Market conditions are tipping toward renting instead of buying for many would-be home buyers, Gainesville housing market observers say. (more…)

Michael Rose put his home abutting Paynes Prairie on the market two weeks ago and has had so much interest he figures he’ll be able to close on it early next year.

If there’s a Florida housing market bust, Gainesville area sellers may not notice. Home sales in Florida and the nation were down and inventory up in the third financial quarter of 2006, and nationally, a five-year boom has turned into what is being described as a “housing recession.”

Florida would not feel all the effects of a sharp downturn because of high population growth, according to Wayne Archer, director of the University of Florida’s Center for Real Estate Studies. Locally, job growth and the stabilizing influence of UF portend a healthy real estate market.

In the third quarter, the median sales price of single-family existing homes was $215,200, up 16 percent over 2005 in the Gainesville area, which includes Alachua and Gilchrist counties. That’s tops in the state among 20 metro areas. The state price remains flat.

• For the third quarter, totals of existing condo units in Gainesville was up 14 percent, with the median sales price of $156,300 up 19 percent, both the second-highest increases in the state.
• Despite local increases in those areas, single-family home sales were down 22 percent in the Gainesville metropolitan area and 34 percent statewide for the quarter.

Another study released Tuesday found most trends held in October numbers. But, sales of existing condos in the Gainesville MSA were down 68 percent from a year ago. Higher prices and sales volume in recent years were driven by investment purchases. Thanks to rock-bottom Florida mortgage costs, real estate became the investment of choice after 9-11

Now, investors are returning to the stock market.

“The past two years - 2005 and the first half of 2006 - the appreciation in Gainesville was too high,” said Jean Chalmers of Coldwell Banker. “I think a lot of people flipping property bought into the market. This made the whole market hotter than what one would normally expect.”

Middle income families are finding that increases have priced them out of what would typically be their next home. The increases are fueling the local third quarter North Florida housing market boom.

Rose said his property has probably doubled in value in two years. He’s asking $350,000 for a three-bed, two-bath house with another two-bed, two-bath townhouse attached.

“We used to say in Gainesville, ‘You never get rich, but you never get poor,’” said one real estate agent. “Then for a couple years people were getting rich, then it corrected.”

McIntosh said the market - with its many appealing elements and the critical factor of low Florida home mortgage rates - continues to lure many home buyers.

“The climate’s good. The inland location is kind of appealing to people who have lived through bad weather. We have a lot of things in our community that big cities have. We’ve got quite a cultural scene here. Sports ought to speak for itself. The restaurants are good, and the medical facilities are arguably some of the best in the state. We appeal to a diverse cross-section.”

As reports coming flying in from around the state, most counties in Florida experienced relatively stable decreases/increases in home prices and sales last month.

Except Gainesville. While most metro areas in exhibited single-digit decreases in median sales prices in the year-to-year comparison, Gainesville homes actually rose 18 percent. This fact didn’t dissuade buyers, however. They still applied for Florida home mortgage loans in droves, considering the fact that Alachua County showed only a 23 percent decline in sales volume, the fifth lowest of the 20 metropolitan statistical areas in the FAR report.

Inside the Gainesville housing market

There were 299 homes sold through Multiple Listing Services in Alachua County, for a median price of $219,800 last month. The list-to-sell ratio (asking price vs. selling price) was 98 percent, meaning all parties involved were satisfied with the transactions.

The Ocala market also saw a total deviation from the rest of the state - only a 1 percent decline in sales, the lowest in Florida, along with a 20 percent increase in median sales prices, the highest in the state in the year-to-year comparison. The 525 single-family homes sold for a median price of $177,200 last month.

So, what explains this balance? Does anything anything account for the proliferation of Florida home loans, despite prices sky-rocketing? Wilbur Van Wyck, president of the Ocala/Marion County Association of Realtors and broker-owner of Coldwell Banker Riverland Realty said:

“In our area, the median sales price remains solid and homes are continuing to sell. The market is leveling to a more even playing field between buyers and sellers.”

