Whom to trust on foreclosure data? Hint: Probably not the property appraiser

We've been arguing back and forth about which source to trust in counting foreclosures in the Tampa Bay area.

Some say non-governmental, independent sources such as RealtyTrac and Realtors can't be trusted. They argue we shouldon the counties for the data.

Looks like the Pinellas County property appraiser's office doesn't trust its own math and has turned to the...gulp...Realtors to get an accurate foreclosure roll. Here's the announcement:

The Pinellas REALTOR® Organization (PRO) today announced that it has formed a partnership with Pinellas County Property Appraiser Pam Dubov, through which PRO will share sales information on short sales and foreclosed properties. 

This partnership will allow the Property Appraiser’s Office to more accurately and efficiently identify sold short sale and foreclosure properties, and include them in their analysis when preparing the county’s tax roll. By including these transactions in the valuation process, the tax roll will better reflect the realities of today’s real estate market.

In the past, foreclosures were typically disqualified from consideration when property values were determined since they were not arms length transactions. Now, with the current downturn in the real estate industry, many property appraisers across the state have realized that to accurately determine a home’s fair market value they must consider the effect of short sales and foreclosures.

According to Ann Guiberson, President and CEO of PRO, “including short sale and foreclosure properties in the appraisal of area homes will reduce values on the tax roll and possibly property taxes for homeowners in Pinellas County since those values will recognize the many distressed sales that are part of today’s market.”

Gathering accurate information about short sales and foreclosures can be a time consuming and labor intensive because many home buyers are reluctant to respond to letters from the Property Appraiser’s Office asking about the circumstances of sales transactions and the condition of the purchased property. 

“We would like homeowners to know that information they provide about distressed sales will help us to justify the inclusion of those sales in our market analysis, and will be used to identify areas that have been hit particularly hard by foreclosures,” said Dubov.  “The data provided by PRO will help us ensure that this year’s property value roll is a fair reflection of a 2008 market that was glutted with foreclosures and short sales." 

Why did Pinellas County foreclosures jump this month?

I've written about the predicted surge in foreclosure filings this summer as banks step up their house cleaning.Is this the beginning of that? From Foreclosuresdaily.com:

437 foreclosure filings in Pinellas County from May 1-May 15, 2009.

1,613 filings from May 15-May 27, 2009.

St. Petersburg real estate attorney Matt Weidner, who provided the numbers, suggests a benign explanation for the surge in filings. A bill expected to become law in Florida raises fees for lenders filing foreclosures. Here's the details:

The original $295 foreclosure fee will be increased according to values of the properties being foreclosed. For foreclosure properties worth below $50,000, the fee will be $395. For properties valued from $50,000 to $250,000, the fee will be $900. Properties worth more than $250,000 will require $1,900 to file.

The fee changes lead me to believe the filing surge is anticipatory and doesn't reflect a sudden rash of mortgage default.

Realtors: Tampa Bay home sales rise for 8th straight month

Tampa Bay area home sales rose for the 8th consecutive month in April, but prices continue to suffer from the drag of foreclosures.

According to the Florida Association of Realtors, single-family home sales in the Tampa area totaled 2,326 in April, up 11 percent from the 2,087 sales in April 2008.

The median sales price in April was $135,200, a drop of 23 percent from last year's $176,000.

Pricing pain was worse elsewhere in Florida. Pity the poor home seller in Cape Coral-Fort Myers. Its median single family home price dropped 57 percent in a single year, from $200,300 to $85,500. Can anyone say foreclosure fire sales?

Orlando's sales rose 38 percent year to year, nearly triple our sales increase, but in compensation prices fell 34 percent over the past year.

Perhaps I'm overreacting, but April's report marked the fourth straight month in which Tampa Bay prices have pretty much stagnated.

January's median price was $122,400. It kicked up a bit to $131,400 in February, rose to $135,800 in March and edged down to $135,200 in April.

Is this what a pricing bottom looks like? Or should we worry about a trough the size of Cape Coral's? 

Tampa home prices down 40.6 percent on Case-Shiller index

Tampa Bay area home prices have shed 40.6 percent of their value in 3 years and have sunk to levels not seen since August 2003, according to the latest S&P/Case-Shiller home price index.

