Local home sales gaining momentum
By MELISSA FOLLOWELL
MANATEE -- May 24,2008
For months, local Realtors have talked about increased traffic, and that traffic may finally be paying off in the way of sales. More existing homes were sold in Bradenton-Sarasota in April than in the same month a year ago.
While the median price continued to slip compared to last year - down 11 percent to $268,200 - April also out-performed March in both price and sales. The median price was almost $30,000 higher than in March.
Numbers released by the Florida Association of Realtors on Friday showed that more Florida markets appear to be gaining sales momentum while median prices in all but one metropolitan statistical area continued to fall.
Statewide, home sales fell 9 percent in April, while in Bradenton-Sarasota, sales were up 5 percent.
"We're seeing a lot more activity, but I think some buyers are still hesitant," said Rod Rawlings, broker manager at Re/Max Alliance Group's University Park office.
While some buyers might be playing the wait-and-see game, many sellers are aggressively pricing their homes.
"The market is self-correcting and as to how long it is going to take, it's probably too soon to tell," Rawlings said.
Local agents sold 743 homes in April, compared to 706 a year earlier. Only four other markets in the state reported more.
Barring a large hike in interest rates, a hurricane or other such unforeseen events, Rawlings doesn't predict the market will lose its momentum.
"Everything seems to be healing and getting stronger," Rawlings said.
In addition to its traditional listings, Wagner Realty is working with several builders to burn off their excess inventory. Any dent in the inventory, whether it be new or existing, brings the market a step closer to normal.
For the past year, Realtors have talked about pricing a home properly but in an ever-changing market, that is not always an easy task so Ron Cornette, director of training and marketing, and Wagner Realty vice president Polly Gaar have been going to all the company's offices teaching agents how to price homes right.
"You almost have to do a new market analysis every 60 to 90 days because the market is changing," Cornette said.
Determining what people are willing to pay per square foot to live in a particular neighborhood is one way to ensure a home is priced properly, Cornette said.
"Our job is to sell it, not just to list it," Cornette said.
As predicted, condos are taking longer to show signs of recovery. In April, condo sales were down 16 percent from last year, and average prices fell 11 percent to $212,000.
"It took a long time for us to get in the real estate mess we are in today, and it could take a long time to get out of it," Rawlings said.
Part of the mess includes the largest amount of foreclosed homes the area has ever seen.
Some Re/Max Alliance Group agents have become specialists in foreclosures. Those sales teams are adding staff and working seven days a week, Rawlings said.
"With the plentiful supply of homes for sale at affordable prices, interest rates approaching 40-year lows and the strong track record of housing as a good long-term investment, conditions are ripe for buyers," said Lawrence Yun, chief economist for the National Association of Realtors, in a press release.
In some instances, even people upside down - owing more on a home than it is now worth - are moving because they can get more home for less money, even with taking a loss on the sale of their current home, Cornette said. The situation isn't that common, but it has happened a few times since the beginning of the year.
"There are many reasons for people to get into the housing market today and very few reasons not to," Yun said.
May 23, 2008
Sarasota market hits highest sales figure since June 2007
Home sales in the Sarasota MLS for April 2008 stood at 567 - the highest level in 10 months, and approximately 72 percent higher than the sales in January 2008. In 2008, sales have been progressively stronger month by month, possibly due to the influence of the new property tax portability law adopted in late January. Sales have climbed from 329 in January to 423 in February, then 514 in March.
Bucking the trend of dropping median sales prices for single family homes, April also saw the median sale price rise to $285,000 from $266,750 in March - about a 7 percent increase.
Condominium sales prices have shown a decline of about 8 percent since the first of the year, but they are also beginning to trend upward and have remained at relatively high levels for the Sarasota market. The median sale price for a condominium stood at $277,000 in April, about 18 percent higher than the $235,000 median sale price in March, but roughly 8 percent off the 2008 peak of $303,500 in January.
"We are very fortunate to live in a beautiful, vibrant community, with world-class culture and amenities," said Helen Sosso, 2008 SAR President. "These obvious factors continue to enhance the value of local properties, and we are seeing this reflected in our stronger sales figures. In addition, it appears we are beginning to see the effects of the recent state legislation which made it easier for families to upsize or downsize, without such a dramatic impact on their property taxes. Portability will likely continue to be a factor as we move forward in 2008."
