Tide is Turning in Florida's Real Estate Market

The recent drop in property values in Florida has affected the pocketbooks and retirement funding sources for many Floridians. Those who want to sell their property at today’s market value are competing with a multitude of foreclosure sales. For those Floridians who have their property on the market, they are finding a very long wait on the market or are holding off on listing their Florida property while the foreclosures work their way through the system. This has created a very strong pent-up demand by these prospective sellers seeking to buy real estate with the proceeds from their current Florida property. As the economy continues its slow but steady recovery, and real estate resumes it’s normal pace, a new wave of Florida buyers will emerge.

Real estate sales in other locations across the Southeast U.S. have been affected by the economic recession over the last two years, however the declines have been minimal compared to Florida. There has been some renewed interest from Floridians in real estate outside of Florida, who are starting to see a light at the end of the tunnel with the depressed real estate market. Many Floridians have come to accept their economy-adjusted Florida property values and are now more anxious than ever to make a move once their Florida property sells, regardless of their financial losses.

Is the Housing Market Recovery Near?

Encouraging signs abound as the U.S. housing market appears to be on the verge of emerging from one of the worst real estate markets. A surge in sales activity was reported in many areas in the past three months; first-time buyers continue to bring vitality to the marketplace all across the country; buyers with good credit are able to get mortgage financing; inventories of unsold homes are flat or decreasing in many areas, and listings with the lowest prices in nearly a decade are being cherry-picked in many communities.

Even repeat buyers are starting to leave the sidelines. Many real estate agents report that they are using the government’s $8,000 tax credit incentive for first-time buyers as an effective marketing tool. The credit – which expires on November 30 of 2009 – can be claimed on the purchaser’s tax return and does not require repayment unless the home is resold within three years. Every dollar of the tax credit reduces income taxes by one dollar. A person is considered a first-time buyer if he/she has not had an ownership interest in a home for at least three years.

It's A Buyer's Market in Florida

Recent property sales that continue to lag in Southwest Florida are following a local and national trend. It's a buyer's market, and it's all about price. According to the National Association of Realtors (NAR), existing home sales increased 4.7% in February over the previous month, with activity concentrated in lower price ranges. Because buyers are shopping for bargains, distressed sales accounted for 40% to 45% of transactions in February. NAR also reports that sales activity remains relatively soft, reflecting additional layoffs, and buyers waiting for housing provisions in the economic sitmulus package to take effect. NAR's analysis shows that distressed homes typically are selling for 20% less than the normal market price, and this naturally is drawing down the overall median price. The bottom line is that the real estate market must cleanse itself in order to improve.