South Florida Market Update

The South Florida Real Estate boom is just a memory…as one of the nation’s hardest hit real estate areas, South Florida is witnessing properties linger for vast periods of time on the market. What used to be only a little over a couple of months on the market, has turned into quite often double digit numbers of months and even years to sell a property.

According to an article published in Sunday’s Sun-Sentinel, 1 in every 10 homes have been on the market for more than one year, and by their estimates, that results in 9,828 homes. At least 1,058 of those properties have been on the market more than 2 consecutive years! However, industry experts claim that even those figures are quite conservative estimates, because the numbers do not reflect properties that were pulled off the market and put back on when Sellers switched agents, made home improvements, or let their listing expire and entered it as a new listing to avoid appearing as stale inventory and to wipe clean the days on market.

Agents have noticed over the past couple of years that sellers are “overly optimistic” when they initially list their home thinking that the market has been slightly unchanged since the bygone days of the boom. They have a “hard time accepting or adjusting their mind to the new value of their property” and are reluctant to adjust their list prices in time with the current market. Resulting in always being “behind the eight ball” and languishing on the market for way too long.

In National news, home prices posted a record 15.3% steep decline. The S&P/Case Shiller Home Price Index has fallen for 21 months straight, based on a twenty city index that has been tracking data for 19 years. What is more alarming, recent drops have been particularly steep. Home prices plunged in areas like Miami (South Florida), seeing 26.7% drops from one year ago, and an additional loss of 4.1% in property values in April 2008.

Most sellers claim they will “ride it out” and hold onto the property for a couple of years until the market recovers… However, what most sellers don’t realize is that the real estate market does not change as quickly as the financial markets. Based on our recent fledgling economy, the mortgage crisis, the astronomical amount of homes facing foreclosure, the war, and upcoming presidential elections… This market is not turning around anytime soon. Most people forget that in the 1970’s it took the real estate market more than 14 years to rebound.

Seasoned agents claim it will take a few variables to start changing the market; home prices have to become affordable once again, inventory has to decrease, and the foreclosure mess has to be resolved.

The plummeting prices are causing a whole other problem for homeowners…NO HOME EQUITY! As home prices are continuing to fall, homeowners are left with no equity in their homes to tap for emergency purposes or are having their HELOC’s (Home Equity Line of Credit) frozen by their lenders. As listing agents we hear quite often from our Sellers, “We need X-Amount of dollars to walk away from this house to be even,”… Unfortunately, what Sellers fail to realize is that “what they need financially and what a Buyer is willing to pay these days for their home is two completely different scenarios”. The result is often leaving homeowners underwater and owing mortgages than are more than the home is worth.

Philip and I, as agents ourselves see these exact problems affecting our clientelle. Unfortunately, we do not create the market, we as real estate professionals interpret the market and facilitate transactions. We have noticed that once both the Buyers and Sellers are willing to buy/sell a property for today’s current market value…a deal can be achieved! A real estate agent is quoted in Sunday’s piece; “You’ve got to face the market…You have to give it what it wants”. It’s all numbers people! It’s ALL NUMBERS!

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.