Housing Prices Still Falling

Just how far have housing prices fallen since reaching their peak in the summer of 2006? According to the latest S&P/Case-Shiller home price index, values locally have dropped 40.6%.

What does this drop mean? If you're a buyer or seller, it means that prices today are at about the same level as they were during August of 2003.

In addition, the March Case-Shiller report indicates that house prices have not yet stabilized in the Tampa Bay area. Housing values dropped 22.4% from March 2008 to March 2009 in Tampa, and between February and March of this year alone they dropped 2.7%.

This February-March drop is especially worrisome because it indicates that the value decline is continuing unabated. As property values continue to fall, the number of short sales and foreclosures will likely continue to increase as those who bought during the 2005-2006 market boom seek to sell upside-down properties.

These distress sales force values farther down for all properties. All sellers of property these days are being hurt financially by the results of the current downward spiral which apparently has not yet run its full course. Sellers today must price their property at reduced prices to be competitive with similar homes that are being offered at distress-sale prices. As these homes are sold, they in turn force other sellers to bring prices even lower and force CMA and appraised values even lower. It's a vicious cycle.

Someday this cycle will come to an end and we'll move from a strong buyer's market to something a little more even. But that probably will not happen until the current inventory of distress sale properties is sold. Right now, about one transaction in three in Pinellas County is a distress sale of some kind. The problem is that there are thousands of distress sales currently in the MLS system here, and we probably have thousands of other distress sale candidates currently considered "ghost listings". These ghost listings are owners who would like to sell, but are currently holding their property off the market waiting for better times. All in all, it might be quite a while before we move away from the current downward pricing spiral.

Well, that's my view.

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

April Sales Look Better

Okay, I kinda messed up. I simply forgot to write the April sales report. Hey, I was busy! So, here's a short summary.

April looked pretty good overall. The Absorption Rate (AR) for single family homes moved up to 8.5 percent compared to 7.7 percent for March -- that's a nice move for 30 days. Condo AR stood at 5.3 percent for April, also a move upward from March's 4.9 percent. Remember, the AR is calculated by dividing the number of units sold during the month by the total number of listings in the MLS inventory.

Single Family Homes

During April there were 7,126 single family homes listed in the MLS. In March, there were 7,492. We had 604 sales in April as compared to 574 in March. The median selling price for a single family home in April 2009 was $144,400; that's down 18.9 percent from April of 2008.

Condo Sales

Condominium listings fell from 6,671 in March to 6,470 in April. Condo sales in April were 340 as compared to March's 330. But brother, did condo median sales price ever take it on the chin! The median price for April 2009 was $115,000 -- that's down 33.1 percent over the median price of April 2008. Bad news if you're trying to sell a condo today.

Something we should all keep in mind is that about one-third of the sales being made now are distress sales of some kind -- foreclosures, REO's or short sales. With that many distress sales being reported in the market, it is going to drive prices down as buyers look for bargains in both single family and condo markets. Because of the distress sales, buyers are finding bargains. Based on the principle of substitution, if you're a seller now you need to be very competitive with your price or buyers will simply move on to a distress property that is similar to your property and buy it instead of your property.

Good luck and happy selling!

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

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Hey, You Gotta Buy The House First

Forbes magazine has reported that some first time home buyers are claiming the $8,000 tax credit BEFORE they buy their house.

Somehow, that doesn't seem quite like it follows the spirit of the law to me. How 'bout you?

The argument for doing this is that some IRS practitioners and real estate professionals have been saying that taxpayers can claim IRS deductions prior to the actual contribution as long as the contribution is made by April 15 of the following year.

The IRS position is that the law requires a purchase to take place BEFORE the credit can be claimed. In addition, IRS Form 5405, used to claim the credit, has a line requiring the taxpayer to state the date of the home purchase. Tax practitioners who assist home buyers in claiming the credit prior to the purchase of a house may be subject to preparer penalties.

Just thought you'd like to know the latest.

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

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