State of SoWal Real Estate - Spring 2009

About 6 months ago, it seemed everyone was cash. The past few months we have seen more loan action. To use a catch phrase, most of the people we deal with right now do not "run in herds." They are ready to buy if the price is right. They are not concerned with continued depreciation because they feel they are buying at below replacement cost. They like the property they are looking at and are looking at the property as a long term hold. If the values go lower they are not worried because within time it will rebound at least to a normal market. When, is not an issue. They love the area and have always wanted a beach home. They may rent the property but do not rely on these numbers to pay the mortgage. They are extremely educated on buying property and have great knowledge of finance. BTW, none (except one) that I know of purchased in 2003-2005. The one that did took his loss and today currently flips properties with me in this market. He has been able to do 3 turns in one year and we are currently working on two more.

Now that's a rundown. Thanks Bobby!

TFT, I read a story the other day which noted that a large bank (Bank of America, I believe) was going to begin focusing on the jumbo loan market (loans of $417,000 or more) because they recognized that no one was touching it.

It seems that the lenders don't like condos as much as single family homes, but banks are still lending -- it is one way which they will be able to bring in money, via interest. They want to see 20% down, and it will depend on the number of homes owned by the applicant, credit score, debt/cash ratio, etc. On condos, lenders are even asking to see the financials of the condo association, which was unheard of for a while.

cavuto today

caught wayne rogers on cavuto this afternoon on fox business channel. he was really talking up the real estate market on the panhandle (rogers' only complaint was all of the cars on highway 98!) his take was that the area here has bottomed out and is on its way back up. and that this is the beginning of a wider recovery of real estate in florida as a whole.

caught wayne rogers on cavuto this afternoon on fox business channel. he was really talking up the real estate market on the panhandle (rogers' only complaint was all of the cars on highway 98!) his take was that the area here has bottomed out and is on its way back up. and that this is the beginning of a wider recovery of real estate in florida as a whole.

His company has dibs on the ole Panama City Beach Airport property--he's talking his book.

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Florida Realtors and Gov. Crist agree: ‘Now’s the time to buy’ a home in Florida

TALLAHASSEE, Fla. – April 15, 2009 – Ten Realtors from across Florida met with Gov. Charlie Crist this morning to discuss increased home sales and other positive trends in their markets, as well as offer insight into some current issues facing the real estate industry. It’s part of this year’s Great American Realtor Days, April 14-15, when about 1,000 Realtors from throughout the state join forces at the state capital to meet with their legislators and discuss concerns affecting all Florida residents.

Representing markets from Miami to Jacksonville and all points in between, Realtors reported an upswing in existing home sales in the past three to six months, when comparing year-to-year activity and also month-to-month sales figures. John Sebree, vice president of public policy for the Florida Association of Realtors? (FAR), kicked off the Real Estate Roundtable meeting with Gov. Crist by noting that February’s statewide existing home sales rose 20 percent over the same period last year, according to FAR data. He also reported that February’s home sales were about 17 percent higher than January’s statewide sales activity.

Realtors also told the governor about other positive indicators such as: mortgage interest rates under 5 percent; reduced housing inventory levels as buyers take advantage of current, more affordable housing opportunities; and encouraging market reaction to the federal economic stimulus package, especially the new $8,000 first-time homebuyer tax credit.

Upon hearing these reports from around the state, Gov. Crist said, “It doesn’t get much better than this. [Housing] supply and demand is going to come into balance here. Two to three years from now, people will be saying, ‘Back in April 2009 I could have gotten that home for so many dollars’ – so you don’t want to wait.

“Prices have gotten as low as they can. Now is the time to buy, while the deals still exist,” the governor said.

Discussing some of the challenges in today’s market, many Realtors pointed to difficulties with so-called “short sales,” where the bank or lender agrees to accept less money on a home sale than the seller owes on the mortgage. They said that short sales are problematic not only because of how long it actually takes to finalize the sale, but also because of the inconsistencies in information and documents required by lenders. Streamlining the short-sale process and providing consistency in required documentation among the lenders would boost the recovery of Florida’s real estate market.

