Builders cutting back sharply in my neck of the woods
First, M/I Homes said it sold off approximately 3,700 lots for $82 million. Most of that land is in Florida, with more than 500 lots being dumped in the West Palm Beach market (which the company is exiting after doing business here since 1985). M/I Homes' local communities include a mixed townhome/detached home community called Paloma not too far from where I live and the Oaks at Hobe Sound.
Second, private builder Mercedes Homes just sold 130 vacant lots in Port St. Lucie for an average price of about $19,400, according to the Palm Beach Post. How big a discount is that from their previous value? Here's an excerpt from the story, with my emphasis added:
"The lots that we sold, we bought at the top of the market," said Rob Smithwick, Treasure Coast division president for privately held Mercedes Homes.
Instead of continuing to pay interest on lots that might be worth one-third of what it paid, the home builder decided to take what cash it could get and move the properties off its books. Smithwick said Mercedes' losses on a per-lot basis were as high as $70,000 in some cases.
"But $70,000 on paper doesn't buy me a hamburger," he said.
So what's the outlook like for this area? Smithwick had some comments there, too:
"I do believe '08 will be the worst of all the years," he said. "Our objective is to hunker down ... so when we come out in '09 we will be one of the few standing."