Florida Mortgage Brokers React to Shaky Year in State Housing

Everybody knows that the region’s Florida real estate market lurched, staggered and stumbled through 2006 while attempting to find an elusive balance.

But just how bad was it?

The quartet of the Southwest’s largest and best-financed realty Florida mortgage broker houses - Michael Saunders & Co., Coldwell Banker Residential Real Estate Inc., Re/Max Properties and Prudential Palms Realty - dropped an average of 43 percent in sales and an average of 47 percent in unit sales.

In raw dollars, it was a drop of about $3.5 billion.

For many brokerages, it was not the third-best year ever, as many real estate agents had hopefully predicted early last year. Complicating slowing sales was the fact that some companies over-invested in infrastructure and some let expenses get out of hand during the heady boom years.

Real estate agents were coming off a sustained red-hot market to a drop-off that was the among the worst in a decade. For all four of the large brokerages, 2006 fell short not only of 2005 but also of 2004.

Two of the top four, Coldwell and Prudential, consolidated offices and reduced head count. Re/Max reduced its total number of employees, but expanded its total offices while Michael Saunders & Co. expanded both in the hope that Florida mortgage activity would pick up again.

The experience in 2006 was one that anyone in real estate will tell you that no one ever wants to repeat.

“The correction in 2006 was very different than previous corrections” said Joe Hembree, the president of the Sarasota Association of Realtors. The drop-off did not occur, as most do, in a general economic downturn. In fact, it was quite the opposite, he said.

It was speculation that fueled the historic sales and price increases and it was “at levels that simply are not sustainable in a healthy economy,” Hembree said.

Factors including high property taxes and insurance costs contributed to the scale of the correction, Hembree said.