Several leading U.S. economists speaking at a Realtor event in Orlando today reported and agreed that Florida's residential real estate market will continue its upward trend into 2013, though the pace of recovery may be slower than the U.S. as a whole.
"Florida's housing market is back, with great possibilities for the future - but those possibilities are only beginning to be realized," said Dr. John Tuccillo, chief economist for Florida Realtors.
Along with Tuccillo, conference speakers included Doug Duncan, senior vice president and chief economist for Fannie Mae; Leslie Appleton-Young, vice president and chief economist for the California Association of Realtors (CAR); and Pat Reass, a state-certified residential real estate appraiser at Appraisal Group MidFlorida LLC in Winter Haven.
Fannie Mae Chief Economist Doug Duncan said, "We believe the housing market is on firm footing. Most of the improvement we've seen has come from the supply side of housing. Distressed properties are coming down from about 5 million to more like 3 million."
Mortgage rates should remain low and not change much in 2013, he added, while banks likely will continue to maintain high lending standards and a tight credit environment.
"The trend has been established for the housing recovery, but robust growth awaits more jobs and a stronger economy," Duncan said. "Three years into the recovery, the current economic expansion is the weakest since World War II. Just over half of the jobs lost in the Great Recession have been recovered."
The real estate market "bottomed out in late 2008," Tuccillo said, according to Florida Realtors' market data, data from the National Association of Realtors (NAR) and other market research sources.
"Since the beginning of 2009, we've clearly seen a regrouping and a recovery underway," he said.
Median sales prices are consistently rising for both existing single-family homes and condo-townhome units across Florida. However, he noted the state's active distressed property (foreclosures and short sales) market is putting pressure on prices, resulting in smaller gains and a slower rate than what is being seen in California and the U.S. as a whole.
Other signs of Florida's steadily improving residential market, according to Tuccillo:
Months' supply of single-family homes is below 6 months;
Latest data (October 2012) shows 44 percent of closed sales were paid in cash, signifying strong demand from investors;
Foreign buyers make up 19 percent of closed sales in Florida (October 2012);
Traditional (non-distressed) sales now make up over 50 percent of Florida's closed sales;
Closed sales include fewer REOs (real estate-owned) and more short sales; and
Shadow inventory has been declining since 2009, though it remains a key factor in the state's housing market going forward since Florida is a judicial foreclosure state (meaning foreclosures go through a court process.)
Comparing Florida's residential market to California's and to the U.S. as a whole, CAR Chief Economist Leslie Appleton-Young agreed that the nationwide housing market is back.
"The latest NAR data shows very strong closed sales and rising prices," she said. "Low inventory is currently a challenge for the nation, for California and also for Florida in many areas. There's just not enough property for sale, particularly with investors buying properties for cash (29 percent of the market in California; 25 percent of the U.S. market). For California, we're calling 2012 the return of the traditional seller to the marketplace - in October 2012, 63.4 percent of our total sales were from equity or traditional sales."
In California, the current months' supply of existing single-family homes is 3.1 months, Appleton-Young noted. While the state is still dealing with lender issues such as tight credit, problems are being resolved at a faster pace, she said, and home prices are rising as a result.
Looking ahead to 2013, Appleton-Young said, "There is a tremendous amount of pent-up demand for housing. The number of new units is improving, but it's still low and isn't enough to meet pent-up demand. The housing recovery is gaining strength, but the long-term viability of the market and its recovery depends on jobs."
Where will Florida be in 2013? Assuming that the national fiscal problems are not resolved but are "postponed," Tuccillo said he expects employment in the state to grow by 10 percent in 2013; residential sales to increase by 10 percent; prices (same sales index) to rise by 5 percent; commercial activity to revive; and inventory to grow as the market improves.
"I think the improvement in the market and rising prices will bring more potential sellers back into the market," he said. "Signs point to a better year in 2013."