Home prices fall, triggering sales
Palm Beach Post

By: JEFF OSTROWSKI

11/25/08

The region's housing picture remained gloomy in October, a month when prices continued to plunge even as sales volumes recovered.

The median price for a Palm Beach County home fell to $264,600, the Florida Association of Realtors said Monday.

That's down 24 percent from a year ago, off 9 percent from September and the first time since February 2004 that Palm Beach County's median home price slipped below $270,000.

Bargain hunters took the bait. Realtors sold 618 houses in October, up 37 percent from a year ago and up 18 percent from September.

"There's buyers out there who are buying, but the mind-set is they want a deal," said Bob Graeve, an agent at Illustrated Properties Real Estate in Palm Beach Gardens. Graeve, for instance, recently advertised a foreclosed home and got three dozen calls.

Even so, the number of October home sales didn't exactly soar - they simply returned to October 2006 levels.

Nationally, of the homes that did find buyers in October, nearly half were the result of a sale after a foreclosure.

That trend helped send home values down at the fastest annual rate since the Realtors association began keeping records in 1968. The nationwide median price of a home was $183,300 last month, down 11.3 percent from October 2007.

The Treasure Coast showed similarly plummeting prices, but with a rebound in sales volume.

The median price of an existing single-family home in Martin and St. Lucie counties was $134,600, down 33 percent from a year ago, while sales jumped to 383 in October, up 76 percent from a year ago.

Housing analyst Brad Hunter of Metrostudy expects Palm Beach County prices to fall another 10 percent to 15 percent, and he sees the housing market weakening, in spite of the sales volume bounce.

"It's good news if you're a Realtor," Hunter says of the uptick in sales. "More transactions fuels that business. But it's bad news for the home builders, because what it means is that there's more pressure on them in terms of how much price discounting they have to do to sell homes."

It can be bad, too, for sellers who are facing intense price competition among banks selling foreclosed properties and by short sales, in which the bank agrees to accept a price that is less than the balance owed on the property and forgive the difference.

Frank Ortiz first placed his 2,600-square-foot, fully remodeled home on the Miami market in September 2007, then took it off the market seven months later because of a lack of buyer interest.

He listed it for sale again this summer for $389,000, and despite lowering the price $10,000 and holding several open houses over the past few months, he's yet to get a nibble.

"I haven't even gotten a call with interest in the house," Ortiz said. "It's not like a dilapidated house or anything. It's a remodeled house."

His agent, Pam Mayers of Esslinger-Wooten-Maxwell Realtors in Miami, says, "It's easy pickings for anybody buying a house right now. For sellers it's horrible. People are like vultures, flying around and picking whatever's left."

Eric Sain, president of the Realtors Association of the Palm Beaches, is urging his clients not to sell now.

"I'm telling my clients that if you can rent it and hold on, that's great," Sain said. "Most economists I've heard are looking for another 10 to 15 percent decline in prices before we hit bottom."

The housing market's meltdown has sent the entire economy into a tailspin.

On Monday, the Florida Home Builders Association said that as banks tighten their lending practices, they're pushing even solvent builders to "the brink of financial disaster."

"Not only are banks making additional capital calls, they are calling in loans not in default, eliminating lines of credit, and in many cases, altogether doing away with construction financing," Florida Home Builders Association President Jay Carlson said. "The current method banks are using to recapitalize is exacerbating Florida's economic problems."

Meanwhile, the National Association of Realtors is calling on Congress to approve $100 billion in incentives for home buyers as the housing market continues to crater.

Nationally, existing-home sales fell 3.1 percent to a seasonally adjusted annual rate of 4.98 million units in October, 1.6 percent below the 5.06 million-unit pace in October 2007, NAR said.

***