Take Advantage Of This New Tax Law Break

If you sold a home in 2007 and purchased another property that qualifies as a homestead, the portability provision of the new tax amendment kicks-in for you. It is retroactive to January 1, 2007.

As a seller, you can transfer your Save Our Homes credit provided:

• The residence sold in 2007 was homesteaded;
• Your new residence qualifies as a homestead as of January 1, 2008;
• You apply for the exemption with the county property appraiser by March 1, 2008.

How much is the credit? The credit is the difference between the assessed value of your homesteaded property and the market (or "just") value.

For more information about real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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Don't Be Afraid To Ask This Question

There are dozens of questions a buyer or seller should ask a real estate agent before they decide to hire them.

A new question has come to mind that I think should be asked prior to making a decision about which agent to hire.

Today's real estate crisis has left many, many agents short on paychecks. Like everybody else, real estate agents need to be making sales and earning commissions in order to support themselves and their families. That's been pretty tough for the last few months because of the downturn in the real estate market.

So, to make ends meet, many agents have had to find work elsewhere. Sometimes that work is part-time. Sometimes it is full-time. That's understandable.

The problem is, when they are not working in real estate, how much time can they put toward selling your house or finding your next home?

Obviously, this outside employment limits the time they can spend working on your assignment.

So, before you hire an agent today, buyers and sellers need to ask if the agent they are talking to is a full-time or part-time agent. Naturally, I would only hire a full-time professional. But if a buyer or seller thinks he can get his work accomplished with a part-time effort, then hire the part-time agent.

Now, here's something else buyers and sellers need to consider: mental attitude.

The downturn in real estate has eroded many an agent's love for the real estate business. They have become depressed -- and understandably so.

Are they still working full time? Well, they may say "yes", but their mental attitude is so low that they have really already left the real estate business. It's just a matter of time before they pack up their office supplies and get a new job.

Buyers and sellers need to try to determine not just full versus part-time status, but also an agent's mental attitude toward the real estate business. That's not an easy thing to do, I know, but you need to look for some enthusiasm that may be lacking from other agents. Enthusiasm, looking toward the bright side, being excited and pleased to be working with you and a positive mental attitude -- those are key items that tell a lot about an agent's outlook.

So, hire a full time professional who stays on the sunny side of the street. You'll be happier if you do.

For more information on real estate in the Tampa Bay area, please visit my website at http://www.thestpeterealestatesite.com/.

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Why I'm Gonna Vote "Yes" On January 29th

I'm sure you all know that I do not bring politics into this blogsite. I don't know a better, faster way to lose friends than start pontificating on politics or religion.

But the vote scheduled for Janaury 29th is not so much politics as it is economics. Not so much religion as it is tax policy. I figure nobody's going to get too mad at me if I voice my opinion on that.

And I promise I'm not going to try to persuade you to vote my way.

But here's the decision I've reached.

I have decided to vote "yes" on the tax amendment on January 29th.

Here's why.

First of all, I don't think this is a great piece of legislation. In fact, it's pretty lame. A knee-jerk reaction if ever I saw one. It may not even be legal and will probably be tested in court pretty darn quick. It might even be a violation of the 14th Amendment to the U.S. Constitution because it may set up separate classes of taxpayers, and that's a no-no.

Secondly, I think our congressmen spent more time trying to figure out how to replace lost tax revenue than trying to figure out a way to pass equitable tax legislation that is fair to everybody, including people who are moving to Florida, and people who own business property, mobile homes, investment property and second/vacation homes. I kinda resent that attitude on Tallahassee's part -- and Clearwater's part -- and downtown St. Pete's part. That's probably why this legislation is so lame. Once again our elected officials lost sight of the people's goal and got sidetracked looking out for their fellow bureaucrats, departments and special interest groups.

Third, I disagree with the real estate boards who say that this legislation will help spur more real estate purchases. It won't. It doesn't represent enough tax savings to spit at. To get buyers off the fence, we need real, substantial and immediate tax relief in Florida. This legislation isn't any of those things. Real estate has much bigger problems than can be solved by saving a couple of hundred dollars on taxes, and anybody who thinks real estate markets can be re-vitalized by this legislation really does not understand the root problems. This amendment is an attempt at a quick fix, and there is no quick fix for real estate. Not gonna happen.

Okay, those are legitimate reasons for voting "no", and if you want to follow that logic, go ahead. I frankly went down that road myself for awhile.

