The housing market is ripe for an adjustment, a year or two of flat or falling prices followed by very modest increases for awhile. of the top six markets that will be hardest hit with dropping housing prices, half are in Florida. A recent report says cost of Florida housing rose at twice the national average for the last five years, with people in only nine other states spending a bigger chunk of their income on housing.
What does not show up in these reports is the great increase in property insurance, taxes and utilities this year, mainly caused by the hurricane onslaught of last year. Across Florida the average price of existing homes in August 2006 was almost unchanged from twelve months ago, with best and worst being the Ocala area up about 14% and Panama City down by 15%. The speculation hot spots that went thru fantastic price increases in recent years will be hurt most, with the Gulf cities of Cape Coral dropping about 18% by the third quarter of 07, and Sarasota close behind with a 14% drop.
In the area where I live, a few blocks from me is a duplex that’s been on the market for over a year. also a single family two bedroom one bath with a large back yard on a corner lot, it was for sale by owner for several months and is now listed with Century 21. both are in a good location. don’t understand why they won’t sell. In this same area are several condo conversions that are selling very slowly, some have even been reconverted back to rentals. In downtown St. Petersburg, some upscale condo projects were never started, and buyers were given their deposit back.
The easy availability of interest only and adjustable mortgages is contributing to more foreclosures which keeps expanding the amount of properties for sale.
And it’s the builders taking the brunt of the slowdown, with the construction industry limping into the final weeks of the year with a gloomy outlook for 2007. with the unfolding slowdown, layoffs and lost contracts are creeping across the building trades. In the Tampa Bay area, construction has lost over 2,000 jobs since May, and that does not include many that are self-employed. Laborers are saying it’s like working on a sunday in the many subdivisions that have become a ghost town, and subcontractors are leaving the suburbs looking for jobs.
The trades that support homebuilding are already feeling the pinch, particularly swimming pool builders and drainage contractors.
Is there a turnaround on the horizon? not until 2008 at best.
Tracy Suttles 