Another 30% drop (Jacksonville, Miami, Orlando: ski resorts, sales, real estate market)

[lukeb321]

America's Weakest Housing Markets

Deborah Orr, Forbes.com

Jan 9th, 2009
ARTICLE TOOLS:

Last year was brutal for real estate markets in Florida, California and Arizona. This year won't be much better.

In Palm Bay, Fla., a 563,000-person metro area on the central Florida coast, it's not just lush palm trees dotting the landscape--foreclosure signs are all over.

Partly to blame? The area's median home sale price has fallen by half since 2006, from $238,000 to $110,000, according to Trulia.com, an online real estate data provider. This has left many homeowners owing more on their mortgages than their homes are worth.
In Pictures: America's Weakest Housing Markets
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As a result, almost 1,800 homes are in the process of being repossessed by lenders--twice as many houses as were sold in the six months between May and November.

And more foreclosures are inevitable as homeowners cut their losses and walk away from their mortgages. There are already so many empty homes that the city passed an ordinance two months ago requiring lenders to identify which abandoned properties they owned.

Farther south in Miami, it's a similar story. Online real estate data provider Zillow.com estimates that 96% of Miami's houses are losing value. Median sales prices were 22% lower than last year in the third quarter.

Out West, in Las Vegas, a crushing 98% of homes are losing value and foreclosures account for 45% of all transactions, according to Zillow.

All three top a list of the country's top 25 worst housing markets in 2009. Provo, Utah, and Fort Lauderdale, Fla., round out the top five.
Behind the Numbers

To find them, we asked Moody's Economy.com to compile a list of the country's real estate markets that are furthest from recovery. Moody's looked at the country's Census-defined metro areas--including metropolitan and micropolitan statistical areas--with populations over 500,000 and prepared forecasts through 2011. They then compared them with prices in the second quarter of 2008, the latest figures available, to calculate how far prices will likely fall before reaching bottom.

In Palm Bay, real estate values are expected to fall another 41.4% before bottoming late next year. Miami could be in for a similar decline, and Fort Lauderdale is forecast to drop another 30%.

There are more familiar names on the worst-off list: Los Angeles and Phoenix where foreclosure signs and half-built exurbs serve as constant reminders of the real estate frenzy that lead to this crisis.

In Las Vegas, where speculation moved out of the casinos and into the property market, prices have another 43% to lose, according to Moody's.

In Phoenix, too many houses and too much speculation sent property prices into a tailspin two years ago. But the bottom may be in sight late this year--after another 31% drop.

Tucson, Ariz., also looks like it's close to flattening out--after an estimated 33% fall by the end of next year.

For other towns on our list, there's still plenty of time to get 'em while they're cold. Most of these troubled markets--including Santa Ana, Calif.,Orlando, Fla., and Jacksonville, Fla.,--won't even start to recover until next year or the year after.

That's even though real estate prices, on average, across the country should hit bottom by the end of this year, according to Moody's forecasts, after an average 15% drop.

It's not just the cities already facing massive foreclosures that are poised to further stumble; this year the gloom is spreading to the country's second-home markets.

Many of these places were doing well until recently as retiring boomers and investors bought property where they played. But the market for second homes followed Wall Street into a deep dive last year. Because the downturn hit many of these markets late, the worst is yet to come.

Just over a year ago, for example, property prices in Salt Lake City were still rising, even though they were falling just about everywhere else.

By the third quarter of 2007, the median home sold for $247,000 versus $203,000 in 2006. Prices haven't fallen much yet; the median price in late 2008 was $230,000, according to the National Association of Realtors.

But Salt Lake City, which is surrounded by some of the best ski resorts in the West, is just starting to feel the effects of the drop-off in second-home buying. Prices are set to fall 29% over the next two years, according to Moody's forecasts.

Provo, Utah, and Boise City, Idaho, are also headed down with the drop in nearby ski home sales, says Mark Zandi, chief economist for Moody's Economy.com.

Honolulu hurt by the drop in buyers from Asia and California, is beginning a long and slow descent, with real estate prices forecast to drop 31% before hitting bottom in 2011.

There is another region where the worst may be to come: New York City-area metros. Housing values in Newark, N.J., could fall 26%.

