Hard times for the King of the Two-Percent Commission

Back in 2005, Stephen Johnston's Home Discovery realty signs were everywhere. His company's selling point was the 2 percent commission. Of course, lots of full service Realtors despised the young upstart for undercutting their business.

I remember attending a Florida Realtor conference in Orlando last August when a speaker proclaimed that discount brokerages were dead. The statement brought down the house. It was one of the biggest applause lines of the day.

When the housing bust hit, Johnston's 2 percent commission model looked a lot less appealing, especially when you consider he was talking only about the listing fee. To have any hope of a fast sale, you'd have to cough up at least 2 percent more to cover the buyer's agent's commission.

Johnston's company has taken it on the kisser as described in a piece over the weekend by my St. Petersburg Times colleague Scott Barancik:

Biggest reversal of fortune: Stephen E. Johnston III, Tampa
Key stat: Biggest plunge in sales volume, 2007
Quote: "We're fighting the traditional hand holding of the 6 percent model that's not needed. This is how we save you money." (2005)

Stephen Johnston had the bay area real-estate market by the tail. In 2005, the same year he notched an extraordinary $240-million in commissioned sales, Johnston and his discount brokerage firm, Home Discovery Real Estate, received a slew of industry awards and bragged about going national.

Things quickly deteriorated. Johnston recorded just $13-million in commissioned sales last year, a 90 percent drop from his 2006 total. He filed for Chapter 7 personal bankruptcy protection in December., and lenders have filed seven foreclosure suits against him this year. Attempts to reach Johnston, 36, for comment were unsuccessful.

His No. 1 sales ranking may be misleading. Unlike most brokerages, his sales staff were salaried, and all sold homes were credited to his account. And Home Discovery's customer service record? The Better Business Bureau gives it an "unsatisfactory rating."

I always found the people at Home Discovery to be agreeable and accessible.  I wish them luck.

Three month snapshot shows steep Tampa home price drop

Companies that track home prices have consistently shown Tampa Bay area prices falling 13 percent to 15 percent.

But what I liked about the latest report from First American Corp. is that it captures not just year to year price changes but 3-month changes.

In that shorter term snapshot, Tampa home prices fared poorly, falling 6.32 percent from Nov. to Jan. That placed us 6th worst among 34 cities.

Equally informative was the company we kept. The usual suspects were in the top 5 - Las Vegas and Cleveland - but New York City and Raleigh, N.C. also placed among the top price losers.

Does this portend a real estate collapse in hitherto healthier markets? Hard to say. Measured year to year, Raleigh's prices are still up 3 percent while New York's are down only 2.6 percent. I'd take those numbers any day.

Here's a chart and explanatory material.

Foreclosures hit home: 80 Tampa area homes part of giant statewide auction

Sign of the times:

On April 7-13, America’s largest foreclosure auction firm, Hudson & Marshall will auction over 500 foreclosed or bank-owned homes throughout cities in Florida. About 200 homes will be auctioned in Miami alone. Nearly a hundred will be auctioned in Orlando and about 80 in Tampa. Valued from $34,000 to over $700,000, all homes come with guaranteed title insurance paid for by the sellers.

“Over-building and the disproportionate number of foreclosures in Florida compared to other states has severely weakened Florida’s real estate market,” remarked Dave Webb, principal, Hudson & Marshall.

Hudson & Marshall will auction over 500 homes throughout Florida on the following dates: April 7th in Destin; April 8th in Fort Myers and Jacksonville; April 9th in Daytona and Port Charlotte; April 10th in Port St. Lucie, Melbourne and Tampa; April 12th in Miami/Fort Lauderdale; and April 13th in Orlando.

All homes are sold “as-is” and prospective buyers should preview all properties prior to placing bids.
There will be an open house for all properties April 5th and 6th from 1:00pm-3:00pm. Buyers may also contact listing agents to schedule appointments to inspect properties. Complete auction details and property listings may be found at www.hudsonandmarshall.com

Democrat or Republican: Which party offers best way out of housing crisis?

If I understand the major presidential candidates' positions correctly, Democrats Obama and Clinton want to freeze mortgage rates, reduce down payments on certain loans and otherwise leave large footprints on the housing market.

Republican McCain has offered fewer concrete proposals but seems to have a better grasp of economic reality. He blames unwise lending and borrowing for the current troubles and doesn't subscribe so much to the "predatory lending" theory beloved of Democrats.

