Area home sales keep torrid pace
by Nadia Gergis
September 27, 2005
Despite higher prices and short-term interest rates, sales of existing single-family homes remain strong on the Treasure Coast.
The median price of an existing home jumped one-third to $267,600 between August of this year and the same month last year in the Fort Pierce-Port St. Lucie Metropolitan Statistical Area, according to statistics released Monday by the Florida Association of Realtors. The area includes Stuart.
Nationwide, the real estate picture is much the same.
Sales rose in August to the second-highest level on record and prices surged at the fastest pace in 26 years.
The National Association of Realtors reported Monday that sales of existing homes rose 2 percent in August to a seasonally adjusted annual rate of 7.29 million units.
That sales pace was exceeded only by an all-time high of 7.35 million units in June.
Economists had been forecasting a slight decline, believing that the red-hot housing market was finally beginning to cool off.
The strong demand pushed prices up to a record level of $220,000 last month, a gain of 15.8 percent from August 2004. That was the biggest 12-month increase since a 17.2 percent increase in July 1979.
On the Treasure Coast, 741 homes sold last month, up 16 percent from 641 during August of last year, according to Florida Realtors, who don't track the Vero Beach area.
Sales have been improving for several years. In the first eight months of this year, Realtors sold 4,813 existing single-family homes on the Treasure Coast. That figure was up from 4,638 in the same period last year, 3,942 in 2003 and 3,462 in 2002.
Maria Wells, president of the Realtors Association of Martin County and owner of Lifestyle Realty Group in Stuart, attributed the gains to the Treasure Coast's attractive location.
"For our location, we still have better prices than other markets," she said. "Interest rates are still relatively good and we're still benefiting from that."
Mortgage rates have changed little in the past 12 months even though the Federal Reserve has consistently raised its short-term lending rate. According to national surveys by bankrate.com in North Palm Beach, the average 30-year fixed rate was 5.34 percent Monday, almost identical to 5.33 percent a year earlier.
And even though Treasure Coast homes become more expensive each month, buyers will continue to come to this region because it's more affordable than South Florida, said Sharon Kelly-Brown, president of the Realtors Association of St. Lucie County.
In the West Palm Beach-Boca Raton area, for example, prices skyrocketed 27 percent to a whopping $411,400 in August, according to the Realtors association.
Prices jumped one-third in Fort Lauderdale to $387,000 between the two months.
"People are still getting more home for the money than South Florida," Kelly-Brown said. "I don't see the market slowing down at all. The bubble isn't busting."
Some economists have predicted that residential property prices would pop after increasing rapidly over the past several years. They argue that once mortgage payments reach unsustainable levels relative to wages, many people can no longer afford to buy homes.
When the bubble bursts, real estate values drop, leaving some homeowners and real estate investors with a debt greater than their property's value.
Some local economists say that while a dramatic burst in the real estate bubble won't occur, the frenzied buying seen on the Treasure Coast over the past few years may level out by 2006.
Inventories will increase, causing prices to stabilize, said Brad Hunter, director of Metrostudy's South Florida Division, which follows housing trends in South Florida and the Treasure Coast.
"As prices move up, there are fewer people who can afford those higher monthly payments, so fewer people will be buying homes," Hunter said. "In the next six months, speculators will be looking for buyers so there will be an increase in inventory, which will lead to more competitive prices."
Hunter also said a slow rise in interest rates might also affect how fast homes change hands.
Sales rose a moderate 2 percent between August of this year and last year in the Melbourne-Palm Bay-Titusville area, according to the Realtors association. Median prices jumped 43 percent to $248,700 from $174,300 in a year's time.
Statewide, sales of single-family existing homes rose 4 percent in August from a year earlier to 21,318 homes. The median price climbed 31 percent to $246,500.
http://www.tcpalm.com/tcp/real_estate_news/article/0,2548,TCP_1019_4111697,00.html
