Home > Year End 2009 Newsletter.
 

They say you can prove anything with statistics. Here are some numbers that shocked me. There are 10,800  banks in the U.S.; of those, 18 are on the watch list. The 18 are the ones who hired lobbyist and partied with our political leaders who are now bailing out their friends.

 

The market is getting harder to predict, not that it was ever easy. Single family home sales are running 10% ahead of last year but prices are down 17% year-to-year. Waterfront and water view condos sales are down 23% from the same quarter last year. This despite some of the best asking prices since 2001...some complexes are off as much as 50% from the peak in October of 2005. We had 2,751 listings and only 226 sales for the quarter or 12+ listings for every buyer.

 

Interest rates are coming down and the mortgage professionals I speak to say they have made recent loans for 30 years at 4.875% and some expect rates to go as low as 4.5% in the next two months. They also say the 5 year adjustable will start coming due in Feb and most of these allowed the buyer to pay less than the full monthly amount and add the difference to the outstanding balance.

 

I still sell Gulf front and Intracoastal properties but at a much slower rate. Where I once sold 2-3 a month I am selling 3-4 per quarter. However, I sell bank foreclosure listings as fast as I can get them on the market. The vast majority of the buyers in both groups pay cash. Thanks to my readers and getting lucky on forecasting where the market was heading, I am the only Agent in our MLS who ranks in the top 100 in both sales and listings. In fact I am in the top 25 and I believe I am the only one who does not report my agents sales under my name. Thatís out of 6,000 agents.

 

The Roe Report is online at www.RoeReport.com along with its archives. You can check my forecasts and share a copy with your friends. A couple are not as accurate as I would like but not bad overall. The Report is mailed to just over 3,000 homeowners. The mailing list is for owners in condo complexes where at least one unit has sold for $500,000 and for 90+% of you, that condo is a 2nd or 3rd home. I have only sold one reader a property with a mortgage and that was because the funds could not be transferred from overseas quick enough to close before he left. It appears many of you are pulling back to see which way the economy is heading. Some of you are selling to reduce overhead or for personal reasons and some are buying to take advantage of prices planning for retirement. In every case I am here to help.

 

The middle price points which Iíll define as $200,000 to $500,000 are stagnant at best and most are financed with 20% down.

 

The group that never ceases to amaze me is the $150,000 and down bank foreclosure market. There seems to be no end to the buyers  willing to buy these properties. The only logic I can understand is that up to 12% of homeowners with mortgages have or may lose their homes and need a place to live. Even if they paid 20% down, and few did, there is no equity in the property. To stay they need to come up with cash to reduce the debt to equity ratio and in most cases the teaser rate is gone and the monthly payments will go up by several hundred dollars. A large number of these buyers have made their payments but canít refinance because the value of the home is less than is currently owed. They are victims who have cash flow but insufficient savings. 

 

The following represents an overview of waterfront and water view condo, town home and villa sales in Pinellas County during all 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 48 condos listed, representing a 15.2 month supply. Sales during 2008 were 28, which represent an increase of 10 from the same period last year.    

 

Clearwater and Sandkey. There are currently 532 condos listed, representing a 26.5 month supply. Sales during 2008 were 281, which represent an increase of 58 from the same period last year. 

 

Dunedin. There are currently 72 condos listed, representing a 22.7 month supply. Sales during of 2008 were 33 which represent a decline of one from the same period last year.

 

Gulfport. There are currently 36 condos listed, representing a 25.8 month supply. Sales during of 2008 were 19, which represent an decrease of one from the same period last year.

 

Indian Rocks Beach. There are currently 70 condos listed, representing a 30/5 month supply. Sales during 2008 were 20, which represents a decline of nine from the same period last year.

 

Indian Shores. There are currently 122 condos listed, representing a 20.2 month supply. Sales during 2008 were 75, which represent an increase of 23 from the same period last year.

 

Largo. There are currently 15 condos listed, representing a 22.1 month supply. Sales during 2008 were five, which represent a decline of eight from the same period last year.