But I've changed my mind and here's why I'm voting "yes".

• If you vote "no" on Amendment 1, nothing changes. Everything remains the same. Nothing's moving forward. We're stuck with the same-old-same-old.
• What's worse, those people in Tallahassee may very well just throw up their hands and say "Look, we tried. The people don't really want tax change. Just look how they voted. Let's just drop the whole thing." That kind of attitude in Tallahassee could spell disaster in this state for many, many years to come.
• There is no assurance that by voting "no" you will ever get anything better to vote on in the future. Frankly, that just scares hell out of me.

You see, if I vote "yes", I'm telling Tallahassee that I'm fed up with this state's backward-thinking tax policy. I'm saying that even a small step in the right direction is better than no step in any direction. Am I happy with the new law? No. Will I continue to work toward getting better laws? Yes. Am I going to do what I can to make my voice heard about this issue. You bet. Do I want to see a more well-thought out tax policy in coming months? Better believe it.

Plus, what have I got to lose by voting "yes"? As I understand it, with a "yes" vote I still keep my Save Our Homes protection, I don't lose my 3% tax increase limit per year, I get an increase in my homestead exemption, and I get portability so I can take up to $500,000 in Save Our Homes tax savings with me if I move. In addition, with a "yes" vote, businesses and mobile home owners can exempt up to $25,000 from their Tangible Personal Property taxes, and I help create a 10% cap on tax increases for businesses and non-homesteaded property.

I don't know about you, but I consider all those to be good things, worthy of a "yes" vote.

If the "no" voters win, none of those good things will happen and the congress will have to start all over again -- if they want to. Additionally, all those politically active people who have worked so hard for change will have to start all over again -- and I don't know if they've got the staying-power and money to continue this kind of fight. Would I like to see something better? Certainly. But I think the wise move is to take what you can get and then keep the ball rolling toward an even better tax policy that is fair for everybody yet still allows government to meet its financial obligations.

So, I'm gonna vote "yes". You do what you want. Just please don't send me a bunch of e-mails telling me I'm making a big mistake.

For more information about real estate in the Tampa Bay area, please visit my website at http://www.thestpeterealestatesite.com/.

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How Florida Measures Up On Real Estate Recovery Scale

"What's badly needed now is a more positive attitude among both Realtors and their customers at the local level because that's where the recovery will begin in earnest," said Michael Bearden, president and CEO of HouseHunt, Inc. HouseHunt is a consumer-oriented internet based firm that provides information to home buyers and sellers in 47 states through about 2,000 member agents. It's website is Househunt.com.

Many real estate gurus believe that what is needed to spur a real estate recovery is re-establishment of consumer confidence. In recent months, that confidence level has dropped by 20 points, so Bearden's comments are especially well targeted.

HouseHunt and the National Association of Realtors (NAR) recently completed a quarterly survey of their members aimed at gauging consumer attitude toward the real estate market and a return to a more balanced marketplace between buyers and sellers.

Here's what their membership had to say -- and note the differences between the national averages and Florida. There are seven (7) categories which HouseHunt believes will trigger a recovery and members were asked about each ...

1. Average Buyer-Seller Ratio: 59% of member agents in the U.S. reported more sellers than buyers. 71% of Florida agents reported more sellers than buyers.

2. Average Time On Market: 61% of members said it now takes an average of 90 days or more to sell a home. 95% of Florida agents said it takes an average of 90 days.

3. Average Sale vs. Asking Price: 54% of members said that sellers are getting 95% or more of their asking price. In Florida, only 19% of agents said sellers are getting 95% of their asking price.

4. Average Annual Price Appreciation: 51% of members reported negative price appreciation during the past twelve months. In Florida, 85% of agents reported negative appreciation.

5. Multiple Offers: Nationally, members reported that 23% of their sellers received multiple offers from buyers. In Florida, only 10% received multiple offers.

6. Buyer Activity: Repeat and move-up buyers represented 61% of sales activity nationally. There was no direct data regarding Florida for this category.

7. Unsold Inventory: 63% of members reported that inventories of unsold properties were up over a year ago. There was no direct data regarding Florida for this category.

If indeed these are the keys to projecting a real estate recovery, Florida doesn't look too good. Florida has a history of lagging in recoveries, and that may continue to be the case when the rest of the nation begins to pull out of this real estate funk. We'll just have to wait and see.

