Home Prices Have Fallen A Third Since 2006

According to the latest S&P/Case Shiller home price index, home prices in the Tampa Bay area have fallen almost a third since peaking in July of 2006. Essentially, this means if you purchased a home at the top of the market in 2006 for $300,000, it is today worth about $200,000.

I really like the S&P/Case Shiller report because I believe them to be exceptionally accurate. Rather than look at median prices for the area, Case Shiller tracks repeat sales of individual homes.

The most recent report showed that much of the loss occurred between November 2007 and November 2008 with a loss of about 21 percent in value during that twelve month period alone.

Tampa Bay was the seventh hardest hit metropolitan area of the 20 cities tracked by the index. Phoenix, Las Vegas, and San Francisco sustained price drops of 30 percent for the year ending in November. Miami was Florida's hardest hit area with a yearly price drop of 28.7 percent and a drop of some 38 percent since 2006.

Sellers would be well advised to keep these drops in mind when considering offers and determining their asking prices for real estate.

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

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Fannie Mae's New Condo Rules Spell Trouble In Florida

Lending giant Fannie Mae has slapped new rules on Florida condos, rules that do not apply to any other state.

The new rules, which took effect about a week ago, include requiring that no more than 15 percent of a condo's unit owners be delinquent on association fees as a condition of funding home loans to new buyers.

Fannie Mae singled out Florida after discovering record high default and foreclosure rates among condo owners in this state. It also said the excessive number of condos for sale in Florida have driven prices downward.

The new Fannie Mae rules come at a time when many buyers face extreme difficulty in getting condo mortgages. Some banks in the past two years have cut condo lending anyway, and some require down payments of up to 40 percent in new condo buildings.

Here are the three new rules for Florida:

• No more than 15 percent of unit owners can be 30 or more days past due on association fees;
• For new condo buildings and conversions, at least 70 percent of units must have been sold or put under contract -- that's up from 49 percent before enactment of the new rules;
• Fannie will now review condo buildings to make sure they meet the new requirements. In the past, lenders could review the buildings.

Freddie Mac will most likely follow suit and enact similar rules soon. Freddie is the second largest mortgage guarantor behind Fannie Mae.

For sellers of condominiums, this makes finding a qualified buyer even more difficult and will certainly add to the glut of condos for sale throughout Florida. That glut will likely force condo prices even lower in coming months as fewer and fewer condo buildings will qualify for Fannie Mae support due to the cash flow problems associated with the recession and employment declines which may force even more current condo owners to fall behind on monthly maintenance fees.

Frankly, this could be the nail in the coffin for condo sales as Fannie Mae tries to recover from its own financial disaster.

For more information on real estate in the Tampa Bay area, visit my website at www.TheStPeteRealEstateSite.com.

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Why Doesn't The St. Pete Times Correct Real Estate Mistakes?

I cannot fully express my dismay, anger, and confusion with the St. Petersburg Times.

Actually, that's not true. I can fully express my dismay, anger and confusion with the St. Petersburg Times. Just read the story below.

I realize that a newspaper has to be something of a sounding board for various viewpoints within the community. That's as it should be.

But a newspaper should also strive for accuracy and seek to correct misconceptions held by readers who send in letters to the editor. If the paper does not correct these misconceptions, it gives tacit approval and support to errors held by the reader and the paper serves only to compound the error and help to spread it throughout the community.

I am referring directly to the letter to the editor written by one Tim Shepherd of Palm Harbor that was published by the Times on January 25, 2009.

By publishing Mr. Shepherd's remarks, the paper has once again shown its true colors regarding its feelings toward real estate agents and brokers, and those feelings are clearly negative and apparently based on the paper's own lack of knowledge regarding real estate laws and practice. As such, the paper should no longer make any comments about real estate matters without first seeking to understand the subject they are writing about and having their articles edited by someone well trained in real estate matters, such as a Realtor or a real estate attorney. Clearly real estate is a subject the current writers and editors of the Times are not qualified to discuss.

Mr. Shepherd has opened his letter to the editor with these words: "Real Estate Buyer's Rule No. 1: Never trust a realtor -- they usually aren't working for you."

That is an absolutely false statement and has been false in Florida for many years.

Of course, the Times did not bother to explain why Mr. Shepherd's statement is false and misleading. I guess that neither Mr. Shepherd nor the editors and writers of the St. Petersburg Times have ever heard of a buyer's broker or Buyer Brokerage -- that is, a real estate agent or firm who represents the interests of the buyer to the exclusion of the interests of the seller in a real estate transaction.

