Daytona Beach Homes Prices Drop 1.55% in the Past Six Months.

Median prices of Daytona Beach Homes have fallen this year, but most of the drop was in the first quarter. The drop in the second and third quarters was less than 1.6%. Yes, that’s right, in the past six months, median home prices in the Deltona-Daytona Beach-Ormond Beach metropolitan area, as recorded by the National Association of Realtors (NAR), have fallen only 1.55%.

In the latest quarter, median prices dropped 0.4%. These numbers are indicating that prices have been stabilizing. These are median distribution values (1/2 above and 1/2 below) and sold prices for similar homes may swing wildly, but these differences were present for all the time periods measured. In other words, there are bargains to be had, but the overall price drop has slowed way down.

So, what do we see happening. Well, it’s interesting. Very few who venture to forecast housing prices are willing to say that housing prices have stabilized. Indeed, most are forecasting a 10-15% drop next year. I think a good part of this is a hedging of bets. They are unwilling to go out on a limb and say prices have stabilized and will stay that way. I don’t blame them.

The Housing Price Wildcards

There are a few factors that we see as the swing factor in what will happen in 2010:

• Interest Rates
• Home Buyers Tax Credit
• More Foreclosures
• More Balloon Loans Coming Due
• The Economic Recovery

Interest rates are very low. Most forecasts have them staying that way through 2010, but watch them carefully. They can make a big difference in monthly payments.

The home buyers $8,000 tax credit is currently set to expire in June, with contract signed by April 30. Congress may extend it again, but not if signs of recovery are strong. NAR is forecasting that 2.6 million homes will be purchased using the extended credit. After that money stops chasing home purchases, we may see a dip in prices again as fewer buyers force more competition.

More foreclosures are coming and balloon payment mortgages will continue coming due through 2011. The foreclosure issues will be with us for some time. 14% of all mortgages nationwide are in financial distress, but the number in Florida is higher, about 25%. See our post Foreclosure and Delinquency Rates Rise for more details. However, we believe these issues are reflected in current prices.

Finally, the recession is officially a year old. How much longer it will last is uncertain. If the economy recovers next year, as many are forecasting, this will reflect positively on prices. If we go into a second phase of the recession, the “double dip” as it is being called, we believe that will affect home prices negatively.

What Now For Daytona Beach Home Buyers?

Most of the recent housing news has been positive. The exception is housing start which is bad for the overall economy, bad for sellers of existing homes, but good for buyers. Why? Because when builders start building again, that will mean that prices have strengthen to the point where it is profitable to build again. When builders start building in Daytona Beach, the bargains will be on their way out.

If you are considering buying Daytona Beach Condos or homes, you need to be tuned into all these factors. You can spend a lot of time reading and researching, or you can come back here regularly for more information. In either case, staying on top of market conditions is critical.

Some financial advisors are advising their clients that if you are buying for the long-term, missing the bottom by a little is not a big deal. However, if you are buying for the short-term, you need to buy at the bottom.

My advice at this point is to get into the market with considerable patience. Don’t wait until any sort of deadline is looming. Why? Because with patience and multiple offers you will get the best possible price and beat the averages. If you beat the averages, you will be in a better position in 2012 and beyond when most of the distressed properties have cleared the market.