House depreciation is happening all around the United States. Some markets are getting hit more than others, like Florida. Florida enjoyed the height of price appreciation during the housing bubble, but now finds itself the #2 state highest in foreclosures, just after Nevada. With the glut of housing available on the market, prices have declined substantially over the last year.

nasaflorida750pix.jpgThe Florida Association of Realtors reviewed the actual declines and estimated that in 2007, the median house price in Florida dropped about 14%. Nationwide, the drop is much less with only a 1.8% drop in the median price which is now about $217,000. In Florida, the median price dropped to about $194,200.

So, is it time to buy a house in Florida?

You can come across some great deals in Florida, although most experts agree that the housing market has not bottomed out yet. If your goal is to get a great property in the sunshine state, you can buy now and hold until prices increase. You may end up experiencing some housing depreciation, but if you are moving to Florida instead of just getting a summer home, it still can be cheaper than renting, due to the interest rates.

If you are afraid to plunk down cash on a house in Florida and want to wait out the market, you can always rent a house for less than what it costs elsewhere to rent the same size home. Once you think you are in a position to buy, you can always make an offer on that home or a similar one. Even doing this, you will pay more for rent than for a mortgage on that house, due to the price depreciation and one other factor: low interest rates on mortgage products.

How do low interest rates impact my decision?

Right now, home mortgage interest rates are very low. If you have good credit and want to move to Florida, you can hedge the depreciation in the home against what you save in the event the interest rate rises. Every extra point the home mortgage interest rate rises, you pay thousands more in your mortgage. So, locking in a good interest rate might make you want to reconsider waiting out the soft market in Florida. While prices are expected to decline further, it’s anyone’s guess how much more they will drop. Interest rates, however, are unpredictable and can cost you significant monies on your home mortgage.

What if I am an investor?

If you are looking for an investment property, Florida homes are beginning to become more attractive, although not substantially so. Florida is a vacation state and many people do retire there. The first wave of boomers is just starting to retire now. You should check out the neighborhood and see whether it is being maintained and what the local job market is doing. As soon the job market shows signs of improvement, you will likely see better signals in the Florida housing market too. Most investors will be tempted to wait out the softening market if they see continued signs of depreciation since they don’t intend to hold their mortgage note for a long period of time, making the interest rate less important.
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