Has The Market Reached The Bottom
Wednesday, April 15th, 2009 | Market Update | 1 Comment
If you are a Realtor, home buyer, seller or just have a heart beat you will probably be involved in a conversation at some point today that involves the question, Has The Market Bottomed Out? I personally believe it hasn’t but the latest report from The Pinellas Realtor Organization suggest it may have. First, the argument for the market having bottomed out;
- Home sales through March of 09 are up 18.1% since the same time last year
- There have been 1,422 sales so far in 2009 compared to 1,204 through the same period last year
- Unit sales have increased an average of 18% per month since December of 08. However, they also increased during the first six months of last year only to decrease slightly after that.
- The median price home as of March of 09 is $140,000 down 22.2% from the same time last year. However, it is up 13% since January of 09. This only means that there has been more higher end sales through march of 09. Case in point, there has been 20 properties sold over $1,000,000 since January this year.
Now, for the argument for the possibility that we haven’t seen the bottom yet:
- Thanks to our goverment efforts to fix or stall our housing crisis we have seen a fraction of the foreclosures still to hit the market.
- The government bail out program only effects 5% of the people behind on their mortgage payments. Even if only 50% of the people that are are behind on their mortgage payment end up losing their home to foreclosure it can only have a negative impact on values.
- The curent absorption Rate is 7.7% up from 6.0% last month but the rate also increased during the first six months of last year only to decrease after that. So, are we truly seeing a brighter market or just the natural ebb and flow of the market? By the way, the absorption rate last June was also above 7% and the market has continued to drop since then.
- The average (mean) value for homes increased from $191,000 in January 09 to $199,300 in February but then decreased to $198,200 in March.
So I do not think we have reached the bottom and probably will not until we see absorption ratio’s above 15% on a steady basis. By definition according to The National Association Of Realtors, a supply and demand of 6 months or more is a buyers market and a absorption rate of less than 10% is a 10 month plus supply of inventory. On the flip side, this doesn’t mean people should not be investing in Real Estate right now. It is always a good time to buy.
Short Sale Buyer and Seller Beware
Saturday, March 28th, 2009 | Market Update | No Comments
If you are one of the many sellers or buyers in our market involved in a short sale (pre- foreclosure property) you should be aware of the dangers involved in getting involved in a investor option contract. If this product if done right it is legal and can be a useful tool to getting your home sold on a short sale or for a buyer looking for a great deal by purchasing a short sale. The idea is an investor will write a contract on a short sale listing on an option contract that states he or she can put the property back on the market in their name and market it for sale as a regular transaction. The good news is the investor usually (not always) has a pr-oven track record of negotiating successfully with the banks. The tricky part is agent representation to the owner, investor and buyer has to be handled the right way. And the piece of this puzzle that causes me great concern is the bank may or may not be aware when or if their is another offer that is more attractive. So what’s wrong with this? Well ethically if not at least sometimes legally my opinion is this is wrong. Here’s a question for you. If you are the short sale seller and the bank says no to the option investor and your home ultimately goes to auction and then becomes a bank owned property, how are going to feel if you find out there was a better offer never presented to the bank because your Realtor said they couldn’t present another offer to the bank because the investor had a legally binding contract with you the seller. So if you are the seller, just make sure you completely understand what it means to get involved in an option contract. Another very important point on this is even if the deal goes through and the property is successfully sold to the investor who in turn sells it to the end buyer (usually 10 to 60 minutes after the first closing) for up to 100% more than what the investor paid for it, how do you feel if you are the end buyer or just an American citizen stuck with the task of bailing out our banking system.
OK, I realize I am putting my neck on the chopping block here but sometimes ethics are more important than being safe. The safe thing for me to do is keep my mouth shut. First of all, I have never been very good at keeping my mouth shut and secondly, sometimes an issue is just too important to not stand up and say “This Is Wrong.”
My goal is simple, please know what you are saying yes to when you say yes to an option contract. There are many Realtors who are doing this the right way and again it can be a very useful tool in getting your home sold if it is done the right way. If you find yourself facing foreclosure, call me at 727-216-8321. I want to help you and I will NEVER present you with an option contract unless it is agreed by all parties that the bank will be made aware of all offers and can accept a higher offer. Also, I would encourage anyone facing possible foreclosure to consult an attorney.
