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Another Glimmer of Hope in The Housing Market

Home sales rise five percent in the Sunshine State

November 18, 2008

Home sales rose five percent in the Sunshine State during the third quarter of 2008, holding out the possibility of a ray of sunshine in what has been a dismal market.

A total of 33,203 existing homes sold statewide in the third quarter; during the same period last year, a total of 31,558 existing homes sold statewide.

"Coming on the heels of positive sales activity in September, Florida's existing home sales are once again above year-ago levels in the third quarter," said 2008 FAR President Chuck Bonfiglio. "Despite lending restrictions and the difficulties of finding affordable credit, we're seeing buyers take advantage of homeownership opportunities in the current market -- buyers who want to make a long-term investment in their future. And, more than ever, people are turning to Florida Realtors to find the professional expertise, knowledge and friendly guidance they need to make the complex process of buying or selling their home go more easily and smoothly."

One reason sales are sharply higher is prices are sharply lower. The statewide existing-home median sales price was $185,400 in the third quarter; a year ago, it was $233,200 for a decrease of 20 percent.

In 2003, the third-quarter statewide median sales price was $163,700, which reflects an increase of about 13.3 percent over the five-year period. The median is a typical market price where half the homes sold for more, half for less.

Twelve of Florida's metropolitan statistical areas reported increased sales of existing homes in the third quarter compared to the same three-month-period a year ago, while seven MSAs also showed gains in condo sales. A number of local markets have reported increased sales activity over the past few months, according to FAR.

Nationwide, prices were lower in 80 percent of the metro areas surveyed and sales were off in 32 states, according to the National Association of Realtors. But economists are focusing most of their attention on what's happening in the devastated states like Florida and California.

In hard-hit Southern California, sales took a surprising upward turn, surging 66.7 percent in October from October 2007 levels. The median price fell to $300,000 – at 67 month low – as foreclosures amounted for more than half of all sales, according to the real estate information service MDA DataQuick.

Florida Realtors continued to report positive signs for the state's housing sector in the third quarter, including an increase in pending home sales, based on contracts signed but not closed, and a slower rate of expansion of inventory levels in some areas.

To gain insight into current trends in Florida's real estate industry, the University of Florida's Bergstrom Center for Real Estate Studies conducts a quarterly survey of industry executives, market research economists, real estate scholars and other experts. According to the third quarter 2008 survey, the investment outlook for various types of properties remains steady.

"People who have responded to our surveys have not lost their faith in Florida as a place to be and a place to invest," said Dr. Wayne Archer, director of UF's Bergstrom Center for Real Estate Studies. "We have 40 pages of comments from our respondents, and although the dominant theme is the disruption of financing, perhaps the second theme, as one person put it, is people being on the sidelines with full pads and helmets just waiting to jump back in."

Over the long term, Florida stands to benefit from the migration of new residents, particularly as baby boomers age, Archer said, adding that the Sunshine State's mild climate and outdoor amenities continue to make it an attractive retirement destination.

In the year-to-year quarterly comparison for condo sales, 9,472 units sold statewide for the quarter compared to 9,680 in 3Q 2007 for a 2 percent decrease. The statewide existing-condo median sales price was $160,000 for the three-month period; in 3Q 2007, it was $196,000 for an 18 percent decrease.

Continuing low mortgage rates remain another favorable influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 6.32 percent in third quarter 2008; one year earlier, it averaged 6.55 percent.

The latest industry outlook from the National Association of Realtors cautions the housing sector likely faces disruptions from the still-stabilizing credit market.

"Inventory remains high, and price declines are pressuring owners," said NAR Chief Economist Lawrence Yun. "Additional housing stimulus would stabilize prices more quickly, which in turn would bring faster stability to Wall Street. Removing the repayment feature on the first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory."

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