The numbers leap off the page.
Sev
en of the top ten markets in the nation whose media list prices are up year over year are Florida markets. According to the latest data from Realtor.com, the world’s largest real estate site, Florida single family home and condo prices are zooming at the same time that the rest of the nation is still recovering from the first quarter’s double dip.
August median prices in Fort Myers are up 33 percent from 2010. Miami is up 24 percent, Punta Gorda 20 percent, Sarasota-Bradenton 10 percent, Daytona 9.3 percent and Lakeland-Winter Haven 8.8 percent. Compared those increases to the national average increase for median list prices from all 146 metros tracked by Realtor.com: .46 percent.
These amazing year over year numbers are not simply the result of being compared to prices during the August 2010 nose dive following the end of the tax credit. They are the real thing. A handful of Florida markets have been leading the Realtor.com hit parade since the end of the first quarter.
With a high saturation of condos, resort, retirement and second homes, these markets were devastated by a combination of foreclosures evaporating demand. Massive inventories of distress sales and slow absorption drove prices to peak lows.
Florida has a long way to go to get healthy. The median property in a number of Florida markets has lost half its value or more since 2006. The peak to trough price differential in many Florida markets is over 50 percent, among the greatest in the nation, according to Case-Shiller. In Miami, for example, prices fell over 50 percent and didn’t trough until the double dip in the first quarter of this year. Prices in Fort Lauderdale fell from 2006 at least 46 percent to 2010. Naples fell 52 percent. Tampa, 43 percent. Orlando, 51 percent.
It makes sense that at some point bargain prices like these in prime Florida markets will attract investors, both foreign and domestic, and there have been bargains indeed. In Vero Beach, for example, the discount on foreclosures reached 53 percent in the second quarter; state-wide the media discount was 40 percent according to RealtyTrac. By all accounts that seems to be the case. In several markets, notably Orlando, Sarasota, Lakeland and Miami, demand has been strong enough to bring supply and demand into close enough balance to reduce median time for listings in inventory by five to 25 percent.
Why then are markets like Jacksonville, Tampa and Orlando, where prices fell nearly as much as South Florida markets, not participating in the renaissance? Discounts, deals and demand—such as it is—don’t tell the whole story.
The answer is fewer foreclosures, and in turn, reduced inventory. What differentiates markets like Fort Myers and Miami from Tampa and Orlando not just geography by a significant decline in foreclosure filings in South Florida that began early this year and reached 60 percent year to year decline in foreclosure activity in July and August.
Miami-Dade County recorded 3,352 foreclosure-related actions in August, a 61 percent decrease from a year ago. Broward County had 2,806 foreclosure actions, a 63 percent decrease, while Palm Beach County recorded 2,035 foreclosure-related actions, a 66 percent decline, according to
During the second quarter of 2011, foreclosure actions plunged by 51 percent in the tri-county South Florida region compared to the same three-month period in 2010, according to a new report from CondoVultures.com, a site listing condos.
Fewer filings means fewer REOs are being listed, which has contributed to the significant reductions in inventories shared by all of the markets were pries are zooming. Almost all have reduced their inventories in the past 12 months, some dramatically. Since last year inventories of condos and single family homes are down 41 percent in Fort Myers, 47 percent in Miami, 32 percent in Punta Gorda, 33 percent in Sarasota, 32 percent in Daytona and 38 percent in Lakeland.
How long will the Florida phenomenon last? Will double digit price increases discourage bargain hunters and encourage local owners to list their properties and dilute the inventory vacuum that has been behind the price? Is the foreclosure fall off a result of servicer processing delays rather than fewer defaults?
Perhaps Bank of America answered that question when it doubled its foreclosure filings in South Florida in August. With a default rate well into the double digits, Florida still ranks number one in defaults. Until the larger economic picture improves, it’s hard to believe the Florida price phenomenon will last much longer.
“Florida, particularly South Florida, is still in a real estate crisis and experts predict it will take a couple of years for Florida to win its battle over this downturn…Looks like there are going to be lots and lots of good bargains here in beautiful South Florida for those with the wherewithal to purchase them,” says Florida real estate attorney Rosa Eckstein Schechter.
