Florida Housing Bubble ‘Wobbles’ In February
The Florida realtors have their February numbers out. “Rising inventory levels and still-low mortgage rates continued to affect Florida’s housing market, which is adjusting to a better balance between buyers and sellers following a five-year run of record-pace sales. Statewide, sales of single-family existing homes totaled 13,539 in February compared to 16,916 homes a year ago, for a 20 percent decrease.”
“Sales of existing condominiums in Florida also decreased last month, with a total of 4,342 condos sold statewide compared to 5,643 in February 2005 for a 23 percent decline.”
“South Florida home prices wobbled in February. Prices for existing single-family homes in Miami-Dade were up 19 percent on a year-to-year basis but continued to drop on a month-to-month basis, for the third consecutive month. The median price of a single-family home in Miami-Dade now stands at $368,700.”
“Similarly, Broward single-family home prices were up compared to February last year but down compared to the previous month. A median priced single-family home is now $360,800, in January it was $370,500.”
“In recent months the inventory of homes for sale has increased dramatically. Some say this is a so-called soft landing from the markets record highs. Others worry the market, particularly South Florida’s condo market, is cooling and poised for price declines.” The associations November numbers show the Miami SFH median at $381,600.
And this link has some tables at the bottom from which the following was drawn. YOY Percentage sales volume declines:
SFH/Condos
-24%, -50%..Daytona Beach
-25%, -27%..Fort Lauderdale
-9%, -44%..Fort Myers-Cape Coral
+6%, -38%..Fort Pierce-Port St. Lucie
-21%, -48%..Fort Walton Beach
-6%, +35%..Gainesville
-1%, na….Jacksonville
-11%, -38%..Lakeland-Winter Haven
-36%, -64%..Melbourne-Titusville-Palm Bay
-21%, -20%..Miami
-47%, -50%..Naples
-3%, na….Ocala
-16%, +95%..Orlando
-32%, -56%..Panama City
-20%, +8%..Pensacola
-16%, -90%..Punta Gorda
-42%, -44%..Sarasota-Bradenton
+11%, -35%..Tallahassee
-29%, -10%..Tampa-St. Petersburg-Clearwater
-22%, -14%..West Palm Beach-Boca Raton
Other notable info from the reports: Naples SFH is now showing a 1% yoy decline. Fort Walton beach condos had a median price 53% lower. Palm Bay condos were off 24% and Pensacola condo prices were down 40%, yoy. Looking back at older reports, it appears the statewide SFH median price peaked at $250,000 in November 2005.
Ben,
Anything good on Palm Beach County? I suspect we won’t see YOY declines here until this summer. Our median price (probably peaked) in November 2005 at $421K. Our condo market is going to get destroyed. It will be even worse in Miami. Thanks.
see below
I got something on PBC today ….. a “notice of intended conversion” stuck in the door and the opportunity to buy our rental.
I didn’t think it was likely to happen this late in the game.
Another bites the dust.
It is happening in Broward as well - an apartment complex in Coral Springs is going condo. $175,000 for a one bedroom, one bath, although current tenants get $5,000 off (instant equity per the notice). I’m not sure if $175k is before or after the discount, either way not worth it at all.
Penina, I read somewhere that condo conversions were always the last to the party, so maybe this is a good indication of the peak.
Yeah, the condo conversions are a sign of the end. I live on Village Blvd. in WPB. Three complexes have gone condo and all are within a few hundred yards of each other. The first 2 started at $165K and the latest has undercut them starting at $140K.
Regarding Naples, you are starting to see confirmation of what many already know. The market there peaked in 2004. Some Investors are coming to closings with cash if they can sell at all. There is a real dearth of buyers here. This summer should be uglier if we git hit with any hurricanes, if not, it may be time to nibble as we already are seeing 5 to 10% multi-year price declines.
I’m wondering where all the strength for the February NAR report came from. From my viewpoint most of the major markets saw very large YOY declines in February volume.
Just where were these homes purchased? Surely nowhere near Northern NJ, we saw a decline greater than 15% YOY in sales..
grim
Northern NJ Real Estate Bubble
If you look at the NAR post from this morning, there is a link that quotes them as saying the big sales were in Indiana, Houston (I would add Austin and Dallas) and Alberq., NM. Remember the flipper in the Fortune story was still ‘holding on’ in Phoenix and had moved on to New Mexico.
I am originally from Indiana. God help anyone who is speculating there. Those of you who have been/lived there know what I mean. No shortage of land either. The entire state is now patiently awaiting who is going to Indiana University’s new basketball coach, none are aware of an RE bubble.
‘ Houston’s housing market continues to buck national trends by recording the highest sales on record for the month of February.
Total property sales for the month were 5,792, a 16.4 percent increase over February 2005, according to statistics released by the Houston Association of Realtors Multiple Listing Service. the median home price for a single-family home reached $142,960, and the average home price rose to $191,779, increases from last year of 4.4 and 7.8 percent, respectively.’
Ben, do you think this activity in the Houston area is due to flippers?
