Good news for renters, bad news for landlords

Renting a home or apartment shouldn't be as expensive this year in the Tampa Bay area.

According to the Marcus & Millichap real estate firm, a "shadow market" of rentals will increase apartment vacancy and dampen rents in 2008.

You can probably guess the nature of the "shadow market:" The investor-owners forced to turn their unsold houses and condos onto the rental market.

M&M predicts asking rents in Tampa will finish 2008 at $852 per month, a 2 percent uptick.

"Owners may need to increase concessions more significantly if vacancy rises above the forecast rate due to reconversions and shadow-rental stock," the company said.

What's it all mean for the housing market?

As people on this blog have noted, lower rents squeeze home prices. Why buy if rent is hundreds of dollars less than a prospective mortgage payment?

But forces are at work to raise rents long term. This week's passage of the Amendement 1, which lowers property taxes on primary residences, doesn't apply to commercial property like apartment buildings. As the tax burden is passed increasingly to landlords, rents will have to rise.

Property tax cut no magic elixir

I ran a story Thursday in the St. Petersburg Times that analyzes what passage of Amendment 1 could do for home sales. The largest change wrought by the amendment is the ability of Floridians to take their accrued property tax savings with them to a new home. It's called portability.

Most of the people I talked to think it will stimulate things a bit but that the positive impact could be drowned out by the persistent weakness in the housing market.

One fact that didn't make the story: Homes sales within Florida - in other words Floridians changing homesteads within Florida - peaked in 2003. That's a full two years before the rest of the market peaked.

What that seems to say is that high property taxes - and the loss of Save Our Homes savings when Floridians move - really did slow down home sales among that group.

Will Amendment 1 help? We'll see in a few months.

Here's a link to the story.

Big builder files for bankruptcy

You could see this coming: TOUSA Inc, parent company of the former Transeastern Homes, has filed for Chapter 11 bankruptcy.

The Florida company, which built New Tampa's Live Oak Preserve and Pasco County's Tampa Bay Golf & Country Club, blamed a credit crisis, falling home prices, low consumer confidence and high inventory for its troubles. It operates locally as Engel Homes, the successor company to Transeastern.

It promises "business as usual" as it restructures. TOUSA is the second builder active in the Tampa area to file for bankruptcy. The first was Levitt & Sons, active in Hernando County.

We're not the worst anymore: Miami home prices fall more than Tampa's

Monthly snapshots of home prices are volatile. More proof of that is contained in the November S&P/Case-Shiller Home Price Index.

The survey shows Tampa as the sixth worst of 20 housing markets in the U.S. Just a month earlier in the October report, Case-Shiller reported we'd suffered the greatest year to year drop in home prices.

Our November price drop was 12.6 percent, which is pretty much in line with what Realtors have already reported. We did a bit better than Miami, San Diego, Detroit, Phoenix and Las Vegas. Miami took top (bottom) honors with a 15.1 percent home price decline.

Our prices have returned to what they were in July 2005, according to the index. Expect the lead to change frequently in this race to the bottom.

Click here for more details: Download CSHomePrice_Release_012900.pdf

Who would have thought? New homes sales down nationally

The Feds have released new home sales data for December. They say sales are off about 40 percent year to year. Of course, we're worse off in the Tampa Bay area. Last I checked we were down more than 50 percent.

Until buyers and sellers reduce the outrageous number of homes for sale in our area, I'll continue to view the new home construction collapse as beneficial for the overall housing market. You don't keep eating when your stomach's set to explode.

Here's a press release from the Feds: Download newressales.pdf

Home prices: Tampa stacks up poorly against other cities

We already know about the median home price here dropping about 15 percent the past year and more than 20 percent since the 2006 price peak.

But it's interesting to note how we compare to the rest of the country. First American Corp. has done the work for us.

The company provides residential date for the mortgage industry, and shows our prices declining 9 percent in November, the last month they've counted.

We're near the bottom in that regard, but the usual suspects have done worse than us: Orlando Phoenix, Las Vega, L.A. and San Diego.

Texas owns many of the success stories. Home prices still appreciated year to year in places like San Antonio and Austin. The crude oil boom has most likely greased that skid.

Here's more if you want it.

