Steve Eckhardt's Tampa Area Blog

The most recent quarterly survey of Florida real estate trends completed at the end of September finds that the investment outlook for various types of real property in Florida remained steady.  The national economic crisis has failed to rattle Florida real estate experts despite the availability of financing.

Experts that responded to the survey overwhelmingly stated that Florida is the place to be and the place to invest. "Although Florida's housing crisis was worse than some other states, over the long term Florida will benefit from the migration of new residents, particularly as baby boomers age," stated Wayne Archer, executive director of UF's Bergstrom Center For Real Estate Studies.  The Sunshine State's mild climate and outdoor amenities make it an attractive retirement destination.

The numbers I have compiled from the MLS seem to justify the feeling in the UF survey.  The Greater Tampa Association Of Realtors show that total residential sales for October increased from 1,063 in 2007 to 1,091 in 2008.  Even in Southwest Florida (Fort Myers, Cape Coral, & Naples), the reported epicenter of the housing meltdown, the most recent numbers for October 24th through November 24, show that 493 properties were sold.  That figure actually topped 2007, with 404 sales during the same period, and 2006, with 426 closed sales during the same period. The improvements are all the more impressive in light of September's financial meltdown.

Last month, MDA DataQuick reported that Southern California homes sales rose 66.7% from the same period as last year.  The reason, many experts pointed out, was because the median home price was at it's lowest level since April 2003.  Don't be surprised if we see the same thing happen on the West Coast of Florida.  The median price in the Tampa/St. Petersburg/Clearwater area fell 26 percent to $152,300. The area hasn't seen home prices that low since April 2004, when the median was $148,800.

Back in 1989, economists N. Gregory Mankiw and David Weil predicted that demographic trends would lead to a "substantial" fall in real, or inflation-adjusted, home prices over the next two decades "if the historical relation between housing demand and housing prices continues." They reasoned that baby boomers were coming to the end of their prime house-buying years and that the smaller baby-bust generation would bring lower demand for housing.  Despite the recent drop, the average U.S. home price is up about 35% in real terms since the end of 1989, according to the Ofheo index.

The median price has fallen to early 2004 levels.  Sales are up from last year.  Last week's announcement by the Fed to drop mortgage rates to 4.5%, prompted a half-percentage point drop in current mortgage rates and sent homebuyers' mortgage applications up 37.4%, according to the Mortgage Bankers Association.  The current 30 year fixed, mortgage rate is now about 5.5%.  Rates have not fallen below 5.37% for 45 years. 

The interest rate was at 6.5% just a few months ago.  The 1% reduction in the interest rate gives the average buyer about 10% more buying power.  If rates go back up to 6.5% and prices fall another 10%, the average buyer would be making the same monthly payment as a person who bought at the higher price with the lower interest rate. 

There are always going to be people yelling that the sky is falling.  I prefer to look at the positive things that are going on around us. Low prices, low rates, and a good amount of inventory makes this a great time to buy!