I tend to favor McCain's tough-it-out approach. Here's a magazine editorial I stumbled across that outlines the various positions. It seems to make sense.

Foolish predictions for housing's recovery

Thought I'd poke a little fun at the Tampa Bay area real estate industry in this week's column:

The housing market is going to correct itself at some point. It's as inevitable as Florida sunshine. We've been having real estate cycles since Andrew Jackson pursued the Seminoles down the peninsula.

In honor of upcoming April Fools' Day, let's look ahead and imagine what our next housing recovery might look like. Here goes:

You know the housing market is humming again when.....

• The Pinellas Realtor Organization and the Greater Tampa Association of Realtors recruit their 25,000th members. Hair spray, nail polish and Cadillac sales skyrocket.

• Laid-off pipe welders from Akron with $55 in the bank start getting the itch to be Florida condo tycoons again.

• The giant Popsicle stains on the carpet, the jagged holes in the drywall and the bug-eaten lawn are considered take-it-or-leave-it options when purchasing a home.

• Donald Trump whirls into Tampa with his eighth wife to launch a new condo tower. This time he boasts that the tower will be the widest in the Tampa Bay area, and the first tenant is Rosie O'Donnell.

• Model home center employees stop pleading for sales with sad puppy eyes. They ignore you again like the no-buy, tire-kicking hayseeds they always knew you were.

• Mortgage companies resume lending to the deceased. The only underwriting requirement is that the borrower had a pulse in the past quarter-century.

• House hunters work up an insatiable hunger for flimsy light fixtures, bowed walls, cracked grout and mildew-splotched roofs. Builders are happy to oblige them.

• Florida farmers uproot their last orange tree, ship the last steer to the stockyards and retire to a quieter place — like Los Angeles.

• Urban planners tire of automobile congestion and get serious about building commuter rail lines. After years of hand wringing, the only viable train runs through Busch Gardens and goes "toot, toot."

• Newspaper columnists stop writing tripe about the terrible housing market. The public issues a sigh of relief.

Florida facing population slowdown; housing market mourns

This might not be the best news for the housing industry: The University of Florida predicts slower population growth for the next couple decades. Guess why? The state's no longer a magnet for bargain seekers.

Here's the full story from my St. Petersburg Times colleague Helen Huntley.

Builder: Huge majority believes it's good time to buy house

It's a miracle: 77 percent of survey respondents feel it's a good time to buy a house.

Maybe it's not so miraculous: The survey was sponsored by big national builder Beazer Homes.

Read for yourself here.

If it's too good to be true....

Here's a Pinellas County guy promising to find buyers who will pay "retail value" for your home. The catch? The buyer pays the seller a downpayment and starts making monthly payments BEFORE he or she gets bank financing.

The company says it's trying to work with "good people who may not have near perfect credit or large downpayment required by banks." Hmmmmmm.

Read it here. I'd appreciate comments from blog readers who've seen this sort of arrangement before. This doesn't smell right to me, in the sense of week-old unrefrigerated grouper.

New home sales still in the tank nationally

Here's latest new home sales report.

Note that new home sale prices are up in the South, but that just illustrates the shortcomings of the national and regional approach. The housing market in the South includes both lively Charlotte, N.C., and left-for-dead Miami.

Sometime in April Tampa Bay area housing analysts will tell us how sales stood in the first quarter of 2008. I'll post the data here as soon as I get it.

Another Tampa builder says sales are better

Last week Lennar Homes announced it had sold 97 homes in 17 days in the Tampa Bay area. Now it's Centex Homes' turn to tout decent numbers.

The Texas-based builder said it sold 77 new homes in 75 days during its recent winter-clearance promotion in four Hillsborough County communities that ended March 9.

The average sales price was $182,800, with prices ranging from the lowest-priced townhomes at $111,000 up to $300,000 houses.

Sales were recorded at Stonebrier in Lutz, Magnolia Park in Brandon, Hawks Point in SouthShore and Southshore Falls in Apollo Beach.

Keep in mind that such sales are subject to cancellation, a real concern with banks tightening credit. But you take good news where you can find it.

    

Vegas, Miami top home price losers

Miami, Las Vegas, Phoenix, San Diego, Los Angeles and Detroit: You're all a bunch of losers.

Let's relish our feelings of cheap superiority. Home prices in those 6 cities all fell more steeply than ours did in the Tampa Bay area.

