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Market Conditions Report
The State of the Pinellas County Real Estate Market
By Elliot Wagner, Prudential Gower Realty, Jan. 18, 2008
The results are in for 2007 total residential listings (single family & condo's) for Pinellas County including the cities of St. Petersburg and Clearwater. Listing volume increased 22.4% and sales volume declined 31.5%. Click here for: Pinellas County Statistics Report (Adobe Acrobat / PDF)
Listings Sales 2006 174,801 2006 14,652 2007 213,996 2007 10,034 % Change 22.4% % Change -31.5%
Summary for Month of December 2007
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Active
Average Days On Market 135 |
Sold
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The media has been relentlessly reporting a tailspin in real estate. Expect 2008 real estate prices to continue the decline. Historically high inventories and other market forces will keep us in this downward cycle. This direction started in 2006 and will likely take 5-7 years to work itself out.
The other market forces specific to our area are high level of foreclosures, decline in tourism, depressed employment levels, slower second home purchases, the potential for recession, latent and embryonic inventories. Many sellers have let their listings expire and are waiting for the market to improve before they sell. That latent inventory will come back to the market. Foreclosures are at record levels. Fears about hurricanes, high taxes and high insurance premiums are also weighing on our real estate market. Retirees are delaying plans to move to Florida or choosing other locations for retirement.
Good news for buyers are lower property prices, lower interest rates and for foreign investors the weak US dollar.
My recommendations for sellers, if you must sell, don’t wait out this market. If you can wait years you may see higher prices but not substantially higher. Reluctance to lose money now (real or perceived loss) may result in greater losses in the future. Don’t delay the inevitable.
For investors, if you’re losing money each month, cut your losses sooner than later. If you're among the fortunate and have positive cash flow, it might make sense to wait. That wait will be years. We will not know the bottom until after prices have stabilized for a year.
77% of all home sales involve a new mortgage. To obtain these mortgages lenders require appraisals. Appraisers, must use the lowest priced comparables and they can't justify any lift in prices over recent comparable sales. What this means to sellers is that even if we find a buyer willing to pay an above market price, unless the buyer is paying cash, they will not be able to obtain a mortgage. This will be true until inventory shrinks and prices trend upward. Don’t expect to see any upward movement.
Slow Markets
Houses sell quickly in a slow market for the same reasons they do in a hot market.
In December, when the average time on the market for sold properties was 110 days, 187 homes or 26 percent of the 714 homes that sold had contracts in 30 days or less. They went from listing to selling in an average of twelve days. They were typically 1,465 sq. ft., three-bedroom, two-bath homes or condominiums which sold at an average of $250,742. That is about $25,000 under the overall average sales price.
Houses that sell fast in a slow market have three common denominators:
• They’re priced better than comparable listings.
• They show like model homes.
• They have a full force of marketing, including enticing Internet photos, behind them.
Prospect For Recovery
Another housing downturn is coming that will compound our housing recession. Four 40 years, 78 million baby boomers have driven up housing demand. That trend will reverse itself.
In the next two decades, millions of aging baby boomers will put their homes on the market. It has already begun in some markets. It will be difficult for these areas to recover from the real estate recession. In many states there are already more sellers than buyers. There will be three sellers for each buyer. First, this movement will hit Northeast and Midwest making it hard for housing markets to recover.
Last hit should be warm-weather states, such as Florida, where retirees usually sell late in life. That’s better news for Florida homeowners, where prices and sales are reeling from the collapse of the real estate bubble.
Census figures show that Florida continues to grow rather than shrink, but the number of incoming residents from other states dropped by about 86 percent in just two years thanks to higher home prices, property taxes and insurance costs. And the boomers retiring to Florida have less to spend.
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204 BEACH DR NE
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