Will Mother Nature ultimately solve Florida's problem of too many homes, too few buyers?
Wake up and good morning. This may feel like dark humor in these economic times, but it''s hardly unusual in stressful times. In a phone conversation yesterday, an area executive joked that the fastest cure to Florida's phenomenal glut of empty housing would be a fire. It's a takeoff on the same humor I hear every hurricane season... The most efficient way to rid Florida of its aging and crumbling housing stock is a Cat 5 hurricane.
Which brings us to an interesting piece in Barron's this week. Headlined "Mother Nature's Solution to the Housing Collapse," the article quotes Wall Street analysts who say that the extreme overhang of foreclosed and empty homes for sale in Milwaukee is starting to yield neglected housing that literally smells from mold and mildew. Says Barron's:
"If that's what it's like in the Upper Midwest, conditions in Florida and California have to be even worse. Presumably foreclosed houses in Arizona and Las Vegas are holding up better in the desert, but any house deteriorates if neglected. If they get bad enough, the properties are worth more if the house is torn down."
Nobody likes to think of such waste but we may heading down that nasty path. This week's Case-Shiller index shows home prices in Tampa Bay and many other markets still falling because (1) there are too many sellers and too few buyers and (2) qualifying for a mortgage is much tougher now and (3) foreclosed homes are selling at a big discount and continue to drag overall prices lower.
Certainly in Florida, if thousands of homes sit untended and empty through this summer humidity, mold and mildew seem inevitable. At some point, it seems to me, the task of reclaiming rancid housing that nobody wants anyway may eventually prompt folks to simply bulldoze the structures. It's all part of the bigger task of shrinking a grotesque oversupply in the face of modest demand. Banks are sitting on a ton of Florida homes that they have yet to place on the glutted real estate market. And some builders, amazing as it sounds, are still putting up new housing -- betting that those folks who do want to buy want a shiny new home and not one that stinks.
-- Robert Trigaux, Business Columnist, St. Petersburg Times