Home Sales Jump In The Bay Area
Tuesday, March 24th, 2009 | Market Update | 3 Comments
According to this mornings St. Petersburg Times, local sales rose 23% in February, the largest year to date jump since September 2005. If you stopped there you would be tempted to think home values have hit bottom and are on the way up. Good thing I didn’t stop there, otherwise I would be calling all my listing clients and telling them to raise their price. James Thorner (Times Staff Writer) points out that the median sales price of $131,400 is down 27% from February of 2008. Before we can hit bottom we have to see our listing inventory decrease significantly and the absorption rate increase from it’s current 6% level to at least over 15%. While the 1,856 sales in February hit a recent high mark, they still pale next to the 3,771 homes that closed during February in the peak year of 2005. There are currently 14,574 homes for sale in Pinellas County. That is down from 18,504 in 07 but prices will continue to struggle to stabilize until the market works off its glut of unsold homes.
OK, the really good news is it’s never been a better time to invest in the Tampa Bay market. First time home buyers can buy at a rate of at least 40% below the peak. This means the $200,000 home you invest in today would have cost you $280,000 at the peak. In other words, your monthly payment would have been approximately $500 more per month at the peak. Add in record low interest rates, a $8,000 tax credit and FHA loans with as little as 3.5% down and it’s never been a better time to invest in Real Estate in the Tampa Bay market. In addition to first time home buyers, investors floundering in the stock market can buy a $100,000 home and rent it out for $1,000 a month. That’s a return of 12% a year. If anyone is getting a 12% return per year from your bank right now call me, I am switching banks. Move up buyers (people selling a $200,000 home in order to buy a $300,000 home) should also be jumping in right now. Yes you are going to take a hit on the sale of your home but you are going to be getting even a bigger gain on the purchase.
So, if you have been waiting for the market to hit bottom before buying your first home, investment property or move up, it’s never been a better time than now. Remember, the market will have already been on the way up at least six months before the media catches on and announces the recovery.
Modest Rebound in new Housing Starts
Wednesday, March 18th, 2009 | Market Update, Tampa Bay | No Comments
For the first time in a many as eight months new housing starts have increased in activity. Up roughly 22.2% over January’s numbers, according to USA Today. While these number are encouraging, it is unlikely that the bump in activity is here to stay. One possible explanation for the increase in activity is the fact that most of the northern states have seen more severe winter weather this season than normal. As we head into spring months much of the construction that has been on hold throughout the winter can get underway again.
Inventory still remains high in most areas. While we have seen the inventory numbers decline slightly in the Tampa Bay area in the last couple months, there are still many homes for sale. It’s still a beauty pageant and a price war, but the good news is there are fewer sellers that are just testing the market.
Irrational Emotion
Monday, March 9th, 2009 | Tampa Bay | No Comments
Today the Florida Associaton of Realtors published an article in it’s daily newsletter discussing irrationality and emotion in market shift. Refering back to what Alan Greenspan warned of almost 13 years ago. At that time the former federal reserve chairman stated that irrational optimism might be driving stock prices above their true value. Many people saw the prices going up, and up, and decided to jump on the bandwagon and ignore the fact that it might be a little too good to be true.
The same can be said about the real estate market. Many market analysts predicted six, seven, eight years ago that housing prices were out of control. Once it became aparent that home values in some areas were increasing at several times the historic average everyone jumped on board believing irrationally that things would keep going up and never come down.
Now the game has changed. People are no longer irrationally optimistic about the economy, real estate, and stock markets. The exact opposite has now happend. People have become irrationally pessimistic, assuming that things will just continue to get worse and worse. While markets have absolutely declined it will not continue forever. If you’re familiar with the basic economic concepts of supply and demand, then you will know that all markets will eventually find equilibrium. As our housing supply comes slowly back down, and the values come back down to earth demand will find equilibrium and prices will stabilize and eventually start to slowly increase again.
Sick and Tired Of The Negative Press
Saturday, February 28th, 2009 | Market Update | 2 Comments
I picked up a copy of my local St. Petersburg Times this morning to be hit with a full page article titled “Good Time To Buy?” “Yes, if you’re a first – timer with a steady job.”
