The median price of an existing single-family home in Lee County fell 5 percent to $268,000 in March from $281,300 a year ago, according to a report released today by the Florida Association of Realtors.
A developer who vowed to give public service workers that took out a Florida mortgage loan a $30,000 discount on new townhouses in the city will instead be giving them a $10,000 credit.
The National Association of Realtors, which has long proclaimed that national and Florida home prices haven’t declined since the Great Depression, now says they are likely to do just that this year.
Amid new signs that the housing slump is worsening, U.S. Senate Democrats said Wednesday that hundreds of millions of dollars of new federal aid may be needed to assist homeowners at risk of foreclosure.
Were reports of the Florida housing market’s premature? The Sunshine State had three of the top 10 real estate markets in 2006, based on the gain in median sales price, according to Forbes.
Of course, no Florida cities could hold a candle to the price increases in Tulsa (nearly 17 percent), but the much-maligned Miami housing market eked out 7.7 percent price appreciation year-over-year.
Of course, that isn’t necessarily good news for would-be Florida mortgage applicants, nor is excess inventory necessarily being absorbed. But fears of widespread price meltdowns so far have proven false.
Here’s the Forbes list of the top 10 housing markets nationally (varying in price and really putting South Florida mortgage costs in perspective) from the fourth fiscal quarter 2005 to the same quarter in 2006…
1. Tulsa, Oklahoma
Median sales price Q4 2006: $103,500
Median sales price Q4 2005: $88,500
Gain: 16.9%
2. Columbus, Ohio
Median sales price Q4 2006: $103,500
Median sales price Q4 2005: $89,900
Gain: 15.1%
3. Wilmington, North Carolina
Median sales price Q4 2006: $191,500
Median sales price Q4 2005: $170,000
Gain: 12.6%
4. Hollywood, Florida (map above)
Median sales price Q4 2006: $292,650
Median sales price Q4 2005: $265,000
Gain: 10.4%
5. Scottsdale, Arizona
Median sales price Q4 2006: $450,000
Median sales price Q4 2005: $407,750
Gain: 10.4%
6. Brooklyn, New York
Median sales price Q4 2006: $585,000
Median sales price Q4 2005: $535,000
Gain: 9.3%
7. Dayton, Ohio
Median sales price Q4 2006: $75,000
Median sales price Q4 2005: $68,637
Gain: 9.3%
8. Portland, Oregon
Median sales price Q4 2006: $260,300
Median sales price Q4 2005: $239,900
Gain: 8.5%
9. Miami, Florida
Median sales price Q4 2006: $280,000
Median sales price Q4 2005: $260,000
Gain: 7.7%
10. Tampa, Florida (map above)
Median sales price Q4 2006: $199,000
Median sales price Q4 2005: $185,000
Gain: 7.6%
SOURCE: Forbes
Most economic forecasters in a new Wall Street Journal survey believe recent turmoil in the subprime mortgage market is likely to spread to the broader Florida mortgage market - and they expect a widely followed index of home prices to fall this year.
But they still think the U.S. will avoid a recession and even a significant rise in unemployment.
“The markets may have over-reacted,” said John Lonski of Moody’s Investors Service. “Only businesses significantly exposed to subprime will be hurt. Mortgage repayment problems aren’t as widespread as we are led to believe. If most people were having trouble paying the mortgage, it would lead to declining consumer confidence and we haven’t seen that.”
Of the 60 economists surveyed, 32 said it is either “very” or “somewhat” likely that the intense and speedy unraveling of the market for subprime mortgages - home loans made to people with poor credit histories - will spill over to the rest of the mortgage market.
But 26 said that’s not likely. Two didn’t respond.
The woes of the bad credit Florida mortgage market are the latest chapter in deterioration of the housing market. Concerns about the sector and the ripple effects on the economy have been blamed for gyrations in the stock market the past week, including a 2% drop in the Dow Jones Industrial Average Tuesday.
But just 22% said difficulties in the subprime market have caused them to downgrade their economic forecasts and, by a 4-to-1 margin, they agreed with the statement that “the worst of the housing bust is behind us.”
The economists slightly reduced their forecasts for the economy this quarter but still expect moderate growth all year, at around a 2.3% rate this quarter, increasing to 3% by year-end - with unemployment rising just a bit. They put the odds of recession in the next 12 months at about 25%, slightly less than former Federal Reserve Chairman Alan Greenspan’s odds of about 33%.
The economists are markedly more optimistic - both about the U.S. economy and about the stock market - than the public is, as measured in a recent WSJ/NBC News poll.
But, as is often the case, there is disagreement among the economists about the risks that the subprime market poses to the overall U.S. economy.
“Mortgage credit-quality problems go well beyond the subprime sector,” wrote Jan Hatzius, chief U.S. economist at Goldman Sachs in New York, in a research note. “The underlying problem is not the subprime market per se, but the reset of large quantities of [adjustable-rate Florida home loan] debt - some of which is classified as subprime some as prime - to higher interest rates in an environment of flat or falling house prices in most of the United States.”
