A supply and demand equilibrium: Could it be true? One home builder reports good news.
Bill expounds on why builders should partner with vulture funds.
Here's a little silver lining to the clouds over Florida: One builder believes the housing market in Southwest Florida is now at supply/demand equilibrium, and he's putting his money behind that contention by opening two new projects.
Pat Neal, president of Bradenton, Fla.-based Neal Communities, is something of a contrarian. He's not pulled in his horns as much as most private builders in Florida. Although he's down to 67 employees (from 150 at the peak of the market three years ago), Neal still has 14 developments and 38 model homes open for business.
Neal picked up the last 45 lots in a community where Ryland built 120 homes and opened two new models a week ago. He calls his version of the development Mandalay, where his base pricing runs from $226,950 to $299,900, for homes ranging from 2,267 to 3,236 square feet. The other new development is Lismore, in the Country Club at Lakewood Ranch, where prices run from $279,500 to $337,500 for homes of 1,866 to 2,642 square feet, in a posh golf community.
Neal has an easy explanation for what he's doing: “We have land for 9,000 homes, which we bought at very low prices. We've been able to drop our home prices low enough to attract buyers. We're not making money on the houses, but we still have margins in the land,” he says.
Neal reports he sold three homes last weekend. “All of us in the local industry believe the new home inventory has been used up,” Neal says. “I'm opening new communities because now there is a balance of supply and demand.”
Home prices in Bradenton and Sarasota, Fla., have fallen back to approximately 2003 levels. Check to see how close your market is to 2003 prices and you may be able to figure out how far you have to go to reach equilibrium where you are.
If you've ever vacationed in the Florida Panhandle in late spring or early fall, you know the allure of those sugary white sand beaches and stunning sunsets. But if you flew into one of the small airports scattered across West Florida, you probably also experienced the frustration of trying to reach this place.
That's about to change, and when it does, new opportunities will emerge for home builders in this region. The new Panama City-Bay County International Airport is under construction and four months ahead of schedule. It will open in the spring of 2010, and the world will discover the Panhandle.
Thanks to a broad coalition of local, state and federal governments — and the pioneering efforts of Florida's largest developer, St. Joe Company, which donated the 4,000-acre airport site — the Florida Panhandle will soon have a world-class airport that will eventually have far more direct flight connections.
St. Joe has the land. The airport will deliver buyers in droves. If I were you, I'd give them a call!
Read more from Bill at his blog, Ear to the Ground .