Home > 2nd Quarter 2008 Newsletter.
 

 

 The purpose of this newsletter is to inform potential clients about the real estate market and to give my perspective of where itís headed. The objective is to help you invest wisely. When I was in the corporate world I often gave my view of International Economics; my purpose here.

We canít drill where we have oil; if we could, we couldnít refine it. We canít build nuclear plants so we are buying 10 million barrels a day at $140, we are sending $5,040,000,000,000 overseas each year. All this in a country that has more proven reserves than all the middle east combined. The balance of payments is destroying the dollar on world markets because they already have so many they donít want any more. We have the ability to be an exporter if Congress would act responsibly.

The Euro has many of the same problems, but itís not yet reflected in itís value on world markets. There has never been a better time for Europe to buy in the U.S.  In time the knuckle heads in Washington may wake up and move to strengthen the dollar, at which time Europeans who invest here will gain a second time from the exchange rate. That is the easy forecast.

We are reproducing just below replacement rate. Europe is producing 1.6 children for every 2 adults. This means we have to send jobs overseas. Our infrastructure is shrinking due to a lack of workers. Donít be fooled by the news reports. When GM fires their lunch staff and farms it out to Marriott, who rehires these workers, the government counts it as a loss of manufacturing jobs,  and an increase in service sector jobs. They are still the lunch staff, just being paid by a different company. 

The reality is we currently have more houses available than we have people to fill them. So where is the market headed? If we put 100 experts in a room we would get 50 who say we have hit bottom, and 50 who would say we have a ways to go.

Here is what we know:  Single family houses increased in value 1% in April and May. June figures are not out. May sales were up 2% in units from May of last year. Condo values did not increase but water related unit sales were up. October 2008 will see the most foreclosures of any month. It represents the top of the bell curve.

I believe we have 3-7% more price declines coming. That is based on the medium price. If you find what you want, this is the ideal time to buy, because nobody ever times the bottom or the top correctly. I donít see prices varying much for 3-5 years. I tend to think closer to five years, as I expect it to take a minimum of three years to sell the excess inventory. The other thing that is happening for the first time is credit worthy homeowners are walking away.

They see the same house across the street selling for much less then they owe, so they simply walk. Therefore, I see no rationale for waiting if you want to buy. The one thing we can be sure of is, this is a good time to trade up.

The following represents an overview of waterfront and waterview condo sales in Pinellas County during the first half 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 51 condos listed, representing a 27.8 month supply. Sales during the first half of 2008 were 22, which represent an increase of 12 from the same period last year.  

Clearwater and Sandkey. There are currently 774 condos listed, representing a 28.3 month supply. Sales during the first half of 2008 were 164, which represent an increase of 26 from the same period last year.  

Dunedin. There are currently 111 condos listed, representing a 25.6 month supply. Sales during the first half of 2008 were 26 which represent a decline of three from the same period last year.  

Gulfport. There are currently 50 condos listed, representing a 21.4 month supply. Sales during the first half of 2008 were 14, which represent an increase of five from the same period last year.  

Indian Rocks Beach. There are currently 97 condos listed, representing a 48.5 month supply. Sales during the first half of 2008 were 12, which represent a decrease of five from the same period last year.  

Indian Shores. There are currently 174 condos listed, representing a 20.5 month supply. Sales the first half of 2008 were 51, which represent an increase of 25 from the same period last year.  

Largo. There are currently 30 condos listed, representing a 22.5 month supply. Sales the first half of 2008 were 8, which represent a decline of one from the same period last year.   

Madeira Beach. There are currently 144 condos listed, representing a 33.23 month supply. Sales the first half of 2008  were 30, which represent an increase of five from the same period last year. (for information on sales by complex visit: www.MadeiraBeach-FL.com.)

North Redington. There are currently 57 condos listed, representing a 48.9 month supply. Sales the first half of 2008 were 7, which represent an increase of one from the same period last year.  

Palm Harbor. There are currently 11 condos listed, representing a 22 month supply. Sales during the first half of 2008 were one, which represents a decline of one from the same period last year.       

