Realtors: appraise thyself

Here's a column I published in the St. Petersburg Times Friday:

Just when you start to feel for Realtors' plight during these crumb-scrounging times in the housing business, you happen upon a couple of sympathy-squashing stories about rampant greed in the profession.

Case 1: Pinellas County property records disclosed a big-shot Clearwater Realtor who helped jack up property values all across the waterfront. He pocketed hundreds of thousands of dollars in murky deals, then let the homes slide into foreclosure. To give you a sense of the flimflam potential, at least one of his properties is selling for a third of what it sold for two years ago.

Case 2: In a scene reminiscent of a shakedown, Realtors are trying to dupe desperate condominium owners into paying them double commissions. They'll take your listing, but you have to give them 10 percent for their trouble. I was glad to hear one would-be target offered the Realtor the one-finger salute.

These manipulators shouldn't define a whole profession. Most Realtors try to make an honest buck. And it's a rotten time to sell houses. With home sales down nearly 60 percent since the 2005 peak, the Greater Tampa Association of Realtors lost 1,200 members this month when it came time to renew their affiliation.

The federal government is pursuing an antitrust lawsuit against the National Association of Realtors for essentially running a price-fixing cartel. The association's lock on the Multiple Listing Service, the most popular database of homes for sales, smacks of a monopoly.

The Internet lets more buyers and sellers bypass agents. One of the latest is called Pad4Pad. As the Web site's founder described it: "You buy mine and I will buy yours." Of course, bartering doesn't command 6 percent commissions.

Most Realtors display an endearing optimism. Paychecks are slim, but you'd think most just sold Eddie DeBartolo's mansion to Donald Trump.

Here's hoping for a self-critique of a business that, through a minority of bad actors, conspired to bring about the current turmoil. Blaming reckless mortgage bankers and property speculators gets you only so far.

More government pandering to the financially irresponsible

A new bill in Congress asks the federal government to buy homes whose owners have over-borrowed. Why does it seem like every one of these proposed bailouts actually rewards irresponsibility and offers backhanded relief to speculators?

Read the gory details here.

Home builders to government: gimme, gimme, gimme

It's an epidemic in our society: A sense of "gimme" instead of gratitude. To whit, the National Association of Home Builders lobbying Congress for a home buyer tax credit.

The national trade group wants a new round of economic stimulus targeted towards...itself. It raises the specter of a Great Depression if Congress fails to act. This from the same folks who slam the media for supposedly talking down the housing industry.

How does this annoy me? Let me count the ways.

The government has helped push down mortgage rates to historic lows. It promotes lending vehicles like the FHA and the VA to subsidize financially strapped buyers. It lets you write off your mortgage interest on your federal taxes. It has all but eliminated income taxes for millions of middle-income families through the $1,000-per-child tax credit.

All of those government goodies reduce the cost of owning a home.  But the association wants more.  I'm all for industries lobbying politicians for redress of grievances. It's in the U.S. Constitution after all. But after you're gobbled four bowls of porridge it's impolitic to demand another helping.

Here's some choice passages from the builders' press release:

With the housing industry facing its greatest crisis since the Great Depression and the economy teetering near recession, the National Association of Home Builders (NAHB) today called on Congress to move quickly to enact a second round of economic stimulus directed squarely at the housing sector. Specifically, NAHB believes the best policy is to create a tax credit for the purchase of a home.

"The biggest bang for the buck most likely would be provided by a temporary home buyer tax credit," NAHB Chief Economist David Seiders told the Senate Finance Committee. "Tax credits for the purchase of a home are a means of eliminating excess inventory, relieving some of the pressure on falling housing prices and ending the waiting-on-the-sideline strategy some potential buyers have adopted in response to overly negative media stories concerning the future of the housing market."

A similar version of a home buyer tax credit was used successfully in the mid-1970s when Congress established a temporary tax credit for the purchase of a newly-constructed home to help clear off a then-record number of unsold homes on the market.

