November Sales Report: The Election Hasn't Mattered
In October, a couple of friends and I were enjoying lunch in a St. Petersburg restaurant. They were all real estate agents of long standing in the local area. They were all smiles. I asked why, given that the real estate market has not been good for the last eighteen months or so. They said that the election was just a week or so away, and that the real estate business would improve after the election. They agreed that it always improved after an election. So, they were all smiles and looking forward to a big month in November.
Sorry boys. It didn't happen.
November was terrible.
As usual, let me start out with the absorption rate. As you know, the absorption rate is actually the inventory turn. It is calculated by dividing the number of units sold during the month by the total number of listings in the MLS.
During November, the absorption rate for single family homes was 5.7%. This is 1.5% less than October, 2006 and the worst month since January 2003, which is as far back as I have records from the Pinellas Realtor Organization (PRO). The condo absorption rate was even more dismal. During November, it was a meager 4.0%; this is also the worst since January 2003 and is 1.7% less than October, 2006 which was also a really, really, really bad month for condo sales.
At the end of November, there were 16,759 properties for sale in the local Multiple Listing Service (MLS). By comparison, in June 2005 when the real estate slowdown actually started, there were only 3,795 properties listed for sale in MLS. Way back in January 2001 there were only 3,641 properties in MLS. I don't think there is a street anywhere in Pinellas County that does not have a "For Sale" sign in it -- and remember, these are just the properties listed with real estate agents and do not include unrepresented sellers (FSBO's) or properties where the seller would like to sell but has withdrawn or not yet entered the market. There is, I think, even more property for sale in Pinellas than is being reported by the MLS. I suspect there are a lot of very frustrated sellers.
So, out of those properties, how many managed to get sold in November? A total of 849. That explains the low absorption rate, doesn't it? In October, 1,034 properties were sold and that was a bad month.
Let's look at some specifics for single family homes and condos.
Single Family Homes. In November there were 10,262 single family homes listed for sale in the MLS. That's just a slight increase over the 10,225 from October. Only 586 homes were sold in November; in October there were 738 sold homes. So, things are getting worse. On top of that, the median price is dropping. In November the median was $216,000, down from the $220,000 of the previous month. Pretty sorry.
Condominiums. Condominiums really took it on the chin in November. At the end of the month there were 6,497 condos on the market in the MLS. Only 263 condos were sold. The median price for condos continues to fall. In November the median price was down to $155,900 as compared to $159,900 for October, a $4,000 drop in the median in one month.
So, what does all this mean?
Well, if you're a buyer you have a lot to select from and you should be able to drive a pretty hard bargain in your negotiations with sellers. Interest rates are low and, once you get over the sticker shock associated with taxes and insurance premiums, this is a doggone good time to buy -- maybe the best time in years. So, I advise buyers to get out there and make offers.
If you're a seller the market is definately not in your favor. About all you can do is stay in the market, be patient, be willing to negotiate every offer and maintain an active advertising and marketing program. If your agent isn't doing much advertising, maybe it's time to find one who will. Remember, there are buyers out there. But if they don't know about your property they won't buy it. So, keep it in the market and keep advertising.
I'd like to know something. In fact, I've got a couple of questions that maybe somebody can answer.
1. I keep hearing that 2006 is supposed to be the 3rd best year in history for real estate. You can't prove it by me or by the many people I know in this business. Perhaps this is just PR hype. Where are all the sales coming from that make this such a stand-up year? They sure can not be the sales figures from Florida.
2. I don't understand why developers keep building condos in downtown St. Pete, Clearwater, Tampa and the Beaches. And I don't understand why companies keep financing these construction projects. Condo sales are so far off they are almost non-existent. Or is this just a "if you build it they will come" kind of strategy for long-term growth? Somebody please explain this to me.
3. Why do people keep looking for a "market correction" that will restore sales figures to real estate? In order to have a market correction, you have to have a problem that marketing will solve such as a problem with supply-and-demand. Real estate does not have a true supply-and-demand problem, we have a problem with Florida property taxes and property insurance which is driving buyers out of the market (and maybe out of the state) and creating an artificial supply-and-demand problem. Forget a marketing solution, this needs to be a political solution and elected officials at all levels of government must take the lead. So, my question is this -- when will politicians and lobbyists solve the tax and insurance problems? Or, is it beyond their ability to address this issue?
Sorry about that last item. I try not to get involved in politics with this blogsite, but I really think a lot of the real estate problems rest with taxes and insurance, and that means I have to get a little into the political arena. Can't be helped, but I apologize to you.
4. When will sellers finally admit that in order to sell a property, they have to bring the prices down? It doesn't matter if the seller bought it two years ago at the top of the market, put lots of money into the remodeling, and now needs to cash out. Buyers don't care about sellers financial problems. If you want to sell something today, get real about its actual value not about your ROI. Buyers will not pay more than the perceived value of the property no matter what you think as a seller. If you think I'm wrong about this, go back to the top of this article and re-read the sections dealing with the absorption rate, number of listings and number of sales. I repeat, sellers need to get realistic about pricing.