That's the message from Tuesday's release of the S&P Case-Shiller Index. Case-Shiller is a bit of a laggard. They're still stuck on January home sales while Realtors are already analyzing February's data. But I like how the index measures our region against 19 others in the U.S.

Tampa prices were off 15 percent year over year. Miami and Las Vegas were the worst off with 19.3 price declines. Phoenix was next worse at 18.2 percent down. Only Charlotte's homes gained in price the past year. Here's the full chart.

According to Case-Shiller's counting methods, our prices are back to what they were in the Spring of 2005. In other words, if you bought a house three years ago and held it since then, you likely haven't made a dime on it.

Good news for housing? Not really

Homes sales up 2.9 percent!

That's the "good news" the national media is reporting.

Only it's not so good here. Press reports are comparing January sales to February sales. In most of the country, a jump in sales in the depth of the winter is a cause for joy.

Unfortunately for the Tampa Bay area, the January-to-February period is normally when sales rise as the holidays give way to snow bird season.

Our sales are up about 17 percent from January to February. Three cheers for housing? Not quite. For the past several years, January-to-February increases of about 30 percent have been routine. So we're actually underperforming.

Anyway, here's the numbers I consider more useful, the February 2007 to February 2008 comparison.

February home sales in Tampa Bay area: down 29 percent

February home sales prices in Tampa Bay area: down 14 percent

February condo sales: up 1 percent.

These numbers come from the Florida Association of Realtors. Check out this site and this site for the single family and condo numbers respectively.

Banks were willing dupes in housing fiasco

A column from Friday's St. Petersburg Times:

The more you reflect on the housing crisis, the more you realize it was just one big bungled bank job.

With last week's failure of yet another financial institution, Bear Stearns, it becomes clearer every day how much mortgage banker recklessness brought on the current fiasco.

Yes, people lied on their mortgage applications, exaggerating jobs and income to buy houses they couldn't afford.

Yes, buyers and sellers treated homeownership as a roulette game in which the house never loses.

Yes, many of these purchasers cynically walked away from investment properties when the payments got to be too much.

No doubt about it: The banks got mugged. But don't think they weren't willing victims. They were begging to be fleeced, begging for it as much as a guy who staggers through a dark alley at 2 a.m. wearing a bandolier stuffed with $100 bills.

You've probably heard how the game worked. Most lenders — especially big players like Countrywide — never actually bore the full risk of the tainted mortgages. Financial wizards packaged millions of home loans as securities for sale around the world.

The riskier the home loans, the higher the potential return on the securities. Of course, borrowers had to repay the loans or the superstructure crumbles. We're now living with that collapse.

The mind reels when you consider how blind the banks were as late as 11/2 years ago. I talked to a Clearwater couple last week who sold their house in mid 2006 for $1.1-million. But the buyer took out a loan for $1.4-million, the extra $300,000 ostensibly to make repairs on the house.

Of course, the extra money was never used for that purpose and within months the owner stopped making mortgage payments. The bank will sell the home at auction next month, probably for half of what it was worth.

The mortgage company in this case wasn't Ma and Pa Kettle's Lendin' Shack. It was New York's venerable Lehman Brothers.

Whatever happened to the gruff naysayer guarding the bank vault? You may have hated him when he shoved the rejected loan application across his big oak desk, but at least he understood one of the first laws of business: knowing when to say no.

Pinellas one of 10 Florida counties to lose population

Pinellas, Broward and eight other counties lost population between 2006 and 2007.

Here's a link to a story and map with the dirty details.

***UPDATE COURTESY OF KETCHPHRASE:

Overall the state grew by 193,735 people.

Top 5 Gainers:
1. Lee: up 20,475
2. Pasco: 16,844
3. Polk: 16,723
4. Hillsborough: 12,845
5. Lake: 11,845

Top 5 Losers:
1. Broward: down 13,154
2. Pinellas: -5,456
3. Okaloosa: -1,495
4. Monroe: -1,174
5. Charlotte: -233

Businessman faults foreclosure statistics

Brad Geisen, founder and president of Internet-based Foreclosure.com, hosted a conference call with journalists to slam the methods by which most of his competitors tally mortgage defaults.

Most interesting were the statistics from the South, which includes Florida. Geisen said genuine foreclosures, which he defines as homes confiscated by the bank, are down 19 percent year over year.

