Tampa Bay Real Estate Update - July 2009

Florida Real Estate Sales are up: June 2009

The U.S. housing market is finally on the mend after its most far-reaching collapse in 70 years. That could help rebuild consumer confidence and revive the economy.For the first time in five years, sales of previously occupied homes rose for the third consecutive month in June, while foreclosure sales and the glut of homes on the market both declined.The figures, released Thursday by the National Association of Realtors, and a string of rosy corporate earnings reports sparked a rally on Wall Street as the Dow Jones industrials rose above 9,000 for the first time since January.“People believe that the worst is behind us,” said Julie Longtin, a real estate agent with Re/Max Professionals in Providence, R.I., an area that has suffered deeply from record foreclosures of risky loans.Sales also have risen for three straight months in 40 out of 55 major metropolitan areas tracked by the Associated Press-Re/Max Housing Report, also released Thursday. Prices rose during that period in about half of those areas.Still, unlike past recessions, the turnaround in the real estate sector is likely to have a muted effect overall. That’s largely because homebuilders are expected to keep bulldozers idle as long as they face competition from bargain-priced foreclosures. And it’s likely to take at least another year before job losses and foreclosures peak.The Labor Department said Thursday the number of newly laid-off workers seeking jobless benefits rose 30,000 to a seasonally adjusted 554,000 last week, though the government said its report again was distorted by the timing of auto plant shutdowns.Unemployment insurance claims have declined steadily since the spring, but most private economists and the Federal Reserve expect jobs to remain scarce and the unemployment rate to top 10 percent by year-end.“We’re not going to see much growth in (home) sales until the labor market turns around,” said Patrick Newport, an economist with IHS Global Insight. “People don’t move as much when they can’t find work.”But companies should start hiring as their fortunes improve – and there were some early signs Thursday that’s starting to happen.Ford Motor Co. surprised investors with a profit of $2.3 billion, due mainly to a huge gain for debt reduction, while manufacturing conglomerate 3M Co. and candy maker Hershey Co. raised their profit forecasts for the year.The Dow Jones industrial average, the stock market’s best-known indicator, shot up almost 190 points Thursday to 9,069.29, its highest level since November, and all the big indexes gained more than 2 percent.Analysts said signs that the housing market is finally, gradually turning around could help spur demand as buyers become less fearful of losing their shirts.“It’s been the abject pessimism about house prices that has placed a pall over the housing market,” said Mark Zandi, chief economist at Moody’s Economy.com. “As that psychology reverses itself, things start to work in the opposite direction.”Home sales rose 3.6 percent to a seasonally adjusted annual rate of 4.89 million last month, from a downwardly revised pace of 4.72 million in May. Sales are now around the same level as before last fall’s financial crisis.Foreclosures, however, continue to put pressure on home prices. About one out of three homes sold in June was foreclosure-related, down from nearly half earlier this year.And despite some buyers’ optimism, some still see potential problems ahead. A tax credit of up to $8,000 for first-time homebuyers expires Nov. 30. Mortgage rates are up from record lows reached last spring, and companies are still shedding jobs.The nationwide median sales price was $181,800 in June, down 15 percent from year-ago levels but up slightly from $174,700 in May. And an Associated Press analysis shows the shows that the gap is narrowing between the sellers’ asking price and the final sales price, indicating homeowners have finally accepted that their homes are worth far less today.Jim Dugan, a 53-year-old plumber, is looking for foreclosures and other low-priced properties in Providence. He wants to buy eight investment properties this year and is slated to close on a small bungalow next week for $62,500.The property was originally listed for $85,000. But Dugan was able to snare a deal because he didn’t need a mortgage, instead tapping a line of credit and his savings.“Cash talks,” he said.Investor activity is helping to pare the number of homes on the market. Nationwide there are about 3.8 million, or a 9.4-month supply at the current sales pace. When the market balances at a 7-month supply, prices should begin to stabilize.A healthy housing market is characterized by prices that rise a relatively modest 4 to 5 percent every year. But this year’s sales prices are still far lower than last year.Those low prices combined with mortgage rates around 5 percent and a tax credit for first-time homebuyers have made homeownership more affordable than it’s been in decades.“We are seeing contracts like crazy,” said Valerie Huffman, a vice president of Weichert Realtors, in Montgomery County, Md., where home sales are up by 42 percent over last year. “We’re having multiple bids on anything that’s priced well.”

June 2009 Tampa Bay Market Update

Single family listings dropped precipitously – down 22% from last year to 6,702. Only two years ago, that number was 9,000. Unit sales were up by 18% from 2008 and the market is approaching the number of sales experienced in the latter half of 2006. The median price appears to be stabilizing, at least for now. Since the low of $125,000 in January, every other month this year has been in the $140,000s. In June the median price was $147,000, including foreclosures and short sales. For non-distressed properties, the median price was $171,750 in June. The market also reached double digits in absorption rate for the first time in a long time at 11.1%. For a change, the lowest end of the market did not lead in the number of sales. Homes under $100,000 accounted for a little more than 26 per cent of sales, while the $100,000 to $250,000 bracket led with over 53 per cent of unit sales. There were no sales of $1 million or more.
For condos, listings are down 16.9 per cent from 2008 and the number currently on the market is now closer to that seen in 2006. For the fourth month in a row, the number of unit sales is up over last year – and not just up, it was a leap up at 29.1% more than 2008. Median price did not drop to get there either as it was $139,000, the highest level we’ve seen so far this year. The non-distressed condo sales median price was $146,500. As for residential financing, all cash closings still dominate the transactions at 46% year to date.