Solutions to ease lenders’ restrictions on the state’s condo market are also needed, said Edgewater Realtor Robert Clinton. “Not only is the prospective condo buyer having to be approved for a mortgage, but the condo owners association itself has to be approved and qualified, which is causing problems,” he said.

Largo Realtor Alan Riley told Gov. Crist that 50 percent of buyers involved in recent home sales in the Tampa Bay area paid cash for their purchases, a strong indicator that investors have returned to the housing market.

“Savvy investors have returned to our market as well,” added Eric Sain, a West Palm Beach Realtor. “But we’re also seeing a lot of young families buying a home to settle down and establish roots in the community. That’s a sign that people aren’t leaving the area, aren’t leaving Florida.”

Gov. Crist agreed, saying, “Of course they are [establishing roots] – it’s Florida. Why would they go anywhere else?”

Not only is it a great time to buy a home in Florida, it’s also a great time for businesses to move to the Sunshine State, noted Suzanne Sherer, a Fort Myers Realtor. Commercial and business properties are readily available in a range of price options, she said, providing prime opportunities for entrepreneurs. She asked the governor and state leaders to take steps to encourage the relocation of businesses and industries to Florida.

At noon today on the steps of the old Capitol, Gov. Crist addressed the crowd of nearly 1,000 Realtors participating in Great American Realtor Days, applauding their perseverance and dedication to their profession despite challenges posed by the economy and the marketplace. Amid reports of increased home sales and other positive signs, the governor said that the “changing landscape” for Florida’s real estate markets is “nothing short of remarkable.”

Other participants in Gov. Crist’s Real Estate Roundtable included: Jacksonville Realtor Millie Kanyar; Fort Lauderdale Realtor Jesse Acevedo; Miami Realtor Carlos Cruz; Port St. Lucie Realtor Scott Wingfield; Panama City Realtor Katie Patronis; and Orlando Realtor Les Simmonds.

I am by no means a cheerleader, and mostly just observe what's going on. I don't know what the future holds but it seems pretty good right now, at least for folks buying for long term. Those who need a home can find one that has costs which are favorable compared to renting. Investors can find something that makes sense. There are plenty of deals for beach lovers who want a second home in SoWal. They can feel good about buying here once again, after sitting on the sidelines for a few years.

Two years ago when I heard someone say (rarely) that the bottom was at hand I didn't take it serious for a second. I am beginning to hear it more often from different types of sources, and not just locally. My belief has always been that you can't predict the bottom, or even recognize it when it happens. You might get lucky and actually buy at the bottom, but it isn't necessary. Don't be obsessed with the bottom. There's nothing wrong with simply buying near the bottom, whether it's heading up or down, just buy for the right reasons.

If you bought a house now for $300,000 and the price drops to $275,000, and 5 years from now it is worth $325,000, is that a good buy?

Kurt, you are right, you know the location of "the bottom," only in hindsight.

I am by no means a cheerleader, and mostly just observe what's going on. I don't know what the future holds but it seems pretty good right now, at least for folks buying for long term. Those who need a home can find one that has costs which are favorable compared to renting. Investors can find something that makes sense. There are plenty of deals for beach lovers who want a second home in SoWal. They can feel good about buying here once again, after sitting on the sidelines for a few years.

Two years ago when I heard someone say (rarely) that the bottom was at hand I didn't take it serious for a second. I am beginning to hear it more often from different types of sources, and not just locally. My belief has always been that you can't predict the bottom, or even recognize it when it happens. You might get lucky and actually buy at the bottom, but it isn't necessary. Don't be obsessed with the bottom. There's nothing wrong with simply buying near the bottom, whether it's heading up or down, just buy for the right reasons.

If you bought a house now for $300,000 and the price drops to $275,000, and 5 years from now it is worth $325,000, is that a good buy?

None of us know when we will truly be at the bottom until the bottom is passed but you surely want to buy before you come out of the bottom. I always say which side of the curve do you want to buy at? As a buyer you will get a lot more seller negotiation as you approach or are at the bottom then you will when the bottom is actually realized. The sellers will be sooooooo ready to tell the buyers to take a hike once we are on the other side of the curve.
I always tell folks we are near IMO because the buyer arrogance has far surpassed the seller arrogance of 2003-2005. Please no offense here just making light of a true reality.

