Continuing fears dampen Florida real estate outlook
The real estate market could get worse before it gets better, according to the latest quarterly survey conducted by the University of Florida.
Respondents in the survey said they feared stagnant financial markets, rising unemployment and another round of foreclosures in 2010, said Timothy Becker, director of UF’s Bergstrom Center for Real Estate Studies.
The 319 respondents expect vacancy rates to continue to climb and rental rates to continue to fall across all commercial property types. They are also concerned about adjustable-rate residential real estate mortgages that must soon be reset and the unavailability of financing for existing residential and commercial mortgages coming due in the future.
Becker said he expects foreclosures, both commercial and residential, to continue to plague Florida because of the issue with refinancing mortgages and the statewide unemployment rate, which at 11.8 percent in December was at its highest since 1975, and may continue to climb. Jacksonville’s unemployment rate was slightly better in December at 11.3 percent.
“Many commercial property owners can still pay their mortgage based on the rents they collect, but with the terms of their mortgages ending, they will have to figure out how to get financing, and there is no financing out there,” Becker said. “With values continuing to decline, the amount of money that banks would be willing to offer if they did finance is considerably less than what is owed on the mortgage.”
Until the backlog of housing foreclosures has been reduced, the outlook for prices for new single-family homes is pessimistic, Becker said. Respondents expect prices to rise at a rate slower than inflation or to remain at present levels in the near future.
Statewide, the apartment market is the strongest segment of the commercial real estate market, Becker said, with expectations for occupancy rates to increase dramatically in 2010 as people continue to lose their homes. But, with a 14.4 percent vacancy rate, according to Reis Inc., Jacksonville has the worst apartment vacancy rate in the nation.
