The Census Bureau revealed that 18% — or 1.6 million — of Florida’s homes are sitting vacant
This vacancy factor is a rise of more than 63% over the past 10 years. Wow!
Having this amount of oversupply on the market will keep home prices depressed and slow any recovery.
How times have changed
During the housing boom, Florida was among the hottest real estate markets in the nation. Homes were snapped up by the state’s growing population as well as hordes of investors confident that prices would continue to soar.
“You’d drive through downtown Miami and see 30 or 40 cranes sticking up in the air,” said Michael Larson, a housing market analyst for Weiss Research.
The bust brought an end to that. Development ground to a halt. Retirees stopped relocating. And prices started falling and vacancies rising.
“Housing went from being the preeminent investment of choice to toxic waste,” added Richard DeKaser, an economist with the Parthenon Group.
The vacancy problem is more dire in Florida than in any other bubble market
- # In California, only 8% of units were vacant
- # In Nevada, the state with the nation’s highest foreclosure rate, had about 14% sitting empty.
- # Arizona had a vacancy rate of about 16%.
Florida’s housing recovery will take years
- # In Florida, the worst-hit county is Collier — home of Naples — with a whopping 32% of homes empty.
- # In Sarasota County, 23% of the housing stock sits vacant.
- # Lee County (Cape Coral) has a 30% vacancy rate.
- # Miami-Dade County has a vacancy rate of about 12%.
It will take about eight years just to put the vacancy numbers back into the single digits
The housing recovery will take years, perhaps many years, to complete, according to Ingo Winzer, a housing market analyst and founder of Local Market Monitor.
The inventory overhang has sent home prices plunging. The median price for homes sold in January was just $122,000, according to the Florida Association of Realtors. That was down 7% from 12 months earlier and less than half the price at the peak of the market.
Winzer thinks prices in Florida will drop even more, another 5% in 2011 and 3% in 2012. “Even after that, they’re not going to rebound, they’ll just sit on the bottom,” he said.
Celia Chen, a housing market analyst for Moody’s Analytics, is also downbeat in her forecasts for Florida. Not only will prices fall another 11%, she said, but the bottom won’t hit until mid-2012, about a year later than the nation as a whole. Some metro areas won’t get back to their pre-recession peaks until long after the present owners are old and gray.
She doesn’t expect Naples, for example, to come all the way back until the late 2030s. Other Florida metro areas with a 20-year wait or longer include Punta Gorda, Palm Bay and North Port.
See just how cheap it is to buy a Florida condo right now!
My 2-cents
If you decide you want to invest in single-family homes/condos, while they are bargain-priced, you’ll have to have a buy and hold strategy. So buy for the cash-flow. Make sure you’re getting a good cash return from your rental rate minus your expenses (PITI, association fee, maintenance budget, vacancy factor).
If you are buying to owner-occupy, if you can own for the same or lower rental rate, then it may make sense to buy now. However, be prepared for the likelihood that prices will continue to decline.
Another option: Consider investing in multifamily buildings, ie, apartment buildings.
Read the advantages of doing so here
#####
Source: http://money.cnn.com/2011/03/18/real_estate/florida_vacant_homes
Technorati Tags: florida real estate, florida real estate market, florida housing vacancy, florida real estate, florida real estate market, florida housing vacancy, florida census data, florida rental property investment, florida census data, florida rental property investment
