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« October 2007 | Main | December 2007 »
They keep reporting this as if it's "bad news" but someone please tell me why we should mourn slower new home construction in this overstuffed turkey of a market.
With apologies to the laid off construction workers, we need a breather if we're going to get supply and demand in balance again.
Here's the latest new home report that takes the typical boo-hoo approach.
RealtyTrac released foreclosure numbers that showed Florida, like the rest of the country, suffers from unusually high foreclosures. Year to year, foreclosures in Florida have doubled. And then some.
Gee, didn't see that coming.
One snippet of possible encouraging news: RealtyTrac said foreclosures appear to have peaked around August, when banks started pulling back from the housing market en masse.
Here's more reading from Reuters.
I'll repeat: RealtyTrac and its cohorts exaggerate "foreclosures" in two ways.
1. They count what are essentially missed mortgage payments, leaving the misleading impression that such defaults necessarily lead to home confiscation. 2. Some homes are hit with more then one foreclosure filing, leading to massive double counting.
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The good news: Orlando, Miami and Fort Myers home sales stink more than Tampa's.
The bad news: Tampa's home market isn't exactly smelling like violets either.
The Florida Association of Realtors made it official today by releasing its October existing home sales numbers. The Tampa Bay area's decline - 30 percent - was a touch higher than the state's decline - 29 percent.
That's single family homes. Our condo sales declined 17 percent versus 20 percent for the state as a whole.
Here's a Tampa area summary: Combined sales of single-family homes and condos went from 2,964 to 2,159 from October 2006 to October 2007.
The median sales price of single family homes was off 7 percent, Realtors said, while condo prices rose 8 percent.
Click on the following charts for more details. Download October_2007_home_chart.pdf and Download October_2007_condo_chart.pdf
It's interesting to see that Sarasota, where the housing market hit the skids first, is now recovering, if you consider a 17 percent sales decline a recovery.
On the other hand, Ocala, whose market still thrived after Tampa's tanked, saw the greatest drop in sales at 54 percent.
Tampa nudged out Miami, Detroit and San Diego for having the largest home price decline the past year.
The S&P/Case-Shiller U.S. National Home Price Index said housing prices fell 11.1 percent in Tampa, the worst among 20 cities listed on the survey. The average decline among those cities was 4.9 percent.
A chart and other information about the index is available at this link.
Case-Shiller measured housing prices from September 2006 to September 2007. The index lags a month behind the monthly housing statistics released by the National Association of Realtors, which is putting out October home sales figures this week.
The index tends to show a steeper price decline than does the Realtors report.
Just what we needed: Another barge of vinegar dumped into our already sour housing market.
This national real estate story from the Wall Street Journal predicts foreclosed homes will boost home supply by about 4 months. It blames $362-billion worth of adjustable rate mortgages that are resetting in 2008.
The housing supply in the Tampa Bay area is roughly 20 months (divide the 41,000 homes on the market by the 2,000 homes that sell each month).
If the WSJ's prediction came true locally - and that's a big if - our home listings could shoot up to the high 40,000's.
Investor optimism has tanked to Hurricane Katrina levels, according to a new Gallup/UBS poll, and respondents blamed the housing market for much of the troubles.
Some snippets from the poll: 56 percent of people think housing is hurting the business climate a lot. Another two-thirds of respondents said credit is harder to get than it was three months ago.
One part of the survey was annoyingly misleading. Gallup said 68 percent viewed the economy as either in a "recession" or "slowdown." They are different things - one means the economy is contracting, the other means it could be growing but at a slower rate.
They shouldn't be grouped together as a survey answer - unless your aim is to emphasize gloom.
The customer is always right, but this is getting ridiculous. I’m talking about Tampa Bay area home sellers who refuse to drop prices on their homes. An exasperated Ann Guiberson, head of the Pinellas Realtor Organization, says asking prices are up over last year by a few thousand dollars.
How can that be? We’re stuck in a Florida-wide housing retraction with talk of 25 percent price declines in the air. Call it Home Seller Sickness. I had the affliction earlier this year when I sold my house after wrestling with the dead-weight market for more than half a year. The disease has four stages, ranging from prickly denial to glum acceptance:
Stage 1/My House Is Better Than Your House: You list your house for $300,000. Your neighbor lists the same model for $275,000. Of course, you can justify the premium you’re charging. Your kitchen has new floor tile, handmade by Venetian artisans. Your neighbor has brown linoleum, circa 1979. You start pricing the Toyota Highlander you’ll buy with the profits. House hunters respond by treating your home as if it’s the Bates Motel.
