Real estate professionals think 2012 will show a modest improvement from 2011. Here are some highlights:
- Foreclosure inventory could still be heavy for the next five years, but most people don’t foresee lenders releasing a “shadow inventory” and flooding the market.
- December has been better than usual, and homebuilders think that mild momentum will carry into the new year.
- Home inventory has plummeted in the Daytona Beach region compared to last year, falling 42 percent. Expect that to continue.
- Builders are seeing signs of life. One Volusia County builder expects to construct 45 to 50 homes in 2012, up from 34 in 2011 and 23 in 2010.
SOURCES: News-Journal research; Daytona Beach Area Association of Realtors
DAYTONA BEACH — After suffering through one of the worst economic downturns in modern memory, local home builders and real estate professionals foresee a modest turnaround in 2012.
It’s already started with a better-than-usual December, which traditionally is a slow time of year for new contracts.
The Volusia-Flagler housing market has been in shambles since 2007, when foreclosures overcame the area and home prices fell drastically. Flagler County has periodically had the highest number of foreclosure filings in the state, and Volusia County has been near the top.
While the inventory of homes for sale is still high, real estate professionals believe 2012 will improve, if only a bit.
“We are seeing a lot more people coming in, more than in the past three or four years,” said Luis Medeiros, president of Palm Coast-based custom builder New Coastal Homes.
“We just had three sales in December for next year starts,” he said. “For me, that’s great in the Palm Coast market.”
For the past couple of years, Medeiros has been building just three or four homes a year, so going into the year with three contracts is uplifting.
“The people looking to buy a home are looking at the short sales and bank-owned and not liking what’s available. They’re looking at a $150,000 home that needs work. But, for a little more they could get a new home with everything they want,” Medeiros said.
Even so, Karen Radcliff, president of the Flagler County Association of Realtors, said she expects foreclosures and short sale homes in the county to be “pretty heavy in the market for three to five years because we have job issues and unemployment issues.”
But the area’s foreclosure inventory isn’t as big as it was during the peak of 2008 and 2009, and she doesn’t expect a “shadow inventory” of foreclosed homes to overwhelm the market.
Flagler County has generally seen a drop in new foreclosures in 2011 compared to 2010, although new filings in November increased, according to the most recent data available from research group RealtyTrac.
Mark Dougherty, executive director of the Daytona Beach Area Association of Realtors, doesn’t predict any dramatic increase in residential sale prices, but thinks prices will start to flatten, barring a slew of foreclosed homes hitting the market.
“The bread and butter inventory, two- and three-bedroom single-family homes, those properties are probably going to stabilize,” he said. “And that’s the typical thing because there are way more of those than anything else.”
SIGNS OF IMPROVEMENT
Median residential sales prices for the Daytona Beach Area Association of Realtors fell more than 8 percent last month compared to November 2010, from $120,000 to $110,000. But two large indicators of improvement — inventory of homes for sale and pending sales — were much better.
There was an inventory of 2,443 homes for sale in November, a 42 percent drop from the 4,219 a year earlier, according to the Daytona Beach Realtors group. And pending sales, which measure signed real estate contracts, increased 70 percent, from 246 in November 2010 to 418 a year later.
West Volusia is also holding out hope for 2012.
Chris Bowley, planning and development services director for Deltona, said he’s seen an increase in building permit applications during the last three months. Most are for single-family houses built on vacant lots scattered throughout the city.
In the Live Oak Estates and Arbor Ridge subdivisions, though, there is some building going on and more is expected.
“During the downturn there wasn’t much activity there,” Bowley said of Live Oak Estates. “But now there’s new home construction. Same thing goes for Arbor Ridge.”
Bob Fitzsimmons with Gallery Homes of DeLand also is seeing a “more active winter.
“I’m working with three clients right now. That excites me because this is usually a slow time before mid-January, when things pick up again,” Fitzsimmons said.
Low land prices, down 50 to 60 percent from the peak period, and more buyers confident that the market has bottomed out, are driving the recent activity, Fitzsimmons said.
HIGH PRICED CONDOS GAIN
The condo market in 2011 reported strong gains in high-price sales. Scott Nieminen, a broker at Palm Coast-based Realty Executives and the 2010 president of the Flagler County Association of Realtors, expects a small appreciation in prices next year, started by an increase in higher-priced homes.
“Gated communities, golf courses, waterfront – those things have a tendency to see it first, but across the board it’ll be an improvement,” he said.
Jim Paytas, of Daytona Beach-based Paytas Homes, built 34 homes in East Volusia in 2011, up from 23 the previous year.
However, before the bust, Paytas Homes was building 100 houses a year.
“There is a renewed sense of urgency I’ve not seen since 2005. Prices have stabilized and buyers have to close on the lots now while prices are low and before they’re gone,” he said. “Following the recent trend, we could see 45 to 50 new homes in 2012. It’s not substantial, but better than what we’ve been doing.”