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In a year marked by falling home prices, record-high inventory and shocking hikes in property taxes, putting a positive spin on the Pensacola area’s 2006 housing market would seem a difficult task.

But according to the Pensacola News-Journal, some local Realtors are doing just that, looking past the roller-coaster year and the homeowner’s insurance quagmire gripping the state to strike a similar theme: “Things aren’t that bad, and it’s a great time to buy.”

“In spite of a lot of bad-looking data, this year in Pensacola is going to end up probably better than the state and certainly better than most of the counties in the Panhandle,” said Auby Smith, the outgoing president of the Pensacola Association of Realtors. “In fact, it’s going to be the third best year (in terms of sales volume) ever.”

Smith added he is optimistic about 2007 because Florida mortgage rates remain low and residential home prices have settled back to realistic market levels. Veteran Realtor Al Ingram agrees with Smith that it’s a buyer’s market.

“In my 25 years in the real estate market, I’ve never seen a better time to buy or sell. Inventory is high, but mortgage rates continue to be low,” Ingram said, adding that sellers finally are reducing unrealistic prices for their homes and letting the market price their property.

Houses priced “at market” are selling relatively quickly, experts say.

Despite Smith’s and Ingram’s upbeat take on the North Florida housing market, the inventory of unsold homes remains at record levels. At the end of last week, the Pensacola MLS had more than 6,400 homes on the market, and that number excluded houses “for sale by owner.”

That consistently high amount of inventory, which has hovered above 6,000 for the past six months, worries Al Muller, co-owner of Metro Market Trends, an independent Pensacola firm that monitors home sales.

“The biggest question coming up with people I talk to is, ‘With more than 6,000 homes for sale, just what do those people do when they sell?’ ” Muller said. “How many have left the area because of hurricanes, high insurance rates and property taxes? That’s the critical question.”

While Muller said he lacks the data to answer that question, he points to recent U.S. Census data that show Escambia is one of only two counties in Florida — the other is Monroe — that have shown a net loss in population between 2003-2005.

Much of that loss can be attributed to the effects Hurricane Ivan had on Pensacola Bay Area housing stock, Muller said. But the question remains whether many former residents have left Escambia County permanently due to problems making Florida home mortgage payments or for other reasons altogether.

Ingram, however, believes that a large portion of the housing inventory is composed of large homes occupied by baby boomers looking to downsize.

“What I see happening is people selling larger homes and buying some smaller, newer houses with lots of amenities. With taxes and insurance so high, people are putting more into less,” Ingram said.

Up and down. Left and right. Good and bad. The housing market around Pensacola Bay Area has been a roller coaster ride over the past two years.

After a pair of hurricanes hit in less than a year, thousands of single-family and multi-family homes were destroyed, while demand for habitable homes skyrocketed overnight. In many neighborhoods, home prices shot up as much as 40 percent in just months.

The future of Florida home loans in the area

The News Journal recently asked a handful of local experts to discuss the housing market at mid-year, where it has been, and where they see it going.

As of mid-July, a record-breaking 6,500 homes in the Escambia and Santa Rosa markets were available for buyers. As “new price” stickers become as common as “for sale” placards in some neighborhoods, some builders have started offering attractive incentives to the buyers in order to lure in Florida home loan offers.

Realtor Alexis Bolin says she has seen significant price reductions in the past few months and believes more are on the way.

“We’re definitely seeing builders with price reductions,” Bolin said. “And it’s not just one builder, it’s several.”

Al Muller, co-owner of Metro Market Trends, a local company that compiles data on the sale of all homes in the Escambia and Santa Rosa counties, says, “we’ve got a situation in the new home market where inventory is high, sales are slow and traffic is down.”

Why the change? Why do buyers now have the upper hand when it comes to securing a reasonable price and Florida home loan?

Further insight into the local market

Bolin is counseling her sellers to require larger earnest money deposits these days.

“No more of these $500 or $1,000 deposits,” said Bolin. “I’m asking them to require more, but we want a certain amount that the seller feels comfortable with.” With the speculator out of the Pensacola market, Muller says that “leaves us with what we call core demand. Now, people are simply buying and selling homes. We’re not sure where core demand is, but we’re sure that’s where we’re headed.”

Another factor contributing to the high inventory - and drop in prices - is simple overpricing on the part of the seller.

Joe Endry, president of Pensacola-based Coldwell Banker JME Reality, one of the largest real estate firms in the county, says of the 6,500 homes currently on the market, a large percentage are overpriced.

“Our rule of thumb is if the listing is 10 percent over market, it probably is not going to sell, and we would discourage our agents from taking those listings,” Endry said.

University of West Florida economist Rick Harper notes that the double-digit run-up of single-family home prices last year “attracted a lot of sellers to the market hoping to get those high prices.” But the reality is that the market for Florida home loans just isn’t that strong right now.

What about Pensacola Beach? Island Realty’s John Panzino says the outlook there isn’t overly bright.

“On the beach there have been nine single family homes close since January of this year,” Panzino said. “That’s terrible. It’s strictly a buyer’s market out there right now. There are 392 units for sale on the beach now, not counting the 92 lots for sale.”

Pensacola Beach’s dilemma is symptomatic of the overall problem settling in on Florida’s real estate market due to rising insurance costs and property tax rates.

Adams says property taxes, insurance costs and lack of availability have become serious issues for new home and resale home buyers. Along with hurricanes, these issues are driving many Florida Baby Boomers north to higher ground in Tennessee and North Carolina where the real estate market is robust.

“I was at a conference recently where the chief economist for Fannie Mae was the keynote speaker,” said Bolin said. “He said Florida will be the worst hit by the price drops, and property taxes and insurance are keeping people from coming here.”

Hope for the housing market future

While the coastal real estate and condo markets are suffering from a dramatic decline in demand, the overall picture still is encouraging, said Auby Smith, president of the Pensacola Association of Realtors.

The area market will continue to have ups and downs, but considering that home prices have not fallen too far, the overall market outlook is still good, and is returning to a healthy state.

Smith said a National Association of Realtors expert recently said the future of real estate in the Panhandle “is phenomenal.” Naturally, this would bode well for anyone hoping to apply for a Florida mortgage loan or make money off a sale.