Florida Real Estate Blog

The problems caused by Chinese Drywall are perfectly clear in thousands of recently constructed homes across the nation.  Issues like corrosion of A/C coils, plumbing fixtures turning black, jewelery turning black and in some cases health problems. The cure to replace all the drywall in a home has typically been in the $25,000 price range for most homes. After spending 3 1/2 million dollars to study the problem the Feds now say their findings are inconclusive. Read more below:

Feds: Chinese drywall reports still inconclusive

WEST PALM BEACH, Florida (AP) – Oct. 30, 2009 – Federal studies released Thursday cannot yet definitively link imported Chinese drywall to health problems or corrosion of pipes and wires that thousands of U.S. homeowners have been reporting for nearly a year.

The Consumer Product Safety Commission, which is leading the multi-agency investigation, said it needs to further study the matter before it can consider a recall, ban or other solutions to help affected homeowners. Additional results from ongoing studies were due to be released next month.

“The expansive investigation and scientific work that has been done and continues to be carried out is all aimed at providing answers and solutions,” Lori Saltzman, a director in the CPSC’s Office of Hazard Identification and Reduction, said Thursday. “No connections have been made yet.”

Saltzman said the agency, which has so far spent $3.5 million on the studies, has received nearly 1,900 homeowner complaints during one of its largest consumer product investigations in U.S. history.

“We understand this problem has literally driven people from their homes,” she said.

Homeowners, however, were frustrated by a lack of answers.

“So many of us have been really waiting on these results released today to offer us encouragement, but in fact, we’re quite disappointed,” said Holly Krulik, of Parkland, Florida, about 45 miles north of Miami.

Krulik and her husband, Doug, along with their two young children, moved in with her parents about six months ago because she says the Chinese wallboard in their home was making them sick and ruining the house.

“We’re hanging on by a thread here. When is help going to arrive?” said Krulik, who will soon join hundreds of others who have filed lawsuits.

Thousands of homeowners like the Kruliks who bought new houses built with the potentially defective materials are finding their lives in limbo as the lawsuits against builders, contractors, suppliers and manufacturers wind through the courts.

During the height of the U.S. housing boom, with building materials in short supply, American construction companies imported millions of pounds (kilograms) of Chinese-made drywall because it was abundant and cheap. An Associated Press analysis of shipping records found that more than 500 million pounds (226 million kilograms) of Chinese gypsum board was imported between 2004 and 2008 – enough to have built tens of thousands of homes.

They are heavily concentrated in the Southeast, especially Florida and areas of Louisiana and Mississippi hit hard by Hurricane Katrina.

The defective materials have since been found by state and federal agencies to emit “volatile sulfur compounds.” Officials have also found traces of strontium sulfide, which can produce a rotten-egg odor, along with organic compounds not found in American-made drywall. Homeowners complain the fumes are corroding copper pipes, destroying TVs and air conditioners, blackening jewelry and silverware, and making them sick.

And some homeowners are reporting that their insurance companies are dropping or refusing to renew their policies based on the presence of the wallboard in their houses, putting them at risk of foreclosure.

The federal test results released Thursday largely confirmed what prior testing had found. The multiple agencies investigating, including the CPSC, the Environmental Protection Agency and the Centers for Disease Control and Prevention, acknowledged the reported health symptoms are consistent with some sort of contamination. But the culprit is unclear.

The Chinese government is assisting with the investigation.

The rental market in SW Florida has seen a steady decline in rental rates over the past year.  This is a direct result of the effects of supply and demand, with the supply of available rentals being greater than the demand by tenants.  This was the first year that I can remember since I arrived in 1973 that the population of Florida actually declined.  As foreclosures and short sales are purchased by investors, many of these properties are placed in the rental pool which increases the supply even more.  Investors who are currently purchasing homes for $45,000 to $85,000 that were originally sold three years ago for $200,000 or more have a big advantage over owners who may have a large mortgage.  A home that was purchased for $45,000 can be rented for $750 a month and show a nice positive cash flow. A house with a $150,000 mortgage cannot.  This causes even more owners who cannot carry the negative cash flow to be forced into foreclosure of short sales, which again adds to the over supply of inventory and compounds the problem. 

Hensley Real Estate's rental department is much smaller than many of the other Realtors in the area as we manage less than 50 properties.  This allows us to be very hands on with our customers and maintain a 95% occupancy rate for our customers.  We are currently advertising for additional units as we have none available at this time. Landlords however need to realistic as to what current rental rates are and be competitive.  Otherwise, their house will sit empty as renters find a better deal down the street.

Below is an interesting article from the NewsPress on this topic:

Lee County rental market in shambles

DICK HOGAN • dhogan@news-press.com • October 21, 2009

The National Association of Realtors reports a spike in home sales last month in excess of 5%.  This is nothing new in SW Florida where sales are up some 800% from a year ago.  Investors are buying foreclosure properties as soon as they hit the market. There are often multiple offers on every property. It's not hard to see the value in a home that sold three or four years ago for $240,000 which can now be had for $50,000 +/-. 

Existing home sales spike 5%

Realtors group says sales of existing homes rose in February. Prices tumble more than 15%.

NEW YORK (CNNMoney.com) -- Sales of existing homes unexpectedly rose in February, recovering from a sharp drop in the previous month, according to an industry report released Monday.

Hensley Real Estate Property Management offers full service property management taking the hassles out of the equation.  If you think you might want to do your own property management here are some helpful tips you might use.

Tips for homeowners who turn into landlords

WASHINGTON – March 11, 2009 – Homeowners who decide to rent out their properties have to stop thinking of themselves as homeowners and instead consider themselves as running a small business, experts say.

Thinking like a businessperson means focusing on the monthly cost of maintenance, mortgage and taxes, as well as being aware of landlord-tenant regulations and avoiding liabilities.

Here are key issues to consider:

• Set a fair rent. Setting the right price will make it more likely that a landlord will be able to keep the place rented.

• Understand landlord-tenant rules. Running afoul of landlord-tenant regulations and rules regarding security deposits can be costly.

• Screen applicants. Eliminating potential tenants who can’t pay or who won’t take care of the property is very important.

• Lay out the rules in a lease. Widely available sample leases can help. If you have questions, ask an attorney.

• Consider a property manager. Despite the expense, turning the job over to experts can help a landlord come out ahead.

• Talk to the condo association. If the property is a condominium, be prepared to deal with a host of regulations.

Source: The Washington Post, Renae Merle (02/28/2009)

This is good news for investors wanting to take advantage of the current low prices and buy multiple properties. Many investors are buying multiple properties with the plan to rent them out for a few years and hopefully make a nice profit on a flip. At the current low prices it is possible to rent and make a nice return on investment. Hensley Real Estate offers full property management and rentals.