June Real Estate Report -- The Worst Words In Business
In business, I think there are probably two words that -- when uttered together in the same sentence -- represent the worst situation you can face.
Those two words are "bad" and "stagnant".
If a situation is "bad", most business people can take steps to correct the situation and sometimes a "bad" situation is really an opportunity in disguise. So, sometimes "bad" isn't so bad.
If a situation is "stagnant", there are any number of things that can generally be done to get the market moving again -- many of those things have to do with market stimulation brought about through advertising and other forms of marketing, promotion, price reductions and buyer incentives.
But when you have a situation in which a market is both bad and stagnant, well, what can you do? A bad stagnant market tends to remain a bad stagnant market until acted upon by a more powerful outside force -- that's Terry's first law of business physics.
Right now, the real estate market in Pinellas County is bad and stagnant and no outside force is on the horizon that can redirect that reality.
The proof is in the June numbers. Here they are ...
As usual, we'll start with a quick analysis of the Absorption Rate (AR) or inventory turn. This is determined, as you probably know, by dividing the number of units sold during the month by the total number of listings in the MLS.
For single family homes the AR for June was 7.5%. That's up a huge, mind-boggling, titanic 9/10ths of 1 percent from last month. Wow, an upward jump of less than 1%. Hmmm ... sounds like a pretty stagnant and pretty bad market to me.
By the way, two years ago in June, 2005, the AR for single family homes was 59.2%. I'm throwing that in just to remind you of how far this market has dropped. Sure, that was a great market, maybe the best ever. But boy, it sure makes this market look really, really bad doesn't it?
The condo AR was also stagnant. In June the AR was 4.0%. That's a drop of 2/10ths of a percent from May. Just to keep things in perspective, the high point for condo sales was April, 2005 when the AR was 62.2%. So when people say there's not much of a market for condos anymore, you'll know what they mean. Condos are both bad and stagnant right now.
So, how did Pinellas County do in real numbers in June?
Single family home lisitings increased, but only by 9 units as sellers continued to keep homes off the market hoping for better times. There were 9,111 homes in the MLS in June as compared to 9,102 homes in May. There must be a lot of pent-up frustration among home sellers today. I'm sure that the inventory of homes available for rent has increased greatly in Pinellas County as investors who bought homes at the high-point of the market hoping for quick profits now find themselves unable to sell and are forced to try to find tenants just to get a little cash flow.
Home sales are absolutely stagnant. June sales in the Pinellas MLS were 682 units. In May they were 602, April 615, March 687, February 594 -- all pretty similar numbers which indicates market stagnation. By the way, the median selling price for single family homes in June was $220,000 which is a decrease from the $260,000 median in May, but median prices jump around a lot and don't mean a lot. Most of the single family home sales fell into the $200,000 to $250,000 price range -- that's where 18.33% of sales were made so far this year.
Condo sales and listings continue to slump. In June, there were 8,954 condos listed for sale in Pinellas County. In May there were 9,066 and in April there were 9,280. The number of listings keeps going down but it is not because of increasing sales. In fact, condo sales are stagnant. In June there were 356 condos sold; in May 378; in April 355. Pretty flat sales data. And as you would expect, the median price for condos is heading downward; June $160,000; May $170,000; April $178,000 -- pretty dismal. So far this year, most condos are being sold in the $120,000 to $139,999 range, some 18.54% of total condo sales fall in this price range.
You know, I've been looking for months for some good news to write about and share with everybody. But all I have been hearing are "after" predictions from people who are looking back in history and trying to apply old rules to today's real estate problems. Those old solutions won't work because today's problems are different and the causes are different. So the solutions have to be different.
I've heard "After the elections in November the market will come back. It always does." It didn't.
I've heard "After the first of the year the market will come back. It always does." It didn't.
I've heard "After the tourists get here, the market will come back. It always does." It didn't.
I've heard "After the special session dealing with insurance premiums the market will come back." It didn't.
I've heard "After the special session dealing with property taxes the market will come back." It didn't.
So, all this "after" stuff is just a bunch of bull in my book.
Here's what I think.
If you want to change the real estate fortunes in Florida, first the Florida legislature has to get off it's duff and write a new property tax law for this state that is fair to every property owner including those who own investment property, second homes and businesses. I shudder to say this, but in a state with this kind of growth and the need for massive infastructure improvements, Florida may need a state income tax to provide revenue for continued growth. We are, after all, one of the few states that does not tax income. To continue to put the burden of paying for growth on the backs of property owners is a sure way to kill the real estate business in the state.
Second, the Florida legislature has to get off its duff and do something to control property insurance that is of benefit to the property owners, not to the insurance companies -- and say "no" to all these after-the-fact rate increases that keep popping up.
Third, the federal government needs to step up to the plate and spend some of our tax money to create a national disaster emergency fund so that areas that get blasted by things like hurricanes, forest fires, floods, twisters, earthquakes and the like have a federally-based financial solution to their problems. Tax money, you see, is supposed to be there to help the citizens who paid-in the money.
I hate getting political in this blogsite, but that's where I think a lot of the solution rests. The market is bad stagnant and the repairs may be politically based. Real estate agents and brokers can not solve this real estate problem because it is not of their making. Whether or not politicians can shed the lobbyists and make decisions for the benefit of everybody remains to be seen. If not, there's an easy way to fire them and hire some new politicians to take their place. And if that batch doesn't do it, fire them too! Eventually somebody will get the message and do the job. I just hope I'm alive to see it.
For more information on the real estate market in Tampa Bay, visit my website at http://www.thestpeterealestatesite.com/.
