Sales of new homes came in disappointingly low in February...again. They were at levels not seen for nearly seven years.
And Florida has become the foreclosure capital of the United States. The Sunshine State has already gone from boom to bust many times. In the 20s, speculators bought and sold lots until they went broke in the 30s.
"You can get a house in wood...you can get brick...you can get stucco," said Groucho Marx, playing a shyster land developer in the movie Coconuts, "...boy, can you get stucco." Many people have gotten stucco in Florida property in the last few years.
"There's something about Florida residential real estate that attracts speculators like an alligator to an easy meal," says an AP story.
"As the market stalled, buyers were scarce and expenses rose, and they were forced to sell... There are for-sale signs on almost every other property on the most desirable road that embraces the graceful, white-sand beaches of the Gulf of Mexico. Local newspapers carry four or more sections of real- estate advertising.
"Like so many formerly torrid markets, southwest Florida home prices are in retreat. Prices fell 2 percent in the fourth quarter of last year in the Naples area and more than 1 percent in Fort Myers after more than doubling in value over a five-year period, according to the Office of Federal Housing Enterprise Oversight, the watchdog agency for the mortgage companies Freddie Mac and Fannie Mae.
"[A] combination of slower sales, higher mortgage rates, large inventories and cash-strapped flippers being forced to sell is tilting the balance to buyers now."
Bill Bonner
The Daily Reckoning Australia
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Comment by Chuck Cobb on 16 May 2007:
In southeast Florida in 2005, we had sales of 1 home for every 4-5 available. Today, we are now seeing 1 sale for every 18 to 25 homes available. Until this inventory can be absorbed, the housing market is going to continue to be slow.