Is the Tampa housing market kissing the bottom?

This could be the turning point we've been waiting for.

The Greater Tampa Association of Realtors (GTAR) reports that 1,235 homes sold in April. That includes houses, town homes and condos.

Here's the encouraging news: Sales are almost unchanged from the 1,249 homes that sold in April 2007. That represents a tiny 1 percent sales decline.

It's a huge shift from the year-over-year declines reported in the first three months of 2008. Take January: Sales in January 2008 were 791, a 29 percent plunge from the 1,121 homes that sold in January 2007.

The average sales price is down 15 percent the past year, so maybe discounted homes are stimulating demand. 

The inventory of homes for sales has dropped only a hair the past year, from 20,409 in April 2007 to 20,117 in April 2008. Measured in months, that's a 16 month supply of homes on the market. Realtors says a balanced market has about 6 months worth of homes for sale.

For more information read this chart: Download gtarapril.pdf

Comments

[Dave]

I just have to laugh at all of the "Bottom Callers"! The Real Estate Bubble was the largest bubble in the history of the world and yet they seem to think that it will be all over in a couple of years. For some perspective take a look at the NASDAQ stock market: http://finance.yahoo.com/echarts?s=%5EIXIC#chart4:symbol=^ixic;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

It has been 8 years since it peaked and it is still 50% below the high. When adjusted for inflation, it is closer to 75% below the high. Just remember that with the stock market, investors were required to have at least 50 cents to buy a $1 worth of stock, and that's only if they had a margin account. With the Real Estate Bubble lots of investors (er, I mean gamblers) were buying with 0% Down or even 120% Loan to Value Option ARMs!!! Needless to say, the bottom is a long ways off and will occur when all of the “Bottom Callers” callers give up.

[k]

"The average sales price is down 15 percent the past year, so maybe discounted homes are stimulating demand."

That would be the conventional wisdom.

Did they give you a figure for price since last month? Any trend? Since January?

[sandra]

I am not in the real estate profession but, it does seem like more people are debating whether we are coming close to the bottom (no we aren't, yes we are). That, at least, is better than 6 months ago when we weren't even close.

[Joe]

The bottom may be here or near....but it really deosn't matter. Pegging the exact bottom is not necessary. Real estate is a tremendous investment and with the prices and inventory where they are today it is a great time to buy.

You really can't compare real estate with stocks. Stocks are traditionally much more volatile, which steeper highs and lows.

[Chris]

I agree with Joe. Stocks are just paper... They have no intrinsic value, versus real estate which does.

This alone, in my opinion, makes the comparison of the two and apples-and-oranges comparison.

[Tino]

This will be great news for some of the downtown Tampa projects that are 80% vacant. I'll bet that they are raising their prices this morning to capture the flood of new purchases.

[Dave]

To Joe and Chris - I offered an objective comparison that showed the extent of the Real Estate Bubble; ignore it at your peril. Your lack of understanding of stocks is obvious and I won't comment any further.

[Joe]

Thanks.

[Fuzzy Bear]

I agree with Joe. Stocks are just paper...

Stock and Home values are never realized until you sell them. Your home or your stocks are only worth what a person is willing to pay and nothing more.

Two months worth of data is not an indicator of a market reaching bottom. The GTAR is also not a good indicator of the housing supply as it does not take into account of those who removed their listings and are now selling by for sale by owner. It does not take into account of the "hidden inventory".

What is a good indicator is the number of properties that have completed the exchange of ownership via a sales or in essence, closed sales, not pending sales.

If home prices are valued correctly for any given market, they will sell and that is encouraging. Based on the information I look at, I think we are about half way through the correction process.

[Fuzzy Bear]

Interesting comment by the NAR:

The median price for a single-family home in the U.S. dropped 7.7 percent in the first quarter, the biggest decline in at least 29 years, as values tumbled in two- thirds of U.S. cities, the National Association of Realtors said.

[Enzo]

So, Fuzzy Bear:

If housing prices have no bottom as you claim, HOW MUCH HAS YOUR RENT GONE DOWN? Do tell... Shouldn't it be going down every month? Shouldn't you be paying 10-15 percent LESS every six months? Tell us, o wise renter!

[btw]

Fuzzy is like Zeno - we are always "halfway" through the correction. Fuzzy, what measurements are you looking for to get us past the "halfway" point? You are constantly talking about affordability, income, inflation, etc., and the fact that we are "halfway" there. If you know we are "halfway" there, you must have some solid numbers in mind for when we are finally "there." Which of these numbers will tell you when we are past the "halfway" point? Let's hear some hard numbers that will indicate the "halfway" point? How about it, Fuzz? Prices are dropping dropping 1-2% per month. We can't stay at the "halfway" point forever, can we Zeno?

