Home > Third Quarter 2009 Newsletter.

 

RECENT TRENDS

 

Sales are down, inventory is up and prices continue a downward slide. You may remember from prior Roe Reports a balanced market has 6 months inventory. Unfortunately water related condo sales are lagging, prices are declining and inventory is growing (see center pages). The average selling price per sq ft continues to decline approximately 1.5% a month.

 

BABY BUST

 

In the late 1970s and early 1980s the Baby Boomers led the switch from 1,500 to 1,750 sq ft homes to 2,500 to 3,000 sq ft homes. Today they are asking do I need this extra space and do I need the high ceilings?

 

The Fannie Mae example given to support the concept of the Boomers leading us toward downsizing was Fairfax, Virginia. Fairfax is 50 miles from D.C. and 50 miles from Baltimore. The average house is less than 10 years old with 3,000 sq ft. Banks and sellerís canít give these homes away. The next step will the a migration back to downtown as gas prices continue to rise.

 

Florida is lucky in that itís a place with many one and two bedroom properties. Itís hard for me to believe a couple wonít plan on the grandkids visiting. So we will continue to sell larger homes and condosÖ.just not at historic rates. However before they can buy here most must sell the home they have now.

 

SHORT SALES

 

In my opinion the market will turn around when the MLS systems around the country start monitoring short sale listings. Or maybe it will be the banks who will eliminate the process unless they have a working agreement with the sellers. I have seen the extreme where an agent lists a property at twice its fair market value to get the listing and I have seen agents who price it at half the fair value which destroys the ability to sell anything else.

 

I have a close friend who owns a 12th floor 1-bedroom, 1.5 bath condo on Boca Ciega Bay. I priced it at $225,000. Another agent listed a 16th (top) floor, 2 bedroom, 2 bath short sale for $115,000. Was there any chance a bank would accept an offer of $115,000? No! Was there anyway a buyer would pay $225,000 for my listing as long as the other listing remains on the MLS? No! I have written the MLS systems where I am a member and I have written the National Association of Realtors, but if I am a solo voice its doubtful I can get the system changed.

 

The following represents an overview of waterfront and water view condo, townhome and villa sales in Pinellas County during the 1st three quarters of 2009. 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 67 condos listed, representing a 24.1 month supply. Sales through the first three quarters of 2009 were 25, which represents a decrease of 2 from the same period last year.     (for sales by complex visit: www.GulfCoastCondoReport.com and click on Belleair.)

 

Clearwater and Sandkey. There are 487 condos listed, representing a 15.6 month supply. Sales through the first three quarters of 2009 were 281, which represents an decrease of 39 from the same period last year.  (for information on sales by complex visit: www.ClearwaterBeach-FL.com, www.Sandkey-FL.com, or www.GulfCoastCondoReport.com and click on Clearwater.)  

 

 

Dunedin. There are 113 condos listed, representing a 22.6 month supply. Sales through the first three quarters of 2009 were 45 which represents an increase of 6 from the same period last year. (for information on sales by complex visit: www.Dunedin-FL.net.)

 

Gulfport. There are 38 condos listed, representing a 16.3 month supply. Sales through the first three quarters of 2009 were 21, which represents a decrease of 7 from the same period last year. (for information on sales visit: www.GulfCoastCondoReport.com & click Gulfport.) 

 

Indian Rocks Beach. There are 65 condos listed, representing a 20.9 month supply. Sales through the first three quarters of 2009 were 28, which represents an decrease of 2 from the same period last year.(for information on sales visit: www.IndianRocksBeach-FL.com.)

 

Indian Shores. There are 111 condos listed, representing a 14.1 month supply. Sales through the first three quarters of 2009 were 71, which represents a increase of 2 from the same period last year. (for information on sales by complex visit: www.IndianShores.info)

 

Largo. There are 32 condos listed, representing a 28.8 month supply. Sales through the first three quarters of 2009 were 10, which represents an increase of 2 from the same period last year. (for sales by complex visit: www.GulfCoastCondoReport.com and click on Largo.)

 

Madeira Beach. There are 106 condos listed, representing a 25.8 month supply. Sales through the first three quarters of 2009 were 37, which represent an increase of 2 from the same period last year. (for information on sales by complex visit: www.MadeiraBeach-FL.com.)

 

North Redington. There are 40 condos listed, representing a 60.0 month supply. Sales through the first three quarters of 2009 was 6, which represents an increase of 13 from the same period last year.   (for sales by complex visit: www.GulfCoastCondoReport.comand click on  North Redington, www.Tides-Beach-Club.com or www.LaContessaCondos.com)

 

Palm Harbor. There are 6 condos listed, representing a 54 month supply. Sales through the first three quarters of 2009 was 1, which represents no change from the same period last year. (for information on sales by complex visit: www.Palm-Harbor-FL.com.)

