FLORIDA’S SINGLE FAMILY HOUSING MARKET HITS BOTTOM: MARKET
STABILIZES
March , 2007 Writer: Cathy Keen Source: Wayne Archer
ckeen@ufl.edu (352) 273-0314
archerw@ufl.edu
GAINESVILLE, Fla. --- Hopeful home buyers in Florida should
not wait. The price is right as the state’s single-family residential housing
market bottoms out, according to a University of Florida study released today.
"If you’re thinking of buying a house, there’s probably not
much to be gained by holding out at this point," said Wayne Archer, director of
UF’s Bergstrom Center for Real Estate Studies. "It doesn’t look like prices are
going to fall anymore."
The quarterly survey of experts in the real estate industry
completed in January shows that the share of respondents observing a drop in
single family housing prices has dipped, while a growing number find prices
staying even with inflation, Archer said.
"We see that as a benchmark," he said. "When prices maintain
the same level as inflation, then we’re probably in some kind of equilibrium. It
indicates the market is stabilizing."
The exception is condominiums, which are overbuilt and prone
to speculative and naïve investors, he said.
This is the first time in the UF survey’s five quarter
history that the buyers’ investment outlook for residential development has
brightened, Archer said. It declined for the first three surveys and remained
flat for the fourth survey at the end of October, starting to rise only in this
latest survey, he said.
Because of the dominance of single family housing, the
findings have far-reaching and potentially optimistic implications for the
state’s real estate industry, Archer said.
"You can’t get away from the fact that the single family
housing market is the single largest driver of the real estate market," he said.
"Most brokers and real estate agents are dealing with single family housing.
Most lending is for single family housing. And home furnishings are driven by
single family housing. So when it stabilizes, that’s important."
One possible explanation for the housing market turning the
corner is a restricted supply of land for residential development, Archer said.
The shortage meant there was less overbuilding than there might otherwise have
been, he said.
Condos did not have this land restraint and that is one
reason they are overbuilt, Archer said. At the same time, condos are prone to
strong speculative swings because they are considered a relatively easy
commodity to exchange; it’s not difficult to acquire them in multiple units or
to buy contracts on them, he said.
The stabilization of the single family housing market came
earlier than anticipated and is not expected to affect all parts of the state
equally, Archer said. The quieter markets are probably going to take longer to
rebound than those in central and south Florida, where growth has been
explosive, he said.
Jacksonville typically has been a slower and steadier market
than Orlando, Tampa-St. Petersburg, Miami and other cities in South Florida, but
that is changing, Archer said. Recently, the Jacksonville housing market has
picked up momentum, he said.
Even with a turnaround, Archer said he does not believe
Florida’s real estate market is likely to reach the same level that it did at
its peak in 2005-2006. "I don’t think any thoughtful person would expect sales
to go back to where they were a year or so ago," he said. "That was probably an
overheated condition and it was extraordinary."
On a positive note, nearly all other markets, including
apartments and commercial rental markets appear to be remaining steady or even
experiencing robust growth, Archer said. "They did not experience a downturn in
the same sense that the single family development market did and they’re
continuing to be strong," he said.
Optimism about Florida real estate seems to be particularly
apparent among foreign investors, Archer said. Many respondents commented that
foreign investors and lenders are aggressively trying to invest more capital in
the state’s rental markets, he said.
"They apparently have no fears about the future of these
markets despite what we perceive as our problems with hurricanes, taxes and
other concerns," he said.
For the survey, UF’s Survey Research Center asked a series of
questions of 318 industry executives, real estate lawyers, market analysts,
title insurers, financial advisers, market research economists, real estate
scholars and other experts in the field. This represents an increase over the
183 respondents in the last survey.
For more information, contact the center at 352-273-0311 or
cres@cba.ufl.edu. More information is available on the center’s Web site
at www.realestate.ufl.edu
