Housing Market Decline
The numbers came out today for the largest decline in the housing market in at least four decades. Sales of single family homes dropped by 32.7%, according to the U.S. Department of Housing and Urban Development. Part of the blame was cast upon the expiration of a tax credit for home buyers. Demand for home loans, as one would expect, has dramatically declined. People with existing homes that are under water are abandoning their houses and leaving them to be reclaimed by nature as weeds and other growth takes over. Municipal governments and homeowner’s associations are strained in their resources to clean up these eye-sores. To be honest, this is nothing new.
Can’t Sell Old Houses – Let’s Build New Ones!
What is new is that the Mormons and Walt Disney both think this is an excellent time to start new housing development projects. I’d like to call them morons, but as we shall see, greater minds than mine have insight to the housing market and local economy.
The Mormons want to build Innovation Way East, which will include homes and shops near the planned medical and research centers that moved closer to Lake Nona, rather than be a part of Innovation Way. If you recall, Innovation Way was supposed to be Orlando’s “high tech corridor.” That fell apart when the afore-mentioned medical and research buildings moved away and the developers who wanted to bring high tech jobs to Orlando decided it would be more profitable to build warehouses. We all know how much more warehouse workers make than high tech employees, so this was considered “progress.”
Innovation Way for Jobs
Part of the argument for housing development in Innovation Way is that it will create jobs. Sure. You’ll need a plethora of engineers and construction workers to plan and develop the place. Just like any other project, it’s short-term. Development projects don’t last forever, so these are not sustainable jobs. Assuming that all goes as planned and the 6,343 new houses are built, then what? I’m sure some of them will get sold to new residents moving here to work in the International Corporate Park (whatever the hell that is) or the Medical City. Some local folks may also want to move there to be closer to their jobs. Of course, those locals will leave an empty apartment or existing home, so that’s not really growth. What happens to the rest of the thousands of available homes in the Central Florida area, some of which are in Avalon Park and other communities very close to the “high tech corridor?” Hint: see photo above. That’s what we’ll get out of the new development project – abandoned homes with an abundance of overgrowth.
Selling Us a Story
Commissioner Bill Segal invoked high tech jobs as reason to approve the development project, stating how it would fuel economic growth in the region. Tell me, Bill. How many high tech employees are working in those warehouses right now? Hindsight is a convenience that does not burden our elected officials. Well, that’s not totally true. The plan faced a vote today and it didn’t get approved. The vote was 3-3. All of the county commissioners who are running for Mayor voted for the project and those who aren’t voted against the project. Since Mildred Fernandez hasn’t been replaced (she would’ve voted to approve), the deal is a stalemate. Once she’s replaced, we’ll find out if that commissioner can be bought as easily as Fernandez (or so the charges against her would indicate). The politicians who voted for the project need to make claims about supporting growth, creating jobs, and all the other bullshit we’ve come to expect from people on the campaign trail. The other commissioners likely saw that this new development would continue the blight in their own districts, and therefore had no incentive to vote for it.
The other brain trust that sees our current market as an excellent time to plan a new housing development is Walt Disney. The entertainment giant announced this morning it had plans to create Golden Oak (presumably, they could only afford one tree), a collection of vacation homes ranging in price from $1.5 to $8 Million. Disney claimed Golden Oak is not another housing development like Celebration, but is intended to be vacation housing for families visiting Disney.
Of course. I know that I always stay in multi-million dollar homes when I travel, particularly to theme parks full of screaming kids. After you get that sunburn while roaming around and sweating in the theme parks, you really need a place with its own home theater room and a gold-plated bidet. Orlando has really been waiting for such a concept. I’m surprised it doesn’t already exist. Vice President of Disney Real Estate Development, Matt Kelly, said, “The affluent market is an area where we haven’t offered a lot of product.”
Fleece the Rich
Translation: since the average Joe can’t afford to visit in this economy, we see an opportunity to fleece the extra-wealthy. I admit, there is a certain charm to that logic. It’s hard for me to get upset by this development project. The risk belongs to Disney. The homes won’t steal from the existing market, where the average price is roughly $250K, well under the $1.5 million price for the Golden Oak slums. It’ll create some local jobs, even if only temporarily, and our criminals will have a new place to prey upon unsuspecting tourists, as these people won’t be wandering around International Drive.
For the rest of us, get used to seeing weeds in your neighborhood. Neither our elected or business leaders seem to have a plan to help the whole community. We’re on our own.
