Florida home sales rose seven percent in May, and median home prices were up throughout the state, according to this press release issued today by the Florida Association of Realtors® (FAR). According to FAR, 24,069 homes sold statewide compared to last year’s level of 22,496 homes sold, with the Tampa-Clearwater-St. Petersburg metro area leading the pack.
Home sales for that region totaled 5,482, increasing from 4,330 homes last year; a 43 percent increase. The Tampa Bay median home price also rose to $196,100. This time last year the median home price was $156,800.
A strong labor market, continued low mortgage rates and a growing economy are credited with the continually growing sales numbers. Are low mortgage rates contributing? Read this snippet from the release:
Keeping in mind the history of interest rates and mortgage rates, Scott took a look at their impact on median sales prices in the state. “The acceleration in median sales prices (both for the May comparison and for the 2005 year) of approximately 27 percent is not sustainable,” he says. “Such price increases are being driven by a once-in-a-lifetime low interest rate environment and opportunity. Thus, this is more of an ‘interest rate bubble’ than a ‘housing bubble.’ Most investors and consumers do not have a long-term perspective on the behavior of interest rates.
“But for comparison purposes, back in October 1981, conventional mortgage rates hit 18.45 percent compared to the rates of today, which are in the vicinity of 5.63 percent. In addition, at that same time in 1981, inflation at the consumer level was in the vicinity of 10.3 percent compared to the most- recent observation of 2.8 percent. The key point is that observed inflation and expected inflation rates drive long-term interest rates. It is, therefore, interest rate changes in the final analysis that will help determine the robustness of the Florida and national housing markets,” he says.
According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage was 5.72 percent last month, up from 6.27 percent in May 2004. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Of course, resort-like living all year ’round doesn’t hurt the market, either, and as long as most adjustable-rate mortgages continue to allow for a maximum of a 1 percent increase per year for variable rates in most cases, the bubble myth will continue to be a myth, but prices will eventually slow and flatten for a while, but it’s unlikely to happen any time soon. Contact a Florida Realtor now to buy your dream home or second home before prices go up again.Powered by Sidelines