Stage 2/Maybe I Was a Little Rash: You’re forced to drop the asking price to $275,000. Sure, you’re still not undercutting your neighbor, but that guy’s a slob. Did you see the orange paint in his living room? Hasn’t redecorated since Fonzi was on TV. Plus, you’ve installed the best aromatherapy system on the block. One whiff of “ocean breeze” and “fresh laundry” and buyers will be racing for the contracts.
Stage 3/You’re Going to Make Me Work for This, Aren’t You?: Six months pass. Neither you nor your neighbor has sold. You drop the price to $249,999. Your realtor insists on the $999 trick: Make the house look desirable. Cancel the Toyota SUV purchase. Settle for an electric scooter.
Stage 4/Will Somebody Please Kill Me Now?: You drop your home price to $234,900. It’s the cheapest house on the block. The buyers finally make an appearance but demand you knock off another $15,000. You accept an offer just to be done with it. They nitpick you to death, insist you fix every jiggly doorknob or else void the contract. The buyer’s smile at closing contrasts with your frown. You blame your realtor. It’s all her fault. But the scooter ride home is invigorating.
--James Thorner
The firm Zillow has done the dirty work for us and compiled neighborhood-by-neighborhood home value declines for our area over the past year.
I did a quick scan and learned that some of our best known neighborhoods are worst hit value wise: Clearwater Beach, New Tampa, Seminole Heights, Tierra Verde and northeast St. Petersburg. Places like Bayshore in Tampa have held up a bit better.
If you want to dig deeper, I'm providing a spread sheet file listing scores of neighborhoods and their relevant housing statistics. Click on the tabs at bottom of file to choose categories.
Here it is Download copy_of_2007q3_tampa_st_petersburg_clearwater_fl_msa.xls
Here's a new way to slice and dice the recent housing slump. The housing tracking firm Zillow keeps tabs on how many of us homeowners have "negative equity" in our homes we've bought the past year.
Negative equity is a fancy term for "I owe more money on my house than my house is worth."
Anyway, nationally the percentage of recently bought homes with negative equity is 15 percent. but in Tampa-St. Petersburg-Clearwater it's 25.4 percent.
While that's bad news, things are MUCH worse in places like Las Vegas and Stockton, Merced and Sacramento, Cal. About 72 percent of Merced homes bought the past year have negative equity.
Zillow has published more interesting details on this Web site. It shows, for example, that homeowners in our area typically have about 9 percent equity in our homes. In other words, we still owe the bank 91 percent of the home's value.
Single family home construction is lousy. Apartment building is up. More details here.
Canadians must be feeling pretty satisfied with themselves this year. First, their second banana dollar has beefed up against the U.S. dollar. Now, as this story shows, Toronto is having a record year for home sales.
Where will it all end?
There's a buzz on Clearwater Beach about a new way to revive homes sales in this comatose market. Two words: Fractional ownership.
It's sort of a modified time share concept in which you actually own a deeded portion of the property. They're doing it now on a project called Island Town Homes on the Intracoastal Waterway of Clearwater Beach.
The developers are offering up 7 units for about $1-million apiece. They hope to split ownership in each unit about 8 ways, so that people could buy a luxury unit on the water for about $200,000.
You don't even have to know the co-owners. A "use agreement" would hash out who occupies the unit at what time.
Is this the salvation for Clearwater Beach, which is suffering from a glut of million-dollar condos? Who knows. But the concept has tested successfully in Colorado ski resorts. So maybe there's a chance.
Interestingly, Realtors can sell each fraction individually. So you could have 8 Realtors splitting a commission on one unit. How's that for spreading the wealth?
With the holiday season’s arrival this Thursday, let’s welcome a festive break from the housing doldrums. But before we do, let’s assemble a list of the rogues and dupes who have made the real estate market such an unwholesome place for the holidays.
You’re behind on your house payment. A postcard arrives in the mail. A company promises to fix your foreclosure for $1,200. One condition: Don’t call your lender. The foreclosure fixers will handle everything. Who could refuse such an offer? The company must have spent at least a quarter on postage. Many people forked over $1,200. How did it work out? Let’s say quite a few homeowners are now not-so-happy renters. The TV show Inside Edition savaged one of those self-proclaimed rescuers, Clearwater’s Foreclosure Assistance Solutions. Nothing says subtlety like the juxtaposition of homeless customers with the owner’s $2-million waterfront mansion.
A special niche in the rogue’s gallery goes to the people who manipulated the market at The Club at Brickell, a 43-story condo tower in Miami. They committed deception on such a scale that bankers are calling it a national epicenter of mortgage fraud. Phony appraisals and lax underwriting let crooks arrange sales of $400,000 condos for $800,000. The cheaters paid the sellers $400,000 per condo, cashed out the remaining $400,000 and let the empty condo fall in foreclosure. Investigators said about 200 of the deals were shady.
