Florida Home Sales Fall, Prices Stay Put

There’s a lot of bait out there, but the patient fish aren’t biting. Sales of existing homes in the Sunshine State dropped by 33 percent in July and prices inched upward slightly, the Florida Association of Realtors said Wednesday, further signaling of a slowdown in the real estate market.

Afflicted by increasing inventory, the departure of many speculators and an upturn in Florida mortgage rates, slowing sales are becoming evident all across the state. Statistics showed 14,451 existing single-family homes were sold statewide last month, down from 21,691 in July 2005.

Each of the state’s 20 largest metropolitan areas saw a drop in sales, from the modest 1 percent in Ocala to a staggering 51 percent in Naples.

Statewide home price increases have not tumbled yet, but they have waned a bit the past few months, reflecting action by sellers who have resorted to lowering asking prices as patient buyers consider rising Florida home mortgage rates — not to mention the increasingly high costs of property insurance and local taxes. Even $3 gas prices are starting to impact the way people look at housing.

Statewide, the median home price for previously owned properties was $250,800 in July, up just 1 percent from $248,200 a year ago. Prices increased by 3 percent in June and 11 percent in May, compared to those months last year. These Florida sales figures reflect closings, which typically occur 30-90 days after sales contracts are written.

The Florida housing market adjustment is also indicative of some national trends. Sales of previously owned homes plunged in July to the lowest level in 2.5 years nationally and the inventory of unsold homes climbed to a new record high. Still, home prices in Florida are up about 90 percent from 2001, and existing home sales are near the pace of July 2002, when 14,916 existing homes were sold.

“The current situation, if you look at it in a big picture scenario, it’s not a dire problem. It’s not a collapse. It’s merely an adjustment,” said Wayne Falbey, owner of The Falbey Group, a firm that specializes in real estate consulting.

According to Freddie Mac, the average rate for a 30-year fixed-rate Florida home loan was 6.76 percent last month, up from 5.70 percent in July 2005. Rates have fallen for four straight weeks, however, and are now hovering around 6.50 percent.

Meanwhile, the condo market is falling even harder. Sales of existing units decreased by 37 percent in July, compared to last year’s figures, and a total of 4,260 condos sold statewide compared to 6,739 in July 2005.

Inventories are this high partly because speculators who sought to quickly resell homes and condos they purchased are finding it more difficult to get rid of the properties. Consequently, these flippers are being forced to lower their listing price.

“We’ve got one of those weird places in Florida housing history when supply outstretches demand. Most of the people I respect in the industry tend to agree that its probably going to be late 2007 or 2008 before the inventory normalizes,” Fabley said.

In the long term, some challenges facing the market, specifically involving home builders and sellers. These include, but are not limited to, the lack of sufficient infrastructure and affordable housing to accommodate the hundreds of people moving into the state a day. Some analysts believe that influx of people, many of them retirees, can also help insulate Florida’s market to a certain degree because it provides constant end-user demand.

Factors such as the adjusting rates on Florida mortgage loans aren’t likely to impact that demographic, in other words.

“We’re a much more stable market. We have such in-migration of people coming here to retire, that’s provided a stable economic base,” said Bill Weaver, real estate professor at the University of Central Florida.