Now It's A Real Estate Cartel

I have to thank James Thorner, author of the (in)famous (Un)Real Estate column in the St. Petersburg Times, for supplying me with loads of grist for my blog site commentaries.

Today's jottings from him had me laughing so hard I spilled my morning coffee, thus convincing me I had to write something myself. You must read Thorner's column in the business section of the Friday, March 20th, Times. But be careful with your mug of mud.

In a nutshell, Thorner says there was (or maybe is) a group of real estate insiders who conspired to control real estate prices. He writes that they are an informational cartel of well placed insiders who aid real estate insiders by fleecing outsiders. This more than anything else, he contends, helped to bring down the housing market.

So who are these all-powerful cartel members?

According to Thorner, they consist of central bankers, government regulators, Wall Street, the National Association of Realtors, and the Mortgage Bankers Association.

What proof does Thorner present for this cartel theory? None. When did these groups gather to fix prices and develop their "whisper campaign" to drive prices up and down? Not disclosed. Where did such meetings take place? Doesn't say. What was their motive in controlling real estate prices as a group? No comment. Why did they want to have such price control? No reason stated. Who were the powerful individuals involved in the cartel? They're nameless.

In fact, there is no evidence anywhere in the story that any of these things ever took place. There is not one factoid in the story that would indicate that this is anything other than James Thorner's fertile imagination at work once again trying to fix blame on organizations and individuals for rising and falling real estate prices. So, it's fiction disguised as op-ed. Op-ed should be based on some kind of verifiable facts though, don't you think?

Markets rise. Markets fall. It has to do with supply and demand. It has to do with the availability of finance money. It has to do with changing zones of population. It has to do with investment opportunities. It has to do with a gazillion other reasons. But until I hear otherwise, it has nothing to do with some mysterious real estate cartel in some ivory tower with the desire and power to fix real estate prices.

On a more serious note, once again I ask why the St. Petersburg Times continues to publish such unsupported accusations from Thorner? This is not the first time he has filled his column with such dribble. Does the paper have any responsible journalists acting as editors anymore? Or can writers just come up with stuff from the back of their minds and publish it without regard to the veracity of what they write or the impact it might have on readers?

People believe what they read in the newspaper. Now, we might end up with a bunch of folks and government investigators running around looking for some non-existent cartel that has been controlling real estate prices around Florida and perhaps the entire nation. Geez, don't we have enough legitimate problems and investigations going on in this country? Do we need a bogus investigation of a cartel that never existed? Do we need more erosion of trust in banks, Wall Street, real estate agents, and the government?

I'm no longer man enough to say that I am involved in journalism. But back when I was a kid in the journalism school at the University of Florida, I think on page 2 of the basic fundamentals of reporting textbook it talked about writing the truth and checking and double-checking your sources. Maybe the guys and gals at the Times need to go back and review that page. Or at least, perhaps Thorner should just review that section of the book. The words you write in a newspaper have an impact on how people think, act and perform. When you write unsubstantiated junk you run the risk of getting wrong-headed actions from readers. Is that what the Times wants?

At least the Times should label Thorner's latest column as "FICTION" so nobody takes it seriously. Why not? We put warning labels on cigarettes, booze, drugs, food, electrical gadgets, batteries and thousands of other products. Why not a label warning readers "not to believe anything in the following commentary because there is no evidence that it is true"?

Until I see it proven that there exists a real estate cartel who conspired to fix prices, I will just continue to laugh at Thorner's comments. But if I spill my coffee one more time ...

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

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February Sales: Sales Up, Prices Down

We can see some very basic economics at work in the February sales figures for Pinellas County real estate. In fact, we can call it Econ 101 and really mean it.

In general, sales are up and prices are down. Or, perhaps it should be that prices are down, so sales are up. You decide.

First, let's look at the Absorption Rate (AR) for the month. The AR, as you know, is determined by dividing the number of units sold in the month by the total number of listings in the MLS system.

For single family homes, the AR for February was 6.0%. Not bad. It shows that the number of single family homes increased nicely over January which had an AR of only 4.9%.

The AR for condos also increased in February over January. The February AR for condos was 3.9%, and it was 2.8% in January. Even though that's an increase, it's still not very good as condo sales continue to lag in Pinellas County.

Single Family Homes

I'm starting to see a trend in single family homes. For the last three months (four months actually), there has been a decrease in the total number of homes listed for sale in the MLS. In February, the number stood at 7,799; in January it was 7,835; in December it was 7,930; and in November it was 8,539. So, what we are seeing is a steady decline in total single family inventory -- fewer houses on the market.

