Surplus of unsold homes sapping apartment rental market

Vacant houses and rising foreclosures are starting to put a dent in the Tampa Bay area apartment market.

Led by Pinellas County, occupancy among the region's 244 apartment buildings declined by 1.4 percent the past year.

Still, occupancy was third best in the state at 91.9 percent. Average rent was sixth best at $863 per month.

Pinellas had the highest rents and worst occupancy. Pasco County had the lowest rents and highest occupancy. Hillsborough county hung somewhere in the middle.

Apartment owners have complained about a "shadow market" of investor houses and condos that deprive them of renters. That's despite the conversion of thousands of apartments into condos during the housing boom. Many of those condos have reverted to rentals.

The firm RealFacts published a regional apartment report for the second quarter of 2008. Here it is: Download RENT.pdf

Comments

[Fuzzy Bear]

"shadow market" of investor houses and condos that deprive them of renters.

The hidden inventory that many denied was in the market. K, you should find this interesting as it will have an impact on home values in a negative way.

[k]

That would go against current market trends in which unsold home inventory is locally decreasing. It's true though, some sellers that can't move their properties (want too much) are converting to rentals for the next 2-3 years (partial reasons for decreases in listings, but not the majority by any stretch). If you have more competition, that's only natural for complexes to have poor numbers. If they needed a bigger scapegoat for those poor numbers they should be looking at the local jobs market for the young. Instead of complaining, those owners should seek ways of gaining larger customer bases, i.e. supporting policies that benefit their particular customer demography. Or, finding new marketing programs... Not necessarily nudist colonies, but other themed communities may start to appear. Some may be themed as a geographic region or perhaps after common hobbies/professions. Interesting, yes, but not necessarily for home values...and not necessarily in every zip code.

[Alex]

Trust me, the shadow market is out there. I am the poster boy of the shadow market: I tried to sell my house and couldn't, so I am renting it out. In an ironic twist, I currently live in another home that I rent because that owner also could not sell.

[Fuzzy Bear]

they should be looking at the local jobs market for the young.

What about the job market for the older workers?

[Fuzzy Bear]

That would go against current market trends in which unsold home inventory is locally decreasing.

The reason most of the inventory has been decreasing is many have opted to take their homes off the market in hopes for higher sales prices at a later date. Those sellers will be disapointed as the wish for higher prices more than likly will not happen.

To say local inventory is decreasing when the sales of closed (not contract) shas been showing the opposite, clearly details that the inventory has been moved to the wait and see mode as sellers try to stop the bleeding of money by renting at a loss just to cover costs.

[Tino]

Fuzzy, I'm not sure what numbers you are looking at, but the Greater Tampa Association of Realtors noted in their 1Q 2008 report that homes available for sale were --up-- almost 40% from the previous quarter.

[k]

MLS inventory is down for Hillsborough and has been declining for several months now. Sales have been steady as reported. Fuzzy, closed contracts are reported as SOLD on the MLS. There are no "opposite" statistics otherwise. You may be mistaken into thinking that the "numbers" include other MSAs. You can get the official PR here: http://www.gtar.org/files/documents/pressreleases/HousingSalesReachEightMonthHigh.pdf
*this doesn't include June stats, which further underscores the inventory trend. **note, GTAR uses average price, which declined 4% in June. The median was up 1.2%, and inventory continued to decline.

[k]

MLS inventory is down for Hillsborough and has been declining for several months now. Sales have been steady as reported. Fuzzy, closed contracts are reported as SOLD on the MLS. There are no "opposite" statistics otherwise. You may be mistaken into thinking that the "numbers" include other MSAs. You can get the official PR here: http://www.gtar.org/files/documents/pressreleases/HousingSalesReachEightMonthHigh.pdf
*this doesn't include June stats, which further underscores the inventory trend. **note, GTAR uses average price, which declined 4% in June. The median was up 1.2%, and inventory continued to decline.

[k]

5-minute delayed double post?? WTG TypePad!

[Grant]

This is another factor that will facilitate the necessary correction in housing valuations. As rents decrease, the gap between rental and housing payments will widen. This will keep more people on the sideline, waiting for parity between the two factors. Until housing affordability matches or exceeds rent affordability, we will continue to see falling real estate valuations.

