Home > 1st Quarter 2008 Newsletter.
 

 

FORECLOSURE. That seems to be the topic on everybody’s mind. Where is the bottom, when will it end? Is this the time to sell? Is this the time to buy?

Most of my regular readers know I am 3% of the waterfront and waterview condo sales. What many of you may not know is that I am a member of NRBA which is the National REO Brokers Association. Our membership lists and sells 42% of all the foreclosures nationally. I also attend the REOMAC convention which is the banker’s organization that repossesses these properties. Until recently these experts said we had 24-36 months before we hit bottom (2010-2011) but recently that changed to 18-24 months (2009-2010).

I don’t have a crystal ball but have been around long enough to know the pattern that surrounds Presidential elections. The party on the outs says the economy in going down the tubes. The media loving a sad story prints it and 55% (documented in studies) of the people who feel secure still believe it applies to the rest of the county. Shortly after the election the winner enjoys a honeymoon period, 1-2 bills get passed and the new President claims a marvelous turn around. The media says he/she is the best thing since sliced bread. And everyone’s attitude changes.

Here is a reality. When Ronald Reagan was President we had 5% unemployment and the media told us that we were at maximum employment. Today we have 4.8% unemployment which is an even higher level of employment yet the media says we are on the verge of a recession. That folks is the pattern of Presidential politics.

What I’m experiencing is buying by smart money investors. I don’t know why but it seems smart money is fully invested when we are in a bull market and on the sidelines when the bears take over. The bulls are getting restless and starting to make purchases. Many foreigners are also nibbling on the fringe accumulating a property here and there.

We are still 1/3 of the world’s economy. If we stop buying it’s not just the US, but the world that will go into a recession. We have two problems. One is the balance of payments which I heard mentioned by a politician for the first time this year...John McCain. The other is attitude which I believe is created by the media. Nationally 1.7% of the loans are behind by one or more payments. As you read how sales are doing in each town keep in mind how quickly the inventory can sell off. I currently have 72 websites 

where I post sales. In 2005, it took me 3.5 to 5 hours to update sales each month, now it takes me less than an hour. I point this out to put an emphasis on how quickly inventory can build and how just as fast bargains can disappear. When a potential client calls to see properties they usually say “x” bedrooms, “x” baths in a set price range. I can usually find 200+ possibilities, but when they narrow it down to features, size, age, location etc I can rarely find 10 properties that meet their needs. If you are thinking of trading up, I believe it’s time. If you have friends who want to buy, I believe it’s time. If you have excess funds, I believe it’s time to invest. Once the economy picks up the buyers stuck in the mid-west and north-east wanting to relocate will find buyers for their properties and Florida still has the weather most people prefer.

The following represents an overview of waterfront and waterview condo sales in Pinellas County during the first quarter of 2008. The transactions by complex, size, bedrooms, and baths, date closed and price paid are published on the websites listed below each community.

Belleair Beach, Belleair Bluffs & Belleair. There are currently 67 condos listed representing a 22.3 month supply. Sales during the first quarter of 2008 were 9 which represents a decline of 4 from the same period last year. There were 26 sales in all of 2007.  

Clearwater and Sandkey. There are currently 806 condos listed representing a 46.5 month supply. Sales during the first quarter of 2008 were 52 which represents a decline of 9 from the same period last year.  There were 261 sales in all of 2007.  

Dunedin. There are currently 137 condos listed representing a 51.4 month supply. Sales during the first quarter of 2008  were 8 which represents a decline of 6 from the same period last year. There were 55 sales in all of 2007. 

Gulfport. There are currently 47 condos listed representing a 35.2 month supply. Sales during the first quarter of 2008 were 4 which represents a decline of 7 from the same period last year. There were 24 sales in all of 2007.

Indian Rocks Beach. There are currently 113 condos listed representing a 67.8 month supply. Sales during the first quarter of 2008 were 5 which represents a decline of 3 from the same period last year. There were 34 sales in all of 2007.  

Indian Shores. There are currently 180 condos listed representing a 28.4 month supply. Sales during the first quarter of 2008 were 19 which represents an increase of 6 from the same period last year. There were 58 sales in all of 2007.   