In Florida, a real estate agent can represent either a buyer or a seller through a legal concept called Single Agency. The agent can also represent both sides in the transaction through a concept called Transaction Brokerage. What's more, the agent must disclose which side of the transaction he represents to anyone who asks, and the disclosure must be in writing.

This blog article would be too long for me to get into an explanation of these three concepts, so let me just say that the old-fashioned idea that the real estate agent always represents the seller since the seller pays the real estate commission is an outdated concept and has not been Florida law in many years. Perhaps it is the law back where Mr. Shepherd used to live, or perhaps his great knowledge about real estate is not as up-to-date as it should be. Don't believe that some agents only represent buyers, Mr. Shepherd? Check with your attorney. Or better yet, Mr. Shepherd, go to real estate school so you can speak with some level of authority.

In his letter, Mr. Shepherd admits that he is a relative newcomer to this state, having lived here only six years. He admits that he has never trusted Realtors. He admits that since moving here, he has been a renter rather than a buyer.

As a renter, Mr. Shepherd pays $1,250 per month according to his letter. He claims that by paying rent, he has avoided the ups-n-downs of the recent real estate market. He claims that compared to an interest-only mortgage, his renting has saved him $72,000.

Bad economics there, Mr. Shepherd. If you've lived in that same rental house for six years at that rental rate, you have spent $90,000 on rent in that time. Know what you've got to show for that expenditure? Cancelled checks. Know who made out well in the past six years? Your landlord who has profited to the tune of $90,000 on your false economic position, and has gained even more equity on the property you are paying off for him. Given that bit of information Mr. Shepherd, do you trust your landlord more than real estate agents? I'm sure your landlord told you he's giving you a great deal. And it is a great deal -- for him.

Had you bought a house six years ago in 2003, even with an interest-only mortgage, the value of that house likely would have appreciated beyond the amount lost in the recent downturn and you would be seeing an equity return by now. The people who are suffering financially are those who bought a house near the top of the real estate market in 2005 and 2006. They likely overpaid. Simple as that. But if you had the opportunity to buy in 2003 and passed on it thus missing all that growth during the real estate boom, well, you can't blame a real estate agent for your poor judgement.

There isn't anything much I can say to get a man like Mr. Shepherd to change his view and suddenly start trusting real estate agents. I guess that somewhere along the way in his life, some real estate agent did something that Mr. Shepherd feels was dishonest to him or some member of his family way back when and way back home. I can't change that. I know some real estate agents I don't trust very much too. Of course, I know some lawyers, doctors, accountants, and restaurant owners I don't trust either. But I don't condemn every lawyer, doctor, accountant and restaurant owner because of the actions of one of their kind. Mr. Shepherd apparently does. Quite small-minded, wouldn't you say? Oh, well.

Mr. Shepherd ends his letter by saying that he might now be willing to buy a house since prices have fallen about 40-percent. But, he still won't trust a Realtor to help him buy it.

I could give this man a hundred reasons why he should hire a real estate agent to help him find, negotiate, and close on his new home but I won't waste my time. He wouldn't believe me anyway. So, I'll let Mr. Shepherd tie his own tail in a knot with some seller, and then I'll let him deal with the lawyers he'll need to represent him in the lawsuit he is likely going to be faced with as a result of not trusting real estate agents.

As for the St. Petersburg Times, what have real estate agents done to you people that make you dislike us so much? Why would you publish such a foul, misleading and foolish letter about real estate agents from somebody whose comments and ideas clearly run counter to common sense and Florida law. I mean, c'mon guys, consider the source of this man's comments and his misguided and ill-informed concepts. Gosh, can't you at least try to publish something that is accurate and objective?

Most importantly, why don't you write a column that corrects Mr. Shepherd's false and misleading statements so that the rest of your readers have accurate information about how real estate agents work in Florida. I'm not asking you to do anything that supports real estate agents -- that would clearly run counter to your editorial position and attitude toward the real estate industry. Just write an objective story about who agents represent in a transaction and correct this fellow's misleading comments. Frankly, your readers deserve the correct information on this subject. Or would that be too much like responsible journalism?

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

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Avoid The Problems Of On-Line Real Estate Shopping

According to the 2008 National Association of Realtors Profile of Home Buyers And Sellers, some 87 percent of home buyers made use of various internet sites to search for a home in the past year. That's fine, as long as you recognize that the internet presents numerous problems and pitfalls for buyers. Matthew Bandyk of U.S. News has written an article outlining many of those on-line challenges and I'm summarizing a lot of what he says in this little blog story -- I urge you to read his entire article from January 7, 2009.

