So you want to sell a home in 2010? Think January, not June.
Not only are prices expected to keep falling, cutting into sellers’ profits the longer they wait, but demand will be strong early in the year from first-time and move-up buyers looking to qualify for tax credits that expire April 30.
“If I had a home that I wanted to get as much money for as I could, I’d sell it as soon as possible,” said Chris Lafakis, an economist for Moody’s Economy.com in West Chester, Pa.
Richard Griest, 58, is selling his three-bedroom home in Margate. It’s listed for $275,000, down from $299,000. “I’m a motivated seller, but I’m not going to give the thing away,” he said.
Griest’s real estate agent, Michael Citron, isn’t advocating any fire sale, but he has stressed to his client that time is of the essence.
Griest’s neighborhood is full of foreclosures and short sales, which will hurt prices of all neighboring properties. Even if Griest accepts an offer in the $250,000 range, that would be better than holding out and watching the distressed sales set a much lower standard for prices in the area, Citron said.
“More distressed sales are happening and will continue to happen in 2010,” said Citron of RE/MAX ParkCreek in Coconut Creek. “The market will continue to decline in value.”
While some real estate observers insist South Florida’s housing prices can’t fall much more than they have, others say the lingering recession and rising unemployment will hurt the market next year.
Potentially playing a large role will be a so-called shadow inventory of homes – repossessed properties that haven’t been put on the market for resale and mortgages that are in default and soon will be in foreclosure.
“Option ARM” adjustable-rate mortgages are due to reset higher in the next two years, leading to more foreclosures. And Miami-Dade, Broward and Palm Beach counties are among the leaders nationwide in first-mortgage defaults, according to Economy.com.
The firm expects South Florida home prices to bottom at the end of 2010, but not before they drop another 24 percent in Palm Beach County and another 30 percent in Broward. That would put Palm Beach County’s median price at less than $175,000 and Broward’s median in the $130,000 range.
Already, prices have plummeted by more than 40 percent in both counties since the housing markets peaked in November 2005.
Sales of existing homes have increased steadily for the past year, but half to two-thirds of the transactions involve foreclosures and short sales, agents say.
Scott Agran, head of Lang Realty in Broward and Palm Beach counties, said the housing recovery will happen once the economy improves.
“Not a lot of people are buying because it’s the right home on the right lot,” Agran said. “Most people are in the market to find a really good buy. There’s not a lot of normal purchasing.”
Still, some market followers take issue with the dire price forecasts for 2010.
Mike Pappas, president of the Miami-based Keyes Co., expects foreclosures will “seep out slowly” as lenders are careful not to deluge the market with more vacant homes.
“I think we’ll be able to handle it,” Pappas said.
Douglas Rill, broker/owner of Century 21 America’s Choice in West Palm Beach, also is optimistic. Lenders and borrowers are better prepared now than in previous years, which will lead to more people staying their homes, he said.
Rill said the large price declines have flattened over the past 12 months, and inventory of homes for sale has steadily decreased.
“I do not jump on the bandwagon of super declines in value,” Rill said. “I think that’s significantly overstated.”