There's No Place Like Home To Buy A Home

Real estate agents and brokers, investment advisers, mortgage experts and others have been saying for a long time that now is a great time to buy a home in the Tampa Bay area.

Now, Fortune magazine has ranked Tampa Bay as the fifth best place in America to buy a home. Tampa Bay is placed between Cleveland (fourth) and Las Vegas (sixth). Atlanta topped the list, followed by Orlando and Jacksonville was ranked seventh.

The magazine said the reason to buy now was due to the drop in residential construction since the market peaked in 2006, and the overall decline in housing prices. Fortune also said that it expects retiring baby boomers to choose Florida as a retirement destination, thus fueling a resurgence in the housing market.

So, all you buyers who are on the fence about buying a home in Tampa Bay need to take note: This may be the time!

Tampa Bay Area May Have Hit Bottom!

The St. Petersburg Times today released an article in which an economist with Wells Fargo, Mark Vitner, stated that it is possible that the real estate market in Tampa Bay may have finally bottomed out.

Vitner said the recent surge in sales can be attributed to low prices and mortgage interest rates, an improving local economy, and to investors searching for bargains.

According to the Times, 4,296 homes were sold during March in Pinellas, Pasco and Hillsborough Counties as compared to 3,258 in February. That's a sales increase of 32% in just one month in the three counties. Moreover, the newspaper reported that sales volume has increased 14% in the three counties this March compared to March 2010.

So, what does this mean for real estate buyers?

Perhaps Vitner's words answer that question best. He said "We're either at or very close to the bottom of the market. It would be crazy to wait for the last nickel to fall." If I interpret that correctly, he's saying that if you are a buyer looking for the best time to buy, this is it.

Readers of this blogsite have read many times that it is my opinion that trying to anticipate the absolute bottom of the real estate market is impossible. There are simply too many variables and nobody has all the data. Suffice it to say that we are at the point where buyers need to act now before the market starts to shift away from their current advantage. The housing market is at or near a six month supply of inventory for sale. Six months supply is considered a market in equilibrium, meaning there is no great advantage for either buyer or seller. Obviously, this means we must be at or near the bottom of the market since neither party to a transaction has an overwhelming advantage at the present time.

My suggestion? If you're a buyer now is the time to act. Prices probably will not go much lower, but inventory will start to shrink. As the inventory shrinks, prices will go up. Act now!

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March Was A Good Month For Pinellas Real Estate Sales

It has been a long time since I've had anything really good to write about in this blog, but the sales figures for March are pretty doggone good!

Let's look at the Absorption Rate (AR) which, as you know, is determined by dividing the number of units sold in the month by the total number of units in the MLS system.

For single family homes, the AR for March was 14.5%. That is the best monthly AR in over three years! The same is true for the AR for condos. The condo AR stood at a remarkable 12.2%!

Single Family Homes

For the month of March, there were 5,812 single family homes listed in the Pinellas MLS. That's a decrease from February's 6,153. You might think that fewer units for sale would mean fewer units sold, but NO, sales went up substantially in March. Some 845 single family homes were sold in Pinellas County in March as compared to February's 629. That makes this the best single month for sales since the market was at its peak in June 2006 when 959 units were sold.

Of course, you can find a dark cloud in every golden sunset if you look hard enough. The median price took a hit. The median sales price for March 2011 was down to $113,000 as compared to March 2010's median of $138,500. That's a drop of 18.4% year to year. I'll have more to say about this price decline toward the bottom of this story, so keep reading.

Condo Sales

Condos, the red-headed stepchild of the Pinellas real estate industry, had a pretty good month in March as well. There were 4,809 units listed in the MLS as compared to 5,073 in February. A reduction in condo inventory has to be considered a good thing, especially for condo sellers.

Sales of condos were red hot in Pinellas and have been since the first of the year. During March, 587 condos were sold. In February, 452 were sold. In January, 368 units made it to the closing table. That is fabulous growth for that sector and its good too see some life coming back into the condo market after all these years of flat sales activity.

Of course, like single family homes, condo prices keep falling. The median in March 2011 was down to $90,000. The median for March 2010 was $110,000, so that's a drop in median value of 18.2% year to year.

Financing

I noticed some new data while researching this story: financing statistics. I don't know if they have always been there and I just missed them, or if this is some new data being supplied by the Pinellas Realtor Organization, but it puts some very interesting light on the subject of real estate sales and who's-buying-what.