(Preforeclosures, a category that usually counts homes at least 3 months behind on their mortgages, are still up considerably the past year).

Geisen reminded journalists that the alarmist foreclosure statistics published in most newspapers exaggerate by counting as a separate "foreclosures" every lien against a single property.

He cited a March 6 Mortgage Bankers Association report that said 2.04 percent of all loans are in foreclosure. Is that bad? Not for Geisen. He said banks hold an emergency reserve to cover them if 5 percent of loans fail.

Geisen was a bit more optimistic than I would be.  He assumes we've reached market bottom and that most of the good real estate deals will be gone by the November general election.

Keep in mind he was speaking mostly about the national real estate market, although he did cite Florida a couple of times. 

Ninety seven homes sales ain't bad. Are we turning corner?

This sounds like some decent news for a change. Realtors have been telling me they're seeing more activity on the market:

Lennar reports it sold 97 new homes in 28 communities in the Tampa Bay region during the first 17 days of March. 

Mark Metheny, president of Lennar in the Tampa Bay region, said the average sale price of a Lennar home during the 2-1/2 week period was $187,895. 

“Lennar Tampa rolled back pricing along with special incentives and financing arrangements for the month of March only. So far that’s been a successful plan,” Metheny said.

Will it last? Is it real? Let's wait until April when they publish March home sales data.

Long time Tampa area builder checking out

It's not pleasant to bear tidings of dozens of lost jobs and a good company laid low. But that's what's happened to Nohl Crest Homes, a semi-custom builder active for 23 years. They built a quality house, even though their stuff was out of my price range.

Here's the piece I wrote in today's St. Petersburg Times.

Building good will: Bank forgives debt of customers burned by home builder bankruptcy

First Bank, the St. Louis lender that bought failing Coast Bank at a fire sale in December, is doing good by customers burned after St. Petersburg builder Construction Compliance Inc. declared bankruptcy last year.

For those who didn't follow the sorry saga, Construction Compliance hooked up with Coast Bank to build no-money-down investment homes in Sarasota County. Buyers, scores of whom came from the Tampa Bay area, would flip the homes for an instant gain of 10 percent.

You know how this tale ends: Construction Compliance didn't complete hundreds of homes, and many buyers were left with debts of $80,000 on vacant lots in undesirable locations.

Leading up to its dissolution in December, Coast Bank played tough with buyers seeking debt relief. But First Banks has recently let some buyers wipe the slate clean for only $15,000-$20,000. And the buyer gets to keep the lot.

First Bank bought Coast Bank so cheaply - $12-million for 20 branches - it can probably afford to be generous. What's more, a buyers' lawsuit still hangs over a bank trying to start fresh in the Tampa Bay area.

Good for customers. Good for business. Who can complain?

Is Florida real estate survey too optimistic?

When University of Florida economists put on their analytical hats, it pays to listen. When they report survey results from interested parties, it's time to arch a skeptical eyebrow.

To whit, here's the latest real estate survey out of Gainesville. And guess what? Things are going to be peachy! Hey, it's good for a daily chuckle:

GAINESVILLE — Fallout from the subprime meltdown is now spreading from the residential to commercial real estate sectors, but the outlook for Florida remains stable because of the fundamentals of good climate and in-migration, according to the latest University of Florida survey.

“It sounds like an old song resung, but our respondents are still keeping the faith in the real estate market,” said Wayne Archer, director of UF’s Bergstrom Center for Real Estate Studies. “It’s not that we don’t see some lessening of the market, but it’s nothing like the sensational doom that dominates the news about residential housing.”

The latest quarterly survey of Florida real estate trends completed in January and released this week shows declining optimism about commercial real estate, which had been a bulwark in the property market, Archer said. Occupancy is expected to fall for industrial, office and retail property, as rental rates are beginning to lag inflation.

Respondents continue to expect only slightly more decline in the sales for new single-family homes, while the picture for condominiums, although more pessimistic, has improved slightly, he said.

“Despite growing near-term concerns about recession, residential foreclosures, falling house prices and disruption of financial markets, our survey respondents maintain an unchanged, even slightly positive view of investment in Florida real estate at this time,” Archer said.

Although there is a staggering number of housing foreclosures in a few counties, foreclosure patterns vary widely at the statewide level, Archer said. While Lee, St. Lucie and Osceola counties are considered among the country’s foreclosure capitals, most counties in North Florida, especially Alachua and Leon counties, are in good shape, he said.