 

Redington Beach. There are 3 condos listed, representing a 13.5 month supply. Sales through the first three quarters of 2009 were 2, which represents a increase of 3 from the same period last year.  (for information on sales by complex visit: www.GulfCoastCondoReport.com and click on Redington Beach.)

 

Redington Shores. There are 66 condos listed, representing a 16.5 month supply. Sales through the first three quarters of 2009 were 36, which represents a decrease of 12 from the same period last year.          (for by complex visit: www.GulfCoastCondoReport.com and click Redington Shores.)

 

Seminole. There are 12 condos listed, representing a 9 month supply. Sales through the first three quarters of 2009 was 12, which represents a increase of 1 from the same period last year.      (for sales by complex visit: www.GulfCoastCondoReport.com and click Seminole.)

 

South Pasadena. There are 74 condos listed, representing a 11.5 month supply. Sales through the first three quarters of 2009 were 58, which represents a increase of 9 from the same period last year.  (for sales by complex visit www.Harbourside-Condo.info or  www.GulfCoastCondoReport.com and click on South Pasadena or www.SouthPasadea.FL.com.)

 

 

St Pete & St Pete Beach. There are 497 condos listed, representing a 18.7 month supply. Sales through the first three quarters of 2009 were 239, which represents a increase of 42 from the same period last year.  (for information on sales by complex visit: www.GulfCoastCondoReport.com and click on St Petersburg or for beach information visit: www.St-Pete-Condo.info)

 

Tarpon Springs. There are 76 condos listed, representing a 45.6 month supply. Sales through the first three quarters of 2009 were 15 which represents an decrease of 5 from the same period last year.  (for information on sales by complex visit: www.Tarpon-Springs-FL.info)

 

Tierra Verde. There are 69 condos listed, representing a 125.9 month supply. Sales through the first three quarters of 2009 were 24, which represent an increase of 2 from the same period last year.  (for information on sales by complex visit: www.TierraVerde-FL.com.)

 

Treasure Island. There are 174 condos listed, representing a 26.1 month supply. Sales during second quarter of 2009 were 60, which represents a decrease of 1 from the same period last year.  (for information on sales by complex visit: www.Treasure-Island-FL.com.) 

 

MY FORECAST

 

This is where I try to predict the short term direction of the real estate market. I admit to being stumped, but Iíll give it my best. There are two trains of thought. One concerns the 600,000 properties that have been foreclosed and held off the market since October of 2008. Our local MLS represents 1% of the U.S.. Rounded off the MLS shows we have 600 foreclosures, 6,000 short sales and these two groups make up 35% of the total listings. Straight math says we could receive 6,000 foreclosures listings (1%) over an unknown period of time but regardless it would place downward pressure on the market value of homes. These properties would be in addition to the current flow of foreclosed homes. The theory behind this concept is the banks canít afford to wait forever to release these properties that are sitting empty and deteriorating.

 

The second concept is called Toxic Banks. We hear the President say banks are on the verge of insolvency. This is considered code for the government must take over the housing market. If you Google ďtoxic bankĒ you will find videos of the network news making mention of this as well as articles from such publication as the Wall Street Journal. This concept has the government buying all the bad loans, forgiving the amount over fair market value and refinancing the balance at a reduced rate for 5 years. The last interest rate quoted was 4.1% up from 3.9% but Washington has yet to release the final details. The theory being that in 5 years the owner will have enough equity in the house to refinance. The idea behind this is to create a balanced housing market where pent up demand will force prices upward. I mentioned in prior Roe Reports that 56% of the loans renegotiated by government between October of Ď08 and April of Ď09 are 2 months behind on their payments. This trend continued through August of Ď09.

 

Before the Health Care debate and Cap & Trade I would have predicted the second theory. Polls show the majority of the voting public is tired of the excessive government spending and are not going to tolerate anymore. I find it doubtful that anyone seeking reelection would vote for more spending at this stage but somebody voted to get us in this fix and I am not aware of any representatives being voted out of office.

 

I predict the 600,000 properties will be slowly released or sold in bulk to investors who will resell them. I believe government will sell some of the toxic loan paper at a deep discount on the condition the properties canít be resold for a specified length of time. We need to turn the housing market but I canít see the options mentioned producing positive results. I see prices continuing to decline another 15-18% this year and next while areas like Miami will drop another 50%. We need to control the short sales process and we need to make investing in real estate attractive to investors. Refinancing loans for people who should never have had them in the first place has already proven unsuccessful. We have 2.5 million homes that need to be adsorbed before we return to a stable market. Buyers for your condos will come from areas with strong currencies relative to the dollar. Most of my condo buyers are from Canada, Eastern and Western Europe. I wish I could paint a rosier picture but I believe honesty is the best policy. You can review my past newsletters online.

 

Cliff