Housing industry economist threads needle between cheerleading and gloom-mongering

Ultra-low interest rates won't last beyond this year.

Tampa Bay builders are getting their house back in order.

The government's news economic stimulus plan should be redubbed the "Re-elect Congress plan using taxpayer dollars."

That's the assessment of economist Ted Jones, who spoke last week to the Greater Tampa Association of Realtors.

There's no denying Jones is entrenched in the housing industry. He's senior economist at Stewart Title Guaranty Co. I caught him last year at the annual Florida Realtor's convention in Orlando.

But I consider him a more reliable forecaster than Lawrence Yun, the economist for the National Association of Realtors who seems to suffer from eager-to-please-itis.

Jones criticized the Fed's low interest rate policy, which has harmed the economy by driving up oil prices. He predicted rates would rise 0.5- to 1 point by January 2009. That means we'll probably see the last of 5.7 percent mortgages for a while.

He said the Tampa Bay area should have twice the job growth rate of the country as a whole, 2.42 percent locally versus 1.17 percent nationally. Jobs matter: A health housing market requires about 1 new home for every 1.5 jobs created.

Local builders have been more responsive to the housing slump, Jones said. In the past year, builders pulled 12,341 residential building permits as the area gained 13,500 job.

That's still too fast a construction pace, but better than in Florida as a whole, where builders lopsidedly pulled 101,331 permits based on 86,800 new jobs.

Jones had mostly scorn for the "economic stimulus plan," not least because Washington plans to send $300 checks to tens of millions of Americans who pay no income taxes. 

Tampa area home prices rank better against other cities

Is this a glass half full or a glass half empty?

The Tampa Bay area was 7th worst in home price rankings of 20 cities in the U.S. But you could also say we were 14th best.

In any case, the S&P/Case Shiller Index for December showed local home prices falling 13.3 percent from a year earlier. Miami took the most punishment with a 17.5-percent price decline. Also hurting more than Tampa were Las Vegas, Phoenix, San Diego, Los Angeles and Detroit.

Three months earlier, in September, Tampa's decline was the biggest among the 20 cities on the index. The only price gainers on the December index were Portland, Seattle and Charlotte. Those cities didn't have our boom. But neither have they had our bust.

Here's a closer look at the data: Download CSHomePrice_Release_022603.pdf

Case Shiller's figures parallel almost perfectly recent price declines reported by the Florida Association of Realtors.  So I think it's tough to make the case that Realtors have been fudging data, a common complaint among contributors to this blog.

You can accuse some Realtors of shameless boosterism, of taking a hear-no-evil-see-no evil approach to the tainted housing market. But their statistics have been mostly sound.

Florida Realtors not despairing over January sales slump

So what if homes sales in the Tampa Bay area sunk 24 percent in January? At least they didn't fall 28 percent like they did across Florida.

Hey, ya gotta highlight the silver lining, no matter how thin the electroplate.

Local home sales totaled 1,235 last month versus 1,627 in January 2007. Florida's sales fell from 9,360 homes in January 2007 to 6,737 in January 2008.

The price slide continued, too. The median sales price locally fell from $220,100 to $187,100 the past year, down 15 percent. The state's price decline was 14 percent.

The figures come from the Florida Association of Realtors, which combined sales in Pinellas, Pasco and Hillsborough counties. Hernando County didn't file statistics in time for inclusion in the monthly wrap-up.

You can look up details here: Download january08home.pdf

Pasco was worse off and brought down the sales average. Pinellas was slightly below average. Hillsborough sales were better than average.

That cheered people like Deborah Farmer, president of the Greater Tampa Association of Realtors. She thinks the approval of property tax portability will improve her industry's fortunes.

"Realtors are telling me they’re busier this week and last week than they were all last year," Farmer said this morning.

Real estate optimists predict sales will bottom this year and slowly turn upwards. It's possible. I looked up January sales in 2005, when business was still humming. Almost 3,000 homes sold then, versus the 1,235 home sales last month. In three years, sales have come down 59 percent.

