April And May Sales Report
One of Tampa Bay's best real estate agents, Debbie Deeb of Prudential Tropical, called me to ask why I have not written my monthly real estate listings and sales round-up article for Pinellas County for April and May. Gosh, it's nice to be missed!
Truth is, I decided to act like a big-shot business writer and prepare one of those super-insightful, multi-faceted, in-depth "think pieces" that would make me a candidate for a Pulitzer. This article would delve into the mysterious underworld of real estate sales versus government tax rebates so we could see the effect of the loss of rebates on real estate sales. You know, one of those "comparison and contrast" stories everybody likes to read so much.
Well, to put it in journalistic terms, I got scooped!
Apparently I was not the only writer out there who thought it would be an interesting and insightful story. In fact, the guys down at the St. Petersburg Times used the idea and put it on the front page of Section B today. Just look for the huge headline reading "Housing Revival Fleeting". The subheadline gives you an instant summary: "The first-time buyers credit expires and so do positive bay area sales and price trends."
To put it in a nutshell, the newspaper has reported that Tampa Bay home sales fell 5.4-percent in May compared with April, and home prices dropped another 3.1-percent. The Times got this info from an outfit called Home Encounter based in Tampa.
So, perhaps the housing meltdown is still with us. Perhaps the recent spurt in real estate activity was directly linked to the tax credits. I think the only way to know for sure is to take a look at listings and sales for April and May and see just what has happened. And remember, this data is from MLS for Pinellas County -- not for "Tampa Bay".
First, let's look at the Absorption Rate (AR). AR as you know is the actual inventory turn and is calculated by dividing the number of units sold in a month by the total number of listings in the MLS system for the county.
For single family homes, the AR for April stood at 13.0-percent. The AR for May dropped to 12.5-percent. So, a larger percentage of listed single family homes were sold in April than in May.
For condos, the AR for April was 10.6-percent. The AR for May fell to 9.1-percent. So, a larger percentage of listed condos were sold in April than in May.
The AR for those two months tends to support the information in the Times article that without tax credits, sales are starting to lag.
By the way, there were 6,057 single family homes in the MLS in April and 6,270 listed in May. In April, 786 single family homes were sold, and in May 786 single family homes were sold. So, we had the same number of sales in both months but April had fewer single family listings, thus the slightly higher AR. So you could question the validity of the conclusion that tax credits had a real influence on sales from April to May, couldn't you?
Condo's had 5,351 units listed in April and 5,375 in May; that's virtually identical. There were 568 condos sold in April and 489 sold in May. While the number of listed condos is pretty much the same for both months, the number of sales is quite a bit different, and that explains the big difference in the AR for April to May for condos and tends to support the theory that the loss of tax credits did have a negative impact on condo sales.
The reason we need to know what is going on related to the impact on sales of the loss of tax credits is to know if the real estate market was ARTIFICIALLY stimulated or not, and if the stimulation given by the tax credit is sustainable.
If sales start tanking once again without the tax credits, well, we know the answer to those questions. It then remains to see if we can do anything about it. If we can't, we may be headed for a double dip recession in real estate ... something that a lot of other gurus and commentators think is very possible and quite likely. Just tune in to CNBC and listen to the real estate reports several times daily and it doesn't sound real good for real estate nationally.
Locally, the Times writer quoted Stan Humphries, chief economist for Zillow, as saying that prices in Florida are still inching lower and will continue to drop until 2011 whereas the market nationally will bottom out in September of this year. So, recovery in Florida will lag the rest of the nation.
Humphries may be correct. But he could just as easily be wrong and it could be longer than 2011 before we bottom-out. He's probably looking at real estate data ... you know, things like inventory, short sale reports, foreclosures, housing demand and the like and trying to project how long it will take to sell off all the listings and ghost inventory around the country.
To me, that's a real estate guy trying to project the end to a real estate problem without taking into account all the other economic conditions that impact the real estate industry. Most notably, he may not be accurately projecting job loss and how long it will take people to find gainful, non-government employment at salaries that are large enough and stable enough to qualify for a mortgage.
Maybe he's not talking about the terrible problems associated with sovereign debt in Europe and the horrible pounding the Euro is taking versus other currencies in the forex markets which will likely have a negative impact on European real estate sales in the U.S.A. Those problems will ultimately impact us in Pinellas County real estate.
And frankly, I'm wondering if Humpries really appreciates the negative impact of all the foreclosed properties that are in Florida. By some estimates, banks are currently shielding over 1-million foreclosures in Florida alone. I wonder if Humphries has factored that into his 2011 forecast?
