McClelland Minute - February 28, 2010

Thankful To Live Here

My wife and I caught a seat sale to Florida in February, hoping to get out of the cold for a while and explore an area of North America we hadn’t seen before.  As a winter vacation, it was a good news / bad news scenario.  We traveled much of the central and southern part of state, including a run down to Key West, but the temperatures were the coldest experienced there in 33 years, hovering in the 50s’ most of the time making our time on the beach quite limited.

I thought I would share with you some observations on real estate activity in this part of the United States.  Florida is one of four states considered to be worst hit with the housing crisis of the past two years; the others being California, Arizona, and Nevada.  Obviously all are in the “sun belt” and areas considered to be prime locations for recreation or retirement.

Tourists have been coming to the coastal regions of Florida for well over a hundred years.  Prominent American families have had second homes there starting as far back as the 1880s including Edison, Goodyear, and Ford.  Today, it is one continuous urban development that sprawls along the Gulf of Mexico shoreline for approximately 120 miles and reaching inland at least 20 miles, from north of Tampa Bay right down to the Naples and the edge of the Everglades.  It is a similar situation on the Atlantic side from Cape Canaveral to Homestead.

Up here, when we talk planned communities, we usually are referring to a subdivision with one or two schools, a park, and a modest mixture of housing from single family to apartments.  Down there, planned communities are the size of Lloydminster and larger, with post-secondary campuses, business zones, and wide spread residential areas; all rising out of the limestone base of what is a relatively flat state.  Today most of the newer subdivisions have an extensive amount of unoccupied housing, and it is a rare community that doesn’t have at least a quarter of the homes in a distress situation.

In the Tampa Bay area, home prices have plummeted more than 40 percent from the peak in 2006.  A two bedroom, two bath, 1254 sq ft town home that sold new three years ago for $191,800, is now listed at $70,000.  Similarly, a three bedroom, two bath, 1301 sq ft single family ranch style home with double attached garage originally sold for $222,800 in 2005 is now available for $97,000.  I was talking to the manager of a Tractor Supply House, a store similar to our Peavey Mart.  He said his acreage had devalued from $650,000 to just over $300,000 in just 30 months!

Inland central Florida is where you find Disneyworld, citrus trees, and the large reservoirs that supply fresh water to meet the incessant demands of the cities of Orlando, Miami, and Tampa-St. Petersburg-Clearwater.  The government appears to be quite concerned that the demand for water is outstripping supply.  All I noticed is that if you climb the 30’ high levee on the south shore of Lake Okeechobee the actual shoreline is at least a quarter mile away.  Not a good sign one would think.

There also appeared to be lot of farmland actively being marketed for potential development.  I guess if your oranges are freezing, and there is intense competition from cheaper South American imports, it would be tempting to cash out and be done with the struggle. 

All in all, I still like our humble home in the Midwest.  Yes, our weather can be cold in winter, and hot in summer, but we still have lots of open country to enjoy, a relatively stable economy, no alligators in the creek, and our communities don’t have to rebuild every 40 or 50 years following a hurricane.

Vern McClelland is associate broker with RE/MAX of Lloydminster.  If you have questions or comments on this article or other real estate matters, he can be reached at 780.808.2700 or through the McClelland Group website www.mcclelland.ca

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