The April 2008 report continued to reflect strength in pending sales, which stood at 765 - the highest level in the past year. In April 2007 pending sales were at only 609. Pending sales have been edging upward since December 2007, when there were only 374 pending sales reported. Pending sales reflect contracts executed by buyers and sellers, and indicate more closings in upcoming months and an improving market in the early summer months.
Inventory levels were lower in April 2008 at 9,830 single family homes, compared to 10,443 in April 2007. Condominium levels also decreased from the April 2007 level of 6,344 to 5,608 in April 2008. Lower inventory normally means a tighter selling market, which tends to put upward pressure on prices over time.
Declining inventory is one of the indicators that a market is beginning to return to a more normal, balanced state. In fact, the Sarasota MLS statistics reveal a lower level of new listings on the market, combined with higher unit sales, which means the inventory is declining for two reasons and should more quickly reach a healthy equilibrium.
The days on market, which translates to the average time it took to sell a property, was at 166 days for single family homes in April 2008, slightly higher than the 158 days in March 2008. The figure has been steadily in the 158 to 160 range throughout the year. Average days on the market for condos was at 189 in April 2008, lower than the 192 figure in March 2008, and much lower than the 203 days reported in February 2008. The days on market reflects the pace of sales.
In general, the Sarasota MLS statistics show a rebound throughout 2008 - every month seeing stronger numbers than the month before.
In an article in the Wall Street Journal last month by Cyril Moulle-Berteaux, a managing partner of Traxis Partners LP, a hedge fund firm based in New York, the author puts together a thought provoking piece headlined "The Housing Crisis Is Over."
In the article, he defined the basic elements of the housing boom, and the historic trends that follow such a boom and return to normalcy. He concludes that the national housing market is bottoming out right now, and says the return of affordability to the market makes a recovery an almost certainty.
He predicts the nationwide home inventory will drop significantly by the end of 2008, and this shift will begin to be reflected in prices. In the local Sarasota market, we have seen the trend already beginning toward lower inventories, higher sales, and a leveling of prices after a few months of declines. The April figures reflect this new reality.
Home prices may be leveling
By MELISSA FOLLOWELL, Bradenton Herald, May 17, 2008
LAKEWOOD RANCH --
Anyway you graph it, home builders have been on the roller coaster ride of their lives since the real estate boom started gaining momentum in 2003. While they enjoyed prosperity during the steep climb up hill, the fall has left many wondering exactly how far down there is left to go.
This week, members of the Home Builders Associations of Manatee and Sarasota counties along with members of the Gulf Coast Builders Exchange, heard some long-awaited good news.
"Prices have finally found a level," said Tony Polito, director of Metrostudy's Tampa/Sarasota division.
Metrostudy is the nation's largest firm that conducts real estate market research and serves a variety of clients in the industry.
"He's one of us, he gets it and he knows this market," said David Langhout, president of the Home Builders Association of Sarasota County.
The news wasn't all sunshine and light as Polito candidly discussed issues from employment to inventory, which all have an effect on home sales.
Sarasota/Bradenton is in the top 10 places in the nation for job loss, Polito said. The majority of job losses can almost all be tied directly or indirectly to the slump in the housing market. Construction and manufacturing jobs as well as jobs in financial services have all been cut. Mortgage lenders, bankers and real estate agent are all included under the umbrella of financial service, Polito said. Locally, more than 5,000 construction jobs were lost from March 2007 to March 2008.
"Some of the biggest growth areas in 2006 are losing jobs now," he added.
Consumer confidence levels are down to levels not seen since 1992, the last time we entered a recession cycle.
"The reality is, we're on the edge of a recession," Polito said.
Consumer confidence did edge up just a bit in February and March but there is less than half the amount of shoppers compared to March 2006, which was already well into the down trend. "If anyone needs to know when demand died, it was the day Katrina hit," Polito said.
That day marked the beginning of the rise in gas prices and investors became more cautious.
