Local Home Prices Fall

The S&P Case/Shiller home price index has announced that single family home prices in Tampa Bay fell another 3.2-percent in July as compared to July of 2009. This was the third highest drop among the 20 metro markets tracked by the well-respected index.

Nationwide, home prices were up 3.2-percent for July versus a year earlier, and half the cities surveyed showed strong gains. San Francisco was up 11.2-percent, San Diego up 9.3-percent, and Los Angeles up 7.5-percent.

The biggest losses took place in Las Vegas, down 4.9-percent, and Charlotte, N.C., down 3.5-percent. Tampa Bay suffered the nation's third worst price drop at 3.2-percent.

Condos are not included in the survey.

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August Sales Were Unremarkable

In case you missed it, I read in the St. Petersburg Times a week or two ago that real estate prices in Pinellas County are now comparable to the prices we had ten years ago. So, if you're like me and bought your home around the year 2000, well, at least you haven't lost any money ... yet.

If we keep seeing numbers like we saw in August, however, you will be losing money on your ten year old property pretty soon.

Prices just keep falling. August is the proof.

We'll start as always with a quick look at the Absorption Rate (AR) or Inventory Turn. This is calculated by dividing the number of units sold in a month by the total number of units in the MLS system.

For single family homes, the AR for August was 9.0%. That's better than July's AR of 8.3%, so at least single family homes are apparently selling a little faster. The AR for condos in August was 6.5% as compared to July's 6.1%.

What this means is that in August, it took a single family home an average of 11.1 months to get sold; it took a condo an average of 15.4 months to be sold. Overall, this means the market is not in equilibrium, which happens when it takes about 6 months or so for property to be sold. So, we're still in a buyer's market with lots of inventory sitting around for a long time.

The number of sales, however, did increase in August. There were 611 single family homes sold in August as compared to July's 555. Condo's also sold at a somewhat more robust pace with 360 condos selling in August compared to July's 335 units sold.

Median prices, however, continue to erode. The median price for a single family home in Pinellas County for August 2010 was $135,000 as compared to August 2009's median of $142,000. So, in the last twelve months, the median price for a single family home in Pinellas County dropped another 4.9%.

For condos, the drop in median prices was even more dramatic in the last year. In August of 2010, the median for condos stood at $115,000 while the median in August 2009 was $138,900. That's a one year drop of 17.2% for condos.

So, that's what happened in Pinellas County during August. It may be a different story in other parts of Florida, but that's the Pinellas County story and I'm sticking to it.

Happy Selling!

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Why Buy A Home In Today's Market?

I can't tell you how many times in the last three or four years that a buyer has told me that he's willing to buy a home, but I have to find him a "great deal".

Buyer's need to understand something. "Great deals" are not "found". "Great deals" are "created".

If you want a great deal, you have to be willing to make an offer that you feel is the deal you want. Then, negotiate, negotiate, negotiate until you have created an acceptable deal on a house that you want to own in a neighborhood where you want to live.

If you do that, you've earned the right to brag about the great deal you got on your new home.

Writing in the Wall Street Journal this past week, Brett Arends reminds buyers that this is a great time to buy real estate in most markets. Arends points out that good deals are all around because, nationwide, purchasing prices are down about 30% on average. Here in Tampa Bay, housing prices have dropped to their lowest point in 10 years. Combine that with mortgage interest rates that are hovering at about the 4.3% for a 30-year mortgage and home ownership looks extremely attractive.

I shouldn't have to point this out, but considering the above info you've got the makings for a steady stream of "good deals".

So, where are all the buyers?

I think people are being served very badly by the media. Their steady stream of bad real estate news and reasons not to buy has turned a lot of potential buyers off to the idea of home ownership. These real estate gurus whose comments stress the negative side of purchasing and owning property have done more to damage the real estate recovery than I ever thought possible. Maybe we need some TV gurus who look to the positive aspects of home ownership. That's something the National Association of Realtors really ought to think about ... the formation of a pro-real estate speaker's bureau for placement on local and national TV shows and news programs. These NAR speakers should stress the many good reasons to buy real estate now.

Ah, but I'm doing the job of the PR people at NAR. I shouldn't do that. That's not my business. I do hope it is theirs.

