- April 24, 2024
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Some brokers are showing a spike in closings, thanks to bargain prices in the housing market.
At Prudential Warren Real Estate, agents say they can barely keep up with their bustling workload.
After a real estate boom from 2005 to 2007, things went bad, Prudential Warren President and 30-year real estate veteran Chuck Warren said. During that time, houses and lots were sold by the handful, many by investors who intended to “flip” them for profit.
But when the market crashed, many buyers were stuck with properties they couldn’t afford long-term, which led to countless foreclosures and “short sales” — banks accepting less than the amount owed to them by lenders, to avoid the expensive and arduous process of foreclosure.
“The banks have been taking the hit,” Warren said. “ … Nearly five years ago, the word ‘short sale’ didn’t exist.”
The proof is in the numbers
Now, the housing market has hit bottom — which, according to Broker Associate Traci Gura, is something not lost on homebuyers.
“I have never been busier in transactions than I have been this year,” Gura said. In the first quarter of 2011, she reports having already recorded 80% of her total 2010 sales.
Another broker, Tim Kennelly, said homes priced $200,000 and under have a current absorption rate — the length of time they remain open on the market — of fewer than five months. In 2009, the rate was closer to two years.
“Everyone’s trying to ease the pain as best they can, stop the bleeding,” Gura said.
And that’s why banks are willing to unload, rather than up-charge their properties. “They’re not in the real estate market,” she said; “they’re in the money market. They don’t want those houses back.”
The new-home conundrum
Rentals are moving quickly, as well, according to Gura. New builds on open lots, however, are slow.
“We don’t have new homes being built (now) because we had this big over-glut,” Gura said.
But Jason DeLorenzo, government affairs director for the Flagler Home Builders Association, said overbuilding is not the problem.
“Our building deficit since late 2006 is far greater then overbuilding (was) from 2002 to 2005,” he said. “That tells me that the economy is what’s holding back recovery.”
Either way, according to Kennelly, if investors have capital, they should put it toward land. “The best bang for people’s buck right now is to create a land bank. Buy dirt,” he said.
Palm Coast has 48,000 platted lots, according to Kennelly, and about 15,000 are still available. Some lots are selling for $10,000 or less, he said.
In pre-planned cities like Palm Coast, he explained, when the plats are gone, “that’s it.” “When the (pre-built home) inventory gets eaten up, the new builds will start,” Kennelly said. “Well, builders need lots.”
In the meantime, Kennelly is busy keeping up with current home sales.
He has conducted about double the number of transactions this year as opposed to this time in 2005. The picture is not all rosy, however: The sales price is about half what it used to be. But, such is the state of the market. Like Gura, Kennelly said now buyers have the upper hand.
“You can get a lot of house now, with those short sales out there, for $100,000,” he said.