Property tax challenges just got easier

TALLAHASSEE, Fla. – June 4, 2009 – Home and business owners who think their local tax bill is too high caught a break today when Gov. Charlie Crist signed a bill that makes it easier to challenge how much a property is worth. Flanked by business and real estate leaders, Crist put his name to HB 521. The bill lowers the burden of proof for owners who dispute property tax assessments to a preponderance of the evidence – a lower standard than the clear and convincing threshold they now must meet to overturn a property appraiser’s estimate. Local governments had successfully scuttled earlier efforts to lower the standard. In the just-signed version, property appraisers still enjoy the presumption that their estimates are correct, but the legislative analysts say the bill will cost local governments $157 million during the current fiscal year, increasing to $693 million a year by 2013

Florida's existing home, condo sale rise!

ORLANDO, Fla. – May 27, 2009 – Florida’s existing home sales rose in April – the eighth consecutive month that sales activity increased in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors® (FAR). April’s statewide sales showed gains over the previous month’s sales level in both the existing home and existing condominium markets.Existing home sales rose 18 percent last month with a total of 13,111 homes sold statewide compared to 11,133 homes sold in April 2008, according to FAR. April’s statewide existing home sales were slightly higher than statewide activity in March.Florida Realtors also reported a 21 percent rise in statewide sales of existing condos in April; existing condo sales last month increased 6.2 percent over the total units sold in March.Fourteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing-home sales in April and 11 MSAs also showed gains in condo sales. A majority of the state’s MSAs have reported increased sales for 10 consecutive months.Florida’s median sales price for existing homes last month was $138,500; a year ago, it was $199,500 for a 31 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note, however, a significant downward distortion in the current median price due to many discounted sales, including a large number of foreclosures. The median is the midpoint; half the homes sold for more, half for less. The national median sales price for existing single-family homes in March 2009 was $174,900, down 11.5 percent from a year earlier, according to NAR. In California, the statewide median resales price was $253,040 in March; in Massachusetts, it was $255,000; in Maryland, it was $264,302; and in New York, it was $222,500.According to NAR’s latest housing industry outlook, it could take a few months for the housing market to gain momentum, though there are signs of stabilization. “The share of lower priced home sales has trended up, indicating a return of many first-time buyers,” says NAR Chief Economist Lawrence Yun. “Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit. By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions.”In Florida’s year-to-year comparison for condos, 4,660 units sold statewide compared to 3,862 units in April 2008 for a 21 percent increase. The statewide existing condo median sales price last month was $106,600; in April 2008 it was $178,900 for a 40 percent decrease. In the latest data available at press time, NAR reported the national median existing condo price was $177,600 in March 2009.Interest rates for a 30-year fixed-rate mortgage averaged 4.81 percent last month, down significantly from the average rate of 5.92 percent in April 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written. Among the state’s smaller markets, the Pensacola MSA reported a total of 316 homes sold in April compared to 272 homes a year ago for a 16 percent increase. The existing home median sales price was $143,300; a year ago, it was $157,400 for a 9 percent decrease. In the year-to-year comparison for the existing condo market, 48 units sold in the MSA last month, up 9 percent compared to 44 condos sold the previous April. The market’s existing condo median price remained level at $250,000.

Additional Homestead Exemption for First-Time Homestead Property Owners

Governor Charlie Christ will have an opportunity to back Florida first-time home buyers that may purchase properties after January 1, 2010. The savings the proposed Bill, if approved, offers may offset any possible rise in home values.

We are hearing of property values possibly reaching a bottom this summer. With a close eye on how the $8000 New Home Buyer Tax Credit will be affecting the economy, realtors, economists, and other industry professionals are monitoring how the tax credit will be spent and the effect it will have on the economy.

If this Bill is passed by at least a 60% majority, it would provide first-time homestead property owners with additional homestead exemption equal to 50 percent of the property's just value in the first year, limited to $250,000.

Voters will vote in November of 2010 with the Bill, if approved, taking effect on January 1, 2011, with application towards properties purchased on or after January 1, 2010.

Right now is the "perfect storm" of buying opportunities as some analysts put it. Record low mortgage rates, a surplus of distressed properties for sale at hugely discounted prices, and renters emerging as key players in the country's economic recovery all point to a steady recovery, it's just unknown when this stabilization will be firmly rooted.

FHA Slated To Offer $8000 Tax Credit As Down Payment On New Home Purchases

With so much of a housing inventory here locally in the Tampa Bay area as well as nationwide, the National Association of Realtors is working with the Federal Housing Administration to finalize plans for use of the $8000 New Home Buyer Tax Credit as a down payment versus a refund received at a later date.

It is hoped by all parties---FHA, NAR, and the IRS--- that this action plan will help spur the sales of even more homes.

First-time Home Buyers (those that have not owned a home within the last 3 years) have accounted for nearly half of all home purchases this year. These first-time home buyers are usually renters that see the opportunity to own a home for less than they are paying for rent, with these opportunists heading straight for distressed properties that offer them more home for their dollar.

With Florida being one of the four states becoming saturated with a new cycle of foreclosed properties, most big players are in strong favor of this federally-backed incentive to assist first-time home buyers that may not have immediate access to the thousands of dollars needed for a down payment and closing costs.