For more information on real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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It Is To Laugh

For years now, the St. Petersburg Times has run a column called "House Values". This column carries the photos of recently sold houses, a brief description of the main features, the address, asking price and selling price. It's a very popular column!

House Values is usually one column wide and a full page deep in the Neighborhood Times tabloid. The info is printed over a light gray background to make it stand out from the rest of the page. It normally carries information on three or four recent sales.

Perhaps reflecting the drop in sales caused by the housing correction, January 23rd's House Values column could only report on two sales. In fact, the bottom third of the space reserved for reporting house values was blank -- nothing there but that gray background screen. The blank part of the space just kinda stood out like a sore thumb, saying "sorry folks, there just aren't enough sales to file a full report this week."

I'd laugh about it, if I wasn't too busy crying.

For more information about real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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Thorner's Insight Is Correct -- But Here's What It Means To Buyers And Sellers

You may recall that in December I wrote a story called "More Info On Housing". In this story I tried to clarify James Thorner's comments that the median selling price in Pinellas County had dropped about 14-percent in the last year. My point was that Thorner was reporting on a median price, and most people thought that meant that real estate prices had dropped by that amount. Comments using median selling price data can often mislead people. Not everybody took statistics in college -- and not all of us passed it.

In today's St. Petersburg Times, Thorner has clarified his comments -- even though his clarification may have been inadvertant on his part. Thorner has written that "the median home sales price can trend lower even in the absence of genuine price cutting. That's what happens when price-shy buyers steer to smaller, less expensive homes."

That's it! That's perfect. Buyers are steering to less expensive homes. This makes the median price drop but it does not mean that sellers are dropping prices. It just means that more people are buying less expensive homes and passing on the more expensive properties.

That's the point I was trying to make in my story.

You can see this sales trend in the monthly data supplied by the Pinellas Realtor Organization (PRO). Their data breaks out sales based on the selling price of the property. What is selling in today's market are homes of more modest price. Many expensive homes are sitting unsold. Since more people are buying lower priced homes, that drives the median price down even though sellers are holding fast to higher prices.

If you want real price reductions, buyers have to start making lower offers on properties and sellers have to start accepting those lower offers. When you start buying more moderately priced homes you may lower the mean selling price but you may not have any impact at all on overall property pricing. Buyers need to start making offers based on what they believe is the current value of the property in today's market.

I think the prevailing thought among many sellers is that they will price the property high and listen to offers. I can't tell you how often I've suggested to sellers that they set their price lower. The response is pretty much the same: "Buyers can always make me an offer."

A few months later, those same sellers are asking me: "How come nobody wants to make me an offer?"

The reason is pretty simple really, and has to do as much with human nature as selling strategy. Buyers want to make offers that they feel have a pretty good chance of being accepted. If the property is overpriced, buyers feel like they are waisting their time making an offer, and they don't need to do that in a market that is oversupplied with property for sale. Instead of making an offer that might be rejected, they just go to another house that they feel is priced more fairly and make that seller an offer.

Look at it this way, buyers don't like rejection. They'd rather deal with a seller who is more likely to accept their offer than get rejected by a seller who has a home priced at the top of the value scale.

So, if you're a seller, putting your asking price into the realm of reality is the best place to start if you seriously want to sell. Proper pricing will bring you more offers and will ultimately increase sales throughout the county. An increase in sales will most likely result in decreasing prices but may also bring an increase in median sales price as more expensive homes become more affordable and get bought. As more expensive homes get bought, the median price will go up, the average price will probably come down, the oversupply of real estate will be reduced and we'll get back to a more normal real estate market.

And everybody lived happily ever after.

For more information on real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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Here's How Houses Sell In Baltimore

Lorraine Mirabella of the Baltimore Sun has written an article in which she analyzed the real estate market in the City of Baltimore and the five surrounding counties. Here's what she discovered.

In November, the average time on market in Baltimore was 105 days. Oddly enough, 13-percent of the 1,892 homes that sold in that area went under contract in only two weeks or less according to data from Metropolitan Regional Information Systems, Inc.

Those 251 homes averaged only seven days from listing to selling. For the most part, they were older homes with 3-bedrooms and 2-baths. The homes had an average selling price of $304,355, which is about $4,000 under the overall average price in that area.

Now, here's the important part of this analysis. The information shows that fast selling homes in a slow market have three commonalities ...

