Florida Home Price Declines Lead Nationwide Slump

Florida mortgage seekers, take notice: prices are falling fast. Now is the time to buy.

The slump in housing deepened in the final three months of last year with sales falling in the Sunshine State and 39 other states, while median home prices dropping in nearly half the metropolitan areas surveyed.

Formerly red-hot areas were among the hardest hit as the five-year housing boom cooled considerably in 2006. While some economists said they believed the worst may be over for housing, others predicted more price declines to come until near-record levels of unsold homes are reduced.

Leading the housing decline

The National Association of Realtors said the states with the biggest declines in sales from October through December compared with the same period in 2005 were:

- Nevada, down 36.1 percent
- Florida, down 30.8 percent
- Arizona, down 26.9 percent
- California, down 21.3 percent.

Nationally, sales declined by 10.1 percent in the fourth quarter compared with the same period a year ago. The national median price fell to $219,300, down 2.7 percent from the fourth quarter of 2005. This should lead Florida mortgage loan applicants to consider buying before values go back up.

In all, median home prices fell in 49 percent of the 149 metropolitan areas surveyed, the largest percentage of areas showing price declines in the 27-year history of the Realtors’ price survey.

The price declines were led by an 18 percent decline in the Sarasota-Bradenton-Venice area of Florida. The city with the biggest price gain was Atlantic City, N.J., where the median home price was up 25.9 percent in the fourth quarter.

David Lereah, chief economist for the Realtors, said he believed the report would represent the low-point in the current housing slowdown.

“When we get the figures for the spring, I expect to see a discernible improvement in both sales and prices,” he said.

But Mark Zandi, chief economist for Moody’s Economy.com, predicted that Florida home prices, along with those in many parts of the country, would continue to be under pressure for the rest of this year as the market works through still large inventories of unsold homes.

He said this process will be made more difficult with banks raising lending standards because of concerns about rising mortgage default rates.

“The price declines we are seeing are extraordinarily broad-based and just symbolize how significant a price correction we are in,” Zandi said.