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One constant in housing market: predictions

Two or three years ago, when local real estate agents were still calling the collapse of the housing market a "slowdown," and I was still quoting them, Vladimir Hucko called to set them and me straight.

The ballooning inventory of unsold homes and the high foreclosure rate meant sales volume and prices would fall indefinitely, said Hucko, a real estate agent with Re/Max Advantage in Spring Hill. And, as the prices of existing houses dropped, builders would find it almost impossible to sell new ones.

He turned out to be right, of course; 1,928 houses in Hernando changed hands during the first 11 months of 2008, nearly 1,000 fewer than during the same period of 2006. The median price of these sales, $141,820, was more than $50,000 lower than in 2006.

Meanwhile, the county issued only 361 permits for new homes in the first 11 months of 2008 — the total for one typical month in 2005.

"We really won't see demand increase until we get these foreclosures and short sales off the market,'' said Dudley Hampton Jr., owner of BJH Construction and president of the Hernando Builders Association.

But now Hucko, who, remember, was gloomy when gloom was justified, thinks the market has bottomed out. Maybe.

He pointed out the inventory of unsold houses in the county, according to the Multiple Listing Service, dropped from about 4,400 earlier this year to 3,317 this week.

More significantly, the number of sales for three consecutive months — September, October and November — were between 10- and 38-percent higher than during the same months in 2007.

December sales were on pace to slip from the 2007 total, he said, but the market often swings erratically during the holiday season. January's figures will be more significant.

"We will be watching those very closely,'' he said. "If sales improve in January (compared to 2007) we will be out of the woods.''

Of course, nobody can be sure about this, said Bob Bazzel, another Re/Max Realtor. Nearly half of the existing homes for sale in the county are vacant, meaning they are likely in foreclosure or heading that way.

Buyers of these properties will likely be investors, which he said makes it hard to gauge true demand and almost guarantees prices will continue to drop.

Also, said Brooksville Realtor Jack Gavish, the market for commercial properties, singled out as bright spot in the past two years, is weakening dramatically.

The number of county permits issued for commercial properties has dropped, as have their market values. Based on the numerous vacancies in area strip malls, Gavish said, we should brace ourselves for a wave of commercial foreclosures and their drag on the local and national economy.

"When residential goes dark, commercial follows two years down the pipeline,'' Gavish said.

That's the main difference from two years ago; darkness has entered the view of everyone who buys or sells property. Even Hucko, now the voice of optimism, said that if he is right, and sales volume has hit bottom, home prices will drop another 15 percent in the next year.

"The first waves of investors are coming into the market and they will lose their shirts,'' he said.

One constant in housing market: predictions 01/03/09 [Last modified: Sunday, January 4, 2009 2:05pm]
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