Some Really Bad Advice In The Times
On Sunday, November 19, 2006, the St. Petersburg Times ran an article on the front page entitled "Bay's home boom suddenly belly-up". This feature article showed how home prices throughout most of the Tampa Bay area are falling, and essentially it blamed the reason for the price declines on an oversupply of property. Okay, basic economics 101 combined with journalistic sensationalism. Makes for nice reading, but not really very timely.
The article ended with some advice from a Century 21 broker named Craig Beggins. The Times wrote that "there's only one cure for the home price blues: smaller supply and greater demand." It then allowed Beggins to chime in with this timely quote to home sellers: "Don't enter the market before you absolutely have to sell."
Folks, I've read some bad real estate advice in the Times in the last few years, but this is just about the worst.
To be candid, if you have property you want to sell or need to sell, why on earth would you wait to put it on the market? The longer you wait, the longer it will take you to sell it. Also, if you continue to wait when the prices are falling, it likely means that when you do put it on the market you will probably have to accept a lower price.
My advice is to put property on the market now, but list it with a real estate agent who knows what's-what in today's marketplace and has a marketing plan that will present your property to ready, willing and able buyers. Then, take each offer seriously and negotiate in good faith. It may take some time to sell. You may have to be patient. But waiting to list your property does not make good sense to me.
As for the advice that the only cure for today's housing blues is smaller supply and greater demand, that's a little like recommending band-aids for treating cancer.
Of course that's a part of the cure! The problem is, that's not really the disease -- it's just a symptom.
The disease has to do with the fact that for about three years investors and speculators treated real estate like a commodity. They bought and sold property for profit. Period. That caused prices to skyrocket. Then, along came a bunch of hurricanes.
Now, those same investors want to cash out. But there are no buyers. Why? Because the disease has set in. That disease is high property taxes combined with high insurance premiums. The taxes are high because of the assessed value of the property brought about by three years of ruthless speculation. The insurance is high because of the high costs associated with hurricane damage. In fact, these two pieces of the disease are deadly and have caused many buyers to simply get out of the market.
Simply put, buyers today can still obtain affordable mortgage rates and can usually find a home within a price range that is affordable for the repayment of principal and interest. What keeps buyers from the marketplace is the high cost of taxes and insurance. Nobody wants to be house poor, so rather than pay the high mortgage+insurance+taxes, buyers are simply not buying.
If you want to increase demand for housing, you must fix the insurance and tax problems that are currently broken in Florida. Only when those two problems have been solved will buyers once again enter the market and purchase the outstanding home inventory that is currently available. Holding property off the market is not going to fix either of those problems, and will not create greater demand which will result in less inventory. C'mon! Don't you guys at the Times get it? It's only a problem of supply and demand because it's really a problem of insurance and taxes.
If the Times really wanted to be of help in this matter, it would use its pages to pound and pound and pound the greedy insurance companies who make billions -- including those at the State level known as Citizens. After the Times has pounded on them, they should turn the power of the press loose on our local, county, and state legislators who never saw a tax increase they didn't like.
Lower taxes and lower insurance premiums will help to reduce inventories and bring the real estate markets back. Holding property off the market won't do anything.
For more information on Tampa Bay's real estate market, visit my website at www.TheStPeteRealEstateSite.com.
The article ended with some advice from a Century 21 broker named Craig Beggins. The Times wrote that "there's only one cure for the home price blues: smaller supply and greater demand." It then allowed Beggins to chime in with this timely quote to home sellers: "Don't enter the market before you absolutely have to sell."
Folks, I've read some bad real estate advice in the Times in the last few years, but this is just about the worst.
To be candid, if you have property you want to sell or need to sell, why on earth would you wait to put it on the market? The longer you wait, the longer it will take you to sell it. Also, if you continue to wait when the prices are falling, it likely means that when you do put it on the market you will probably have to accept a lower price.
My advice is to put property on the market now, but list it with a real estate agent who knows what's-what in today's marketplace and has a marketing plan that will present your property to ready, willing and able buyers. Then, take each offer seriously and negotiate in good faith. It may take some time to sell. You may have to be patient. But waiting to list your property does not make good sense to me.
As for the advice that the only cure for today's housing blues is smaller supply and greater demand, that's a little like recommending band-aids for treating cancer.
Of course that's a part of the cure! The problem is, that's not really the disease -- it's just a symptom.
The disease has to do with the fact that for about three years investors and speculators treated real estate like a commodity. They bought and sold property for profit. Period. That caused prices to skyrocket. Then, along came a bunch of hurricanes.
Now, those same investors want to cash out. But there are no buyers. Why? Because the disease has set in. That disease is high property taxes combined with high insurance premiums. The taxes are high because of the assessed value of the property brought about by three years of ruthless speculation. The insurance is high because of the high costs associated with hurricane damage. In fact, these two pieces of the disease are deadly and have caused many buyers to simply get out of the market.
Simply put, buyers today can still obtain affordable mortgage rates and can usually find a home within a price range that is affordable for the repayment of principal and interest. What keeps buyers from the marketplace is the high cost of taxes and insurance. Nobody wants to be house poor, so rather than pay the high mortgage+insurance+taxes, buyers are simply not buying.
If you want to increase demand for housing, you must fix the insurance and tax problems that are currently broken in Florida. Only when those two problems have been solved will buyers once again enter the market and purchase the outstanding home inventory that is currently available. Holding property off the market is not going to fix either of those problems, and will not create greater demand which will result in less inventory. C'mon! Don't you guys at the Times get it? It's only a problem of supply and demand because it's really a problem of insurance and taxes.
If the Times really wanted to be of help in this matter, it would use its pages to pound and pound and pound the greedy insurance companies who make billions -- including those at the State level known as Citizens. After the Times has pounded on them, they should turn the power of the press loose on our local, county, and state legislators who never saw a tax increase they didn't like.
Lower taxes and lower insurance premiums will help to reduce inventories and bring the real estate markets back. Holding property off the market won't do anything.
For more information on Tampa Bay's real estate market, visit my website at www.TheStPeteRealEstateSite.com.
-30-
posted by Terry Ward at 5:54 AM
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