Pair of Studies Casts Differing Views Upon Brevard County Housing Market

It’s all relative, after all.

A just-released federal study indicates the Brevard County housing market — while not as strong as it was in recent years — remains in the top third in the country for price appreciation over the last year.

The study, which is conducted every three months by the Office of Federal Housing Enterprise Oversight (OFHEO), found the value of homes in Brevard County rose by 9.67 percent from the third quarter of 2005 to the third quarter of 2006. That ranked Brevard in the top third of U.S. metro areas in the study — or 81st out of 275.

The findings differ sharply from data compiled by the Florida Association of Realtors, which showed a 10.8 percent drop in home resale prices during the past year.

The difference reflects how the two studies are done.

The OFHEO index is based on repeated sales on the same property over time, for single-family properties that were financed or refinanced with Florida home loans issued by Fannie Mae or Freddie Mac, the government-sponsored secondary mortgage buyers. The agency’s index attempts to look at the experience on the same homes over long time frames.

By contrast, the Florida Association of Realtors study compiles data for all sales by Realtors, and its reports are not necessarily an apples-to-apples comparison between time periods, according to Stan Smith, Professor of Finance at the University of Central Florida. Smith issued a report analyzing the data as it relates to Central and East-Central Florida.

Smith said different types of houses may be selling better in different time periods, and the federal report makes for a better comparison tool.

He said the latest numbers from OFHEO indicate there is no housing bubble bursting or about to burst, and that Florida mortgage activity is healthy in this part of the state.

The current numbers suggest that, in general, Central Florida housing markets are currently experiencing the soft landing that many hoped for,” Smith said. “As we watch the effects of higher inventories and discounts on new homes, it is possible that the situation may change. But, for right now, the Central Florida housing market looks like a good investment, particularly as one’s investment horizon increases.”

Nationally, the Office of Federal Housing Enterprise Oversight said home prices were 7.73 percent higher in the third quarter of 2006 than they were one year earlier. They were up 0.86 percent from the second quarter of 2006 to the third quarter of 2006 nationally. The quarterly increase is the lowest since the second quarter of 1998.

The quarterly increase was even less in Brevard — up 0.04 percent.

“Brevard has always been the county of opportunity,” said Gene Collins, President of the Melbourne Area Association of Realtors. “Real estate always has value, and it’s a great time to buy. But we’re only having a soft landing, if you believe we hit the bottom, and, let’s face it, the inventory hasn’t gone anywhere. There are more than 10,000 properties in Brevard County. Buyers are coming back, but there’s so many more homes to choose from that sellers have to be realistic.”

The average rate for a 30-year, fixed-rate Florida home mortgage fell to 6.14 percent this week, the lowest rate since January, according to data compiled by mortgage agency Freddie Mac.

Collins said he expects January to be a strong time for seller, but they have to price their houses smartly.

“Just because a guy next door got $300,000 for his home last July doesn’t mean you’ll get that in January 2007,” Collins said. “You have to be realistic.”

Smith said various surveys relay information about Brevard home sales, as well as inventory on hand, but home price appreciation is something that regards the equity investment.

“There are six existing homes (sold) for every new one built,” Smith said. “So there is a lot of interest in this information.”