Not unexpected: December home sales, prices down in Tampa

The numbers are in: Tampa-St. Petersburg-Clearwater single family home sales in December fell 32 percent.

The hard numbers are 1,761 sales in December 2007 versus 2,607 sales a year earlier.

Prices dropped 14 percent over the year, from a median of $226,800 in 2006 to $194,200 in 2007.

We pretty much floated along with the state's housing currents: Sales were off 31 percent statewide, while prices fell 13 percent.

The condo picture was more nuanced. December sales in the Tampa Bay area dropped 33 percent from a year earlier. (488 sales in Dec. 2007 against 731 sales in Dec. 2006)

Condo prices were off only 1 percent, declining from $183,200 to $181,700. The relative price stability is mostly an illusion since greater numbers of pricier condos are coming on line, which distorts the median.

UPDATE: Here's links to full single family home and condo charts for all of Florida. Download decsales.pdf and Download decsalescondo.pdf 

International home survey: Tampa homes "seriously unaffordable"

Many people on this blog have made major hay about lack of home affordability in the Tampa Bay area.

They've got any ally in the just-released Demographia home affordability survey. Demographia simply divides median home price by the median household income and comes up with a number.

Tampa-St. Petersburg's $218,300 median price (from last summer) was divided by a median household income of $46,000.

The resulting number, 4.7, puts us in the "seriously unaffordable" category along with the likes of New Haven, Conn., Fort Myers and Charleston, S.C.

A rash of California cities comes off the worst, along with Honolulu and Miami-West Palm Beach. Demographia calls them "severely unaffordable."

You can scroll through the full results here.

Take comfort in the fact that the "most affordable" cities for housing come with a healthy dusting of rust and frost. The top five includes Thunder Bay, Canada, Youngstown, Ohio, and Flint, Mich. Nothing like winter on the Great Lakes.

Demographia seems to have an ulterior motive. Its prescription for the affordability crisis is to open up more cheap land along suburban fringes. Didn't we just do that in our latest housing boom?

Nevertheless, it's a good exercise to compare home prices with incomes. We've gotten way out of whack in that department.

We want our money back: Home buyers sue Realtors

Is it your Realtor's fault if you paid inflated prices for real estate in 2005? Speaking as a guy who signed up for a new house in November 2005 - and whose home value has subsequently fallen - I take responsibility for my own decision.

But out in California some home buyers are suing their Realtors for being "misled" during the housing boom. Here's a link from the New York Times.

New home contradiction: Sales are savaged but average prices rise

You’ve probably expected this news - new home sales in the Tampa Bay area were sliced in half in 2007. But did you imagine that average new home prices would stay about the same last year?

According to housing analyst Marvin Rose, single family home permits in Pinellas, Pasco and Hillsborough counties fell from 15,448 in 2006 to 7,555 in 2007. But home prices rose a hair from $338,917 to $339,696 over the year.

What’s going on?

Let Rose explain: While the price of the same floor plan in the same community has dropped about 10 to 15 percent, the average closing price doesn’t reflect that because fewer cheaper homes are selling.

Less expensive homes were favored by speculators and sub-prime borrowers, and they’re hardly buying these days.

Rose said sales could rebound in 2009 provided a recession doesn’t put the kibosh on that. In the meantime, a housing recovery depends upon prices fallign further, he said.

A little clarity on the new home sales "crisis"

It's the worst market since 1980. That's right. You heard it everywhere this week. New home sales have fallen more steeply than they have in about 30 years. We're back to Jimmy Carter-ville! Next thing you know, Miss Lillian will be rising from the grave.

Welcome to the wonderful world of misleading statistics.

It's true that the percentage decline in new home sales is as sharp as it's been in 30 years. But that doesn't mean total sales have returned to levels unseen since 1980.

Skeptical of the alarming headlines, I pulled historical new home sales data for the Tampa Bay area going back almost 40 years.

Guess what? In Pasco County, new home permits, sort of a leading indicator since builders pull permits before they break ground, returned in 2007 to 1997 levels. The hard number is about 2,220 permits.

In Hillsborough County, the story was much the same. Hillsborough issued 4,665 permits for single family homes in 2007. That approximated the levels of 1995.

Only in Pinellas County did the permit total fall to levels not seen in 30 years. But the "crisis" there is largely one of land scarcity.