1. They are priced lower than comparable listings;
2. They are well maintained and show like model homes;
3. They have a full marketing program behind them which includes great internet photos.

Seems like I've heard this formula for success before.

I don't know how many times I've written it, but we are in the most price sensitive market I've ever seen. In a market like this, only the best values get sold.

Follow the three stops above if you want to sell your property. The proof is in Baltimore.

For more information on real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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What Goes Up Must Come Down -- And It Is!

The media keeps reporting that the median sales price for single family homes is dropping. It seems like real estate writers keep using "median pricing" as if it was "average pricing". It isn't. The median only reports the mid-point in a series of figures. In other words, half the people paid less and half the people paid more for their property. The median is dead center, not average.

Despite this, I'll go along with the trend of using median pricing to illustrate that prices for single family homes in Pinellas County are indeed falling -- and that's a great reason for buyers to start making offers right now, and for sellers to get realistic about the prices they ask for their property.

I have data going back to 2003 and running through 2007. That's long enough since it covers the big real estate boom years and gets into the current market correction.

Here are the average median prices for each year (rounded to the nearest thousand):

• 2003: $180,000
• 2004: $206,000
• 2005: $249,000
• 2006: $222,000
• 2007: $206,000

As you can see, the prices appear to have peaked during 2005 and have been falling since then. In fact, as we start 2008, we are actually dealing with selling prices that likely track very close to selling prices from 2004. For what it is worth, I predict that these prices will continue to fall during 2008. Will they reach 2003's level? Sorry, the old crystal ball is a little cloudy on that issue.

Here's something to think about if you are a seller. If you bought your property toward the peak years, you might be in financial trouble now. The market is flowing against you right now. Market activity seems to be eroding the value of your investment, and that erosion might continue. The longer you wait to sell, the less value your property may have. If you want to sell it, you might want to consider pricing it at it's correct market value now and get out while the gettin' is good. The longer you wait, the larger your potential loss. The other option? Hold your property and hope for an improved market sometime in the future.

If you are a buyer, this may be a great time to make offers. Prices are probably near the 2004 level today. I don't know how much lower they will go, but I'd frankly be surprised if they go all the way back to 2003's average median. You may be near the market bottom now. If you buy now, you may suffer some short-term paper losses if prices drop a little more, but most likely the value will increase within the next few years and you'll be okay. If you're buying for the long-term (which is how you should look at a real estate investment) it won't matter much to you anyway. In other words, NOW is a great time to buy.

By the way, when did the market actually peak? Based on the median price data, it appears to have been in October, 2005. The median selling price for a single family home in Pinellas County hit $276,000 in that month. Where is the median today? Try $185,000. What goes up ...

For more information on real estate in Pinellas County, visit my website at http://www.thestpeterealestatesite.com/.

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December Sales Figures Are Not Encouraging

I'm doing my best to find the silver lining in this dark real estate cloud, but the December sales figures don't have much shimmer.

As usual we'll start by examining the Absorption Rate (AR) for December. The AR is the inventory turn; it's determined by dividing the number of units sold by the total number of properties listed in the MLS system for the month.

For single family homes, the AR was 5.1-percent. That's up from November's 4.4-percent AR, but is still the 9th lowest AR for the year.

For condominiums, the AR for December was 3.4-percent. It too is up from November's 3.0-percent figure, but ranks as the 7th worst month of 2007.

Single Family Home Data

The number of single family homes listed in the MLS system fell during the month of December. This is good news if you are trying to sell a home because it means there is a little less inventory competing against you. In December, there were 8,760 homes listed as compared to 9,181 in November and 9,228 in October. I grant you that's not a big inventory drop, but something is better than nothing. This drop in inventory is also the reason the AR went up this month -- it has nothing to do with sales. December was actually the second worst month of the year for single family home sales. Only 447 homes were sold in Pinellas County during December.

Here's something else single family home sellers need to consider. The December median selling price in Pinellas County was $184,900. Compared to the same period in 2006, that's a drop in median selling price of 13-percent in one year, or about 1-percent per month. To be candid, median prices now appear to be tracking with the same monthly medians we saw during 2004. So, if you bought toward the top of the market in 2004-2005, your property's market value might be less today than what you paid for it. If you want to sell it, you just might take a loss.

