Inventory of Homes for Sale Shrinks in South Florida
WEST PALM BEACH, Fla. Aug. 17, 2010 The number of homes and condominiums for sale across South Florida has steadily declined over the past two years, an encouraging sign for the region’s battered housing market.
Still, industry observers worry about a sizable shadow inventory of foreclosed homes that could complicate any real estate recovery.
Broward County had 19,869 properties on the market in July, down 35 percent from July 2008, according to a multiple listing service report compiled by the Keyes Co.
Palm Beach County’s inventory of homes and condos slid 31 percent to 23,947 during the same period.
The supply of new homes being built in the two counties also has decreased sharply in the past two years, said Brad Hunter of the Metro study research firm in Palm Beach Gardens.
In 2005, sellers rushed to list their homes, hoping to fetch record prices during the housing boom. But the frenzy led to a collapse and prices plummeted.
Thousands of foreclosures and short sales have clogged the market ever since, giving buyers plenty of choices and little reason to pay top dollar.
You won’t get price appreciation until you get the inventory in balance, said Mike Pappas, president of Keyes. We’re making great strides.
Declines in homes for sale already have helped stabilize prices recently.
The median price in Broward rose 7 percent during April, May and June to $209,800 from a year ago, the Florida Realtors said Wednesday. Palm Beach County’s median increased at the beginning of the year but dipped 2 percent in the second quarter to $235,500.
Pappas said his firm is handling fewer transactions involving foreclosed homes, and he thinks that’s an indication the foreclosure market has peaked.
But some analysts disagree, pointing to a recent surge in homes repossessed by lenders that is pushing inventory levels higher in recent months.
Banks are on pace to take back nearly 50,000 properties in Palm Beach, Broward and Miami-Dade counties this year, according to CondoVultures.com, a real estate consulting firm. Many lenders are careful to hold off listing those properties for sale all at once to prevent widespread price declines.
Sean Snaith, an economist at the University of Central Florida, expects more foreclosures to result from homeowners losing their jobs. And he said the sagging labor market likely will discourage potential homebuyers.
You have to have a healthy labor market as a foundation for a healthy housing market, Snaith said.
Another concern is the expiration of the federal homebuyer tax credits.
Buyers who signed contracts by April 30 and close by the end of September are eligible for the $8,000 and $6,500 tax rebates. But people who put homes under contract after April 30 don’t qualify.
While pending sales still are robust, demand for homes is expected to wane in the second half of the year. Fewer sales would keep the supply of homes elevated and ultimately hurt pricing, said Chris Lafakis, an economist covering Florida for Moody’s Economy.com in West Chester, Pa.
â€œOur forecast is that … demand won’t be strong enough to work off the excess inventory fast enough to stave off future price declines, Lafakis said. But by this time next year, the worst of the declines will be over.