For a long time, those of us who have been involved in the sale of investment properties have noticed that a lot of investors buy their properties all-cash, no financing. This increases the yield on the investment to the owner, obviously.

Well, the new financing data indicates that of all the properties purchased this year in Pinellas County, 66% of those sales have been all-cash purchases. What is more, the median price keeps falling, and remember, median means that half the people paid more than the median value and the other half paid less. A lot of investors buying lower-priced properties will drive the median price down -- and that's what we've been seeing for the last year or so. By way of comparison, only about 30% of purchases have been via conventional, FHA or VA mortgage -- an indicator of non-investor purchases.

With 66% paying cash and a falling median, well, that's got investor purchases written all over it. A lot of investors buy lower priced houses for cash, fix them up, then either rent them or sell them again for a profit. Investor purchases of short sales and foreclosures will tend to drive down a median price figure, and we've been seeing a lot of investor activity in those sectors as well. I'd be willing to bet dollars-to-donuts that the majority of these sales are going to investors rather than to primary home buyers. This data just has that kind of look to it to me.

It also follows a trend that I saw when selling real estate back in the 2002-2005 period. In those days, the stock market was as flat as a blacktop road cutting through a south-Florida pine woods. I had many buyers tell me they were buying real estate because you "can't make money with money anymore". Given the topsy-turvy stock market of today, I'll bet a lot of investors are pulling money out of turbulent Wall Street paper and going for brick-and-mortar investments.

Anyway, it was a good month for Pinellas real estate no matter who did the buying -- let's hope it continues!

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Stop Doing Open Houses? No Chance!

In case you missed it, the St. Petersburg Times ran an article in the April 9th issue in which it says that many real estate agents are no longer using open houses as a means to help market properties for sale. The paper says that the open house is past its time as more and more buyers shop by computer and smart phone.

The paper then goes on to quote some real estate agents who blame the reduced number of open houses on everything from sellers who don't want strangers walking around in their homes to agent safety concerns. Some agents, the paper says, only hold open houses if the seller requests it.

Well, I want you to know that I happen to believe very strongly in open houses. I don't think it is an outdated marketing tactic. I think that for many, many home shoppers, seeing the property "live and in color" is a lot better than looking at some photos on a computer screen. And don't get the idea that attendance at open houses is falling off. Far from it. Recent open houses that I have held -- and those held by my associates -- have been very well attended and usually by people who are in a position to make the purchase if they are so inclined.

For many years, I have been hearing that agents only hold open houses so they can attract more business for themselves from other buyers or from people who stop by but also need to sell their house. Sure, there probably are some agents who use open houses to feather their own nest. But for the most part, real estate agents who hold houses open for inspection do so in the hope of finding a buyer for that particular house. If any other business comes from the open house, fine, but for the most part they want to sell the house they are holding open.

Here's something else that real estate agents know. If you are trying to sell a condo in a retirement community, the open house might be the agent's best marketing tool. The reason? Referral sales. Many sales in retirement condos are made because some current resident influenced a friend or family member to move to that same community so they can be nearby and help each other. They often find the condo that they recommend because it was held open by a savvy real estate agent. Those older folks don't generally spend their days looking at listings on the internet, but they will visit an open house.

For all the years that I've been around real estate, I've heard agents make all kinds of arguments for not doing open houses. In reality, the reason they don't do open houses is because they don't want to give up their Sunday afternoons.

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Help Coming To Avoid Foreclosure

A $1-billion federal program could help an estimated 40,000 Florida residents from losing their homes to foreclosure.

The Hardest Hit Fund, offered through the Florida Housing Finance Corporation, is due to roll out statewide in a few weeks. There are two forms of help offered through the fund.

The first option provides up to six months of mortgage assistance to unemployed or underemployed homeowners up to a maximum of $12,000. Homeowners must pay 25% of their monthly income or $70 toward their home payment.

The second option will provide up to $6,000 to make a delinquent mortgage current if the homeowner has returned to work or is recovering from underemployment.

To qualify for this program, the homeowner can be no more than 180 days behind on his mortgage payment, must have a monthly housing debt that is more than 31% of gross monthly income, doesn't have a conviction for a mortgage related felony or a bankruptcy that has not been discharged, doesn't have more than one property other than their primary residence, and their fist mortgage must have originated on or before January 1, 2009 and was not seller financed. For more information on this program, go to http://www.flhardesthithelp.org/.

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