Uncertainty Clouds Florida Housing Market Picture
Since the beginning of 2007, National Association of Home Builders’ chief economist David Seiders has lowered his expectations for the national and Florida housing market four times.
“The reason for the revisions is all because of the new eruptions on the [Florida mortgage] side,” Seiders said.
In a teleconference earlier this week, Seiders said a recent Home Builders survey found that 62 percent of the builders who responded are feeling the crunch of tighter lending practices. That number is up from just 33 percent in March.
He predicts it could take until 2011 to see a full recovery.
Also Tuesday, the New York-based Conference Board said consumer confidence weakened in August as American consumers focused on many of the same things home builders are worried about: turbulent financial markets, a decline in home prices and tighter credit standards.
Consumer spending represents two-thirds of the U.S. economy, and confidence levels tend to influence spending.
However, builders in the Bradenton-Sarasota market said they are already seeing their business bouncing back.
“We are seeing, over the last 45 days, a tremendous amount of [Florida mortgage] activity that we have not seen in the past year,” said Evelyn Treworgy, a fourth-generation Manatee County developer. She is developing Palma Sola Bay Club, a condo community that recently broke ground on 75th Street West.
According to Seiders, condo production across the nation is down 50 percent, but locally, the Florida condo market is doing well.
Numbers released by the Florida Association of Realtors earlier this week showed existing condo sales were up by 41 percent in the Bradenton-Sarasota area.
Like Treworgy, Pat Neal of Neal Communities is seeing more activity than in 2006.
“Our sales in 2007 are above 2006 and at our price range, which is just a little less than $600,000 average, we think the market has hit bottom and is on the way up,” Neal said.
It is Neal’s prediction that homes in lower ranges may take longer to recover in the wake of the bad credit Florida mortgage meltdown.
The meltdown, which was followed by a tightening of purse strings and more than 100 lenders going out of business, is one of the reasons Seiders’ expectations have been lowered yet again.
After the unsustainable boom of 2003, 2004 and 2005, prices started to return to normal. Seiders and many other economists found hope in the market’s stabilization. Then the mortgage meltdowns began.
“It looked like things were stabilizing the middle of this year, but I’m sure we’ll see another decline,” Seiders said. There is still plenty of money out there in the more traditional sense, but perception often clouds reality, Seiders said. “It’s an overreaction to the subprime market that triggered other issues. Consumers feel tremendous uncertainty.”
He also said that while prices have tumbled in many markets, they still have a way to go until they get to a mark where individuals with good credit can get a more traditional Florida mortgage without a skewed debt-to-income ratio. He predicts price appreciation across the nation may not start until sometime in 2009.
“The reality is we did have a lot of overaggressive lending during the boom,” Seiders said.
SOURCE: The Bradenton Herald