As Florida's most densely populated county, Pinellas has suffered a slow long-term decline in housing permitting going all the way back to the house and condo construction boom of the early 70s.

Pinellas home construction has zigged and zagged over the years, but the general thrust is downward.

Conclusion: Beware of the numbers/percentage game. It makes for alarming headlines, but it's only half the story.

We were sitting atop Mount Everest in 2005. Just because we've fallen off that summit, doesn't mean we're residing in Death Valley.   

If home prices are down, why are bargains so hard to find?

Here's a real estate column I wrote for Friday's St. Petersburg Times:

When I mentioned two weeks ago that Tampa Bay area home sales prices had fallen 21 percent during the previous 18 months, many readers reacted with an exasperated, "Where do I get a piece of that action?!?"

Someone even quoted me the old Mark Twain favorite: "Lies, damn lies and statistics." The implication was that the number was an attempt to shroud reality in pixie dust.

Buyers are told the market is so lopsided - 41,000 home listings chasing fewer than 2,000 monthly buyers - that bargains abound. Yet when they try to haggle down a home price, sellers recoil as if someone were demanding a pound of flesh from their firstborn.

Why the discrepancy between statistics and supposed reality? Where are all the hard-up sellers?

For one thing, the median home sales price can trend lower even in the absence of genuine price cutting. That's what happens when price-shy buyers steer to smaller, less expensive homes. You saw that happen with the increase in townhome sales.

Another reason is more obvious: Sales prices record just that - homes that have sold. These days, that grocery basket includes a ton of homes hobbled in various ways: short sales, fire sales, foreclosure fixer-uppers.

Heard about all the homes selling for 60 cents on the dollar? Probably not. That's because many are snapped up by investors before the general public gets a glimpse. When the average buyer sees them they'll have been marked up and relisted.

Among the armies of less desperate sellers, people are reluctant to give their houses away. Pinellas County home sales data show a large gap in many neighborhoods between asking prices and sale prices. It's a sure sign of sellers who haven't come to grips with the glut.

In December in south St. Petersburg, 50 of the 1,207 homes listed for sale actually sold. But most of those 50 sellers had to cry uncle. Their average listing price was $352,000, a number that had plunged by closing to $310,000.

Little noted by statisticians are the no-sales and the near-sales, the deals that fell apart over price. If you're a buyer negotiating with a stubborn seller, you can be excused for thinking the 21 percent price decline is just a bunch of fluff.

New home construction off by 25 percent last year

These national housing reports don't always shed much light on our local situation, but here's a link to a story about the government's new home construction numbers for 2007.

Rest assured, the Tampa Bay area was harder hit. Based on numbers acquired earlier this month from local housing analyst Tony Polito, we've gone from about 23,000 housing starts in 2005 to under 10,000 today.

Mortgage insurer: Tampa-St. Pete 9th riskiest housing market in U.S.

Gimme an Advil and two Rolaids

PMI, the mortgage insurance company, rates the Tampa Bay area ninth riskiest for home price declines through the summer of of 2009.

Fellow housing hangover sufferers such as Phoenix, Los Angeles, Fort Lauderdale and Orlando came off worse than us. But Tampa-St. Pete shares the "red zone" atop the list of high risk markets. Miami came in 13th. Jacksonville was 16th.

How does PMI evaluate risk? Probably just like you would. It keeps tab of home prices, employment trends, affordability, housing supply and foreclosure rates. It sees little chance of home price improvements this year.

Here's PMI's top ten list (more like bottom 10 list) :

1. Riverside, CA
2. Las Vegas, NV
3. Phoenix, AZ
4. Santa Ana, CA
5. Los Angeles, CA
6. Fort Lauderdale
7. Orlando
8. Sacramento, CA
9. Tampa-St. Pete
10. West Palm Beach

If you want to wade through PMI's 12-page report, click here. It offers some good perspective on when we might expect a housing recovery.

Median or average? What's the best way to measure home prices?

Last week I questioned the claim by Hillsborough County Realtors that home sales prices increased 3 percent the past year to a whopping $267,117 in December.

Something didn't smell kosher. Forty-two percent fewer homes sold the past year yet people are paying more for them? Had the laws of supply and demand been violently overthrown?

