For home buyers, rock bottom prices tough to pinpoint Homes are starting to sell again, but prices will keep falling, real estate observers say.

BY MONICA HATCHER
mhatcher@MiamiHerald.com

The explanation for a surge in sales of South Florida homes last month can be found in a one-bedroom condo on the 29th floor of a Brickell Avenue condo tower.

The Club at Brickell Bay unit sold in 2006 for $410,000. Five days after real estate agent Doug DeWitt listed the foreclosed unit earlier this month for $114,000, 12 bidders swarmed, offering cash. The sale -- above the asking price -- is set to close next week.

''I am standing on the bottom,'' DeWitt said. The agent says eight of his 15 foreclosure listings now have contracts with buyers. ``Prices do not go lower than this.''

Bargains like the Brickell Bay unit continue to draw buyers back into the market at a quickening pace, February numbers showed. Analysts have said that increasing sales, along with steep declines in home prices, would signal the beginning of a long-awaited recovery in the region's ailing housing market.

February's sales figures, combined with low mortgage rates and government moves to restart lending, suggest the market has reached a pivotal point.

But most analysts believe prices still have much farther to fall and that recovery remains at least a year away -- although, as the frenzy over DeWitt's condo shows, what constitutes a market bottom depends greatly on the neighborhood and type of property.

''The sales trend is positive and we're going to see an increase in sales throughout the year,'' said William Hardin, director of real estate programs at Florida International University, ``But there is no doubt about it, prices have to come down.''

By how much is where opinions begin to vary.

Hardin said the worst of the price declines have passed. He expects them to level off around the end of the year, based on improved affordability, pent-up demand and low interest rates.

Moody's Economy.com is more pessimistic.

The research firm estimates prices will drop a further 51 percent in both Miami-Dade and Broward from November 2008 before they reach a trough in the first half of 2011. Moody's uses the highly-regarded S&P/Case-Shiller index for its calculations, which unlike Florida Association of Realtors numbers tracks sales of the same homes over time.

''It's very severe,'' said Chris Lafakis, who analyzes the South Florida economy for Moody's Economy.com. He agreed with Hardin that price declines will begin to slow in four to five months, but said ongoing job losses will offset the impacts of increased affordability and other factors.

''We're losing a tremendous number of jobs in southeast Florida and the pace of job losses is undermining any recovery,'' he said. ``While homes are more affordable, job losses are going to take away from the number of people who are willing and able to buy homes.''

Lafakis also said falling home prices will actually contribute to increased foreclosures because homeowners who bought during the boom and have lost money walk away rather than continuing to pay their mortgages. While expected to peak this summer, foreclosures will ''remain at very high levels'' after that, he said.

But that's a little too severe for Jack McCabe, a South Florida real-estate consultant who considers himself among the most pessimistic observers of the current market.

Based on Realtor data and inhouse sources, he predicted prices will bottom out in the middle part of 2010, declining a further 20 percent from current levels for homes, and perhaps 35 percent more among condos. From the boom to the bottom, he says single-family homes will lose at least 40 percent. A big reason is the sheer number of homes for sale in South Florida.

In February, the number of sales was way up over the same month last year. Still, the 1,893 properties that changed hands represented a mere 3 percent of the roughly 64,000 houses and condos for sale on the Realtors' Multiple Listing Service. At that pace, it would take three years to work through the supply. Real estate analysts generally consider a market healthy when there is a housing supply of about six months because it indicates a balance between buyers and sellers.

One positive sign: the overall number of homes and condos on the market is down by double-digits over a year ago. Shrinking inventory is an important precursor to reaching pricing stability.

In Broward, the number of single family homes for sale fell by 20 percent from last year. In Miami-Dade, single family home inventory fell 13 percent.

McCabe said Broward, indeed, would recover faster than Miami.

The gloomy forecasts should not deter buyers who stumble across their dream home at a price they can afford, said Helen Jeanne Nicastri, an international real estate marketing specialist and chairwoman of the Master Brokers Forum.

''You cannot time the bottom of the bottom of the market. There are many bottoms and it depends on what you want to buy, every niche has a different bottom,'' Nicastri said.

DeWitt and others said the best deals were being gobbled up within days of being listed and that homes in desirable neighborhoods like Weston and Coral Gables were changing hands more quickly than in the past.

However, areas like Homestead, flush with foreclosures and unsold properties, are likely to continue sliding into the distant future. And, condo prices in Miami-Dade are likely to remain in the sinkhole for as many as five to seven years.

But again, everybody's bottom is different.

For Felix Fuentes it occured Feb. 28 when he closed on a three-bedroom foreclosure that sits on 1.25 acres in Hialeah Gardens. It's blocks from his childrens' school and minutes from babysitter in-laws.

He picked it up for $350,000, marked down from its last sale price of $830,000 about two years ago. His total monthly mortgage payments, taxes and insurance: $1,900.

''Where can you find a place where you can keep horses! I will never find this size property for this amount of money in the future. I would buy it again 100 times over,'' Fuentes said.