Case Shiller: Prices flee to 2003

Tampa Bay area home prices have taken a magic carpet ride back to November 2003, according to the latest S&P/Case-Shiller Home Price Index.

The well-regarded index of 20 major U.S. cities shows our home prices, as of February, retreated 39 percent since the July 2006 peak. Year over year, prices have fallen 23 percent.

They should call it the Case-Chiller index.

Case-Shiller said price across the nation declined at a slower rate in February, perhaps the first step toward stabilization.

Some news organs are jumping the gun by discussing home price recoveries. The Associated Press, for example, called February's Case-Shiller report "fresh signs Tuesday that the housing recession may be hitting bottom."

That's a ludicrous exaggeration. Most housing analysts I've read don't expect home prices to stop sliding until 2010.

Tampa area homes sales up 16 percent in March

Fifteen of 20 Florida metro areas reported gains in single family home sales over the past year. The Tampa Bay area was no exception.

Local sales rose 16 percent from March 2008 to March 2009, from 1,974 a year ago to 2,292 this year. Prices were down 24 percent, falling from $178,300 to $135,800 year over year.

Realtors attributed the sales rise to entry-level buyers are seeking bargains, which resulted in sales of distressed properties accounting for 40 to 45 percent of February’s transactions.

Lawrence Yun, chief economist with the National Association of Realtors suggested the price declines don't represent the whole market. In fact, Tampa Realtors point out that bank-owned foreclosure homes sell for about two-thirds the price of undistressed sales.

 “Given the downward distortion in price comparisons due to distressed sales, it’s important for owners to keep in mind that this doesn’t equate to a similar loss of value for traditional homes in good condition,” said Lawrence Yun, chief economist with the National Association of Realtors.

The sales rise in Cape Coral-Fort Myers is nothing short of astonishing. Transactions nearly tripled in one year, from 501 in March 2008 to 1,464 in March 2009. Not surprisingly, that foreclosure-laden market has seen one of the steepest price declines in the U.S.

 

Forbes: Tampa home prices to reach bottom in 20 months

Forbes.com placed the Tampa Bay area fourth on a list of regions with the "fastest falling home prices that have yet to hit bottom."

Forbes predicts our home prices will smack the earth - and presumably slowly start rising again - in December 2010.

Prices in Orlando, Miami and Jacksonville all have further to fall than in Tampa, the story said.

I see plenty of flaws in the Forbes piece. It lists our median home price at $151,000, when February's was something close to $130,000. On top of that, the story assumes that homes should sell for about 2 1/2 times income, or a bit under $100,000.

Color me skeptical. As a cautionary tale, Forbes.com predicted in 2007 that we'd have a "V-shaped" recovery in Tampa, meaning prices meaning prices would perform a bungee plunge but spring back up from the bottom.

We know how that worked out.

Viva foreigners - Otherwise Florida population would be in pits

From the Associated Press:

For the first time since the 1940s, more people moved out of Florida last year than new residents moved in from other states as the economic slump halted years of explosive population growth in the Sunshine State.

Florida reported a net loss of 9,286 domestic residents between July 2007 and July 2008, according to U.S. Census data released this month. But that loss was offset by a net gain of 77,427 new international residents, mainly Latin American immigrants.

The loss of domestic residents who once flocked to the Sunshine State’s condo towers and palm-tree lined neighborhoods also was offset by more births than deaths during the year, according to the Census data.

The Census data looked at population changes from July 2007 to July 2008 in Florida, which currently has 18.3 million residents and is the nation’s fourth most populous state.

It was the first time Florida has experienced a year-to-year loss in domestic migration since the University of Florida’s Bureau of Economic Research began keeping records in 1972. It also was probably the first dip since shortly after World War II, when soldiers who had come to Florida for training returned home after the war, said Stanley Smith, the bureau’s director.

“This, I think, is much more fundamental and related to the national economic situation and the recession,” Smith said.

The state’s 9.5 percent unemployment rate is the highest since 1975, which translates into fewer jobs to attract new workers. A nationwide housing slump also has stymied out-of-state residents seeking to sell their homes to move to Florida.

