Nearly 20% of Florida homes are vacant
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A reader of the Probate Attorney Blog.com recently asked when the real estate downturn was going to end. Unfortunately the facts appear to show it will take some time given the over supply of properties as this article shows.
While Florida residents are very fortunate to have weather in the 70s and 80s most of the winter and no income tax it was one of the hardest hit states relating to the real estate crash. As a result values have plunged massively, foreclosures have surged and there are a substantial number of homes vacant.
On Thursday, the Census Bureau revealed that 18% -- or 1.6 million homes in Florida are vacant. That's an increase of more than 63% over the past decade.
Having so much oversupply of Florida real estate on the market will keep home prices depressed and slow any recovery.
During the housing boom, Florida was among the hottest real estate markets in the nation. The population was growing and eager to buy homes and investors were rushing to buy homes believing prices would continue to surge and for a while they were going up by well into double digit percentages each year sometimes even every couple months.
The real estate bust brought an end to that. Development ground to a halt. Retirees stopped relocating. And prices started falling and vacancies rising.
"Housing went from being the preeminent investment of choice to toxic waste," added Richard DeKaser, an economist with the Parthenon Group.
The vacancy problem is more dire in Florida than in any other bubble market: In California, only 8% of units were vacant, while Nevada, the state with the nation's highest foreclosure rate, had about 14% sitting empty. Arizona had a vacancy rate of about 16%.
In Florida, Collier County is the the worst-hit area. An incredible 32% of the homes are empty in the Naples area and throughout Collier County Florida. Nearby Lee County (Cape Coral) has a 30% vacancy rate.
The housing recovery will take years, perhaps many years, to complete, according to Ingo Winzer, a housing market analyst and founder of Local Market Monitor.
Not helping is the the fact that the state's rate of population growth slowed in the second half of the last decade to just 5.7%. Still, the 2000s saw the state population grow overall by nearly 18%, the Census Bureau reported.
"It will take about eight years just to put the vacancy numbers back into the single digits," said DeKaser.
The inventory overhang has sent home prices plunging. The median price for homes sold in January was just $122,000, according to the Florida Association of Realtors. That was down 7% from 12 months earlier and less than half the price at the peak of the market.
Winzer thinks prices in Florida will drop even more, another 5% in 2011 and 3% in 2012. "Even after that, they're not going to rebound, they'll just sit on the bottom," he said.
Celia Chen, a housing market analyst for Moody's Analytics, is also downbeat in her forecasts for Florida. Not only will prices fall another 11%, she said, but the bottom won't hit until mid-2012, about a year later than the nation as a whole. Some metro areas won't get back to their pre-recession peaks until long after the present owners are old and gray.
She doesn't expect Naples, for example, to come all the way back until the late 2030s. Other Florida metro areas with a 20-year wait or longer include Punta Gorda and Palm Bay.
"If you're buying in Florida for retirement," said Winzer, "maybe you buy next year when prices will be near the bottom. If you're buying for investment -- don't."
See Les Christie staff writer CNN Money - Nearly 20% of Florida homes are vacant.
Attorney David Luber in Hollywood Florida and the author of the Probate Attorney Blog.com has seen clients who have Florida real estate which has declined over 80% in the past five years and many homes have lost nearly half their value with some losing more. For those who have bought in the past few years and do not plan to move may actually like the plunge in the respect that their property taxes are likely to decrease as well even if not to the same degree as the fall.
The plunge in values has created some outstanding values though and for those seeking to own their own home and get great weather Florida may become a compelling option sooner than some analysts are projecting. The economy is improving and the stock market has already surged with the Dow is up nearly 87% since the market bottom March 9, 2009, the S&P 500 up 95% and the Nasdaq up 117% from March 9 2009 until March 2011. Some investors may decide to buy homes that have not had the same recovery or those who had been blocked out from the surging prices could return along with the improving economy.
The major correction could be perceived as the law of gravity what goes up must come down. Florida, California, Las Vegas, and Arizona the states mentioned above as having the biggest corrections and Florida now leading the way with vacant properties but these states had the largest increases to their values so it is logical they would also experience the biggest drops as well. Just as the stock market surged back the real estate market eventually will resolve the over supply and rise as well.
Source: Les Christie, staff writer CNN Money