Here are some of the most common mistakes internet shoppers make when searching for their new home ...

1. Assuming The Internet Has All The Answers. While it is true that the internet allows skilled users to handle many of the tasks normally accomplished by a professional real estate agent, don't make the assumption that you can do it all on-line. The process of purchasing real estate is extremely complicated from a legal viewpoint, and if you make a mistake it could cost you thousands of dollars. Your best bet remains a real estate agent or an attorney to help you navigate through these turbulent legal seas.

2. Taking Too Narrow A View. There is a load of real estate information on the internet. As a consequence, many home shoppers stick to just one or two trusted sites for their home search. The problem with doing that is that the shoppers may be missing out on the full range of available properties. Just because a house is posted on one site does not mean it is on all of them. Use several websites to get a wider perspective on what's really in the marketplace.

3. Don't Ignore The FSBO's. The big search engines often do not include homes that are being sold as For Sale By Owner (FSBO). The house you really want might be one that is being sold without the aid of a real estate agent and is not included in any sites. Craigslist, by the way, is a great source for such homes.

4. Avoid Fake Listings. The internet is full of scam artists and outright crooks. They are active in the area of on-line home buying. One of the things these con-artists do is put up fake home listings in order to collect more page views. Here's a way to make sure what you are looking as it legit. Websites will put watermarks on their photos. If you don't see any watermarks or you see multiple watermarks on the same photo, beware!

5. Don't Put Too Much Trust In On-Line Valuation Services. There are valuation decisions that sites like Zillow and Cyberhomes can't take into consideration when putting a value number on a home. Use their figures as a range and do other research or talk to a real estate agent or appraiser to narrow that range and determine a more accurate home price.

Well, there you have it. I think all of you who are doing on-line searches can use these tips from Mr. Bandyk to make your on-line experience in real estate a bit more fruitful and safe.

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

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Thorner Strikes Again

I hate being a media critic. I spent too many years in media to be comfortable posting comments on professional writers and editors. Problem is, our boy James Thorner has struck again in his (Un)Real Estate column in the St. Petersburg Times for January 16, 2009.

I just have to take exception to this none-to-thinly-veiled shot at the real estate industry.

Let me set the scene for you. In Thorner's latest column, you have Dr. Jackal who is the public face of real estate and tries to convince everybody that buying property now is smart. When Dr. Jackal goes home at night, he turns into Mr. Nothing-To-Hyde who, in effect, repudiates all the public comments made about buying real estate and instead dwells on the negative aspects of property purchase and ownership today. Thorner would have you believe that those after hours comments are more truthful and heartfelt.

Essentially, Thorner is saying that you can't trust those nasty old real estate people because they will tell you one thing in public but in their heart-of-hearts they believe something else.

What rubbish!

Real estate agents are saying that this is a great time to buy property. Hey, James, it really is! You can't argue with me that there is currently a great selection of property on the market. You can't argue that many sellers are desperate and will sell for lower than normal prices. You can't argue that mortgage interest rates are very, very attractive.

Let's see, that's great selection, low prices and super terms. Doesn't that sound like the makings for a good time to buy?

Of course, the real estate industry has to make some assumptions when we tell people that this is a good time to buy.

We assume that we are speaking to grown up adult people who know how to analyze a situation and make informed decisions about whether this is a good time for them to buy property. If a grown up adult has a bad credit history, nothing for a down payment, a job that doesn't pay well, an "iffy" income stream, and works in an industry where layoffs are becoming more and more common, well, they might not want to make the commitment to take on a thirty year mortgage and all the responsibilities that goes along with owning property.

On the other hand, if you have good credit, a steady job, some money to put down and things are looking stable in your industry, this is probably one heck of a good time for you to take advantage of the current market situation and buy a piece of real estate for all the reasons listed above. James, perhaps you should re-read the reasons to buy now and apply them to financially stable adults. Then, let adults make their own decisions about buying or not buying in today's marketplace.

By the way, James, I say the same things to myself in the wee small hours of the morning because it is the truth 24 hours a day. This is not a Jackal and Hyde turnabout of opinion.

James, I enjoy your column very much. But sometimes you just seem to write unsubstantiated things for the purpose of stirring up controversy. I think you just make this stuff up out of your fabulous imagination.

Here's what's real.

