Florida Real Estate Report Card: Home Ownership Slowing, Rental Rates Rising
National home ownership peaked at 69.2 percent in 2004. Since then, Florida home mortgage applications have mostly decreased, as potential buyers wait out high interest rates and steep prices.
The chart below illustrates the stagnant ownership market, while showing that rentals have remained mostly steady. Many insiders believe that rental rates will rise as more and more individuals eschew Florida home loans until the market tilts even more in their favor.
Meanwhile, here’s one analyst’s real estate report card from last quarter:
Economic Growth: C
The U.S. economy continues to perform at an average level, though current trends show slowing job growth and rising inflation. Gross domestic product growth was revised upward to a healthy 2.9 percent in the second quarter, but is still short of the first quarter’s 5.6 percent growth. Job growth continues to slow, adding 1.69 million jobs in the last 12 months.
Mortgage Rates: B
The pause in interest rate hikes by the Federal Reserve last month was a factor in falling Florida mortgage rates in August. At the end of the month, the 30-year fixed rate was 32 basis points lower than the previous month’s average, while the one-year adjustable rate was 19 points lower. During August, adjustable rate mortgages fell to 26.8 percent of total loan activity.
Consumer Behavior: C+
Consumers are growing increasingly more pessimistic about the short-term economic outlook, as the consumer confidence index fell below 100 in August to 99.6, its lowest level of the year. The consumer sentiment index fell in August to 82, due to slowing job growth and the weakening housing market.
Existing-Home Market: B-
Annual existing home sales are now 11 percent below year-ago levels, falling to 6.3 million homes through July. The volume of existing homes available for sale is approaching 3.9 million homes.
Housing Supply: C
Slowing in construction activity has now reached double-digit declines across annual starts and permits. Annual housing starts fell below 1.8 million for the first time in nearly two years to 1.79 million in July, which is down 13 percent from one year ago. Permit activity fell for the fifth month in a row to 1.75 million units, nearly 21 percent below the permit level in July 2005.
While many buyers may be hesitant to enter the market, those with houses already are commonly considering Florida mortgage refinancing. They wish to get out of loans whose rates are about to adjust for the worst.