Despite some positive spin from some national news services, it's hard to spot any hopeful signs in the numbers. Tampa housing values plunged 22.4 percent from March 2008 to March 2009. Our decline was seventh worst on the 20-city index.

As you can see if you click on the link above, our month-to-month home value decline is holding steady at about 2.7 percent. Foreclosures are heavily to blame.

The usual suspects - Phoenix, Las Vegas and Miami - surpassed us in home price decline. But in what I consider a worrying trend, the Minneapolis housing market moved into the danger zone, shedding 23.3 percent of its value the past year. Less surprising was auto graveyard Detroit's 25.7 percent decline.

Case-Shiller releases its numbers a month later than does the National Association of Realtors. Realtors' April housing report is due tomorrow.

Buying frenzy among foreclosure homes in Phoenix. Is Tampa next?

Interesting New York Times story about investors hunting for foreclosure bargains in Phoenix. That desert city has an advantage over Tampa: Its homes have depreciated 50 percent. We're still pikers at about 40 percent depreciation.

Tampa Bay apartment vacancies to rise with high unemployment

Apartment vacancies will rise and rents will fall as the Tampa Bay area sheds another 50,000 jobs this year.

That's the not-so-cheerful forecast from a Tampa Apartment Research Report from the Marcus & Millichap real estate firm. 

Here's the highlights:

• Vacancies will rise to 10.4 percent this year while effective rents drop 4.4 percent to $759 this year. That's because the area will shed tens of thousands of employees, many of whom would have rented the units.
• The highest vacancy - 11.5 percent - belongs to downtown Tampa, where 644 units recently joined the rental pool, including 395 in the Element high rise in the city center and 249 in the Vintage Lofts in Channelside.
• The average rent in central Tampa, $967, is the region's highest, which partly explains the vacancies. Central St. Petersburg's vacancy is only 6.6 percent, but the average rent is a relatively modest $716.

The full report is here: Download Apartmentreport

Tampa home prices could be stabilizing (As long as the home's not in foreclosure)

It's unsafe to call a Tampa Bay housing recovery without the presence of two good omens: Homes sales have to start rising. And home prices have to rise in tandem with sales.

For the past nine months the gods have smiled on home sales. Measured year to year, sales have risen every month since August, thanks in part to investors buying foreclosure homes.

What has been lacking are signs that prices have stabilized after the housing market's three-year, 40-percent depreciation.

Until now.

Based on April home sales, we might be observing a price stabilization trend, particularly in Pasco and Pinellas counties.

From February to April, prices of homes sold conventionally — those unencumbered by foreclosure or mortgage defaults — stopped dropping. Prices have actually inched up in some places in those three months.

Assuming that trend is a statistical false start, Pasco County offers further proof that a price floor is materializing. Since February, homes sold via short sale — when a bank lets a homeowner sell for less than the mortgage debt — have collected almost the same prices as conventional sales.

Why is that significant? Short sales can take months to negotiate. Banks rarely write off such losses willingly. To compensate for the nuisance of lengthy negotiating, buyers of short sale homes expect a large discount.

But these days, at least in much of Pasco, banks are short selling for close to full market price. In February, Pasco short sale homes even fetched more than conventionally priced homes, $82 per square foot versus $79 per square foot.

What's that mean? Regular homes are priced so attractively that banks can't undercut them on short sales. Put another way, non-short sale homes are considered bargains if the alternative is months of short sale red tape.

Either way, it's a sign that prices for non-foreclosure homes probably won't fall much lower.

Pinellas shows much the same short sale phenomenon. In April, Pinellas short sale homes sold for 89 percent the price of conventional homes. Hillsborough County isn't so lucky. Short sale homes collect only 80 percent of conventional sales.

The Tampa real estate company Home Encounter crunched all these numbers and predicted a "market rebound" in Pasco and Pinellas later this year. Alas, Hillsborough's higher per-square-foot prices will postpone a rebound for two years, according to Home Encounter.

For balance's sake, let's toss some cold water on our theory. After all, real estate folk have been hyping recoveries since 2006.

