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| Check back regularly - We will add/edit articles as they become relevant to the current market trends. |
Florida home sales fall again; Tampa Bay hit particularly hard
Tuesday, October 26, 2010 - Nationally, a housing rebound appears to be taking hold,
as home sales jumped 10 percent in September, the second monthly increase in a
row and biggest monthly gain in 28 years.
Unfortunately, Florida will be late to the party.
The state's home sales fell 3 percent since August, while the median sales price
slumped 6 percent to $133,400.
The numbers released Monday were even more stark for the Tampa Bay area. Home
sales were down 16 percent compared to a year ago and off 4 percent compared to
August. Prices fell 7 percent to $127,400.
"Florida's housing market is feeling pressure from an uncertain economy," Florida
Realtors president Wendell Davis said. "Easing foreclosures and increasing job
growth would go a long way in stabilizing the market."
Indeed, the current disconnect between Florida and much of the country might be
summarized in two words: distressed sales. The term refers to both foreclosures and
short sales in which delinquent homeowners sell their property for less than the
mortgage balance.
For the first time during the housing crisis, distressed sales accounted for a majority
of homes sold in the bay area, according to an analysis of the September data by
Tampa-based real estate consultancy Home Encounter.
All told, the firm said, 52 percent of all bay area sales were distressed. The
breakdown: 30 percent were foreclosures and 22 percent were short sales.
"We've reached an unfortunate milestone," Home Encounter president Peter
Murphy said, "and with 75 percent of all pending sales in the distressed category,
it's a trend we're not likely to see reversed for quite some time."
Foreclosure listings are at levels 2.5 times higher than the start of the year, he said,
while the number of short sales are up about 15 percent since the federal
government launched the Home Affordable Foreclosure Act in April to push
alternatives to foreclosures.
The net effect of more distressed sales is to lower market values overall and make
some buyers reluctant to purchase what could be a depreciating asset. Foreclosures
sell for 49 percent of the price of nondistressed sales, while short sales sell for an
average of 71 percent of the nondistressed sales price, according to the Home
Encounter report.
"Short sales and foreclosures continue to be the Achilles heel of our local housing
market," Murphy said.
Nationally, about 35 percent of all sales were distressed last month, up slightly from
33 percent in August, according to the National Association of Realtors. Neither the
NAR nor Florida Realtors broke down distressed sales rates by state and local
market, but there is no doubt Florida is among the highest.
About 157,000 Florida properties received some sort of foreclosure filing from July
to September, a flood of filings second only to California.
"Distressed sales in Florida tend to be higher than the nation overall. It's the
nature of the Florida economy right now," said Jed Smith, managing director for
quantitative research for NAR.
Complicating the picture is a smattering of state and national investigations into
faulty foreclosure filings due to mistakes and alleged fraud. Both lenders and courts
have either temporarily halted or slowed down the foreclosure process as the scope
of the problem is investigated.
The paperwork controversy is already giving potential buyers of foreclosed
properties or short sales reason for concern over validity of property titles.
"People are going to be a little bit gun-shy for a few months as to whether a title is
complete because of what happened," said Smith of the Realtors association. "I
think you'll see things slow down for a little bit."
An association survey last week indicated that about 15 percent of Realtors had
already had closings that didn't occur because of the question of title. "Whether
that's business permanently lost or business that will recur later, I don't think
anybody really knows," Smith said.
For Florida, a state saddled with 11.9 percent unemployment, the housing crisis and
unemployment crisis have been intertwined throughout the prolonged recession.
"The labor market is going to remain in a state of distress for an extended period,
and that feeds into this cycle of gloom as far as real estate is concerned," said Sean
Snaith, director of the Institute for Economic Competitiveness at the University of
Central Florida.
"Here in Florida, we're at the extreme as far as what this housing cycle has been. …
To see us lagging recovery compared to the nation as a whole shouldn't be much of a
surprise."
In a release, the Florida Realtors said sales of existing condos were up 10 percent
statewide compared to a year ago. The median sales price of $83,400 was down 18
percent compared to a year ago.