The Florida Association of Realtors reported in a press release yesterday that statewide, Florida home sales decreased by 31 percent in comparison to homes sold in 2005, the year of the hottest real estate market on record. Florida home prices, however, increased, even with sales lower. The average was $249,700 last month, up from $221,100 at this time last year. Nationally, home sale prices were up 7.8 percent to a median price of $217,500.
...core inflation, excluding energy and food, was up 2.1 percent in April compared to the same month a year ago. This was the fastest increase in this inflation gauge since a similar 2.1 percent increase for the 12 months ending in March 2005 and was above the Fed's comfort zone for inflation.
While inflation and higher incomes are both believed to be driving prices higher, Realtors say the housing market is becoming more balanced, as buyers and sellers are more equally in number, unlike 2005, which was an overheated seller's market due to low housing inventories and a flood of buyers in the market due to low interest rates.
"The single-family existing-home market has eased its pace, but the market is returning to a more normal balance after a long run of record sales and low inventory," Beverly Pindling, president of the Orlando Regional Realtor Association and broker-partner of Orlando Real Estate Professionals, said.
"With economists predicting the national housing market to be the third-best ever (below 2005 and 2004), by comparison this confirms...a very strong local market. Our condo market offers many homeownership opportunities priced under $200,000, which helps to meet the challenge of getting more people into their first home."
The Tampa-Clearwater-St. Petersburg MSA reported that while sales numbers declined by nearly two-thousand in comparison to this time last year, the median home price increased from $183,000 to $225,500.
Many buyers are being priced out of the housing market due to inflation, which is responsible for higher interest rates, averaging around 6.51 percent, up from 5.86 percent last year, and ever-increasing housing prices.
Rising energy costs, a factor the Federal Reserve has no control over, are primarily to blame for the high inflation rate. Many experts believe that rising interest rates are more likely to plunge the economy into recession than they are to slow inflation, especially with Bernanke, known for creating inflation, as Fed chairman. Some say higher interest rates will increase the cost of goods even more, adding another burden to business costs, and inflationary pressures.