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-
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-
posted by Terry Ward at 11:10 AM
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