Price Appreciation on Single-Family Homes at Lowest in Three Decades

Perhaps the bubble sitters had the right idea.

Those that have waited on the housing market sidelines for prices to plunge may now be ready to apply for a Florida home mortgage. After all, growth in the price of a single-family home was just 1.17 percent in the second quarter, according The Office of Federal Housing Enterprise Oversight (OFHEO).

It was the slowest quarterly increase since the fourth quarter of 1999 and the sharpest quarter-to-quarter pullback since OFHEO began the index in 1975.

Meanwhile, Jonathan Miller of Miller Samuel, an appraiser in New York, believes the slowdown may be even more pronounced than the numbers are showing. He thinks many sellers are holding out for unrealistically high asking prices, while the buyers actually purchasing homes are only the ones willing to pay those higher prices.

“That’s why there’s been such a drop-off in volume,” said Miller.

To close deals with the on-the-fence or reluctant buyers that aren’t quite ready to take out a Florida mortgage loan, sellers will have to drop their prices. Only then will the index reflect the actual market. The effect could snowball if sellers get a bit panicky and try to unload their properties quickly, before prices erode further.

Areas of slowest appreciation

The release from OFHEO said that appreciation in many states declined dramatically; the largest effects were felt in states that had experienced the greatest increases in recent years, such as Arizona and Florida.

“Of the seven states that saw more than 80 percent appreciation over the 2001-2005 period,” read the report, “only Rhode Island’s appreciation rate has increased over the last year. The remaining markets experienced rapid decelerations.”

Florida home prices, which spiked nearly 113 percent over the past five years, rose just 2.51 percent. In some areas, such as the Miami housing market, this is due to stubborn buyers and sellers. Demand for Florida home loans has remanined steady because neither side will change it asking or offering prices.