The future is bright for the sunshine stateby Michele Lerner
While the housing market crash pulled like an undertow in many parts of the country, Florida residents felt as if they had been hit by a tsunami. Much of the state experienced record levels of foreclosures and home values plummeted, leaving thousands financially underwater.
It’s been a hard couple of years for Florida homeowners, but the sunshine state’s housing market is showing some serious signs of recovery:
- Home sales: Single-family home sales in Florida rose by nearly16 percent from December 2011 to December 2012. Condo sales rose by 8.6 percent in that same timeframe.
- Home prices: Median home prices rose by 14.1 percent between December 2011 and December 2012, while condo prices rose by 26.3 percent.
- Federal assistance: $60 million of mortgage assistance is now available to Florida borrowers. “Floridians will now benefit from millions in down payment assistance, housing counseling, legal aid and better funded courts for foreclosure-related issues,” said Florida Attorney General Pam Bondi in a statement.
- Increased competition: Competition among foreign homebuyers is heating up, especially among Canadian and Chinese buyers. “Investors have been sweeping the bottom of the market, so potential Florida buyers thinking they would snap up a bargain are finding they’ve been beaten to the punch and need to look at a little higher price range,” says John Tuccillo, chief economist for the Florida Realtors.
While things are certainly looking brighter in the sunshine state, the bad news for Florida homeowners is far from over, says Tuccillo.
“Right now, we probably have the largest shadow inventory of any state in the country because of the number of homeowners who are currently in the foreclosure process or have the potential for a foreclosure,” says Tuccillo.
Florida is a judicial foreclosure state, meaning the foreclosure process must be handled by the court system rather than directly by lenders. Tuccillo says it can take as long as two years between entering the foreclosure process to completing the paperwork and putting the property back on the market.
But Florida lawmakers are working to reform the process, and lenders are even starting to pursue other options.
Rental demand is high
“Investors are buying bloc purchases of foreclosed single-family homes and condos, bringing them up to market condition and then renting them,” says Tuccillo. “There’s strong demand for rentals because we have so many people who lost their homes to foreclosure or who cannot qualify for a mortgage.”
Regionally, Tuccillo says areas like South Florida that had zoomed up the most dramatically in value and then fell hardest are the places making a stronger comeback now, while areas in North Florida that saw less of a run-up or run-down in prices are just bumping along slowly.
Florida’s 2013 outlook
“As home values rise we’re seeing the number of underwater homeowners drop,” says Tuccillo. “Those homeowners have a little more maneuvering room because they can refinance or sell if they need to. It’s not that people aren’t still struggling, it’s just that we can see a gradual return of our housing market over the next few years.”
Some builders are beginning to construct new homes in the state, another indicator that the housing market is beginning to rebound, says Tuccillo.