MIAMI – June 16, 2009 – South Florida home prices have hit bottom, but threats to the housing market still loom as foreclosures rise, mortgage rates creep up and inventories remain high.
That’s according to a prominent economist and several top real estate brokers who spoke here Thursday during the International Real Estate Congress hosted by the Realtor Association of Greater Miami and the Beaches.
“We’re certainly near the bottom if not at the bottom,” said Lawrence Yun, chief economist for the National Association of Realtors.
The median price of an existing single-family home in Palm Beach County has plunged more than 40 percent since 2005. Yun cited a study released last week by research firm IHS Global Insight that said home prices in Palm Beach County are undervalued by 32 percent.
Mike Pappas, head of Keyes Co. Realtors, agreed that the withering collapse of the past three years finally has ended.
“We believe the worst is behind us,” Pappas said.
That’s not to say that the housing market is poised for a big rebound. Realtors see obstacles, including:
• Foreclosures. The number of foreclosure filings in Palm Beach County rose 33 percent from April to May, research firm RealtyTrac said Thursday. “Unfortunately, foreclosures will continue to increase,” Yun said.
• Rising mortgage rates. The average rate for a 30-year mortgage spiked from 5.29 percent last week to 5.59 percent this week, Freddie Mac said Thursday. Yun acknowledged that rates above 6 percent would slow the recovery, but he predicted rates will fall to 5.2 percent later this year. “I believe the bond market is overreacting,” Yun said, causing rates to rise.
• High inventories. The number of homes for sale has fallen over the past year, but there remains a glut of homes on the market. Inventory “is still much higher than it should be,” said Ron Shuffield, head of EWM Realtors.
• A sluggish high-end market. Although properties priced at under $200,000 are moving quickly, the high-end market is “stagnant,” in part because of high rates for jumbo loans, said Rei Mesa of Prudential Florida Realty.
Copyright © 2009 The Palm Beach Post, Fla., Jeff Ostrowski. Distributed by McClatchy-Tribune Information Services.