Sunny Forecast for Housing Market
- Aug 01, 2012
Orlando—Housing figures released by Florida Realtors reveal a nice climate for Sunshine State housing. Increased pending sales, more closed sales, higher median prices and lower inventory are all part of the sunny report.
Statewide closed sales of existing single-family homes in June totaled 18,800. That figure was up 5.3 percent vis-à-vis the year-ago figure. The statewide median sales price for single-family homes in June was up 8.2 percent compared to June 2011, reaching $151,000.
Three related factors help explain the upsurge in housing.
“Number one is investors are coming in for a large number of purchases,” Florida Realtors chief economist John Tuccillo tells MHN. “They’re purchasing at the market‘s low end, sprucing up the homes, and using them as rental properties. These are investors with five- to seven-year time horizons. These [purchasers] may be formal or informal investment funds, as well as private individuals.”
Another factor is two and a half years of steady job growth Florida has experienced since early 2010. When job growth picks up, so does housing growth, Tuccillo says.
A third and final factor is the resurgence of the stock market, he observes. Finding their stock portfolios had been decimated during the Great Recession, many people had given up on the idea of looking for a home in Florida.
“We’ve seen the stock market come back over the past couple of years pretty smartly,” Tuccillo says. “Now that value has been restored.”
While sales have been brisk at the low end of the market, they are now becoming more noticeably robust at the market’s upper end as well. “Where sales are hurting is in the middle of the market,” Tuccillo says. “But right now, we’re looking at a pretty strong top and bottom across the entire state.”
As far as submarkets are concerned, metro Tampa-St. Petersburg has been particularly strong.
Also flourishing is much of the state’s west coast south of Tampa, including such markets as Bradenton, Sarasota, Ft. Myers and Naples.
Multifamily unit sales are not as brisk as those of single-family homes, Tuccillo says. Substantial overbuilding took place in the multifamily sector in Florida from 2004 to 2008. Moreover, the renting of single-family homes is helping trim demand for condominium units and townhomes. “If demand continues to grow, multifamily will come back,” he says. “We just haven’t seen that yet.”
One of the most intriguing aspects of the Florida housing market is its appeal to foreign investors. Florida Realtors’ recent figures suggest one in four homes sold in Florida is sold to an overseas buyer. Much of the interest from abroad focuses upon Miami and Orlando, where Central Americans and Europeans flock for qualities that include climate, attractions and investment opportunities.
“Someone from Great Britain may come here and buy a large property of say five or six bedrooms, and rent it to people from their own country coming to Florida for vacation,” Tuccillo says. “Very few people visit here for three days. The prices are such that you’ll save up and come for a couple of weeks. It works out to be a nice venture for them. Our mortgage rates are low, folks can finance the package without too much strain, and they can make the numbers work.”
As for the future, Tuccillo envisions Florida home values rebounding over the next five or six years. “You’ll get more demand with an improving economy, demographics suggest there will be more retirees coming here, and in multifamily, the overbuilding will have been absorbed.”