S. Fla. housing slump continues; inventory expected to grow
By Paul Owers

09/25/07

Like many South Floridians, Sheridan Lydon is frustrated by the pillow-soft housing market. She has houses in Boca Raton and Pompano Beach but can't sell either and now is asking less than she paid for each.

"Isn't that lovely?" Lydon, 43, said. "And I'm not even the worst one. There are a lot worse off than me." She and other sellers are trying to weather a long housing hangover that showed no improvement in August, according to figures released Tuesday by the Florida Association of Realtors.

Sales of existing homes in Palm Beach County declined 13 percent to 568 from 655 a year ago. The median price of $366,200 was off 5 percent from $386,000 last August. And the number of homes on the market hit a record as the inventory topped 40 months.

The county's condominium market also was sluggish last month. Sales fell 16 percent, and the median price of $209,000 dropped 5 percent from $220,300 a year ago.

"The housing market is trying to find a bottom, but it's just not there yet," said Mike Larson, an analyst with Weiss Research in Jupiter.

A five-year run-up in sales and prices ended late in 2005. Demand for homes waned as investors pulled their money out of real estate. August is month No. 20 of the steep slump in South Florida.

Many prospective buyers now are reluctant to commit, saying prices remain too high. They also insist they haven't seen enough property tax and insurance savings promised by Florida lawmakers.

The nation's credit crunch is reducing the pool of eligible buyers as lenders scrutinize debt histories and demand more money down. Buyers who do qualify for loans are in no rush because they have a large inventory of homes from which to choose.

The number of properties on the market in Palm Beach County has leveled off in recent months but still is up over last year. There were 33,708 homes and condos for sale at the end of August, a 10 percent increase from 30,774 a year ago, according to Illustrated Properties in Palm Beach Gardens.

At the current pace, it would take 40.3 months to sell that inventory, assuming no new properties were listed. "That's an all-time high," said Chappy Adams, president of Illustrated. "That's horrible."

Analysts expect even more homes to become available as people lose their properties to foreclosure later this year. As a result, it could be next fall or later before the region's housing market starts to rebound. "This is not going to be a really good period for anybody, except the buyers," said John Burford, chief economist with The International Bank of Miami.

Lydon, the woman stuck with two properties she can't sell, paid $600,000 for her Boca Raton home last year. She's now asking $579,000.

Even after moving to Boca, she wasn't able to unload her home in Pompano. She's listing it for $450,000 after buying it for $479,000 and making major upgrades.

"How was anyone supposed to know the market would get this bad?" said Lydon, who owns an insurance agency.

With some homes and condos staying on the market for months, owners are deciding to rent them out with options to buy, real estate agents say. Homeowners benefit because they get rental income to defray their mortgage expenses.

The arrangement also helps tenants, particularly those who are struggling to get loans. They can live in the homes while taking time to boost their credit scores.

"It's a very appealing option right now for a lot of sellers and buyers," said Esta Mae Murton, an agent in Broward and Palm Beach counties.

The housing slump is apparent in Broward County and across Florida, with sales down in 19 of 20 metropolitan markets. Sales fell 26 percent statewide, while the median price of $231,900 was off 6 percent from $246,800 a year ago.

Nationally, existing-home sales were down 4.3 percent in August from a year ago, while the median price remained flat, up 0.2 percent to $224,500. The median means half sold for more, half for less.

Back in South Florida, not everyone is cursing the market. Some sellers and real estate agents say they're enjoying success because they're realistic.

Kellie and Scott Collins recently listed their three-bedroom home in Florida Gardens, near Lake Worth, for $269,000. A buyer stepped forward after about a week and is paying close to the asking price.

"I was real surprised," said Kellie Collins, 27. "I thought it would take three or four months to sell it."

The Collins' agent, Mike Kleinrichert, said sellers have to price their homes as if it were 2003 or 2004. "I ask my clients, 'Do you want to list your home or do you want to sell it?'" Kleinrichert said. "If you price the house right, it's going to sell."

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