South Florida Real Estate Experts Weigh in on State of the Market

How do you recognize when the real estate market hits bottom?

That’s a question Florida housing market prognosticators are still trying to figure out.

One old-time market theory suggests that buying is best when the blood in the streets slows from a gush to a trickle.

Wall Street’s proverbial blood theory aside, a survey of market experts shows there are as many theories as empty condos in South Florida.

Some theories are funny, some serious and others amount to little more than a denial. Any - or none - may be right.

“It could be when I wake up my husband in the middle of the night after 25 years and tell him I think we paid too much for the house,” said Maxine Robbins, Realtor associate with Leadership Realty in Fort Lauderdale.

What she actually looks for in a market bottom during her waking hours is a 30- to 60-day period of extreme inactivity in both pending sales and closings.

“I think that it might have already happened in January,” she said.

How important is a market bottom? Not vital to most Florida mortgage borrowers, according to Robbins.

“There are always people who have to buy and sell, and I’m selling now to children of the baby boomers who are entering the market in the $150,000 to $300,000 range.”

Michael Pappas, president of Miami-based Keyes Co., thinks the key to anticipating or finding a market bottom is watching sales trends.

“Key indicators of a market bottom include the stabilization of monthly inventory levels, followed by a net decline in new listings,” he said.

Kiku Martinson, director of Florida real estate for Deerfield Beach-based brokerage firm Campbell & Rosemurgy, uses an anecdotal method for recognizing a market bottom.

“We are approaching the bottom as evidenced by increased property showings and an increase in offers made,” she said. “Sellers are coming to terms with the current market and are accepting reasonable offers.”

Kendall attorney Thomas Ringel, a partner with Markowitz, Davis, Ringel & Trusty, said picking a bottom is a matter of supply and demand. He is looking for a summer spurt of demand for homes to neutralize the current buyers’ market in single-family homes.

Ringel expects the 2008 presidential election to be a favorable influence on national and Florida mortgage rates, while Latin American buyers looking for a safe haven investment may help turn the condominium market.

Kim Kirschner, CEO and broker at Hollywood-based Kirschner Realty International, is watching foreclosures and defaults as a guide to when the market will hit bottom. Her current estimate is in about 6 months.

“Developers as well as individual borrowers are also defaulting, though many are in a work out mode and hopeful that they will not reach foreclosure,” she said. “A recent column in SmartMoney magazine noted that banks seem to be building up reserves and anticipating defaults in the neighborhood of 20 percent, but we aren’t at that rate yet.”

Kirschner said a lender she knows recently predicted the bottom of the market would be at hand when you see an exodus of the non-traditional developers and lenders leaving the market.

Florida home loans will then stop being made, and the ones that are made will require more equity from buyers.

“An out-of-state developer we work with is not looking for opportunities in Florida at the moment, based on his feeling that Florida builders are not yet willing to accept losses, as there is still a bailing out by buyers,” Kirschner said.

She said units in the condo projects her company is marketing are still selling, but at a slower pace. A realist, Kirschner acknowledged that there is no question the market has taken a big hit.

Interest rates, however, are still low and buyers recognize the rich opportunities some developers are providing with incentives and credits, she said.

“We are also finding foreign buyers who appreciate the opportunities,” Kirschner said. “And, with any luck, this legislative session will provide tax and insurance relief to help activate the local and second home markets further.”