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Northwest Florida Real Estate Activity
by David Kane, BS

The first quarter of 2008 began the year with a whimper rather than a bang for real estate activity in NW Florida.   For the five-county region total home sales were down by an average of over 28 percent compared to the first quarter of 2007.  Again however, the downturn in NW Florida was not quite as severe as the rest of the state over all.  Based on the Florida Association of Realtors survey of MLS sales data within the twenty Metropolitan Statistical Areas (MSA’s) that comprise the state, sales of existing single-family homes were down by 26 percent compared to last year.  But for the three MSA’s that comprise the NW Florida region alone sales of existing single-family homes declined by a slightly less painful 22.3 percent.  During the same time frame the median sales price of an existing single-family home declined by 15 percent for the state, compared to a decline of 4.7 percent in NW Florida.  While hardly cause for celebration, the real estate picture remains a bit brighter here than many other parts of the state.

During the first quarter of 2008 sales of single family homes decreased sharply in four of the five counties in the NW Florida region.  Escambia County experienced the largest decrease at 33.7 percent, followed by Bay County at 26.7 percent, then Okaloosa and Santa Rosa counties, each dropping by approximately 24 percent.  Only Walton County showed improvement, coming up 4.2 percent over last year.  Condominium & townhome sales were also down in four of the five counties, and also by substantial margins.  For the second consecutive quarter Walton County suffered the greatest decrease, this time by almost 70 percent, followed by Escambia County at 51.3 percent, then Santa Rosa and Okaloosa counties, dropping by 36.1 and 35.5 percent respectively.  Bay County however had a significant increase in condo sales - up 13.5 percent over last year.

New homes sales also decreased in four of the five NW Florida counties compared to a year ago.  For the third consecutive quarter Walton County was hardest hit, dropping almost 84 percent from last year.  Escambia County also experienced a significant decline at 47.6 percent, closely followed by Okaloosa County at 44.6 percent, and finally Santa Rosa County, down by 24.2 percent.  Bay County showed a slight improvement in new home sales, up 6.0 percent from last year.  As mentioned above, sales of existing homes declined across the region.  In Escambia County the drop was over 34 percent. Santa Rosa County dropped by almost 25 percent, followed by Okaloosa County at 18.7 percent, and finally Bay County with a decline of 16.8 percent.  Walton County posted a modest increase in home re-sales, up 6.7 percent from last year.
 
Lots with construction loans declined tremendously in all five NW Florida counties, and may represent the most telling aspect of the current real estate market.  The average decline in this category was over 61 percent for the NW Florida region.  Escambia County had the steepest decline from last year, down 73.7 percent, while Santa Rosa County had the least severe decline at 54.3 percent.  Permit activity was also predictably down by substantial margins across the region, with the exception of multi-family units in Bay County, which were up over 61 percent from last year.

In spite of these negatives many experts in the Florida market see signs of improvement in some parts of the state;   increased sales activity, increased “pending” sales, reduced rate of expansion in inventory levels, and in a few markets a slight rise in prices.  Another positive sign is that mortgage rates remain very low.  Freddie Mac reported   the commitment rate (nationally) for a 30-year conventional fixed-rate mortgage was 5.88 percent in the first quarter of 2008.  That’s lower than it was a year ago, and for nearly all of 2007 for that matter, during which it averaged about 6.25 percent.   According to National Association of Realtors’ (NAR) Chief Economist Lawrence Yun, “Things are beginning to improve”.   He expects that sales and prices should stabilize during the second half of the year, and begin to rise next year.   Stay tuned!