The rest of Florida is a little worse off than the rest of the nation but not dramatically so because its subprime meltdown is offset by the still frozen snows of the north, he said.

“There are pessimists who think people are going to pack up and leave Florida, but when I stand outside on these clear winter days, I think ‘they’re not going far,’” Archer said. “As long as people keep moving here, the growth will bring us a correction that you won’t get in industrial states like Ohio, Michigan or Illinois.”

Even in the worst counties, there are signs of Florida’s attractiveness with the growing popularity of “vulture ventures,” in which people move in to buy distressed properties thinking they can make huge profits as the market corrects itself, he said.

Another factor in Florida’s favor is the aging of the baby boomers, some of whom have considerable wealth, Archer said.

“A lot of baby boomers are closing up shop and deciding where they want to be in the future,” he said. “As you get a little older, you get a little more sensitive to the cold, and Florida is going to look pretty good to them.”

Although it won’t save Lee County on Florida’s southwest coast, prospects for international investment, especially with the weak dollar, may spell relief for the 40,000 condominiums sitting vacant in Miami, Archer said.

“With possibly half of these luxury condominiums in an urban setting with spectacular views, they could appeal to high-income individuals throughout the world, especially from Latin America,” he said. “Eventually downtown condominiums may be hard to find as land becomes scarce.”

The January report is the only Florida-centered survey of leaders and professional advisers in the real estate industry. The largest group of respondents was appraisers, about 61 percent, followed by consultants and brokers.

What tax reform? February home sales not so hot in Pinellas, Pasco

I was curious if the property tax reform package approved by voters Jan. 29 would stimulate February home sales. Here's the short answer: About as stimulating as flat soda pop.

Home sales in Pinellas and Pasco counties, when measured against sales a year earlier, were anemic. Pinellas' were down 20 percent, from 848 sales in Feb. 2007 to 678 sales in Feb. 2008. Pasco's dipped 23.5 percent over the year, from 437 to 334.

Condo sales in both counties brought up the average, mostly because more product came on line this year over last. In both Pinellas and Pasco, single family home sales were off about a third.

What about median home price changes the past year? Single family home prices in Pinellas were down 10 percent, from $198,000 to $179,000. Pasco's decline was twice as large, falling 20 percent from $194,000 to $155,000.

Pasco's median home sales price is back to what it was in mid 2004. The last time Pinellas' median price was in the neighborhood was the $177,000 median price in Nov. 2003.

In all fairness, most of the homes that sold in February were based on contracts signed BEFORE tax reform passed. So we wouldn't expect to see much impact, not yet at least. March sales are a different story. We won't know how good or bad they were until April.

Mortgages could now require good faith estimates

Trying to tamp down on mortgage hijinks, the federal government is proposing lenders provide a good faith estimate to borrowers.

Loan agents and mortgage brokers would have to disclose the interest rate, fees and possible prepayment penalties, but also give clues to how much they stand to earn in commissions from the bank. Real estate agents also issue good faith estimates.

"It's not right that millions of consumers go to the settlement table without fully understanding the mountain of paperwork they're asked to sign and, on top of that, expected to pay thousands of dollars in closing costs for services they've never heard of," said Brian Montgomery, HUD's Assistant Secretary for Housing.

"This new Good Faith Estimate  will give families the tools they need to understand what they're getting into before they sign on the dotted line."

Here's a copy of a proposed mortgage good faith estimated, courtesy of HUD.

Overfed housing market needs time to thin

From a column this morning in the St. Petersburg Times:

In the biblical Miracle of the Loaves and Fishes, a nearly empty basket dispenses a never-ending supply of food for a crowd of hungry disciples.

You could adopt the same theme to describe the surplus of homes for sale in the Tampa Bay area. But it's not exactly The Greatest Story Ever Told.

In a given month, roughly 2,000 homes sell across the region, raising hopes that buyers are slowly consuming the glut on the market.

But like during that tilapia and pita bread picnic 2,000 years ago, this particular basket just keeps giving. And giving. And giving.

Take a look at the numbers: In April, active home listings, after rising alarmingly for 1 1/2 years, leveled off at about 42,000.

Since then, more than 25,000 houses and condos have changed hands. Simply subtracting the 25,000 from the 42,000, you'd think only 17,000 homes remained for sale.

You'd be wrong. Combined listings have barely budged in Pinellas, Pasco and Hillsborough counties. Pinellas' listings dipped modestly, but Hillsborough picked up the slack.

