Will Buyers Hop the Fence in 2009?
Low mortgage rates, economic stimulus packages and affordable homes point to an increasingly healthy market in 2009.
When Mike Pappas looks ahead to 2009, he sees market opportunities in foreclosures and short sales. “In South Florida, the mantra for 2009 will be foreclosure, foreclosure, foreclosure,” says Pappas, president and CEO, The Keyes Co./Realtors®, Miami. “The storm of speculation has passed, and now the lenders are cleaning things up. There will be a tremendous amount of foreclosed product available in 2009 – probably the most in two decades.”
While it’s difficult to get too excited about the prospects for Florida’s real estate market in 2009, there are several bright spots in the picture, according to real estate analysts and brokers interviewed by Florida Realtor magazine.
Declining prices in most markets have made Florida homes more affordable to first-time and move-up buyers, while vacation residences are bargains to U.S. and international buyers. With lower prices and strong pent-up demand, the volume of sales has begun to rise in many Florida markets. “The bottom in sales has passed,” says Pappas, “and we’ll see more units sold in 2009 than in 2008.”
Brad Hunter, director, South Florida region of MetroStudy in Boca Raton, notes that the number of foreclosures coming to the market will continue to keep downward pressure on median home prices. “In the hardest hit markets, prices may not reach a hard bottom until 2010,” he says. “That’s likely to be the case in South Florida’s new condominium market.”
A trickle-up market
Nationally, the best-selling properties are foreclosures, short sales and entry-level builder closeouts, according to Steve Murray, editor of REAL Trends in Denver. “That’s important because real estate is one of the great trickle-up markets, where you have to have liquidity in the lower priced homes before you have it at the middle and upper price ranges. So a pickup in entry-level sales is a good sign for us.”
That’s certainly true for the Southwest Florida market. Phil Wood, president of John R. Wood Realtors in Naples, points to a steady increase in pending sales and closings. “The largest category of sales has been under $300,000, although other price ranges are also picking up,” he says. “A side note is that the availability of under-$300,000 properties has greatly benefited our nurses, firemen, law enforcement officers, teachers, and other professionals who can now afford to purchase.”
In Northern Florida, Joe Manausa, broker–co-owner, Century 21 First Realty, Tallahassee, says high inventory levels are starting to decline. “We’ve seen that change in the market, although prices are still falling,” he says. “But even in a tough market, there are still a lot of buyers and sellers out there.”
Two years of extraordinarily low sales activity in the Orlando area means many renters are ready to buy as soon as economic and credit conditions improve, according to Anthony Crocco, director, Central Florida region, MetroStudy, in Orlando. “We expect the job market to stabilize at some point next year and economic growth to resume,” he adds.
Job creation is also the key to home sales in the Tampa Bay market, notes Tony Polito, director, Tampa Bay region, MetroStudy, However, he doesn’t expect an upturn until late 2009. On the other hand, Sarasota may be one of the state’s bright spots next year due to falling inventory levels and its traditional appeal to affluent northern second-home and retiree buyers who can afford to purchase Florida homes without necessarily selling a current residence.
A recent survey by the University of Florida’s Bergstrom Center for Real Estate Studies shows the Sunshine State remains highly attractive to homebuyers and investors. “People who’ve responded to our surveys have not lost their faith in Florida,” says Wayne Archer, executive director. “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’s retiree market will benefit from the migration of aging baby boomers, Archer says. International buyers and investors are attracted to the state by the weak U.S. dollar.
As for 2009, positive factors for the state’s market include a federal income tax credit up to $7,500 for first-time buyers, and the “portability” of some property tax benefits that make it easier for primary homeowners to purchase a new residence.
“We need to look at the opportunities that the market presents—low interest rates, great inventory, great pricing, first-time homebuyer programs,” says Ed Forman, president Watson Realty Corp., Jacksonville. “The opportunities are there and we need to seize them.”
Richard Westlund is a Miami-based freelance writer.