Paul Owers, Contact Report
July 5, 2016
South Florida homeowners have little to fear in the way of falling prices, new data show.
The likelihood of price declines in Palm Beach County in the next two years is 3 percent, according to a report from Arch Mortgage Insurance Co., a private mortgage insurer based in Walnut Creek, Calif
Broward and Miami-Dade counties and 22 other areas in Florida have a 2 percent chance of price declines. The national average is 5 percent.
“I’m bullish,” said Ralph DeFranco, chief economist for Arch. “I think it’s a good time to buy. Interest rates are low, so buyers should lock in while they can.”
The Arch risk index analyzes median home prices from the Federal Housing Finance Agency while factoring in regional unemployment rates, affordability, change in population, housing starts and delinquent mortgages.
The South Florida housing market is strong, but sales and prices are starting to cool, analysts say.
Still, Brad Hunter, the Palm Beach County-based chief economist for the Metrostudy research firm, said he isn’t concerned about a market tumble.
“One could easily make a strong case that prices will keep moving up, albeit at a slower pace,” he said. “I think it’s a single-digit probability that we see a real decline in home prices.”
Hunter added that even if FHFA median prices fall, that just might mean more lower- and mid-priced homes are selling and not indicate values of all homes are on the decline.
Jack McCabe, an analyst in Deerfield Beach, said that’s exactly what could happen. While a housing slowdown will continue through 2016, he expects prices of luxury homes and condominiums to be most affected. Strong demand and limited supply of homes in lower price ranges will continue to nudge values of those properties higher, he said.
“This is not going to be a total market crash like it was last decade,” McCabe said.
Ten-X, an online real estate marketplace in Irvine, Calif., released a report Thursday showing the top real estate markets for the spring. Palm Beach County was fourth, while Broward was fifth. Miami-Dade ranked 19.
Seattle was No. 1, while Portland, Ore., was second. Ten-X said it ranked markets based on home price increases, affordability and future demand as a result of economic and demographic conditions.
“Florida, in general, seems to be doing really well,” said Rick Sharga, executive vice president of Ten-X. “Of the states that were hit hardest during the crash, Florida still has the most room to grow to get back to peak housing prices.”
While most housing forecasts are optimistic, there are concerns brewing.
Mortgage company Freddie Mac said last week that affordability is becoming more of an issue in South Florida because wages aren’t keeping pace with home prices. And earlier this year, Fitch Ratings said homes in the tri-county region are overvalued.
Palm Beach County homes are above value by 5 percent to 10 percent, according to Fitch, while Broward properties are overvalued by 10 percent to 15 percent.
Fitch said Miami-Dade County was 15 percent to 20 percent above value, matching Phoenix, Riverside, Calif., and San Francisco as the most overpriced regions among major metro areas nationwide.