Condominium Data

The number of condos listed in the MLS took a nosedive in December. Why? I don't know, unless it is because a lot of condo sellers simply decided to take their units off the market and hope for better selling conditions sometime in the future. The net result is that those who keep their units on the market may have a little better chance to sell them -- the operative word there is "may".

The MLS has reported 7,957 condos for sale during December in Pinellas County. In November there were 8,325 units for sale. The reduction in listings did not result from condo sales, however, as only 267 condos were sold in the county during December; that's the 4th worst month in 2007.

The median selling price for condos increased significantly during December, jumping to $176,200 from November's $150,000 median. Still, these December prices reflect a year-to-year median drop of 12.9-percent for condos.

Overall, 2007 was a crummy year for real estate -- but I don't have to tell you that. There were more properties listed in the MLS in 2007 than in 2006 -- so, it was harder to sell property due to increased competition. In addition, 2007 saw fewer sales than were posted in 2006 -- probably because there were fewer buyers willing to make offers. Based on pure old sales volume, 2007 saw fewer properties sold than any year in the last five years.

Like I said, December was not encouraging.

For more information on real estate in Tampa Bay, please visit my website at http://www.thestpeterealestatesite.com/.

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Hear Ye, Hear Ye: Home Sales To Increase in '08

Hank Fishkind, the head of a well-respected economics and financial consulting firm in Orlando, has stated that sales of existing homes likely bottomed out in late 2007 in Pinellas, Pasco and Hernando Counties. For Hillsborough County, Fishkind doesn't see that area hitting bottom until sometime in 2008.

Fishkind released his forecast on Monday (January 7th). Essentially, here are his predictions ...

• Single family home sales will increase by about 2,500 units in Pinellas, 1,000 units in Pasco, and 700 units in Hernando.
• Single family home sales will decrease by about 1,500 units in Hillsborough County.
• Single family home prices will remain flat for at least another two years.

Fishkind prepared the report for Attorney's Title Insurance Fund, which is one of the largest title insurance companies in Florida.

Readers of this blog site know that I am not a big fan of real estate gurus or real estate predictions. Fishkind is a man with a famous name and I respect his work, but frankly I'd be surprised if these predictions prove true for 2008. Here's why.

The real estate market for single family homes is stagnant and has been so for at least 18 months. Nothing much will happen to change that stagnation until buyers start making offers on property and stimulate the market. Offers from buyers are lacking right now, and without offers the market can not change and sales will not increase. As a result of this stagnation, prices are dropping and we are in the most price-sensitive market I have ever seen. There is now talk nationally in the media about a recession in 2008 and that will not be good news for the world of real estate if the overall economy starts to suffer. Foreclosures are rampant, short sales are becoming more common. What few buyers there are have been forcing lower prices on sellers. Mortgages are becoming more difficult to obtain even for people with solid credit. Insurance remains problematical. Taxes will continue to be a problem regardless of the outcome of the election later in January. How Fishkind sees an increase in sales volume in 2008 with all these stars out of alignment is beyond me.

In all candor, I can't make any predictions about sales volume in 2008 because I don't have access to that kind of data. I do see prices continuing to drop due to seller desperation and frustration. I think that the buyer's market will continue in 2008 and that will mean lower prices, not flat prices. In other words, I kinda disagree with Fishkind. But hey, I'm just a real estate agent and Fishkind's an economist. Maybe he knows something I don't.

For more information about real estate in Pinellas County, visit my website at http://www.thestpeterealestatesite.com/.

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Oh! This Is Great News!

The past year has not been very successful for most of us in the real estate business. It has been just as bad for those in real estate-related businesses like mortgages, title insurance, construction, property inspection, development, furniture sales -- you name it.

Ah, but the insurance industry has done real well. According to info published in the St. Petersburg Times today (Jan. 3, 2008), Florida's insurance industry posted net income of $3.4-billon dollars. In case you want to see that written out, it would be $3,400,000,000. That's a net profit of $283-million per month, or about $9.4-million per day if I did the math correctly.

And yet insurance executives keep asking for rate hikes and keep dropping policy holders to reduce their exposure to possible homeowner claims.

Remember this, folks: I keep writing about the four stars that are out of alignment and how they are causing any real estate recovery to be long and slow. Insurance is one of those stars. This is an example of what's wrong with their star's position.

For more information on real estate in the Tampa Bay area, please visit my website at http://www.thestpeterealestatesite.com/.

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