Builders were frenzied trying to get homes completed and many of those were for investors who purchased prior to Katrina. Many who didn't close before Aug. 29 pulled out of contracts. As a result, the inventory of finished vacant homes in Sarasota/Manatee shot up from 782 in the first quarter of 2005 to 3,282 by the first quarter of 2007, more than quadruple. In just one year, however, vacant newly constructed inventory was down by more than half to 1,722.
"We've done a pretty good job of reducing inventory and are in a better situation than most other markets," Polito said. "It looks like by the fall we should see equilibrium putting us ahead of most other markets in Florida."
Surrounding counties like Hillsborough might take as much as four times as long to recover and existing home sales in both markets are way behind new construction. The resale market will continue to see a drop in prices especially on the condo side, Polito said. Builders have an advantage over individual sellers with a larger arsenal of incentives to offer.
The Housing Crisis is Over -- Wall Street Journal
Wall Street Journal, By Cyril Moulle-Berteaux
May 6, 2008
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005.
New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50%, and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high -- but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.
Inventories will drop even faster to 400,000 -- or seven months of supply -- by the end of 2008.
This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.
Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages.
And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.
This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.
A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year.
Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to sub-trend growth for a couple of years.
Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now. Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.
TALLAHASSEE, Fla. – Jan. 30, 2008 –Realtors around the state expect buyers and sellers’ pent up demand to generate an immediate increase in home sales following passage yesterday of Amendment 1, which allows buyers to take their Save Our Homes tax savings with them when they move.
“People who buy now are getting a great deal because home prices have fallen,” says 2007 FAR President and St. Petersburg Realtor Nancy Riley, who led the charge last year in support of Amendment 1. “These price reductions, combined with portability, will mean a great deal on the taxes owed on their new home.”
Some Realtors expect to see sales activity from first-time buyers thanks to a slight increase in the homestead exemption provided by Amendment 1, record-low mortgage rates, pent-up demand and a large selection of properties.
“Again, given the lower cost of housing and the increased homestead exemption, those who have been dreaming of buying their first home will find this the best market in many years,” Riley adds.
/// The portability provision of Amendment 1 is retroactive to Jan. 1, 2007. Sellers may transfer their Save Our Homes credit (the difference between the assessed value of a homestead and the market [or “just”] value) provided:
1. The residence sold last year was homesteaded;
2. The new residence qualified for the homestead exemption as of Jan. 1, 2008;
3. The owner applies for the exemption and transfer with the county property appraiser by March 1, 2008.
///
© 2008 FLORIDA ASSOCIATION OF REALTORS®
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Have housing prices hit bottom?
Florida's best known economist says market in region has stabilized
By MICHAEL POLLICK, Herald Tribune
 January 8, 2008 --
Florida's best known economist says the Sarasota-Manatee residential property market bottomed out in September-October and has now stabilized in both price and volume.
Hank Fishkind predicts flat prices for both counties through 2010, as the region chews through excess inventories of new houses and condominiums.
His findings jibe with what some Southwest Florida real estate observers have been saying and with what statistics from the Florida Association of Realtors have shown during the final months of 2007.
OUTLOOK FOR THE HOUSING MARKET
Florida economist Hank Fishkind is suggesting that housing markets in portions of Southwest Florida have bottomed out in their fall from the boom times:
NEW SINGLE-FAMILY HOME MARKET:
Manatee County: The new single-family home market will not likely bottom out until 2009, with more than 1,000 homes predicted to close that year. The average cost will remain flat through 2010.
Sarasota County: The market bottomed out by the end of 2007, with around 900 predicted closings, down from 1,700 in 2005. The average price of a new single-family home will remain constant through 2010.
EXISTING SINGLE-FAMILY HOME MARKET
Manatee County: Closings of existing single-family units dropped to 4,000 in 2006 after the 2005 peak of 8,000, and this gap is expected to widen during the next few years. As a result, prices will remain flat through 2010.
Sarasota County: Existing single-family homes are expected to see a slight rebound in 2008, though not significant enough to bring levels back to the 2005 mark. The average price is expected to remain at about $340,000 for the foreseeable future.
NEW CONDOMINIUM MARKET
Manatee County: As the softest part of the Manatee County market, condominiums will see significant drops in both units and prices in the coming years.