HOPE arriving for foreclosures, courtesy of Charlie

Washington churns out most of the banking regulations, but what's to stop Tallahassee from tinkering around the edges?

On Tuesday, Governor Charlie Crist established the Florida Home Ownership Promotes the Economy (HOPE) Task Force. The task force will bring together experts in the mortgage and banking industries, as well as consumer advocates and policy experts, to review Florida’s foreclosure rate and its impact on Florida’s economy. 

“Foreclosure hurts all Floridians by depressing home values and causing families to lose homes, jobs and hope,” Crist said.  “As this task force comes together to explore solutions, we will search for ways to restore hope to Florida’s families – and to our state’s economy.”

In 2007, Florida ranked second in the number of home foreclosures, with twice as many foreclosures than in 2006.  The task force will meet four times, beginning on March 3, 2008, in Tallahassee.

Governor Crist appointed Lt. Governor Jeff Kottkamp as chair. Other members are Chief Financial Officer Alex Sink, Senator Bill Posey, Senator Tony Hill, Representative Franklin Sands, Representative Garrett Richter, Alex Sanchez of the Florida Bankers Association, D. Ritch Workman of the Florida Association of Mortgage Brokers, Mike Fields of Bank of America, Thomas Kuntz of SunTrust, Nancy Riley of the Florida Association of Realtors, Bill Newton of the Florida Consumer Action Network and Steve Auger of the Florida Housing Finance Corporation.

Seems like another feel good, "Let's Do Something" measure that the government seems to specialize in these days. But at least they're not thoughtlessly throwing money at the problem.

 

New property tax law can be confusing

Visited the property appraiser this morning to inquire about property tax portability. The short answer: I don't qualify. I moved officially last year, but made the mistake of switching my homestead before the March 1, 2007 deadline.

By a quirk of the new property tax law, if I'd waited beyond March 1 last year to switch my homestead, I would have been able to carry my old tax bill with me and would have saved about $2,500.

It's part of the retro-activity provision in the law that allows some homes bought in 2007 to qualify for portability. If you bought a house in 2007 and haven't already switched homesteads, you've got until Feb. 29 to do so.

An employee at the property appraiser's office flagged another misconception about the tax reform law. He reminded me that lots of people won't get to double their homestead exemption to $50,000 because their taxes are so artificially low already through Save Our Homes.

The changes add more complexity to an already complex law - not to mention the arbitrariness of the deadline that deprived me of thousands of dollars in tax savings.

To quote the property appraiser employee: "Even the people who wrote the property tax bill don't understand it."

They even took the toilet seat

Here's a new wrinkle on the foreclosure crisis.

You got in over your head in real estate, stiffed the bank on mortgage payments for a year and finally got the heave-ho from your house.

But you can't resist flipping off the bank one final time. So you break into the now-confiscated house and cart off everything of value. Wouldn't want any old banker sitting on your toilet and messing with your light switches.

Such looting-after-the-booting is a growing problem around the Tampa Bay area as recounted in this story in the St. Petersburg Times.

Pinellas, Pasco housing markets got that sinking feeling

Blame it on the post-holiday blues. Or maybe not.

Single family homes sales remained weak in January in Pinellas County. Sales were off 25.6 percent from a year earlier. About 333 homes sold last month, compared to 448 homes that sold in January 2007.

Pinellas condo sales were up 26 percent over last year, but 1,100 more condos were on the market this year over last year.

The median sales price for single family homes dropped 16 percent the past year, from $210,000 to $176,500.

Ditto for Pasco: Single family homes sales fell 28.6 percent, from 353 in Jan. 2007 to 252 last month. Condos are a trouble spot. About 1,310 condos are for sale - more than double the number of last year - but only 34 sold in January.

Median home prices also fell 16 percent in Pasco, from $197,000 to $166,300.

Two encouraging signs: Pinellas whittled down its single family home inventory by 1,800 the past year. Pasco's inventory declined by 1,000. Inventory is the number of home placed for sale on the Multiple Listing Service.

