Good And Bad News In April Real Estate Sales Figures

The Pinellas Realtor Orgainization (PRO) has just released April's sales and listing figures for Pinellas County. There's good news and bad news. If you're a buyer, the news is probably pretty good. If you're a seller, the news is probably a bit dismal.

Here are the facts ...

• The Absorption Rate for single family homes hit its lowest point since January, 2003. It was at 11.5%. The Absorption Rate is the inventory turn; it is determined by dividing the number of units sold during the month by the total number of listings in the MLS. By comparison, in April 2005, the Absorption Rate was 46.3%. For sellers, this is bad news. It means your house is likely going to remain on the market for a longer period of time.

• The Absorption Rate for condominiums was at 9.9%, the third lowest rate since January, 2003. By comparison, a year ago in April 2005 the condo Absorption Rate was 62.2%. This is also bad news for sellers.

• At the end of April, 2006, there were 7,983 single family homes listed for sale in the MLS. At the end of last month there were 7,325. At the end of April 2005 there were only 2,865 homes listed for sale. This is good if you're a buyer; you have more houses from which to select and can probably negotiate price and term concessions from sellers. This is bad news if you're a seller; it shows that you have more competition and need to respond with greatly increased marketing efforts and will need to negotiate heavily with buyers.

• At the end of April 2006, there were 5,563 condominiums listed for sale. At the end of last month there were 5,178. At the end of April 2005 there were only 1,429 condos in the MLS. If you're a buyer, this is good. If you're a seller, it's bad. One thing about condo numbers needs to be kept in mind: some of this increase must be directly related to new condo communities coming on-line and to investors wishing to divest themselves of properties which they bought previously as pure speculation. With condos, the raw numbers might be a bit misleading.

• The median price of a single family home appears to be trending downward. At the end of April 2006 it was at $219,900 while at the end of April last year is was at $242,200. If you're a buyer this is probably good news. If you're a seller, bad news. Keep in mind we're talking about the median. The price you pay for a home has little to do with this.

• Condo prices seem to be trending upward. The median price for a condo at the end of April 2006 was $185,000 while it was $152,400 at the end of April 2005. Good news for sellers, bad news for buyers. Again, a word of caution: some of this price increase must be attributable to higher-priced new units just coming onto the market, and keep in mind we are again reporting only the median. You know, many of these new condos have prices well over $1-million. It does not take all that many sales in a slow condo market to skew the median upward, and that could throw the trend-line off a bit. So, be a little careful when making decisions using this condo data right now.

Overall, it appears to me like the market has shifted from a strong seller's market to a much more even market -- perhaps a buyer's market, but I'm not prepared to make that statement just yet. Let me look at a few more months worth of data. Certainly, things look better for buyers now than they did in the past few years.

If you're trying to sell a property, there are one or two things you can do to improve your situation. First, you must have a heavy-duty marketing program designed to attract qualified buyers to your property. This is the kind of marketing you can't do as a FSBO because you just don't have the marketing tools. You also won't find this kind of marketing at discount brokers who cut their commissions because when they cut their commission they won't spend any money marketing your property -- think about it, that's just grocery store arithmetic. Second, be ready to negotiate your price and terms. Buyers now have options and plenty of inventory from which to choose. If you won't negotiate with them, they can just move on to the next property.

We'll see how things look at the end of May.

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I've Walked This Road Before

I went into the real estate business in 1994, shortly after disposing of my interest in an advertising agency in Tampa. At that time, we were experiencing a very strong buyer's market. Getting listings was easy. Selling them was hard -- darn close to impossible. It was common for residential property to remain on the market for eight to ten months before finding a buyer.

In order to overcome this problem and get their properties sold more quickly, many homeowners and developers resorted to some really interesting bonuses for buyers and their real estate agents. Things like "buy the house at the listed price and the boat hanging on the davits stays with the property", and "certainly the seller will throw-in the antique dining room table and chairs", and "buy now and get club membership dues paid for one year", and there was the ever popular "$1,000 Realtor bonus if your client buys before December 31st".

It would appear that we have come full circle. By that I mean that we must be back in a buyer's market because sellers and developers are resorting to the same tactics. The only real difference is that the incentives are larger and reflect America's new affluence.

Recently while searching for property in the MLS, I found a seller willing to include the Lexus automobile housed in the condo garage. Some brokers have upped the commission from the substandard 2% to a much more appealing 4% for buyer's agents. Since cash always talks loudest, "bonuses" of $2,500 to $5,000 are becoming more common on higher priced homes. Not to be outdone -- and probably more desparate for sales -- area developers are including heavy incentives. I've seen some as high as $10,000 to the buyer's agent with discounts of up to $50,000 directly to the buyer. If you're buying one of those multi-million dollar waterfront homes on the end of a finger on Isle of Capri or Paradise Island or Snell Isle, you can probably get the owner to throw in the yacht moored in the back yard -- just play your cards right.

They say real esate runs in cycles. I guess that's true. I've been in real estate for quite a few years now, and it seems to me like I've walked down this road before.

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My New Web Site

I have a new web site. The address is www.thestpeterealestatesite.com. You can use the web site to search for properties, get info on the St. Petersburg and Tampa Bay area, get details on local schools, and links to dozens of places. I also have detailed info on the neighborhoods of the St. Petersburg area.

We'll be adding more to this web site from time to time, and I hope you enjoy it.

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