Could the Housing Bust be Over?

The slower housing market in Destin and South Walton may be coming to an end. At least that’s the view of many economic experts.

The local real estate market had experienced less than half the sales on a monthly basis from that of a year ago, but the sales figures are improving. "The situation is no longer deteriorating" for home builders, according to Zoltan Pozsar, who follows the numbers for Moody’s.

The local market is showing signs of having bottomed out with the inventory of unsold properties decreasing as owners increasingly withdraw their properties from the market place stabilizing the market after a build up of inventory last summer.

Florida has seen a 26% increase in foreclosures statewide, but not in the Destin and South Walton areas, principally because more than half of all properties owned in the areas are without mortgages.

Mortgage rates are holding steady with the Federal Reserve Board of Governors decision not to increase rates at their past two meetings. Additionally, a Merrill-Lynch economist is now forecasting that the Fed will drop the prime rate 1.25% in 2007 to further bolster the housing market.

If interest rates stay flat or drop the pent up demand of buyers for property would absorb the excess inventory of homes and condos that were built over the past two years. The Moody economist thinks the current backlog of properties will be sold off within a year, producing a strong pattern of growth after nearby Panama City Beach was selected as one of the top ten places to purchase investment property in the next year in the nation.

Economists are increasingly confident about the local market. As one local real estate analyst says, "There’s only so much room at the beach." The second home market, which encompasses the Destin and South Walton markets, is forecast to be one of the strongest sectors of the nation’s economy through at least the end of the decade.

"This will be a lengthy process," Pozsar says. "The focus now is on the secondary effects of the housing slowdown."

Many economists feel home prices should continue to fall at least for a while. Pozsar predicts a 5 percent fall in average home prices before the bottom arrives next summer nationally, and economists are saying that with the right negotiation tactics purchasers can save that much now entering the market place.