The local condo market

Statewide sales of existing condos also decreased in July, with a total of 4,260 condos sold, compared to 6,739 in July 2005, a 37 percent decrease. The statewide median sales price for condos last month was $210,200; a year ago, it was $211,900. Pretty similar. Are you looking to use a Florida home loan on a condo?

Think about Gainesville in that case. The condo market here was quite different from the statewide average. There were 215 condos sold last month, a 54 percent increase over July 2005. Prices for Gainesville condos increased 10 percent - to $152,100 - with other areas experiencing declines as deep as 27 percent or increases as high as 36 percent.

Thomas McIntosh, president of ERA Trend Realty in Gainesville, said the seemingly steep rise in the median price of single-family homes could be attributed to more sales in higher-price homes - there were 176 homes closing for more than $200,000 last month - and “a real inventory problem with affordable homes. There’s not enough to buy.”

So all is not perfect. Lower-income families may still need to consider Florida home mortgage financing in the area, but those who can afford more expensive houses are evidently doing so around the city.

Both national and Florida Realtor associations say that the housing sector is “adjusting to market conditions.”

May statistics show slower sales of homes and condominiums nationally, and prices continuing to climb upward, albeit more gradually. The Gainesville, Fla., market mirrors the overall Florida housing market when it comes to single-family homes, but its condominiums showed sharp increases in sales, according to the Gainesville Sun.

The National Association of Realtors says there is a 6.6 percent decline in home sales versus May 2005, and a 6 percent rise in prices. The 6 percent gain is a stark contrast from the 10-20 percent appreciation rates that have become customary in the past few years. In the Sunshine State, the Florida Association of Realtors reports a 24 percent decline in sales and price increases of 11 percent.

Experts say that rising inventories of properties for sale and increasingly expensive Florida home loan rates have both contributed to the cooling of the market.

But Gainesville, at least regarding condo sales, is at odds with statewide figures. Single-family home sales in the Gainesville market dropped by 28 percent in May — 332 compared to 462 in May 2005 — the sales of condos boomed between those two periods. While 97 condos sold in May 2005, 167 sold in May 2006, a 72 percent increase. This is the highest percentage hike in a state which is seeing declines up to 94 percent elsewhere.

“Rents are going up - one landlord said he was increasing them 3 percent a month. Pretty soon people aren’t going to want to pay higher rents. Condos provide affordability and investment,” said Carol Bosshardt, a broker and Realtor with Bosshardt Realty Services, who added that condos give first-time buyers a strong vehicle to ownership.

“In other places, they are a vacation or second home. Interest rates are starting to go crazy in places and people aren’t closing on those vacation condos because they aren’t a necessity. Here they represent the primary home or a retirement nest,” she said.

One of those new homeowners is Mary Anne Hoggan, who with her husband and three young daughters bought a condo conversion on the west side of town. The Hoggans, in their early 30s, moved here from outside of Dallas and had a set amount of money to spend on closing on a home. But they could not find a suitable one, so they went condo and haven’t looked back.

“We left a perfectly good starter home that cost us $100,000. The same home here was going to cost $200,000 or more. Our options were to buy a rundown house and spend thousands fixing it up, living in an outlying community, or buy a three-bedroom condominium,” Hoggan said. “Everyone who lives here considers their condo their home, and they take very good care of it and want it to look as good as possible.”

Roslyn Levy, Senior V.P. for Coldwell Banker MM Parrish Realtors, has seen more condos on the market this year and last year than ever before.

“It’s a greater share of the market,” and this is because they are more affordable than many homes, she said.

The median price of a condominium selling in Gainesville in May 2006 was $135,700, a 13 percent increase over May 2005. Levy warns, however, that condo association fees can bring a monthly cost up to near that of a more expensive, traditional home. The median price of a single-family home in Gainesville in May 2006 was $207,500, up 22 percent over last year.

Condos and townhouses also have appeal in their convenience and lifestyle.