Kurt, you are right, you know the location of "the bottom," only in hindsight.

Many saw the peak when it was occurring. Many will note the bottom as it occurs. We aren't there yet--but we are closer than we were a year ago. ;-)

As for Kurt's example, if you need to sell when it drops to $275k, not only did the house drop in value by $25k, but you also lost your closing costs of 2-3% of the original purchase price, plus you paid 6% commission to sell the house. So, the 10% or so drop in value actually results in about a 17% plus loss of cash.

In addition, in Kurt's example, the $325k price in five years assumes appreciation (which is unlikely in this market for quite some time) and even with such appreciation, you would still only be close to breakeven after considering real estate commissions on a sale in five years.

Only buy if you have enough money to take a big cash loss ast the bottom is not in sight.

Many saw the peak when it was occurring. Many will note the bottom as it occurs. We aren't there yet--but we are closer than we were a year ago. ;-)

As for Kurt's example, if you need to sell when it drops to $275k, not only did the house drop in value by $25k, but you also lost your closing costs of 2-3% of the original purchase price, plus you paid 6% commission to sell the house. So, the 10% or so drop in value actually results in about a 17% plus loss of cash.

In addition, in Kurt's example, the $325k price in five years assumes appreciation (which is unlikely in this market for quite some time) and even with such appreciation, you would still only be close to breakeven after considering real estate commissions on a sale in five years.

Only buy if you have enough money to take a big cash loss ast the bottom is not in sight.

I actually think if you want to make money in this market you can do quite well if you are patient and know what you are doing. Bottoms are for Herds.

Given that bottoms are found in only a moment of time, I wonder how many buyers will be in the handful of the small count in the trough. Since most people look at stats on a time period of once per month, even a month's worth of buyers (just over 100 for march), is a tiny handful compared to the properties on the market. If you look at the market on a moment by moment basis, you will likely find that the bottom holds even less people. Statistically, only a few will buy at the very bottom. Where's my Bell Curve?

None of us know when we will truly be at the bottom until the bottom is passed but you surely want to buy before you come out of the bottom. I always say which side of the curve do you want to buy at? As a buyer you will get a lot more seller negotiation as you approach or are at the bottom then you will when the bottom is actually realized. The sellers will be sooooooo ready to tell the buyers to take a hike once we are on the other side of the curve.
I always tell folks we are near IMO because the buyer arrogance has far surpassed the seller arrogance of 2003-2005. Please no offense here just making light of a true reality.

IMHO, with 33 months of inventory, no seller is going to be telling a reasonable buyer to take a hike any day soon.

None of us know when we will truly be at the bottom until the bottom is passed but you surely want to buy before you come out of the bottom. I always say which side of the curve do you want to buy at? As a buyer you will get a lot more seller negotiation as you approach or are at the bottom then you will when the bottom is actually realized. The sellers will be sooooooo ready to tell the buyers to take a hike once we are on the other side of the curve.
I always tell folks we are near IMO because the buyer arrogance has far surpassed the seller arrogance of 2003-2005. Please no offense here just making light of a true reality.

That's a very dangerous game, whether it's real estate or stocks, and IMHO is incredibly bad advice for your clients. The flaw in that argument is that you might guess wrong and lose money on your investment to more downside. By following the market rather than leading it, you put yourself at much less risk and assure the lowest possible price. Seller negotiation at 20% above the bottom is still worse than accepting list after prices start to stabilize.

The other thing to remember is that real estate markets usually don't experience "V" shaped recoveries, they tend to follow more of an "L" shaped recovery with a long slow climb back up (see previous price histories in market booms and busts for examples). So the block of time you have on the rebound is much wider and safer, generally.

IMHO 2005 warped our view of real estate - from here on out most buyers shouldn't treat buying a home like day traders treat buying and selling stock. A home is the largest investment most will make in a lifetime and often involves debt financing that can stretch 40 years. If you're smart and you've been paying attention to what's going on, you've learned that exhibiting risky behavior isn't the smartest approach. (Afterall, risky behavior is what got us into this mess in the first place.) I sense people still acting irresponsibly will feel the sting of loss down the line, while those who approach the current market sensibly will reap the rewards of a reasonably priced asset and house to love.

