Bargain Prices Reducing The Foreclosure Excess?

As the wave of foreclosures continues, prices are hitting record low numbers and reaching a level to generate huge interest among both consumers and investors. The Tampa area is definitely getting this attention.

According to the Associated Press, "For some buyers, the deals are now too good to pass up." As buyers snap up these foreclosed homes, the inventory of unsold foreclosures is shrinking... up to 13% over the past year!*

The PURTEE Team has recently formed a relationship with several of these bank owned property managers and have released over a dozen onto the marketplace. Our job is to help these managers price these properties correctly to get them off the books quickly! The reality is that the buyer frenzy taking place to get one of these 'super-deals' creates multiple offers and bidding wars to get them. When the bank calls for "Highest & Best Offer", this is the last chance for a buyer to be able to walk away with this property. 10% over asking price is not unheard of.

Many of these sales involve investors, private equity firms, foreign buyers taking advantage of the currency savings on top of the discounted prices, and out-of-state buyers looking for vacation homes. Cash is definitely king and March experienced 38% of all previously owned homes being purchased with all-cash.

As this activity heats up, these inventory is lessening which adds fuel to the frenzy. Although we can anticipated another wave of foreclosures (that have been hung up in the system) hitting the market, these devalued properties will eventually be gone. As that unfolds, prices will begin to stabilize. Home owners who had put off moving during the downturn become more confident of selling for a decent price... thereby generating more buying and selling.

*Associated Press, April 27, 2011

March Statistics Are In - What A Difference A Month Makes!

The March 2010 Market Statistics have just been posted for Pinellas County and they have been added to our website. As you see from month to month, the Absorption Rate (or Inventory Turnover) gives us the first blush overview... and take a look at this chart! The Absorption Rate is determined by dividing the number of units sold during the month by the number of active listings in the Multiple Listing Service.

Click On The Chart For A Clear View:
What a difference a month makes in Pinellas County!!! In March, the Absorption Rate on Single Family Homes jumped to 11.5% from March '09 7.7%, and Condos went right along at 9.5% over March '09 4.9%!

The median prices stabilized and actually began to move back up while sales results made a significant jump. Single Family Home sales improved 17.2% over March '09... with sales of 1667 homes. The median price of $138,500, although slightly down from March '09 $140,000... was significantly higher than Feb '10 at $130,000.

Condos made the most significant comeback with a 53.1% increase in sales over March '09... with sales of 1200 condos! The median price remained flat at $110,000.

As we continue to watch our depressed market rebound, the telltale sign is how busy we have gotten! We are posting Hot Deals to our website frequently... and watching them get sold quickly.













The February Market Statistics have just been posted for Pinellas County and we have added them to our website. Personally, I always go first to the Absorption Rate (or Inventory Turnover) to catch a trend. The absorption percentages increasing reflects the market absorbing the inventory that is available. This is definitely a result of the median price. In Single Family Homes, the highest price level occurred in October of 2005 at $276,000. In February 2010, the median price of homes sold was $130,000. Condos reached their high level as well in October of 2005 at $215,000. In February. the median price was $110,000.The inventory has had to experience this decrease in value to stimulate the market back into activity. This is the point investors, and buyers in general, start to look hard at which depreciated properties have the best chance to appreciate on the upturn.

Redington Shores Yacht Club On The Move!

We continue to talk about how quickly the market can change. A few months ago, there were distressed sales available in Harborview Grande in Clearwater Beach. Savvy Buyers who had sat on the fence for months realized the opportunity was NOW. The result? There is nothing available for sale in the complex and there is a waiting list of hungry buyers wishing they had moved quicker.

The other community we watch closely is Redington Shores Yacht & Tennis Club. As a matter of fact, we have a dedicated website for this community because of its uniqueness along the beaches of Tampa Bay. Built in 2007, this gated community combines beautiful waterfront condominiums with private homes. A clubhouse, lighted tennis courts, fitness center, private boat slips and waterfront pool & spa for each of the four condo buildings. Plus, right across the street is a beautiful stretch of white sandy beach!

Redington Shores Yacht & Tennis Club got caught right as the market turned downward. As the owners who had anxiously awaited the grand opening were closing on their condos, appraisals were coming in 15-20% higher than the price they had secured pre-construction. The delight felt by these new owners was short lived and over the past two and a half years they have watched their property slide in value by up to 50%! Of the 126 condos, 6 have fallen into the mid-$300K range as short sales of foreclosures. Lots have been foreclosed on while other homes were still under construction.

