Hank Fishkind says the Florida housing market bottomed months ago and is on a slow road to normalcy. Fishkind did mention the Miami condo market is still in serious trouble, but that market will not affect the rest of the state.
In SW Florida closed sales have stabilized, and inventory has fallen just a bit. We’re seeing buyers regain their swagger and are making offers. The sluggish real estate market in SW Florida is shifting away from buyer’s fear of buying to credit issues.
In the past, buyers were fearful of buying because they were convinced prices would keep falling. Buyers are more confident now is a good time to buy as prices have dropped dramatically. What’s different today is that many banks are not lending like they were a few years ago, and it’s causing a credit crunch. Banks and mortgage brokers have come under increased scrutiny due to the sub prime lending issues of the past. Now banks are taking greater care to make sure borrowers have income, assets, and documentation to prove the loan. Banks are also questioning appraisals, and in many cases looking for any reason Not to make the loan.
This has and will cause pressure on the real estate market for the next few years as marginal buyers are now out of the market. Solid buyers have been waiting for Tax Reform and Insurance Reform. They’ve partially received both, and may receive even more by the 1st qtr of 2008.
Long-term investors are wading back into the water scooping up bargains from other weary short-term investors and home sellers in trouble. This is all a sign the market is recovering. The process will not happen overnight. We still have over 14,800 single family homes on the market in Lee County. Building permits have fallen, which is another good sign. Resales one day will no longer have to compete with builder inventory and high discounting once this backlog is finished and sold.
Builders are pulling out of SW Florida, among many other places. Builders realize they cannot continue to build and oversupply the market like they did a few years ago. It’s not in their best interests, as builders are not in the business of losing money. All this leads to a market recovery. This recovery will be slow, and we won’t see large price gains like we have in the past. Not all markets and sub-markets will react in concert, as real estate has proven to be an inefficient market compared to the stock market. What is certain is that eventually the real estate market reacts, and it all works out in the end.