We've got 41,000 homes for sale on the market. Will foreclosures pump it up more?

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.

Comments

[Fuzzy Bear]

The 41,000 homes on the market is just the number of listings from the MLS which is often incorrect due to manipulation.

The true number is much larger when you include property listed for sale by owners and current forclosures that have hit the market, but are not listed on MLS or for sale by owner and the number of properties removed from the listings as investors rent while waiting for home prices to go up.

If you had read the article in the November issue of Fortune magazine on the housing issues, you could easily determine that the inventory will increase rather steeply next year.

We are only at the beginning of the massive RE meltdown and in 2008, it will be much worse than this year when you look at the numbers. Then again, if your a news organization and have revenues tied to advertisments by realtors, you would want to provide a positive view to get the business.

[James Thorner]

It's true there's a lot of "hidden inventory." But for consistency's sake it pays to use the MLS, shortcomings and all, as a reference point. That's what I tried to do with the blog post: Take a known base (the MLS) and build a more accurate number with foreclosures factored in. Let me reiterate that the news and advertising sections of our newspaper are divorced. My stories have cost the paper real estate advertisers but never have I been pressured to change a word. Nor do I sweeten the news to gain some future Realtor business. I can't speak for other newspapers, but that's not the Times' way.

[James]

I liked the "Four Stages of Home Seller Sickness". Will the impending crush of additional foreclosure properties cause current sellers to lower their prices in anticipation?

My guess: No. The clueless chumps who have been trying for years to sell their 1 BR condos for $500-600/sq ft just don't get it.

[Johnny]

I went to a model home yesterday in a planned development in the bay area. While there the realtor told us the market is turning around as they have sold 3 houses this week. Really?? If that were so why did the developer lower the prices on their homes $60K each? The realtor was either blowing smoke or terribly unaware of the market.

[JB]

Why was the fed so reluctant to announce the housing market had crashed until it was too late, they denied it up to the last minute. Did greenspan purposely lower the interest rates so people would have a place to place their investments after the 2001 stock market crash? The interest rates spurred the activity, but good old greed fueled the fire. Now the fires out and there's quite a chill in the air. But how long until sellers realize they must reduce price to sell - its basic economics of supply & demand. In 1997 I paid $54 a sq. foot, I see prices dropping to under $100 a sq foot at least - do you agree?

[jackie]

It was a false housing inflation. Until sellers drop prices to 2001 levels and tax reform takes effect, nothing will change. Florida needs to respect 2nd homeowners, not chastise them for owning 2 homes. Florida deserves all that is happening.

[Keith]

Perception typically lags reality in any change... look how many people blindly purchased houses in 2005 and stocks in 2000. The stock market naysayers missed their buying opportunity in 2003 by continuing to complain. The market has too much inventory, we know that. The doomsday talk is over the top, however. Now is a great time to find the right deal, or to buy a house you plan to keep for more than 5 years. you will build equity with mostly flat appreciation for a couple of years, but that still may be better than renting for 3 to 5 years.

[Sandra]

To Jackie: I hope you don't live in this state. "Florida deserves all that is happening"---with citizens like you, who needs enemies? FYI, the real estate bust is happening in almost every state in this country. Sooner or later (grant it, it will be later), Florida will come out of her problems and be healthy again.

[Erica]

I am ready to buy a house as a first time home buyer- I am just waiting for sellers in the Tampa Bay area to adjust their prices to reasonable levels because the homes in this area are NOT worth the asking price. I came to Florida last year and can buy a mansion where I came from for what they are asking here. It's ridiculous.

[James Thorner]

I've met a lot of people who WANT to lower their prices but CAN'T because they either took a 100 percent mortgage or tapped home equity out the wazoo. To lower their price would be to destroy their finances. That's part of the reason for the buyer/seller standoff.

[sue]

Erica, I 100% agree with you. I've seen the same homes listed on MLS for almost a full year at the same price. Others have asking prices so ridiculous it almost makes you wonder if the sellers are delusional. $700k for an older home, that has NOT been maintained and would need thousands in updates/upgrades. It would make me laugh if it wasn't so frustrating. The absolute refusal to lower the sales price at all just mystifies me, as you always assume that basic laws of supply/demand will kick in. We're ready to buy, come on already and be realistic about what you're really selling!