I think what will frustate people is the saying "this time is different". I firmly believe wether its wall street or the real estate mkt americans have been taught to seek instant gratification. This time what is different is the usa has taken on the greatest debt load in world history by a factor of 5 which means we're basically another japan in the making were growth will be flatlined for 10-20 years as we try to escape 30 years of gluttony.It means asset prices when they hit bottom will flatline for possibly 10-20 years making quick profit impossible

I think what will frustate people is the saying "this time is different". I firmly believe wether its wall street or the real estate mkt americans have been taught to seek instant gratification. This time what is different is the usa has taken on the greatest debt load in world history by a factor of 5 which means we're basically another japan in the making were growth will be flatlined for 10-20 years as we try to escape 30 years of gluttony.It means asset prices when they hit bottom will flatline for possibly 10-20 years making quick profit impossible

Exactly--IF we are lucky.

Given that bottoms are found in only a moment of time, I wonder how many buyers will be in the handful of the small count in the trough. Since most people look at stats on a time period of once per month, even a month's worth of buyers (just over 100 for march), is a tiny handful compared to the properties on the market. If you look at the market on a moment by moment basis, you will likely find that the bottom holds even less people. Statistically, only a few will buy at the very bottom. Where's my Bell Curve?

Peaks and troughs in a real estate market--versus the stock market--are not moments in time. They happen over a period of time. The peak did not occur on a particular date and the bottom won't either. But, if you look carefully at trends, you will see it when it occurs.

I'm using this method.

IMHO, with 33 months of inventory, no seller is going to be telling a reasonable buyer to take a hike any day soon.



That's a very dangerous game, whether it's real estate or stocks, and IMHO is incredibly bad advice for your clients. The flaw in that argument is that you might guess wrong and lose money on your investment to more downside. By following the market rather than leading it, you put yourself at much less risk and assure the lowest possible price. Seller negotiation at 20% above the bottom is still worse than accepting list after prices start to stabilize.

The other thing to remember is that real estate markets usually don't experience "V" shaped recoveries, they tend to follow more of an "L" shaped recovery with a long slow climb back up (see previous price histories in market booms and busts for examples). So the block of time you have on the rebound is much wider and safer, generally.

IMHO 2005 warped our view of real estate - from here on out most buyers shouldn't treat buying a home like day traders treat buying and selling stock. A home is the largest investment most will make in a lifetime and often involves debt financing that can stretch 40 years. If you're smart and you've been paying attention to what's going on, you've learned that exhibiting risky behavior isn't the smartest approach. (Afterall, risky behavior is what got us into this mess in the first place.) I sense people still acting irresponsibly will feel the sting of loss down the line, while those who approach the current market sensibly will reap the rewards of a reasonably priced asset and house to love.

33 months of inventory but how many months of good stuff. The stuff that sells the week it hits the market. You are looking at the market in a general sense. You really have to look at pockets and values. You can look at an area and see 100 homes for sale. I may look at it and see only 5 that are of market value and a good buy. I would not call it Risky Behavior at all. A builder still builds. An investor still invest. A flipper still flips. There will always be risk in any type of market. Most of the buyers we deal with today are extremely sophisticated and are able to be buyers because they did not get caught up in the herd mentality of 2003-2005. These buyers are approaching the market sensibly. The majority of our sales this year I would feel confident putting back in todays market and selling for a profit. When I sell today I always tell the buyer this needs to be a long term hold to feel the value but it does not mean we don't try to buy properties they could get right back out of if they need to. The buyers understand the market. Basically, the purchase could compete the day they buy. That to me is not risky but just good business. You make money in life when you buy. Not when you sell.

Peaks and troughs in a real estate market--versus the stock market--are not moments in time. They happen over a period of time. The peak did not occur on a particular date and the bottom won't either. But, if you look carefully at trends, you will see it when it occurs.

If that is the case, how about you tell us when it occurs? Your preface seems opposite of the bold part. If the trough occurs over time, how do you know where the bottom is, until AFTER we see the uptick which follows the bottom?

