Jacksonville home prices projected to fall another 39%, bottoming out in 2011

[fsu813]

http://realestate.yahoo.com/promo/how-low-will-real-estate-go.html;_ylc=X3oDMTFuc2lqbWltBF9TAzI3MTYxNDkEX3MDOTc2MjA0NjUEc2VjA2ZwLXRvZGF5BHNsawNsb3ctcmVhbC1lc3RhdGU-

Behind the Numbers
To figure out which housing markets have yet to reach bottom, we looked at the 50 largest metropolitan statistical areas in the U.S., as defined by the Office of Management and Budget and, using calculations from Moody's, analyzed each area's spending power, unemployment, housing and credit availability going back 27 years.

Over that time, each area's home prices have fluctuated differently according to these factors. Moody's calculations determine how much each area's home prices would have to change to bring that particular housing market back to a state of balance. The further from equilibrium, the further the market has to go. Projections were made on the basis of the current rate of price decline, absorption rate, employment and salary deterioration, and how long it would take each metro to wash out to a historical point of balance.

All of this adds up to bad news in one of the states hardest hit by the real estate bust, Florida--particularly Miami, Orlando and Jacksonville. Home prices are down 32%, 27% and 9%, respectively, in year-over-year terms, and are expected to decline a further 53%, 48% and 39% in each area, according to our calculations. Each has decade highs in unemployment, not to mention still out-of-balance price-to-home-price ratios.

In Miami, home prices are $234,200 at the median, and that's still six times the median income of $39,350, making it one of the nation's least affordable markets. Unaffordable housing markets are hit particularly hard when unemployment spikes, especially over multiyear periods. In Miami's case, unemployment has gone up steadily since 2007.

"These price decreases tend to add up in metro areas that have had continuous increases in the unemployment rate over the past two to three years," says Andres Carbacho-Burgos, an economist at Economy.com.

And unemployment has a nasty way of compounding with other factors.

"Rising unemployment is accompanied by a whole host of other occurrences--rising defaults and foreclosures, reduced mortgage originations, falling incomes, reduced industry investment and construction, increasing outmigration, and lower long-term income prospects," says Carbacho-Burgos.

In other words, as jobless rates go up a little, home prices sink a lot.

All Markets in this Together
It's not just broader metro areas, with their vacant outer suburbs, overbuilt beachfront and overly hopeful new developments that are taking hits. In New York, Manhattan has been showing signs of cracking for months, in the form of rising inventory and slowing sales.

Yet it wasn't until the first quarter of 2009 that it became apparent how much of a hit that market would take.

Manhattan median prices were down 21% in year-over-year terms, from $852,500 to $675,000, according to Miller Samuel, a Manhattan-based appraisal firm. While Moody's expects the broader metro to decline another 23%, and Manhattan will no doubt contribute to that, the price drops have at least piqued interest among those still employed, a lone bright spot.

While a slower housing price decline won't bring jobs back to AIG--or resurrect Lehman Bros. from the dead--and save housing prices, it at least wards off some fears of a return to the frightening bankrupt New York of the early 1980s.

"By the end of the first quarter there was a noticeable uptick in contract activity and attendance at open houses," says Jonathan Miller, president of Miller Samuel. "While this is partially attributable to seasonality, it is also a sign of first-time qualified buyers seeking to take advantage of improved affordability."

Though, as is the case in Los Angeles and most other parts of the country, that increased interest has yet to result in price reversals to sustainable levels. As long as unemployment continues to rise, don't expect that we've seen the worst of it.

In Depth: How Low Will Real Estate Go?



Top 5 Places With Fast-Falling Home Prices
1. Orlando, Fla.
(Orlando-Kissimmee metro area)
Price correction necessary: 48%
Median income: $36,330
Median home price: $175,200
Unemployment rate: 9.7%
Projected bottom: June 2011

2. Miami, Fla.
(Miami-Fort Lauderdale-Pompano Beach metro area)
Price correction necessary: 53%
Median income: $39,350
Median home price: $234,200
Unemployment rate: 8.2%
Projected bottom: June 2011

3. Jacksonville, Fla.
(Jacksonville metro area)
Price correction necessary: 39%
Median income: $37,690
Median home price: $160,700
Unemployment rate: 9.2%
Projected bottom: June 2011

4. Tampa, Fla.
(Tampa-St. Petersburg-Clearwater metro area)
Price correction necessary: 36%
Median income: $37,530
Median home price: $151,500
Unemployment rate: 10.2%
Projected bottom: December 2010

5. Los Angeles, Calif.
(Los Angeles-Long Beach-Santa Ana metro area)
Price correction necessary: 29%
Median income: $45,390
Median home price: $354,300
Unemployment rate: 10.2%
Projected bottom: March 2010

[tufsu1]

this seems a bit dramatic...basically its predicting the average home price in Miami to be about $108,000 in 2011....its one of the hardest hit areas in Florida so far, and yet home values have fallen less than 50% since their high in 2006....I have a hard time thinking they will drop another 50+ percent in the next 2-3 years.

the housing bubble correction should take us back to prices around 2001, and I'm not sure any major market in FL was less than $100,000 at that time...surely not Miami

[fatcat]

I am not sure I understand how they arrived at such projections. From my experience, most of the property already selling below their own 2001 price.
When I used to live in Boston, the Globe has a tracking statistics of "same property selling price". I have not see anything like it in Jacksonville.

[urbanlibertarian]

Let's look on the bright side.  Home buyers are happy.  The ones that can qualify for a mortgage these days.

[mtraininjax]

According to Watson Realty, Jacksonville normally has homes sit on the market for 2.5 months, they are projecting that with unemployment rising, and people out of work, that we will see houses sit for 25 months, before they are sold. There is just too much supply, and not enough demand, really at any price out there.

2011 is optomistic, I think we are looking at 2012, as we have not seen unemployment hit its height yet, we could see 15-20% in the local area before this is over, with all of our mortgage jobs going away, as people are no refinancing, if they can, who needs to refinance every year?

[fatcat]

It is very hard to refinance in Florida. When I was in MA, I did pretty much refinance every year when the interest rate was dropping. I was able to get "no cost" refinance there. When I talk to my mortgage brokers here, the fee is so high, they cannot do "no cost". So even "no points" refinance end up cost at least 1k. What is the current rate for someone with good credit now a days?