Here's some charts and graphs if you need more detail: (UPDATE: THE PINELLAS REALTOR ORGANIZATION ASKED ME TO REMOVE ITS MATERIAL FROM THIS BLOG)

We'll have to wait another month. Keep in mind January sales generally reflect contracts signed during the Thanksgiving-to-Christmas pause. February's report, which comes out in March, should be enlightening.

Who can blame them: Tampa area Realtors thin ranks

About 1,200 local Realtors have called it quits.

The Greater Tampa Association of Realtors reports a 14 percent drop in membership this month. The Hillsborough County-based association said rolls fell from 8,878 in December to 7,648 this month. That's pretty much been the pattern elsewhere in the state.

You have to hand it to Realtors: They're a hopeful bunch. Tampa Bay area home sales are down about 65 percent from the peak in 2005. About 4,788 homes sold in August of 2005 versus 1,761 that sold in December 2007.

But a majority of agents are staying accredited. (Though you can bet most are making little money and working second jobs)

Foreclosure filings: It was a very bad year

Foreclosure filings in the Tampa-St. Petersburg-Clearwater metro area reached 41,539 in 2007, nearly double what they were the year before.

That comes from the firm RealtyTrac.

Among the nation’s top metros, we ranked 23rd worst, with 1.9 percent of households reporting mortgage defaults. It could have been worse. Miami, Orlando, Fort Lauderdale and Palm Beach all had a higher percentage of foreclosure filings, as did real estate trouble spots like Las Vegas, Detroit, Cleveland and Denver.

RealtyTrac tends to double count foreclosure filings so the number isn’t as bad as it appears. The firm said a total of 24,086 properties accounted for the 41,539 filings.

Traditionally, only a minority of properties cited for missed mortgage payments are confiscated by the bank. This week I learned about a Pinellas County property investor who wasn't bounced from her condo until she missed 23 consecutive monthly payments.

Banks simply can't afford to overload their balance sheet with so many repossessed homes.

Home builders in an uproar, cut off political contributions

The National Association of Homes Builders has cut off contributions to Congressional candidates to protest what it calls the government's slowness in dealing with housing troubles.

Read it all here.

Let's think about this.

The government has helped push mortgage rates to historic lows. It subsidizes home sales by letting us write off mortgage interest. It's largely eliminated capital gains taxes if you turn a profit on your primary residence. It provides generous FHA and V.A. loans. We could go on.

This protest reminds me of the spoiled teen who flips off his parents because he wanted the blue and not the red Jaguar.

Say it ain't so: WSJ says our home prices may fall by a third

Here's a link to a depressing Wall Street Journal column.

The author feels Florida median home prices will have to nosedive by about a third from current levels. That's the fastest way for prices to get back into line with incomes.

I had several reactions to the piece:

1. Prices in some Tampa area neighborhoods have fallen in excess of the roughly 12 percent overall home sales price declines of the past year. So those areas won't need to fall by a third to reach equilibrium.

2. South Florida, especially Naples and Fort Myers, is worse off than us. Since they're bringing down the Florida average, our decline should be less drastic than theirs.

3. Why didn't all these financial wizards warn buyers more strenuously about home price/income imbalances back in 2004-2005? Some did, for sure. But there's plenty of 20/20 hindsight going on.

Trouble spot in Tampa: Condo sales

Condo sales have plunged 75 percent the past year in Hillsborough County, according to the Greater Tampa Association of Realtors.

That statistic, more than any other, stood out in a January home sales report released Tuesday. Condo sales in Jan. 2007 stood at 249. Last month's sales were 62.

Even the most optimistic housing analysts have had few kind words for the region's troubled condo market. It's not just the supply glut. It's the dismal demand reflected in January's 62 closings.

Now for some less miserable news: Single family homes sales were 650 in January, down 21 percent from the 825 houses that sold in Jan. 2007.

GTAR said the average sales price was $246,260 in January. The median price was $193,000. Inventory of homes for sale exceeds 20,000. Keep in mind GTAR includes sales from central and east Pasco County in their numbers.

