Recent financial crisis fails to hurt confidence in Florida real estate

GAINESVILLE, Fla. – Oct. 21, 2008 

The national economic crisis has failed to rattle Florida real estate experts, who, despite serious concerns about the availability of financing, remain surprisingly calm about market conditions within the state, a new University of Florida survey finds.

The most recent quarterly survey of Florida real estate trends, which was completed in September, shows the investment outlook for various types of properties remains steady, according to Wayne Archer, executive director of UF’s Bergstrom Center for Real Estate Studies.

“People who have responded to our surveys have not lost their faith in Florida as a place to be and a place to invest,” he says. “We have 40 pages of comments from our respondents, and although the dominant theme is the disruption of financing, perhaps the second theme, as one person put it, is people being on the sidelines with full pads and helmets just waiting to jump back in.”

Although Florida’s housing crisis is worse than other states, over the long term Florida stands to benefit from the migration of new residents, particularly as baby boomers age, Archer said. The Sunshine State’s mild climate and outdoor amenities make it an attractive retirement destination, despite high property taxes, insurance rates and hurricanes, he said.

Unfortunately, the plunging stock market combined with the fall in housing prices and tightening of home financing requirements will likely temporarily delay plans baby boomers may have to retire and move to the state, he said.

For the state’s real estate market to recover at all in the short term, banks and other financial institutions must ease credit restrictions, Archer said.

“If the financial crisis continues, that would really change the picture,” he said. “Our respondents, I think, are keeping the faith that they may have seen the worst and the shock will not be overwhelmingly severe.”

One sign of optimism is the trend in the latest survey toward a more favorable view of new single-family home development, Archer said.

“The respondents actually moved in a somewhat guarded but positive direction,” he said. “It suggests to me that they believe we may have already reached the bottom in that category.”

Although the survey does not include the market for existing single-family homes, one respondent said houses were beginning to sell in Lee County, once dubbed the foreclosure capital of the world, indicating perhaps the market is beginning to stabilize, he said.

Several neighboring counties in southwest Florida are likely to be in trouble for a long time, however, along with the Miami condo market, where an estimated 40,000 units are for sale, Archer said. Prospects are particularly bleak for higher-end condos in the city’s downtown, he said.

The weak dollar and general confidence in the United States as a safe harbor for investment could lure international investors to Miami, but that would be unlikely if the economic crisis deepens into a worldwide recession, he said.

While condo markets throughout the state face problems, which are likely to persist in the foreseeable future, the outlook for apartment rentals bounced back a little from the last survey in June, Archer said. “There was an expectation that occupancy rates would be falling, and while they’re not great, they are viewed as stable,” he said.

The weakest rental markets are in retail, which has been particularly hard hit by the economy as consumers spend less money, Archer said.

“After seeing what’s happening to their home values and watching the news, they are deferring purchases,” he said. “As a result, most retail organizations are curtailing their expansions and consolidating their operations and stores, which is creating higher vacancies.”

Perhaps the most negative survey result was that respondents’ perceptions of their own business outlook, which has declined steadily for 11 quarters, took an even larger downturn this quarter, Archer said.

“This is in marked contrast to their views of the market as a whole,” he said. “Although keenly aware of the downturn in the availability of capital, they remain surprisingly calm.”

The latest survey is based on 392 responses and is 12th in a series. It is the only Florida-centered survey of leaders and professional advisers in the real estate industry. The largest group of respondents was appraisers, about 51 percent, followed by brokers and other service providers.

© 2008 FLORIDA ASSOCIATION OF REALTORS®

ORLANDO, Fla. – Sept. 24, 2008 –

For the second month in a row, several of Florida’s metropolitan statistical areas (MSAs) reported increased sales of both existing single-family homes and existing condos in August 2008, according to the latest housing statistics released by the Florida Association of Realtors® (FAR).

“Despite economic uncertainty and the start of the school year, which impacts August home sales, a number of Florida’s metro areas continue to report an upswing in housing activity,” says 2008 FAR President Chuck Bonfiglio. “Florida Realtors are noticing signs that investors think the market has reached bottom in many areas, and they are preparing to jump in while prices remain below value. Industry analysts hope that the federal government’s financial rescue plan will boost the housing market and help restore confidence.”

A total of 10,847 existing homes sold statewide last month while 11,282 homes sold in August 2007, a decrease of 4 percent in the year-to-year comparison, according to FAR. Florida’s median sales price for existing homes last month was $186,900; a year ago, it was $234,100 for a 20 percent decrease. But, looking back to August 2003, the statewide median sales price for single-family homes at that time was $163,600 – an increase of 14.2 percent over the five-year-period, according to FAR records. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in July 2008 was $210,900, down 7.7 percent from a year earlier, according to NAR. In California, the statewide median resales price was $350,760 in July; in Massachusetts, it was $326,500; in Maryland, it was $303,959; and in New York, it was $229,000.

The latest housing outlook from the National Association of Realtors® (NAR) predicts that existing home sales nationwide will improve in the coming months, though the speed and timing of a recovery depends on local market conditions. “Sales have picked up significantly in several Florida and California markets,” says NAR Chief Economist Lawrence Yun. “Home prices generally follow sales trends after a few months of lag time. Still, inventory remains high in many parts of the country and will require time to fully absorb. We expect more balanced conditions in 2009 and will eventually return to normal long-term appreciation patterns.”

In a year-to-year comparison for condos, 3,214 units sold statewide compared to 3,428 in August 2007 for a 6 percent decline. The statewide existing condo median sales price last month was $158,000; in August 2007 it was $197,400 for a 20 percent decrease. In the latest data available at press time, NAR reported the national median existing condo price was $223,400 in July 2008.

Last month, interest rates for a 30-year fixed-rate mortgage averaged 6.48 percent, down from the average rate of 6.57 percent in August 2007, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Seven of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in July; seven MSAs also showed gains in condo sales. Many Realtors around the state are noting a rise in pending sales, more telephone calls and increased business activity in their markets, indicating heightened buyer interest.

Among the state’s large to medium-size markets, the Fort Lauderdale MSA reported a total of 604 homes sold in August compared to 538 homes a year ago for a 12 percent increase. The existing home median sales price was $269,800; a year ago, it was $368,800 for a 27 percent decrease. In the year-to-year comparison for the existing condo market, sales activity remained stable with a total of 550 existing condos sold in the MSA last month compared to 551 condos the previous August. The market’s existing condo median price was $133,300; a year ago, it was $178,800 for a 25 percent decrease.