Many real estate agents are having a hard time trying to make a living right now. We aren't asking you to write stories that support us, but writing an article that undermines the basis of trust between agents and buyers and agents and sellers serves no useful purpose that I can determine. That's what this recent column accomplishes; it weakens the basis of trust between the parties.

The real estate industry did not create the current economic crisis the country now finds itself in. As an industry we are suffering along in it like everybody else, and hoping to stimulate a little business so we can keep our heads above water until things finally turn around.

A stronger real estate industry is important to the economic recovery of this country. Media comments which weaken the industry serve to prolong the economic recovery and are a grave disservice to the country as a whole.

Making people think less of the real estate industry, it's economists, agents and brokers may seem like great sport to you, but for those who consider themselves real estate professionals your recent comments were not well received because they cast us unfairly as the villains in this economic mess and make us out to be little more than two-faced opportunists.

Frankly, there is plenty of blame to go around in this country about the current economy, and the media has played it's share in it as well with negative comments and editorials which serve only to undermine public confidence and business strength.

Just checking the advertising lineage in the Times recently, I'd say all those negative comments from the media are doing a doggone good job of scaring the peewadlin out of advertisers. Kind of a case of biting the hand that feeds you, isn't it?

Well, that's my view.

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Selling Hint: Cleanliness Is Next To Soldliness

Here's a little selling hint for everybody who has property on today's market: Cleanliness Is Next To Soldliness.

Buyers like to walk into a property -- even one that is vacant -- and get the feeling that the property has been well maintained by a caring owner. How clean the property is has a lot to do with the mental impression the property makes on the buyer. The cleaner the better.

If you currently occupy the property, I suggest you tidy up every morning before heading out the door. You never know when a real estate agent is going to want to show the property to a buyer on short notice. Your best bet is to keep the place fairly clean all the time, and then just spruce it up a bit each morning. Quick and easy.

If your property is vacant, things can be a little more complicated. A vacant house can become a dirty house faster than you think. In Florida, we have bugs that die in the middle of the living room floor, dust that appears from nowhere to coat your counter tops, and mildew outbreaks that just seem to be part of the bathroom landscape. If the property is nearby, consider dropping by every other weekend for a few minutes and give it a quick once over -- shouldn't take very long if you keep some cleaning supplies and equipment in a pantry or the garage. If you now live far from the property, you might want to consider engaging a maid service to visit the property once a month and just straighten things up.

Don't rely on your real estate agent to do much of this kind of thing for you. They might pitch in if things start to look really bad and the property is vacant, but your real estate agent is usually a very busy business person and cleaning house is not what you hired them to do for you.

A clean property shows better and makes a more positive first impression. I believe that how well a property shows is related to how fast it sells and how much it sells for. I don't have any statistics about this, but I've been selling real estate long enough to see what happens. If you want it sold, keep it clean.

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

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The Year Ended With Kind Of An Uptick

Facts are facts, and the fact is that December produced a year-end that kind of proves what economists and old-pro real estate agents have been saying for quite some time: As property prices go down, sales volume will go up.

Eventually, this increasing sales volume will significantly reduce the number of properties on the market, and then prices may start to move up again. I think that's how the recovery is going to look, and I predict that it will take a few years to reduce all this inventory and rebuild demand.

I think December gave us a preview of how the recovery is going to look.

The December Absorption Rate (AR) was up for both single family homes and condominiums. Not up a lot, but up! The AR, as you know, is determined by dividing the number of units sold in the month by the total number of units in the MLS.

For single family homes, the AR for December was 6.8-percent. In November it was 5.0-percent. That is a pretty significant jump. For condos, the AR for December was 4.2-percent. In November it was 3.4-percent. Again, a nice little jump which may show some market growth.

Single Family Homes Sales

The number of single family homes on the market decreased during December to 7,930 from November's 8,539. So, we are seeing a slight reduction in inventory at year's end.

We are also seeing an increase in the number of houses sold. In December, 536 single family homes were sold as compared to November's 429. Nice!

The median price for a single family home in December fell to $145,000 in Pinellas County. In December of 2007, the median was $184,900. That's a reduction in value of 21.6-percent December to December. Single family home median prices are now so low that they pre-date the current data charts, so prices are now pre-2003. Buyer's need to start buying now!

The data above is in-line with the theory that as prices go down, sales go up.

Condominium Sales

We all expect condo sales to start going up in December since it's the start of the tourist season along the west coast of Florida. True to form, condo sales did jump up a little in December.

The number of condos listed in the MLS in Pinellas County was 6,593. In November, there were 7,001 condos in the MLS. So, the volume has dropped a little bit.