Growth has been the economic engine of Florida for decades. But Smith said he doesn’t expect any significant population growth in the state until the national economy rebounds in a year or two.
And when a recovery does occur, Florida’s growth isn’t likely to reach the heights it did this decade, he added.

“Those were abnormally high,” Smith said. “The economy was booming. Florida was adding a lot of jobs, it was easy to get loans for mortgages, and Florida’s construction industry was booming.”

Factoring in the net gain of 77,427 new international residents, Florida had a total net migration gain of 68,141 people last year. Last year’s loss in domestic migration also was offset by 235,241 births compared to 176,811 deaths recorded between July 2007 and July 2008.

Taking into account all demographic changes, Pinellas County lost 4,184 people in those 12 months, capping a multi-year slide in population. Hillsborough, Pasco and Hernando counties all gained population.

But Florida’s total migration gain was paltry considering that for the past eight years Florida averaged a combined annual gain of 293,000 domestic and international residents.

“Our No. 1 industry here is growth, whether you like it or not,” said Richard Crotty, mayor of Orange County, which is home to Orlando.

U-haul, the truck rental company, reported that in the first part of 2009, 5.7 percent more customers left Tampa than moved into Tampa. Last year, departures exceeded arrivals by 1 percent.

Some Florida residents, like David Oldread, left for professional opportunities.
Oldread and his family left the Orlando area last July so he could take a radio station manager’s position in western Massachusetts with better prestige, pay and advancement. It also didn’t hurt that he still had family in New England.

“My wife and I both love Florida. We enjoy the lifestyle ... being able to do things year-round,” Oldread said. “But a lot of people who grew up in the Northeast seem to migrate back at some point.”

None shall pass: Florida builders and the Not-So-Great Wall of China

Florida based home building giant Lennar is getting pulled deeper into the Chinese drywall hubbub partly engineered by limelight hungry politicians and cash hungry personal injury lawyers.

Here's the latest news. 

Lennar has established a fund to pay for drywall replacement, though its reassured shareholders insurance would step in were Chinese drywall to become a bigger problem.

A couple hundred homes have reported wire corrosion and sulphur odors from imported drywall. Lennar is replacing drywall free of charge in a few Tampa Bay area homes and paying for temporary homes for the residents. Based on the millions of pounds of Chinese gypsum board brought into the U.S. in 2006, the problem could be much more widespread.

But that doesn't justify all the fear mongering.  As you'll notice from the news link above, the story mentions the drywall being "toxic." I read the actual testing results released by Florida's chief toxicologist last month and IT'S SIMPLY NOT TRUE.

Smelly? Yes. Corrosive? In many cases. A major nuisance if you have to move? Indeed. But we're not talking asbestos clouds and Hiroshima fallout.

The state test results showed that American made sample of drywall actually had MORE SULPHUR than did one Chinese sample. And scientists had to heat and dampen the Chinese stuff to get it to put off an odor.

Here's another anecdote that shows how distorted the issue can become.  I talked to a man from Brandon who suspected he had Chinese drywall in his house. His daughter had a chronic sore throat and other respiratory problems. He was almost certain he was a victim. 

Guess what? A testing lab found no problem. It's on to antibiotics and lozenges. Don't tell that to the tort lawyers, though. Wouldn't want to stand between an Armani suit and his pay day.

The turnaround that wasn't: New home starts still unsteady

National housing starts were off about 50 percent in March compared to starts a year earlier, the U.S. Census Bureau said. I'll get you the more useful local wrap up as soon as possible from my sources. But in the meantime you can chew on this.

Brad Hunter, chief economist of housing prognosticator Metrostudy, said the March downturn was expected. Not only are builders struggling to sell at a profit, but consumers are still standoffish.

 “There are ‘four Fs’ of pent-up housing demand: fear, financing, falling home prices, and failure to sell an existing home,” Hunter said. “People who have a legitimate need for a new home are holding back because of these factors."

Local foreclosures wax instead of wane

A flurry of foreclosure filings in Pinellas County in March worsened the mortgage failure rate in the Tampa Bay area.