Mr. Hatzius notes that the so-called teaser rate, or low initial rate on adjustable-rate mortgages, expires sooner for subprime mortgages. This implies that mortgage-holders with prime rate ARMs may come to experience the same woes currently making waves in the subprime sector.
The extent of any spillover from subprime to the broader housing market remains unclear.
“You can tell a lot of scary stories,” said Richard DeKaser of National City Corp., “but they’re not broadly accurate. We’re still talking about a small segment of the nation’s homes that are affected.”
According to the American Housing Survey for 2005, the most recent date for which data are available, 33% of all homes are owned outright and 57% have traditional Florida mortgages, leaving just 10% potentially affected by ARM woes.
The subprime concerns are also likely to weigh on Florida home prices, according to Mr. Lonski: “Home sellers will be forced to accept lower prices in the spring. The subprime issue reinforces that home prices would be subject to price recession, creating an expectation of lower prices among buyers.”
Click here to read the rest of this Wall Street Journal article.
South Florida home prices for single-family homes inched downward in Fort Lauderdale and West Palm Beach-Boca Raton for January, as Miami registered an increase. The number of sales in each area fell.
The 5 percent rise put the Miami housing market at $395,900 in January, up from $376,300 during the same month the year before. The number of homes sold dropped 9 percent, to 528 homes from 580 homes.
In December, the median single-family home price in Miami was $380,100 on 639 home sales.
In Fort Lauderdale, the 2 percent median price decline was to $364,500 from $370,500, as the number of homes sold declined 17 percent, to 458 homes from 552 homes.
In December, the median single-family home price in Fort Lauderdale was $367,600, still out of the range of most hopeful Florida mortgage loan borrowers.
The 1 percent decline in West Palm Beach-Boca Raton pulled median prices to $388,000 from $393,700, as the number of homes sold declined 15 percent, to 496 homes from 586 homes.
Near South Florida, year-over-year January median prices declined:
- 7 percent in Fort Myers-Cape Coral, to $266,900 from $287,200, as the number of homes sold declined 34 percent, to 492 homes from 751 homes
- 8 percent in Fort Pierce-Port St. Lucie, to $241,000 from $261,500, as the number of homes sold declined 27 percent, to 252 homes from 343 homes
- 8 percent in Melbourne-Titusville-Palm Bay, to $202,500 from $219,100, as the number of homes sold rose 13 percent, to 333 homes from 296 homes
- 12 percent in Punta Gorda, to $199,400 from $227,400, as the number of homes sold declined 20 percent, to 155 homes from 194 homes
As prices drop, individuals should take note. This is a great time to apply for a Florida home mortgage. Do so before values rise once again.
Soaring Florida home prices are being blamed for a sudden and surprising decline in the number of students entering public schools, a survey of county school superintendents revealed last week.
Half of the 62 school chiefs polled cited the cost of housing as a major reason why students and their families either left their counties or chose not to move there. The findings underscore the emerging view that Florida mortgage costs are putting the brakes on the fast-growing state population.
For schools, the first signs of the trend surfaced when state analysts wrongly predicted that 48,376 more students would crowd classrooms statewide when doors opened in the fall. Instead, only an extra 477 children showed up.
“We missed it big time,” said Wayne Blanton, executive director of the Florida School Boards Association. “Through 2005, we had 10 years in a row of more than 50,000 new students a year. Suddenly, it’s stopped.” It’s the slowest growth rate in students that Florida has seen since the 1982-83 school year.
State economists conducted the new survey of the state’s 67 superintendents as part of a continuing analysis of proposed changes to Florida’s property tax system. All but five of the superintendents responded.
To the superintendents, it was clear that high housing prices, high insurance premiums and high property taxes are driving the downturn in students.
“It’s really a perfect storm of factors,” said Amy Baker, coordinator for the Legislature’s Office of Economic and Demographic Research, which surveyed school officials.
The Legislature held a special session last month, approving measures aimed at pushing down homeowners’ insurance costs. But the impact won’t be seen in customers’ bills for at least a few months, lawmakers acknowledge.
Gov. Charlie Crist and legislative leaders are targeting property taxes. He wants to have a special election this fall so voters can decide whether to double the state’s $25,000 homestead exemption and expand the Save Our Homes property-tax cap. But the package would slash billions of dollars from tax rolls, and counties and cities are warning it would lead to cuts in police, fire, park programs and other public services.
In all, 23 school districts saw a decline in enrollment last year — a trend state analysts say has hit 33 counties this year.
State analysts Thursday did upgrade an earlier enrollment forecast for the coming year and now predict that 5,953 new students will be added to the 2.6 million already in public schools. The hope is that more families will be able to take out Florida home loans at the year goes on.
Fewer students generally mean fewer dollars, since state school funding is driven by enrollment. Statewide, more than $200 million in funding was held back from the counties because of slumping enrollment, and counties facing fewer students continue to belt tighten.
