Existing Home Sales are Up…is this the Bottom?

According to data recently released by the National Association of Realtors, existing home sales have finally posted a gain for the first time in over a year thanks in large part due to the sale of foreclosure properties. Florida is listed as second in the nation for mortgage defaults and also experienced improved sales of single family homes and condos for September. In fact, it is estimated that short sales and foreclosures represented from 30 to 40 percent of sales through September in bubble regions such as California, Nevada, Florida and Arizona.

So, does this mean the worst is over? Maybe – but probably not. Although sales were up – prices were down as median sales prices fell an average of 9 percent in the past year nationwide but dropped 22 percent in Florida to a median price of $175,100….not counting foreclosed home sold at auction which were not part of the data. Further complicating the situation is the general financial crisis that worsened during the month of October; bank mergers, bankruptcies and the general uncertainty surrounding the economic melt-down is likely to impact real estate numbers for October if not the remainder of the year.

Other disturbing trends such a resetting adjustable rate mortgages are still not complete in many of the same areas most impacted by the downturn. As ARM’s begin to reset, an entire new wave of defaults and foreclosures could be in the works during a period when banks are less willing to refinance. Congress is actively discussing methods to guarantee or work with mortgage companies to refinance these loans to prevent further foreclosures but to date, little consensus has been reached.

There is currently a 9+ month supply of inventory with some homes in much higher demand than others and with tightening credit standards, economists are unsure what the 4th quarter will look like in the real estate market. Cautious optimism seems to be warranted as sales are expected to continue increasing even as prices stabilize. Unfortunately, rising interest rates are likely to offset further price reductions resulting for little incentive for buyers to wait before buying.

To recap; buyers searching for Tampa foreclosures may find rising interest rates likely to offset potential price reductions. Homes are selling and prices for the local Tampa Bay and surrounding areas are at their lowest in years:

• Tampa: The median price of Tampa homes has dropped from over $200,000 last year (and over $220,000 prior to that) to $160,500 last month. Median condo prices in the Tampa area have fallen to $139,100.

• Fort Myers, Lakeland & Winter Haven: Median home prices have fallen to approx $140,000

• Sarasota-Bradenton: Median home prices are down 29 percent to $200,000.

Lance Mohr is a full time professional Tampa Realtor specializing in New Tampa homes for sale and Tampa real estate.