By MARCIA LANE
Housing prices in Northeast Florida, including St. Johns County, will drop more than 20 percent this year, on top of the 30 to 50 percent they have already fallen, say national and state economic experts. In 2011, prices will stay nearly flat, they say.
While the pricing drops are bad news for speculators and people who have not owned their homes for long and must sell, it's good news for first-time homeowners and people with cash to buy.
"The housing market went through the roof in 2005 and early 2006. It's kind of like the stock market -- it has to adjust itself," said St. Johns County Property Appraiser Sharon Outland.
The adjusting and the recovery depend on several factors, according to Sean Snaith with the University of Central Florida.
"In the near term the housing outlook is not particularly rosy. I think 2010 will mark the start of the recovery of Florida's economy overall, but I think housing is still going to lag behind significantly," said Snaith.
That's due to a variety of factors -- weak job growth coupled with negative or near zero population growth, credit markets and, particularly, mortgage lending that has not normalized.
"On top of that you've got a pretty significant inventory out there and probably a pretty significant shadow inventory that banks are sitting on for the time being," Snaith said. "I think there's a lot to wade through before we're back to being (normal)."
Basically, there are too many houses for sale and not enough mortgage money available.
Fortune magazine's recent report on the housing market showed the Jacksonville area, which includes St. Johns County, with a 2008 median house price of $145,250. Projected price changes for 2010 in the Jacksonville market are expected to drop 22.31 percent this year and remain almost flat in 2011. The picture's even worse in Miami which has a projected price drop of 33 percent, the greatest drop on the list of 84 areas across the nation.
The good news
"It's a great time if you want to buy and you have cash," UCF's Snaith said. The entry-level sector is seeing the biggest increase when it comes to mortgages and tax credit funding.
Those entry-level buys get people started "up the food chain" of home owning, Snaith said.
But when it comes to higher priced homes and luxury housing, "I think that market is in very dire straits. It's very difficult to get funding for jumbo-sized mortgages," Snaith said. A jumbo-sized mortgage is a larger than normal size mortgage with larger than normal rates. It's anything above what's considered to be the standard mortgage size. In 2006 the amount was set at $417,000.
In St. Johns County it's certainly a different market than two years ago.
Then, high-end homes ($500,000 and up) were going like hot cakes; now it's the lower end homes ($200,000 and under) that sell.
"I think housing is already down 30 to 50 percent overall based on the peak we saw in 2006 (or earlier)," said Chuck Pacetti, new president of the St. Augustine and St. Johns County Board of Realtors.
That percentage depends on the area.
While some existing homes are selling for 50 percent below what they were, others haven't dropped anywhere near that much.
"It's hard to say exactly how much because real estate is so neighborhood specific," Pacetti said.
He hopes the predicted 20 percent drop in house values isn't correct, based on what the market has already had to absorb.
"There may be room for further decline in some neighborhoods, but I think we have to already be there. It's been a big decline," he said.
Federal program helps
That decline in prices as well as financing possibilities through the government mean "it's a true buyers' market," he said.
Teresa Mercurio, broker owner of Re/Max Realty on St. Augustine Beach, agrees, saying there's a "good side to the bad side."
"Consumers today can buy a home more affordably than (they've) ever been able to buy in the last 10 years," Mercurio said.
She says the federal government's first-time home buyer's tax credit program and one that aids qualified repeat home buyers has made a difference in local sales.
"Home ownership is truly a goal people can reach in today's market for first-time homeowners," Mercurio said. There's also money available for existing homeowners.
Those programs as well as historically low lending rates make home ownership "more of a draw" than ever, she said.
That means lower price range homes are the ones that are moving, Mercurio said.
Also, the government tax credit program has helped boost sales in St. Johns County.
Pacetti said a comparison between the last quarter of 2008 and the last quarter of 2009 shows sales are up on single-family home sold through the Multiple Listing Service.
In 2008, the MLS total was 478; in 2009, total sales were 646.