Of course not.

At the newspaper's request, the Greater Tampa Association of Realtors did some math and provided a more useful median home price. After all, Tampa Realtors have to supply median prices to the Florida Association of Realtors. 

Here's Hillsborough's median price for December: $211,613. That's $55,000 below the average price. Hmmmm...wonder why the Realtors association prefers average prices to median prices?

National Realtors group: Buy a home...pretty please!

You can't blame a trade group for trying to keep its membership upbeat. To wit, here's the latest on a national ad campaign from the National Association of Realtors. I've provided my rough translation in parentheses after each paragraph:

Beginning today, the National Association of Realtors® is reaching out to consumers with the facts about homeownership and the value of real estate as a long-term investment. Would-be homeowners who are uncertain about their home buying plans can learn more about the options available to them and the long-term benefits of owning a home through a new advertising campaign that will provide current, relevant housing data to help them make informed decisions about buying a home.

(What we want to do is reach out and shake you by your grimy lapels. Would you hurry up already and buy a house? We're dying here.)

Over the past 30 years, the median price of existing homes has increased an average of more than 6 percent every year, and home values nearly double every 10 years, according to historical data from NAR's existing-home sales series. A Federal Reserve study has shown that the average homeowner's net worth is 46 times the net worth of the average renter. Despite this and other research, some potential home buyers are being kept on the sidelines as they react to national media reports about the housing market.

(Don't force us to mention that inflation eats into these 6 percent annual gains like flesh eating bacteria. And the slump is all the fault of the media. Let's forget that the media ran all those beneficial buy-now-or-forever-rue-the-day stories two years ago)

"Nobody buys a home in the national real estate market,” said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. "All real estate markets are local, and buyers and sellers who are thinking about making a move should consult with a Realtor® in their local market to learn about conditions specific to the area."

(If only the local housing story were better than the national housing story. About the only thing worse than the Florida Follies is the California Catastrophe.)

According to NAR's most recent forecast, existing-home sales are likely to total 5.66 million in 2007, the fifth highest on record, rising to 5.70 million in 2008 and 5.91 million in 2009. Existing-home prices are likely to be down 1.9 percent to a median of $217,600 for all of 2007 which is good news for buyers; prices are expected to hold steady in 2008, and then rise 3.1 percent in 2009 to $224,400.

(Forget all that stuff in the previous paragraph about real estate being local. We're back to using national numbers here. All's fair in love and real estate. So what if home sales prices are down 21 percent in the Tampa Bay area? Did you know that prices are up in Seattle? Hey, Tampa and Seattle are both rainy, aren't they?)        

Hillsborough County home sales plunge 42 percent

No disguising the fact that Hillsborough County homes sales still stink: December home sales fell 42 percent, from 1,898 in 2006 to 1,099 last month.

The Greater Tampa Association of Realtors says the average sales prices actually INCREASED 3 percent year over year, from $259,363 to $267,117.

That's almost certain to be a statistical fluke. If the association was using median home prices - the preferred method of the Florida Association of Realtors - prices would have declined. Think of it this way: If your business sold 42 percent fewer widgets than a year earlier, you wouldn't be raising prices.

For a historical perspective, here's a chart comparing home sales and prices over the years in Hillsborough. Keep in mind that GTAR includes sales from parts of Pasco County, so there's some overlap from the Pasco stats I previously published.

Download tampadechomesales.pdf

Bummer in the 'burbs: Pasco County home sales off 39 percent

Pasco County, one of the hot spots of the recent housing boom, sputtered in December when it came to year-over-year single family home sales.

December sales came in at 325, a 39 percent drop from the 533 homes that sold in December 2006. The median sales price dropped 14 percent over the year, from $214,900 to $184,200.

One bright spot: Inventory of homes dipped in December to its lowest point since April 2006. About 6,656 homes were available for sale on the Multiple Listing Service last month. Inventory peaked at 8,052 in March.

Inventory should drop this year in the Tampa Bay area. It also helps that builders have also sold off much of their backlog.

But don't count on a condo recovery this year. The glut is huge and growing. Investors are walking away from deposits rather than close on units they can't sell.

