Home Prices Continue to Surge; Orlando Housing Market Leads the Way

If you’re searching for an affordable Florida home loan - a new house at a reasonable price - you may have to keep looking.

According to a study by the Office of Federal Housing Enterprise Oversight (OFHEO), appreciation continued at a robust pace at the end of 2005, with average home prices increasing 12.95 percent from the fourth quarter 2004 through the fourth quarter 2005.

For the most recent quarter, appreciation was 2.86 percent (or an annualized rate of 11.4 percent). There is no evidence of a slowdown in average prices.

“Despite recent indications that a slowdown may be forthcoming, house-price appreciation during 2005 continued to hover at near-record levels,” said OFHEO Chief Economist Patrick Lawler. This was a scenario that many Florida home loan experts have been predicting.

Home prices continued to grow considerably faster over the past year than did prices of non-housing goods and services reflected in the Consumer Price Index. House prices rose 12.95 percent, while prices of other goods and services rose only 4.3 percent.

“While deceleration continues in some areas, appreciation generally is still extremely strong,” said Lawler. “Mortgage rates climbed significantly during the second half of last year, but the effect of that increase on price appreciation so far appears to be limited.”

Significant findings in the OFHEO index included:

• Four-quarter appreciation rates were at record levels in 26 metropolitan areas including Orlando-Kissimmee, Fla.; El Paso, Texas; and Myrtle Beach-Conway-North Myrtle Beach, S.C.
• Phoenix-Mesa-Scottsdale, Ariz., continues to be the metropolitan statistical area with the greatest appreciation rate of 39.7 percent.
• Price growth in the South Atlantic Census Division, which includes East Coast states from Maryland to Florida, was at its highest rate since 1975, the beginning of the period covered in OFHEO’s index. Home prices grew by 17.81 percent between the fourth quarter of 2004 and the fourth quarter of 2005.

OFHEO’s index is based on analysis of data obtained from Fannie Mae and Freddie Mac from more than 31.2 million repeat transactions over the past 31 years. OFHEO analyzes the combined mortgage records of Fannie Mae and Freddie Mac, which form the nation’s largest database of conventional, conforming mortgage transactions. The conforming loan limit for mortgages purchased in 2005 was $359,650. The limit for 2006 is $417,000.

Of course, not every area of Florida is flooded with expensive homes. An affordable Florida home loan may be found in South Florida, currently a buyer’s market facing depreciated prices when compared to recent years.