Insurance Rates - Not Florida Home Mortgage Demand - Top Housing Market Concern Survey

Industry insiders don’t sem worried about the Florida home mortgage situation; demand should continue to increase as interest remains low and sellers are forced to lower asking prices.

When it comes to the real estate market and, ultimately, the economy, experts are more threatened by spiraling insurance rates, says a University of Florida researcher.

”The entire economy will have to adjust to these higher insurance costs,” said Wayne Archer, director of UF’s Center for Real Estate Studies, which recently completed a new quarterly survey of Florida real estate trends. “It’s a big enough hit, just like gas prices, that it will ultimately affect every business and every price that is property intensive.”

The unusually active 2004-05 hurricane season precipitated the higher rates. While these have already struck homeowners with Florida home mortgage loans and apartment owners - who are passing costs on to tenants by raising rents - commercial tenants have not been affected yet on a large scale, Archer said.

”The most dramatic increases will be in the cost of real estate, but consumer prices will also go up some, just as rising gas prices put pressure on costs across the board,” he said.

The insurance crisis was identified as the biggest trend in Florida’s real estate market in the center’s new statewide quarterly survey. Industry executives, real estate lawyers, market analysts, title insurers, financial advisers, market research economists, real estate scholars and other experts in the field from around the state were asked a series of questions by UF’s Survey Research Center in July.

The softening Florida housing market was the second most mentioned trend.

While 69 percent of the survey respondents expect condo prices to lag behind inflation or even decline, only 47 percent of the respondents were as pessimistic about single-family home prices, Archer said. Also, while nearly 70 percent expect a downturn in absorption rates - the rate at which properties are able to be leased or sold –61 percent expect the same pattern in single-family housing.

The recent explosion in apartment-to-condo conversions is beginning to slow and will slacken even more as the housing market continues to soften, Archer said. Sellers and developers will be taking it easy, as the leverage shifts toward buyers seeking a Florida home loan and reasonable purchase.