Wilma Helping the Real Estate Cool Down in Florida?

[gatorcane]

The real estatem market in South Florida, and all across the country for that matter has very recently (past couple of months) started to collapse - there are clear signs the bubble is bursting.

What is interesting is that the bubble started to pop right after Wilma and many articles discuss this timing - or perhaps just coincidental timing:

Q: How can we prevent the outrageous increases in insurance knowing that there are predictions for another 10 or so years of substantial hurricanes on the way? -- Debbie in Pompano Beach

A: Debbie, you could be entitled to insurance discounts by having approved shutters, impact-resistant garage doors and maybe even a certain shape of roof. For more information, go to the web site Flash.org. It's run by the Federal Alliance for Safe Homes, a non-profit consumer education group focused on disaster safety.
http://www.sun-sentinel.com/business/re ... customform


With more hurricane possible for South Florida - could we finally be seeing the real estate market seriously considering the problems that hurricanes may cause?

What will happen when that major CAT 4 or CAT 5 slams into South Florida? Will the real estate market collapse even more just like we saw int the 1920s?

I keep warning but nobody listens...what do you all think?

http://www.stock-market-crash.net/florida.htm
http://www.investopedia.com/features/cr ... ashes4.asp

[terstorm1012]

I doubt Wilma had much to do with your local bubble and the national bubble "popping." It was already in decline last summer nationwide. In my city homes sit on the market for months before they are finally bought.

my thoughts are that people will continue to flock to Florida regardless of the hurricane threat...and the next Cat 4 or 5 will bring a speculative bubble. Note that places in Miami-Dade that were rural or semi-rural in 1992 are now covered with miles and miles of ubiquitious suburban tract housing.

[SouthFloridawx]

Who do you keep warning? The money hungry investors here in south florida? There is a deluge of condo conversions here in south florida. A lot of lenders are no longer giving the option to finance an condo conversion because of the shear amount of them. I am a mortgage broker here in south florida and now when i talk to real estate agents they mention the fact that they have a lot more properties on the market and there is less turnover. Could we be starting to see a bubble burst? It is possible we could be seeing that but, it's too early to tell. Most assuredly though if we saw another hurricane hit the area it would certainly not be good. Taxes and insurace are extremely high here is South florida as noted by boca chris. I have a some clients in broward county just south of fort lauderdale and thier taxes are anywhere between 5,000-7,000 per year and insurance is not much better than that.

[gatorcane]

I doubt Wilma had much to do with your local bubble and the national bubble "popping." It was already in decline last summer nationwide. In my city homes sit on the market for months before they are finally bought.

my thoughts are that people will continue to flock to Florida regardless of the hurricane threat...and the next Cat 4 or 5 will bring a speculative bubble. Note that places in Miami-Dade that were rural or semi-rural in 1992 are now covered with miles and miles of ubiquitious suburban tract housing.

The reason why rural Miami-Dade prospered after Andrew is because people think that major hurricanes into South Florida are a "once-in-a-lifetime" event. But old-timers that lived here in the 1940s know otherwise.

I truly think that a CAT 4/5 through the heart of Miami/Ft.Lauderdale or through SE Palm Beach County (Boca Raton) that severely damages the metro areas will cause an even bigger burst (think about it, we have not seen a major into metro South Florida in over 50 years).

[KWT]

It all depends on how often those hurricanes come through, if they keep coming through year after year, then eventually people will simply not invest in Florida anymore.

Same with New orleans, if another big one rips through in the enxt 3-5 years, then i think that will probably beocme a proper ghost town.

[gatorcane]

It all depends on how often those hurricanes come through, if they keep coming through year after year, then eventually people will simply not invest in Florida anymore.

Same with New orleans, if another big one rips through in the enxt 3-5 years, then i think that will probably beocme a proper ghost town.

Yes, I agree, it all depends. New Orleans and Miami may not get hit for the next 50 years again. We just don't know.

