A Postive Article in the Sarasota Herald Tribune?

Have housing prices hit bottom?
Florida's best known economist says market in region has stabilized
By MICHAEL POLLICK
michael.pollick@heraldtribune.com


Florida's best known economist says the Sarasota-Manatee residential property market bottomed out in September-October and has now stabilized in both price and volume.Hank Fishkind predicts flat prices for both counties through 2010, as the region chews through excess inventories of new houses and condominiums.His findings jibe with what some Southwest Florida real estate observers have been saying and with what statistics from the Florida Association of Realtors have shown during the final months of 2007.In November, for example, Sarasota-Bradenton Realtors sold twice as many homes as their Miami counterparts. The median price in November -- the most recent sales reports available -- was $267,700, down 4 percent from a year earlier, but an improvement from $244,300 in September and $263,900 in October.Fishkind made his own predictions for this region as part of a 33-county economic report prepared on behalf of Attorney's Title Insurance Fund Inc., a leading title insurance underwriter.His report painted Miami-Dade and Lee County as the state's most problematic areas, because of excessive condo building in South Florida and a proportionately higher level of home building during the boom in Fort Myers.Orlando has the strongest market in Florida, followed by the Tampa Bay area and Interstate 4 corridor, Fishkind said."But both Manatee County and Sarasota County are still in considerably better shape than many other areas," he said.Fishkind said that Charlotte County continues to shake off some of the vestiges of 2004's Hurricane Charley, but that the market is in far better shape than its neighbors to the south, where speculation on investment properties was rampant during the housing run-up."We are starting to see more normal activity," Fishkind said. "I am much more concerned about Lee County than I am about Punta Gorda."Fishkind projects moderate rates of growth for population and employment in Manatee and Sarasota counties between now and 2010."In regard to housing growth and starts, speculative investing in the real estate market occurred in the area between 2003 and 2006 and resulted in an excessive amount of new homes in both markets," Fishkind said in his report. "This is expected to temporarily slow down the area's housing markets in the next few years, and result in household growth exceeding housing starts in both counties in the next several years. A recovery in housing starts for both counties, however, is expected to begin in 2008," he wrote.The Sarasota market appeared to bottom out in the spring at 470 to 480 closings per month. But then a national liquidity crisis sprang to life in August, prompted by defaults on subprime mortgages issued during the feverish markets of 2003-05 and continuing into 2006.For a month or so, mortgage makers froze. As a result, sales fell to 310 in September and stayed flat at 319 in October."It seems to me that is the new bottom," Fishkind said, referring to sales in more recent months. "So I'm not seeing any major price declines, and I think volume has stabilized."Fishkind looked at average prices for all closed residential sales in both counties, taking into account for-sale-by-owner deals as well as builder sales.In Sarasota, the average price for existing homes in Sarasota during 2007 was $330,042, a 12 percent drop from the peak of $374,107 in 2006, Fishkind reported.In Manatee County, the decline in average prices has been more severe, coming down 24 percent to $280,622 in 2007 from a peak $370,200 in 2006.The economist's forecast is predicated on the assumption that the national economy, while definitely in slow motion, will narrowly avert a full-blown recession."We have had a significant slowing to basically zero growth in the fourth quarter," he said. "The U.S. economy isn't going to start improving until the second half of '08 and into 2009."That national assumption is critically important because Florida depends on the Midwest and Northeast United States for a supply of residential real estate buyers, Fishkind acknowledged.When they suffer, Southwest Florida suffers, too, on a lagging basis, he said."Almost everybody who moves to Florida in 2008 made a decision to move in 2007," Fishkind said. Because of that national slowdown, "we will see Florida's economy slowing in 2008 and not improving until 2009."Other economists have a more pessimistic view, leading to predictions for a more drawn-out recovery for Florida. But Fishkind maintains that the Sunshine State's historical drivers will lift it above other states in the Southeast."Florida tends to generate more jobs and population growth than any other state in the Southeastern United States, so turnaround for some parts of Florida ... will take place ahead of many other states in the Southeast," Fishkind said in a statement."Other parts of Florida, namely Miami-Dade County and Fort Myers, will not recover until later."

Foriegn Buyers Ice the Cake this Holiday Season

In an era when the media seems to relish in continuing to deplete consumer confidence, it is refreshing to see some bright spots starting to surface in the Sarasota real estate market. Michael Saunders and Company has continually charted and shown the resilience of the Sarasota market over against the rest of the state. One of the largest factors contributing to the trend of stabilization in our local market is foreign buyers. My personal experiences over the last months have led me to encounter two sets of buyers from Canada. Both groups of wonderful people, these Canadians share one key aspect in common: they have more confidence in our market and our economy than we do!