One hitch is foreclosure homes. Once banks repossess a house, they've been selling the properties for little more than half the market price in Pinellas and Hillsborough. (Pasco is better off. Banked-owned homes are capturing about three-quarters the money of conventionally priced homes, lending more support to the theory that a recovery is near is that county.)

Also keep in mind that Home Encounter's forecasts have suffered the slings of outrageous fortune. Last year it predicted Pasco/Pinellas real estate would mend in early 2009. Then came the financial crisis of September 2008. All bets were off.

But after three years in which home prices had as much traction as a bobsled after a freezing rain, it's a relief to think the runners could be skidding to a stop.

Florida construction jobs still scarce

Some one's losing work on account of the housing slump. And here are the latest hard numbers. Florida has shed 254,200 construction jobs, both residential and non-residential, in nearly 3 years.

That's a 37 percent free fall from peak employment of 686,300 in July 2006. The numbers come from Ken Simonson, chief economist of the Associated General Contractors of America. He spoke in Tampa on Tuesday.

When you consider those losses, the predicted employment gains from the federal stimulus seem pretty paltry. For an investment of $1-billion from Washington, Florida would probably gain 7,800 construction jobs and 3,700 jobs related to construction. That's just 4.5 percent of the jobs already lost. Better than nothing, I suppose.

But make no mistake: Economic dynamism is mostly a product of private initiative, not government spending.

Simonson also did a breakdown of prices of construction materials. In the short-term, the news is good. Steel, diesel, lumber and plywoodhave all fallen substantially since 2007-08. Asphalt, made from petroleum, should be heading down.

Prices for gypsum and drywall have held fairly steady the past 2 years. Copper prices remain flaky and subject to run ups. Once the economy recovers, expect more shortages of all of this stuff, thanks to competition from builders in China and India.

The price of materials obviously matters in establishing new home prices. But it also has a bearing on homeowners insurance as you compute replacement costs for a damaged home 

Here's Simonson's slide show: Download Agcslideshow

Zillow: Beware of "shadow inventory"

One of the most heated topics on this blog has been the existence or non-existence of a shadow inventory of unsold homes. The real estate firm Zillow purports to have proof that such a parallel universe of marketable homes exists. Here's a key section of the article from Zillow veep Stan Humphries:

This “shadow inventory” will likely be one of the contributors to a recovery that is more “L”-shaped than “V”-shaped. As sales rise and inventory is cleared off, many homeowners will start to test the waters again by putting their homes on the market, thus keeping supply levels higher than they would be without this pent-up inventory. These sustained supply levels will serve to keep downward pressure on prices, which can only increase as demand begins to outstrip supply.

Florida Chinese drywall analysis: No need to raise the roof

A laboratory analysis of Chinese drywall sponsored by the Environmental Protection Agency discovered Chinese drywall contains higher levels of sulfur and strontium, as well as two organic compounds typically found in acrylic paint.

Dozens of houses in Florida with Chinese-made drywall have suffered from air conditioner and other electric appliance failure as drywall fumes corrode copper wiring. Chinese drywall went into thousands of Florida homes in the housing boom year of 2006.

State toxicologists reached the tentative conclusion in March that the drywall samples they tested didn't pose a health hazard. Congress pressed the EPA into service to do backup tests.

If you read between the lines of the press release put out by U.S. Sen. Bill Nelson's office, the EPA doesn't seem overly alarmed: The agency won't even go on the record yet that the drywall caused the household corrosion, let alone caused health problems..

Strontium naturally occurs in carbonate mineral deposits in China, the type that go into gypsum based drywall. Sulfur also naturally occurs. The U.S. drywall tested against the Chinese sample contained smaller samples of strontium and no measurable sulfur.

Here are the results with more detail than you probably need: Download Chinesedrywall.

I'm sticking to my opinion that the Chinese drywall threat has been exaggerated for political and monetary gain.

Lennar Homes has covered the cost of drywall replacement and temporary lodging for home buyers afflicted with the questionable gypsum board. That didn't stop the builder from being sued by whiplash attorneys who usually stake out traffic court.