The normal churn and burn of real estate means homes are always coming on and off the market. People get job transfers. Others die. Some outgrow their old houses. Others downsize. But our stubbornly high housing inventory points to a cyclical sickness in the market.

So many people are desperate to unload their homes — many of them unwisely bought investment properties — that the supply-and-demand imbalance can't be righted quickly.

And though new-home permits are half of what they were a year earlier, builders haven't idled the cement mixers nearly enough. That means a fresh supply of new houses and condos keeps pouring onto a saturated market.

If that weren't enough, the Amendment 1 property tax reform encouraged people who had held back their properties to try their luck on the listings. Bank sales of foreclosed houses swell the inventory, as do those new Tampa and Clearwater condos abandoned by their cold-footed buyers.

At a certain point, the housing market will burn off its flab. A leaner supply will satisfy a diminished demand. But don't look for such a miracle in 2008.

Foreclosures hang in the stratosphere

Foreclosures didn’t jump much over last year in the Tampa Bay area, but they remain high and steady.

The region reported 4,265 foreclosure filings in February, including 612 bank auctions and 271 repossessions, according to the firm RealtyTrac.

That’s 15 percent above the 3,704 filings in February 2007 and 1 percent over the 4,210 filings in January 2008.

The vast majority foreclosure cases counted by RealtyTrac are mortgage default notices that won’t end in home confiscation. The company also tracks multiple default notices filed against a single property, which leads to double counting.

RealtyTrac said 1 out of 296 homes was in some stage of default, making us the 28th most hardest hit out of 229 metro areas in the nation.

In Florida, only Fort Myers and Fort Lauderdale appeared in the list of the 10 worst hit markets. Most were in California.

More here for the foreclosure curious

Has it come to this? Builder paying contractors in land

This is pretty much confined to rumorsville at this point, but I've been hearing from real estate insiders that at least one builder is out of cash and paying his contractors with vacant building lots.

Expecting to be laughed off the phone, I called local housing analyst Marvin Rose to ask whether such a barter system is possible.

Rose surprised me by saying it doesn't surprise him.

"I've seen that happen before. Builders have more lots than cash," Rose said. "These lots sold for $50,000 a year ago. $50,000 is better than nothing."

More proof that Florida going more upscale?

I took flak for a previous posting quoting University of Florida economist David Denslow. Denslow assumes high real estate prices, insurance and taxes will force out less well heeled homeowners, leaving mostly wealthier residents behind.

I found another proponent of the separating-the-wheat-from-the-chaff theory of real estate. Property developer Perry Reader, who helped build the upscale Celebration community near Disney World, told a Tampa audience that migration out of Florida isn't always a bad thing.

"The quality of people moving in is better than the quality of people moving out," Reader told a group of mostly real estate professionals.

Perhaps realizing his statement could be misconstrued as snobbism, Reader quickly qualified his statement to define quality in economic terms.

I'm in the middle on this one: Gentrification can be a good thing when it comes to slum clearance, but I hate to hear stories about middle class Florida retirees whose $5,000 property insurance bill forced them to migrate to Deliverance, Tenn.

Real estate conference Part II: Business won't s**k for long

Hey, got to keep things balanced here.

Dropped back to the Tampa real estate conference to attend a lunch speech by John Fregonese. He's the big shot planner who helped make Portland, Oregon, much of what it is today. (street cars, walkability, plenty of parks, suburban growth boundaries).

He made two excellent points that bodes well for Florida's long term real estate success.

1. The U.S. population will grow by something close to 125 million in the next century, more than the 76-million growth predicted for China. You know what that means: Higher demand for housing, particularly in popular states like Florida. That doesn't mean everyone will want a big house on a big lot. Fregonese assumes changing tastes - and ransom priced gasoline - will boost demand for smaller houses closer to the office.

2. The country is on the brink of a massive labor shortage. We keep hearing about baby boomers retiring but we rarely consider the implications for employment. Fregonese whipped up a chart showing a wide gap between labor supply and labor demand. How does that affect housing? First, higher paid workers can afford better homes. Second, those badly coveted engineers, nurses, teachers and managers can be choosy about where they live. Florida's got natural advantages over most other states.

Anyway, that's Fregonese's take.

Business s**ks: Notes from a Tampa real estate conference

Here's some of the quotes from a Tampa Bay area real estate conference I attended this morning in Tampa. Take the temperature of the words and tell me how we're faring locally.