As the media and other pundits continue to decry the woes of the dollar and the housing market it is encouraging to me to see buyers from several foreign destinations begin to take a stake in our market. Foreign nationals make for some of the most motivated buyers in the market right now. They seem to believe in the market more than most local residents do and they want to take advantage of the favorable exchange rates and pricing that might not always be there. It would serve Sarasotans well as a community not to forget our seasonal visitors from the north and from foreign lands- they just might be the catalyst that starts what will be an interesting and long road to full market recovery.

Venice Amongst Best Places to Retire

Here is a great article from the Sarasota Herald (for a change...)

So what makes Venice a great place for retirees?
Locals agree with magazine that the city is a great place to retire
By PATRICK WHITTLE

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VENICE -- Lucille Steen was not surprised when she saw an article in a national magazine declaring Venice a great place to retire.After all, the city did not attain a median age of 68.8 by accident."No, not surprised at all," said Steen, who moved here from Connecticut. "When we decided eight years ago to retire, we looked up and down the west coast. We chose here."Still, U.S. News & World Report used its first-ever "Best Places to Retire" issue to tell the world something Venetians have known for years.The magazine thought highly enough of Venice to include the city on a top 10 list that also includes San Francisco, Calif., and Prescott, Ariz., but no other Florida cities.Managing editor Tim Smart said the magazine based its list of cities, which were not ranked, on a range of quality-of-life issues including "weather, crime, proximity to health care and relative cost of living." Award-winning beaches and golf did not hurt, said the magazine's Web site.That is all well and good, but locals such as Steen point to a number of slightly more folksy amenities that make them glad they chose Venice.Secret beachesTourist brochures scream about the shark teeth at Venice Beach, but locals point to the more obscure South Venice Beach, which is only accessible by ferry, as a favorite. Secluded Caspersen Beach, the longest strip of sand in the county, is another favorite."That's one of the reasons we bought in this area," said Steen of South Venice Beach.Cockpit CafeFrom the outside, the little restaurant by the Venice Airport runways does not look like much. But inside, Chef Jarda Hornacek serves up homemade soups and sandwiches.The Cockpit is a favorite place for retirees, and everyone else, to watch planes take off and land. Locals also swear by the Cuban sandwich, which Herald-Tribune readers voted the best in the county.Dolphins at the jetties at sunsetWhen the water scooters and Boston Whalers finally putter out for the night, the Gulf of Mexico's marine mammals take the stage at the North and South Jetty. Crowds of more than 50 people have been known to gather to catch the sunset and scan the surf for bottlenose dolphins."The accessibility of the beaches and the accessibility of the nature ... are reasons we moved here," said Steen.The joy of navigating endless road constructionWhile not exactly a labor of love, driving around the seemingly unending road construction north of the island is a favorite gripe of Venice retirees, and it is an instant conversation starter. Tamiami Trail was also the site of a long construction project in 2003 and 2004."They kill me with the road. How can anybody get in and out?" said Steve Fotos, former owner of Ntino's Restaurant in Venice, in 2004.U.S. News & World Report released the retirement issue on Sept. 24 and launched a Web site at www.usnews.com/usnews/biztech/best-places-to-retire.U.S. News sent reporters all over the country after narrowing down a list of 2,000 candidates, said Smart, the magazine editor.Venice stood out, he said."The small-town feel of Venice -- the writer came back with that," Smart said. "The overwhelming atmosphere is that of a traditional Old Florida feel."Steen could have told him that years ago."We really looked on the west coast, up and down. We decided on Venice," she said.

Great Article- 10 Reasons to Buy

I found this article online and thought it was a good one. It is by Paul Pastore.

10 Great Reasons to Buy:

Selection, selection, selection. There are about 57,000 resale homes on the market in Maricopa county(Phoenix). Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago the resale inventory dropped below 5,000 units. A buyer was forced to make compromises if they were going to locate the home of their dreams. There is a great selection of attached homes, condos, and townhouses. You can find large lots, small lots, and a lot that will accommodate your boat or RV. There are lots of options in this market.

No Bidding Wars. In 2005 we had one client that made an offer on ten homes. They lost the first nine to the 'feeding frenzy' that existed. Other buyers bid the properties up substantially from the original listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. There is no competitive bidding in this buyer's market.

You can make an offer. A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ration is about 96%. A seller will not be insulted if you 'make them an offer they can't refuse'.

Patience is tolerated. In the hot seller's market that existed everything was rushed. Find a house before other buyers did. Hurry up and make the offer. Today a buyer can take their time. Look at several homes and think about your decision for a few hours.

Due diligence is welcomed. In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order gain an advantage with multiple offers.

