The History of Florida Real Estate is Telling

Know the worst year in Florida real estate since President Ford’s days?

People trying valiantly to sell your homes might howl “Now!” - and in a few more months of weak housing prices, writes St. Petersburg Times business editor Robert Trigaux, they may be right.

But the answer is 1976. The second quarter of 1976, in fact, is when Florida real estate prices dropped a stunning 9.58 percent from one year earlier.

Actual declines in overall housing values are rare in general and even more so in sunny Florida.

Aside from the nasty 1976 example, price declines have only occurred two other times since President Ford was in office.

Home prices dipped a miniscule 0.83 percent in the fourth quarter of 1994 vs. the fourth quarter of 1993. It happened again in the next quarter, the first quarter of 1995, when prices dropped a puny 0.39 percent vs. the first quarter of ‘94.

And that’s it in recent Florida housing market history. So far.

These numbers come courtesy of the long-winded Office of Federal Housing Enterprise Oversight, of the Department of Housing and Urban Development.

The last 30 years of the Florida housing market is largely a steadily cyclical tale of appreciation. After slow gains in the 1970s, prices accelerated in 1978 and stayed strong until the 1980s when 1 to 3 percent a year was common.

Come ‘94 and ‘95, as noted, Florida went briefly negative, then recovered. By 2000, home prices sparked, hitting double digits in late 2001, then rising by the fourth quarter of 2003 (up 11.66 percent).

Appreciation peaked two years later with fourth quarter 2005 prices up a remarkable 27.92 percent above 12 months earlier.

What’s striking since then is the speed of the slowdown, as Florida mortgage applicants have dropped off the map.

• It’s only taken five quarters - 15 months - to see annualized appreciation decline from 27.92 to 4.34 percent in the first quarter of 2007.
• This year’s second quarter’s numbers are not out yet, but rest assured, they will be less than 4.34 percent.

Look at the price-cutting on home sales these days. And here’s a more concrete clue to further decline. From January 1 to March 30 of this year, Florida home prices dropped 0.34 percent.

Based on those three months, state housing prices have gone negative.

Thirteen of the 18 larger Florida cities on the federal list experienced price declines between the fourth quarter of 2006 and the first quarter of 2007.

Consider the Tampa housing market. Year over year, home prices gained 5.11 percent in the first quarter. Between January and the end of March, however, prices fell 0.64 percent.

That’s better than Punta Gorda, down 4.57 percent for the year and 3.81 percent in the first quarter - the worst decline among nearly 300 cities sampled.

In Florida, it’s clear we’re not out of painful price adjustments yet. But consider the positive history of home prices in the state.

Since 1980, all told, housing prices appreciated 391.76 percent in Florida. Only 12 states can brag of higher gains since then.

Prospective Florida mortgage loan applicants can at least take solace in the fact that conditions are turning in their favor.

SOURCE: St. Petersburg Times