So is the value still there? We believe it. As a result of the market downturn, builders and developers abandoned new construction projects quickly. For that reason, there is a major shortage of new construction and because of that projects finished in 2006 and 2007 ARE the new construction. In the last three weeks, we have seen the last of those distressed sales go under contract. The deal that we particularly liked was a penthouse unit listed at $495,000... a full $100,000 more than those distressed sales. It went under contract Monday.

What does this mean to current owners and buyers wanting to get into the community??? The $300's and $400's are gone. At this time, there are 7 of the 2000 sq ft condos and 2 of the 3000 sq ft condos available for sale. The lowest prices? In Building 3, #206 for $529,000 and #304 for $535,000. WHY would a buyer go after those two knowing others had sold for less? Because after those two, the next least expensive is #401 in Building 1 for $599,000! Of the other six on the market, prices range from $600,000 to $829,000.

In advising a Buyer right now who loves the community, I would remind them that these $500's are a full $300,000 less that what they were appraised for in 2007. In each of those situations, the sellers are losing money. The community is still the most unique on the beaches and the construction is new with the high ceilings and stricter building codes. What do you think?

Florida Bucks The Trend In December Home Sales!

Watching Fox News yesterday, a very depressing story came on the air about "home sales taking a dramatic plunge in December." It caught my attention because I knew Florida's existing home sales had grown in December.

As a matter of fact, home sales in Florida grew "33 percent last month with a total of 14,630 homes sold statewide compared to 11,013 homes sold in December 2008, according to Florida Realtors. Statewide existing home sales last month increased 4.3 percent over statewide sales activity in November.

The National Association of Realtors says sales nation-wide dropped 16.7 percent to a total of 5.45 million in December, down from 6.54 million in November. Experts had predicted a decrease of 7-10 percent. This news came out at the same time as the Obama administration announced plans to withdraw mortgage support that kept interest rates low! Tomorrow's blog will concentrate on the impact of that wind down of federal lender support.

We have said all along that real estate and the recovery would be localized. Here in Florida, and specifically the Tampa Bay area, we are poised to bounce back much faster than other parts of the country. Forbes Magazine predicted that over a year ago. December marked Florida's 16th month of sales activity increases over prior year! As the snow birds come here throughout the season, the appeal to some of these great prices is a huge draw.

Tampa Bay Realtors sold 5,000 more homes in 2009 than they did in 2008, a healing trend that helped real estate prices find some footing last year. Single-family home sales totaled 28,617 in 2009, up 21 percent from the 23,615 homes that changed hands in 2008, Florida Realtors said.
Tampa Bay's median home price ended the year at $140,000, pretty much the level at which it was in the spring of 2009, defying the depressing effects of cheap foreclosure homes.

2009 Perspective - cont'd

In all fairness, we should give credit where credit is due for some efforts made during 2009 to help kickstart the house industry recovery. An unprecedented $8000 first-time home buyer tax credit sparked the motivation to get out there and buy now. Cash actually delivered by the federal government to first-time buyers and extended to many "trade-up" buyers on December 1st encouraged many fence-sitters to make their move. The simultaneous push was to see the real market statistics encouraging "Buy now before the prices go up."

The state helped, too. Supported by Florida Realtors, the 2009 Florida Legislature created a law that enables buyers to use the federal tax credit as part of the down payment on a home. It essentially became a bridge loan for the buyer to use prior to actually receiving the tax credit check from the IRS. There are still funds available for use that will flow into 2010.

Recent signs seem to indicate that the economy - while fragile - is slowly starting to stabilize in our area, though analysts' reactions to the actual date are mixed. Still, at the end of 2009, most economists foresee a steady, yet very slow, improvement by Summer 2010.

1 in 20 Americans Plan A Home Purchase For 2010

According to the Associated Press yesterday, citing a Move.com survey, despite today's challenging economy, 5% of Americans plan to buy a home next year. Nearly 10% plan to buy within the next 2 years! The survey goes on to say that of those planning to purchase, nearly half are first time home buyers 34 years old or younger.

After three years of staggering price declines, Americans are finally getting the wake-up call that the fragile housing recovery is on its way. The number 1 reason for purchasing is the belief the market has bottomed out and the second is a fear of rising interest rates. "This latest Homeownership Survey validates what many had hoped to see in the housing markets -- affordable prices and ample inventories are restoring the appeal of real estate to investors while providing opportunities for first time home buyers to enter the market," said Move, Inc. Chief Revenue Officer, Errol Samuelson. "In today's environment, regardless of whether you're an investor or interested in purchasing a home to live in yourself, residential real estate is a more attractive investment today for many than is has been in recent years."