Wonder why Florida leads the nation in mortgage fraud? Stick the next case in the dumb-as-a-sheet-rock file. Transeastern Homes, operating in Tampa as Engle Homes, is one of the builders lanced by bankruptcy rumors this month. Here’s one reason: Transeastern was notorious for its high-pressure, cattle-call sales events. At one event at Saddlebrook Resort in Wesley Chapel, if you didn’t sign up for a home quickly, you’d be exiled to the rear of the line. The ploy came back to bite the company. So eager was Transeastern for fast sales, it lost money on many transactions. Construction costs rose and the company couldn’t renegotiate home sale prices they locked in.
We could fill the list with more examples, but that’s plenty for now. Must leave room for pie.
Florida's second-largest title insurance company will pay $5-million to settle charges that it ran an elaborate kickback scheme to build its business, state and federal officials said Friday.
Regulators say that First American Title Insurance Co. illegally paid real estate agents, mortgage brokers, banks and home builders for referrals by making them partners in sham title companies. Eighty-four of these companies were created to funnel business to First American and payments to those making the referrals, authorities said.
First American denied breaking any laws, but agreed to shut down the partnership companies. First American will pay $5-million to the three agencies involved in the investigation and settlement, the Florida Department of Financial Services, the Florida Office of Insurance Regulation and the U.S. Department of Housing and Urban Development. Look here for more on this story.
Selling a home these days is tough. Some people try warm cookies and helium balloons. Others give away free washers and dryers. But what if you own million-dollar properties? The kind where you don’t ask about a mortgage because there is no mortgage?
Here’s the answer from a luxury real estate auction held in Sarasota Friday by SKY Sotheby’s International Realty: If you want to move waterfront mansions in a hurry, it’s best to settle for 40 cents to 70 cents on the dollar.
“The current market has been dysfunctional,” said SKY president Chad Roffers, whose company offered up 79 homes worth about $200-million in a giant lawn tent at the private Long Boat Key Club.
“Homeowners learned what fair market value is. We had 400 buyers from four countries and 18 states. The market was here.”
Homeowners also learned the limits of auctions, a method gaining favor this year to provide an amphetamine rush to a slumbering market. About 30 of the 79 properties sold on Friday. Some were auctioned, but required a minimum bid, while others were sold “absolute” — best offer takes the property.
While Roffers proclaimed the day a triumph, none of the three Pinellas and Hillsborough County properties on the block ever passed Go. One 5,200-square-foot waterfront house at 6161 51st St. in Bayway Isles in St. Petersburg, originally listed for sale at $2.4-million, couldn’t rustle up a minimum $800,000 bid.
Another of the higher-end waterfront properties, listed at $11.9-million on Longboat Key’s Gulf of Mexico Drive, also failed to sell.
Considering their ability to toss around tens of millions of dollars, many of the buyers were a secretive lot. Participants paid a $10,000 deposit just to win use of a blue bidder’s paddle. If they won, they had to write a check for 10 percent of the purchase price on the spot.
“It’s the aftermath of irrational exuberance,” said one anonymous millionaire with a British accent from Southeast Asia who — no doubt enjoying the weak U.S. dollar bargain effect for foreign buyers — scooped up four properties for about half their recent value.
His son chimed in: “This is a market wake-up call. Forty to 50 cents on the dollar: I think this is the new reality.”
Read more here about Friday's auction.
Housing is hurting, but you can always count on the Florida Association of Realtors to supply some soothing balm.
In a barrage of press releases Thursday, the Orlando-based group suggested real estate's recovery will be driven by three forces: Florida's continuing popularity with foreigners, its stronger-than-average job creation and the retirement of baby boomers seeking warmer climes.
"We are in for a retiree boom, and we are in the right place for it," said Patricia Osborne, a Realtor in New Port Richey.
FAR noted that about 10 percent of Americans will retire in the next decade. Yes, it's talking about the vaunted baby boomers. And it quoted University of Central Florida economist Sean Snaith, who predicts 2008 will be a strong year for the state's economy - outside of home building, of course.
A crisis of confidence in real estate, combined with stingy credit, has produced the worst Florida housing sales in a decade.
All talk these days is about a credit crunch, but the doom and gloom seems to miss one point: Banks can't stay tight forever. They are, after all, in the money lending business. McDonald's sells hamburgers. Residential lenders lend to residences.