So, what do I think? I think we sold a bunch of houses as a result of the tax credit program and I think that's a good thing. Now it's gone. We'll know the full impact of the departure of the tax credit program in another month or two. I have a feeling that what we will discover is that we've sold fewer homes to people who want to live in them, and more homes to investors who want to do a little speculating in real estate -- especially so if the stock market continues to be volatile. Gosh, this is starting to have a familiar ring about it. Kind of like 2003 and 2004.
And I think one other thing. I think real estate agents, brokers, and prognosticators need to broaden their view on real estate recovery. To a great extent, the problems being confronted by local real estate involve two words -- Global Economy. Many of the problems faced by real estate today have as much to do with world economic conditions as they do with local sales volumes and pricing.
Don't believe it? Do this. Go home one afternoon this week and turn on CNBC -- they're all about business news. Keep track of how many times you hear the terms "Sovereign Debt", "Euro Crisis", and editorial discussions about foreign exchange rates and the effect they have on imports, exports and purchases by Europeans.
Along with that, keep track on how many times you hear the term "non-government employment".
Then, apply what you hear to the concept of having foreign investors buying property here. Foreign investment has been a very important part of Pinellas real estate for many years. What you will hear now is frankly quite discouraging. It all has to do with the falling Euro. I even sat in on televised discussion a week or so ago when the question was if Europe and the European monetary system can survive for more than another year or two. Right now, it appears that nobody has much confidence in Europe in the long term. It's a shame.
As far as U.S. employment goes, keep in mind that the so-called economic recovery in the United States is not creating many non-government jobs within the country. Without jobs and the stable incomes that accompany them, real estate agents won't have many buyers who can qualify to buy a home. Where are all the jobs? Well, let's just say they are America's favorite export.
The problem is, the real estate industry can't make large contributions to solving either of these problems because global economic recovery, job creation and foreign exchange rates are not our areas of expertise. But all these problems impact local real estate sales.
I think it would be best if we all broadened our outlooks when discussing the problems and possible solutions to the real estate problems, but as real estate agents and individual homeowners we also need to recognize our limitations. We need to think globally and act locally. Gosh, that sounds kinda like a bumper sticker, doesn't it?
Happy Selling!
-30-
Truth is, I decided to act like a big-shot business writer and prepare one of those super-insightful, multi-faceted, in-depth "think pieces" that would make me a candidate for a Pulitzer. This article would delve into the mysterious underworld of real estate sales versus government tax rebates so we could see the effect of the loss of rebates on real estate sales. You know, one of those "comparison and contrast" stories everybody likes to read so much.
Well, to put it in journalistic terms, I got scooped!
Apparently I was not the only writer out there who thought it would be an interesting and insightful story. In fact, the guys down at the St. Petersburg Times used the idea and put it on the front page of Section B today. Just look for the huge headline reading "Housing Revival Fleeting". The subheadline gives you an instant summary: "The first-time buyers credit expires and so do positive bay area sales and price trends."
To put it in a nutshell, the newspaper has reported that Tampa Bay home sales fell 5.4-percent in May compared with April, and home prices dropped another 3.1-percent. The Times got this info from an outfit called Home Encounter based in Tampa.
So, perhaps the housing meltdown is still with us. Perhaps the recent spurt in real estate activity was directly linked to the tax credits. I think the only way to know for sure is to take a look at listings and sales for April and May and see just what has happened. And remember, this data is from MLS for Pinellas County -- not for "Tampa Bay".
First, let's look at the Absorption Rate (AR). AR as you know is the actual inventory turn and is calculated by dividing the number of units sold in a month by the total number of listings in the MLS system for the county.
For single family homes, the AR for April stood at 13.0-percent. The AR for May dropped to 12.5-percent. So, a larger percentage of listed single family homes were sold in April than in May.
For condos, the AR for April was 10.6-percent. The AR for May fell to 9.1-percent. So, a larger percentage of listed condos were sold in April than in May.
The AR for those two months tends to support the information in the Times article that without tax credits, sales are starting to lag.
By the way, there were 6,057 single family homes in the MLS in April and 6,270 listed in May. In April, 786 single family homes were sold, and in May 786 single family homes were sold. So, we had the same number of sales in both months but April had fewer single family listings, thus the slightly higher AR. So you could question the validity of the conclusion that tax credits had a real influence on sales from April to May, couldn't you?
