May Sales Report: Have We Turned The Corner?

The sales figures are in for May for Pinellas County. They look encouraging. Very encouraging.

Let's start with the Absorption Rate (AR) as usual. As you know, the AR is determined by dividing the number of units sold in the month by the total number of units listed.

For single family homes, the AR for May was 8.9 percent as compared to 8.5 percent for April. For condominiums, the AR for May was 5.7 percent as compared to 5.3 percent. I will grant you that these are not huge increases, but they are increases rather than decreases.

Single Family Homes

The number of homes listed in the MLS for May stood at 6,910. In April, there were 7,126 homes in the MLS system. This means less inventory for buyers to select from, and less competition for those wanting to sell.

The number of sales increased in May to 616 homes sold as compared to 604 in April. Not a big jump, but a jump nevertheless.

Here's something important. The number of single family homes sold has increased every single month since November 2008. That's half a year of monthly increases in single family home sales volume. I think that is significant.

The median price continues to fall as compared to prices in 2008. For May '08, the median was $175,000; for May '09 it fell to $145,000. That's a drop of 17.1 percent in a year. Sellers need to take note of this and price their property accordingly.

Here's something everybody needs to take note of: the market may have hit bottom or it may be near bottom. What do I base this on? I've checked the median selling prices each month going back to December 2008. Those prices have remained pretty doggone stable. In December '08 the median was $145,000. In January, $125,000. In February and March, $140,000. In April, $144,000. And in May, $145,000. That's a pretty flat bunch of pricing numbers. I'm not an expert in these kinds of things, but I kinda see a pattern that says maybe, just maybe, we've hit bottom or are pretty close. What do you think?

Condominiums

Condos still seem to be lagging. I don't know why. The condo lifestyle is very appealing for a lot of people, but they just don't seem to be buying right now -- just check the AR.

In May, there were still 6,234 condos listed in the MLS as compared to 6,470 in April. Only 355 condos were sold in Pinellas County in May, and only 340 in April. The median selling price for sold condos in May was $130,000 as compared to $175,900 in May of 2008; that's a 26.1 percent drop in median value.

There could be a lot of reasons for this low volume in condo sales, but I have a theory that a lot of it has to do with the way so many condo communities have had to drastically increase the monthly maintenance fees. Many of these fee increases have to do with paying increases in the annual premiums for property and flood insurance on common areas. There is a limit as to how much people are willing and able to pay for services associated with the condo lifestyle. Well, I think that has something to do with these slow sales figures.

All together, there were 13,144 properties listed for sale in the MLS for May 2009. Just so you know, in May 2007 there were 18,166. That's a drop of almost 5,000 properties. Pretty significant reduction in inventory, right? Well, maybe. I think that there are a lot of sellers out there who would still like to sell their property, but have simply given up for the time being. Sure, they'd like to sell, but will wait for times to get better -- or so they think.

The question is, when will times get better? And how much better will they get? The market seems pretty flat right now. The so-called experts are now saying that it may take years before the market returns to 2006-type pricing -- some gurus say it may be the year 2018 before we see prices like that again. How long can these frustrated sellers wait? There's even a term for these people who would like to sell but have withdrawn from the marketplace. They are called "ghost sellers" because they are not actively on the market but if the right price came along they'd sell.

Because of the ghost sellers, I think there is actually more inventory out there than what we see on MLS. And I'm seeing some more signs of misguided people trying to sell on their own without the aid of a real estate agent. So, by rights, you should add them into the inventory count as well. The long and the short of it is, there is still a lot of inventory to be sold ... and until it is sold we will remain in a buyer's market.

Anyway, I think things are starting to look better. And it's about time.

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

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Keep Advertising During The Recession

Back in my past life -- the one I had before I went into the real estate business -- I was in the marketing communications business, better known as the advertising and public relations agency business. I did that for about 25 years before I decided I was pretty close to being burned out and went into real estate.


Back in the late 1980's, two friends and I started an advertising agency and just about the time we had made it through the first two horrible years and were actually making a little money, along came a financial crisis and a recession that was pretty bad. Like a lot of businesses, we suffered financially.

In order to conserve cash flow, many businesses cut back on their advertising expenditures. After all, advertising costs stick out like a sore thumb on a balance sheet and this was about the time that companies started being managed by accountants who cared only about profit-loss statements and not by entrepreneurs who cared about customer growth and business expansion. So, the accountants-turned-CEO's eliminated those wasteful advertising expenditures and cut marketing costs in an effort to save some corporate money.

We had some clients who stuck it out with us and ended up doing pretty well through the recession. We had other clients who eliminated advertising and ended up not doing so well in the long run (or the short run either).

Why is it that some companies prospered in the recession and others failed, you ask?

Well, I don't remember all the facts and figures from back then, but Advertising Age magazine did some studies of the effects of advertising during a recession. Essentially, they found out three very important things that apply to real estate agents just as much as they do to international mega-conglomerates:

1. If you keep up your advertising expenditures during a recession, you will do better financially during the recession because the advertising exposure will allow you to maximize your share of the available business. Frankly, this means you will make more money during the recession.
2. If you maintain your advertising activities during the recession, you will pull out of the recession faster and with a higher level of name recognition (or, brand awareness) than competitors who reduced or eliminated advertising in an attempt to save money during the recession.
3. If you continue to support your advertising program during the recession, your business will grow faster and larger after the recession ends because you became better known than your competitors during the recession. So, in the end, your business will grow even larger at the expense of your competitors when times get better.

Now, the magazine had all kinds of statistics to support these three things but I can't remember all that. Suffice it to say that a recession might be a good time to grow your business at the expense of your competition if you just keep doing all those things that you would normally do to promote yourself -- you know, making phone calls, writing personal notes, promoting open houses, doing drop-by's, making monthly contacts with sphere of influence members, calling past customers, mailing post cards, updating your website, memberships in clubs and civic organizations. You know, all the regular things. Don't stop. Keep promoting yourself and your company right through the recession no matter how much it hurts to do it.

Good luck during the recession, and keep the faith baby!

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

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