Polk Country Housing Market Woes Continue

Two years ago, Polk County housing market was a seller’s dream.

Realtors couldn’t keep inventory, buyers were snapping up two houses at a time and the good times were rolling.

Then along came 2006.

Flat prices, an abundance of unsold new homes and incomes that struggled to keep up with the rise in home prices led to some of the poorest monthly showings on record when it came to Florida home mortgage activity.

So what’s the future hold? More struggles for about two years - and then a turn in 2009.

“Polk County’s economy will grow through 2009,” Hank Fishkind, owner and economist of Fishkind & Associates in Orlando, will report this week when he releases a two-year projection that he authored. Fishkind partnered with the Attorneys’ Title Insurance Fund to create the look at local real estate markets in Florida.

“With excess inventory in the housing stock, future growth is expected to slow as household formation declines and existing inventories are sold,” Fishkind reports. “This trend is expected to continue forward through 2008. By 2009, inventories of housing units are expected to increase.”

Inside Polk County

Polk County had a peak year for growth in 2005: More than 11,000 building permits were issued and nearly 6,600 existing homes were sold.

But 2006 fell flat. Home sales have fallen 21percent to about 5,200 and permits dropped nearly 43percent to about 6,500 last year.

“Closing volumes are expected to slip in 2007 and the housing market peaks in response to higher [Florida mortgage interest rates] and a lower formation of households,” Fishkind’s report said. “However, closings are expected to increase steadily through 2009 as the market re-equilibrates.

“Pricing will be relatively flat for the balance of 2006, 2007 and 2008. It will take this much time for incomes to catch up to the recent sharp run up in home prices. Prices will not rise appreciably until 2009.”

Future of this Florida housing market

While many experts agree on the problems facing the local, state and national market, the time for a rebound differs.

“We still have stuff going on,” said Dean Saunders, owner and Florida mortgage broker of Coldwell Banker Commercial Saunders Real Estate in Lakeland. “Things are still moving pretty well. I think what happened was that we underestimated the number of speculators in the market.”

Speculators, buyers who have no intention of living in a home or keeping a property for a substantial amount of time, purchased property throughout the state, all in the hopes of making a quick buck. But the investments and fast purchasing drove up market prices, causing a frenzy in both commercial and residential real estate circles.

It meant skyrocketing prices and overbuilding of properties.

But for the Florida housing market to make a full rebound, home inventories need to be cleared out, experts say.

“It is all going to be dependant on the absorption rate,” said Grant Thrall, a professor of geography at University of Florida, referring to the existing home inventories in Polk. “There’s not a lot of new construction going on.”

Thrall predicted the market to rebound in 12 to 18 months when buying begins again.

It was a lack of consumer confidence and a rise in affiliate home costs, such as property taxes and homeowners insurance, that brought the market to a near standstill, Thrall said.

“I think it will be overcome,” he said. “It (investing in a home) is a good thing to do. It is a good and safe place for your life savings. It’s a good time to buy and will be for the next two years. And if they are waiting for it to go down more (in price), they are just going to miss it. The market is going to go up.”