Recovery Act? Not for Destin

It’s been a month since the Housing and Economic Recovery Act of 2008 was passed and The Log questioned whether it would jump start the sluggish real estate market in Destin.

In a word — no.

“I wish that were the case, but it’s not the silver bullet some people might think,” Ed Smith, owner of RE/MAX Coastal Properties, said.

“The majority of the properties in this market won’t qualify.”

In response to a subprime mortgage crisis, the Act was passed to motivate buyers who have not owned a home in the past three years to start buying by offering a $7,500 tax credit if the closing takes place on or after April 9, 2008 and before July 1, 2009.

The passing of the Act motivated local Realtors that cater to the area’s first-time buyers and caused speculation that a surge of buying would follow. But numbers do not support an increase in activity to date.

“There are over 1,000 single family homes for sale in the Destin and Sandestin areas,” Smith said. “It’s almost exactly the same as last month.”

The Act was also slated to gain equity for current homeowners, but with a lack of change in the Destin market, equity has not budged.
Smith said that a majority of the distressed properties in Destin and South Walton are second properties and investments that do not serve as the owner’s primary residence. Since the Act will only benefit someone buying a home to be their primary dwelling, the Act will not help too many property owners in Destin.

Though the Act does not mean any big changes for the market in Destin so far, the air is still hopeful.

“It’s unprecedented to have a buyer’s market and low interest rates at the same time, but that’s what we have right now,” Smith said.
In the Destin area, home prices still remain 40 percent lower than they were just two years ago and the supply still far outweighs the demand. Smith said that interest rates are still comparable at about 6.25 percent.

He also added that a larger percentage of the buyers in the market right now are first-timers.

The possibility for more activity remains and some Realtors are seeing the Act’s benefits.

“I surpassed what I did last year,” Ken Koger, Realtor with Crye-Leike Coastal Realty, said, giving a little credit to the passing of the Recovery Act. “That in combination with the lower property values has brought people back to the area.”