HOT HOME SALES

IMMIGRANTS AND BUILDOUT FUEL HOT HOME SALES

FLORIDA PRICES AND DEMAND ARE SIZZLING

South Florida Sun - Sentinel
Aug 18, 2002
Antonio Fins and Robyn Friedman;

Housing sales and prices are sizzling across the nation and in South Florida, where a combination of factors is making the house hunt particularly harried and hurried.
The momentum in home sales and sticker shock here is caused by a confluence of events that includes instability in Latin America, the stock market funk, a smaller supply of houses in some markets and the usual flow of folks coming to South Florida for weather, work or both.
That's good for sellers, who might be the only ones smiling on the way to the bank -- though worry is growing that prices might get so high they will outstrip the ability of too many to afford a home.

And buyers? Well, newcomers and long-timers alike are finding that a red-hot housing market requires a lot of hustle in the chase for the American Dream.
That was the case for Patricio Sly. The 38-year-old Argentine arrived in South Florida in mid-July with a mission: find a home.Sly, who moved here to run the U.S. subsidiary of an Internet and multimedia company based in Buenos Aires, and his wife came armed with a list of about 40 candidate homes in Weston that they found on the Internet before they left Argentina.
Faster than they expected, however, the number of to-see four bedroom, two-bath homes with covered patios were snatched off the market.
"In one case we saw a home we liked in the morning, but by the time we went back to see it in the afternoon it had been sold. Then we found another home we liked, but they were already negotiating a contract," said Sly, who finally made a successful bid on a home and moved in last week. "We knew that if we found a house we liked we had to make a decision rapidly."

Unrealistic prices

A boom that started with the sizzling economy of the late 1990s has remained unabated despite the ongoing 18-month national recession and the fallout from the Sept. 11 terrorist attacks that hurt tourism and major employers such as the airlines.
The seemingly unending demand for homes and the dizzying increases in price tags are astonishing real estate agents, researchers, buyers and sellers.
Some speculate that the region's home market is in a bubble, meaning prices are increasing at an unsustainable rate. The consequence could be a crash that brings the market to a crawl or a costly drop in prices for those who bought at the peak.
What's not a matter of speculation is the fact that home prices have shot up.
In the Fort Lauderdale area, the median price of a home in June was $204,500, an increase of 15.1 percent over the same period last year. The median price is up about 59 percent since June 1998.
Statistics on housing prices in Palm Beach County for the past year are unavailable because of a county computer malfunction, but numbers compiled by federal regulators show that the median price has increased 38.4 percent in the past five years. The skyrocketing price tags have turned off some buyers.
"I'm just super frustrated," said attorney Mark Gallegos, 47. "People are being greedy."
Gallegos said that soon after he joined a Fort Lauderdale law firm last November, he and his wife, Jeanie, decided to start looking for a home in Broward County.
Months later, the corporate and public finance attorney is still living in Pinecrest, a community in south Miami-Dade County, and is still driving two hours, 80 miles roundtrip to his office and back each day.
The Gallegoses know what they want in a Davie-area house: a three- bedroom, two-bath home with 2,000 square feet on an acre or so of land for their son and dogs to roam. But they say the prices some are asking are not "realistic."
"Sellers must think that money is falling from the sky because the prices they're asking have just been outrageous for nondescript land and rundown homes," he said.
"I'm suffering from sticker shock."
But one analyst said the supply of buyers remains plentiful.
"I don't foresee a downturn in the current market," said Richard Bass, a broker with Coldwell Banker Residential Real Estate Inc. in Boca Raton. "Unless the entire economy goes deeper into a recession, there is no reason for the housing market to change."
What seems certain is that there is lot more behind the home rush than simply cheap mortgage rates.
On one end, political and economic crises wreaking havoc in Latin America, from Colombia to Argentina, have led to an influx of people -- in many cases middle class professionals or entrepreneurs who fear losing gains accrued over a decade's worth of advancement.
In addition, the bear market gripping Wall Street has spooked investors who have either cashed out their stock portfolios to invest in real estate or are looking for alternatives instead of putting more funds into equities.
And despite the national economic recession that is now into its 18th month, South Florida is still drawing its share of folks moving from other parts of the United States to the Sunshine State every day.
Finally, land in South Florida is not an infinite resource. Buildout means that after a century's worth of construction and paving, growth in the supply of homes is grinding to a halt.
According to Boca Raton-based Metrostudy, the supply of new homes is shrinking. Only 1,295 single-family homes were started by builders in Broward in the second quarter of 2002, a decrease of 30.8 percent compared with last year.

Fewer new homes

In Palm Beach County, the inventory of new single-family homes available for sale decreased 2.2 percent during the second quarter of 2002 compared with the same period in 2001.
With fewer new homes being constructed, potential homebuyers in these areas are forced to look at resales of existing homes.
The end result: more and more people looking for fewer and fewer homes, pushing up prices. All this to the disadvantage of those now looking to buy.
When Linda Rochez and her husband David moved to South Florida from Buffalo two years ago, the couple had their hearts set on moving to Boca Raton. But the search for a four-bedroom home in the $250,000 to $290,000 price has proved fruitless.
"The prices in Boca were $30,000 to $50,000 higher than they were in Boynton Beach or Lake Worth," she said.
She settled for a place in Lake Worth on a large lot and is thrilled; her house has already appreciated by about $80,000, she said.
The people Rochez is helping to search for homes -- she works in corporate relocation -- are finding the going tough as well.
"Just a year and a half ago, the prices were still very reasonable," she said. "Now the prices are escalating so fast that they jump up while the people are looking."
Rochez said that some of her clients are changing plans by setting their sights on areas where housing prices are more affordable.
She has seen a flow of people moving to north Palm Beach County and even Martin and St. Lucie counties in search of more reasonable housing prices.
The price increases have left even some Realtors shaking their heads.
Sonia Montana, a real estate agent at Esslinger-Wooten-Maxwell Inc.'s Weston office, said she is still astonished by the appreciation in prices.

Revised expectations

"Every time you think they [have] gone up as much as they can, they go to another level," said Montana, who moved to Weston from Colombia three years ago with her husband and three children. "It just doesn't seem to stop."
Another factor, Realtors say, is that many people, including those fleeing economic and political uncertainty in Latin America, are congregating in specific communities, like Weston, which has a reputation for safety and good schools.
The foreign influence is so strong that Realtors at EWM's Weston office, for example, represent 12 different countries and collectively speak eight different languages.
"The bottom line is things are moving rapidly," Montana said. "For lots of people that doesn't leave a lot of time to make a decision. The decision is now."
Some buyers said they also readjusted their expectations.
After renting for a year, Pablo Schaer, 37, finally moved into a new house in Weston in early August. Schaer, who moved from Argentina last fall, said he likes his new home, although it's not exactly what he envisioned buying as he left Buenos Aires last September.
The home is on a tight lot, not on a spacious piece of land. But he is content with his screened patio, the A-graded schools, the sense of community in the neighborhood and the fact that the rat- race search for a house is finally over. "Everyone has an ideal but sometimes you have to adapt," he said. "We are happy."