Florida’s housing market for 2Q 2007: Sales activity remains soft

Related story: NAR: Second-quarter homes prices improving but sales down in most states

ORLANDO, Fla. – Aug. 15, 2007 – In second quarter 2007, Florida's housing sector in many markets continued to report higher inventory levels of homes for sale, median prices edging down and sales activity reflecting a buyer’s market.

Statewide, sales of single-family existing homes totaled 37,709 during the three-month period, a decrease of 30 percent compared to 53,723 homes sold during the same time a year earlier, according to the Florida Association of Realtors® (FAR). The statewide existing-home median sales price was $239,200 in the second quarter; a year ago, it was $250,400 for a decrease of 4 percent. In 2002, the second-quarter statewide median sales price was $137,400, which reflects an increase of about 74.1 percent over the five-year period. The median is a typical market price where half the homes sold for more, half for less.

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. When assessing the state’s single-family markets, those polled in the second quarter 2007 survey viewed absorption activity as a sign the markets are continuing to move toward stability, said Dr. Wayne Archer, the center’s director. While acknowledging the potential impact of the subprime mortgage “meltdown” on Florida’s housing sector, along with the issues of property taxes and high insurance rates, Archer said, “Those of us who have watched markets for a long time realize the picture can change rather dramatically in a short period of time if something allows people to sell their house more quickly, such as a change in the property tax situation or a sudden improvement in the economy.”

Continuing low mortgage rates remain another positive influence on the housing market. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 6.37 percent in second quarter 2007; one year earlier, it averaged 6.60 percent.The latest industry outlook from the National Association of Realtors® (NAR) predicts that existing-home sales will continue to be stable over the next few months. Long-term fundamentals of the housing market remain favorable, said NAR Senior Economist Lawrence Yun, who expects a modest upturn for existing-home sales toward the end of the year.

“With the population growing, the demand for homes isn’t going away – it’s just being delayed,” Yun said. “More buyers, and cutbacks in new construction, will eventually draw down the inventory levels and support future price appreciation.”

Looking to Florida's existing condominium market, sales of existing condos also decreased during the quarter, with a total of 12,415 condos sold statewide compared to 16,566 in second quarter 2006 for a 25 percent decline, according to FAR. The statewide median sales price for condos remained relatively stable at $208,400 for the three-month period; a year ago, it was $211,200 for a 1 percent decline.Among the state’s larger markets, the Sarasota-Bradenton metropolitan statistical area (MSA) reported 2,365 existing homes sold for the quarter, a 4 percent increase compared to the 2,281 homes sold a year earlier. The market’s existing-home median sales price was $294,100; a year earlier, it was $318,500 for a decrease of 8 percent. A total of 948 existing condos sold in the market over the three-month period, up 2 percent from second quarter 2006, while the existing-condo median price decreased 9 percent to $246,900.

The Tallahassee MSA, one of the smaller markets in the state, reported that 1,178 homes changed hands in the second quarter, down 20 percent compared to 1,471 homes sold a year earlier. Over the same period, the market’s existing-home median home price rose 4 percent to $181,000; a year earlier, it was $174,800. A total of 102 existing condos sold in the Tallahassee area during the second quarter, a decrease of 30 percent from the previous year, while the existing-condo median price rose 4 percent to $153,600.

© 2007 FLORIDA ASSOCIATION OF REALTORS