July Real Estate Looked Pretty Flat

July appears to have been a pretty flat month for real estate in Pinellas County, Florida.  I guess it's a combination of things ... and some of it probably has to do with just the summer doldrums. 

Let's take a look at how real estate did ...

For single family homes, the absorption rate (AR) stood at 29.8% for July,  That means it would have taken 3.35 months to clear all the single family homes in the inventory.  That's not too bad and, in all honesty, is pretty close to June's AR of 29.1%.  By comparison, the AR for July of 2009 stood at 11.1%, meaning it would have taken about 9 months to sell the available homes in the MLS.  As you can see, the market has certainly improved in the last three years.

Condo sales, however, seemed to have slipped a little in the last month.  For July, the AR for condos in Pinellas was 16.8%.  So, it would have taken almost 6 months to sell the listed inventory.  In June, the AR for condos was 18.9%, or about 5-1/2 months to sell the inventory.  I think this reflects the seasonality of condo sales in Pinellas County.  If you think back to July of 2009, the condo AR stood at 6.9%, meaning it would have taken 14-1/2 months to sell the inventory at that time.  Quite a change for the better!

Single Family Sales

In July, the MLS showed a total of 3,024 single family homes listed for sale in Pinellas County.  In June, the total number of homes was 3,160.  As you can see, the Pinellas home inventory continues to slip each month.  If we were to go back to July of 2007, there were 9,198 homes listed for sale.  So, we have about 1/3 as many homes listed for sale today as we did five years ago.  This is probably good news for sellers, but bad news for buyers.  As you recall from basic Econ class, scarcity coupled with high demand causes prices to increase.

Sales for July were about the same as they were for June.  A total of 900 homes were sold in July as compared to June's 918 -- not much of a difference.  In July of 2007 -- despite that big number of homes on the market -- only 541 were sold.  Going back to that Econ class you took, remember that oversupply and lack of demand causes prices to drop. 

Reflecting this supply/demand cycle, the median price for a single family home in Pinellas County in July 2012 now stands at $137,600 as compared to July 2011's median price of $122,500.  That's an increase of median price of 12.3% in the last year.

Condominium Sales

Unlike single family home sales, condo listings actually increased between June and July.  In June, we had 3,223 listed properties and in July we had 3,272.  So, there are about 50 more condo units listed in the county.  Good news for buyers -- a few more from which to select.  The big selection numbers were in July of 2007, however, when there were 8,614 condos listed for sale in Pinellas County alone!

Condo sales, however, slumped in July as compared to June.  In July, only 551 condos made it to the closing table whereas 610 condos were closed in June.  So, more inventory and fewer sales.  That tells me condo prices should be falling.

I'm right!  In July 2011 the median price for condos in Pinellas County stood at $92,000 but in July of 2012 it was only $90,000.  That a drop in median price of 2.2% for condos.  Hey, it's basic economics!

Oh, just so you remember, in July of 2007 only 319 condos were sold out of those 8,614 that were listed ... so, we're doing a lot better today!

Well, that's the July report.  I'd give a slight edge to sellers of single family homes and to buyers of condos.  Let's see what happens in the fall!

Happy Selling!

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Pinellas Real Estate Is Now A Seller's Market

There are a lot of real estate buyers who are clinging to the belief that they can make low-ball offers and that desperate sellers will accept way less than market value for their property.  To be candid, those market conditions no longer exist.  At least they don't exist in Pinellas County anymore.


Pinellas County has become a seller's market once again.

Don't believe it?  Well, let's look at some numbers.

Lets go back five years to June, 2007 and compare it to today.  June of 2007, by the way, was clearly a buyer's market.

In June of '07, there were 9,111 single family homes listed for sale in Pinellas County.  During that month, 682 properties were sold.  That means 7.4% of the listed inventory sold during June of '07.

By comparison, at the close of June in 2012, there were only 3,160 single family homes listed for sale in Pinellas.  Of those, 918 were sold.  That means 29.05% of the listed inventory was sold that month.

These figures show that today we have only about one-third of the inventory for sale, but nearly an additional third of buyers in the market.  If you recall Econ 101, product scarcity combined with high demand means prices go up. 

Those figures also show that it would take over 14 months to sell all the listed inventory in 2007, while today it would require only about 3-1/2 months to sell the inventory.  The market is considered to be in equilibrium when it will take about 6 months to turn the listed inventory.

So, who has the advantage?  Clearly, the seller has the advantage.  In an active market like this with scarce inventory, if the seller doesn't like the offer or the terms he can sit tight and wait for another buyer to come along.  Most likely, it won't take long to find the next offer if the property is priced correctly and in nice condition.

Although the figures vary a bit, the same seller's market condition exists for condominiums as well.

What all this means of course, is that this dwindling inventory of homes and condominiums coupled with high buyer activity will usher in rising prices for real estate.  I expect a slow but steady rise in prices -- nothing like the crazy price jumps we saw during the "bubble" years.  This is good news for sellers and makes now a great time to put property on the market. 

Remember, if buyers are active, it's a good time to be a seller.

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A Thought About Retirement

I've been giving a good bit of thought lately to the possibility of my own retirement, and this story is something that just crossed my mind.  Mind you, I'm not in the habit of giving anybody financial planning advice, but I thought maybe I'd share these thoughts with everybody -- especially those "babyboomers" who are (or should be) planning how and where they want to spend their "golden years".

Even though your true retirement may be a few years off, right now might be the best time to buy that retirement residence you've been dreaming about on-and-off for the past few years.  You know, the condo overlooking the golf course.  The beach house.  The cozy cabin in the mountains.  Whatever.

Consider these facts.

First, real estate prices are low.  Perhaps they are about as low as they are ever likely to be in our lifetimes.  They are, however, inching their way up.  Think about this: do you really think real estate prices will be this low five years from now?  Other things being equal, I seriously doubt it.  So, if you buy now your retirement place might be a good investment and actually gain in value while you finish off your working years.  Hey, nothing wrong with that!

Second, mortgage interest rates are at-or-near an all time low.  Last I heard, a 30-year fixed mortgage was about 3.6 percent or so.  That's like free money!  With rates that low, you can probably afford to buy a more expensive property because the monthly paymets will be much lower than they were a generation ago when your parents retired.  Besides, do you really want to gamble that mortgage rates will be this low when you actually do retire?  I bet they won't be!  Lock that property up now and you will probably pay less for it.  Also, I've heard financial planners say that with these low mortgage rates, don't pay cash for the property.  Keep your cash invested ... you may need it to keep your golden years, well, golden.

Third, there's fewer and fewer properties on the market.  So, it may take you longer than you think to find that "just right" retirement place.  It might be a good idea to start shopping now, find it, buy it while rates are low and prices affordable.  You don't have to move into it immediately.  If you want, you can find a tenant for it and make a couple of dollars with it until you are ready to quit the work-a-day world and move in.  If the property is some distance from where you live or you just don't want to be bothered, turn the tenant management chores over to a property manager who sends you a check every month.

Look, all I'm saying here is that retirement takes planning.  Locking up your retirement residence now rather than waiting until you actually retire may make a lot of sense for some people.  If you wait, I'm willing to bet that the price will be higher, the mortgage rate will be steeper, and somebody else may get that dream home you've always wanted.  My advice?  Act now.

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