Blog of Bonnie

The upside of Florida real estate: 15 market positives

Let’s take a look at some of the opportunities for today and the future of Florida’s real estate market.

1. Great prices. Statewide, the existing-home median sales price was $161,200 in the fourth quarter of 2008; a year earlier, it was $216,600 for a decrease of 26 percent.

2. The time is right. Home sales volumes are rising again – a clear signal that today’s “buyers market” may be changing soon. In fourth quarter 2008, statewide sales of existing single-family homes were up 13 percent compared to the same period last year, according to FAR statistics.

3. High inventory levels. Conditions are ideal for buyers to find their dream home. Inventory is still plentiful in all price ranges. But as sales volumes increase, inventory levels are likely to shrink. That reality translates into this advice for buyers: Don’t wait too long.

4. Low mortgage rates. Mortgage rates are still at the lowest levels since the 1960s. Lower rates multiply a buyer’s financial power. Even half a percent can make a sizeable difference. For example, on a $200,000 home, half of 1 percent could save the homeowner about $815 a year. Buyers can get more home for the money, which is a perfect scenario for families looking to upsize.

5. Incentives to buy. Federal, state and local housing programs can help buyers make that big purchase. The U.S. Housing and Economic Recovery Act of 2009 includes an $8,000 tax credit for first-time buyers. President Obama’s 2009 economic stimulus package also identifies and offers incentives to help home buyers with mortgages. Talk to a local mortgage lender about state and federal incentive programs.

• How to get the $8,000 credit. 

6. A long-term-growth state. Long-term economic and demographic trends continue to favor Florida. By 2010 economists forecast that Florida will be the third-most-populated state in the country. Florida’s population is expected to swell about 75 percent by 2030. Florida has been one of the 10 fastest-growing states in the U.S. for each of the past seven decades, and often the state has been in the top four, according to census data. Population growth will continue to provide a foundation for other economic development, such as new jobs and growing incomes.  All of these trends are positive indicators for real estate growth.

7. A migration magnet. Even with a slowdown in economic growth nationally, projections call for Florida’s population to return to more normal growth levels of about 317,000 a year between 2010 and 2020, similar to the 1980s and 1990s, said Stan Smith, director of the University of Florida’s Bureau of Economic and Business Research. That’s a lot of new buyers coming into the market.

8. A favored retirement destination. Over the long term, Florida stands to benefit from the migration of the aging Baby Boomer generation, roughly 80 million strong. Demographic studies show that the Sunshine State’s mild climate and outdoor amenities continue to make Florida a top retirement destination.

9. Business-friendly state. Florida has always been a business-friendly state – no state income taxes, plus incentives from local municipalities encourage businesses to set up shop here. Even with the current economic downturn nationwide, Florida leaders continue to keep business needs in the forefront of planning for the state's future. The Milken Institute/Greenstreet Real Estate Partners ranked five Florida communities on its “Best Performing Cities Index 2008,” which ranks U.S. metropolitan areas by how well they are creating and sustaining jobs and economic growth. Florida’s business climate ranked fourth among executives and sixth overall on “Site Selection” magazine’s 2008 Top State Business Climate rankings.

10. Positive investment outlook. Every quarter, the University of Florida’s Bergstrom Center for Real Estate Studies conducts a survey of industry executives, market research economists, real estate scholars and other experts. In the third quarter 2008 survey, the investment outlook for various types of Florida properties remains steady. “People who have responded to our surveys have not lost their faith in Florida as a place to be and a place to invest,” said Dr. Wayne Archer, director. “We have 40 pages of comments from our respondents, and 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.”

11. Homeownership has value. Realtors believe – and research supports that belief – that homeownership provides a variety of tangible and intangible benefits to the community and homeowners. Studies show that home equity is still the largest single source of household wealth, both for the individual homeowner and for homeowners as a group.

12. Greater sense of well-being. Owning a home leads to increased personal well-being. Research shows that people who own their own homes tend to show higher levels of personal esteem and life satisfaction, which in turn helps to make homeowners and their children more productive members of society.

13. Beneficial for kids. Studies show that children raised in homes owned by their families are more likely to stay in school and more likely to graduate high school. They’re also shown to have a higher lifetime annual income.

14. Community involvement. People who own homes have a strong financial stake in what happens to their community and tend to become more involved in community and civic affairs. Studies show that homeowners also interact more with their neighbors and communities. Compared to renters, homeowners join up to 41 percent more civic and/or nonprofessional organizations, such as the PTA or Scouts; vote in local elections 15 percent more often; enhance their neighborhoods with gardens 12 percent more often; attend church about 10 percent more often; and have a 3 percent greater chance of being interested in public affairs.

ORLANDO, Fla. – April 22, 2010 – Florida’s existing home sales rose in March, which means that sales activity has increased in the year-to-year comparison for 19 months, according to the latest housing data released by Florida Realtors®.

Existing home sales increased 24 percent last month with a total of 16,294 homes sold statewide compared to 13,090 homes sold in March 2009, according to Florida Realtors. Statewide existing home sales last month increased 37 percent over statewide sales activity in February. Also noteworthy: While March’s statewide existing-home median price of $137,000 was down from the same time a year ago, it was 4.3 percent higher than February’s statewide existing-home median price.

Florida Realtors also reported a 63 percent increase in statewide sales of existing condos in March compared to the previous year’s sales figure; statewide existing condo sales last month rose 40.6 percent over the total units sold in February. Though March’s statewide existing-condo median price of $96,900 was down compared to the year-ago figure, it was 5.1 percent higher than February’s statewide existing-condo median price.

Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in March while all MSAs had higher condo sales. A majority of the state’s MSAs have reported increased sales for 21 consecutive months.

Florida’s median sales price for existing homes last month was $137,000; a year ago, it was $141,300 for a 3 percent decrease. Industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

Thenational median sales price for existing single-family homes in February 2010 was $164,300, down 2.1 percent from a year earlier, according to NAR. In California, the statewide median resales price was $279,840 in February; in Massachusetts, it was $271,950; in Maryland, it was $237,446; and in New York, it was $225,000.

NAR’s latest outlook anticipates a rise in home sales in late spring, which should help to absorb inventory. Increased pending sales is a positive sign for home prices, which are continuing to stabilize, according to NAR Chief Economist Lawrence Yun.

In Florida’s year-to-year comparison for condos, 7,148 units sold statewide last month compared to 4,387 units in March 2009 for an increase of 63 percent. The statewide existing condo median sales price last month was $96,900; in March 2009 it was $108,500 for an 11 percent decrease. The national median existing condo price was $170,200 in February, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 4.97 percent last month, down from the average rate of 5 percent in March 2009, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s larger markets, the Sarasota-Bradenton MSA reported a total of 1,055 homes sold in March compared to 765 homes a year earlier for a 38 percent increase. The market’s existing home median sales price last month was $163,800; a year earlier it was $150,000 for an increase of 9 percent. A total of 382 condos sold in the MSA in March compared to 226 units sold the same month a year earlier for an increase of 69 percent. The existing condo median price last month was $146,400; a year earlier, it was $129,000 for a gain of 13 percent.

Related: NAR: Existing-home sales rise on buyer tax credit, favorable market conditions

© 2010 Florida Realtors®

• Northeast: the index rose 9.0 percent to 77.7 in February and is 18.9 percent higher than February 2009.

• Midwest: jumped 21.8 percent to 97.9 and is 18.7 percent above a year ago.

• South: increased 9.2 percent to an index of 107.0, and the index is 17.5 percent higher than February 2009.

• West: the index fell 4.8 percent to 98.0 but is 14.6 percent above a year ago.