After a suitable period they'll have to start loosening up mortgage lending a bit if they want to make money. That assumes the federal government doesn't pass onerous regulations that torpedoes the ship while claiming to bail it out.
Here's the latest about bank's lowering interest rates this week. Note the growth in refinancings. People may not be buying homes, but you can count on them to refinance if the terms are generous.
A nightmare story out of Miami about how phony buyers for a single 43-story condo project duped banks out of millions of dollars.
We've had plenty of similar fraud in the Tampa Bay area, but are there any on the scale of this 643-unit tower? I don't think so. But if you know something let me know.
Here's the latest on home foreclosures locally: Tampa-St. Petersburg Clearwater was rated 19th worst of 100 major metro areas in the United States.
In a report released Wednesday, the firm RealtyTrac said the region listed 13,562 foreclosure filings on 9,126 properties in the third quarter of this year that ended Sept. 30. That's one filing for every 93 households.
Cities worse off than Tampa-St. Pete include Miami, Fort Lauderdale, Detroit, Phoenix, Las Vegas, Atlanta and San Diego. But all the troubled cities seemed to have something in common: They were either housing hot spots that have cooled or rust belt areas strapped with big job losses.
I've said this before, but RealtyTrac tends to exaggerate foreclosures. The filings don't necessarily mean people are losing their homes. In most cases, RealtyTrac captures households that have defaulted on home loans. Most of the homes escape bank repossession.
Another statistical problem is duplication of filings. Many houses get foreclosure notices from two lenders, or else from a lender and a home owners association. That double counting makes it seem like the problem is worse than it is.
Fortune magazine has published depressing news for those of us who bought recently into the housing market.
The magazine places Tampa in the top five of "real estate markets poised to fall." Florida favorites Miami and Orlando join us in this not-so-elite company. Lauderdale and Palm Beach aren't far behind.
Fortune concludes that few people want to buy a house or condo that they can rent for less. You see it everywhere: Investors pay $2,500 a month for a home they bought during the boom but can rent it for only $1,500. From a buyer's prespective, what's the incentive to buy when you can rent for $1,000 less a month?
Two things could help break the impasse: Home values start rising slowly again, making home ownership more attractive, and a reduction of rental homes on the market allows landlords to raise rents to cover more of their house payments.
Keep in mind that this report includes condos, gluts of which are forming in places like Miami, coastal Pinellas County and downtown Tampa. Houses in desirable neighborhoods wouldn't feel the rent/mortage pinch the same way.
Also, we've probably already experienced part of this supposed 28 percent price decline. In my new neighborhood, prices are down 15-20 percent this year.
The proposal to double the homestead exemption from $25,000 to $50,000 on Florida homes is a joke. There, I said it.
But it’s hard to laugh at this particular joke. In all the debates about property taxes, no one seems to mention that the $25,000 homestead exemption, effective since 1982, has been The Incredible Shrinking Tax Break for 25 years. When the exemption was increased from $10,000 to $25,000 between 1979 and 1982, the median home price in the Tampa Bay area was about $50,000. In other words, the exemption cut the taxable value of your house in half. March forward 13 years.
In January 1995, when the complementary Save Our Home tax cap took effect, Tampa Bay area homes sold for a median price of $71,000. The homestead exemption exempted about 35 percent of a home’s value. Observe our plight today: Based on September’s local home sales price of $200,700, the value of the exemption is only 12 percent of a typical home’s value. What seemed like a governmental gift in 1980 is the Great Home Heist in 2007. Home values have risen through the roof, but the state hasn’t indexed the exemption for inflation.
Instead, the Legislature passed Save Our Homes, approved by voters in 1992. SOH caps the increase in taxable value of a primary residence at 3 percent a year. When you move, you lose the accrued savings and are taxed at your new home’s real value. Florida Tax Watch flagged the unfairness of SOH back 1992. People mistakenly think SOH is a tax cut. It’s not. It’s a tax shift, a shift to first-time home buyers, businesses, vacation homes and anyone who wants to change his or her address. To its credit, the Legislature tried to rig a fairer tax structure this year. The homestead exemption would have expanded to 75 percent of a home’s value up to $200,000. The state would have taxed a $200,000 house as if it had been worth $50,000. Voters feared the change. A judge objected. And the Legislature hatched this turkey of a compromise to double homestead to $50,000.
On my house, it’s going to cut $200 off a tax bill of $6,200. The sound you hear is laughing. And it’s not the joyous variety.
Condos seem to be driving the increase in the inventory of unsold homes on the market. That's what emerged from an analysis of Tampa Bay area home sales data for October.
