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Housing rebound official as sales continue to surge

STORY BY STEVEN M. THOMAS, (Week of August 30, 2012)

The housing market rebound is now official, led by a surprising summer of steady sales on the barrier island.

When Indian River County Relators released their most recent report Aug. 22, it was the fourth monthly report in a row to show year-over-year increased sales, increased median prices and reduced inventory for both single-family homes and condominiums

“I see a sustained improvement in the market,” says Buzz MacWilliam, owner of Alex MacWilliam Inc. Real Estate. “We saw huge sales in the first six months of year. I expected it to slow down in the summer but we are still selling a house a day and we are starting to see prices increase.”

“This has been my busiest summer since I started in real estate in Vero Beach in 1998,” says Christine McLaughlin, owner of Shamrock Real Estate Corp. “Our island market has stabilized and a lack of inventory has driven prices up substantially since last year. We are probably going to end up in bidding wars in 2013.”

“We have seen increased velocity and buyer appetite and a resurgence of confidence over the last year,” says Michael Thorpe, co-owner of Treasure Coast Sotheby’s International Realty, whose business is on track for a 50 percent increase in 2012. “A buyer buying today may have to pay a little bit more.”

The island upswing is part of a statewide phenomenon.

The median sales price for a single-family home in Florida is up $20,000 so far this year, from $128,000 in January to $148,000 in July. The average price is up from $199,000 to $215,000.

The average price for a condominium has been up, year-over-year, every month since August 2011. Likewise with the median price.  The cumulative gain in median condo price is more than 10 percent over that period, from $91,000 to $102,000.

The figures do not mean the price of most individual homes has increased by the same percentage. The strong average and median gains reflect general market improvement as much as specific property price increases.

The upward price trend results from fewer bargain basement foreclosures sales, which drag down average and median prices, increased buyer confidence as the economy recovers, which leads to the purchase of higher-priced properties, record low interest rates that empower buyers,  and drastically reduced inventory.

The number of single-family homes on the market in Florida this summer is down 45 percent compared to two years ago, from 185,000 to 100,000; the number of condos for sale is down by more than half, from 109,000 to 51,000, and the law of supply and demand is finally starting to take effect.

“I would say inventory on the island is even tighter than what is reflected in the statewide figures,” says Thorpe.

“Inventory has been whittled away and prices are starting to work their way back up again,” says MacWilliam.

“Inventory is the lowest it has been since 2007,” says McLaughlin. “There are no houses east of A1A in Central Beach for less than $500,000, unless they are right on A1A.”

In the spring and summer of 2011, there were multiple central beach homes east of A1A offered between $300,000 and $400,000.

“Lot value west of A1A is $200,000, where it was $130,000 to $150,000,” McLaughlin says.

Central Beach is unique because of the small number of homes available there and the area’s desirable proximity to the ocean and the shopping and dining district on Cardinal and Ocean Drive, and price increases there are not typical of the overall market.

“Buyers are willing to pay 10 or 15 percent more than they were a year ago,” says Sally Daley, owner of Daley and Company, describing what may be more of a market norm. “They see the value and know that prices are still low compared to the peak.”

Thorpe cautions sellers against getting too far ahead of the curve. “Sellers have gained a teeny bit of pricing power. But the new normal is a market where we are going to see very slow appreciation over a long period of time, and that is good for the market and everybody involved, because buyers, sellers and real estate agents know where they are at.”