Residential real estate in Florida improved drastically over the course of 2012 and there are expectations these positive trends will continue heading into next year, said top U.S. economists at the Florida Realtors 2013 real estate and economic forecast conference in Orlando discussing the state of the industry.
John Tuccillo, chief economist for Florida Realtors, said median sales prices are consistently rising for both existing single-family homes and condominium-townhome units throughout the Sunshine State. But, he noted that the state’s active distressed property market is putting pressure on prices, resulting in similar gains and a slower rate that what is being seen in other markets across the country.
Other signs that Florida is in a stable housing recovery mode is that months’ supply of single-family homes is below 6 months, Tuccillo said. Also, October data shows 44% of closed sales were paid in cash, signifying strong demand from investors. Foreign buyers accounted for 19% of all closed sales through October.
Another positive sign for the state’s market is that traditional sales now make up over 50% of closed sales, therefore there are less REO sales being finalized and more short sales.
Additionally, shadow inventory has been declining since 2009, though Tuccillo said this is still an important factor for the state’s housing market going forward since Florida is a judicial foreclosure state.
“Florida’s housing market is back, with great possibilities for the future—but those possibilities are only beginning to be realized,” Tuccillo stated.
If the fiscal cliff problem is not resolved, but postponed, Tuccillo expects employment in the state to rise by 10% in 2013. He also is forecasting for a 10% increase in residential sales, commercial activity to revitalize, inventory to grow as the market improves and prices to go up 5%.
“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.”
On a national level, Doug Duncan, chief economist for Fannie Mae, said that since mortgage rates are currently at all-time lows and are not expected to change much next year, the housing market is on “firm footing.”
“Most of the improvement we’ve seen has come from the supply side of housing,” he continued. “Distressed properties are coming down from about 5 million to more like 3 million.”
But, Duncan anticipates banks will continue to maintain high lending standards in 2013 and credit environment will be tight.
“The trend has been established for the housing recovery, but robust growth awaits more jobs and a stronger economy,” said conference speaker Doug Duncan, chief economist for Fannie Mae. “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.”