Robert Trigaux, business editor for the St. Petersburg Times, tells the story in today’s paper about an encounter with the woman who delivers his mail stopped to vent about the wacky Florida housing market.
Soon after that, a savvy real estate agent paused with his dog to marvel at the seemingly fruitless task of raking the leaves, but more importantly, to lament the rough climate for home sellers.
It’s a sign of the times in the Sunshine State. In neighborhood encounters, agonizing over home prices has become the tip-of-the-tongue topic.
And it’s easy to see why. The writer’s neighborhood, like so many others, is dotted with “For Sale” signs boasting “just reduced,” “motivated seller,” and, in more extreme cases, “free car” or “will pay closing costs.”
Anything to generate some interest.
At first glance, the housing data released last week was sobering. Across the U.S.A., median prices for single-family homes sold in the fourth quarter of 2006 fell in 73 of 149 metropolitan areas, slipping 2.7 percent.
But with Florida mortgage costs through the roof, some parts of the state suffered rough year-to-year price declines. Sarasota-Bradenton, Fort Myers and Miami-Fort Lauderdale got walloped.
Yet more than a few Central Florida metro areas hung tough. Year to year, home prices rose in Orlando, Ocala and Gainesville. Even here, Tampa Bay area median home prices squeezed out a 3 percent gain to $229,700.
Critics will point out, correctly, that paltry annual gain becomes a loss when the fourth quarter is compared to the third quarter last year. Median home prices then were $234,000, which means prices dropped $4,300 by the fourth quarter.
That decline may offer some signs of hope for home buyers feeling priced out of the inflated Tampa housing market.
For those lucky to have owned their homes for a while, be thankful. Homeowners have enjoyed an astonishing run-up in wealth from home price appreciation, outstripping most of the nation. The amounts of money pulled out of homes via Florida home equity loan funds have helped power the state economy to new heights.
Since 2001, six Florida metro areas rank in the top 10 nationwide in price appreciation. Miami-Broward-Palm Beach ranked No. 3 in the country with a 135.4 percent appreciation, behind two southern California locations.
And the Tampa Bay area? Over five years, the median home price rose 85.2 percent from $123,600 to $228,900. That’s good enough for No. 24.
Some folks complain about affordable housing, and how they can’t buy a house here, and that’s a concern. Others complain they bought in the overheated market and find out later that they overpaid.
But the burst of wealth in Florida created by such remarkable gains in home values is nothing short of an economic bonanza. Remember that when raking those leaves. It may make the job a little less tedious.
FLORIDA MEDIAN HOME PRICE APPRECIATION SINCE 2001
Miami-Fort Lauderdale-Palm Beach: 135.4 percent
Palm Bay-Melbourne-Titusville: 130.2 percent
Daytona-Ormond Beach: 119.6 percent
Sarasota-Bradenton-Venice: 119.5 percent
Orlando: 117.9 percent
Cape Coral-Fort Myers: 114.4 percent
Tampa-St. Pete-Clearwater: 85.2 percent
Florida mortgage seekers, take notice: prices are falling fast. Now is the time to buy.
The slump in housing deepened in the final three months of last year with sales falling in the Sunshine State and 39 other states, while median home prices dropping in nearly half the metropolitan areas surveyed.
Formerly red-hot areas were among the hardest hit as the five-year housing boom cooled considerably in 2006. While some economists said they believed the worst may be over for housing, others predicted more price declines to come until near-record levels of unsold homes are reduced.
Leading the housing decline
The National Association of Realtors said the states with the biggest declines in sales from October through December compared with the same period in 2005 were:
- Nevada, down 36.1 percent
- Florida, down 30.8 percent
- Arizona, down 26.9 percent
- California, down 21.3 percent.
Nationally, sales declined by 10.1 percent in the fourth quarter compared with the same period a year ago. The national median price fell to $219,300, down 2.7 percent from the fourth quarter of 2005. This should lead Florida mortgage loan applicants to consider buying before values go back up.
In all, median home prices fell in 49 percent of the 149 metropolitan areas surveyed, the largest percentage of areas showing price declines in the 27-year history of the Realtors’ price survey.
The price declines were led by an 18 percent decline in the Sarasota-Bradenton-Venice area of Florida. The city with the biggest price gain was Atlantic City, N.J., where the median home price was up 25.9 percent in the fourth quarter.
David Lereah, chief economist for the Realtors, said he believed the report would represent the low-point in the current housing slowdown.
“When we get the figures for the spring, I expect to see a discernible improvement in both sales and prices,” he said.
But Mark Zandi, chief economist for Moody’s Economy.com, predicted that Florida home prices, along with those in many parts of the country, would continue to be under pressure for the rest of this year as the market works through still large inventories of unsold homes.
He said this process will be made more difficult with banks raising lending standards because of concerns about rising mortgage default rates.
“The price declines we are seeing are extraordinarily broad-based and just symbolize how significant a price correction we are in,” Zandi said.
