Data released today confirms that Florida's real estate meltdown is worsening.
The number of homes sold in Florida in October dropped 29% compared to the same period last year.
The median sales price in October for existing Florida single-family homes dropped 8% compared to the same period last year
The number of condos sold in Florida in October dropped 20% compared to the same period last year.
The median sales price in October for Florida condos dropped 8% compared to the year ago period.Nationally, the real estate picture is bleak - despite assurances from realtors. The US inventory of unsold homes continues to increase - making a turnaround unlikely any time soon. In October, total housing inventory in the US rose 1.9% - equal to 10.8 months supply at the current sales pace.
Meanwhile, Key West real estate continues to suffer as the number of unsold properties remains at near record levels. Adding to the worry is the large number of developments underway and, for the most part, unrecorded in the local MLS. Price reductions in the 100s of thousands of dollars are not uncommon. (The November 25, 2007 chart from Zillow, above, illustrates the current state of the Key West market.)Nearby neighbor Miami has seen home prices has drop 10% over the last 12 months.
But have we seen the worst of it?Probably not. And here is why:
- Too much supply. As the basic law of supply and demand states: When supply is greater than demand, prices fall.
- Homes are still overpriced. In Key West, many properties are still listed at over $1000 per square foot while the few that sell are going for far less (often under $500 per square foot).
- Banks, mortgage companies, and financial institutions are rapidly bleeding money from bad loans on overinflated properties. If you are looking to purchase with credit: GOOD LUCK. And if you are a subprime borrower (or are an investor/flipper/speculator reliant on "liar loans"), sorry - that market has evaporated.
- Foreclosures continue to climb. When a bank ends up with a property, it typically sells at a 30% loss. This pressures surrounding properties' prices downward.
- Appraisers are coming under fire from banks (and municipalities) for allegedly overstating the value of property. Banks have suddenly become very skeptical of appraisers - and this may lead to the next leg down in real estate pricing
- Developers keep building - further glutting the market with properties