Is the Sunshine State’s housing picture finally showing some juice? It would appear so, as tractors and bulldozers are slowly re-emerging on home construction sites.
But it’s more than just anecdotal glimpses of construction equipment — the numbers show that the Florida housing market might really be coming back.
Of course, the Florida market has a steep hill to climb. According to the Florida Association of Realtors, the Sunshine State’s median home sales price in the third quarter of 2007 was $232,200. One year later, that number had dropped to $185,200. By January 2010, that number had fallen to $163,000.
But there appears to be an upswing in Florida home sales in the first three-and-half months of 2010. According to the Orlando Regional Realtors Association, new home sales are up 40% from March 2009 to March 2010.
Why the buying burst? Let’s look at a few key reasons:
The Interest Rate Landscape May Be Rising. Housing prices in Florida have been fairly cheap for three years now, while interest rates have been low. Any potential buyer who was sitting on the fence now may realize that home prices and interest rates could go a lot higher, and if you wait too long, you won’t get the steal you’ve been waiting for. Better to lock in at 5.25% now than wait a few months to see that rate rise to 5.75%. On a $200,000 home, half a percentage point translates into savings of $815 annually.
Inventory Is Plentiful ... for Now. Across the state there is no shortage of “for sale” signs. With inventory high, prices tend to stay low. But with the recent uptick in home sales, inventory levels shrink, and home prices rise accordingly. Once again, if you wait too long, inventory will soften, and home prices will rise.