Full chart of Pasco home data: Download pasco_december_2007_all_reports.pdf

Weakness continues in December for Pinellas home sales, prices

Sales of existing homes in Pinellas County continued their slide in December.

The Pinellas Realtor Organization reported that single family home sales dipped 19 33 percent from 672 in December 2006 to 447 in December 2007. Pinellas’ median sales price was down 13 percent year to year, from $212,500 to $184,900.

Condo sales were up slightly year to year, as were prices, but housing analysts attributed that movement to more expensive buildings coming on line.

Realtors hyped up the fact that the number of single family homes for sale - known as inventory - fell by 1,100 the past year. What they didn't emphasize was that condo inventory climbed by 1,500 units, cancelling out the gains from single family homes.

Pasco and Hillsborough County statistics coming soon...

National Realtors group sees encouraging growth signs

Everyone's favorite rosier-than-thou forecaster, economist Lawrence Yun of the National Association of Realtors, predicts a semi-decent year ahead for home sales.

Hey, didn't he say that at the start of 2007? Yun predicts higher sales in 2008 than in 2007. He cites pent-up demand from prospective home buyers waiting for the market to stabilize.

Yun cited some of the nation's relatively hot markets: Beaumont, TX, and Bismarck, N.D. Nothing like Bismarck in January!

A link for the curious.

Economists: We'll dodge a recession this year

Media outlets are feeding rumors that a recession is imminent in the United States. Of course, a economic retraction is bad for the housing market, dependent as it is on new job creation.

But a fresh survey of economists predicts anemic growth this year that will produce few new jobs. But we'll avoid the Big R.

Here's the story.

It's come to this: builder will match your federal tax refund if you buy a house

Give Lennar Homes points for creativity.

Like most builders active in the Tampa Bay area, Lennar is losing money as home sales plummet. What's a hard-strapped builder to do?  Come up with a gimmick.

The company announced a "bold new incentive program" to match a buyer's federal tax refund, up to $5,000, and apply the money to the purchase price of a home or the closing costs. It applies on "select homes only" in Pasco, Hillsboorugh and Pinellas counties.

This is the same company that offered prospective Tampa area buyers a chance to spend the night in a model home. Tough times call for goofy measures.

Will retirees keep revving Florida housing? Builders say yes

We've been hearing for the past two years that Baby Boomer retirees will save Florida's troubled housing market. Eager to flee snow and ice, Americans born between 1946 and 1964 will jack up demand for housing in the Tampa Bay area. The leading edge of this generation turns 62 this year, old enough to collect Social Security. That's the theory anyway.

Up to now we've heard only skimpy proof as to why this will come true - until this week. At a presentation Jan. 8 before the Tampa Bay Builders Association, housing analyst Tony Polito explained the mechanics of the retiree-as-housing-market-messiah predictions.

Polito said about 4-million Baby Boomers will enter the retirement stream each year. Surveys show that about 20 percent of them plan to change homes upon retirement. That's 800,000 people each year.

Twenty percent of those 800,000 are expected to choose Florida. That's 160,000 people moving to Florida each year. Assuming most of these people arrive as married couples, housing demand from these people alone would be about 80,000 a year.

If true, that's good news for the housing industry in the long term. But it also means that Florida, despite its best efforts to attract more industrious youth, will remain a largely gray haired destination.

Naysayers will argue that Florida has become too expensive for the average retiree. Observe how property taxes and homeowners insurance are driving old people to Alabama and North Carolina and Tennessee.

But economists have an answer for that: They suggest the state will attract a more affluent retiree than it has in the past. Think waterfront condominium rather than rural trailer park.

Have existing home sales in Tampa area bottomed out?

Hank Fishkind is one of the state's top economists. In a report released Monday he claims that in 3 of the Tampa Bay region's 4 counties, sales of existing homes already bottomed out in late 2007.

Fishkind said Pinellas, Pasco and Hernando counties will see modest housing improvement in 2008. Hillsborough County won't bottom out until 2008, he said.

Here's his full economic forecast for Florida. Download AnnualForecast_January_2008.pdf  Scroll down to pages 76 to 85 for the Tampa Bay section.

If Fishkind is correct, that's good news for our region, dependent as it is on the housing industry.

