Expert thinks housing market has completed its down cycle


By NADIA GERGIS nadia.gergis@scripps.com

December 7, 2006VERO BEACH — The housing market has hit bottom and that's good news, a prominent Orlando economist told real estate leaders Wednesday.

Hank Fishkind, president of Fishkind & Associates, Inc. an economic and financial consulting firm, said the Treasure Coast is completing the down cycle with a "soft landing." He predicted a rebound for the market in 2008 through 2009.

"The good news is, it's not going to get any worse," Fishkind said. "We're at the bottom of the cycle right now."

Fishkind spoke at a Wednesday luncheon sponsored by the Real Property Council of Indian River County, a real estate attorney association — and the Treasure Coast Real Estate Council, which collects data on local real estate transactions.

However, he warned that because of the current housing slump — land prices would continue to suffer because prices had reached unsupported values and buyers are not absorbing the influx of new and existing single-family homes coming on the market.

Additionally, he warned that the area would not experience any significant price appreciation until the market rebounds again.

"Prices in Florida shoot up like rockets and then falls like a feather, so there will be no price appreciation for a long time," Fishkind said. "I've seen this two or three times before and it will take awhile for the market to absorb all these housing starts."

Fishkinds remarks are inline with what other local economist are predicting for the housing market.

Speaking at an Urban Land Institute conference last month, Brad Hunter, Metrostudy director for South Florida, said the market turnaround could take 18 to 24 months. Don Santos, past president of the Treasure Coast Builders Association and president of Santos Construction, has also predicted the market would recover during the 2008 timeframe.

Fishkind said the housing boom could not be sustained in the area because Indian River County did not have a large job base to support population growth.

"The employment and economic base is narrow here and cannot support growth for a lengthy period of time," Fishkind said.

Other factors having a negative effect on local real estate: property taxes and skyrocketing insurance rates.

He also explained that the portability of Save Our Homes the ability to carry your tax savings to a new property proposed by Governor-elect Charlie Crist may seem like a positive alternative on the surface. But, local governments and their budgets may suffer if it's passed as a constitutional amendment in Florida.

"I am concerned about the impact of the portability issue on local government because it creates a distorted impact," Fishkind said. "It would reduce the growth of the ad valorem tax."

Ad valorem tax is a major source of revenues for state and municipal governments.

source: TCpalm