Residential developer Perry Reader of Florida Crosland: "One of my lenders based outside of Florida said you're the "F" word."

Retail developer Craig Sher of the Sembler Company: "Florida is the plague of the U.S. when it comes to retail."

Office developer Dan Woodward of Tampa Highwoods Properties: "The current economic malaise has definitely affected decisions by office tenants."

Oh, and two of these panelists simply came out and said "business sucks."

The point of this post is to show how the downturn applies to most real estate. The same banks now turning down people for mortgages (rightfully in many cases) are also stiffing office and shopping center developers.

As more than one real estate guy said this morning, equity is everything these days. No more 100 percent financing, whether it be in residential, retail or office.

Only one real estate guy was fairly upbeat: Lou Plasencia, a consultant and investment banker for hotel projects.

The downturn hit at the right time for hotels. We don't have a large enough supply of rooms to handle all the beach, theme park and convention visitors. So the hotels we do have are making good money.

More on the real estate conference in tomorrow's St. Petersburg Times....

Economists: We could avoid recession

Not everyone is fanning recessionary fears. Here's a story that takes a contrary view:

The U.S. economy will suffer as the slumping housing market eats away at job creation and consumer spending, but the nation should avoid slipping into a recession this year, according to a new economic report.

A recession could still happen though, if the credit crisis that has stifled the housing market deepens, preventing consumers from buying big-ticket items like cars and businesses from spending on equipment, according to the quarterly Anderson Forecast by the University of California at Los Angeles.

Read more here.

Too many recession fear mongers fail to define what it is: Two consecutive quarters of negative growth. In other words, if the economy shrinks one quarter but not the next - a real possibility this year - that's not a recession.

But using the "R" word strikes fear in people. That's the whole point.

Who will rid us of this mediocre housing market?

Sink, sank, sunk: Tampa area home sales slipped by a third the past year.

The Greater Tampa Association of Realtors, first off the mark in releasing February housing figures, reports sales of 813 in Feb. 2008 versus 1,209 sales in Feb. 2007.

The decline was more severe with condos than with single-family homes. Condo sales were off 71 percent. Single family sales were off 28 percent. The average sales price was $240,000.

Inventory, another name for active home listings, remained depressingly high at 20,486. At current sales, it would take 25 months to burn off the supply of homes on the market. A healthy market should have about an 8 month supply.

Here's a chart showing current sales measured against historical sales: Download gtarfeb.pdf.

The Tampa Realtor association includes sales from Hillsborough County, as well as parts of east and central Pasco County.

Is a home price bottom in sight?

Here's a column I wrote for St. Peterburg Times this morning:

On the ups and downs of the market, late economist Milton Friedman once noted that bulls make money and bears make money, but hogs get slaughtered.

Friedman's point was that investors who wait for a market to bottom out tend to miscalculate the timing. Their standoffishness, motivated by a desire to maximize gain, costs them in the end. He was talking about stocks, but his lesson applies to housing.

Here in the Tampa Bay area, rolling out the barnyard analogy is probably premature. A rough consensus of economists and analysts holds that median home prices have a way to fall before they're back in line with buyer expectations and incomes.

But I confess Friedman's image came to mind after I listened to Realtors complain this week about the bargains on the market begging for buyers: bank foreclosures marked one-third off, $150,000 northeast St. Petersburg bungalows priced below $90,000, condos on clearance.

Even builders are waxing conciliatory. A co-worker told me a southeast Hillsborough County builder voluntarily refunded his mother $46,000 midconstruction. The builder cut prices for new buyers and extended goodwill to established customers.

Are such deals stimulating sales? Not much. It's as if buyers suspect a trap door lurks under the talk of price floors.

Let's stipulate inflated home prices of 2005 deserved a nasty pin prick. Let's stipulate further that many sellers still dwell in the Land of Make Believe Where Every House is Made of Gold.

Case in point is the investor who told me he's trying to sell the Clearwater condo he bought for $450,000 in 2004 for more than $900,000. He says foot traffic in his unit has been brisk, but he's been saying that for eight months.

But I suspect that elusive price bottom is beginning to materialize, if mostly via foreclosures. Despite tough talk, banks aren't rejecting too many honest offers. With thousands of properties in default, expect mom-and-pop home sellers to join the race to the bottom.

