Saturday, March 18, 2006

Oversupply Of Homes For Sale In Port LaBelle?

Can You Afford To Buy A $250,000 home?

LABELLE, FL. (March 18, 2006) -- As the real estate market cools all over
South Florida, evidence in Port LaBelle may be confirming the oversupply of
new homes in two of the state's poorest counties as well. A count of new
homes now occupied in Port LaBelle versus homes under construction and
unoccupied new homes indicates that builders and financing institutions
may be facing some stiff problems ahead. The largest building "boom" in 20
years has been taking place in Glades and Hendry county, primarily in the
Port LaBelle subdivisions.

The 32,000 acre subdivision is now largely huge areas of vacant lots owned
by out-of-staters who purchase lots beginning in the 1970s. In the last few
years speculators and builders have been busy buying up as many lots as they
could from absentee lot owners. CHL and its various corporate entities
bought hundreds of lots as low as $200 a piece in the last several years.
CHL is probably the largest Port LaBelle vacant lot owner at the current
time. The company set up model homes on SR80 east of LaBelle and then began
building dozens of homes and selling them fairly quickly until recently.
Other builders and real estate speculators saw what was going on as lot
sales prices increased dramatically in 2004 and 2005 and bought vacant lots
by sending out form letters to owners in some cases with the assistance of
local real estate brokers offering to buy the lots at way below market
prices, although the out-of-state owners were glad to accept since prices
had been stagnant for 25 years, vacant lots in Port LaBelle almost
impossible to sell at prices exceeding the original owner's purchase prices,
even though they had owned the lots for as long as 25 years.

We have split Port LaBelle into five sections, each with slightly different
growth and sales patterns. Overall, in the last several years 82 new homes
have been built and are now occupied in the sections we counted. Some appear
to be occupied by renters, as home sales have slowed. Builders are putting
some of their construction people in the homes or are actually advertising
new rental homes in local papers. There are 77 homes under various stages of
construction and 22 homes are completed but not occupied. There are now 99
homes under construction and completed but not occupied, versus 82 homes
occupied in the sections we counted.

We have split Port LaBelle into sections as follows: South Port LaBelle,
being in Hendry county and south of State Road 80, but not including a
small section west of Eucalyptus Blvd. and south of Cowboy Way where new
homes primarily were built before the building "boom" by CHL. Secondly,
North Port LaBelle, being north of SR80 in Glades county, and Laural Oaks an
existing community of 49 homes north of SR80 in Hendry county. In Glades
county, the Port LaBelle Ranchettes, an existing community of 44 homes, and
lastly Oak Haven, a new upscale community south of SR80 and west of
Birchwood in Hendry.

The highest percentage of unoccupied and homes under construction is in
South Port LaBelle stretching from the LaBelle Middle School area in the
east to the Country Oaks Elementary in the west and from State Road 80 on
the north and Helms Road on the south. This is by far the largest section of
subdivided vacant lots in Port LaBelle and in Hendry county. There were 34
new homes occupied, while 54 were under construction, and 14 were
unoccupied. It's not known exactly how many of the under construction and
unoccupied homes might have been under contract with buyers, but presumably
only a small percentage as "for sale" signs were seen throughout the area.
Homes were priced in the mid $200,000 price range and included frame stucco
construction as well as CBS homes with and without garages. All power lines
are above ground on poles which some see as unsightly in the mostly untreed
South Port LaBelle subdivision.

In Glades county, the North Port LaBelle area, on the north side of SR80 had
32 new homes occupied, 10 under construction and four unoccupied. Prices in
the mid $200,000 with CBS construction as well as modular homes trucked in
and installed on stem wall foundations. In Laurel Oaks, just southwest of
the North Port LaBelle section but in Hendry county there were seven CBS
homes with two car garages under construction in the existing community of
49 homes. It was presumed these were speculative homes being built by one
owner. Prices were in the $300,000 plus range.

In the Glades county Ranchettes section only four homes were being built,
and four unoccupied in the existing 44 home high-end subdivision. It was not
known what asking prices were, but most likely in the $500,000 and above on
multi-acre lots. In Hendry county, the high-end Oak Haven subdivision of 16
new homes had only two new homes under construction on multi-acre lots. It
was assumed these were being built for new owners under contract.

Over all, the under construction and vacant homes compared to occupiednew
homes ranged in percentages from 67% in South Port LaBelle to only 11% in
Oak Haven. The average was 55% of unoccupied or under construction compared
to occupied for all the subdivisions. That includes 82 occupied new homes,
77 under construction, and 22 unoccupied.

The huge increase in home building originally began with the cheap land
prices in Hendry and Glades county compared to coastal counties. Then last
fall Hendry county commissioners began charging builders an impact fee of
several thousand dollars causing a mini-boom in building permits issued to
builders just before fees took affect in order to save thousands of dollars.
This coincided with the state wide slowdown in home sales and the timing of
the impact fees was probably not the best for Hendry county. Glades county
commissioners are now studying implementing impact fees there as well at
this time.

Along with new home building exploding here, existing home owners saw house
prices increase dramatically in the last two years and decided they would
join the band wagon and put their homes on the market, increasing
dramatically the number of homes for sale. Joining the speculative frenzy
were locals hurriedly getting real estate salesmen licenses to sell homes.
Over two hundred individuals are either licensed in Hendry county to sell
real estate or are qualified by the state and waiting to take the real
estate exam.

The question for builders and real estate brokers is whether the Hendry and
Glades county prospective home buyer can afford the prices now asked, for
new homes in two of the state's poorest counties and counties with the
state's highest unemployment rates. Or have builders and financiers over
estimated the capability of the local economy to absorb the largest number
of new homes being built in the last two years since the 1980s. Maybe the
best thing for the local economy is for real esate builders, realtors, and
home owners to slow down a bit, and not rush to put more housing units on
the market at this time hoping for a windfall profit.

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