Nearly a decade of growth in home prices in the Sarasota-Manatee, Fla., region could be coming to an end.
Home prices in the two-county area now stand a 90% chance of falling over the next year, real estate database CoreLogic said Tuesday.
That is higher than the 50-50 odds of lower home prices CoreLogic predicted for the area just one month ago.
The region's housing market is among the 10 to 20 riskiest metro areas nationwide for price declines.
Home prices nationwide are now forecast to begin cooling this summer and plunge 6.4% over the next 12 months, CoreLogic said.
Sarasota-Manatee home prices still have not fully recovered from the Great Recession, remaining about 11% off their pre-bubble peaks.
Local home prices did rise 3.5% over the year in May, the 132nd lowest rate out of the 403 metros analyzed, the database reported. But that was slower than the Florida gain of 4.2% and the U.S. increase of 4.8%.
From April to May, prices in Sarasota-Manatee declined just under 1%, the 44th highest in the country.
"Pending sales and home-purchase loan applications are higher than in June of last year and reflect the buying activity of millennials," said Frank Nothaft, chief economist at CoreLogic. "By the end of summer, buying will slacken and we expect home prices will show declines in metro areas that have been especially hard hit by the recession."
Home sales have stalled — in Sarasota Manatee they dropped 21% in April and 40% in May — as shelter-in-place orders, and an unprecedented spike in unemployment, hurt home-buying activity. The for-sale inventory of homes is tight as well.
The May jobless rate was 13.2% in Sarasota-Manatee, the second highest in at least 30 years and topped only by the revised 14.1% in April, according to the Florida Department of Economic Opportunity.
More than 45,000 workers are now counted as unemployed in the two counties, a grim 313% increase from 2019.
States like Florida faced the "perfect storm" of elevated COVID-19 cases and the subsequent collapse of the spring and summer tourism market, which curtailed home-purchase demand enough to keep a lid on home price gains over the coming year, CoreLogic said. While harder-hit areas like Florida may also experience a slower rebound, low mortgage interest rates and a shortage of for-sale supply have supported prices in some metros and may also encourage home price stabilization nationwide.
Unlike the Great Recession, this economic downturn is not driven by the housing market, which continues to post gains in many parts of the country. While activity up until now suggests the housing market will eventually bounce back, the forecasted decline in home prices will largely be due to elevated unemployment rates, CoreLogic said. That prediction is exacerbated by the recent spike in COVID-19 cases across the country.