That's the point when buyers should heed Friedman's hog call. Wouldn't want to miss a rout on account of the snout.

3 Tampa home prices studies show comparable declines (more or less)

Tell us something we don't know.

Yet another home price study shows double digit prices declines the past year in the Tampa Bay area: Title insurance giant First American LoanPerformance reports median single-family home prices declining 11.18 percent in the year ending December.

Here's how various real estate reports stack up in rating home prices the Tampa-St.Petersburg-Clearwater market:

• FLORIDA ASSOCIATION OF REALTORS: -15 percent
• S&P CASE SHILLER INDEX: -13.3 percent
• FIRST AMERICAN: -11.18 percent

***Please note that the Realtors are using January figures, while the other two are still stuck in December. But I'd say they're pretty close when you consider the Realtors reported a 14 percent decline in December.

Second Tampa Channelside condo developer declares bankruptcy

Last summer, dozens of people sued The Place at Channelside to get their money back on condos they felt they overpaid for in 2005.

On Wednesday the developer had had enough. Key Developers Group and its owner Fida Sirdar asked for Chapter 11 protection.

His is the second bankruptcy filing this year among Channelside condo developers. Towers at Channelside LLC declared insolvency in January.

Sirdar completed two eight-story towers last year but many investors who paid top dollar during the housing boom wanted out of the 245-unit complex at Channelside Drive and Washington St.

You've got to sympathize with both parties: The developer who built with confidence knowing he had bona fide buyers and the buyers who realized too late that imploding home values would skin them alive.

Builder says sayonara to Tampa Bay

This hot of the presses from Times reporter Lisa Buie:

The experts said it would probably happen. Just like in the 1990s, this latest housing downturn would push some builders out of the state. Last week, Illinois-based Kimball Hill Homes announced it would leave the Florida market.

The company promised that all homes now under construction would be completed, and warranties would be honored.

"Over the course of the next 10 months, we will be winding down our Florida homebuilding operations in an orderly manner and fulfilling all our oblgations," Chief Executive Ken Love said in a news release, that announced the company would lay off 75 employees at its corporate office. "These are not decisions we made lightly."

Love noted that Florida has been among the hardest hit states in the housing slump and mortgage meltdown. The privately held company will continue building in its other markets of Illinois, Texas, Nevada and California.

Kimball Hill's communities include Ashton Oaks in Wesley Chapel and Sawgrass Creek in the Trinity area. Its Web site had planned to open two new communties in the Tampa Bay area: Putter's Pointe in Hudson and Stone Creek in Brandon.

Tampa Bay housing analyst Marvin Rose said in November that he expected the slowdown to claim some casualties. Tousa and Leavitt & Son recently filed for bankruptcy protection under Chapter 11. Kimball Hill has no plans to do the same, a company spokesman said Wednesday.

Census says we have 2nd highest home vacancy in U.S.

Our housing glut is now statistically relevant to the federal government.

The U.S. Census Bureau rated homeowner vacancy rates in the country's 75 biggest Metropolitan Statistical Areas.

Funerary drum roll, please: We're second worst on the list after Orlando. Ouch. Doesn't say much for Central Florida's housing market, does it?

HERE'S THE WHOLE LIST

Why are so many homes vacant? Don't believe all the Dust Bowl-Mr. Potter hype about families kicked out on the street by the oh-so-cruel market. That's only a small part of the problem.

The main issue is housing speculation - gambling if you will - that led to over-construction in 2004-2006. Now thousands of homes sit empty, searching in vain for the families that were supposed to have bought them.

Vacancy in Tampa-St. Petersburg-Clearwater nearly tripled in the two years between 2005 and 2007, rising from 1.8 percent to 5.1 percent.

I went back to 1986 to put it in perspective. Our previous high was 4.3-percent vacancy in 1991 during the last property meltdown. Through most of the 80s and 90s it hovered around 2.5 percent.

UPDATE: I failed to define what the government means by homeowner vacancy rates. It is the proportion of homes FOR SALE that are vacant It's vacant homes for sale divided by all the owner-occupied homes in a region, with allowances made for seasonal properties. And it's an estimate using a statistical sample.

Stopping foreclosures to stop urban blight

Philanthropists are putting money into foreclosure prevention, but they're doing so for a unique reason: Foreclosure leads to urban blight and American cities don't need a repeat of 1970s-style decay and crime.

Here's story from Wall Street Journal.