I’ve heard of much more flipper activity in San Antonio, Austin and the Dallas area. But as the Houston realtors point out, houses there are cheap and it is possible. But to the original question, these little booms are what pushed up the national number today. The NAR said the hot areas had double digit decreases in sales, and it looks to be true; MA, FL and CA. Maybe the New York realtors will have their numbers out in a month or so.
Katrina refugees may be trying to stay in Houston rather than trying to rebuild in NO/ Gulf coast.
The median home price could easily be affected by transplants (i.e. from California, etc.) buying more expensive/large homes than the prior buying trends of the local populace, vice price rises in general. I have been tracking the Houston market since late 2003 when a friend of mine from San Diego transplanted to a beautiful community north of the city called Bentwater (awesome, on Lake Conroe, three golf courses, country club, etc.). Compared to SoCal it is cheap, but prop taxes are north of 3.3%. I was very interested until I stopped in Houston last July….Ughhh (the weather)! Definately won’t be moving there.
That is in line with the Housing tracker for Miami which shows prices trending down and supply up.
Trend 03/21/2006 1 month 2 month 3 month 6 month
Median Price $399,000 0.0% 0.0% -0.2% -4.5%
Inventory 29,107 +8.9% +26.8% +42.7% +104.2%
Look at that inventory 104% + in 6 months
Eventually, reality will take place. We are still stuck in denial.
BigDaddy63,
I live in PBC like you. Any data on PBC median home price? I know it went from $421K to $393K fron November 2005 to January 2006. Did it drop more in February? I got a bet with a local RE bull that by July 2006 we will see YOY declines in median price. I still say the median price in PBC will be well under $300K when everything finally unwinds. Thanks.
From printouts going back to October 2005, the assoc. shows West P
Palm Beach-Boca-Raton as follows:
SFH-median
Oct 05 $416,500
Nov 05 $421,500
Dec 05 $408,200
Jan 06 $393,700
Feb 06 $391,000
Thanks Ben. I think I’ll win my bet. $421,500 to $391,000 is a 7.2% drop in 3 months. Not a good sign for my bullish friend. We are in the peak selling season here as well.
yes, median price declined Jan. to Feb. but only marginally. Jan # for SFH was $393,700; Feb. was $391,000. Was $390,900 last May … so put another way, we’re at the lowest price in 10 months. BUT median price does typically drop seasonally. So it’s possible we’ll pop into March, April, and May. If we don’t, that’s when the crap hits the fan because YOY price numbers will likely go negative or at least flat
I agree Mike_in_FL. If we don’t get any pop in March-May, it could get ugly here quick. We’ll get an idea when we see the March numbers. I still believe the spring rally won’t happen, but I could be wrong. I am still calling for a YOY median decline in July, if not, it will come in October or November.
What will also be telling is when the billions in resets start to hit in the spring/summer. As we all know. people on PB County and Broward are living way beyond their means.
Yes they are. South Florida is a tourism/service industry economy that doesn’t produce enough high paying jobs to support the lofty prices. The resets are going to kill many down here in addition to all the speculators.
2001 - PBC median was about 150 k give and take..
2006-2008 we may be looking at 170-200k give and take..
at 3% “Fed assumed/desired inflation” it would have been near 180 mark in 5-6 yrs…30 yr fixed should go up to 6(short term)+2to3=8-9%.
Wow. I have a buddy who’s an “investor” in some condo in a new Miami high-rise. Wish I knew the name of it…I think it was built last summer? I think he’s screwed.
Screwed is an understatement. Miami condo construction is mind boggling, construction cranes everywhere. 25,000 units under construction which is more than what was sold the last 9 years!! I have heard as many as 60,000 more are planned, many won’t make it of the drawing board. Some projects have been scrapped. To make matters worse 70-75% of the Miami condos are in the hands of “investors”. I would advise your friend to sell immediately. There will be no soft-landing here.
i donot know how benengbreth gets his data..any how median of 390k for miami-ftlauder-palm MSA would be now no more than 365-370k..miami area has the most homes…
benengbreth data is the asking price from MLS, not the sales price.
Check out the drop in Panama City. Keep in mind that we have something like 50 highrise condo projects in planning or under construction, literally thousands of units, most f them quite expensive. Looks like the condo hustlers are about to take a hard fall here.
Sales declines look pretty bad when you consider “season” in Florida is just about over. This should be the highest sales numbers of the year.
Back in the Texas oil bust (around ‘86 I think) my sister had just bought a condo the year before in the Arlington area. She took a loss on it somewhere in the neighborhood of $20,000. I think the speculators running to Texas with the high property taxes are in for a hell of a wake up call.
I agree. From my study of most markets in Texas over the last few years (I’ll be relocating there next year), it appears that homes there have typically followed what should be a normal appreciation trend (i.e. inflation/cost of living), and often not even that, as the home depreciates (wears out) as it gets older. Moving out of San Diego I was worried about a bubble forming in San Antonio and was tempted to buy a home quickly, though I wouldn’t be able to move there for 2 years. I worked with some honest realtors, one who thought they were already in a bubble (i.e. prices having gone up about 10%) and the other said I should just wait until I actually move there. It is the high prop taxes that make it unreasonable to be an out of state landlord and prices of resales are held in check by the huge supply of new inventory available. I hope I’m not wrong, but at least I have maintained my flexiblity.