[Tino]

Enzo - I am seeing rents plunge in the downtown Tampa market. People who are so desperate to have any money coming in are offering empty condos for rent on the cheap. In my community, rents can be had for a little more than half of the ongoing ownership costs.

Look around -- you would be amazed at what you can negotiate.

Tino - if it is too good to be true it probably is. If the rent is that far off you may be walking into an inevitable foreclosure situation. I don't care how cheap the rent is, being in the middle of that situation is not worth it.

[Ronnie]

Rents in markets where investors purchased new homes for $200k and up have decreased as the owners look for ways to recover some of the money they are losing. However, rents for older more modest homes (1100 sq ft and smaller) have risen sharply in the past two years (at least in the Holiday/South New Port Richey area). I own a number of rentals of this type and have had to raise rents to cover insurance and tax increases.

People I know in the rental business are lucky to be breaking even right now. Most are losing money. Like me, they have been in the rental business for 10 or 15 years.

So rents are not coming down in this segment of rentals. Taxes and insurance costs affect everyone across the board. They also have an affect on the overall market as well.

[Ronnie]

Are we at the bottom? I am not sure; however, our title company has seen a steady increase in business since February. We deal in closing, not sales contracts. We are seeing fewer contracts fall apart before closing. People are buying, which is something that was not happening until this past February.

[k]

"Prices are dropping dropping 1-2% per month."
The median figure for SFH in Hillsbrough does *not* follow that trend.
Since Jan, the price was rose a little in Feb, took an 8.7% hit in March and then back up 2% for April. If you were to *average* this, you would come up with a figure akin to fuzz's, but it is misleading to imply "down every month".

[btw]

I'd say 1-2% per month is a good figure for the whole area:

http://www.housingtracker.net/askingprices/Florida/Tampa-St.Petersburg-Clearwater/

Ronnie, I found your reply insightful. You're seeing the data that matters - actual closings. I've posted regarding rentals and can confirm that I agree with you about small SFHs - especially with a 3rd br - these rents generally stay proportionate to inflation...and I personally like them the best.

[Joe]

Ronnie, I found your reply insightful. You're seeing the data that matters - actual closings. I've posted regarding rentals and can confirm that I agree with you about small SFHs - especially with a 3rd br - these rents generally stay proportionate to inflation...and I personally like them the best.

[k]

btw - tracking *asking* prices? Ummm...nevermind.

[Fuzzy Bear]

If housing prices have no bottom as you claim, HOW MUCH HAS YOUR RENT GONE DOWN?

Enzo:

Show me one claim I have made that "housing prices have no bottom".

Enzo, you are just making up false and unfactual information about what I said and that is just intentionally misleading to the readers!

What I did say Enzo is "Two months worth of data is not an indicator of a market reaching bottom."

Next time read and quote exactly what I post instead of posting false and misleading quotes Enzo as it reflects your lack of credibility!

[Fuzzy Bear]

HOW MUCH HAS YOUR RENT GONE DOWN?

All you need to do is survey the rental market and you will get your answer Enzo.

In fact let me help you understand the Tampa Bay rental market before you start your survey. The apartment complexes in the Tampa Bay market are hurting as many of their renters have moved to rent single family homes instead of renting the appartment.

The reason, flippers and speculators have flooded the market with rental properties thus impacting the appartment complexes. Supply and demand!

[Fuzzy Bear]

Fuzzy is like Zeno - we are always "halfway" through the correction.

We are at the half way point and even the FED's own data clearly shows it in their data. If we were at the bottom, the inventory would be much less than what it is now and the foreclosure activity would have stopped by now.

Your problem is you are only looking at MLS or GTAR and that can be misleading as it does not include the "hidden inventory" or forsale by ownerlet alone houses that did not sell that are now rental properties.

[Fuzzy Bear]

Shouldn't you be paying 10-15 percent LESS every six months? Tell us, o wise renter!

With a house paid off, it makes no sense to rent Enzo. Perhaps you can come up with more lies and false information in your attempt to fool the readers and discredit me!

Your lack of credibility is being clearly demonstrated to the readers Enzo.

[k]

For those that think our local market is in trouble, I suggest you do a search in 33993. We have it pretty good, relatively.

This should give the bottom callers confidence they may be incorrect:

The folks at RealtyTrac, and granted these folks list foreclosed properties for a fee, say they don’t believe we’ll see the numbers start to slow until the second quarter of 2009. May and June of this year, according to banking estimates, are supposed to be the peak of adjustable rate mortgage resets from subprime loans initiated in 2006.

[Enzo]

"With a house paid off, it makes no sense to rent Enzo."

So that explains it. You're one of those angry homeowners who missed their chance to sell at the height of the bubbkle for a fat profit, is now trapped and now bitter at the whole real estate system, it seems.