In other words, don’t bother unless you are a first time home buyer. They are kidding right? How about the move up buyer looking to sell their $200,000 3 bedroom 2 bath home in order to buy a larger 4 bedroom 3 bath pool home but couldn’t afford to three years ago because their dream home was out of reach. How about the baby boomer that has always wanted a vacation home in Florida but couldn’t afford to buy a second home until now.
Truth is people, there has never been a better time to buy Tampa Bay Real Estate than now; consider the following, interest rates are at a 20 year low, values are down to 2003 levels before they reached there 2006 insane peaks. By the way, the same doom and gloom media types that are slinging the negative drama today were telling us back in 05 and 06 that the market was pricing the average Joe out of The American Dream, well now Joe can buy a home so what the heck is the problem? Don’t get me wrong, I understand times are tough but there is always going to be a silver lining and it’s my job as a Tampa Bay area Real Estate expert, to be a voice of hope, of reasonable optimism and to point out great opportunities to my clients.
The following is a little local Tampa Bay real estate perspective that I hope you will enjoy:
- Business Week- 1969 – “The goal of owning a home is getting beyond the reach of more and more Americans. The typical house today cost $29,000.”
- The National Business Review – 1977 - “Housing experts predict price increases won’t be that great in the future. The median price of a home today is approaching $50,000.”
- Money Magazine – 1985 – “The golden age of risk free run ups in Real Estate is gone”
- The Sanfrancisco Examiner 1996 - “A home is where a bad investment is”
Just for fun, check out what the average home sold for in Sanfrancisco in 2006 compared to 1996. We should of all have been so lucky to have made an investment in the “bad” Real Estate market of 1996.
Weekend Open Houses
Thursday, February 26th, 2009 | Tampa Bay Properties | No Comments
This Weekend the Dietz Team will be holding the following properties open:
1782 Split Fork Dr. Oldsmar, FL (click for directions) Saturday 12-2p
8801 Torchwood Dr. Trinity, FL (click for directions) Saturday 12-3p
213 Arbor Woods Cir. Oldsmar, FL (click for directions) Sunday 12-3p
Keller Williams Buyer Job loss Protection Program
Thursday, February 19th, 2009 | Market Update, Tampa Bay, Tampa Bay Properties | No Comments
The South Florida region of Keller Williams Realty is pleased to be the first national real estate company to offer new home buyers job loss protection insurance. We will have more information on the program in comming weeks. The program is set to roll out sometime in the beginning of march. The program will be sold for $495-520 and will have two major protection plans. The first part of the program will provide a 24 month policy that will be good for up to $1800/month for up to 6 months if there is an unplanned/unexpected sudden job loss. As an exception this program will not be approved for investors, self-employed, or military. The second part of the program is a rainy-day grant program. Meaning if a one-time catastrophic emergency were to take place (i.e. unexpected medical bills) and you were unable to cover these expenses and your mortgage you may be able to qualify for a grant to help cover the difference. Both parts of the program will have a 60 day seasoning period, but both will provide that extra piece of mind for the person who wants to buy but is unsure of future economic conditions. This is a Keller Williams Exclusive offering, it is our stimulus package for you.
Open Houses
Wednesday, February 18th, 2009 | Tampa Bay Properties | No Comments
The Weekend the Dietz Team will be holding the following properties open:
312 Lebeau St. Clearwater, FL Saturday February 21 from 12:30-2:30p (click for directions)
2713 Beagle Path Way Palm Harbor, FL Saturday February 21 1-3p (click for directions)
Stimulus Update
Tuesday, February 17th, 2009 | Market Update | No Comments
If you are unaware, President Obama has offically signed off on the stimulus package. What does that mean for your future real estate transactions? Well we previously discussed an old draft of the package that would have had a larger tax credit for home buyers. The version that was passed today containted a smaller tax credit than was originally proposed. The tax credit will now be $8,000 for first-time homebuyers. Up from the $7,500 credit that was already in place. Obviously this does not constitute a large increase but now the money does not have to be repaid. In the previous legislation that $7,500 was bascially an interest-free loan to be repaid by the home buyer. It’s not a great improvement, but it is an improvement, they have also reinstated the higher lending limits for FHA and VA loan programs that took place in 2008. The higher limits will make larger home purchases available to families they can not qualify for conventional loans.