Florida Real Estate Stable? Not So Fast

A recent report indicates that the Florida housing market is stabilizing, but at least one columnist recommends delaying any celebration.

The experts quoted in that report were polled in July, notes Jerry Jackson of the Orlando Sentinel, before the bad credit mortgage morass spread throughout global markets and into the broader economy.

If the quarterly survey were taken today, “they might be quite a bit more apprehensive than they were two or three weeks ago, said Wayne Archer, director of UF’s Bergstrom Center for Real Estate Studies.

New single-family home development is sluggish but considered stable by industry experts polled, while the condo market continues to struggle.

The fear now is that bad credit Florida home loans underlying many real estate securities will result in even more defaults, foreclosures and losses for investors than expected.

Subprime loans, as we all surely know by now, are higher-interest Florida mortgage loans made to home buyers with weaker credit.

And the crisis has “pervaded the entire financial system, causing declines in the stock market and generating fears about the kind of damage that might result in the future,” Archer said.

In Florida, commercial real estate is now much sounder than owner-occupied residential, though he noted that home sale prices have not crashed, as many sellers cling to their sale price as long as possible.

“I think homeowners have not yet come to terms with the fact that the price increases we’ve seen in the last 2-3 years are not going to continue,” he said.

What’s more, many Florida mortgage lenders, Realtors and builders privately concede that the slump is serious and has had a ripple effect on businesses.

SOURCE: Orlando Sentinel