Again, it's houses in the lower price range that are selling.
Sales leveling off
Betsy Picot, a broker associate with Watson Realty on County Road 210, remains optimistic for the long term.
"I don't see any real price improvement in the short term because we're still dealing with foreclosures and short sales, and I think those will continue to come on the scene on a daily basis," Picot said.
But, sales are no longer plummeting as they were.
"I can't say they're stable, but they seem to be leveling. They're not plummeting anymore like they were six months ago," she said.
Sellers have become more realistic and that's made a difference as well as helping reduce inventory.
"There were a number of people hoping they could still get what they were asking. Now if they didn't have to move they've taken (their house) off the market and that has cleared inventory a little bit," Picot said.
Also out of the market are many of the people who were speculating. They would buy a home for themselves and then buy one or two more for resale. The financial crunch caught them and they faced short sales and foreclosures.
There's even some good news there.
More houses are going on the rental market - and many are better quality than in the past. Many looking to rent want to build up their credit history again.
Recovery of the housing market is closely tied to recovery of the financial markets, said Snaith of the Institute of Economic Competitiveness at UCF.
"The recovery is going to depend on how quickly the financial markets recover, how quickly the flow (of credit) resumes," Snaith said.
"I think 2010 is not looking very optimistic, 2011 will be back in stronger economic shape," he added. "Knock on wood, the financial sector and the flow of credit will have improved. If it turns out that's not the situation then Katy bar the door until lending recovers."
*
WAITING OUT THE TREND
Chuck Pacetti, the recently installed president of the St. Augustine and St. Johns County Board of Realtors, knows things will get better -- he's seen it before.
He also knows how homeowners feel who are watching their property values bob up and down.
In 2000 he bought his current home for $78,000.
"We improved it and added on. A year-and-a-half ago it was appraised at $400,000. Now it's probably at $275,000," Pacetti said.
But, he notes, "I'm still probably way ahead."
That's because he hasn't lost any money since he never had it to start with -- "It's just a paper loss."
He's not planning to move so the house will in time go back up in value.
"That's the historic trend," Pacetti said. "As they say, this too will pass."
Once the country gets through the mortgage crisis and unemployment, Pacetti expects to see people once again looking for their own home.
"They all have to live somewhere," he said.
*
SILVER LINING ON SHORT SALES
Veteran real estate broker Teresa Mercurio says there's always a "silver lining to everything."
Right now, that silver lining has to do with short sales and the way some lending institutions are handling them.
A short sale is a real estate term for when the sale falls short of the balance owed on the property's loan. The borrower usually cannot pay the mortgage loan so the lender decides to sell the property and take a moderate loss rather than press the borrower. Both parties have to agree to the process, which avoids foreclosure. Foreclosure means lots of fees for the bank and lowers the borrower's credit report.
The problem has been the length of time it takes to get the short sales approved.
"It's very discouraging to the consumer (because) they are seeing contracts taking so long to (get approved)," she said. "Consumers are saying there are no good deals out there."
But, that's changing.
"There have been some significant changes in short sales with lending institutions becoming more streamlined and bringing in a third party (to handle them)," Mercurio said.
Since all the third-party does is handle short sales it can shrink the process from a three to six month period to less than 90 days.
Mercurio has had two short sales go through in the last week that had been turned over to a third party company.
"Now we're getting answers, specific time lines, all kinds of good stuff," Mercurio said.
*
TAX CREDIT PROGRAMS
The federal government's boost to the housing market will soon end.
By April 30 first-time home buyers who want to take part in the tax credit program must have a binding sales contract signed so they can qualify for a home purchase completed by June 30.
Up to $8,000 is available for qualified first-time home buyers purchasing a principal resident.
Those dates also apply for the program aiding qualified move-up/repeat home buyers (existing home owners) purchasing a principal residence. Up to $6,500 is available.
For more, go to www.federalhousingtaxcredit.com.
Source: National Association of Home Builders
No comments:
Post a Comment