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Foreclosures rise, home prices plummet in Hernando County

The economic picture in Hernando County continues to get worse.

Compared to the start of 2008, the first six months of 2009 saw a 7 percent increase in foreclosures, a 30 percent decrease in median home prices and much higher rates of unemployment, according to county figures.

These economic indicators — key for a local economy so dependent on the construction industry — dampen the growing optimism among those in the real estate and construction industry who suggest a rebound is near.

"We just have not seen the start of a trend that would indicate an economic recovery here," said Mike McHugh, the county's economic development director. "We need to be realistic."

The first indications of a recovery often occur at the building permit level. But Gary Fisher, the county zoning administrator, said preliminary numbers indicate that new permits fell nearly 20 percent in the first half of 2009 compared to the same six months last year, down to a rate of 25 a month.

Likewise, homeowners are making fewer major improvements to existing properties. Those permits fell by 24 percent in the same period.

"It tells me there are a lot of things not happening out there right now," Fisher said. "Hopefully we are at the bottom and at the end of the year we will see an increase in our permitting."

What hurts the most, officials said, is not knowing how long the downturn will continue.

A year ago this month, an economic consultant told county officials that Hernando officially had entered a recession. And he forecast the housing slump had hit bottom.

The premature declaration now acts as a warning to those inclined to predict the local economy's rally.

But it doesn't keep others, especially in the eternally rose-colored real estate industry, from trumpeting even the smallest glimmers of hope.

One of those bright spots is a 13 percent increase in home sales in the first half of 2009, compared to the same period last year. Another is a two-week decrease in the time period homes sit on the market, according to the latest Multiple Listing Service figures.

"That's excellent," said Marilyn Pearson-Adams, president of the Hernando County Association of Realtors. "That shows you the market was moving."

But this good news is propelled by a steep decline in the median home price — from $145,000 in the first half of 2008 to $100,900 for the same period this year. The low prices are encouraging mostly bargain shoppers and investors.

"What goes up must go down, and it will bounce back again," said Laurie Pizzo, a Realtor and member of the Hernando County Commission's Business and Economic Development Committee.

The market won't recover until home prices reach more normal levels. And prices won't recover until the wave of foreclosures saturating the market subsides.

More than half the homes sold this year were foreclosed properties, or so-called short sales in which the home is sold for less than what is owed.

The number of foreclosures spiked to 1,675 through the end of June, leading to the 7 percent increase compared to the same time last year, according to numbers from the county Clerk of Court's Office.

The June total — 229 — is the lowest since November 2008 and represents a 19 percent decrease from May, which saw a last-minute flood before the filing cost increased.

These dismal numbers from the building industry and housing market are reflected in the county's unemployment numbers.

In May 2008, the rate stood at 7.4 percent, rising to 12.7 percent by May.

Unemployment is the most important figure in the mind of McHugh, the county's economic development director.

"It's the first thing you need to have before you can start to see an improvement," he said. "It has a definite impact on an awful lot of things."

McHugh is reticent to predict a timeline for a recovery. He knows it is a fickle endeavor.

What he wants to see first is these negative numbers finding a level floor.

"We are looking for that firm footing," he said.

John Frank can be reached at jfrank@sptimes.com or (352) 754-6114.

Fast facts

Economic indicators

January-June 2009

(vs. January-June 2008)

Foreclosures: Up 7%

Home sales: Up 13%

Home prices: Down 30%

Building permits: Down 19%

Source: Hernando County

Foreclosures rise, home prices plummet in Hernando County 07/04/09 [Last modified: Saturday, July 4, 2009 9:36am]
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