Sales increased in February as compared to January. There were 467 houses sold in February as compared to 381 in January.

Why?

I think it is because prices have continued to fall in Pinellas County and more and more sellers are realizing that they need to take less if they want their property to sell. The median sales price in February was $139,900 as compared to $179,000 in February of 2008. That, my friends, is a 21.8% decline in median prices in one year for single family homes.

Now, go back to Econ 101. When prices fall, sales increase.

Condo Sales

If we turn our attention to condos in Pinellas County, we see a somewhat different story.

The number of listed condos in the MLS went from 6,701 in January to 6,775 in February -- virtually no change.

The number of condo sales did improve somewhat. During February, 265 condos were sold as compared to only 189 in January. That's a nice improvement.

Why the increase?

Econ 101 again.

The median price for condos fell and the number of sales increased.

During February, the median was $117,500 as compared to $155,000 in February of 2008. That's a drop in median price of 24.2% in twelve months.

I think it is clear to everybody that we are seeing an increase in the volume of sales tied directly to a decrease in prices. I hope that sellers are getting the word on this if they really want to sell their property.

The Bottom

Some buyers are waiting to make offers because they think real estate prices will go even lower. Some sellers are waiting to sell their property because they think prices will start going up pretty soon and they want to wait for a market recovery. Both these sets of people are playing with fire, and don't even know it.

As a general rule, few of us are any good at predicting the direction of a market and timing it perfectly. By the time the newspapers start running stories saying the market has turned, it will be too late for many buyers because their property -- the one they have been waiting for all this time -- will be sold to somebody else who acted a bit sooner. And for sellers who are waiting for a huge and swift upswing in the market to drive their prices back up to 2005-2006 levels, well, don't hold your breath. We may never see prices like that again, and I'm not sure any of us want to.

So, have we hit bottom yet?

I don't know. Maybe we're pretty close. We've been in this darn decline for over two years.

The thing that is hard to judge is the effect of foreclosures and short-sales on the price of real estate. Certainly, reduced prices asked by mortgagees to clear away toxic loans are driving overall real estate prices down farther and faster than most people thought possible a year ago. In fact, it could be argued that mortgage companies caught with bad loans are having a greater impact on real estate prices than normal market activity would have allowed. After all, one in three sales in Pinellas County is a distress sale in which the mortgage company must agree to the price and terms of the sale ... and they are oftentimes agreeing to some pretty low prices. So, their impact on pricing can not be overlooked or underestimated.

So, are we close to the bottom? Don't ask me. Ask your banker.

For more information on real estate in Pinellas County, visit my website at www.TheStPeteRealEstateSite.com.

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Four Steps For Selling Your Home

A house in today's tough real estate market has to make a good impression on prospective buyers. If the house lacks what I call the "wow-factor", it's chances of selling are greatly reduced.

So, how do you give your house more wow value?

Here are four things every home seller can do to make a better impression.

1. De-Clutter. Home shoppers want to be able to picture their belongings in your house, not be overwhelmed by all of your possessions. To do that, you have to de-clutter your house. Remove all those old photos from above the fireplace. Remove that "extra" chair from the family room. Have the kids pack-up those soccer team trophies. Clear off the kitchen counter top and put the blender in the pantry. You want to make your house look like a model home. Look at it this way, when you sell your house you're going to have to pack things away anyway. Pack stuff up now and you are getting a good start on moving.

2. Deep Clean. To be real honest here, I don't know of anything that turns buyers off faster than a dirty house. Buyers want to think that your house was always well cared for over the years. That means you have to do more than just the regular weekly cleaning. You have to deep clean the house and especially the bathrooms. It's a troublesome task, I know, but it will pay off with a sale.

3. Make Simple Repairs. Let me be very clear about this matter. I am talking about making simple repairs, not big jobs or remodeling projects. If the light switch doesn't work, fix it. If the doorbell won't ding, fix it. If the light bulb over the kitchen sink is burnt out, fix it. Don't remodel the kitchen. Don't put in a new bathroom. Don't add a room. The idea is to have what is already in your house working properly. Nothing more. And nothing less.

4. Neutralize. You may love the plum-colored accent wall in your dining room, but it may turn buyers off. For some buyers, that's all it takes to make them move on to the next house and buy it. The best rule of thumb is to make your house "real estate agent beige". That is, make the walls and carpeting a nice shade of neutral. This helps buyers visualize how their belongings will look in your house.

Why are these kind of things important?

