How to Tell if Florida’s Housing Market Hit Bottom
Do we have a pulse on South Florida real estate recovery? According to a statistical analysis performed for The Wall Street Journal by the online real-estate information and search firm Zillow, home values in a handful of communities are where they were just before the most frenzied days of the real-estate bubble.
The good news: Zillow spotted 25 places that are within single-digit percentage points of their home-value peaks. As a result, spotting the factors that have helped those communities get by may allow all homeowners to better gauge what’s going on where they live—and what the future may hold for their home’s value.
The reality: The biggest reason that most are surviving the downturn is because they never experienced the huge price runups like we did here in Florida or places like Nevada or California.
Here are three big factors to look for. If your Florida community shares any of these traits, you may be on the rebound.
Determining whether your community has passed through the worst of the worst of the housing debacle is its state of employment. The connection between Florida employment and the Florida real estate market has become increasingly greater. An increase in employment has a high likelihood of leading to an improvement in your communities’ real estate situation.
Local rents are very strong indicators of Florida real estate values. Home prices in most communities that have weathered the downturn tend to have lower price-to-rent multiples.
Rent vs. buy calculators are available on may personal finance websites, with most figuring if the purchase price is less than 15 times of the annual rent, the market favors buyers.
Healthier Florida communities have fewer foreclosed properties pulling down values of other homes. Florida foreclosures are the opposing force to employment. Florida employment can boost the real estate market, while Florida foreclosures can put on the brakes.
In 2010, the worst year so far, about 2.23% of all the homes received a foreclosure filing, according to RealtyTrac, a firm that monitors foreclosed properties.
Watch for our next post on Florida’s New House Rules.