[k]

"Nationwide, 243,353 homes received at least one foreclosure-related filing in April, up 65 percent from 147,708 in the same month last year and up 4 percent since March, RealtyTrac Inc. announced."

- fuel for the downward argument.

...just keeping it real. ;)

[Fuzzy Bear]

ENZO REPLY: So that explains it. You're one of those angry homeowners who missed their chance to sell at the height of the bubbkle for a fat profit, is now trapped and now bitter at the whole real estate system, it seems.

Enzo, your just a frustrated individual who is bent on making up lies about me in your effort to undermine my postings because your not intellegent enough to reply in a professional or ethical manner.

I am not interested in making any fat profit and I am not frustrated by missing the "bubbkle for a fat profit" per your words. Additionally, I am far from being trapped or bitter at the real estate system.

Posting like your posting Enzo, only underscores your lack of professional ethics and it only hurts the honest realtors when you resort to making up lies as you are unable to counter with factual information and therefore need to make personal attacks.

What is clear Enzo, is you lack the education in basic economics, let alone economics 101! Therefore, your lack of knowledge is replaced by attacking me with false and misleading lies.

[Fuzzy Bear]

- fuel for the downward argument.

Former Federal Reserve Chairman Paul Volcker warned Wednesday the United States could face a 1970s-style period of skyrocketing inflation if investors lose confidence in the buying power of the U.S. dollar.

"If there is a real loss of confidence in the dollar, then I think we are in trouble. That is something that has to be watched," Volcker told the congressional Joint Economic Committee.

A recent analysis by Morris Davis of the University of Wisconsin-Madison, and Andreas Lehnert and Robert Martin of the Fed, shows that the rent/price yield in America ranged between 5% and 5.5% from 1960 to 1995, but fell rapidly thereafter to reach a historic low of 3.5% at the height of the boom. Given the typical pace of rental growth, Mr Feroli reckons house prices (as measured by the Case-Shiller index) need to fall by 10-15% over the next year and a half for the rent/price yield to return to its historical average. Again, that suggests the national housing bust is only halfway through. And, given the scale of excess supply, house prices are likely to overshoot. All told, the pressure on policymakers to help struggling homeowners is bound to increase.

“High as they are, the MLS numbers may not tell the full story. There’s a ’shadow market’ of houses not officially for sale even though they’re owned or soon will be owned by lenders who took them back in foreclosure, said Jack McCabe, a Deerfield Beach-based real estate consultant who tracks the area’s home market.

K, I thought you might find this above information interesting in addition to your posting. I have the maps that the fed is using to watch the housing market, but there is just too much information on it to post. I'll put it this way, green is good and red is not and Florida had no green anywhere.

[k]

Fuzz -
I have to agree with his concern. The current administration seems all too willing to pull the wrong levers. It's nice to have low rates - I like that form of stimulus and ARM protection. (who likes paying interest?)
What I don't like is the constant flooding of dollars and gambler bailouts. I'd like to see more big infrastructure projects (rail, alt-energy, etc.), not a war that only benefits the MIC. ...sore subject, I know.

Florida has a lot of regional activity. As Realtors® like to say, the market is local. Very true. You look at Miami or Cape Coral and you see pure chaos. Tampa looks relatively stable compared to those regions, although the latest foreclosure stats look unappealing. Go up to the Nature Coast and a LOT of acreage listings have disappeared. Those that remain have increased in price. The recently hot, southern-appalachia half-backer boom is cooling. Metro Atlanta's speculative inventory is way too high...probably an indicator. And the highly anticipated influx of northern retirees? CNN (I think) just ran a story on people postponing retirements due to inflation and the fact that they can't sell their homes (something we knew). Sure, the baby boomers will eventually make their way here, just not as quick as formerly believed.

Since the Morris Davis report is on the national level, it would only be a guess as to where the 15% reduction will come. Who is more overpriced? Tampa, Miami, Jacksonville, Orlando, Boston, San Jose, Simi Valley, Pheonix?
If you're looking at our local numbers for the past four months, that 15% looks to be made elsewhere. If that 15% figure was stated from the beginning of the year, our market is already halfway there. One more month like March and that prediction will be realized.

Hidden inventory? I see that a lot mentioned here, but I have to question any significant difference in historical ratio. There have always been FSBOs and the past few years have seen remarkable technological advances in tools to help the FSBO (BuyOwner, Zillow, Trulia, FlatMLS, etc.)...but...has the ratio changed enough to be statisically significant? (change of ±5%)
The MLS isn't perfect, but it has and will remain the best indicator since the vast majority of transactions go through there (including bank-owned, foreclosures and short sales).

[Enzo]

Enzo, your just a frustrated individual who is bent on making up lies about me in your effort to undermine my postings because your not intellegent enough to reply in a professional or ethical manner.

