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House prices keep on surging

When it comes to housing - with due apologies to the movie Field of Dreams - if you build it, they will buy. No matter how much the price goes up, it seems.

The average price nationwide of a single-family home jumped nearly 13 percent in the past year. So large a surge has not been seen since Iranian students stormed the U.S. Embassy, the Three Mile Island nuclear power plant almost melted down and the Soviets invaded Afghanistan.

That would be 1979, a quarter century ago.

Florida's housing market outdid the national 12.97 percent average, ranking seventh among U.S. states by rising almost 20 percent in the past 12 months ended Sept. 30, according to federal data released this week.

Florida stood out all the more because many other states in the Southeast lagged far below the national average in home appreciation.

Georgia ranked No. 40 with an annual appreciation of just 5.59 percent. North Carolina, No. 43, was up a mere 4.96 percent, while South Carolina was No. 38 at 5.90 percent.

Texas was dead last, after all other states and Washington, D.C., at No. 51 with a 3.81 percent appreciation rate.

In Florida, four midsized metro areas from the Panhandle to the state's east coast and gulf coast all ranked among the nation's top 20 metro markets in housing appreciation in the past year. The four markets - Port St. Lucie-Fort Pierce, Palm Bay-Melbourne-Titusville, Fort Walton Beach-Crestview-Destin, and Punta Gorda (despite the hurricanes) - all registered appreciation in the past year of 24 percent or more.

As for the larger Tampa Bay area, it was right behind with single-family home prices increasing 17.7 percent annually. So says the quarterly report of 245 metro markets by the Office of Federal Housing Enterprise Oversight, or OFHEO, the federal agency that oversees the Fannie Mae and Freddie Mac mortgage giants.

Credit many factors for the housing appreciation frenzy. Topping the list are years of remarkably low mortgage rates, which remain stubbornly low in spite of the Federal Reserve's decisions to raise short-term interest rates several times in 2004.

Other key reasons for strong appreciation include: the ongoing migration (to Florida) of new residents, keeping housing demand strong; an investment shift out of the stock market and into the red-hot real estate market; new mortgage products that make it easier to buy homes with smaller down payments or iffy credit histories; and a sustained rush by first-time buyers to purchase homes while rates are low.

There are even signs of growing momentum in home prices, suggests OFHEO director Armando Falcon. Single-family home prices appreciated 9.8 percent nationwide from June 2003 to June 2004. The latest year-to-year increase, from Sept. 30, 2003, to Sept. 30 of this year, was a full three percentage points higher.

Does a 17.7-percent gain in Tampa Bay's average home price mean a real estate bubble is threatening?

Not according to Randy Johnson, chief executive of Clearwater's Market Street Mortgage, a major mortgage lender in the Tampa Bay area.

He says the migration of new people to the area, the rise of first-time home buyers and the anticipated swarm of retiring baby boomers should keep this housing market strong.

Florida real estate speculators, who try to buy homes and flip them for a quick profit, are most active in the coastal Panhandle market and in Miami's condominium craze, Johnson said. One warning sign: A Wall Street Journal story this week said Miami speculators account for as much as 80 percent of the preconstruction purchases of luxury condo units.

Of the 20 fastest-appreciating metro markets, 17 were in California. The Las Vegas area was No. 1 with the highest annual growth rate of 41.74 percent, though that blazing market has been slowly cooling.

In addition to the four hot Florida metro areas noted above, other Florida housing markets soared well above the national average in the past year. At No. 21, the Miami-Fort Lauderdale-Miami Beach market increased 23.55 percent. The typically booming Fort Myers-Cape Coral area saw home prices rise 18.47 percent, slightly above the Tampa Bay area's pace. The Sarasota area rose 19.69 percent.

California's already high-priced metro areas dominated the housing appreciation rankings. But that is not necessarily good news.

One in four Californians say they would seriously consider pulling up stakes because of high housing prices, according to a statewide survey last month by the Public Policy Institute of California.

Retiree George Tully, one California resident quoted in the San Diego Union-Tribune, said he is "so discouraged" by the high cost of housing that he is seriously considering moving, possibly to Florida.

Come on down, George. The water's fine. Homes are a lot cheaper. And housing appreciation is still going strong.

Robert Trigaux can be reached at trigaux@sptimes.com or 727 893-8405.