“There are people who want to travel. There are those who have no interest whatsoever in doing lawn work or home maintenance,” Levy said.

She added that the perception of a slower housing market in the area overall is unfounded.

“At a sales meeting we tallied residential sales, including condominium, single-family and multi-family homes, new and existing. From January 1 to June 26, 2005, there were 2,216 closed transactions by all multiple listing service members. The same period this year, there were 2,247 closed transactions, about a 1 percent increase. In addition, average sales prices only rose 13 percent.”

Part of the continuing growth of the Gainesville area could be, to borrow the Realtors’ favorite phrase: location, location, location.

“After many years of seeing people come down here for the milder climate, I am now seeing people come up from South Florida to get away from big city problems,” Levy said. “I also see people moving in from the coast to get away from the hurricanes. It used to be people would ask how far it was to the beach, and I had to tell them you’re about as far away as you can get. Nowadays, that’s turning out to be a really big selling point.”

This may be just the beginning of Gainesville’s boom. As home prices in South Florida and the rising costs of Florida home loans continue to price out large numbers of buyers, expect the northern, more-affordable part of the state to see significant growth.

Next month, a neighborhood rehabilitation initiative will begin in the Fifth Avenue and Pleasant Street neighborhoods near downtown Gainesville, as part of an effort to attract new residents and retain existing residents.

The Gainesville Community Redevelopment Agency, Freddie Mac and mortgage lender Taylor, Bean & Whitaker announced today the plans for the renovation of and new construction of up to 40 homes.

The aim of this Florida real estate project

The goal is to revive the neighborhood by building new homes; rehabilitating empty homes; offering affordable low-down payment mortgages; homeownership workshops and counseling; and up to $7,000 in down payment and closing cost assistance to qualified, mainly first-time, low-to moderate-income homebuyers.

The area targeted for revitalization includes properties along the north and south sides of Northwest 4th Street, extending from Northwest 8th Street on the west to Northwest 3rd Street on the east. The estimated completion date is 2009.

“Housing affordability is the greatest challenge facing Florida’s families – especially working families trying to live in the communities in which they work,” said Sen. Mel Martinez (R-FL). “This comprehensive neighborhood revitalization project will create quality, affordable housing for Florida families.”

How this will affect Florida housing affordability

Gainesville City Commissioner Chuck Chestnut IV was also a big fan of the endeavor. He noted:

“Affordable housing gives families the opportunity to take part in helping to revitalize their neighborhoods and will become 70 percent of a homeowner’s wealth. Affordable housing is very important because it helps to build wealth in neighborhood rehabilitation initiatives.”

“We are helping working families who are struggling to find reasonably priced, quality homes in Gainesville,” said Craig Nickerson, vice president of Expanding Markets at Freddie Mac. “Homeownership represents more than just having a roof over your head – it is a financial asset, a driver of individual wealth and the economy, and it is a key component of family stability.”

The Gainesville Community Redevelopment Agency will manage the construction and renovation of homes as well as make available its down payment assistance and homebuyer education and counseling programs. They are also working with local agencies to design the new homes and renovations plans, ensuring adherence to guidelines established by the National Trust for Historic Preservation.

The new 1,200-1,800-square-foot homes will have three-bedrooms, one or two baths. The three-bedroom, two-bath renovated homes will be 1,250-1,800-square-feet.

To ensure borrowers have access to affordable mortgage financing, Taylor, Bean & Whitaker will offer a wide range of low-down payment, flexible credit mortgage products. Freddie Mac will buy eligible mortgages from Taylor, Bean & Whitaker.

“Taylor, Bean & Whitaker is extremely excited about offering mortgage products that really open up new opportunities for home ownership to the people of Gainesville,” said Lee Farkas, the company’s chairman. “We are pleased to be working with Freddie Mac and the Gainesville Community Redevelopment Agency.”

This project should serve the needs of those looking for an affordable Florida home loan. As one of the nation’s hottest markets, it can be difficult for lower income buyers to find the right deal.