from staff
To gain insight into current trends in Florida’s real estate industry, the University of Florida’s Center for Real Estate Studies recently conducted a new statewide quarterly survey of industry executives, market research economists, real estate scholars and other experts.
The threat of spiraling insurance rates was mentioned as the biggest concern, followed by the softening housing market as the second most-mentioned trend.
Still, even if a sharp downturn in the housing market occurs as some analysts predict, Florida will be less affected by it than other states because of the insulating effect of its high population growth rates, said Dr. Wayne Archer, director of UF’s Center for Real Estate Studies. Despite some people’s worst fears, housing is unlikely to suffer the same fate as tech stocks at the beginning of the decade, he said.
“Unlike tech stocks, housing has a use, which means it can’t just evaporate,” said Archer.
Local Jacksonville members of the building and real estate industry perpetually say Jacksonville is insulated, and while Archer and other analysts predict Florida will be less affected, the state’s housing market continues to mirror the national trend in the third quarter of 2006.
Statewide there is a higher inventory level of homes available for sale in many markets and a slowdown in sales. During the three-month third quarter, sales of single-family existing homes totaled 43,395 statewide, a decrease of 34 percent compared to 65,364 homes sold during the same time a year ago, according to the Florida Association of Realtors.
The Jacksonville metropolitan statistical area — Baker, Clay, Duval, St. Johns, and Nassau counties — reported 4,173 existing homes sold for the quarter, a decrease of 18 percent compared to 5,116 homes sold a year ago. The market’s existing-home median sales price increased 5 percent to $204,500; a year ago it was $195,600.
Statewide, existing-home median sales prices did remain stable at $247,900; a year ago it was $247,800. In 2001, the third-quarter statewide median sales prices was $132,000, which is an increase of 87.8 percent over the five-year period.
And while condominiums continue to rise out of the Southbank and other areas of the Jacksonville MSA, the numbers aren’t indicative of a rising trend to condo living. A total of 393 condos sold in the market over the three-month period this year, down nearly 50 percent from a year ago, and the existing condo median price fell only slightly from $172,600 in the third quarter of 2005, to $171,900 this year.
That 50 percent decline is on par with the state’s 41 percent decline in the existing condo market. A total of 12,538 condos sold statewide compared to 21,240 in the third quarter of 2005, according to FAR.
The statewide median sales price for condos decreased 3 percent to $204,300 for the three-month period; a year ago it was $210,900.
According to David Lereah, chief economist of the National Association of Realtors, the housing market is showing signs of life and sales may be leveling out.
“Many potential buyers who have been taking a wait-and-see attitude or are being methodical in the search process are being enticed by lower home prices,” he said. “Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year.”
NAR’s latest economic outlook calls for existing-home sales to be fairly stable in the fourth quarter, with 2006 expected to be the third strongest year for sales after consecutive records in 2004 and 2005.
The U.S. economy experienced relative tranquility in the third quarter, analysts pointed out, noting that the Federal Reserve declined to raise interest rates when policy makers met in August and also in September. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 6.65 percent in third quarter 2006; last year, it was 5.76 percent.