Housing market expected to continue thriving

By Linda Rawls, Palm Beach Post Staff Writer

Saturday, March 20, 2004

Sharply rising home prices in Palm Beach County and the Treasure Coast -- as much as 80 percent in the past five years -- have prompted nervous talk about a "housing bubble."

Don't worry, says a new study recently released from the University of Florida's respected Shimberg Center, which studies housing issues. Single-family homes in Palm Beach County will appreciate 6.27 percent during the decade between 2001 and 2010, the study predicts.

That is the third-highest anticipated rate of appreciation among the state's 20 geographic areas.

"I think that's low, if anything," said Cheryl Linck, business development director for Illustrated Properties in Palm Beach Gardens. "When you look at the 78 million Baby Boomers, there are only a few places in the country they can go to have the warm weather and nice lifestyle they want: California, Arizona, Texas and Florida."

California has problems, Linck said, and not everyone likes a desert, so she predicts growth will occur in Texas and Florida. But she puts her money on the Sunshine State.

"Although Texas has the Gulf, it doesn't have the beautiful coastline we do," Linck said, "so I think Florida will be a real home run for many years to come."

Homes in Miami-Dade County will appreciate the most in this decade, increasing in value at a rate of 7.49 percent, with Broward County No. 2 at 6.84 percent, the Shimberg study says. That makes South Florida indisputably the area of highest predicted home appreciation in the state.

"Demographics are everything," Linck said. "When you look at the groups we draw from -- South Florida, the Northwest and internationally -- we are going to continue to have people come here."

Demand generally spurs price increases, especially when combined with historically low interest rates, according to the study.

Shimberg researchers looked at changes in population, real income, mortgage interest rates, housing starts and price changes in previous periods. They used economic information from UF's Bureau of Business and Economic Research and assumed that mortgage rates would average about 7.5 percent for the decade (the average rate for the 1996-2001 period). They also assumed a low inflation rate of 2.5 percent, the average rate for the same period.

Although the predicted home-price appreciation is good news for local home owners, the report also contains some bad news for house hunters: Houses already cost a lot more than thought.

The median price of a single-family home in Palm Beach County in 2001, the most recent year for this part of the Shimberg report, was $171,900, the study says. That is nearly $25,000 more than the median price of $149,600 for 2001 that the Florida Association of Realtors has reported.

The disparity is because the Shimberg study used property appraiser records in each county to document sales prices. The Realtors' association, on the other hand, used a sampling of sales from the Multiple Listing Service in 20 geographic areas.

In Martin County, the median price of a home in 2001 was $163,000, and $94,000 in St. Lucie County, the Shimberg study says. For the entire Treasure Coast (the two counties combined), the median price in 2001 was $117,000, compared with $108,200 in the Realtors' 2001 report, the Shimberg study says.

The Realtors' report doesn't break down Martin and St. Lucie prices separately, as the Shimberg study does.