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ORLANDO – Aug. 28, 2008 – Throughout the year, Florida has frequently been held up as an example of just how bad the housing market can get, with reports of a fast-rising foreclosure rate and a steeper slump in sales than in many other parts of the nation, caused in large part by overbuilding during the height of the market.

There’s no question the continued problems in Florida’s housing market have been well-documented.

But not everyone thinks the state has a longer period of correction ahead before the situation improves. Two people involved in Central Florida housing think the national media are missing the real picture here, that the market is showing some signs of improvement.

“Geographically, Central Florida is going to be the recovery point for the state of Florida,” said Roger Soderstrom, owner and founder of Stirling Sotheby’s International Realty. He said “pent-up demand” is finally bringing people back into a buying mode.

“In the sub-market we’re in, I see stability, and I feel we are on an upward swing,” Soderstrom said. “We are beginning to see positive trends.”

Local Realtors have been making similar predictions since the slowdown began in 2006, only to see the housing picture get worse as sales slumped, unfinished subdivisions got abandoned, new condo developments maintained a tiny occupancy rate, and foreclosures soared.

The difference this time around, Soderstrom said, is that for much of 2006 and 2007, prices remained stubbornly high as buyers waited to recoup the large investments they’d made just a few years earlier.

Today, he said, buyers have gotten serious about cutting the price tag, and people who had been nervous about the market are starting to see good bargains.

“The market has corrected itself from the extremes of 2005 and 2006,” he said. “Prices are trending down, back into a more realistic range where we probably would have been if we hadn’t had the big peak in 2004 and 2005.”

Soderstrom said that despite all the bad reports about Central Florida’s housing market, the reality is that people who have owned houses for a decade or more have actually seen strong appreciation in the value of their homes, and that Central Florida’s housing market made historic gains throughout this decade.

“If you look at what’s happened in the overall real estate market since 1995, there’s been a 270 percent price appreciation from 1995 to the peak of the market in 2006,” he said. “Even if you go from 2003 to the peak in 2006, we had a 100 percent price appreciation.”

The Mid-Florida Regional MLS has reported that median sales prices rose from $91,389 in 1995 to $148,798 in 2003 – an average annual growth rate of 7.8 percent. At the peak of the market in 2006, the average Central Florida price had soared to $248,137, a level that Soderstrom said was simply unsustainable.

“The biggest challenge in the market today is for people who purchased in 2005 and 2006,” he added.

“These are the folks who really got hung out at the high end of the market, and if they go to sell, they don’t have the equity in the home because we had a price decline into a more realistic price range. That segment of the market is just going to have to correct itself – which will happen over time. Some of those homes will be foreclosed. Others will continue to live in their homes, and it will continue to increase in value.”

The good news, Soderstrom said, is that his company has seen an improvement since the start of the year. As prices keep falling, buyers have been taking notice.

“The market continues to improve month over month in 2008,” he said.

“Since January, we kind of had the lower point in the market, where our total sales were 900 homes. Since then, our monthly sales are increasing, and now we’re upwards of 1,400 to 1,500 sales per month. We keep seeing strong sales activity, and we’re seeing more traffic. We’re seeing the fence sitters coming back into the market.”

“It’s like everything else,” Soderstrom said. “Even when the market slows down, people’s desire to purchase a new home doesn’t go away. They’re just postponing their decision because they don’t have confidence in the market yet.”

He predicted Florida would remain a growth state and that this region in particular would continue to attract newcomers and retirees, and as a result, “We feel that the market will continue to improve, and 2009 is when I really think we’ll begin seeing strong movement of activity coming in. I see it as being a steady increase.”

Soderstrom is not the only one who thinks that. Cole Whitaker, an Orlando partner in the firm Hendricks & Partners – a multifamily development consultant – is predicting that the construction of a massive health-care and medical research facility at Lake Nona in east Orlando will help spur more development across Central Florida in the next few years, improving both job growth and the housing market

Source: The Ledger