There are plenty of specs. In the not too distant past buyer had to 'play games' if they wanted a new home. There were lotteries and waiting lists in order to obtain new construction. Some buyers slept in their cars in order to get to the head of the lines. R.L. Brown estimates that builders have thousands of specs ready for immediate occupancy.

Repair requests are welcomed. After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold 'as is'. Many times, there were back-up buyers waiting for a primary buyer to upset the seller whose home was increasing in value almost daily.

Few, if any investors. It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyer caused the market to inflate and affordability to decline. Mortgage fraud became commonplace. It's a great time to buy without having to compete with hundreds of prospective landlords.

Location, location, location. Today's buyers can find homes closer to work. In the past buyers flocked to Maricopa and Queen Creek in order to find affordable homes. In this market, reasonably priced homes are within biking or walking distance to schools, rapid transit lines, and relatives.

Real Financing is available. The 'wink, wink' zero down, no doc, adjustable, sub-prime loans are gone. Fixed rates are back. FHA financing, first time homeowner bond programs, special loans for teachers, and police officers are back in business. It's a great time to buy real estate!

Michael Saunders on the Real Estate Market

Michael Saunders has been an innovater in the local real estate market for 30 years. No one knows the ins and outs of the market better than she does. I thought that I would post a link to a recent Sarasota Herald Tribune interview featuring her. I would recommend taking an opporunity to listen to her perspective. The interview is in pocast form and can be listened to using this link:

http://www.heraldtribune.com/article/20070912/PODCAST0701/70911027/1201/REALESTATE

Market Update

As I run into my colleagues, friends and family, I am constantly being asked the same question: “Drew, what’s the latest on the real estate market?” Hopefully I can provide some insight into the latest trends in the market for you in the limited space I have for this column. I think that the most prominent contour of our market right now is how much the face of residential lending has changed in a very short period of time. We are seeing ripple effects of tightened lending standards at all price points of the residential market. While I have been seeing 30 year fixed rate loans as low as 6.125%, jumbo loans (loans over $417,000) have become very unattractive to lenders and are subject to much higher interest rates. While this is painful trend for sellers, I see this tightening of credit as something that will be good for the long term health of our market.

Why This is a Good Thing: To be perfectly candid, a lot folks I have come across in the last few months are having problems with affording properties that they should never have bought in the first place. Lenders are really scrutinizing would-be borrowers to make sure that they can repay mortgages. For well qualified borrowers financing is still easy to come by while those who are over-leveraged will not be able obtain mortgages- especially on investment property. This new level of scrutiny by lenders will ultimately be a large part of the solution to our volatile real estate market. What we need is confidence by consumers. This will eventually be a natural byproduct of lessened speculation and unqualified purchasers. Deals closed with the help of conventional financing will become more and more solid as qualified buyers (mostly end-users) will begin to absorb well priced inventory and bring more stability to our market overall. I see our residential market as on the road to recovery. There are still plenty of people out there who need to buy and sell, which is why when people ask me how my practice is going, I can honestly respond, “Better than ever!”

On Auctions...

Auctions have come to the forefront of the real estate market as a viable means of liquidating properties that just will not sell under the traditional brokerage model. With surging inventories and diminished sale prices, many are under the perception that the best way to induce a quick sale is sign with one of the companies who is offering auction services. Based on my study of several local auction companies (whose function in the market I highly respect) I am going to explain how the process works. I believe that the process has a value to it, but is not appropriate for all the sellers who have chosen this path as of late. While many of the local brokerages are sponsoring this new way of moving homes, I am not convinced that an auction has a true benefit to sellers at all. Michael Saunders and Company continues to operate under the philosophy that a well-priced and professionally marketed property will always sell- and often at a higher than auction price.

The auction process often starts with the seller being to referred to an auction company by his or her listing agent. For this referral, the agent will be paid a commission in conjunction with the successful sale at auction. An up-front marketing fee is paid to the auction company- this is often over $10,000. Before the auction begins the auction company and the listing broker establish an aggressive marketing plan to create a buzz about the property to be sold. During this time, several prospects are driven to the property and in some instances the listing agent is able to procure a sale without going to auction, but the seller still has paid up front costs out of pocket. If the property does make it to auction, the best way to sell the property is absolute (a term which apparently has many meanings). An absolute auction means that the property will go at any price, although several stipulations can apply to this such as an approval from the lender if the property is a mortgage short sale. If the property does reach a successful sale at auction almost all the auction companies charge a 10% buyer’s premium on top of the sale price. So buyers are always mindful of this and offering 10% less than what they are willing to pay. Those percentage points start to get awfully big very quickly. Out of the 10% premium, the listing broker gets 3% for the referral and the auction company keeps the rest (If anyone reading this thinks the process work differently, please enlighten me at drewrussell@michaelsaunders.com)