Sarasota County: The condominium market will remain at its 2006 level for the next several years, despite a significant drop in prices in 2007. Prices are predicted to remain flat thereafter.
EXISTING CONDOMINIUM MARKET
Manatee County: The existing condominium market is predicted to begin a strong recovery in 2008, and the average price is expected to remain at $270,000 through 2010.
Sarasota County: Existing condominiums are expected to see a strong rebound in 2008, and an average price of $370,000 is projected through 2010.
Source: Fishkind & Associates Inc. Published Jan. 8, 2008
In November, for example, Sarasota-Bradenton Realtors sold twice as many homes as their Miami counterparts. The median price in November -- the most recent sales reports available -- was $267,700, down 4 percent from a year earlier, but an improvement from $244,300 in September and $263,900 in October.
Fishkind made his own predictions for this region as part of a 33-county economic report prepared on behalf of Attorney's Title Insurance Fund Inc., a leading title insurance underwriter.
His report painted Miami-Dade and Lee County as the state's most problematic areas, because of excessive condo building in South Florida and a proportionately higher level of home building during the boom in Fort Myers.
Orlando has the strongest market in Florida, followed by the Tampa Bay area and Interstate 4 corridor, Fishkind said.
"But both Manatee County and Sarasota County are still in considerably better shape than many other areas," he said.
Fishkind said that Charlotte County continues to shake off some of the vestiges of 2004's Hurricane Charley, but that the market is in far better shape than its neighbors to the south, where speculation on investment properties was rampant during the housing run-up.
"We are starting to see more normal activity," Fishkind said. "I am much more concerned about Lee County than I am about Punta Gorda."
Fishkind projects moderate rates of growth for population and employment in Manatee and Sarasota counties between now and 2010.
"In regard to housing growth and starts, speculative investing in the real estate market occurred in the area between 2003 and 2006 and resulted in an excessive amount of new homes in both markets," Fishkind said in his report. "This is expected to temporarily slow down the area's housing markets in the next few years, and result in household growth exceeding housing starts in both counties in the next several years. A recovery in housing starts for both counties, however, is expected to begin in 2008," he wrote.
The Sarasota market appeared to bottom out in the spring at 470 to 480 closings per month. But then a national liquidity crisis sprang to life in August, prompted by defaults on subprime mortgages issued during the feverish markets of 2003-05 and continuing into 2006.
For a month or so, mortgage makers froze. As a result, sales fell to 310 in September and stayed flat at 319 in October.
"It seems to me that is the new bottom," Fishkind said, referring to sales in more recent months. "So I'm not seeing any major price declines, and I think volume has stabilized."
Fishkind looked at average prices for all closed residential sales in both counties, taking into account for-sale-by-owner deals as well as builder sales.
In Sarasota, the average price for existing homes in Sarasota during 2007 was $330,042, a 12 percent drop from the peak of $374,107 in 2006, Fishkind reported.
In Manatee County, the decline in average prices has been more severe, coming down 24 percent to $280,622 in 2007 from a peak $370,200 in 2006.
The economist's forecast is predicated on the assumption that the national economy, while definitely in slow motion, will narrowly avert a full-blown recession.
"We have had a significant slowing to basically zero growth in the fourth quarter," he said. "The U.S. economy isn't going to start improving until the second half of '08 and into 2009."
That national assumption is critically important because Florida depends on the Midwest and Northeast United States for a supply of residential real estate buyers, Fishkind acknowledged.
When they suffer, Southwest Florida suffers, too, on a lagging basis, he said.
"Almost everybody who moves to Florida in 2008 made a decision to move in 2007," Fishkind said. Because of that national slowdown, "we will see Florida's economy slowing in 2008 and not improving until 2009."
Other economists have a more pessimistic view, leading to predictions for a more drawn-out recovery for Florida. But Fishkind maintains that the Sunshine State's historical drivers will lift it above other states in the Southeast.
"Florida tends to generate more jobs and population growth than any other state in the Southeastern United States, so turnaround for some parts of Florida ... will take place ahead of many other states in the Southeast," Fishkind said in a statement.
"Other parts of Florida, namely Miami-Dade County and Fort Myers, will not recover until later."
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