In Daytona Beach, Real Estate Concerns Rise Above Gas Price Problem

Don’t get residents in Dayonta Beach wrong: they don’t exactly like the price of gas being so high.

But the man who measures the state’s consumer confidence every month says most Floridians aren’t that worried about these costs as much as they are focused on the growing real estate bubble.

“High gasoline prices have been around for a year or more,” said Chris McCarty, survey director at the University of Florida. “I suspect that a lot of people have more or less accommodated to them.”

McCarty’s team of pollsters reported a July confidence index reading of 89, up 1 point from June, as a growing number of people surveyed agreed now is a good time to make a big purchase. But McCarty predicted unease about values in the housing market will push down confidence levels for the next several months; Florida home mortgage demand may suffer as a result.

A look at Florida mortgage/consumer confidence surgey

UF’s index uses a 150-point scale for its monthly survey of 500 households, with 2 representing maximum pessimism and 150 representing maximum optimism. A score of 100 is used as a reference point to show Floridians’ economic mood in 1966. Over the past year, the index has fluctuated from 78 last September to 95 in January.

“We expect a fairly pronounced effect from the decline in the real estate market,” McCarty said.

As prices soften, there will be a “leveling or decline” in home equity, a loss of construction jobs and slower sales of appliances and building products, he said. Need proof? Area homes marketed by Realtors sold in June for a median price of $221,300. While that was $12,600 higher than the median price of a year ago, it was $10,200 below May’s price level.

“There’s clearly a lot more inventory on the market now, but sellers haven’t come to grips with that yet,” McCarty said. He expects prices to fall farther in higher-priced coastal markets like Naples, Fort Lauderdale and Sarasota, but he was uncertain whether Daytona Beach will follow suit. Many hopeful buyers - “bubble sitters” - are hoping this is the case, as they continue to wait to file a Florida mortgage loan application.

The response by sellers

One local seller who recently lowered his asking price is Bill Fletcher, an Ormond Beach resident who had been trying to sell a two-bedroom starter home on Sherwood Lane in Holly Hill for $147,900. After four months of waiting for a buyer, he’s lowered his price to $143,900.

“My theory is that the market is very saturated right now, and interest rates are going up,” Fletcher said. Many first-time homebuyers are likely to have modest incomes and lower credit scores, he added.

Mark Soskin, an economist at the University of Central Florida’s Daytona Beach campus, can understand why sellers are nervous about empty properties. Speculators trying to flip expensive new condominiums while juggling interest-only Florida home mortgages are perhaps at greatest risk, he said.

How come? Because this group will be more likely to default on a Florida home loan as rates reset. Make sure you’re aware of your situation and speak with a lender to learn more about various Florida mortgage refinancing options if you fall into this category.