Sharks await big meal but may go away hungry

Here's a column that ran this morning in the St. Petersburg Times:

More than a couple of e-mailers to the newspaper can't discuss the recent housing plunge without cackling with pleasure. Okay, so I can't hear them cackling, but that's the tone of their messages.

Some salivate at the prospect of scooping up cheap houses from chumps who rashly bought at the housing peak. They'll wait for the Great Meltdown and then come in to sop up the drippings. Some even predict a return to three-bedroom, two-bath houses in the suburbs for $88,000.

They've got some support for their schadenfreude. In the past 18 months, the Tampa Bay area's median home price has dropped 21 percent, from $239,600 to $189,100. Naples, where median prices topped $500,000 in the fall of 2005, watched prices plunge to $415,000 a year later before shell-shocked Realtors stopped publishing the data.

These aren't selective statistics gleefully gleaned from an I-Told-You-There's-a-Housing-Bubble Web site. They come straight from Florida Realtors themselves.

But I can't escape the feeling that this particular brand of bottom feeder is doomed to be disappointed. When it comes to housing, what goes up just doesn't seem to go down, at least not permanently.

People have moaned about the ridiculously high price of California real estate since Charlie Chaplin was the king of Hollywood. But after several real estate booms and busts, you still struggle to find a house in San Francisco for less than $750,000.

Remember Massachusetts? The high cost of living was supposed to finish off a state dubbed Tax-a-chusetts. The last one to leave Boston, please turn out the lights. But home sellers still easily collect more than $500,000 for modest homes in the Boston 'burbs.

You can say we're neither California nor Massachusetts, so those rules don't apply to us. True. But neither are we Flint, Mich., or Midland, Texas, where our fortunes are tied to the fickle fortunes of an automobile or oil industry.

In the early 1980s, our home prices hovered around $50,000. In the early 1990s, despite a decade of high interest rates on mortgages, homes were worth about $75,000. By 2000 our median home price topped $100,000. Even then we were still undervalued compared to other cities in the Sun Belt.

Prices appreciated fairly normally until the insane run-up between 2004 and 2006. Inasmuch as speculators drove up the median home price to its $239,600 peak in June 2006, we need to see a correction. We've already seen part of that correction.

But don't expect a steal of a deal on every block. Subtract the speculators and inflation runs about 3 percent a year. Incomes have climbed over the years in Tampa, albeit slowly. Tens of thousands of people are locked into homes bought at boomtown prices. They won't give away their money without a struggle.

I have a name for house hunters counting on a return to 1998 prices: lifelong renters.

One slight caveat after hearing from a couple of readers of this column. You can find houses for 1998 prices - I didn't mean to imply you couldn't - but they're relative rarities. Many of those homes are held by investors cutting their losses.

As one anonymous caller told me this morning: "I'm one of those sharks. The investors made it good for people like us."

Hillsborough County foreclosures up 150 percent for year

Yes, I know, these foreclosure tracking companies are suspect when it comes to pin-point accurate data.

But it's still interesting to note that Hillsborough County saw foreclosure filings rise 150 percent from 2006 to 2007.

The firm Default Research reports that Hillsborough's filings jumped from 2,738 in 2006 to 6,886 in 2007. Miami-Dade, Broward and Palm Beach counties came off worse with 13,877, 14,003 and 7,975 filings respectively. The company didn't report filings in Pasco and Pinellas counties.

It bears repeating that companies like Default Research exaggerate foreclosures by essentially labeling homes foreclosed when mortgage payments are as little as 3 months late. Banks won't confiscate most of these homes.

Plus, many homes receive more than one default notice and companies such as these tend to count each notice as if it represents a separate household. So be warned: These companies are in the business of selling foreclosure data and a little exaggeration never hurts. 

Kerplunk: The sound of Tampa Bay area home sales, prices

The people manning the housing recovery watch have to be patient folk.

November was another downer for prices and sales of Tampa Bay area homes. The Florida Association of Realtors made it official this week and released statistics comparing November 2006 to November 2007.

A synopsis: Sales down 30 percent over the year, prices down 15 percent. That's for single family homes, the most plentiful category of sales.

Take a look at these charts to see how we compared to other Florida cities. We didn't come off the worst, but that's pretty small comfort. Download NOVSINGLE.pdf and Download NOVCOND.pdf.