(Xinhua) – Sept. 1, 2011 – One of the first U.S. states to have its economy crushed by the U.S. housing market recession is now experiencing a rather happy surprise – its housing market is undergoing an upturn.
Despite an unemployment rate of 10.7 percent, which is higher than the national rate of slightly over 9 percent, enough people are buying houses in Florida, especially in the Miami area, so that the state’s housing market is no longer considered an imminent problem by housing and regulatory agencies.
What makes this even more unique is the fact that the status of Florida’s housing market seems to be in the opposite condition of the national housing market.
End of July statistics by the U.S. Department of Commerce show that total sales of newly built homes in the U.S. declined for the third consecutive month. Total sales in July fell almost one percent.
On another housing market matter, Standard and Poor’s (S&P), the rating agency which created a global storm by downgrading U.S. credit rating in early August, is currently being investigated by the U.S. Department of Justice to see whether or not S&P mis-rated home mortgage securities. S&P declined to be interviewed by Xinhua for this story.
With all of the above fiscal-related problems negatively affecting the U.S. housing market, how are the Miami and Florida housing markets now having success? Todd Nordstrom, a Realtor for Keller Williams Realty in Miami Beach, got the answers.
“The recent building boom has brought a tremendous increase in residents to the (Miami) downtown areas. At this time, approximately 85 percent of all condominiums built in the last boom are currently occupied, which is fueling new restaurant and entertainment options. Foreign nationals account for over 50 percent of all sales in the (Miami-Dade) county,” said Nordstrom.
According to Nordstrom, “foreign nationals with cash due to rising currencies” were attracted to Florida by its lower home prices. They are mostly nationals from Brazil, one of a few countries that have witnessed rapid economic expansion in the past decade despite the recession that hit the U.S. and other major industrialized countries.
A spokesman for RealtyTrac, which publishes the monthly U.S. Foreclosure Market Report, also gave its explanations for the housing boom in Miami and Florida.
“We believe a slowdown in foreclosure activity, that started 10 months ago because of problems with foreclosure paperwork and documentation, is actually helping the Miami and Florida housing markets to experience this upturn,” said Daren Blomquist of RealtyTrac.
Miami and Florida’s good-fortune housing market environments have happened elsewhere in the U.S. – most notably in Phoenix, Arizona – and “prices have passed the tipping point where buyers are willing to jump in, and the temporary lull in the foreclosure activity has helped to boost buyer confidence as well,” Blomquist said.
Yet there are two other possible reasons for Miami and Florida’s upturn in their respective housing, according to Brad Sullivan, a spokesman for the U.S. Department of Housing and Urban Development (HUD).
“Florida/Miami has a relatively high concentration of retirees that may contribute to the demand for housing, relative to states/metro areas with a higher share of unemployed persons. The Southeast in general was/is growing faster than many other parts of the country – the upper Midwest, for example,” noted Sullivan.
The Miami-Dade housing market has had 12 consecutive quarters of increased sales. Condominium and home sales in the Miami-Dade area rose almost 50 percent in the second quarter of 2011.
The Internet is another source for would-be homebuyers to refer to if interested in buying a house in Florida. RealtyTrac.com and Foreclosure.com, which has monthly charges for customers who are given a grace period of seven days without fees, allow Internet users to examine Florida foreclosure records. Another website, Equator.com, does the same, but for no charge at all to customers.
While the Federal Housing Finance Agency (FHFA) is considering making tens of thousands of government-owned foreclosed homes into rental units, the medium price for a single-family home in the West Central Florida region dropped 3.2 percent from June to July. The medium price for such a home is now 125,000 U.S. dollars.
According to S&P’s Case-Schiller home price index, from June of 2010 to June of 2011, Tampa had the largest decrease in the price of a single-family home than anywhere else in the U.S. In that time span, the price of a home in the region of Tampa declined by 9.5 percent.
When RealtyTrac released in late July its mid-year report of the 20 metropolitan areas in the U.S. that had the most foreclosures, only one Florida area – Cape Coral/Fort Myers, which rated at 12 – was listed. One year ago, Florida had nine areas and cities listed in the top 20 of RealtyTrac’s listing.
But in Washington D.C., a number of federal agencies have churned out data and reports about the housing market that seem to conflict – and the upturn in the Miami and Florida housing markets is no exception.
On Wednesday, the FHFA issued a 83-page report about the status of housing markets all throughout the country, which stated that Florida’s housing market was down 8 percent in the second quarter of 2011 compared with the same period of last year.
Yet Andrew Leventis, a senior economist for the FHFA, admitted that all is not glum for the Miami and Florida housing markets.
“The strength (of both housing markets) is that there are incredibly affordable price levels for houses and that interest rates are at historic lows. If you want to buy a house in Florida and you have good credit, there’s a good chance that you can get a 30-year loan, which Americans love to do. There’s a lot of inventory (i.e., unsold homes) out there,” noted Leventis.
Miami-Dade County is not the only area of Florida’s housing markets that is now experiencing robustness. In Orange and Seminole counties, both located in the middle of Florida, Realtors note that there is anywhere from four to five months of backlog inventory houses available – meaning that all types of homes, from single- family houses to mansions, are available to would-be buyers.
In Leon County, only 9 percent of all homes available for purchase were sold in 2010, yet 2011 figures showed that this statistic is on the rise.
DataQuick.com, a website which posts real estate news and custom data, reported that in the immediate Miami metropolitan area, the number of foreclosures decreased to it’s lowest level since 2007.