Home sales hint at recovery

After a nearly six-year downslide, is Brevard County's housing market ready to make a turnaround?
Some signals point to at least a slowing of the decline, and real estate agents talk about a market that is becoming re-invigorated.
"We've seen a marked increase in sales," said Ray Craig, president of the Melbourne Area Association of Realtors.
Sales are indeed up. Over the past 12 months, 6,693 single-family homes were sold in Brevard. That was up from 5,734 in the same point of 2010, 5,464 in 2009 and 4,827 in 2008.
And there are other positives:

Year-over-year price declines aren't as steep. The median sales price of houses here in 2010 was $105,900, down 9 percent from 2009. The percentage drops in 2009 and 2008 were 24 percent and 21 percent, respectively. After 53 consecutive down months, three of the past six months have seen median price increases compared with a year earlier.

New foreclosure filings are down sharply. Just 212 foreclosure suits were filed in Brevard in April, the lowest monthly total since October 2006. In the first four months of the year, 951 foreclosure suits were filed compared with 2,881 during the same period of 2010.

Fewer new homes are com ing onto the market. In the past 12 months, the local Multiple Listings Service has had 6,596 new listings, according to Craig. That's down from 9,104 at the same time last year. Fewer homes for sale leads to higher prices and shorter sales times."It looks like we're poised for steady growth," Craig said.
But some worry that low consumer confidence, problems attaining mortgages and, maybe most potentially damaging, high unemployment, could extend the sluggish market for another year or two before there's a true rebound.
Persistent joblessness has the potential to stall any recovery in the housing market, both locally and nationwide.
That is particularly true in Brevard where the jobless rate is 10.8 percent, above the national average of 9 percent. Exacerbating jobless worries are ongoing layoffs of thousand of space workers at Kennedy Space Center as the shuttle program winds down.
"People's perception of the space center's woes are hurting consumer confidence," Craig said. But he also pointed out that the county's economy is much less dependent on the space industry than in years past, and new businesses moving into the county are creating jobs that will help offset losses at KSC.
Similar concerns have hampered home sales across the country. That hurts Florida, since a large portion of home sales traditionally involve people relocating from colder climes. While some can afford to buy a second home, most have to sell their houses before relocating here.
Another concern is that more foreclosed homes could flood the Brevard market in the coming years, putting downward pressure on prices. Many predict the sharp decline in foreclosures in recent months -- both here and across the country -- is only temporary as lenders regroup from the "robo-signing" fiasco that led to a temporary halt to the foreclosure process last fall.
In a teleconference Wednesday announcing the findings of a survey on American's attitudes about the housing market, RealtyTrac Senior Vice President Rick Sharga acknowledged that there is an "overhang of foreclosures yet to come." But he added that lenders are showing signs they will only repossess houses as fast as they can sell them. "There is no incentive for them to rush through foreclosing on more properties when they are sitting on hundreds of thousands of properties they can't move."
Sharga and Pete Flint, CEO of the real estate website and survey co-sponsor Trulia.com, said they expected the housing market nationwide to bottom out this year, but they expect it to remain flat for perhaps two years before prices start climbing again.
"We do believe this year will see the bottom," Sharga said. "We are not expecting a bounce off that bottom."

Double dipping

One problem facing the housing market, the survey found, is that a majority of respondents believed the market wouldn't experience a full recovery for some time: 54 percent believed the market wouldn't recover until 2014 or later. When the companies last conducted the survey in November, just 34 percent thought recovery would take that long.
Fueling the pessimism, at least in part, is the growing number of areas that have seen a "double dip" in home prices: Years of decline followed by a period of stability followed by further price declines.
Brevard is among those areas. In November and December, the median sales price of homes on the Space Coast were higher than they were a year earlier, the first time that had happened since the middle of 2006. But the trend reversed in the first quarter of 2011, before turning upward again in April.

Affordability

All of this is happening at a time when buying a home is more affordable than it has been in more than a decade due to the sharp drop in prices combined with historic low interest rates.
A Brevard County family earning the median household income could afford to buy 86 percent of the homes sold here in the fourth quarter of 2010, according to a report from the National Association of Home Builders and Wells Fargo. In the fourth quarter of 2006, only 49 percent of homes sold here were affordable for the typical family.
The combination of depressed prices and low interest rates are making buying a home increasingly more affordable than renting. That could turn more renters into buyers, even if they believe prices won't rise again for two or more years.
"With concerns of rising inflation and the potential for rising interest rates, now is a good time for people to buy, and we may not be in this environment for much longer," Trulia spokesman Ken Shuman said.
Even if prices decline slightly or remain flat for the next couple of years, potential buyers might miss out if they wait too long, Craig said, noting that trying to time the absolute bottom is next to impossible. "Being on the bottom 5 percent going down or the bottom 5 percent going up is a good thing," he said.
Many of those in the market to buy, though, face a problem getting the money to do so. Lenders, reeling from years of watching millions of loans go sour, have been reluctant to approve mortgages. Even very creditworthy buyers are finding lenders turn them down over concerns that the properties they want to acquire will drop in price.
Banks making more loans "is one of the things that has to come for the housing market to come back," Sharga said.

Alternative loans

With lenders tightening up, anecdotal evidence suggests that more buyers across the country are turning to their families instead of banks for mortgages. Craig said he just closed a deal where the buyer's parents took money from their retirement savings to lend their son to buy a home.
And the lack of credit has meant that investors with cash in hand are buying a substantial portion of homes on the market, even though the biggest players in the foreclosure market would rather sell to people who plan to live in the homes they buy. Fannie Mae, for instance, won't accept offers from investors for the first 15 days a foreclosed home is on the market.
Despite that, though, investors continue to buy foreclosed homes. In the past, such investors typically fixed up properties and rented them out or resold them quickly. Increasingly, they plan to hold onto them as they expect prices to rise, Craig said.
Source http://www.floridatoday.com/