Original Post date: July 10, 2012
Article by: Anonymous
The subtitle of a recent Miami Herald Business Monday (6/18/2012) article read: “South Florida’s real estate market suffers from depressed prices and low inventory [emphasis added].” With an average decrease of 49% in real estate values from the housing peak in 2006, perhaps suffering is an appropriate term –unless you are looking to buy. With prices so low, demand has increased; however, some homeowners, including those who borrowed too much during the Housing Bubble at peak prices, seem unwilling to sell unless the need arises. As the supply of available houses constricts, real estate values have increased. Miami’s 4% increase from prices six months ago is the second largest rebound in the nation, following Phoenix, suggesting the Florida housing market has bottomed out from the Great Recession (Miami Herald, 6/21/2012).
Still, not everyone is optimistic. Some within the real-estate market are still skeptical that the rebound is permanent. With the Florida housing market representing almost 30% of all foreclosures in the U.S. (towards the end of 2011), perhaps the case for skepticism against reaching the price bottom should be taken seriously. Banks have yet to flood the market with previously foreclosed homes but, with the nearly 1.1 million distressed sales in Florida, the potential for a significant increase in available homes for resale is still there to offset the rising effects of demand on home prices.
What does this all mean for new home construction? Well, currently the confidence level among U.S builders has reached a five-year high according to the National Association of Home Builders/Wells Fargo builder sentiment index. Nevertheless, builder confidence is still nowhere near the level it was during the housing boom. Florida home construction is likely to remain well below pre-bubble peaks for quite a while.