How Florida Is Recovering From The Real Estate Roller Coaster

By Guest Contributor Rikk Miller

stickguygraphrgbFlorida is a state that has always been famous for its amusement parks but no such ride has been like the last real estate cycle. The period from 2004-2007 was the worst experience for people in Florida as they experienced one of the biggest property booms in the United States of America. The excessive greed of the borrowers coupled with slack lending policies sharply led to a massive growth in a very short span of time. In spite of the meteoric rise in the home prices, there were many people who believed that the housing market couldn’t just fail. But soon after the US market exploded, Florida was unfortunately the first states to crash under the pressure and the analysts and the experts watched helplessly as the demand and prices plunged.

Canadians Find Great Home Prices In Florida Market

Soon after this crash, “For Sale” and “Foreclosure” signs popped up like weeds and the majority of Canadian retirees and keen investors started developing an interest for this place Florida. The prices in Florida plunged more than 45% on the FHFA index and some other top destinations like Orlando also witnessed a 58% drop in home prices from an average of $258,000 at the peak to $115,400 in 2012. Rock bottom real estate prices and a huge exchange rate made buying real estate property a very attractive idea for the neighboring countries. Times have changed however and the BMO indicates that the worst time is over for the Florida housing market as there are mounting signs of sweeping recovery.

Florida Housing Market Is Recovering

The economists are of the opinion that the Florida economy is gradually recovering at a modest pace as the GDP is anticipated to grow by 2% throughout 2013. Unemployment is gradually reducing although it is still above 8%. Different pockets of the housing market are showing promising recovery as prices in Miami and Tampa bounced by 9% from the record low levels in the last quarter of 2011. Yet another notable positive sign is the reduction in the supply of homes. According to reports by the owner of The Pink Flamingo, Erica Muller, inventory has also reduced by more than 60%.

There are bidding wars and more than one offer on almost every property as long as the home isn’t overpriced. Construction of houses is up and an increasingly large number of people are paying builder prices for a new home due to the lack of inventory. Nevertheless, it should be noted that the foreclosure rate is still the highest in the US at 14%. Therefore, this is being considered as the beginning of the end of the negative housing market cycle in Florida.

Hardest Hit Helps Florida Homeowners

Apart from the recovering real estate market, there is also a remarkable growth in the mortgage market in Florida too. The federal government is all set to invest in a $1 billion housing program that has been designed to help the homeowners repay their mortgage loans and avoid losing their homes to a foreclosure. Florida Housing Finance Corp. administers Hardest Hit and as per reports, only 18% of Floridians who applied for help from the Hardest Hit received help by the end of the year. This program is specially meant for the unemployed and the underemployed as it helped them alter their mortgage terms and conditions. Homeowners may receive as much as $24,000 to cover their mortgage payments throughout 12 months.

With the above mentioned changes in the Florida housing market, underwater mortgages will gradually become a thing of past in Florida. The prospective homebuyers will probably benefit with the changes and thereby be able to grab the right loan in the market.

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