Condo's had 5,351 units listed in April and 5,375 in May; that's virtually identical. There were 568 condos sold in April and 489 sold in May. While the number of listed condos is pretty much the same for both months, the number of sales is quite a bit different, and that explains the big difference in the AR for April to May for condos and tends to support the theory that the loss of tax credits did have a negative impact on condo sales.
The reason we need to know what is going on related to the impact on sales of the loss of tax credits is to know if the real estate market was ARTIFICIALLY stimulated or not, and if the stimulation given by the tax credit is sustainable.
If sales start tanking once again without the tax credits, well, we know the answer to those questions. It then remains to see if we can do anything about it. If we can't, we may be headed for a double dip recession in real estate ... something that a lot of other gurus and commentators think is very possible and quite likely. Just tune in to CNBC and listen to the real estate reports several times daily and it doesn't sound real good for real estate nationally.
Locally, the Times writer quoted Stan Humphries, chief economist for Zillow, as saying that prices in Florida are still inching lower and will continue to drop until 2011 whereas the market nationally will bottom out in September of this year. So, recovery in Florida will lag the rest of the nation.
Humphries may be correct. But he could just as easily be wrong and it could be longer than 2011 before we bottom-out. He's probably looking at real estate data ... you know, things like inventory, short sale reports, foreclosures, housing demand and the like and trying to project how long it will take to sell off all the listings and ghost inventory around the country.
To me, that's a real estate guy trying to project the end to a real estate problem without taking into account all the other economic conditions that impact the real estate industry. Most notably, he may not be accurately projecting job loss and how long it will take people to find gainful, non-government employment at salaries that are large enough and stable enough to qualify for a mortgage.
Maybe he's not talking about the terrible problems associated with sovereign debt in Europe and the horrible pounding the Euro is taking versus other currencies in the forex markets which will likely have a negative impact on European real estate sales in the U.S.A. Those problems will ultimately impact us in Pinellas County real estate.
And frankly, I'm wondering if Humpries really appreciates the negative impact of all the foreclosed properties that are in Florida. By some estimates, banks are currently shielding over 1-million foreclosures in Florida alone. I wonder if Humphries has factored that into his 2011 forecast?
So, what do I think? I think we sold a bunch of houses as a result of the tax credit program and I think that's a good thing. Now it's gone. We'll know the full impact of the departure of the tax credit program in another month or two. I have a feeling that what we will discover is that we've sold fewer homes to people who want to live in them, and more homes to investors who want to do a little speculating in real estate -- especially so if the stock market continues to be volatile. Gosh, this is starting to have a familiar ring about it. Kind of like 2003 and 2004.
And I think one other thing. I think real estate agents, brokers, and prognosticators need to broaden their view on real estate recovery. To a great extent, the problems being confronted by local real estate involve two words -- Global Economy. Many of the problems faced by real estate today have as much to do with world economic conditions as they do with local sales volumes and pricing.
Don't believe it? Do this. Go home one afternoon this week and turn on CNBC -- they're all about business news. Keep track of how many times you hear the terms "Sovereign Debt", "Euro Crisis", and editorial discussions about foreign exchange rates and the effect they have on imports, exports and purchases by Europeans.
Along with that, keep track on how many times you hear the term "non-government employment".
Then, apply what you hear to the concept of having foreign investors buying property here. Foreign investment has been a very important part of Pinellas real estate for many years. What you will hear now is frankly quite discouraging. It all has to do with the falling Euro. I even sat in on televised discussion a week or so ago when the question was if Europe and the European monetary system can survive for more than another year or two. Right now, it appears that nobody has much confidence in Europe in the long term. It's a shame.
As far as U.S. employment goes, keep in mind that the so-called economic recovery in the United States is not creating many non-government jobs within the country. Without jobs and the stable incomes that accompany them, real estate agents won't have many buyers who can qualify to buy a home. Where are all the jobs? Well, let's just say they are America's favorite export.
The problem is, the real estate industry can't make large contributions to solving either of these problems because global economic recovery, job creation and foreign exchange rates are not our areas of expertise. But all these problems impact local real estate sales.
I think it would be best if we all broadened our outlooks when discussing the problems and possible solutions to the real estate problems, but as real estate agents and individual homeowners we also need to recognize our limitations. We need to think globally and act locally. Gosh, that sounds kinda like a bumper sticker, doesn't it?
Happy Selling!
-30-
posted by Terry Ward at 4:32 AM
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