Home prices have rebounded this past summer at an annualized rate of almost 7%, according to Standard & Poor's/Case Shiller home price index. Low prices and foreclosure bargains have been the primary motivating factors.

We have found a great way to help with buyers seeking to purchase in the Tampa Bay area... through our Home Buyer Program. It is so simple and lets a potential buyer program in the specifics they are looking for in their purchase. We can enter that data directly into the realtor site of the multiple listing service to determine current matches. What really works is after that. Now any price reduction or new property that fits your criteria is automatically emailed to you. This has been a great tool for many of our clients!

Response To The Trick or Treat Question About The Market...

Well... I was looking for an answer, once that could clearly define when the real recovery is underway in Florida and especially here in Tampa Bay. Did the question in the sand - and no, the answer wasn't written back. BUT, while reading the St Petersburg Times over the weekend, I got their take on that exact question.

According to the article, there are 5 signs that we want to look for to indicate we are truly on our way back. As realtors, we see the increase in sales and more buyers considering a purchase as a chief indicator. Here are the 5 signs to go along with that observation:

1. Single Digit Unemployment: Nationally, unemployment is expected to peak at 10.5% in 2010. In Florida, unemployment is now at 11% and could go as high as 12%. (However, see prior blog posts on unemployment statistics and rapid rail increase in employment.) These numbers need to be in the single digits and to be truly healthy, we are looking at a goal of less than 6%!

2. Small Businesses Growing: The credit freeze that began over a year ago and brought small businesses to its knees has eased slightly in recent months. "A July survey by the Federal Reserve found that 35% of banks had tightened lending to small firms and 79% of small business owners reported that their credit card lines had been cut significantly. For the Small Business Administration's fiscal year that just ended Sept. 30, business loans were down 43% in the Tampa Bay area."

3. Florida's Housing Pipeline Ramps Up Again: We have that covered and are watching as prices inch back up. This will tie directly in to retirees up north and their ability to sell their homes there in order to relocate to the Tampa Bay area.

4. Banks Stop Bleeding Loan Losses: Essentially, this is referring to the difference between the large financial companies invested in trading stocks and bonds versus more regional and community banks heavily invested in commercial real estate. The recent bank failures are up to 106 nationwide and the tally is expected to grow.

5. Retail Sales Pick Up: For the first time in a year, a small increase in sales has been reported by the International Council of Shopping Centers (a measly .1%). According to the article, store owners are anticipating this holiday season to be the second worst (the worst was last year). In a survey released Thursday, Consumer Reports said 65% of Americans plan to cut back on holiday shopping, travel and entertaining.

So... stay tuned as we include these 5 signs in our following of the market!

Lowering Unemployment Rate = Faster Recovery

Reading in USA Today, this report came in yesterday and again... the news we are getting casts a positive spin on where the recovery is heading. According to an economic survey that came out of Washington yesterday, the third quarter saw customer demand increase for the first time in more than a year and the jobs outlook brighten.

"For the first time since the recession began, the portion of companies planning to add employees in the next six months outnumbered those expecting to cut jobs, according to this month’s quarterly survey of economists at 78 firms by the National Association for Business Economics.Twenty-four percent plan to grow their workforce, 20 percent say they’ll trim staff and 57 percent expect no change. In July, 18 percent expected to add workers, while 28 percent said they would scale back. 'It’s a little ahead of what I was expecting,' says Ken Simonson, chief economist at the Associated General Contractors of America, who helped conduct the survey."**

According to Simonson, unemployment (now at 9.8%) will peak in the second quarter of 2010 at 10.5% (which coincides with other economists). However, his take on this survey was that it could mean the jobless rate will crest earlier and at a lower level. This would surely be good news!

"Most bullish were services companies: 31 percent say they’ll add workers in the next six months, up from 16 percent in an April survey. Just 3 percent say they’ll cut staff. By contrast, 12 percent of manufacturers plan to beef up their workforces."**

Some other key factors that came out of the survey:**

• 44% of firms reported rising customer demand, vs. 21 percent with falling demand, the first time gainers outpaced losers since July 2008. Only the transportation, utilities and communication sectors posted a net decline

• More respondents reported an increase in capital spending from the prior quarter, for the first time in a year

• Companies that had rising profits compared with the previous quarter outpaced those that had drops for the first time in nearly two years

• The portion of firms chopping jobs fell to 31 percent from 36 percent in July. Those adding rose to 12 percent from 6 percent.

**USA Today - Washington, October 26, 2009