County logs largest drop in home sales in Florida

by Linda Rawls

08/16/06

Sales of existing single-family homes in Palm Beach County posted the biggest second-quarter decline in the state as one of the hottest real estate markets in the nation continued to cool down, a Florida Association of Realtors report shows.

Indeed, home sales dropped in all 20 markets in Florida, with all but two posting double-digit slides compared with the same quarter a year ago.

In Palm Beach County, buyers closed on 2,733 single-family homes in the second quarter, a 36 percent drop from the same period a year ago, when buyers bought 4,293 single-family homes in a flourishing real estate market.

In the Treasure Coast, sales fell 28 percent in the second quarter of this year, to 1,523 from 2,110 in the same period last year, according to the report released Tuesday.

"There's a definite cooling off in the market, but I'm not seeing any fire sales," said Chappy Adams, owner of Illustrated Properties, the largest independent agency in Palm Beach County. "Inventory is up, but that's misleading because many of those houses will come back off the market if their owners can rent them."

Despite rising inventory, prices remain basically unchanged from 2005, the peak of the five-year real estate bonanza. In the second quarter of this year, the median price of an existing home in both Palm Beach County and the Treasure Coast rose 1 percent over the second quarter of 2005, the report shows.

In Palm Beach County, the median price of an existing single-family home rose to $394,100 from $389,500 in the second quarter of 2005; in the Treasure Coast, the median price rose to $254,500 from $252,400 over the same period.

For the first quarter of this year, the median price in Palm Beach County was $392,900 and 2,222 homes were sold. In the Treasure Coast the median was $260,200 with 1,317 sold.

"Flippers are not buying property now, but they are the ones holding a large part of the inventory," said Jim Sahnger, vice president of Palm Beach Financial Network in Sewall's Point. "Those buying homes today are primarily for their principal residence, and they are offering fair prices, but that's still in excess of what property sold for last year."

Condominium sales in Palm Beach County, though smaller in number, plunged deeper than single-family home sales, with a 44 percent drop in the second quarter compared with second-quarter sales in 2005, the report shows. Condo prices, on the other hand, rose a respectable 8 percent, to a median of $215,700 from $199,900.

Treasure Coast condo sales fell 41 percent over the same year-over-year period, the report shows, to 219 from 372. Median prices rose 7 percent, to $203,600 from $190,300.

"Properties have not been on the market long enough to force downward pressure on prices," said Adams of Illustrated Properties. "Unless a seller really, really needs to sell, they will try it out for a while at the price they were used to over the last six months."

However, there was a slight decline in the median price of condos between the first and second quarters of this year. For the first quarter of 2006, Palm Beach County condos sold for a median price of $220,200, and in the Treasure Coast for $204,500.

Statewide, home sales fell 26.7 percent in the second quarter, to 53,161 from 72,870 in the second quarter of 2005. The median price of a home in Florida rose 9 percent, to $254,800 from $234,500.

Nationwide, former boom states felt declines while previously slow markets enjoyed strong growth, according to a National Association of Realtors report also released Tuesday.

Florida was just one of a total of 28 states and the District of Columbia that reported second-quarter sales declines, and one of the five previously sizzling markets that also include: Arizona, down 26.9 percent; California, down 25.3 percent; Virginia, down 23.9 percent; and Nevada, down 23.5 percent.

Nationwide, the declines averaged 7 percent, to a median price of $227,500 from $219,400.

The median U.S. existing-home price in the first quarter of this year was $217,900. The median is the midpoint at which half the homes cost less and half cost more.

"Total home sales are down compared to last year, inventories are quickly piling up, mortgage credit quality has taken a turn for the worse and home builders remain pessimistic," said Tuesday's housing analysis on Economy.com. "So far, all indications are that the housing market is slowing in an orderly fashion, but we are still early in the housing slowdown."

In a separate national association report on prices for 151 metropolitan areas, 26 areas had declines and 37 had double-digit increases. Neither West Palm Beach nor the Treasure Coast was included in this report.

The highest price hikes were in Baton Rouge, La., up 27 percent; Ocala, 25 percent; Virginia Beach, Va., 24 percent; Gainesville, 20 percent; and Portland, Ore., 19 percent.

The biggest price drops occurred in Danville, Ill., down 11 percent; followed by Detroit, 8 percent; and Rockford, Ill., Davenport, Iowa, and Cleveland, all down 5 percent.

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