About 41,000 homes were listed for sale last month in Pinellas, Pasco and Hillsborough counties. The biggest growth occurred among condos in Hillsborough.
The number of condos for sale in and around Tampa grew from 1,976 to 4,032 from October 2006 to October 2007. The condos bloated the county's overall inventory from 13,229 to 15,092 year over year.
Several forces seem to be at play. First, apartment buildings converted to condos have swollen the market. Second, investors are trying to sell units in recently completed condo towers in downtown Tampa and Channelside.
I would suggest a third possible cause: As single-family home prices come down off their housing boom highs, buyers no longer need to economize by buying into less expensive condos.
Big national builder Toll Brothers is having a poor year but said some markets are worse for new home sales and cancellations. Guess which he rated among the two worst markets? Yep, it's Tampa. Las Vegas was the other.
To be fair, the company has only a small presence in Tampa Bay area if you exclude Manatee and Sarasota counties. It's best known project locally is The Estates at Harbour Isles in Apollo Beach southeast of Tampa.
Toll's chief executive talked about the company's travails for the New York Times. His main point in the article was - here we go again - the media's to blame for the suffering of the housing industry.
The University of Florida released its population estimates for all 67 counties in Florida: Download PopulationChange1980-2007.pdf It contradicts rumors that more people are leaving than arriving in Florida.
An eye opener Tuesday at the Hillsborough County Court House at the daily auction of foreclosed homes.
Not one of the 15 homes offered up for sale attracted a bona fide bid. The 20 investors in the crowd sat on their hands.
Why the lack of activity? You'd think banks would be desperate to unload properties in a Tampa Bay area market burdened with 41,000 homes for sale and record-setting foreclosures. That's not necessarily so.
One typical no-sale from the Court House: The bank set a minimum bid of $228,000 for a Tampa house on the auction block, even though the owner owed the bank $217,000. That's not exactly dumping.
"I don't see anything to buy," one investor at the auction complained.
The pattern repeats itself: Of the dozens of homes placed for auction last week in Tampa, fewer than five sold to winning bidders.
It's quite a change from two years ago, when hordes of investors paid market price for foreclosed homes with the certainty of big mark-ups on the resale.
Here's a good-news-bad-news report about jobs in industries like mortgage lending, real estate, and construction.
About 6,500 people across the nation lost jobs with mortgage lenders in October. That's bad enough, but not when you compare it to the more than 50,000 mortgage workers who lost jobs in August and September.
It was a similar story in housing, which includes real estate agents and construction workers. About 12,000 people lost jobs in October, far below the nearly 57,000 who dropped from those industries the two months before that.
The figures come from the Chicago outplacement consulting firm Challenger, Gray & Christmas Inc.
"It may be too soon to declare an end to the crisis in housing and the credit markets, but this is definitely a very positive report," said John A. Challenger, chief executive of the company.
Many of those jobs cuts are happening in Florida, which shares top honors with housing-stressed states like California and Nevada.
Home building executives aren't suffering too badly from the housing downturn as you'll note from this list. Major builders are losing hundreds of millions of dollars, but what's a few million bucks among friends?
Mayday Florida! is the name of a column that appeared in the business magazine Site Selection. The author argues that residential developers have commited "carnage" on our landscape and suggests, among other things, we pay a $100,000 state impact fee on each house.
Read it all here. (When on main Web Page, scroll down, look under "Future Studies" and click on Mayday Florida!)
He makes some good points about making Florida into a Garden of Eden, but after paying $100,000 on a house I don't think I could even afford a fig leaf.
Here's a column that ran in the St. Petersburg Times. It addresses the tricky question about whether to plunge into the housing market now or wait for what many think will be lower prices.
Interesting numbers from the Web site HousingTracker.net. The company tracks asking prices for homes as opposed to sales prices. Over the past year, the Tampa Bay area's median asking price is down 13 percent, to $230,000. More details here.
It's a pretty good gauge of seller sentiment, which doesn't always mesh with what buyers are willing to pay. The Florida Association of Realtors said the median sales price in September was $200,700. The gap tells you something about the standoff between bargain hunting buyers and profit-seeking sellers.
 (Un)Real Estate offers a peek at the housing market usually reserved for insiders. While it focuses on the Tampa Bay area, it won't neglect dipping
into the rest of Florida and beyond. Its goal? Simple: To help you keep a roof over your head without losing your shirt.Times business reporter James Thorner has covered the Tampa Bay area housing market since 1999 and writes a weekly column on the topic in the St. Petersburg Times. Having recently bought and sold a house here, Thorner has shown his insights are more than theory. He's got the burn marks to prove it. E-mail James Thorner: jthorner@sptimes.com. |
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