Redington Beach. There are currently two condos listed, representing a 4 month supply. Sales during the first half of 2008 were three, which represents an increase of three from the same period last year.  

Redington Shores. There are currently 103 condos listed, representing a 28.1 month supply. Sales the first half of 2008 were 22, which represent a decrease of 20 from the same period last year.  (for by complex visit: www.GulfCoastCondoReport.com and click Redington Shores.)

Seminole. There are currently 22 condos listed, representing a 8.8  month supply. Sales the first half of 2008 was 15, which represent a increase of 5 from the same period last year.  

South Pasadena. There are currently 105 condos listed, representing a 14.7 month supply. Sales the first half of 2008 were 43, which represent a increase of one from the same period last year.  

St Pete & St Pete Beach. There are currently 535 condos listed, representing a 25.1 month supply. Sales the first half of 2008 were 128, which represent a increase of 26 from the same period last year. 

Tarpon Springs. There are currently 75 condos listed, representing a 42.78 month supply. Sales the first half of 2008 were 8 which represent a decline of 4 from the same period last year.  

Tierra Verde. There are currently 91 condos listed, representing a 50.18 month supply. Sales the first half of 2008 were 17, which represent an increase of 5 from the same period last year. 

Treasure Island. There are currently 225 condos listed, representing a 46.63 month supply. Sales the first half of 2008 were 38, which represent an increase of 11 from the same period last year.   

FORECAST

There is an old saying: ďPut your money where you mouth is.Ē This newsletter has always been based on Pinellas County waterfront and waterview condos because that is where I did business. As we go to print I am adding an office in Pensacola. We will add coverage of Pasco, Hillsboro (Tampa), Manatee (Bradenton) and Sarasota counties out of this office. The Pensacola office will cover Escambia and Santa Rosa counties in FL and Baldwin county (Gulf Shores and Orange Beach) in Alabama. Obviously I am putting my money on the future. We have already covered the expertsí opinions, and I canít say they are wrong. I am simply confident my business will continue to grow. 

The chart shows sales turned up during the second quarter of 2008. Year-to-date we have had 799 sales vs. 577 during the first half of last year; a 38.5% increase. I am not predicting a return to the days when you could pay any price and still make money but I am a mini-bull. Studies show the media has convinced 55% of us think the economy is bad, despite thinking we personally are doing well. The next President will have some meaningless piece of legislation pass, and he will be declared the greatest thing since sliced bread. As a result, attitudes will change allowing people in the mid-west to sell their property and move to Florida. I think we will continue to attract Foreign buyers. I personally am seeing professional people buying, investors are buying, and I expect more to be buying soon. The stock market is no longer looking like a place that can generate a decent return, but rental property looks good, buying on the water is priced more attractive than its been in years. The unknown is always hurricane season.

If you are a believer in Global Warming you are expecting a hurricane season to be remembered. I met Al Gore when he was 14. When I was a young man growing up in Tennessee, Al, writing for the Nashville Tennessean, was predicting the coming Ice Age. I am guessing there is more profit in Global Warming, which is why Al switched sides. What I said about Al is true, but it will be my last political joke, as some people are sensitive and itís getting close to election time. This argument should subside after the election as the north pole is melting slower than the south pole is freezing. Both sides can clam scientific proof despite the fact Global Warming has less evidence to support its theory. 

Not receiving instant gratification is no excuse for doing nothing. The argument ďwe canít drill our way out of the gas shortageĒ will end after the election. This is common sense. We can be producing oil in less than two years, and while it may not be anywhere near our potential, every drop helps. We will adjust to $4 a gallon gas; we have no choice because we failed to develop our resources. Congress outlawed oil shale conversion in 2007, but the military is doing it to insure its requirements in case of war. Hopefully we will wake up and demand this be reversed. If we go all out we can be self-sufficient in 10-15 years, correcting our balance of trade deficit, strengthening the dollar and offering our children a brighter future. Plus the $4 per gallon price will be enough to support the development of alternatives, which the world will need sooner or later. Itís this simple logic that makes me think real estate is a solid long term investment.

In the mean time if you have a property you would like to sell, or if youíre in the market to buy, I would appreciate your business.

  Cliff