The South Florida real estate market is beginning to show signs of recovery. In August, the number of existing single-family home sales in Miami and surrounding areas increased 22 percent from August 2007, while condominiums increased by 13 percent from during the same time period. This is especially significant when comparing local market figures to the entire state of Florida, where the number of sales decreased by 4 percent.
While sales have begun to increase, enough time has not yet passed to have the sales impact inventory levels and drive prices back up. Short sales and foreclosures are other factors suspected of affecting the current median sales price in South Florida. In August the median sales price for existing single-family homes dropped 30 percent from a year earlier, while condominiums experienced a 20 percent drop.
During a recent podcast on Realtors.org, National Association of Realtors chief economist Lawrence Yun, recognized as one of the top five economists in the U.S. due to his accuracy, expressed optimism about the recovery of the real estate market in Florida and other areas.
Housing Stimulus Bill to Have Positive Impact on Real Estates Sales
Nationally, Yun expects the recent passing of the Housing Stimulus Bill to significantly influence the real estate market over the next year.
“The Housing Stimulus Bill will have a big impact in my view because it’s a very simple strategy, “said Yun. “People buy a home, a first time buyer, and they get a tax break.”
The new Stimulus Package offers first time home buyers a tax credit of up to $7,500. After considering the repayment features, Yun estimates a $2,000 to $3,000 payment to the buyer.
“We will see may be 2.5 million first time home buyers over the next 12 months taking advantage of this tax credit", Yun said.
Because buying a home can be a two, three, or four month process, actual closing activity will begin to occur in the fourth quarter of 2008. Yun believes momentum will then build and accelerate homes sales from current low levels.
Mortgage Loan ActivityMortgage loan interest rates are at a very historically favorable 6.5 percent, despite having slightly increased since the lowest point in February 2008. While Yun anticipates the Federal Reserve to start raising short term rates in 2009, he says mortgage rates are determined by market forces. According to Yun, mortgage rates may tick up modestly to 6.7 to 6.9 percent but will remain well under 7.0 percent for most of 2009.
The Economic Stimulus Package also increased the jumbo conforming limit to $729,750. This is especially beneficial to buyers in high cost areas, which includes many parts of the country.
“Jumbo loans above $417,000 have not been functioning since the credit crisis in August (2007),” said Yun. Now with higher, permanent loan limits, I do anticipate more securization in those conforming jumbo loans and, hence, we will begin to see lower mortgage rates for those borrowing jumbo loans up to $625,000.”
Florida Real Estate Market Recovery
Yun is very encouraged about recovery in previously hard-hit areas such as California, Nevada, Arizona, and Florida.
“Home sales have fallen dramatically, prices dropped 30 percent, but we’re seeing buyers returning to the market place, said Yun. “As a result, we are already seeing signs of multi-bidding. So I think we have already hit bottom in those hard high regions. Hence, I see price building potential.”
As the top state for international buying activity in the nation, Florida has additional demand from international and second vacation home buyers. Yun stressed the importance of differentiating local market conditions from national and other market information. The first time home buyers tax credit and higher loan limits will most likely improve market conditions. Additionally home builders have drastically cut back on production. Inventory of empty homes is falling, which will result in a solid foundation for markets to recover in a very healthy way.
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