[Aquawind]

It all depends on how often those hurricanes come through, if they keep coming through year after year, then eventually people will simply not invest in Florida anymore.

Same with New orleans, if another big one rips through in the enxt 3-5 years, then i think that will probably beocme a proper ghost town.

Well said..

I think the current trend was well underway and has little to do with the hurricanes other than delays and higher prices for materials for an number of reasons. With the repeated hits we have already seen FPL and Insurance companies raising their rates for the long term..even though they had massive profits last year. Fact is if the infrastructure continues to be destroyed it is going to become even more expensive to live here with the need for more taxes etc to cover the costs. It is already expensive in south Florida we have people with good jobs who can't afford a home.. Collier county median is ~ $480,000 and in Lee ~ $290,000.. I think the economy in general is going to swing for some tough times ahead for south Floridians and ESPECIALLY if this yearly landfall trend continues as investors will wise up..But Wilma alone I don't think so.

[MiamiensisWx]

It all depends on how often those hurricanes come through, if they keep coming through year after year, then eventually people will simply not invest in Florida anymore.

Same with New orleans, if another big one rips through in the enxt 3-5 years, then i think that will probably beocme a proper ghost town.

Good points and I agree.

[GeneratorPower]

Remember that Florida was hit hard by the 2004 season with 4 hurricanes, not just the 2005 season with Katrina and Wilma. It's gaining a reputation as a hurricane hotspot. That will make a LOT of people think twice before moving there. Wilma alone won't do it but *sheesh*, when will it end???!?!

[gatorcane]

Well said..

I think the current trend was well underway and has little to do with the hurricanes other than delays and higher prices for materials for an number of reasons. With the repeated hits we have already seen FPL and Insurance companies raising their rates for the long term..even though they had massive profits last year. Fact is if the infrastructure continues to be destroyed it is going to become even more expensive to live here with the need for more taxes etc to cover the costs. It is already expensive in south Florida we have people with good jobs who can't afford a home.. Collier county median is ~ $480,000 and in Lee ~ $290,000.. I think the economy in general is going to swing for some tough times ahead for south Floridians and ESPECIALLY if this yearly landfall trend continues as investors will wise up..But Wilma alone I don't think so.

Yes well-said - I agree with you 100%

[Bocadude85]

Though there has been a downward trend in real estate, there are hints that the market is once again slowly picking up. Houses that I have had listed for months are now slowly starting to sell and just yesterday I submitted an offer of 2.6 million on a townhome on A1A in Boca Raton.

[stormie_skies]

First of all, it makes no sense at all to talk about a "national bubble." Real estate is the most local of all businesses - its not like the tech bubble, which was driven by nationwide speculation in a nationwide market. What is happening in your real estate market might be completely different from what is happening in another state, or even across town. Of course, the media rarely sees such distinctions.....and loud proclamations of an impending disaster sell more newsweeklies, anyways.

Hurricanes might have a little to do with the deflation of parts of the south Florida market, but I don't think they are the driving factor. You guys have seen ridiculous appreciation rates in recent years....double digits, I believe .... something that has no doubt drawn a lot of out of state investors into the market. But appreciation rates just can't stay that high for long, as California is starting to find out. Eventually you price first-time and middle class homebuyers out of the market. And when you price everyone out of the market who doesn't already have equity in a home in that price range, there is no real demand to justify those high appreciation rates. And the rates start heading back toward what would be considered a moderate level, a level that new home buyers can actually sustain.

Now, heres the problem with an investor-heavy market: because these people own property exclusively for the money and have no attachment to it per se, odds are they will jump ship the second they see their profits slipping away. That takes the normal moderating market forces and puts them on steroids - get enough investors busting out and you'll end up with depreciation instead of appreciation for a while.

Smarties are already starting to see this happening in some of the major markets and are selling and going places where the market has kept appreciation - and prices - lower, like Texas, for example. Houston has one of the strongest real estate markets number-wise in the nation - if fear of hurricanes was a driving factor, theres no way that would be the case.

