Middle-priced homes the buzz among buildersMIAMI — Aug. 4, 2006 — Standing on a top floor of a Coral Way office building, developer Miguel Angel Barbagallo turned his back on the gleaming, pricey high-rises along Miami’s shoreline and looked west. Surveying the squat buildings and houses with barrel-tiled roofs in Miami’s more modest inland neighborhoods, Barbagallo declared: “This is my market.” As South Florida’s housing market slows down, there are more houses for sale on the high end than buyers who want them. But there’s still a severe shortage of mid-priced housing that doesn’t require buyers to live on the fringes of the region. So private developers are starting to shift gears from selling the lofty dreams and lavish lifestyles of expensive condominiums to the more mundane — but still lucrative, some say — task of delivering middle-income housing. “The private sector is suddenly saying, wait a minute, no one is serving the middle class, and that is where we need to be,” said Rafael Kapustin, president of Kapustin Corp., who has a hand in two downtown Miami mid-priced projects and plans a third. “In today’s market developers also may not have much choice.” The Related Group, a Miami company that ranks among the biggest luxury condo builders in the country, has started an affordable-housing division. A host of smaller builders is aggressively targeting the middle market. The Miller Group and AmeriBuilt Corp. recently announced a condo project in Broward County’s Pembroke Park with one-bedroom units starting at $165,000. And Restless Development, a New York City developer with a project in North Miami Beach, is marketing what it calls “affordable luxury.” Experts generally divide South Florida’s housing market into three sectors: Market-rate or high end; middle-income or “workforce”; and low-income. The lines between them remain inexact, but the middle market occupies the broad area between the two extremes. For Eli Dreszner, a principal at mFm Construction, that’s anywhere between $200,000 and $400,000. Related Group, which first built affordable housing when it was founded more than 25 years ago before becoming a luxury builder, pegs mid-market housing in the low $100,000s to high $300,000s. The new race to the middle is nationwide, and it comes largely because home prices have risen far faster than wages in recent years, creating large numbers of professionals and middle-income earners who are priced out. Some developers say the volume of demand will make up for somewhat lower profits. A growing demand “This sector has been left unaddressed for so long that need has become greater and greater,” said Oscar Rodriguez, head of Related Group’s affordable housing division. Real estate analyst Michael Cannon contends that if builders “want to stay in the housing development business they have to get into the workforce housing market — which they should have been doing all along.” Still, identifying the so-called middle market and reaching it are proving to be entirely different propositions. Many builders say the costs of land, construction, insurance and borrowing with higher interest rates are simply too high to deliver homes at relatively low prices. Down-payment hurdle Also, buyers for new projects must typically make a 20 percent down payment and then wait two years for the condo to be built. Even if a unit is priced at $100,000, most middle-income earners don’t have $20,000 to spend and wait two years. Another hurdle: Recent reports in The Miami Herald of widespread corruption, waste and mismanagement of Miami-Dade County’s low-income housing programs have raised new questions about efforts to make a dent in affordable housing. “There is a lot of demand there, but the problem is you can’t make any money doing it,” said Daniel Kodsi, president of RPC Holdings in Boca Raton, who plans a luxury hotel and condo tower across the street from American Airlines Arena. “You need some sort of subsidy because if you do conventional development there is no profit in the deals.” City and county governments are considering a variety of measures to encourage or mandate middle-income housing. But developers differ on how far government should go. Some builders are going it largely alone by targeting neighborhoods long overlooked to get cheaper land prices. For instance, Miami neighborhoods like Little Havana and the Civic Center — recently renamed the Health District — are seeing a raft of new proposals for middle-income projects. “You have to take a long time to find the right property at the right price,” mFm’s Dreszer said. “But it can be done.” Government help Other developers insist they need government assistance because of high land and building costs. The help, they say, can come in various forms, such as waiving impact fees, opening up government land in urban areas for development or allowing developers to use city-owned parking instead of building costly garages. Related, for instance, wants to build middle- and low-income housing, along with a restaurant, parking garage and offices, on county-owned parking lots pinched between the Miami River and the Richard E. Gerstein Justice building on Northwest 12th Street in Miami’s Health District. Next month, the proposal is going before a county committee. Buyer incentives Developers also are toying with proposals to help lower the down-payment hurdle. B Developments’ Barbagallo said his lender has agreed to require only 10 percent down payments, rather than the typical 20 percent. Kapustin of Related said he is working to create a company that will help buyers finance the initial down payment — something banks generally don’t do. And mFm Construction says it is making sales pitches directly to county and city workers, who in some cases get down payment help from their employers. They require a 10 percent deposit but allow buyers to pay as little as 5 percent initially, establishing a payment plan to make the rest of the fee before construction is completed, he said. “This is our niche,” Dreszer of mFm said. “We started developing in this area because we found less competition. Now we are seeing more competitors all the time. But there is definitely enough space for a lot of competitors to come in. This is a big market.” ***As always, the latest in Real Estate News as it pertains to Spring Hill Real Estate, Brooksville Real Estate, Weeki Wachee Real Estate, Hernando Beach North Real Estate, Hernando Beach South Real Estate, and Hudson Beach Real Estate. – Brought to you by Hernando Luxury Homes, Your Luxury Real Estate Leader in Hernando County, Florida and Pasco County, Florida. Bookmark This Post
THE NEW HOME OF 2005The National Association of Home Builders Economics Group compiled U.S. Census Bureau statistics on single-family houses built in 2005 and found that the average size was 2,434 square feet, while the average price was $297,000. Other new home 2005 facts: Eighty- nine percent have central air conditioning; 96 percent have at least two bathrooms while 28 percent have three or more; 88 percent have at least three bedrooms while 39 percent have four or more; 50 percent have a fireplace; 84 percent have a garage for at least two cars; 34 percent have vinyl siding; 53 percent have a porch; 46 percent have a patio; 27 percent have a deck; and 55 percent have two stories or more. ***As always, the latest in Real Estate News as it pertains to Spring Hill Real Estate, Brooksville Real Estate, Weeki Wachee Real Estate, Hernando Beach North Real Estate, Hernando Beach South Real Estate, and Hudson Beach Real Estate. – Brought to you by Hernando Luxury Homes, Your Luxury Real Estate Leader in Hernando County, Florida and Pasco County, Florida. Bookmark This Post
Housing boom hits Hernando CountyDevelopers Targeting East Side Brooksville – County commissioners on Wednesday will consider a request by Mercedes Homes to build 900 homes near State Road 50 and Nightwalker Road. Last Wednesday, a Tampa developer filed an application with the county to build 3,700 homes north of State Road 50 off U.S. 19. The state right now is in the process of reviewing a comprehensive plan amendment paving the way for 1,750 homes in eastern Hernando County that would someday become the upscale Hickory Hill community. In that same vicinity, near Interstate 75 and SR 50, the massive Sunrise development would have 4,800 new homes. Despite rising insurance rates and taxes, people continue to flock to Hernando County, lured perhaps by its rural serenity and proximity to Tampa. Even the threat of hurricanes has not diminished the Florida lifestyle for many people who live out of state. The east side is especially gearing up for growth. By the year 2025, the county estimates nine new housing developments in that area, accounting for more than 10,000 more homes, according to county staffers. These days, people need a scorecard to keep track of the many proposed housing developments and those that are still getting off the ground. Here’s a thumbnail sketch of several of the major communities and what’s on the drawing board for the future. Bookmark This Post
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