Thursday, February 16, 2006

Are We Over The Edge?

Anyone get the feeling that home prices have seen the peak and are about to descend like falling off a mountain? For your information, here is a news story from today's Sun-Sentinel link. Believe it or not, there are people in South Florida that might not double their money by selling their home. In fact, some might actually-gasp- lose money! And I thought this was impossible! Didn't the NAR predict sales would rise again in 2006?

"Linda Rudner of Boca Raton bought a two-bedroom condominium near the beach as an investment last year. She fixed it up, then listed it at $450,000 but later dropped her asking price to $399,000. Rudner might have to come down even more, especially now that she can't count on Scripps Florida moving to Boca Raton and raising property values. She wants to sell soon and said she's done dabbling in real estate."

"The rising inventory of existing single-family homes is slowing sales across South Florida. Closings dropped during the fourth quarter, compared with the same period a year ago, the Florida Association of Realtors said Wednesday.Sales fell by 35 percent in Broward County and 23 percent in Palm Beach County, the Orlando-based Realtors group said. Miami-Dade sales declined by 38 percent."

"Broward's median sales price rose 26 percent to $377,300, while Palm Beach's median increased 23 percent to $415,800. Miami-Dade's median rose 29 percent to $375,900."

"The median price means half the homes sold for more, half for less.Although prices rose significantly compared with the fourth quarter of 2004, they have remained flat for the past six months, and experts say that will continue in 2006."

"As inventory builds, homes sit on the market longer, causing antsy sellers to reduce their asking prices."

"Steve Petranick, a Broward real estate agent for Douglas Elliman Florida, said he used to have only three or four properties to show clients looking for homes in the $200,000 to $300,000 range. Now he has 20 or more."There are a ton of listings," he said. "It's definitely become more of a buyer's market."

"Ann DeFries, an agent with Balistreri Realty in Boca Raton, said Hurricane Wilma skewed the fourth-quarter numbers. The storm postponed sales after hitting South Florida on Oct. 24.Still, the housing market has slowed, and sellers need to be more realistic, DeFries said."They can't compare their home to a home that sold a year ago or even six or eight months ago," she said.

"And homes have to be properly marketed. The days of just putting it in the [Multiple Listing Service] or putting a sign in the front yard are over."

"Also hurting sales are rising interest rates.A 30-year fixed-rate mortgage averaged 6.22 percent in the fourth quarter, up from 5.73 percent in the fourth quarter of 2004, according to Freddie Mac. Rates are expected to inch toward 7 percent in 2006."

"As rates do go up, we'll see [fewer] people being able to buy more expensive homes," said Sara Gutierrez, founder of South Bay Lending in Miami. "If you're a wage earner, you'll be kind of limited. But I don't see the market going crazy in either direction."

Take this poor lady and mutliply her story times 100 or so.... that is what's going on in South Florida. The number of listings is exploding.( See my post below They call me Flipper for that info.) Prices have dropped and as I keep saying the rush to the exits has begun. This woman dropped her price $50,000 or 11% already and still can't sell. Hot money is already wanting to get out. I predict another three months of stagnant/falling prices and increased inventory will lead to a full on stampede.


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