The number of sales jumped too! In December, 280 condos were sold as compared to only 235 in November.

The median price for condo sales in Pinellas County in December was $140,000. In December of 2007 the median was $176,200. That's a 20.5-percent drop in median value and puts condos back to a pricing range as if it was the year 2004.

Same story on the pricing versus volume theory: condo prices dropped about 20-percent and the number of units sold increased.

So, is this the start of the much anticipated and needed real estate recovery? Well, probably not. There are some other major issues that need the attention of the nation -- like unemployment, Wall Street crisis and a host of other important matters. Those kinds of things will have an impact on the real estate recovery. But, it does show what the recovery is likely going to look like. And it shows sellers that if they want to get their property sold, they need to keep prices low. There are buyers out there -- sellers just have to price their property appropriately for the market.

Remember, if you want to know more about real estate in Pinellas County, visit my website at www.TheStPeteRealEstateSite.com.

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Case-Shiller Shows Local Price Declines

As if my last story about Hank Fishkind's predictions were not bad enough, the Standard & Poors/Case-Shiller Home Price Index was just e-mailed to me by my friend and fellow real estate agent Ted Nohren. Ted's always giving me great information about the real estate market -- and sometimes I actually understand what Ted is saying! Frankly, that worries me a little.

Anyway, Ted sent over the Case-Shiller report for December. Not too good. Essentially, when you cut through all the charts and graphs and dotted lines and stuff, Case-Shiller reports that during the September-October period, Tampa property values dropped 3.4-percent. They dropped an additional 1.8-percent from August to September. Yes, I think that's a trend, don't you?

The reason these figures are important is because the Case-Shiller indices accurately track the price of a typical single-family home in various markets across the country. Without going into a bunch of detail about why the indices are so accurate, just kind of take it on faith that these reports are highly accurate and very well respected among the nation's economists.

So, as you can see, real estate prices continue to fall in this area. If you are a seller, you need to keep this kind of data in mind when you analyze an offer. The offer may be less than you had hoped to see, but it may accurately reflect today's market value for your property. So, before you reject it out of hand, keep in mind that you are most likely trying to sell a depreciating asset that may be worth less with each passing month. Maybe the offer is not as bad as you think.

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

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Fishkind Predicts Real Estate Recovery Is Years Away

I've always had a lot of respect for Florida economist Hank Fishkind. Sure, his housing predictions for 2008 were off by 42-percent since he did not anticipate the Wall Street mess. But over the years Fishkind has been more right than wrong -- and anybody can have a bad year when it comes to crystal-balling the future.

That said, Fishkind is now reporting that real estate sales in the Tampa Bay area will be lackluster for the next four years. Tight credit and weak population growth will be the primary culprits for this slow recovery, according to Fishkind. So, between now and 2012 Fishkind thinks the Tampa Bay area will see flat or even weaker sales. The only possible bright spot might be a gradual upturn in sales activity in Hillsborough County, but their commercial real estate sector may fall flat due to overbuilding -- especially shopping centers.

I've written about this before and I'm glad to see that Fishkind agrees, but prices will not start to rise until the huge surplus of homes on the market is vastly reduced. Fishkind predicts that prices will rise as inventory is reduced over time. He said that average prices will stabilize and finally start to rise in about four more years. His prediction? Prices will increase 10.7-percent in Pinellas; 13.8-percent in Hillsborough; 17.2-percent in Pasco; and 9.1-percent in Hernando by 2012.

If you're thinking that retirees are going to come charging to the real estate rescue, Fishkind says to not hold your breath. He thinks that many baby boomer retirees just won't have the financial resources to make a big move from the midwest and northeast to Florida. He jokes that for many baby boomers, their 401k's are really 101k's.

Of course, if you need to sell today these predictions of increasing value by 2012 are of no real help to you. The market is what the market is, and if you need to sell now you will only get today's market value for your property. That market value today is currently depressed and may actually still be spiraling downward in the local area.

By the way, just to kind of reinforce what Fishkind is predicting for Florida, the National Association of Realtors reported that pending U.S. home sales fell to the lowest level on record in November of 2008. And to add a little salt to the wounds, old-line home builder Jim Walter Homes has decided to close shop and 230 employees will lose their jobs -- 45 in Tampa. Like Fishkind says, job loss has a lot to do with the real estate problems in this area.

Thanks, Hank! If you can think of any more news like this, please keep it to yourself.

For more information on real estate in the Tampa Bay area, visit my website at www.TheStPeteRealEstateSite.com.

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