Bay. The reality is that a large number of homeowners are barely hanging on to their homes as they fight off an inevitable mortgage payment default. So, we will most likely continue to experience a decline in housing prices as we launch into 2010.
What's the lesson here? Well, we can ALWAYS look on the bright side of things. Spring time will come and these freezing temperatures will rise as fast as our memories fade. Sooner or later, our economy will turn for the better and people will want to build new homes again. In the meantime, keep your slanket on and stay warm. It's cold outside.
Please be advised that this article does not constitute legal advice nor does it provide any basis to form an attorney-client relationship. Nothing in this article should be copied without the express permission of the author.
Mr. Hounchell has a law degree from The University of Florida College of Law and he is a principal in The Law Offices Charles A. Hounchell, P.A., in Tampa, Florida. Mr. Hounchell earned his undergraduate degree from The George Washington University in Washington D.C. and he obtained his MBA in International Management from the American Graduate School of International Management (“Thunderbird”) in Glendale, Arizona.
Mr. Hounchell is a licensed title insurance agent and a real estate agent with Smith and Associates, Inc.www.smithandassociates.com; www.livecasanova.com. He has lived in many different countries, including Spain, Brazil, Argentina, Mexico and Germany and he speaks Spanish and Portuguese. A significant portion of Mr. Hounchell’s law practice is concentrated on Real Estate Law. He can be reached at 813-251-2701 or firstname.lastname@example.org
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