Anyway, that's about it for November. Pretty bad. Maybe things will pick up after the first of the year.
For more information about real estate in Tampa Bay, visit my website at www.TheStPeteRealEstateSite.com.
Sorry boys. It didn't happen.
November was terrible.
As usual, let me start out with the absorption rate. As you know, the absorption rate is actually the inventory turn. It is calculated by dividing the number of units sold during the month by the total number of listings in the MLS.
During November, the absorption rate for single family homes was 5.7%. This is 1.5% less than October, 2006 and the worst month since January 2003, which is as far back as I have records from the Pinellas Realtor Organization (PRO). The condo absorption rate was even more dismal. During November, it was a meager 4.0%; this is also the worst since January 2003 and is 1.7% less than October, 2006 which was also a really, really, really bad month for condo sales.
At the end of November, there were 16,759 properties for sale in the local Multiple Listing Service (MLS). By comparison, in June 2005 when the real estate slowdown actually started, there were only 3,795 properties listed for sale in MLS. Way back in January 2001 there were only 3,641 properties in MLS. I don't think there is a street anywhere in Pinellas County that does not have a "For Sale" sign in it -- and remember, these are just the properties listed with real estate agents and do not include unrepresented sellers (FSBO's) or properties where the seller would like to sell but has withdrawn or not yet entered the market. There is, I think, even more property for sale in Pinellas than is being reported by the MLS. I suspect there are a lot of very frustrated sellers.
So, out of those properties, how many managed to get sold in November? A total of 849. That explains the low absorption rate, doesn't it? In October, 1,034 properties were sold and that was a bad month.
Let's look at some specifics for single family homes and condos.
Single Family Homes. In November there were 10,262 single family homes listed for sale in the MLS. That's just a slight increase over the 10,225 from October. Only 586 homes were sold in November; in October there were 738 sold homes. So, things are getting worse. On top of that, the median price is dropping. In November the median was $216,000, down from the $220,000 of the previous month. Pretty sorry.
Condominiums. Condominiums really took it on the chin in November. At the end of the month there were 6,497 condos on the market in the MLS. Only 263 condos were sold. The median price for condos continues to fall. In November the median price was down to $155,900 as compared to $159,900 for October, a $4,000 drop in the median in one month.
So, what does all this mean?
Well, if you're a buyer you have a lot to select from and you should be able to drive a pretty hard bargain in your negotiations with sellers. Interest rates are low and, once you get over the sticker shock associated with taxes and insurance premiums, this is a doggone good time to buy -- maybe the best time in years. So, I advise buyers to get out there and make offers.
If you're a seller the market is definately not in your favor. About all you can do is stay in the market, be patient, be willing to negotiate every offer and maintain an active advertising and marketing program. If your agent isn't doing much advertising, maybe it's time to find one who will. Remember, there are buyers out there. But if they don't know about your property they won't buy it. So, keep it in the market and keep advertising.
I'd like to know something. In fact, I've got a couple of questions that maybe somebody can answer.
1. I keep hearing that 2006 is supposed to be the 3rd best year in history for real estate. You can't prove it by me or by the many people I know in this business. Perhaps this is just PR hype. Where are all the sales coming from that make this such a stand-up year? They sure can not be the sales figures from Florida.
2. I don't understand why developers keep building condos in downtown St. Pete, Clearwater, Tampa and the Beaches. And I don't understand why companies keep financing these construction projects. Condo sales are so far off they are almost non-existent. Or is this just a "if you build it they will come" kind of strategy for long-term growth? Somebody please explain this to me.
3. Why do people keep looking for a "market correction" that will restore sales figures to real estate? In order to have a market correction, you have to have a problem that marketing will solve such as a problem with supply-and-demand. Real estate does not have a true supply-and-demand problem, we have a problem with Florida property taxes and property insurance which is driving buyers out of the market (and maybe out of the state) and creating an artificial supply-and-demand problem. Forget a marketing solution, this needs to be a political solution and elected officials at all levels of government must take the lead. So, my question is this -- when will politicians and lobbyists solve the tax and insurance problems? Or, is it beyond their ability to address this issue?
Sorry about that last item. I try not to get involved in politics with this blogsite, but I really think a lot of the real estate problems rest with taxes and insurance, and that means I have to get a little into the political arena. Can't be helped, but I apologize to you.
4. When will sellers finally admit that in order to sell a property, they have to bring the prices down? It doesn't matter if the seller bought it two years ago at the top of the market, put lots of money into the remodeling, and now needs to cash out. Buyers don't care about sellers financial problems. If you want to sell something today, get real about its actual value not about your ROI. Buyers will not pay more than the perceived value of the property no matter what you think as a seller. If you think I'm wrong about this, go back to the top of this article and re-read the sections dealing with the absorption rate, number of listings and number of sales. I repeat, sellers need to get realistic about pricing.
Anyway, that's about it for November. Pretty bad. Maybe things will pick up after the first of the year.
For more information about real estate in Tampa Bay, visit my website at www.TheStPeteRealEstateSite.com.
-30-
posted by Terry Ward at 4:17 AM
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