Bobby J, good point about the "real" inventory. So many of the listed properties are not real inventory. eg- twenty lots for sale in a subdivision, where no homes are built. All lots have the same characteristics and value. One lot is priced at $59,000, a couple priced at $69,000, with the majority priced around $170,000, with a couple priced above $230,000. In my mind, there are three lots for sale. The remainder won't count as inventory anytime soon, unless the price is substantially decreased, and we aren't seeing that happen, unless the bank takes them back. I guess another way one could analyze this is that all twenty lots are for sale, but the price is really $59,000 for each of them.

Many saw the peak when it was occurring. Many will note the bottom as it occurs. We aren't there yet--but we are closer than we were a year ago. ;-)

As for Kurt's example, if you need to sell when it drops to $275k, not only did the house drop in value by $25k, but you also lost your closing costs of 2-3% of the original purchase price, plus you paid 6% commission to sell the house. So, the 10% or so drop in value actually results in about a 17% plus loss of cash.

In addition, in Kurt's example, the $325k price in five years assumes appreciation (which is unlikely in this market for quite some time) and even with such appreciation, you would still only be close to breakeven after considering real estate commissions on a sale in five years.

Only buy if you have enough money to take a big cash loss ast the bottom is not in sight.

your characterizations of sowal real estate lend me to believe you would be calculating opportunity cost in the middle of your vacation....

This has been my point SJ. We don't show the 33 months worth of inventory. Only the good stuff. An example of what you are talking about would be Lakeside at Blue Mountain. The lots range from $55,000 on up. The bottom seems to be from the $55,000 to $60,000 and we begin to see some contracts. The ones listed higher are a waste of time and probably make up 95% of the listings in the neighborhood.

I also think that a $55,000 lot that you can walk to the beach is a deal and a steal. In many areas the market is over correcting.

This has been my point SJ. We don't show the 33 months worth of inventory. Only the good stuff. An example of what you are talking about would be Lakeside at Blue Mountain. The lots range from $55,000 on up. The bottom seems to be from the $55,000 to $60,000 and we begin to see some contracts. The ones listed higher are a waste of time and probably make up 95% of the listings in the neighborhood.

I also think that a $55,000 lot that you can walk to the beach is a deal and a steal. In many areas the market is over correcting.

Sounds right to me.

This has been my point SJ. We don't show the 33 months worth of inventory. Only the good stuff. An example of what you are talking about would be Lakeside at Blue Mountain. The lots range from $55,000 on up. The bottom seems to be from the $55,000 to $60,000 and we begin to see some contracts. The ones listed higher are a waste of time and probably make up 95% of the listings in the neighborhood.

I also think that a $55,000 lot that you can walk to the beach is a deal and a steal. In many areas the market is over correcting.

Didn't a lot in Lakeside recently close for around 45K or less? I seem to remember seeing one on a hotlist someplace that went under contract. The list was around 45K I believe so I would assume it was neg'd down a bit for the sale.

The lowest closing I see right now without going to the tax card is $60,000. There are 4 under contract from $64,000 to $55,000. There is an active short sale listed for $49,000(actually just came back on the market 4 days ago). This looks to be a really good buy if the bank will take it. There was actually a lot that sold for $175,000 in July 2008. Ouch on that one.
This neighborhood sure has proved the theory about price. Dead in the water until the reductions and now it has activity. The only one that is not a short sale is one under contract at $64,900.00 I am sure that one will probably close. So right now, lowest sale to date is $60,000. I just looked over the tax roll. This lot had really good elevations and backed up to the bike path. The buyer will be able to walk to the beach.

The lowest closing I see right now without going to the tax card is $60,000. There are 4 under contract from $64,000 to $55,000. There is an active short sale listed for $49,000(actually just came back on the market 4 days ago). This looks to be a really good buy if the bank will take it. There was actually a lot that sold for $175,000 in July 2008. Ouch on that one.
This neighborhood sure has proved the theory about price. Dead in the water until the reductions and now it has activity. The only one that is not a short sale is one under contract at $64,900.00 I am sure that one will probably close. So right now, lowest sale to date is $60,000. I just looked over the tax roll. This lot had really good elevations and backed up to the bike path. The buyer will be able to walk to the beach.

70% reduction off peak price will do that sometimes.