Largo. There are currently 30 condos listed representing a 18 month supply. Sales during the first quarter of 2008 were 5 which represents “0” change from the same period last year. There 22 ales in all of 2007.  

Madeira Beach. There are currently 115 condos listed representing a 38.3 month supply. Sales during the first quarter of 2008 were 9 which represents a decline of 4 from the same period last year. There were 55 sales in all of 2007.  

North Redington. There are currently 82 condos listed representing a 82 month supply. Sales during the first quarter of 2008 were 3 which represents a decline of 1 from the same period last year. There were 14 sales in all of 2007.  

Palm Harbor. There are currently 7 condos listed. Sales during  first quarter of 2008 were “0” which represents “0” change from the same period last year. There were 10 sales in all of 2007.  

Redington Beach. There are currently 5 condos listed representing a 15 month supply. There was 1 sale during the first quarter of 2008 which represents a increase of 1 from the same period last year. There were 2 sale in all of 2007.  

Redington Shores. There are currently 112 condos listed representing a 48 month supply. Sales during the first quarter of 2008 were 7 which represents a decrease of 18 from the same period last year. There were 79 sales in all of 2007.  

Seminole. There are currently 26 condos listed representing a 26 month supply. Sales during the first quarter of 2008 were 3 which represents a increase of 6 from the same period last year. There were 26 sales in all of 2007.  

South Pasadena. There are currently 98 condos listed representing a 11.8 month supply. Sales during the first quarter of 2008 were 25 which represents a increase of 9 from the same period last year. There were 73 sales in all of 2007.  

St Pete & St Pete Beach. There are currently 754 condos listed representing a 23.1 month supply. Sales during the first quarter of 2008 were 98 which represents an increase of 2 from the same period last year. There were 296 sales in all of 2007.  

Tarpon Springs. There are currently 79 condos listed representing a 47.4 month supply. Sales during the first quarter of 2008 were 5 which represents “0” change from the same period last year. There were 24 sales in all of 2007.  

Tierra Verde. There are currently 103 condos listed which represents a 34.3 month supply. Sales during the first quarter of 2008 were 9 which represents an increase of 2 from the same period last year. There were 22 sales in all of 2007.  

Treasure Island. There are currently 240 condos listed representing a 60 month supply. Sales during the first quarter of 2008 were 12 which represents a decline of 9 from the same period last year. There were 73 sales in all of 2007.  

MY THOUGHTS

As I wrote this newsletter I noticed first quarter sales were running ahead of last year. Look at the chart on the front page. I also noticed six towns showed an increase in sales year-over-year and there were three that had no change. That’s quite an improvement over the past two years. I am not ready to announce a bottom, but as I stated before smart money is starting to buy.

On one of my websites I use the following example to explain how little it takes to turn a market in either direction:

Imagine an isolated island with a single complex where supply and demand equal one unit each month. As long as supply and demand remain in balance prices remain stable; Fair Market Value is the previous sales price +/- inflation. Assume that demand increases by one unit. Every month there will be two buyers vying for a single unit. Demand exceeds supply by a ratio of 2:1 pushing prices higher. Remove one buyer and the situation is reversed; the ratio becomes 1:2. Knowledge of supply and demand can save buyers $1,000s in any market. This same knowledge can produce thousands of additional dollars for condo owners who know when to sell.

I believe it’s time to consider trading up, investing or recommending me to a friend :-) Our big tourist season runs from October 1st to April 30th but high season is mid-December to the end of April. However, this is not the big selling season (see graph on front page). It normally takes 30-45 days to close making the peak selling season mid-March to mid to late August. I believe the reason is occupancy. Owners tend to occupy or rent their units during the season and the units  are empty in the off season making them easy to show. As always it's my pleasure to serve you and your referrals are always welcome.

  Cliff

RECENT HISTORY OF HOME VALUES

Prices peaked 10/2005. Over the next 15 months waterfront property dropped 35% and everything else declined by 32%. Prices continued to drop 1-1.5% a month until Feb of 2008 when prices dropped 4% and the greater Tampa Bay area was named the 2nd most active REO market in Florida.