 

Madeira Beach. There are currently 105 condos listed, representing a 31.6 month supply. Sales during 2008 were 41, which represent an decrease of ten from the same period last year.

 

North Redington. There are currently 35 condos listed, representing a 21 month supply. Sales during 2008 were 17, which represent an increase of six from the same period last year.

 

Palm Harbor. There are currently 5 condos listed, representing a 19.8 month supply. Sales during 2008 were zero, which represents a decline of five from the same period last year.          

 

Redington Beach. There are currently two condos listed, representing a 6 month supply. Sales during 2008 were five, which represents an increase of five from the same period last year. 

 

Redington Shores. There are currently 87 condos listed, representing a 35.4 month supply. Sales during 2008 were 34, which represent a decrease of 33 from the same period last year. 

 

Seminole. There are currently 20 condos listed, representing a 30 month supply. Sales during 2008 were 8, which represent a decrease of two from the same period last year. 

 

South Pasadena. There are currently 81 condos listed, representing a 15.9 month supply. Sales during 2008 were 81, which represent a decrease of 11 from the same period last year. 

 

St Pete & St Pete Beach. There are currently 495 condos listed, representing a 23.5 month supply. Sales during 2008 were 283, which represents and increase of 38 from the same period last year. 

 

Tarpon Springs. There are currently 51 condos listed, representing a 40.8 month supply. Sales during 2008 were 15 which represents a decline of four from the same period last year. 

 

Tierra Verde. There are currently 71 condos listed, representing a 31.6 month supply. Sales during 2008 were 27, which represent an increase of seven from the same period last year. 

 

Treasure Island. There are currently 167 condos listed, representing a 27.8 month supply. Sales during 2008 were 72, which represent an increase of seven from the same period last year. 

 

INVESTMENT OPPORTUNITY

 

As a member of NRBA.com, the National Association of REO Brokers, I have been invited to participate in bulk sales of Fannie Mae properties. Normally, to participate, the buyer needs to prove liquid assets of $2 to $10 million depending on the bank. The standard entry level is $10M. This is a test to see if brokers like myself can reduce the time and cost required to move foreclosed inventory. The normal time is 6-12 months depending on the state. The banks cost per property disposed is $53,000 on average. This means from the time they start the process till the property is sold and clears the books. If my group successfully sells these properties in 30ó45 days at 50% of market value there will be more opportunities. If we canít, they will pull the offer and go back to the current process.

 

Market value works as follows. In October of 2005 the medium price house sold for $245,000, today it would sell for $183,000 (-25%). That assumes the property is in good condition and a normal sale. Bank sales are different. First, they typically have some damage that has to be corrected to meet FHA financing requirements. Second, they are tainted because they are or will be bank owned. The banks hire companies like mine that have a BPO department (Brokers Price Opinion) that can recommend a listing price and what price they can expect to receive in 30 days. We estimate the repair cost and if the bank chooses, have a staff of sub-contractors who do the repairs. We also tell them if we recommend the repairs and how it will affect values and sale price. The bank hires two brokers independent of each other; if we are off by 10% they will hire an appraiser. If I was assigned the above mentioned house it would most likely have a suggested list price of $169,900 with an estimated selling price between $158,000 and $162,000; lets call it $160,000 as there are many factors that can cause me to go up or down a few thousand. I am within 2% on 98% of my listings. In this example the bank would give me 30-45 days to sell this property. In the Fannie Mae example at $80,000 as part of a bulk offering.

 

Sales are offered in bulk, thus the name. It might be by zip code(s) or size. At this stage, I donít know. You can buy in bulk if you have $1,000,000 but all sales are non-negotiable and itís all or none. I will not be asked to do the BPOís because I will be the listing agent. I expect the packages to be divided into groups of ďxĒ number of units or by price points. If  you have an interest, please let me know. My office will contact you as soon as we know the details.

 

Some readers have asked how they could participate in the foreclosure market. I am considering forming an investment group for those without the expertise to manage these sales; If you have an interest or want additional details call my cell at 727-644-7209. Or call 727-595-7295 and leave your name and address with Sandie.

 

Cliff