Those two words are "bad" and "stagnant".
If a situation is "bad", most business people can take steps to correct the situation and sometimes a "bad" situation is really an opportunity in disguise. So, sometimes "bad" isn't so bad.
If a situation is "stagnant", there are any number of things that can generally be done to get the market moving again -- many of those things have to do with market stimulation brought about through advertising and other forms of marketing, promotion, price reductions and buyer incentives.
But when you have a situation in which a market is both bad and stagnant, well, what can you do? A bad stagnant market tends to remain a bad stagnant market until acted upon by a more powerful outside force -- that's Terry's first law of business physics.
Right now, the real estate market in Pinellas County is bad and stagnant and no outside force is on the horizon that can redirect that reality.
The proof is in the June numbers. Here they are ...
As usual, we'll start with a quick analysis of the Absorption Rate (AR) or inventory turn. This is determined, as you probably know, by dividing the number of units sold during the month by the total number of listings in the MLS.
For single family homes the AR for June was 7.5%. That's up a huge, mind-boggling, titanic 9/10ths of 1 percent from last month. Wow, an upward jump of less than 1%. Hmmm ... sounds like a pretty stagnant and pretty bad market to me.
By the way, two years ago in June, 2005, the AR for single family homes was 59.2%. I'm throwing that in just to remind you of how far this market has dropped. Sure, that was a great market, maybe the best ever. But boy, it sure makes this market look really, really bad doesn't it?
The condo AR was also stagnant. In June the AR was 4.0%. That's a drop of 2/10ths of a percent from May. Just to keep things in perspective, the high point for condo sales was April, 2005 when the AR was 62.2%. So when people say there's not much of a market for condos anymore, you'll know what they mean. Condos are both bad and stagnant right now.
So, how did Pinellas County do in real numbers in June?
Single family home lisitings increased, but only by 9 units as sellers continued to keep homes off the market hoping for better times. There were 9,111 homes in the MLS in June as compared to 9,102 homes in May. There must be a lot of pent-up frustration among home sellers today. I'm sure that the inventory of homes available for rent has increased greatly in Pinellas County as investors who bought homes at the high-point of the market hoping for quick profits now find themselves unable to sell and are forced to try to find tenants just to get a little cash flow.
Home sales are absolutely stagnant. June sales in the Pinellas MLS were 682 units. In May they were 602, April 615, March 687, February 594 -- all pretty similar numbers which indicates market stagnation. By the way, the median selling price for single family homes in June was $220,000 which is a decrease from the $260,000 median in May, but median prices jump around a lot and don't mean a lot. Most of the single family home sales fell into the $200,000 to $250,000 price range -- that's where 18.33% of sales were made so far this year.
Condo sales and listings continue to slump. In June, there were 8,954 condos listed for sale in Pinellas County. In May there were 9,066 and in April there were 9,280. The number of listings keeps going down but it is not because of increasing sales. In fact, condo sales are stagnant. In June there were 356 condos sold; in May 378; in April 355. Pretty flat sales data. And as you would expect, the median price for condos is heading downward; June $160,000; May $170,000; April $178,000 -- pretty dismal. So far this year, most condos are being sold in the $120,000 to $139,999 range, some 18.54% of total condo sales fall in this price range.
You know, I've been looking for months for some good news to write about and share with everybody. But all I have been hearing are "after" predictions from people who are looking back in history and trying to apply old rules to today's real estate problems. Those old solutions won't work because today's problems are different and the causes are different. So the solutions have to be different.
I've heard "After the elections in November the market will come back. It always does." It didn't.
I've heard "After the first of the year the market will come back. It always does." It didn't.
I've heard "After the tourists get here, the market will come back. It always does." It didn't.
I've heard "After the special session dealing with insurance premiums the market will come back." It didn't.
I've heard "After the special session dealing with property taxes the market will come back." It didn't.
So, all this "after" stuff is just a bunch of bull in my book.
Here's what I think.
If you want to change the real estate fortunes in Florida, first the Florida legislature has to get off it's duff and write a new property tax law for this state that is fair to every property owner including those who own investment property, second homes and businesses. I shudder to say this, but in a state with this kind of growth and the need for massive infastructure improvements, Florida may need a state income tax to provide revenue for continued growth. We are, after all, one of the few states that does not tax income. To continue to put the burden of paying for growth on the backs of property owners is a sure way to kill the real estate business in the state.
Second, the Florida legislature has to get off its duff and do something to control property insurance that is of benefit to the property owners, not to the insurance companies -- and say "no" to all these after-the-fact rate increases that keep popping up.
Third, the federal government needs to step up to the plate and spend some of our tax money to create a national disaster emergency fund so that areas that get blasted by things like hurricanes, forest fires, floods, twisters, earthquakes and the like have a federally-based financial solution to their problems. Tax money, you see, is supposed to be there to help the citizens who paid-in the money.
I hate getting political in this blogsite, but that's where I think a lot of the solution rests. The market is bad stagnant and the repairs may be politically based. Real estate agents and brokers can not solve this real estate problem because it is not of their making. Whether or not politicians can shed the lobbyists and make decisions for the benefit of everybody remains to be seen. If not, there's an easy way to fire them and hire some new politicians to take their place. And if that batch doesn't do it, fire them too! Eventually somebody will get the message and do the job. I just hope I'm alive to see it.
For more information on the real estate market in Tampa Bay, visit my website at http://www.thestpeterealestatesite.com/.
-30-
posted by Terry Ward at 4:24 AM
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