Florida Housing Update: April Sales Decline 9% as Prices Fall 17%
Monday, June 9, 2008
By Paul D. Puryear, Raymond James Equity Research
♦ During April, Florida existing single-family home sales declined 9% y/y to 11,200 units, marking a notable deceleration in the state’s rate of housing deterioration. Of the major metro markets, Orlando fell 16%, Miami plunged 47%, Tampa declined 8%, and Jacksonville dropped 31%. In our view, it appears significant recent price reductions have started to reach “clearing” levels that are attracting new buyer interest. Relative to the peak April sales in 2005, though, overall sales in the state are still down a cumulative 53%. Importantly, the reading for April 2008 represents the best y/y comparison dating back to late 2005.
♦ The downside to seeing some moderation in sales declines, however, is that prices appear to be accelerating to the downside and, in our view, still appear poised for additional declines due to: 1) significant inventory pressure that has continued to build statewide, 2) the re-marketing of growing home foreclosures (many owned by banks), and 3) the lack of liquidity for new or refinanced mortgages on many Florida properties.
♦ Statewide median sales prices were down 17% y/y from $239,000 to $199,600. Of the 20 major metro markets, 19 had price declines, with markets such as Fort Pierce-Port St. Lucie (-34%), Fort Myers-Cape Coral (-29%), Punta Gorda (-27%), Miami (-24%), Fort Lauderdale (-18%), Melbourne-Titusville-Palm Bay (-18%), and Lakeland-Winter Haven (-18%) showing significant y/y sales price declines. The top three markets in terms of median price performance were Fort Walton Beach (+1%), Panama City (-2%), and Naples (-4%).
♦ Condominium sales declined 16% y/y to 3,900 units, with 13 of the 20 metro areas posting y/y declines. Among the key condo markets, Miami condo sales declined 56%, Ft. Lauderdale fell 13%, and Orlando dropped by 34%. Better sales trends were seen in Southwest Florida, including Fort Myers-Cape Coral (+57%), though we suspect this was likely driven by heavy levels of price discounting and bank-owned foreclosure auctions.
♦ The median condominium price during the month was down 19% to $179,200, with 16 of 20 markets reporting y/y declines in median prices. Notable weakness was cited in Jacksonville (-35%), Naples (-34%), Pensacola (-34%), West Palm Beach-Boca Raton (-28%), Fort Lauderdale (-25%), and Orlando (-22%). Positive y/y price comparisons were experienced in Lakeland-Winter Haven (+11%), Miami (+3%), and Panama City (+1%).♦ The results for the month of April are a marked improvement from prior months when sales were consistently declining at 25-30% rates but, in our view, are the result of an accelerated deterioration in pricing. Inventory in most Florida markets remains well above the national averages and should contribute to further deterioration in home prices, despite the slight improvement in sales pace.
♦ As a percentage of total 2006 unit closing volumes, WCI Communities, Lennar, and Hovnanian are the largest active public builders with the heaviest exposure to the state of Florida.
♦ During April, Florida existing single-family home sales declined 9% y/y to 11,200 units, marking a notable deceleration in the state’s rate of housing deterioration. Of the major metro markets, Orlando fell 16%, Miami plunged 47%, Tampa declined 8%, and Jacksonville dropped 31%. In our view, it appears significant recent price reductions have started to reach “clearing” levels that are attracting new buyer interest. Relative to the peak April sales in 2005, though, overall sales in the state are still down a cumulative 53%. Importantly, the reading for April 2008 represents the best y/y comparison dating back to late 2005.
.♦ The downside to seeing some moderation in sales declines, however, is that prices appear to be accelerating to the downside and, in our view, still appear poised for additional declines due to: 1) significant inventory pressure that has continued to build statewide, 2) the re-marketing of growing home foreclosures (many owned by banks), and 3) the lack of liquidity for new or refinanced mortgages on many Florida properties.
♦ Statewide median sales prices were down 17% y/y from $239,000 to $199,600. Of the 20 major metro markets, 19 had price declines, with markets such as Fort Pierce-Port St. Lucie (-34%), Fort Myers-Cape Coral (-29%), Punta Gorda (-27%), Miami (-24%), Fort Lauderdale (-18%), Melbourne-Titusville-Palm Bay (-18%), and Lakeland-Winter Haven (-18%) showing significant y/y sales price declines. The top three markets in terms of median price performance were Fort Walton Beach (+1%), Panama City (-2%), and Naples (-4%).
♦ Condominium sales declined 16% y/y to 3,900 units, with 13 of the 20 metro areas posting y/y declines. Among the key condo markets, Miami condo sales declined 56%, Ft. Lauderdale fell 13%, and Orlando dropped by 34%. Better sales trends were seen in Southwest Florida, including Fort Myers-Cape Coral (+57%), though we suspect this was likely driven by heavy levels of price discounting and bank-owned foreclosure auctions.
♦ The median condominium price during the month was down 19% to $179,200, with 16 of 20 markets reporting y/y declines in median prices. Notable weakness was cited in Jacksonville (-35%), Naples (-34%), Pensacola (-34%), West Palm Beach-Boca Raton (-28%), Fort Lauderdale (-25%), and Orlando (-22%). Positive y/y price comparisons were experienced in Lakeland-Winter Haven (+11%), Miami (+3%), and Panama City (+1%).
♦ The results for the month of April are a marked improvement from prior months when sales were consistently declining at 25-30% rates but, in our view, are the result of an accelerated deterioration in pricing. Inventory in most Florida markets remains well above the national averages and should contribute to further deterioration in home prices, despite the slight improvement in sales pace.
♦ As a percentage of total 2006 unit closing volumes, WCI Communities, Lennar, and Hovnanian are the largest active public builders with the heaviest exposure to the state of Florida.
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