[Migraine]

Every time I've purchased a house I felt like I was paying too much. The current direction of the market did not matter.

[Fuzzy Bear]

But for consistency's sake it pays to use the MLS, shortcomings and all, as a reference point.

It does not pay if your the buyer or the investor. If you follow the advice of the realtors advice, you will lose money!

[Rachel Sartain]

Can we impose a moratoriumon new construction? I still see new developments under construction. What are they thinking?

[Migraine]

I don't know Rachel. I think that they think they can still make money by building houses, and the libertarian inside tells me that they have the right to try and make a buck.

New home construction is already at the mortuary.

[Floyd]

We are still a ways away from hitting bottom in Florida & especially here in Tampa. As a mortgage broker still surviving in this downturn I have seen prices decline & sellers more willing to cooperate when dealing with homes under 200k. When you start getting above 300k many of these people just are not getting it...THEY ARE PRICED TO HIGH!! Even sellers that are maxed out equity wise have to understand that they are not walking away with any pocket money on the sell of their house, in some cases it makes sense to just do a short sale with the bank so it doesn't hurt credit, sell, & move on. Sooner or later it all has to come to a head & I'm betting on stubborness to win out & it will be later. Start checking foreclosure websites & their are still good programs out there for financing that makes sense to serious home buyers. Hopefully Christ will finally get something done with taxes & Insurance (lol). Rubio has a new proposal that needs to be checked out, needs 611,000 signatures by end of December. www.cutpropertytaxesnow.com

[Craig]

The market is adjusting. It's sad so many people maxed out their mortgages with equity loans but that is going on EVERYWHERE. Add to that the investors driving prices up in Fla over the last 5 years and we're hurting a little more here. Have been here only 6 months, and watching prices go DOWN on bank owned houses and foreclosures at www.buyafloridaforeclosure.com
We will buy when the prices hit bottom. That may be in winter 2008.
Good luck to you all!

[James]

James - people who can't lower their prices will eventually lose anyway. In a buyer/seller standoff, the buyer always wins. Why? The seller continues to incur 10-12% annual carrying costs for mortgage, insurance, prop taxes, repairs, etc. Buyers can and will hold out until prices correct.

Sellers who won't or can't lower prices will just bleed to death.

Erica,
Didn't you look at the home prices before you moved here? AND, just because you came from a place with cheaper housing, that doesn't mean it should be the same here. I'm not saying that our prices weren't inflated. I'm just saying that you can't be naive enough to think they should or will be the same everywhere. My guess is that even after our correction, you'll still be able to get that mansion back home for the price of a home here. I'm willing to bet that there are many places you could have moved to, and seen the same thing.
Location, location, location. That will never change.

Erica,
Didn't you look at the home prices before you moved here? AND, just because you came from a place with cheaper housing, that doesn't mean it should be the same here. I'm not saying that our prices weren't inflated. I'm just saying that you can't be naive enough to think they should or will be the same everywhere. My guess is that even after our correction, you'll still be able to get that mansion back home for the price of a home here. I'm willing to bet that there are many places you could have moved to, and seen the same thing.
Location, location, location. That will never change.

[DELdaBULL]

Unfortunately,

Florida home prices don't match up with Florida salaries. Can't afford an average home of ~$250,000 on and average household income of ~41,000. It just does not add up:(

[BoBo]

To Deldabull: what neighborhood are you looking in? I didn't know the average home price in Tampa was $250K. Did you ever think about looking at other neighborhoods? There are plenty of neighborhoods that are less.

[James]

The average home price in the Tampa area is $209,000 (October data). DELdaBULL is using a common blog tactic known as "hyberbole".

[BoBo]

What DeldaBull wants is a higher priced house without working up to it. Part of the "got to have it all now" generation. Look at realtor.com, there are plenty of entry level homes.