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Northwest Florida Real Estate Activity
by David Kane, BS

The third quarter of 2008 was again, quite discouraging for real estate activity in NW Florida.   In total, residential real estate activity for our region has dwindled to levels not seen since the early 1990’s.  For the five-county region total home sales were down by an average of almost 25 percent compared to the third quarter of 2007.  Many areas within the state, however, have begun to experience an up-turn in sales activity compared to a year ago, which is good news.   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 actually up by 5 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 almost 24 percent.  (Note:  The Ft. Walton Beach MSA remained stable compared to last year.)  Over the same time period the median sales price of an existing single-family home declined by a state-wide average of 20 percent, compared to a decline of only 8 percent in NW Florida. 

During the third quarter of 2008 sales of single family homes decreased in all five counties in the NW Florida region.  Both Escambia and Bay County decreased by approximately 24 percent, followed by Santa Rosa County at 17.8 percent, Okaloosa County at 14.6 percent, and Walton County by just over 4 percent.  Condominium & townhome sales were also down in all five counties, significantly in most cases.  For Bay and Okaloosa counties the decline was over 56 percent.  In Escambia County the decline was 40.5 percent, followed by Santa Rosa County at 23.1 percent, and finally Walton County, which declined by 8.3 percent.

Similarly, new home sales decreased in all five NW Florida counties compared to a year ago as well.  In Okaloosa County the drop was a staggering 78.3 percent.  Bay County’s decline was almost as severe at 72.6 percent.  Walton County dropped by 59 percent, followed by Santa Rosa County at 42.1 percent, and finally Escambia County, which dropped by 40.4 percent from last year.  Sales of existing homes dropped off in four of the five NW Florida counties, though not as steeply as new home sales.  Escambia County declined by 24.5 percent, closely followed by Bay County at 21 percent.  Santa Rosa re-sales dropped by 10.4 percent, and Okaloosa County showed a decline of 4.2 percent.  Walton County re-sales actually increased from last year by 15.5 percent, a figure that represents the only positive movement in any sales category this quarter.
 
Lots with construction loans also declined in all five NW Florida counties, this time by an average of 48 percent compared to last year.  Walton County, again, had the greatest decline - over 74 percent.  Okaloosa County had the least severe decline at 18.8 percent.  Permit activity was, predictably, down across the region for single family units, but for multi-family units there were some bright spots.   Escambia, Bay, and Okaloosa counties each had sizable increases for multi-family permit activity compared to last year; Okaloosa County in particular experienced a jump of over 4000 percent.

So, have we seen the worst of it?  Have we hit bottom yet?  It’s very difficult to say.  As mentioned above, at a state-wide level sales of existing single-family homes were actually up during the third quarter compared to last year.  In fact, twelve out of Florida’s twenty MSA’s reported that upturn, and seven of those MSA’s reported improvements in condo sales as well.  According to Dr. Wayne Archer, director of the University of Florida’s Bergstrom Center for Real Estate Studies, “Florida stands to benefit from the migration of new residents, particularly as baby boomers age…”  Also, that “Florida is still an attractive retirement destination.”  That said, the continuing financial uncertainties facing the nation and the state, including difficulties in finding credit, rising unemployment, and increasing foreclosures make it very difficult to see any light at the end of the tunnel just yet.  One favorable point is that interest rates are still very good.  According to Freddie Mac the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 6.32 percent in the third quarter of 2008, which is about a quarter of a point less than the previous year.  Again, according to Dr. Wayne Archer, the results of a quarterly survey of various real estate experts conducted by the Bergstrom Center suggests that there are many people waiting “on the sidelines”, ready to jump back in (the real estate market).  Let’s hope they don’t have to wait much longer.