[Tino]

Sorry, k, I'm going to have to call shenanigans here. That press release does not jive with their earlier report of massive increases in inventory.

The topic: Hillsborough inventory levels

The facts: GTAR reported that 4Q 2007 home inventory was 6,377 homes. 1Q 2008 inventory was 10,348. That is actually a 62% increase in homes, not the 40% number I thought it was.

The source: Greater Tampa Association of Realtors, "Economic and Market Watch Report 1st Quarter 2008"

Okay, so we know that on 3/31/08 inventory levels were 10,348 homes. Can you tell us what they were on 4/30/08, 5/31/08 and 6/30/08? Also, how can something "continue to decline since August" when it has, in fact, been increasing?

I'm not buying your spin. I'm waiting for the next quarterly report.

[k]

From what I am witnessing on MLS stats, pricing figures have more to do with the commingling of greatly discounted REO and short sales than any other factors. There are more, of course, but to a much lesser extent of impact.

[k]

Tino - you are simply incorrect.

GTAR, as stated on this blg MANY times, includes parts of PASCO in their statistical reports. Those stats can have as much as a 30-40% impact on the overall "numbers" in their *generalized* reporting. FAR uses an MSA that includes a few of the Tampa AREA boards in their reporting.
(you can get those stats here: http://media.living.net/statistics/statisticsfull.htm)

GTAR uses AVERAGE. FAR, NAR and yours truly uses MEDIAN. I also only give stats for Hillsborough ONLY and those are straight off the MLS. There are simply NO "massive" or even minute increases in the Hillsbrough inventory. Inventory has **decreased**.

[Tino]

k, this is getting tiring.

Once again, you attempt to refute my numbers with a DIFFERENT number. Do you know what the word inventory actually means? It does not mean price, which is the link you provided.

Please state what the exact Hillsborough inventory levels were on 4/30/08, 5/31/08 and 6/30/08. I've got a copy of the GTAR report in my hand with the numbers that I stand behind. Let's see yours.

It's okay to admit when you are wrong.

[k]

NO Tino - parts of PASCO county are included in "your" numbers....got it? Here's your link:
http://www.forumammo.com/cpg/albums/userpics/10071/picard-no-facepalm.jpg

[Alex]

This is driving me crazy. The numbers I see for the past 2 months, according to the GTAR, are that prices are down, inventory is up and sales are up too. Is that what everyone else is seeing?

[k]

"These sales have reduced the inventory of homes on the market to just over 15 months, its lowest level since August of last year."
http://www.gtar.org/files/documents/pressreleases/HousingSalesReachEightMonthHigh.pdf

[Ralph]

"Hidden Inventory" Hah. What a crock. You're house is either on the market -- or it's not.

If you worked for a major company, and tried to tell the accounting or operations department about "hidden inventory" they'd laugh in your face!

[bobo]

OK, this sounds easy to understand. K gives numbers out for HILLSBOROUGH county, only, and Tino keeps looking at GTAR numbers (GREATER Tampa Area--meaning more than one county). Am I correct? NOt too hard to comprehend.

[john]

No Ralph, I disagree. It is hidden inventory.

I relocated out of state, and bought another home. Renting out the Florida home was the only option other than walking away. 14 months on the market was painful and I should not have waited so long. It actually doesn't work out too bad since I have equity.

That said, you can crunch all of the numbers you want. I think the Florida RE market is paralyzed because of the economy and the horrible job market. Mix that with the over-building and it looks like several years before things get normal.

[Tino]

Seriously, all of you have reading deficiencies, especially k, who has a copy of this report and refuses to read/understand it in order to create a fantasyland. Believe it or not, GTAR separates out statistics for the counties. I was quoting the statistics for HILLSBOROUGH COUNTY.

So k, go get your copy of the GTAR report for 1Q 2008. Look on Page 1, titled HILLSBOROUGH COUNTY, FL.

Below the title, there is a table for HILLSBOROUGH COUNTY. It states:

Q4 '07
Average Price = $278,700
# Homes on the Market = 6,377
# Homes Sold = 2,471

Q1 '08
Average Price = $255,900
# Homes on the Market = 10,348
# Homes Sold = 2,062

Did I mention that GTAR's report says that this is for HILLSBOROUGH COUNTY only?

k, I will accept your apology now. You can stop making things up.

