Storms Could Drastically Alter Florida Housing Market
That’s the viewpoint of a Palm Beach Post columnist, who believes that the state of Florida mortgage rates pales in comparison to the potential impact of severe weather on the housing market.
Linda Rawls reports that she had a conversation with notable Florida real estate analyst Jack McCabe, who said that if Florida has another hurricane season like the ones that brought us Frances, Jeanne and Wilma - plus Charley and Ivan on Florida’s west and Gulf coasts - “it could place the health of our real estate markets in jeopardy for the next 10 years.”
Gulp.
“Everyone is afraid to talk about h-h-h-hurricanes,” McCabe said. “But if we get the Big One that rolls up Biscayne Bay (in Miami) and hits those condos, it could have a devastating impact.”
McCabe also thinks everyone is afraid to talk about “r-r-r-recession,” even though analysts from all over the country voice strong concern that we may see some recessionary pressures by the end of this year or in 2008.
“For the long-term economic health of Florida, it’s a good correctional cycle,” he said.
The Florida housing market has been through such cycles twice in the past 30 years, McCabe said.
“It shouldn’t surprise anyone who has gray hair, but the young pups who are 25 or 30, they’ve never seen a down real estate market before or an artificial market driven by speculation. They don’t have a realm of comparison.”
McCabe believes they’re about to get one.
• Meanwhile, home price appreciation indexes came out last week, but the one considered most reliable, S & P’s Case-Shiller Index, was, in a word, dispiriting - or, in two words, quite distressing.
For the first quarter of 2007, a home’s value fell 1.4 percent nationwide, compared with an 11.5 percent increase in the first quarter of 2006.
The 2007 drop is the first year-over-year quarterly decline in home prices in 16 years. Not exactly sending you sprinting to apply for a Florida mortgage loan, is it?
S&P’s month-over-month index for 20 metropolitan areas, also released last week, showed home price declines in 14 of them. Eleven of the areas posted annualized price declines of more than 5 percent.
• Reacting to the Case-Shiller report, Seeking Alpha’s Barry Ritholtz took aim at what he called “the bottom-callers.”
“Despite all of the obvious data, the bottom calling continues unabated,” he wrote on the Web site. “The housing story is only halfway done and is going to get worse as time progresses. We are not anywhere near a bottom in residential real estate.”
He put his last sentence in boldface italic type, but we think his message is clear. Whether it rings true in Palm Beach County and beyond remains to be seen.
SOURCE: Palm Beach Post
