Facing the worst real estate crash in U.S. history, the Florida housing market is seeing home prices drop at a pace that hasn’t been seen since the early 1920s before the Great Depression. Despite a surge in home and condominium sales as a result of the federal tax credit, values on homes and condos throughout Florida are declining. The Sunshine State has been designated as one of the Hardest Hit States by the White House, but little has actually been done to aid Florida.
The foreclosure crisis has produced a massive economic disaster as unemployment reaches heights above the national average and full-time residents exit the state for better prospects. Nonetheless, in Miami the median price of a home in October rose for the first time in more than a year as a fluke, according to the local Realtors association. But that fact means little since home prices are still declining. Unlike the single family home market, median prices on condos in Miami dropped 22% from a year ago.
However, sales, aided by near record low mortgage rates and pent up buyer demand, should improve during 2011 in the state’s largest metropolitan area. Bank-owned homes and condos that have been taken back by lenders will lead to the rise in sales, which compose more than half of all transactions, including auctions and private sales not accounted for by the multiple listing service. Miami is forecast to see average home prices, including condos decline an additional 10.8% in 2011.
In Tampa home sales plummeted after the federal tax credit expired and lenders called for a moratorium on foreclosures to investigate allegations of fraud. Sales hadn’t fallen as much in nearly two years in Tampa, which has been crippled by foreclosures. As more homeowners walk away from their mortgages, especially vacation owners Tampa will be riddled with economic woes. Home prices are forecast to deflate another 8.8% by year’s end.
Orlando is suffering through one of the highest rates of foreclosures in Florida. Second homeowners were walking away from homes in rising numbers, but are now waiting to see what attorney generals in all 50 states do regarding the foreclosure crisis. If banks feel the pressure of the prosecutors enough, they could negotiate mortgage modifications with homeowners and cut the damage to the overall economy. If not, the foreclosure crisis is projected to increase in 2011 as more homeowners upside down on their mortgages flee.
Tens of thousands of vacant homes make up the distressed inventory of properties in Orlando. Average home prices are forecast to decline another 8.5% in 2011. If more homeowners leave their homes as a result of lenders failing to reach an agreement with prosecutors, housing deflation is likely to be higher in the city that houses Mickey Mouse.
In the northern tier of Florida, Jacksonville saw home sales explode with the federal tax credit. High unemployment is hurting the housing market even as banks cut prices on foreclosures to sell them off. But the bankers’ moratorium on foreclosures is slowing any sort of progress the market could make. The process is placing the delicate balancing act between buyers and sellers in a dangerously precarious place as buyers hold-off buying decisions as a result. Jacksonville home prices are forecast to decline an average of 9.3% in 2011 on sluggish sales.
In the state capitol of Tallahassee lawmakers have virtually done nothing to aid troubled homeowners as if by some miracle the economic strife caused by the foreclosure crisis will soon miraculously disappear. Tallahassee home prices may never see the heights they did during the boom, and are forecast to deflate another 7.5% on average this year.
In posh Palm Beach, where the second home market was once active, financial stress and fallout from convicted swindler Bernie Madoff have hurt the local economy. The prices on high-end estates are tumbling amid a sluggish market that is projected to remain slow through the New Year. Palm Beach is forecast to sustain 7.6% in average housing deflation in 2011.
Over on the eastern seaboard in Fort Lauderdale, neighborhoods that sparkled during the real estate boom have given way to over-grown lawns and an ailing economy as foreclosures make up more than half of all home sales. Fort Lauderdale is forecast to decline 8.0% in average home prices by year’s end. In Naples, where condos are selling at auction often at less than half of what they originally sold for new a recovery is still a distance off. Employment will have to improve before either market does. Naples is forecast to decline an average of 8.9% in 2011 on both homes and condos.