[Alex]

Tino, for what it's worth, I was looking at June and May numbers only.

[k]

Tino - first off, if you're going to debate, please provide LINKS of PROOF. It makes it much easier for everyone. I'm definitely not saying your report doesn't exist, it just needs to be treated like any other academic reference - the burden is yours.

2) I've perused the "GTAR" derived reports and they DO NOT separate counties. Reports made FOR the GTAR by the MFRMLS (typically by Mike Blinn), do not reflect residential listings on specified dates for HILLSBOROUGH.
Local GTAR stats are here: http://www.gtar.org/marketstats.aspx
See for yourself - PASCO included.

3) Those specific dates you mentioned. Funny thing about that, knowing darn well that typically thousands of listings expire at the beginning of the month and may or may not be slowly replaced over the next few days. This is why total listings amounts and MONTHS of inventory are different animals. The one that has the most bearing, naturally, is the months of inventory. That particular statistic was covered in the press release link posted ealier.

4) You know full well, that "Homes on the market" could be (and is) manipulated by a listing on the market one day and withdrawn the next - it still counts as a listing, making it a VERY faulty stat.

5) So you know, from someone that actually has MLS access, the amounts of "home" listings at the beginning of the year for HB County were hovering around 16,300. That number is generally below 15,000 these days (a couple of days ago, it was around 14,700, but it fluctuates hourly). Actual inventory is, in fact, lower, but I default to the logic of #4.

6) You're debating stats from 1Q? Three months old "data"? And, trying to use it for today's market? Please.

7) Look, you're a self-admitted buyer, right? Still looking on the Green Earth for that million-dollar waterfront home? If you think the market is so bad, why are YOU of all naysayers, doom+gloomers, and anarchy-inciting pessimists, BUYING??

[Tino]

Wow. Foreclosures now eclipse Realtor sales in 2Q in Hillsborough:

http://www2.tbo.com/content/2008/jul/25/bz-bay-area-foreclosures-skyrocket/

2Q Hillsborough foreclosures = 6,310
2Q Hillsborough realtor sales (using k's link) = 3,874

I can't wait to see how this will be spun as "good for prices"!

[Tino]

"I've perused the "GTAR" derived reports and they DO NOT separate counties."

Wait a minute. I've quoted the source: Greater Tampa Association of Realtors, "Economic and Market Watch Report 1st Quarter 2008". Since it is a document from a private organization that is not released to the public, that's all the proof you are going to get from me.

Since you claim that you are a member of GTAR, you should call them (1-800-874-6500) and request a copy of this report. You are getting ripped off if you are paying thousands of dollars a year in dues and are not receiving this information. Believe it or not, not every document from every organization is posted on the internet for free.

"You're debating stats from 1Q? Three months old "data"? And, trying to use it for today's market? Please."

Until GTAR puts out their 2Q report soon, that's the only way I can get apples-to-apples comparisons. Besides, their members are still trying to sell homes based on 2005/2006 prices. That's the real comedy gold.

[k]

Tino - The "GTAR" reports are prepared by the MFR-MLS by Mike Blinn. If you read the bottom it's likely sourced from Orlando Regional. No matter.
GTAR's public reports do not separate the County data. Blinn's member reports separate county data, but not for inventory. The Q2 report, as compiled by Blinn has the following info (pertinent to our discussion)

Greater Tampa Median Price:
April $222,254
May $244,947
June $227,565

Hillsborough Median Price:
April $185,000
May $189,000
June $192,000

Greater Tampa Inventory (they add vacant lots):
Jan 20,237
Feb 20,486
Mar 20,141
Apr 20,117
May 19,758
Jun 19,363

Greater Tampa Months of Inventory:
Jan 25.58
Feb 25.20
Mar 17.33
Apr 16.29
May 15.01
Jun 13.89

The sales gains and decreases in inventory are undeniable. The real surprise is that they include a large amount of data-distorting REO and short sales.
Speaking of distortion, your membership cost analysis is laughable. Thousands? Too funny. (another facepalm)