More Studies Show Florida Housing Market Weakness

Two studies released Monday underscore the dismal picture for the Florida housing market and show similar patterns across the nation.

A quarterly survey from the University of Florida shows that the Florida housing market has continued to deteriorate since January.

UF officials said sales of existing homes have faded in recent months, though they are optimistic about the prospects for new homes sales.

But then came a report from the National Association of Home Builders, which said home builder confidence slipped two more points in June and now stands at its lowest level since February 1991.

“I am of the opinion that the Florida real estate market is going to take a long time to recover,” said David Levin, a real estate consultant in Delray Beach.

“As much as we all would like for it to be faster, it’s just the way it is.”

A large inventory of overpriced homes for sale is contributing mightily to the escalating Florida mortgage doldrums, according to a UF survey of 306 industry professionals conducted in April.

A similar study conducted at the beginning of the year indicated that the housing market might be stabilizing despite bad credit Florida mortgage problems and widespread drops in demand.

Hardly.

“Things have gotten a little more sober,” said Wayne Archer, director of UF’s Bergstrom Center for Real Estate Studies.

“People are overly optimistic about the prices they can get and have not come to terms with the fact that we’re not having the huge leaps in home prices that we had in the past.”

Analysts and real estate agents were hoping for a market rebound once Florida legislators addressed the state’s property tax crunch.

While the new tax plan offers some immediate relief, many agents say it won’t be enough of a long-term fix to rekindle interest in home buying.

“I felt extremely positive that the lawmakers were going to do something constructive,” said Sharon Castrillon-Harrington, an agent in Wellington.

“But they let us down.”

Meanwhile, builders nationwide are concerned about the problems facing subprime lenders, which target borrowers with weak credit.

Builders also worry about the effect of rising Florida mortgage rates for prime loans, given to buyers which qualify for the lowest market costs.

The National Association of Home Builders/Wells Fargo index of home builder confidence declined to 28 this month from 30 in May. Readings below 50 mean most respondents see conditions as poor.

“Sales most likely will erode further in the months ahead and improvements in housing starts probably will not be recorded until early next year,” David Seiders, chief economist for the home builders group, said.

“As a result, we expect housing to exert a drag on economic growth during the balance of 2007.”

SOURCE: South Florida Sun-Sentinel