January Sales Report Is In. Let's Blame Everything On El Nino.

I think the cold, blustery, rainy weather kept January from being a better month for real estate sales. That's my story and I'm sticking to it.

The single family home absorption rate (AR) took a big hit in January as sales plummeted. The AR for January 2010 dropped to 6.8 percent compared to December's 9.9 percent figure. That is a pretty significant decrease in inventory turn for a 30-day period. It has to be El Nino.

Same thing for condos ... it's all El Nino's fault. Condo AR dropped from 8.0 percent in December to a miserable 5.7 percent in January. Blame it on the rain.

Still, if we were to compare this January to past Januaries, we're starting the year off much better than before. Here's an example. The single family AR for January 2007 was 4.2 percent; for January 2008 it was 3.8 percent; for January 2009 it was 4.9 percent. At 6.8 percent, we're actually starting the year off pretty good and that could be a sign of good things to come.

Same for condos. From 2007 through 2009, the condo AR was 2.8 percent, 2.9 percent, and 2.8 percent. Heck, last month's 5.7 percent is a huge improvement, wouldn't you say?

Let's take a look at hard numbers ...

Single Family Homes

The number of single family homes listed in the MLS increased in January as compared to December. In December, there were 5,928 single family listings in the MLS. In January, that number had climbed to 6,399. Quite a jump.

Single family homes sales dropped in January compared to December. In December there were 586 homes sold. In January, only 438. Quite a slowdown and that explains the drop in AR.

Median home prices, oddly enough, increased when you compare January 2009 to January 2010. The January 2009 median was at $124,500 while this past month it stood at $130,100. Maybe that increase in price is why fewer houses sold. Hard to say.

Condominiums

Wow, big jump in condo listings in the last month. In December there were 5,180 listed condos in the MLS for Pinellas County. In January, that number swelled to 5,503. Lots of new condo listings.

Condo sales, as the AR indicates, took a plunge. In December, 413 condos were sold and I thought condo sales had turned for the better. I was wrong. In January only 312 condos were sold -- and this is supposed to be the best part of the season for condo sales.

Unlike single family homes, the median price for condos also dropped comparing January 2009 to January 2010. In January 2009, the median price was $125,000. In January of this year it was only $113,000.

So, all in all, I'd say January was not a bad month, just not a very good month. But we are starting off the year in better shape than we have in any of the past three years, and I think that's a very good omen for future real estate sales in 2010. If everybody plans their work and works their plan, we just might get someplace good in the next few months. And let's keep in mind that an El Nino won't last forever.

Happy Selling Everybody!

-30-

Tampa Bay's Housing Outlook For 2010 Is Not So Good

Talk around the water cooler is that housing sales are increasing.

Talk around the coffee pot is that the housing market has turned and that things are looking up.

Talk in all the martini bars is that now's the time to buy, the market has bottomed out and you better jump in before all the good deals are gone.

Hmmmm. Maybe that's all just talk.

Let's look at a more learned opinion backed by research.

Mark Zandi is the chief economist for Moody's Economy.com and one of the top prognosticators in the real estate field. He's one of the gurus who I pay special attention to because I think he tells it like it is.

Zandi is not nearly so optimistic as the boys around the water cooler. In a CNN Money.com story from December, Zandi feels that home prices nationally are going to drop another 5 to 10 percent in 2010. Some places, like Miami, will see prices retreat another 30 percent in the coming year. Then prices might -- and the emphasis is on the word "might" -- start turning a little sometime in 2011. But no promises.

Zandi bases this prediction on one of the most troubling aspects of the current real estate crisis -- foreclosures.

Right now there are millions of loans that are in foreclosure or headed that way, and many of these loans can not and will not be modified. RealtyTrac data shows that nearly 2-million U.S. homes are in foreclosure or are bank-owned now, and millions more are headed that way. Zandi himself estimates that some 2.4-million more homes will find their way into foreclosure in 2010.

Here's why prices are going to fall. Banks are going to start unloading those homes onto an already over-saturated market during 2010. This will result in a tidal wave of low-priced homes that will drag prices down even lower.

I heard that just recently in Las Vegas a large bank said it will start putting 500 foreclosed homes per month onto the local market. They have 6,000 foreclosed homes to sell in that city alone. And they are just one bank. What do you think that will do to property values there? And if one bank starts doing this, others will surely follow suit since they will not want to be caught holding foreclosed properties with prices falling. So, one problem will probably feed the other in Las Vegas. My fear is that this time, what happens in Las Vegas will NOT stay in Las Vegas. Banks dumping foreclosed properties could become a national trend serving to drive prices lower nationwide.

Here's the next problem. These foreclosed properties are going to be offered for sale to a market that is not buying property. The country is no longer real-estate-greedy.

Why aren't we buying real estate anymore -- like during 2003 or 2004?

Unemployment.

Last October the unemployment rate was at 10.2 percent nationally. It's higher now. In Tampa Bay it's around 12 percent. That kind of soft job market means potential buyers don't have enough steady income to buy new homes, and they lack the confidence that their jobs will remain steady enough to pay for the mortgage on their existing homes. So, they simply don't buy. Period.

Those factors, coupled with the fact that the government's first time home buyer program is going to expire in March, mean we are faced with a very fragile housing market.

Economy.com's housing price outlook for 2010 keeps those factors in mind, plus such things as local income figures, population trends, mortgage interest rates, and foreclosures. The results are broken down for 100 metropolitan areas.

The result? The four weakest areas of the country for housing prices are going to be Florida, California, Nevada, and Arizona. That shouldn't surprise anybody. These areas have the highest rates of foreclosure now and those rates are likely going to increase.

The worst market in the prediction? Miami. Prices there are predicted to fall another 33 percent in 2010.

So, where does good ol' Tampa Bay figure into this picture according to Economy.com?

Well, of the 100 markets surveyed, we rank a disappointing 94th. Prices here are expected to sink another 22.77 percent in 2010.

So, if you've been waiting for the market to improve before trying to sell your property, well, looks like you're going to have to keep it for yet another year.

Oh, and how long will it take for you to start to pull even on the house you bought at the top of the market in 2006? A very long time, my friend. The prediction is that the market will turn sometime in 2011, but will only go up in Tampa Bay by a dismally small 1.26 percent. So, if you lost half your value in the last four years, and the market is going up by 1.26 percent annually, you should be able to get your investment back in ... well ... you do the math.

Best bet? Sell it now at today's prices. Take your lumps. Get on with your life.

-30-

Fannie Mae Offers Closing Cost Help On Foreclosures

The out of pocket expenses incurred when purchasing foreclosed property just got a little less thanks to a new offering from Fannie Mae, the largest provider of residential home funding in the United States.

Fannie Mae announced on Friday, January 29th, that it would pay closing costs for buyers of foreclosed properties if the property was in Fannie Mae's inventory of foreclosed homes.
The inventory list can be found on a special website set up last year by Fannie Mae -- www.HomePath.com. Buyers of foreclosed homes can obtain up to 3.5 percent in closing cost assistance or an equal amount for the purchase of new appliances.

Fannie Mae has nearly 50,000 foreclosed properties in its current inventory and wants to clear them out, thus the closing cost incentive. The offer is available to any owner-occupant who closes on the property before May 1, 2010.

In addition, select Fannie Mae properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing which offers qualified buyers the ability to purchase with as little as 3 percent down.

Good luck and happy house hunting!

-30-