Kelly Smallridge knows that lower home prices are good for Florida's future. "When companies consider relocating their operations to our state, housing affordability for their employees is a major consideration," says Smallridge, president and CEO of the Business Development Board of Palm Beach County. "The decline in home prices over the past two years has encouraged prospective employers to take another look at our area. CEOs want an environment that's attractive to recruiting the best employees, and housing price is a factor."
Five years ago, affordability was the major challenge facing Florida's housing market. With home prices jumping 15 to 25 percent annually in the boom years, many working-class buyers found themselves priced out of the market. At the 2006 peak, the state's median sales prices reached $248,300 for single-family homes and $211,300 for condos, according to Florida Realtors statistics.
To put those figures into perspective, buying a $250,000 home typically requires a $25,000 down payment (10 percent of the total), and a $225,000 mortgage. To comfortably meet those monthly payments of about $2,500 (including taxes and insurance), the buyer needs more than $115,000 in annual income.
Since 2006, however, the state's median sales prices have fallen more than 40% to about $140,000, putting far more Florida homes in the reach of middle-class buyers with household incomes of $40,000 to $75,000. Now that prices have stabilized in many areas, the number of transactions is rising and listing inventories are shrinking as more and more buyers take advantage of market conditions that are highly favorable to them. "The combination of adjusted prices, historically low rates and the income tax credit makes it incredibly attractive for buyers on the lower end of the scale," says Michael Wohl, founding partner of Pinnacle Housing Group in Miami, Florida.
Florida Realtor Magazine March 2010
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