Affordable Housing in Southwest Florida Still Scarce Despite Sagging Market

In a cooling market, three things are altering the chances for housing affordability: insurance, Florida mortgage rates and property taxes.

In Southwest Florida, where median home price appreciation hit 40-50 percent in 2005, the market may be creeping downward, but that has not translated into much of an increase in the number of lower-priced homes for sale.

In Collier County, from January 1-September 25, 2005, when most of the market was still on an upswing, 107 homes were listed for sale for under $200,000. For the same period this year, there were only 104 in that price range.

As of mid-September, there were no current listings under $200,000 for Collier County outside of Immokalee, and only 130 homes under $300,000.

The numbers also haven’t changed much in southern Lee County, even with the slowing Florida housing market. Last year, 284 homes were listed for sale for under $200,000 in the Bonita Springs/Estero area from January 1-September 25. This year, that figure rose by 9, to 293.

The number of homes listed in south Lee between $200,000 and $250,000 also stayed nearly the same — 315 this year compared to 314 last year.

The biggest change seems to be for homes for sale just under $300,000. In the first 9 months of last year, 395 Bonita Springs and Estero homes were listed for sale at prices ranging from $250,000 to $300,000. That number grew by 65 percent to 653 for the same period in 2006.

“It is sad when you have to call a $300,000 home affordable housing,” said Joy Runyon of Keller Williams Platinum Realty.

In the Naples housing market, the largest jump was in the under-$400,000 range, where there were 854 single-family homes listed compared to 290 last year.

As the market cools off, sellers are reducing prices to make a sale, but for houses in the $200,000-$300,000 range, the reductions in most cases aren’t much, even as Florida mortgage rates retreat from their summer highs. Data from the Sunshine multiple listing service show that on average, prices for those homes have only gone down about $10,000.

Not to mention the fact that those reductions are quickly being eaten up by substantial insurance and property tax hikes.

While insurance can make things difficult for investors and even current homeowners, it makes the climate almost impossible for prospective entry-level, first-time buyers.

“The rise in [Florida home mortgage] rates combined with the rise in home insurance rates makes it tougher for those on the margin,” said Wayne Archer of the University of Florida Center for Real Estate Studies. “Those who could just barely make it before, now won’t.”

Indeed, the interest on Florida mortgage loans, led by the 17 consecutive increases in short-term interest rates by the Federal Reserve in the last two years, has made it hard on buyers.

For an average 30-year fixed-rate mortgage, home payments are 80-90 percent interest, Archer points out. Every time interest rates go up just three-quarters of a percent, it adds about 20 percent to the interest portion of the house payment, and that means the monthly payment goes up by about 15 percent overall.

For young couples and those in the working class, the region is becoming unaffordable. It will be interesting to see if, within the next 12-18 months, the housing decline makes prices come back to earth — or we begin to see the beginnings of a mass exodus from Southwest Florida.