[gtalum]

I think it's premature to call it a collapse. The market has cooled, but prices have remained steady, abd in some areas are still actually on the rise even as inventories increase. We may see a 5-10% drop in real estate, which will really only hurt those who purchased with too little equity or the wrong types of loans in the past year or so.

[gtalum]

On the other hand, I do wait with bated breath for condo prices to tumble. I'm readying my finances to take advantage of this next year or the year after.

[melhow]

I'm of a different opinion over on this coast. Maybe it's because we don't have as large of a perceived hurricane target pasted over our part of the Florida map as you guys down near Miami do, but home sales here in the Tampa Bay area seem to be doing just fine. In fact, I see more second home snow-bird purchases going on around me over the past three years than I can ever recall, hurricane threats and all.

People will always come here and build over disasters. For example - If any of you remember the "no name storm" back in the early ninetys - it did considerable damage to some communities around Tampa Bay, to the point where some areas could not be insured for new construction for years and years. But then as time passed, those areas that were under 8 or 9 feet of water began to have builder interest, and whadya know, now there are multi-million dollar homes standing where I can remember piloting my dad's johnboat over to get our of our neighborhood and into the Bay.

It is getting more expensive to live here, for sure. I mean, a 62% increase in property insurance will take anyones breath away, as it did mine this renewal period. But I don't think the raise in cost of living or home ownership will stop people from coming to Florida, because people, IT'S FLORIDA. So we have hurricanes. Some people dream all their lives about living here. And I think that is what makes Florida different than places like New Orleans.

Don't get me wrong, I really enjoy New Orleans. I enjoy visiting, I enjoy the culture, and lord knows I enjoy the beignets. But about what poster above said about if New Orleans got whacked a couple more times by a hurricane and it turning into a ghost town - I think that might be a possiblity, and I just don't think that would ever be the case for anywhere in Florida. Now, it might get expensive as hell to live here, but I think people would continue to come to rebuild and reinhabit instead of abandon. They would just keep coming, cause it's Florida.

What Floridian government should really try to concentrate on now is keeping the residents that they have before we get priced out of our own communities. Teachers, police officers, and firefighters can barely afford to live in the counties that they service in some areas around here. I do agree on that point wholeheartedly.

[hookemfins]

I think it's premature to call it a collapse. The market has cooled, but prices have remained steady, abd in some areas are still actually on the rise even as inventories increase. We may see a 5-10% drop in real estate, which will really only hurt those who purchased with too little equity or the wrong types of loans in the past year or so.

I said a year and half ago that prices won't go down. Instead home prices will just go back to the 3% yearly appreciation. You are not going to see a collapse like the 80's.

The commercial side is still alive and doing well.

[hial2]

[quote="KWT"]It all depends on how often those hurricanes come through, if they keep coming through year after year, then eventually people will simply not invest in Florida anymore.

Remember,SFla is not like the rest of the USA!In my opinion, as long as there are revolutions and instability in Central and South America, you will see home prices keep going up in South Fla. (Miami Dade, Browrd and Palm beach counties). As an example, the Doral area in Miami Dade is known as Little Venezuela..

[terstorm1012]

I'd move to Florida regardless of the hurricane threat. However the high prices and your lack of mass transit keeps me away (for now.)

Good points all around, but I don't forsee the housing market ever collasping in South Florida. Now----if sea levels continue to rise...then maybe 50-60 years down the line I can forsee it...but not so much now.

[MGC]

Home prices are dependent on several factors. As long as the demand out paces suppy prices will rise. I was just over in Panama City Beach for the Easter weekend. Condos are going up like there is no tomorrow. I was talking to some locals about how much the area has changed since the first time I visited in 1973. The locals said that the condo market is over built there and people are not even getting the pre construction prices for their condos. The current decrease in home sales nationally is directly related to the rise in mortgage rates. Of course local markets may be weaker or stronger based on local demand.......MGC

[gatorcane]

Great comments!

I have changed the title based on the comments.