Northeast Florida Housing Market Nearing Rock Bottom

After months of falling, local builders and analysts say the Florida housing market is about to hit bottom.
Sales statistics from three different sources all indicate another steep drop during the first quarter 2007. That trend could continue for the remainder of the year as Florida mortgage demand wanes in the face of high prices.

There are some indications that the market is beginning to turn though, said Scott Taccati, vice president of relationship management in the commercial real estate division at AmSouth Bank.

“The recovery will be a slow process, it won’t be a blip back up,” Taccati said. But, “this isn’t hell in a hand basket.”

Overall listings reached a new peak of 12,322 homes in the first quarter of 2007. That’s more than half of the 21,267 listings for all of 2005, when the real estate cycle peaked, according to Taccati’s data. Although contract signings are usually highest during March and April, they dropped during those months this year, which Taccati said indicates that the market is still struggling.

The new home supply areawide is 5.6 months, as new starts have dropped 33 percent from the third quarter 2005. Taccati said 56.1 percent of the inventory in Clay County is vacant. In St. Johns County, it is 49.3 percent; Nassau County, 47.8 percent; and Duval County, 45.3 percent.

Duval posted the strongest first-quarter performance in existing home sales with a 21 percent increase to 3,690, said Real Estate Strategy Center of North Florida Inc. President Ray Rodriguez. Existing home sales in other regions, though, as individuals held off on applying for mortgages of all kinds.

Homeowners are moving closer to employment centers to reduce energy costs, Rodriguez said. “The cost of gasoline, the cost of life is getting to their pocket. They’re just pinching their pennies.”

The changes are more dramatic on new homes, Rodriguez said, because the purchase of a brand new home requires startup housing costs not necessary in older homes. Clay County’s first-quarter drop of 65 percent is probably due to the rising costs of land, permitting and energy and traffic congestion.

The first quarter was slow, said Randy Long, chief operating officer for Clay County builder J.A. Long Inc., But he’s seen interest rise in homes priced from the high $300,000s to more than $1 million.

According to the Florida Association of Realtors, which tracks only existing homes, single-family home sales declined 14 percent in Jacksonville, compared with 26 percent statewide during the first quarter. The median sale price rose 1 percent locally, to $199,500 from $197,100 in the first quarter 2006.

Rodriguez is seeing more lot sales, which he said could indicate the home mortgage market might be turning. In April, 13 builders bought 174 lots, compared with eight builders who bought 150 lots during the first quarter. Still, those lots won’t affect housing sales until houses are built on them.

“It’s like going to a flea market,” Rodriguez said. “Just because you buy something there doesn’t mean retail’s coming back. It could be a liquidation sale.”