Florida Builder Encouraged by Recent Uptick in Sales
Among home builders around the country who are beginning to see tentative signs that the housing market is turning the corner of its worst downturn in generations, Mori Hosseini, chairman and CEO of ICI Homes in Daytona Beach, Fla., said that his sales in April were the best in three years and the upward momentum appears to have carried over into May.
Participating in a May 18 NAHB media teleconference along with association President Jerry Howard and Chief Economist David Crowe, Hosseini said that he has been impressed by the velocity of people showing up at his sales offices. “And some of them are buying,” he said.
Hosseini’s markets in the central and northeast parts of the state — including Daytona Beach, Jacksonville, Tampa and Orlando — have seen recent increases in interested buyers in both the starter and trade-up markets. The only exception, he said, is the second-home market, which remains moribund.
Lower home prices, along with low mortgage rates and the availability of the $8,000 tax credit for first-time home buyers, he said, have provided a significant incentive for prospective buyers to return to the housing market. Hosseini sold 81 homes last month.
“People are coming from up North and making the decision to buy,” he said. One existing home owner, he said, decided it was worth taking a loss on the sale of their current property to take advantage of Florida’s decline in home prices. While prices nationwide have subsided roughly to 2003 levels, “in Florida we have gone down to 2000 or 2001,” Hosseini said, adding that he currently is seeing “some bottoming of home prices.”
However, Hosseini said that about 30 of his recent home buying prospects “did not get qualified to buy the homes,” including some who had sizable downpayments on hand and good credit scores. “Banks are absolutely looking for the gold plate to approve people,” he said, making it more difficult to sustain the market upturn that is just materializing.
Crowe said that access to credit for both home buyers and builders remains one of the headwinds constraining activity even as the market seems to be finding a bottom.
“Mortgage rates are at historic lows,” Crowe said, “but underwriting standards have been tightened” and buyers are having to come up with larger downpayments and being allowed to allot a smaller share of their income for mortgage payments. At the same time, “home builders are having difficulty getting credit from banks and thrifts, which are shying away from most forms of real estate lending even in recovering marketplaces.”
Crowe said that he expects new housing activity in 2009 to total about 50% below 2008 levels, with a pick-up toward the end of the year because of rising consumer confidence and an improving economy followed by an eventual return to normalcy in 2010 and 2011.
“Unemployment will be another one of the retardants to the recovery,” he said, “with continued increases in unemployment and the number of people jobless or worried about their job” in the months ahead, he said.
However, Crowe said, “it’s not unusual for home buying to begin to recover before the employment market. Over 90% of the people have a job; roughly 85% of all people have the job they expect to have, so there’s still a lot of employed people out there, and finding the bargain conditions will push the rest of the market forward.”
Among signs indicating that “we could be turning the corner,” Howard noted that housing starts appear to have stabilized over the past three months and that housing affordability has improved dramatically.
“We are not ready to pop the champagne corks and sing happy days are here again,” Howard said, “but we do see a light at the end of the tunnel.”
Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit — including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
Spanish Version Also Available Online
A Spanish version of this increasingly popular Web site is also available to provide detailed information on the tax credit to Spanish-speaking first-time home buyers.
Industry professionals are encouraged to highlight either tax credit Web site when marketing to their potential first-time home buyer market.
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