Happy Selling!

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Fewer Sellers Reducing Prices

If you've been waiting for the seller to reduce the price of your dream home before making an offer, be advised that fewer and fewer sellers are volunteering to reduce their asking price. So, your wait may be long and futile.

According to news just released by Zillow, fewer U.S. home sellers cut their prices in August. Of all the homes listed for sale on the Zillow site, prices had been cut at least once on 28.8% of them by the end of August, 2010. This is down from July's 30.1%. In September of '09, some 32.6% of listed properties on Zillow had experienced at least one price reduction. The median price reduction was 7% in August. The median was the same in July. The cities with the largest price reduction, according to Zillow, were Tucson, Arizona and Portland, Oregon.

I have to be honest with you about this. If you are a buyer right now, why on earth would you sit on the sidelines waiting for a seller to unilaterally drop the price?

Buyers today have all the advantages. Real estate prices are at near record lows. Many sellers are just plain desperate to sell and will look at any offer. Mortgage interest rates are at or near record lows if you qualify. Nationally, the selection of properties in all price ranges is at near record highs, so you have plenty of homes from which to make a selection.

Buyers gain nothing by waiting. First of all, you may lose the property when some other buyer comes along and takes the initiative to make an offer while you're waiting for the seller to cut his price. Remember, if you like the house, others will too! Second, interest rates may go up. If they do, you may find yourself with a higher monthly payment even if the seller agrees to your price. Third, property taxes and insurance premiums may increase while you're waiting for a price reduction. Remember, most government taxing authorities are desperately looking for ways to increase government revenues, and insurance companies are for-profit organizations that just love to make homeowners pay higher premiums for the same-or-less coverage. Finally, the seller may never reduce his price and elect to simply take the house off the market.

So, there is a down-side to waiting that may outweigh the possible gains from a price reduction.

My advice is to act now. If you don't want to pay what the seller is asking, make an offer for what you are willing to pay for the house. Then, negotiate, negotiate, negotiate. That's how great deals are forged on homes today.

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A Priceless Story About Real Estate, Divorce, And Getting What You Want In The End

Last Tuesday, Judy Clark -- the brilliant, level-headed, experienced, fun-loving managing broker for Coldwell Banker Real Estate's Northeast St. Petersburg office -- told this story. Could it be true? Well, maybe ...

"Curtain Rods"

On the first day, he sadly packed his belongings into boxes, crates and suitcases.

On the second day, he sat down for the last time at their beautiful dining room table, by candle-light. He put on some oldies background music, and feasted on a pound of shrimp, a jar of caviar and a six pack of beer.

When he finished, he went into each and every room and deposited a few half-eaten shrimp dipped in caviar into the hollow center of the curtain rods. He then cleaned up the kitchen and left.

On the fourth day, the wife came back with her new boyfriend.

At first, all was bliss. Then, slowly, the house began to smell.

They tried everything: cleaning, mopping, and airing-out the place. Vents were checked for dead rodents and carpets were steam cleaned. Air fresheneres were hung everywhere. Exterminators were brought in to set off gas canisters, during which time the two had to move out for a few days. In the end, they even paid to replace the expensive wool carpeting.

Nothing worked!

People stopped coming over to visit.

Repairmen refused to work in the house.

The maid quit.

Finally, she couldn't take the stench any longer, and decided they had to move, but a month later -- even though they had cut their price in half -- they couldn't find a buyer for such a stinky house.

Word got out, and eventually even the local real estate agents refused to return their calls.

Finally, unable to wait any longer for a purchaser, they had to borrow a huge sum of money from the bank and purchase a new home.

It was then that the ex-husband called the lady and asked how things were going. She told him the saga of the rotting house. He listened politely and said that he missed his old home terribly and would be willing to reduce his divorce settlement in exchange for having the house.

Knowing he could have no idea how bad the smell really was, she agreed on a price that was only one-tenth of what the house had been worth -- but only if he would sign the papers that very day. He agreed, and within two hours her lawyers delivered the completed paperwork.

A week later the woman and her boyfriend stood smiling as they watched the moving company pack everything to take to their new home. And to spite her ex-husband, they even took the curtain rods!

Don't you just love a happy ending?

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