Here's a chart to chew on: Download gtarjan.pdf

I'll post January home sales for Pinellas and Pasco counties as I get them.

   

Zillow: Tampa Bay home values down nearly 13 percent

The online housing evaluation firm Zillow has released an updated break down of home values in the Tampa Bay area.

The average value of a home here is $174,078, Zillow says, a decline of 12.9 percent the past year.

Lots of people question Zillow's accuracy. After all, it says my house is worth $50,000 more than I know it's worth on the actual market. But Zillow insists it's doing more to improve accuracy. We'll see.

Here's a link to the Zillow charts for the region. Find your zip code, county, town of neighborhood and see what it says: Download zillow.xls

   

In living color: Slide show portrays a so-so housing market

Want evidence that home sales could be stablizing and the economy is a tad better than the media makes out?

I'm providing a link to the slide show economist Hank Fishkind presented to Tampa real estate folks this week. Check out pages 158-200 for graphs that suggest that homes sales are starting to flatten, at least in Pasco and Hernando counties.

Click here for the show: Download fishkind_econ119.pdf

It's official: New home sales tanked here last year

Cut prices. That's the advice housing analyst Tony Polito, based here in Tampa, had for new home builders coming off the worst year in a while.

Polito's company, Metrostudy, said housing starts here were down 58 percent in 2007, from roughly 17,500 in 2006 to 7,400 in 2007.

“With diminished job growth, the slowdown in absorption and the decline in closings, it will be the fall of 2008 before Tampa Bay reaches supply-demand equilibrium,” Polito said.

“When the market shifted, the short-term remedy for the lack of demand was incentives. The long-term cure is likely a price shift to get back in touch with buyers and their income levels.”

Southeast Hillsborough County dominated Metrostudy's list of the top 10 best selling Tampa Bay area neighborhoods. Save the perennially successful Meadow Pointe, Pasco has dropped off the list it's owned for many of the past few years.

Economist has mixed message for Tampa area housing market

Just back from a speech by Hank Fishkind, an Orlando-based economist with a good grasp of the Tampa Bay area's business scene.

Here's a breakdown of what he said about our housing market during a lunch sponsored by real estate attorneys:

1. HOME SALES: Pasco and Hernando counties' housing markets have hit bottom and will likely wallow a while in the basement before turning up slightly later this year. Hillsborough is close to the bottom, but Pinellas has a few more months of downturn before home sales and prices stabilize.

2. FORECLOSURES: While bad in certain neighborhoods, Fishkind thinks foreclosures have gotten more press than they deserve. Measured against the total housing market here, they're a "thimble in the ocean."

3. AMENDMENT 1 PROPERTY TAX CUTS: Don't count on any noticeable stimulus from tax cuts this year. Most won't get a tax break until next year. Plus people can't sell their houses, making the portability issue moot. 

4. CONDO CRISIS: Fishkind was down on condos in Pinellas and Hillsborough counties. He said oversupply, combined with limited sales, "makes me nervous." He sees no bottom yet here.

5. MORTGAGE RATES: Good news. Fishkind expects home loan rates for credit worthy borrowers to drop below 5 percent this year. It will be a good time to refinance - if you have any equity left in your home.

Tampa job creation numbers suspect. What's that mean for real estate?

Published a story Tuesday in St. Pete Times that calls into question some of the super-duper job creation numbers attributed to the Tampa Bay area the past decade.

While most of the 185,000 job gain since 2000 seems to be legit, tens of thousands of the jobs were reported by employee leasing firms based in Tampa-St. Pete-Clearwater. There's the rub: Most of these leasing companies serve all of Florida and the jobs were often erroneously counted as Tampa's.

Why does it matter for housing? Developers traditionally have used the formula that it takes 1.8 jobs for every housing start. If job figures were inflated by thousands, did Tampa developers overbuild to serve essentially phantom workers?

Might explain part of the overbuilding. Here's a link to the full story.