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Northwest Florida Real Estate Activity
by David Kane, BS

The second quarter of 2008 was no more encouraging than the first for real estate activity in NW Florida.   Overall, residential real estate activity for the region is now down to levels not seen since early in 1995.  For the five-county region total home sales were down by an average of nearly 28 percent compared to the second quarter of 2007 – the same rate of decline as the first quarter.  This time, however, the downturn in NW Florida was more severe than the rest of the state over all.  According to 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 6 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 an average of 20.3 percent.  On the other hand, over the same time period the median sales price of an existing single-family home declined by 16 percent for the state, compared to a decline of only 3 percent in NW Florida. 

During the second quarter of 2008 sales of single family homes decreased in all five counties in the NW Florida region.  Bay County experienced the largest decrease at 29.1 percent, followed by Santa Rosa County at 28.5 percent, Escambia County at 26.6 percent, Okaloosa County at 21.3 percent, and finally Walton County by a relatively small 4.6 percent.  Condominium & townhome sales were also down in all five counties, and by significant margins.  Escambia County saw the worst of it, dropping by 48 percent compared to last year.  Okaloosa County followed closely with a decline of just over 47 percent.  Walton County also saw a major decrease at 41 percent, followed by Bay County at 26.2 percent and then Santa Rosa County, dropping by 13.3 percent.

Following the same pattern, new home sales decreased in all five NW Florida counties compared to a year ago.  Okaloosa County was hardest hit, dropping by 67 percent.  Walton County suffered a similar decline at 63.5 percent, followed by Bay County, dropping by 43 percent, then Escambia County, dropping by almost 40 percent, and finally Santa Rosa County, with a decline of nearly 29 percent. Sales of existing homes fared better only in the sense that the declines were slightly less severe than for new homes.  Escambia and Santa Rosa counties each had declines of about 28 percent, followed by Bay and Okaloosa counties with declines of 20.7 and 12.4 percent respectively. On a much needed bright note, Walton County had the distinction of posting the only change in a positive direction in this (or any other) category – improving by 1 percent from last year.
 
Lots with construction loans also remain on the decline in all five NW Florida counties, but not quite as severe as during the first quarter.  This time the average decline was just over 37 percent for the NW Florida region.  Walton County had the greatest decline from last year, down 51 percent, while Escambia County had the least severe decline at 20 percent.  Permit activity was also down by huge margins across the board for the NW Florida region.

Given this long list of declining indicators it’s difficult to imagine a light at the end of the tunnel, but there are some signs of just such a thing.  According to FAR (Florida Association of Realtors) President Chuck Bonfiglio, “Realtors are reporting heightened interest from buyers, more business activity, and an increase in pending sales.  Prices also appear to be reaching equilibrium in many areas, another encouraging sign that could boost the market’s momentum.”  Another positive influence on the housing sector is the continuation of low mortgage interest rates.  Based on data reported by Freddie Mac the national commitment rate for a 30-year conventional fixed-rate mortgage was 6.09 percent in the second quarter of 2008, which is about a quarter of a point less than the year before.  Also, recently approved housing stimulus legislation could provide a boost through a tax credit now available to first-time homebuyers.  What does seem apparent is that at the end of the second quarter of 2008 we hadn’t yet reached the bottom, at least not quite.  But maybe we’re close.  Maybe just around the next bend.