Our local radio RE guru out of Santa Cruz-San Jose just reiterated that now is a great time to buy a house. Used the latest NRA data and then had a guest on talking about how to sell your house by ‘Home Staging’. Gee, if you have to stage something must be quite slow on the other end. Gist of the staging was to get the buyer ‘emotionally involved so they overlook price, repairs, etc. Now I ask you, if one of the things that defines a RE agent is ethics, then shouldn’t location, defects, your ability to pay the mortgage in a crises, etc come before the smoke screen and mirror.
From the post coming out in a few minutes:
‘Sales in Santa Cruz County dropped 23.6 percent year-to-year, while the median price declined 2.5 percent to $712,000 from February 2005.’
If you think your neck of the woods is overpriced, Santa Cruz makes you look like a mere piker. What used to be summer condos (no insulation) near the beach sell for $700K and up for a small 2 bedroom 1 bath.
…said the mortgage broker to the realtor to the seller, “You hook em, and I’ll fry em!” Yeeee hawwww!
In Palm Beach County, consider this: There are thousands of houses under construction that were contracted last Summer and Fall. These were at the market high. When these buyers are ready to close, their home value will be much lower than the selling price. With all the 95 and 100% LTV mortgages being done to sell these places, these homowners are going to be in the bucket on day one. Just like buying a new car.
Pick,
There was a news story which I noted on my blog concerning this. People are suing builders for cancelling or demanding that the buyers come up with additional funds at closing on homes they contracted for months ago.
I have a relative in Palm Beach County who is a mortgage broker. She told me yesterday that there is more business than she can handle and is working late every night on loans. Everyone in my family thinks I’m nuts warning about the bubble. My brother just bought a house in Portland OR and my Dad is building a multi million dollar house on land he just bought on the OR coast. I also have friends who are realtors in Miami who are saying the party will never end as well as friends in OC CA that say houses on their street are selling with no problems. I have given up talking to anyone (including my wife) about the bubble.
When the masses think you are “nuts” too think opposite their bullish viewpoint, you are going to be right.
From the Personal Journal section of today’s WSJ:
“Homeowners Face Rising Insurance Rates
Reeling After Katrina, Insurers Drop Policies And Increase Premiums Far From Disaster Zones
By M. P. McQueen
The hurricanes that ravaged the Gulf Coast last summer are beginning to wreak havoc with homeowners’ insurance coverage in states far removed from where the storms hit.
Still reeling from an estimated $56 billion of hurricane-related losses, major insurers are dropping policies or not writing new ones in coastal areas from Texas to Florida and in the Eastern Seaboard as far north as Massachusetts. Insurers including Allstate Corp. and Nationwide Mutual Insurance Co. say they need to reduce the financial risk that could come with fresh storms as soon as this year. But the moves have left homeowners in a number of states scrambling to find new coverage, often at higher cost.
Some home insurers also are winning regulatory approval to raise premiums in states hit by hurricanes Katrina, Wilma and Rita. Now rate increases are expected to spread far beyond those areas, as the industry comes under new pressures related to hurricanes. Reinsurance companies, whose business it is to insure the insurers, have begun charging sharply higher prices in anticipation that hurricanes will become more frequent and more intense, and some primary insurers say they will try to recoup these added costs from consumers.”
Sorry I have no online access to post a link for this one. Assuming buyer rationality, the hike in insurance premiums should be reflected in a lower level of demand (in other words, capitalized into a lower market value). Never been a better time to buy on the Eastern Seaboard!
Found the link here:
http://www.post-gazette.com/pg/06082/675468.stm
BTW, the article neglects to mention that rising insurance prices (including infinite prices because none is available) translate into lower home valuations…
There is an interesting comparison between the Orlando numbers in the FAR report and the rosy picture painted by the Orlando Sentinel via the stats from the Orlando Regional Realtors Association. The FAR numbers (which separate single family homes and condo sales) show a 16% drop in SFH sales year over year with a large increase in condo sales. But the ORRA’s “combination” of these two figures result in their press release concluding that “sales were higher than expected” and that Orlando is defying the bubble pressure being felt elsewhere. I wonder if the Sentinel will ask them to explain the discrepency between the FAR numbers and their own? If you look at SFH sales on FAR’s website over the past several months there is a noticeable decline, with this month being the greatest at 16%. There’s your storyline.
“BTW, the article neglects to mention that rising insurance prices (including infinite prices because none is available) translate into lower home valuations… ”
But, but, but, Mr. Realtor had said that home prices only go up and that I could make $100K just by living in this house for a yr. It was guaranteed. What do you mean that my house value is down from $350K to $250K, my pymt just went up due to an ARM reset, and increased insurance cost? But, that isn’t fair. I need the government to bail me out.