Fuzzy, I'm not a realtor nor am I involved in the real estate business in any way whatsoever. And, actually, I have a business degree, a minor in economics, a master's degree and always base my arguments on sound logic. I'm also a keen observer of the local real estate scene.

So anytime you'd like to get together to discuss time-series data, panel data, cross-sectional data or any of the other fine points of econometrics, let me know.

It seems that I deal in positive economics, whereas you deal in normative economics (hence, your constant rants about the wage-to-income ratio). I assume that I don't have to explain these concepts to you.

In the meantime, your ad hominem attacks don't hurt me.

[Enzo]

When I said "wage to income ratio" I meant to say "wage to house price ratio."

[Fuzzy Bear]

Interesting article regarding if we hit bottom.

http://www.economist.com/finance/displaystory.cfm?story_id=11325709

[Fuzzy Bear]

In the meantime, your ad hominem attacks don't hurt me.

Enzo:

Excellent! Now stick to the topics versus personal attacks!

I use macroeconomics and the facts are the facts no mater how you look at the data. Some organizations prefer to distort the data to the positiveI look at the big picture versus looking at one subdivision or one zip code as it provides a clearer picture of the entire market.

I would be pleased to post positive information, but right now I just do not see it. In fact, when 45% of those who purchased in 2007 are in the foreclosure process, that in it's self is a problem.

All you need to look at is the wide disparity between home prices and rental costs in the Tampa Bay area and you can clearly determine that there has been an affordability issue on the real estate side during the bubble. Is it getting better, yes. Are we out of the woods yet, No.

Perhaps you can share your opinion on the following article based on your experience in economics:

A recent analysis by Morris Davis of the University of Wisconsin-Madison, and Andreas Lehnert and Robert Martin of the Fed, shows that the rent/price yield in America ranged between 5% and 5.5% from 1960 to 1995, but fell rapidly thereafter to reach a historic low of 3.5% at the height of the boom. Given the typical pace of rental growth, Mr Feroli reckons house prices (as measured by the Case-Shiller index) need to fall by 10-15% over the next year and a half for the rent/price yield to return to its historical average. Again, that suggests the national housing bust is only halfway through. And, given the scale of excess supply, house prices are likely to overshoot. All told, the pressure on policymakers to help struggling homeowners is bound to increase.

My concern is the overshoot, but I doubt it can be contained as the market had a large overshoot on the upside.

[Fuzzy Bear]

The current administration seems all too willing to pull the wrong levers.

K, I would agree with you on that area you mentioned above.

Most of the hidden inventory I mention comes from the past few years as a result of speculation/flipping followed by foreclosed properties that have not hit the market. I see a much larger inventory when compared to past historical inventory.

I am currently looking at past historical sold property data and comparing it current sold property data. As you well know, it takes a substantial amount of time and I am not finished with my analysis.

One area of major concern for the Tampa Bay area is the amount of high payinng college educated jobs that have been lost to offshoring. That may be a problem for this market.

[Enzo]

In fact, when 45% of those who purchased in 2007 are in the foreclosure process, that in it's self is a problem.

Fuzzy,
Please provide a reputable citation for this.

Also, rent-price yield is estimated to be 4 percent as of early 2008, according to the last chart I saw in The Economist. That sugests to me that we're past the "trough" of 3.5 percent RPY, altohough past performance is no indicator of the future. But, if the trend holds true, RPY will reach its historical 5 percent level by mid-2010. I don't have the data at hand to tell me whether that portends another 10-15 percent price drop or not.

Remember, too, that homebuying is largely psychological and not based on rational modeling such as RPY.

[Fuzzy Bear]

Fuzzy,
Please provide a reputable citation for this.

Enzo, which post, the above post citing the 45% or the below post?

I will try and find that source for you over the weekend. Sorry for the delay, but I am very busy right now on a customer project.

Paulson still said "housing is the biggest risk to our economy," and warned that "foreclosures will remain elevated even if we avoid every single preventable foreclosure."

"If someone can"t afford their home and must move, it's painful," he said."

If someone walks away from a mortgage they can afford, it"s irresponsible."

[Fuzzy Bear]

Fuzzy,
Please provide a reputable citation for this.

Enzo:

Read the article on Saturday in the St. Pete times in the home and garden section and you will get your answer regarding the Home price to rent aspect I keep mentioning as well as the overall market.

I will be traveling out of the country soon on business, but I will do my best to respond back if you still have questions Enzo.

[Fuzzy Bear]

That sugests to me that we're past the "trough" of 3.5 percent RPY, altohough past performance is no indicator of the future.

Enzo, I read that article and we are not even close to that number. Remember my comment on macroeconomics, I see other issues outside of the housing market that is having a significant impact on the Tampa Bay market.