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Northwest Florida Real Estate Activity
by David Kane, BS

The fourth quarter of 2008 capped off a discouraging year on a discouraging note for real estate activity in NW Florida.  For the five-county region total home sales were down by an average of 21 percent compared to the fourth quarter of 2007.  On balance however, not all the news was bad.  For the second consecutive quarter many areas within the state, particularly the southern and central regions, experienced increased sales activity.  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 up by 13 percent compared to last year.  Unfortunately for the three MSA’s that comprise the NW Florida region alone, sales of existing single-family homes declined by 9.6 percent.  Over the same time period the median sales price of an existing single-family home declined by a state-wide average of 26 percent, compared to a modest decline of only 5 percent in NW Florida.

During the fourth quarter of 2008 sales of single family homes decreased in all five counties in the NW Florida region.  Bay County got the worst of it, declining by nearly 34 percent compared to last year.  Escambia and Santa Rosa counties declined by 24.5 and 22.8 percent respectively, followed by Okaloosa County at 13.1 percent, and Walton County at 11.1 percent.  Sales of condominiums & townhomes were also down in all five counties, and again, severely in some cases.  For Bay and Santa Rosa counties the decline was 50 percent.  In Escambia County the decline was 33.1 percent, followed by Okaloosa County at 25.7 percent, and finally Walton County, which declined by 11.3 percent.

Mirroring the nationwide trend, new home sales decreased in all five NW Florida counties compared to a year ago as well.  In Bay County the drop was a whopping 64.3 percent.  Walton County’s decline was almost as steep at 60.5 percent.  Okaloosa County dropped by almost 52 percent, followed by Escambia County at 45.4 percent, and finally Santa Rosa County, which dropped by 28.6 percent from last year.  As mentioned above, sales of existing homes dropped off in four of the five NW Florida counties, but not nearly as much as new home sales.  Santa Rosa County declined by 22.6 percent, followed by Escambia County at 20.5 percent.  Bay County re-sales dropped by 14.6 percent, and Okaloosa County had a small decline of 3.5 percent.  For the second quarter in a row Walton County re-sales increased slightly from last year, going up by 6.6 percent, a figure that once again represents the only positive movement in any sales category this quarter.
 
Lots with construction loans also declined in all five NW Florida counties, and mostly by sizeable margins.  Escambia County took top honors this time, dropping by 87.5 percent.  Walton and Santa Rosa counties dropped by 58.8 and 50 percent respectively.  Bay County also experienced a steep decline at 40 percent compared to last year.  And finally, once again Okaloosa County had the least severe decline in this category at 7.7 percent.  Permit activity was also uniformly down (significantly) across the region compared to last year.

As the year came to a close the same questions regarding the real estate environment persisted:  How much longer will the downturn continue?  Have we seen the worst of it?  Have we hit bottom yet?  If not, how much further?  While no one can answer these questions with a high degree of confidence there is reason to believe that we’re close.  First, there has been an increase in sales activity in many areas in the state for two consecutive quarters, and the fourth quarter increase was more than twice the increase of the third quarter.  Might that signal the shift?  Possibly.  Add to that the fact that home prices are continuing to drop, putting much more of the inventory within reach for an ever larger number of potential buyers.  Also, interest rates remain historically low, and are likely to drop further in the coming months.  According to Freddie Mac the average rate for a conventional 30 year “fixed” mortgage was 5.86 percent in the fourth quarter of 2008.  The previous year it averaged 6.23 percent.  In many ways it appears that the real estate market itself is poised for a comeback, but given the current national economic outlook and rising unemployment - that comeback may have to wait a bit longer.