While foreclosures were mostly flat in Hillsborough and Pasco counties from February to March, Pinellas reported a 66.6 percent rise in foreclosure activity, according to the real estate firm RealtyTrac.

It’s unclear whether this represented a deepening housing crisis in Pinellas or whether banks unloaded a backlog of cases held up by Gov. Charlie Crist’s foreclosure moratorium in January.

In the region as a whole, RealtyTrac counted 6,926 foreclosure filings in March, up from 5,828 in February. The Tampa Bay area’s foreclosure rate, 1 out of every 190 households, was 23rd worse in the nation. Florida counted 47,131 foreclosure filings in March, making it the fourth-worst-hit state.

The year-over-year change in the region was even worse. Foreclosures rose 80 percent from the 3,837 cases reported in March 2008.

As always, here's a chart from RealtyTrac: Download Realtytracmarch09.

I've opined here before that I think we're due for another surge in foreclosures this summer before things get better toward the end of the year. Hope I'm wrong about the summer surge, but our high unemployment suggests more people will default on their mortgages. 

Hillsborough County homes sales march forward in March

In what's becoming a new pattern in this housing market, Tampa area home sales rose 20 percent from March 2008 to March 2009.

The Greater Tampa Association of Realtors reported 1,400 sales last month, compared to 1,162 a year earlier. Over that year, sales prices gave up 27 percent, falling from an average of $230,204 to $168,071.

Is this the first step towards a housing recovery? Hard to say. But I've spotted several encouraging signs:

• The inventory ofhomes on the For Sale listings dipped 3,363 from March to March. The 16,778 homes on the Realtor listings represent a 12 months supply at the current sales rate. A healthy market has a 4 to 6 month supply, but 12 months is the most balanced supply we've seen in 2 1/2 years.
• Homes sales, measured year to year, have risen for 7 consecutive months.
• While it's true that foreclosures make up a quarter to half of all sales, the market seems brisk for those bank-owned properties. There were fewer cash buyers in Hillsborough County in March (32 percent versus 37 percent in February). That suggests mortgage lending is loosening a bit, or that more buyers are applying for home loans.

Here's a chart: Download Gtarmarch09  

The limits of low mortgage rates

The Wall Street Journal nailed an important point about housing demand during a recession - even low interest rates can't overcome the inertia of the downturn:

As mortgage rates fall to near historic lows, some home builders are offering even lower interest rates, in an effort to lure buyers amid the slow spring selling season.

The latest sales promotion: Lennar Corp. is offering a fixed 3.625% rate over the life of a 30-year fixed rate mortgage. The deal is besting average rates that have fallen below 5% nationwide, but it comes as other builders are reporting mixed results from similar incentives.

Hovanian Enterprises Inc.’s recent offer of a 3.99% rate sparked “underwhelming” interest from home buyers, says Dan Klinger, president of the builder’s mortgage operation. “It wasn’t like we needed crowd control,” says Mr. Klinger.

Bargain mortgage rates are the latest sales strategy from builders struggling to sell homes. Mounting unemployment continues dogging the sector, because people without jobs, or those afraid of losing one, are unlikely to purchase, no matter how low the rate.

The builders’ low rates may help first-time home buyers, “but it’s not going to goose the trade-up market,” says Thomas Lawler, a housing economist. “That’s because most trade-up buyers use the equity from their previous home for a down payment, and that equity often doesn’t exist any more.”

We'll say it again: To power up a housing market, there's no substitute for population and income growth. Cheap money via the Federal Reserve won't last.

 

Two mighty Tampa area builders merge

Pulte and Centex, two of the biggest and best regarded builders in the Tampa Bay area, will merge in a billion-dollar deal. Centex's name will vanish when the new company adopts the Pulte brand.

The New York Times has the scoop.

Both companies ranked highly in the annual J.D. Power and Associates Tampa area home builder survey. Both have lost tons of money in the housing slump, but have withstood the recession better than most builders.

Pulte had planned a massive 14,000 home development on the Wiregrass Ranch in Wesley Chapel, the Pasco County suburb on the edge of New Tampa. It had to call off the deal last year, losing tens of million of dollars, money written off when it cancelled its option on the land.