Brevard County Real Estate Looking Steady
Starting to panic about the bubble bursting? A story printed by Florida Today might make you rest a little easier. With economists and real estate professionals increasingly concerned about the impact of the housing bubble bursting (or at least deflating), an analysis by the National Association of Realtors suggests that there is actually “very little danger” of a large-scale market meltdown in more than 100 metro areas, including Brevard County, Florida.
Recent news reports across the country have speculated that dramatic growth of housing costs and the recent increases of mortgage rates have created a bubble that could burst, sending prices into a tailspin. The Realtors beg to differ. The Brevard County real estate market is in excellent shape, they say, “with a potential for significant housing equity gains, particularly for home-buyers who plan to remain in their house for the long run.”
The group’s report projects that even a modest 5 percent price decline would only happen under “unlikely circumtances” such as an increase in mortgage rates to 10.7 percent or a loss of 15,000 area jobs. Local real estate professionals hailed the positive evaluation, describing the recent slowdown in price appreciation as a return to a normal cycle and not necessarily any indication of a significant market “bust.”
In the past five years, the double-digit percentage appreciation of Florida real estate was being fueled by the basic economic principle of low supply and high demand. Now, the rapid price ascent is lessening as the market is returning its normal amount of inventory, leaving about six months’ worth of homes on the market.
“For a while, we had six weeks, maybe,” said Julia Dreyer, owner of Coldwell Banker Sun Land Realty, which operates out of both Melbourne and Indian Harbour Beach, Florida.
Several factors have contributed to the increased housing stock, according to the brokerage firm:
- Hurricane recovery efforts. Many of the homes that would have been listed last fall instead suffered hurricane damage, meaning owners had to wait for insurance payments, and contractors to do repairs.
- A tough rental market. Owners of rental properties made a ton of money in the past year, as people whose properties were damaged by the storms of 2004 and 2005 needed housing, as did appraisers and others in the area.
- Profit-taking among seniors. Individuals who bought homes decades ago have seen dramatic increases in property values. Many have concluded that it’s time to sell, take the profit and move closer to their families.
That profit is what’s causing such widespread speculation about a bubble.
Since 2001, the median price of home sales in Brevard County has more than doubled. The median price was $225,300 as of September 2005, up from $101,600 in September 2001, according to the Florida Association of Realtors. While this increase pushes the average income needed for a home purchase above healthy levels, the Realtors insist that a better measure for market health is the cost of financing a home relative to income, which remains at a very manageable level.
Historically low interest rates have helped reduce buyers’ monthly payments, as have adjustable-rate mortgage loans, which feature a fixed rate for a set period of usually three or five years. Interest-only loans and 40-year mortgages are also growing options, and while they have very clear drawbacks, many of those become irrelevant if a buyer plans to be in a home for only a few years.
Despite all of the negative speculation swirling around the real estate market nationally, local realtors remain confident and point to Brevard’s ace in the hole — its desirability as a retirement destination.
“We just have too many retirees who are still coming and still want waterfront,” said Debbie Schmid, a Realtor for Pruitt Real Estate, a firm with Viera and Cocoa Beach, Fla., locations.
The local market slowed this summer, but that is generally the case in Florida, Schmid says. The unwelcome arrival of Hurricane Wilma last month delayed the start of the busier fall season as well. While the Realtors expect the market to remain strong, they concede that sellers will need more patience now than they have had to demonstrate for a few years. Today, buyers have more properties to look at, and especially if rates continue to rise, are likely to take their time and think things over.
