As home sales begin to climb in certain parts of Florida at noticeable and significant rates, builders for the first time in three years are planning to acquire new parcels. Our national builder clients in Florida are once again cautiously optimistic that the worst is over. They are now looking for sensible vacant land parcels where they can begin the process they virtually abandoned over 3 years ago. Home inventories are shrinking thanks to short sales, foreclosures, and increased selling. In addition, the luxury market is slowly improving due to great pricing opportunities. Banks are cautiously lending once again (including Jumbo mortgages at higher rates) and new buyers are visiting model home sites. As we advise our Florida clients on these land parcels, we cannot help but to visualize the affect of Florida's improving housing market on our northern neighbors.
Eventually, this bodes well for North Carolina, South Carolina, Georgia and Tennessee. These are echo states to Florida; meaning that Florida's real estate eventually has an affect on theirs. Thousands of sellers in Florida are anxious to move to these states as they sell their existing Florida homes. Floridians seeking a change in lifestyle and economics are looking northward. But a word of caution about this relatively new echo phenomenon. These buyers have faced a devaluation of their net worth with diminished home values and lower stock portfolios. Builders and developers in these echo states will see buyers with lower expectations looking for value and wishing to stay more liquid. Builders will need to be flexible on re-positioning their old yet-to-be-sold-out subdivisions or they will be left behind realizing slower sales and longer hold times.
However, the plethora of Floridians previously (pre-recession) looking to make this northern move will be somewhat smaller in numbers. Let's not forget Florida's awesome year round weather. Many parts of Florida have once again become affordable as a result of this recession. The panhandle especially. With the new international airport nearing completion in Panama City and with St.Joe Paper ready to begin developing its inland properties, this area will redirect some of those people previously committed to the mid Atlantic states. Other regions of Florida will also benefit by the new affordability and lower interest rates. However, Builders and Developers in all regions will need to factor in more strict bank approvals and more conservative appraisals.
In western North Carolina, where Edge has several clients, the market is actually slumping below 2008 levels this winter and spring. The summer season is nearing and we are optimistic improvement will start to show here when Floridians begin their annual summer trek to the Carolina's and surrounding states. But, builders should be ready for buyers wanting discounts, looking for deals and having less disposal cash than they did 3 years ago. FLEXIBILITY IS KEY THIS SUMMER. Be flexible on your pricing, downsize and be flexible on your home and home sites for sale, re-do and lower those HOA fees where possible and cherish every advertising dollar left in your original proforma. The resumption of the northern trek by this group of Floridians will be different than before. Those builders who are flexible in pricing and product will do well. The rest will be left in the dust. Let Edge help you plan for your future.
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