Florida housing gaining strength

In fact, according to the Case Schiller Index, prices have stabilized, and even appreciated in 17 major markets. Prices rose in all segments of the market (low, medium, and high) in Boston, Washington, and Chicago. More interesting, is that if the four markets with the largest declines -- Las Vegas, Detroit, Phoenix and Orlando, Fla. -- were removed from the quarterly study, the average sales price nationally rose 2.4%.

This does not necessarily indicate that we’ve re-embarked on the housing road to perdition. But it does suggest that there is more than the $8,000 credit driving home sales. After all, rising prices cannot be the result of only first time buyers coming into the market. Because mortgages that will cover extensive repair work are not available, first time buyers cannot afford the deeply discounted foreclosures that need extensive rehabilitation. If such properties are selling with rapidity, it means that investors are back in the game.

In South Florida, they’ve arrived with a vengeance. We constantly see damaged foreclosures that sold for $40,000 - $50,000 reappearing 90 days later at prices of $90,000 - $150,000, depending upon neighborhood, demand, and, very important these days, appraisal. Banks are selling these foreclosures at 30 to 40 cents on the dollar, and investors are gutting them, installing new kitchens and baths, and selling them to first time buyers at 80-90 cents on the dollar. Banks will lend to credit worthy buyers if a house is in good condition and is not over valued for its neighborhood.

Surprisingly, first time buyers are not the main strength in the market. In fact, according to the National Association of Realtors, they represent only 30% of the current buying market. Higher end buyers also seem to be helping out. Toll Brothers, the luxury home builder that has been foundering for three years, recently announced its first year over year quarterly increase in signed contracts since 2005.

Data from the National Association of Realtors shows that more than 25% of current buyers of new homes already own homes and are not eligible for the tax credit. Florida, as a retirement destination, is a market that benefits from these buyers. The result is a continuing increase in home sales. In August of 2007, there were 470 homes under contract in the South Florida. A year later, the number was 550. As of August of this year, the number of homes under contract is 1100.

Currently the inventory of unsold homes in South Florida is declining. Available inventory in August of 2007 averaged 29 months. The following year it dropped a bit to 24.7 months. Currently, it is down to 7.4 months. For those who continue to preach doom and gloom in Florida, the national average is also 7.4 months. What’s more telling is the upward movement in median sold prices in south Florida. In July of this year the figure was $232,000. However, the median sold price in August moved up to $239,000. That’s a 3% increase.

That increase does not necessarily portend a price rise across the board. What it shows is that lower priced homes are moving out of the market so quickly that slightly higher priced homes are filling the gap. The sales of these higher priced homes push up average prices. The important aspect is that there appears to be more than sufficient strength in the Florida market to keep home sales moving.

Written by Marc Jablon, Realty Associates
marcjablon@yahoo.com - 561 / 213 – 6139
www.MarcJablonHomes.com