Summer 2009 eNews Home

Northwest Florida Real Estate Activity
by David Kane, BS

The first quarter of 2009 began the year with no cause for celebration, but there were scattered signs of positive changes on the horizon. For the five-county NW Florida region, total home sales were down by an average of 16 percent compared to the first quarter of 2008. However, on a statewide basis this marks the third consecutive quarter that Florida has reported higher (than the corresponding quarter of the previous year) sales of existing homes. According to the Florida Association of Realtors survey of MLS sales data within the twenty Metropolitan Statistical Areas (MSA’s) that comprise the state, sales of existing single-family homes were up by 25 percent compared to last year. Sadly, for the three MSA’s that comprise the NW Florida region alone, sales of existing single-family homes declined by 6 percent. Over the same time period the median sales price of an existing single-family home declined by a statewide average of 30 percent, while having declined by only 11 percent in NW Florida.

During the first quarter of 2009 sales of single family homes decreased in four of the five counties in the NW Florida region, but those declines were not nearly as extreme as previous quarters. Okaloosa County experienced the steepest drop, declining by just under 21 percent compared to last year. Next was Santa Rosa County, which dropped by 16.2 percent, but then the picture changes significantly with Escambia and Bay counties dropping by only 2.6 and 0.6 percent respectively. Walton County posted the only increase, at 3.3 percent. Sales of condominiums & townhomes were down in only three of the five counties, and here again, things seem to be changing. Bay and Okaloosa counties had fairly steep declines of 60.9 and 54.4 percent respectively, but Escambia County declined by less than 2 percent. Walton County posted an increase of 3.4 percent, and Santa Rosa County jumped by almost 35 percent from last year.

Sales of new homes, however, presents a sobering reality – enormous inventory of unsold homes across the state {and nation}. Thus, new home sales continued to decline sharply in all five NW Florida counties. Bay County saw the worst of it, dropping by 80.4 percent. Okaloosa County’s decline was almost as extreme at 76.6 percent. Next was Walton County, dropping by just over 57 percent, followed by Santa Rosa and Escambia counties, each dropping by over 45 percent. As stated above, sales of existing homes increased significantly on a statewide basis, but continued to drop-off somewhat in NW Florida. Even so, the decline in our region was relatively small and affected just three of the five counties. Okaloosa County had the largest drop, sliding down by just over 14 percent. But then the declines are quite modest – Santa Rosa County by 3.8 percent, followed by Bay County at 3.1 percent. Escambia County posted a small increase over last year of 3.6 percent, and Walton County jumped up by 15.3 percent.

As expected, lots with construction loans roughly paralleled the sales of new homes, declining sharply in all five NW Florida counties. Walton County tumbled by almost 93 percent compared to last year, followed by Santa Rosa and Bay counties, each dropping by approximately 60 percent, and then Escambia and Okaloosa counties, each of which declined by about 40 percent. Permit activity was similarly down across the region from last year, and in most cases by significant margins. The one exception was a bump in multi-family permits in Okaloosa County, up from 5 last year to 10 this year.

So it seems that nearly everything that was true at the end of 2008 remained true through the beginning of 2009 – namely that we still don’t have definitive answers to the thorniest questions plaguing the real estate industry, particularly the one that sounds like a childs refrain from the backseat: “Are we there yet?!” However, the steady increase in sales activity throughout much of the state certainly suggests that we might be. A sustained increase in sales would be the first sign that the situation is improving, even if that improvement hasn’t manifested itself in NW Florida (yet). If not “there”, surely we’re very close. In fact, it’s possible that we may have hit, and are now dragging along the bottom, and could do so for a while before things (prices) actually start to turn upward. As prices continue to drop, many people, particularly first-time buyers, are getting into the market. In addition to low prices, a substantial tax break (up to $8,000.00) for first-time buyers has generated considerable incentive for many to act. Finally, interest rates are still historically low, though not likely to drop much further in the coming months. According to Freddie Mac the average rate for a conventional 30 year “fixed” mortgage was 5.06 percent in the first quarter of 2009. The previous year it averaged 5.88 percent. If ever there were a “buyer’s market”, this is it.