Sluggish April Home Sales Increase Florida Housing Market Woes
April’s existing-home sales report released Friday dashed all hope that the spring selling season would pull the Florida real estate market out of its post-boom doldrums.
The Florida Association of Realtors report proved that the fundamental things still apply - and in real estate, that means supply and demand.
Such an elemental ratio, however, is so out of whack locally that the inventory of unsold homes from Boca Raton to Hobe Sound soared to a stunning 43-month supply in April, according to Illustrated Properties Real Estate.
“What’s the story here?” said Mike Larson, an analyst with Weiss Research in Jupiter. “Supply, supply, supply. A lot of yesterday’s speculators have turned into today’s sellers.”
Today’s sellers, however, are sticking to yesterday’s inflated asking prices.
And today’s would-be buyers, for the most part, just are not buying it. In Palm Beach County last month, there were only 665 single-family home closings, down 17 percent from a year ago, according to the Realtors association’s report.
“That’s a real significant number,” said Ellen Bitton, owner and chief executive of Park Avenue Mortgage in Palm Beach. “We’re going to see some downward pressure on those properties that weren’t priced properly to start with.”
In the Florida condo market, on the other hand, the association said April sales made a strong showing locally, rising 24 percent in Palm Beach County and 17 percent in the Treasure Coast. While the supply of condo units remains heavy, the comparatively lower prices are likely more attainable for many home buyers, especially first-timers.
Single-family homes are proving a tougher sell. Despite the pressures of swelling inventories and tightened credit standards for Florida mortgage applicants, median single-family home prices in Palm Beach County declined only 3 percent in April, year over year, the report shows.
A combination of factors - not just stubborn sellers - is keeping prices up, said Mike Pappas, president of The Keyes Co.
“Palm Beach had a harder adjustment early on due to the hurricanes in the fall of ‘05,” Pappas said. “The Scripps (Research Institute) location decision gives confidence for the future. And the economy is strong, and unemployment is low,” which keeps prices from falling.
Florida mortgage rates are still near historic lows, Pappas added, at a little over 6 percent.
Nevertheless, April’s sales declines suggest local home prices will have to come down before the market stabilizes.
Doubters can look to Thursday’s Commerce Department report, which showed that new-home sales climbed by the largest amount in 14 years as builders slashed prices for the largest price drop on record.
In Palm Beach County, the median price of an existing single-family home fell to $376,300 in April from $386,500 a year ago, the Realtors association said. In the Treasure Coast, the median price dropped to $239,700 from $258,000. Statewide, nine markets reported year-over-year price increases and 12 had price drops.
Meanwhile, April resales in the Treasure Coast posted the largest drop in the state, plunging 41 percent year over year. That market is still relatively small despite the attention it gets nationwide: 290 sales last month compared with 491 in April 2006, according to the Realtors’ report.
Statewide, existing-home sales fell a dismal 26 percent, while the median price of an existing home in the Florida housing market dropped 4 percent to $236,000, the association said.
SOURCE: The Palm Beach Post