It has to do with the psychology of selling. When they are looking at your house, buyers will psychologically picture themselves living in your house with all their stuff in place. If they like what the see, they may make you an offer. If they don't like what they see, the won't make you an offer.

By de-cluttering, deep cleaning, making simple repairs and neutralizing the environment, you give buyers minds a better, less distracting picture of what it will be like to live in your house. If they like the picture, you may get an offer. That's why these four steps are so important when selling.

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

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Highlights Of The First-Time Buyer Tax Credit

President Obama has recently signed into law a far reaching economic stimulus program, and part of that program is designed to help first-time home buyers more easily afford a new home.

To make it simple, here are the highlights of this program ...

• You or your spouse may not have owned a home during the three years prior to the purchase date of your new home.
• You receive a tax credit of up to $8,000 or the lesser of 10% of the home's purchase price if you buy the home before December 1, 2009.
• The home must be a single family home and it must be your primary residence.
• You can not have an adjusted gross income of more than $75,000 if single, $150,000 if married filing jointly.
• You do not have to repay the tax credit unless you sell the home within the first three years.
• You can get the tax credit and still use any state or local revenue bonds to help with financing the property.

I think those are the main points, but you might want to contact your tax advisor for more specific details on how this all works and how it applies to your particular situation.

Here's the big point: the tax credit makes this an even more appealing time to buy a home. First time buyers should act now and buy that first home.

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

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Real Estate: Fifth Most Stressful Job

So, you want to be a real estate agent eh? Sure, sounds good from the outside. Just run around with friendly people in your car looking at houses, have interesting conversations, get great decorating ideas for your home, make your own hours, take weekday afternoons off if you want.

Sounds like an easy lifestyle, right?

Wrong.

According to CaeerCast.com, being a real estate agent is currently ranked as the fifth most stressful job in the nation. The only jobs that carry more stress are being a surgeon, a commercial airline pilot, a photojournalist and an advertising executive.

Having personally spent twenty-five years as an advertising executive, one of the reasons I went into real estate was because I wanted a little less stress in my life. Well, apparently that's what I got. A little less stress. I went all the way from fourth to fifth on the stress chart.

Since I've spent my entire career in high-stress related fields, I've found out some things about stress that I thought I'd pass along just in case you may be feeling a little pressure these days.

First of all, everybody has stress no matter what kind of career path they are following. The reason? I think it's because deep down inside, we all want to do a good job. We want to make a nice living, be respected by our fellow workers and family, and feel like we are making a positive contribution to both the enterprise for which we work and also for the community in general. These kinds of goals lead us to care about what we do. If you care, you want things to turn out good in the end, both for yourself and for your clients and customers.

The last part is the important part ... we want things to turn out good in the end.

It is worrying about how things end up that puts us under the most stress. When we think too much about the end, we put ourselves under stress.

I learned a long time ago to not worry much about how things will end. Instead, I concentrate only on the next step in the process leading to the end. Concentrate on the task in front of you and do it well. Then, move on to the next task in the process, then the next, and so forth. Before you know it, you've reached the end, all the steps were done well, and the end will be satisfactory for everybody.

This approach has helped me to control stress in my professional and personal life. Notice, I said "control", not eliminate. I don't think you can eliminate stress, and maybe you don't really want to. Without some stress, many of us would probably never even roll out of bed in the morning and nothing would be accomplished. Oftentimes, I think a certain amount of stress is the driving force behind accomplishing our goals.

Great golfers are really good at handling stress in this manner. Many times they stand over a 2-foot long putt with a championship trophy, hundreds of thousands of dollars, and perhaps millions in endorsement contracts at stake. For an ordinary golfer, with all that to consider, a 2-foot putt could feel like a 20-foot putt. But some golfers walk up and tap the ball in as if they we just playing golf with friends back at the local golf course.

Professional golfers call this, "staying in the moment". Tiger Woods may be the best at it. Essentially, when Woods stands on the tee box looking down the fairway at some impossibly long and difficult golf hole, he does not worry about sinking his putt to make a par. Instead, he concentrates only on the shot that is in front of him at that particular moment. His whole thought process is about that one shot that has to be made correctly, not the cumulative number of shots that will be required to put the ball in the hole. He executes that one shot only, then moves on to the next shot. By doing this, Woods stays "in the moment" and keeps his mental game in tune with his physical game. Before he knows it, the 18 holes are over and Woods can carry home another trophy.

That's the way to avoid stress on the golf course, and it's the way to reduce stress in business and in our daily lives. I've been using this approach for years and I know it helps me a lot. Why not give it a try and see if it can take some of the stress off you.

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

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