Palm Beach County in December saw home sales increase by 37 percent, as buyers were out scooping up deals as the price of homes continue to decline. Sellers have offered considerable concessions, and mortgage rates have plummeted to near 5 percent, but many potential buyers still are holding off. The problem: Some buyers can’t qualify for mortgages, and most buyers fear for their jobs during the recession. Consumer confidence is at an all time low and major purchases are sidelined. Buyer mentality is that prices will keep dropping. Guess what? They are right! Home prices have fallen to February 2004 levels as per the S&P Case-Shiller Home Price Index, with steady declines through 2009. Home prices have declined every month since August 2006, we are looking at 28 months consecutively of price depreciation.
As we enter in the 4th year of our housing slump, active buyers in the market are predominantly looking for “distressed” sales or bank-owned properties. While regular sellers see their homes languish for months on the market with no offers or interest in their home in sight. Today’s buyer considers the Short-Sale & Foreclosure listings as the best values out there. Like I said earlier this week, there will be further “tough times ahead” until this toxic inventory disappears.
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Palm Beach County housing sales perk up, but don’t get too excited
Housing slump enters 4th year
Source: South Florida Sun-Sentinel
January 27, 2009
“I think a lot of people are glad that 2008 is in the books,” said Mike Larson, a housing analyst for Weiss Research in Jupiter.
Palm Beach County sales jumped 37 percent in December, as buyers rushed to take advantage of falling prices, the Florida Association of Realtors said Monday.
It was by far the sharpest annual percentage decline since the Realtors’ group started keeping statistics in 1994.
Existing sales countywide fell slightly last year, to 6,953 from 6,971. Sales may finally have hit bottom as South Florida’s housing slump enters its fourth year, but prices could keep falling through 2009 and into 2010 until the excess inventory of homes for sale dissipates, experts say.
“The excesses of the housing boom coupled with the economic downturn have produced the most severe recession for housing in this area in recent memory,” said Chris Lafakis, an economist covering Florida for Moody’s Economy.com.
Mortgage rates have plummeted to near 5 percent and sellers are offering major concessions, but many potential buyers still are holding off. Some can’t qualify for mortgages, and others fear for their jobs during the recession.
There’s also the belief that prices will keep dropping.
Ed and Bobbi Miller want to move to the Ocala area, so they put their two-bedroom house west of Boynton Beach on the market in November.
Their real estate agent, Bob Melzer, says the property is competitively priced at $289,000, and it gets plenty of showings, but they’re still waiting for a buyer.
“Everybody walks in and says, ‘Your house is immaculate and wonderful, yada, yada‘ and then I never hear back from anybody,” Bobbi Miller said last week.
Real estate observers say people secure in their jobs who find houses they can afford at good interest rates should feel comfortable buying now.
“Risk-takers will probably come out smelling like a rose five years from now,” said Randy Bianchi, broker-owner of Paradise Properties of Florida in West Palm Beach.
Adjustable-rate loans taken out during the housing boom of 2000 to 2005 have caused thousands of people to lose their homes to foreclosure. But by the end of 2008, mounting job losses were being blamed for the rash of mortgage defaults that will likely worsen in 2009.
Overall consumer prices started falling toward the end of last year as a result of a decline in oil prices, but the housing market isn’t benefiting because of the sharp rise in unemployment.
Although the federal government has pumped hundreds of billions of dollars into the banking system to loosen credit, the National Association of Realtors says lenders still are slow to approve mortgages for home buyers.
President Barack Obama has pledged to fight the foreclosure debacle, but there’s no guarantee that federal programs will be instrumental in keeping people in their homes. With a strong push from the federal government, major banks such as Bank of America have responded by promising to modify many mortgages rather than repossessing homes.
Another factor that could hammer housing this year: Two weeks ago, lender Fannie Mae has imposed new requirements on mortgages for Florida condominiums. Fannie says, for example, that it won’t approve loans for buyers in condo buildings where more than 15 percent of the owners are delinquent on association dues.
That’s likely many buildings in South Florida where the housing bust has ravaged the condo market because of the investor-led buying frenzy during the boom years.
Palm Beach County’s existing condo sales in 2008 were up 7 percent from the year before. The median condo price last year was $143,800, off 27 percent. The median means half sold for more and half for less.
Nationally in 2008, 4.9 million homes changed hands, down 13.1 percent from 2007. It was the lowest number of sales since 1997. The median home price last year was $198,600, down 9.3 percent from 2007.
With buyers scooping up bank-owned properties at low prices, regular sellers should buckle up for another rough ride in 2009, Weiss’ Larson said.
“People are buying all the cheap stuff, and the rest is languishing,” he said.
Please Contact: The Smiths – Luxury Resort Portfolio
at (561) 445-2282 or
email at TheSmiths@LuxuryResortPortfolio.com
The information herein is believed to be accurate but not guaranteed and may be subject to errors, omissions and changes without notice. This is not to be construed as a solicitation of property presently listed for sale. All information is derived from the Palm Beach County Property Appraisers website and the MLS.
All information is derived from the Palm Beach County Property Appraisers website and the MLS.