FLORIDA HOUSING MARKET WARNING ISSUED BY ONE OF AMERICA'S BIGGEST BANKS
Citigroup's downgrade of homebuilders Lennar and D. R. Horton has spurred a warning from Raymond James, one of the biggest investment banking firms in the U.S., for Florida's sluggish real estate market.
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Shares of the two homebuilders have been falling since Citi cut its ratings on both companies from 'buy' to 'neutral' and slashed its price target for Lennar from $174 to $164 and from $181 to $156 for D. R. Horton. Shares of Lennar (LEN) were down by 1.59 percent as of early on Wednesday, while shares of D. R. Horton (DHI) were down by 1.32 percent, according to Google Finance data.
On Wednesday, Raymond James downgraded its outlook for Lennar from "outperform" to "market perform," saying that one of the main issues weighing on the decision was the builder's overexposure in Florida, as reported by Yahoo Finance. According to Raymond James, Lennar's projected annual revenue is now $30,164,000, down 13.95 percent from their previous expectations for the company.
Newsweek contacted Raymond James for comment by email on Wednesday morning.
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The difficult situation currently facing the Sunshine State's housing market, including skyrocketing home insurance premiums, the addition of resale inventory, and relatively high property taxes, has contributed to the sluggishness cited as a source of concerns in the coming months by both Citi and Raymond James.
Florida, together with Texas, has been one of the states that has been building the most new homes in the past few years, trying to increase inventory amid a historic shortage in the U.S.
The addition of these newly built homes to the state's inventory, together with the addition of existing homes that owners have finally decided to sell assuming that mortgage rates won't increase any further, have brought down prices in parts of Florida and caused a spike in "stale" listings—those of homes which had stayed in the market without going under contract for at least 30 days.
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According to Redfin's latest data, there were 200,997 homes for sale in Florida, up 40.1 percent compared to a year earlier. The number of newly listed homes was 48,945, up 12.5 percent year-over-year.
Only 11.7 percent of homes in Florida sold above list price in May, according to the real estate brokerage, down 4.0 points year-over-year. Over 32 percent of homes had price drops, up from 26.0 percent of homes in May 2023.
An expected slowdown in Florida's and the U.S.' housing permits, starts, sales and prices is likely to continue in the coming months, contributing to lower revenues for builders like Lennar and D. R. Horton.
2024-07-03T12:35:18Z dg43tfdfdgfd