Likewise, Edison, N.J., is also among the mid-sized metro areas expected to see the steepest drops this year. But the worst could be over by the end of 2009 for New York's satellite cities.

Manhattan, now at the epicenter of the financial crisis, is noticeably absent from the top 25 weakest markets list. So far, the city has been isolated from the popping bubbles in the rest of the country.

Property prices were rising in Manhattan until early last year. Zandi believes Manhattan could be spared a steep drop. He expects a fall of around 20%. Even if big bankers lose their bonuses, "Manhattan is still supported by international demand," he says.

That prediction may prove conservative. The value of new contracts signed have already dipped 15% to 20% in the fourth quarter, according to a Beige Book report from the U.S. Federal Reserve last month.

The report said much of the activity came from "desperate sellers," so it may not be a fair gauge of where prices will go from here.

Of course, that depends on how many more sellers become desperate.

America's Weakest Housing Markets - Yahoo! Real Estate

[tonyc]

Thanks!

[Momma_bear]

Those of you who are listening to realtors who are telling you things are picking up, please take heed. I don't see things really getting worse here (in terms of more inventory on the market) but I don't see them getting any better either........

[fauve]

Actually, I was thinking that there has been a lot more activity on this board lately. Maybe it's the first really cold winter in awhile, but there does seem to be increased interest in moving to S Florida.

[Huckleberry3911948]

many are attempting to convince this is the crash and should buy now. not so. the bailout which is poorly managed will fail and then there will be a crash but it will be delayed. dont buy for 18 months. be prepared to pay cash.

[Wild Style]

Originally Posted by Huckleberry3911948

many are attempting to convince this is the crash and should buy now. not so. the bailout which is poorly managed will fail and then there will be a crash but it will be delayed. dont buy for 18 months. be prepared to pay cash.

that is exactly right. We have not hit bottom. things will get worse as more jobs are loss. Foreclosures have not let up and prime and near prime alt A loans will be resetting this year through 2012 and those are the bulk of the exotic loans (subprime was just a drop in the bucket). Usually it takes a equal amount of time to deflate a bubble as it does to inflate it. This started in 1998 and fell off in 2007 (2008ish if you are in NYC). This year is going to suck.

[fauve]

^^^ I was concerned with this as well, however, it seems the Fed have at least anticipated this. The Alt-A's are set to the one year Libor rate, with a typical margin of 2.25 above Libor at re-set. After all of the dramatic interest rate cuts of late, this has caused the Libor to drop to 1.86 this week (was around 4 last year at this time). This would mean someone who got, say a 5% fixed interest only loan in 2004 who re-adjusts this year would actually be looking at their interest rate *dropping* to 4.11% The interest rate drop doesn't result in a drop in pmt however because principal wasn't amortized previously, but the ultimate monthly payment is comparable and doable. So even if the mortgagee would not be able to refinance due to underwater mortgage, they could still hang on till things (eventually) improve. Dicey for sure, but not the inevitable doomsday I was predicting would occur before.

Since Alt-As have prime credit, I don't see the fall-out from this sector beng nearly as severe as the subprime group, and as long as the Fed can keep the rates low, may stave off a dramatic default in the Alt-As in the near-term (or hopefully for as long as they were offered - about 3 years). But of course, this is assuming homeowner doesn't lose their job or get sick or....

http://www.bankrate.com/brm/ratewatch/other-indices.asp

[Wild Style]

link

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link (made in April 2008 before Lehman took the loss) *note the lehman reference

^^

Just so you know who this guy is
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*edit*

Forgot to mention again, job losses are not going to slow down. They expect 2 million jobs lost this year. 2010 = another horrible year. That means even more trouble for home owners. They also said they expect 1 in 10 retail spots to not make it back from this depression (that's right, I said it)

[fauve]

^^^ I agree we are in a depression now - we could argue all day about the measures of this, but in the end, I'd agree with you. I am concerned that in the necessity to hold down interest rates to lessen the severity of the "depression", we are at much greater risk of a hyperinflation. This would be devastating, and I'm not sure which direction is worse or which way it might go. Talk about walking a tightrope.

[Wild Style]

If we entered into hyperinflation interest rates would go to the moon. meh, I wish I had a special tv remote and i could fast forward through life until it things became decent again

sun sentinel article talking about broward's housing mess link