So to recap, an auction seems like the worst way to sell a home unless you are absolutely in immediate distress. In addition to the normal closing costs such as prorated taxes, doc stamps, title fees etc., the seller forks out a large sum of money up front. At Michael Saunders and Company, most of our agreements are structured so that we are paid on a contingent fee basis, meaning we are paid to perform. After this money is gone from the seller’s pocket, bidders come to see how low they get the price, ever mindful of the painful buyer’s premium, closing costs, loan origination fees etc. etc. The end result is much more money being spent to procure the property transfer at a huge disadvantage to both parties involved. The traditional brokerage model works and compensates real estate professionals fairly for their work. As a seller, consider speaking with your agent seriously about a price reduction before you go to auction. Do you believe enough in the marketability of your property to stroke a check to the auctioneer? If not, get real and give your agent a price reduction. Undercut the market and create a buzz and frenzy. My bet is that in a private sale, assisted by a qualified broker, both parties will come out ahead while maintaining a bit more peace of mind.

New Market Stats- Local Market and Palmer Ranch

There is slightly better news in the latest statisitcs that I have pulled from the Sarasota MLS. In terms of single family homes in the Sarasota market, total sales have increased slightly as did the inventory. Based on February 2007, which is the last month of data availible, we have a 32 month inventory of homes available. The most promising trend is the increase in homes put under contract which has climbed steadily over the past 3 months which will very likely reduce some of our lingering inventory. In December 151 homes were put under contract. This number rose to 224 in January and climbed to 266 in February. These numbers seem to be indicative of the larger trend that I am seeing which shows stabilizing market (at least prices are falling more slowly now.)

In Palmer Ranch, single family home sales accomplished an amazing feat- 31 homes were put under contract- a number higher than anytime in the past 14 months. (I was able to account for two of these sales). Inventory remains at an all time high of 35 months. Sales are picking up due to ever falling prices of properties- most homes in Palmer Ranch are now selling in the mid to high $100's per square foot. In February, the average time on the market for a house that sold was 124 days, and most homes sold within 93% of the listing price. The average house sold for $397,000 while the average listing was priced at$573,000.

The strength of the condominium market was actually fairly similar- less condos were put under contract (14), but this was a huge increase from only 4 in the prior month. There is a 31 month inventory of condominiums for sale in the area, and the average sold condo sells in 90 days at 93% of the list price. The average sold condo in Palmer Ranch had a final price of $251,000.

For information and statistics on your neighborhood, be sure to email me at drewrussell@michaelsaunders.com.

Snow and Taxes

I managed to escape our Sarasota winter climate for one much further West- and one much colder- for a week on a snowboarding vacation. Amidst the dryness and abundant snow, I was amazed to find similarities in real estate trends between Sarasota, Florida and Vail, Colorado. I am amazed at the prices in Vail Valley. It is not the fact that a massive snow chalet can set you back about $12MM, but the fact that what the buildings are made out of is so much cheaper than Florida building materials. The land is the key as in all real estate deals and location is king. From what I learned in Vail, the luxury market is surging much like it is in Sarasota. Record prices are being set everywhere, with extreme buying confidence being found in the elite.

I am also receiving lots of calls and questions in regards to recent series of newspaper articles regarding a change in tax law in the state of Florida. For those who have not heard, a proposition is on the table that would eliminate property taxes for homesteaded property and raise consumer sales to 8.5%. The tax rate on vacation homes and commercial property would also receive a break to the tune of around 18%. There are many ramifications of this potential legislation, but as a homeowner and Realtor, I can see a large upside. Stay tuned to government news sources as this very exciting and controversial discussion continues.

On My Soap Box Again

This is a familiar stumping topic for me, but I am again amazed at the confidence that I am seeing in the upper end of our market. Just last week, our company participated in two record sales: A closing for over $7 MM in Harbor Acres and a closing for over $6MM in Cherokee Park. We are continually seeing a pattern of the wealthy making bold investments in this market. Now that the stock market is hot everyone is talking about their investments in similar fashion to how everyone was talking about their real estate holdings a year and a half ago. Be different and be smart. Now is one of the best times to buy and hold in the Sarasota market.

Some More Market Data For Number Crunchers

We are seeing an up-tick in sales activity both locally and nationally. Take it with a grain of salt though- inventory levels are still high, and there are plenty of investors out there with ARM’s or negative amortization loans that will be adjusting payments soon. I expect to continue seeing higher than normal amounts of property coming on the market though prices seem to have somewhat stabilized. On a national level, the number of homes that were pended slipped a bit statistically- about .5%. This number is actually encouraging considering the departure from the double digit decreases around this time last year (Source NAR). In Florida, a total of 11,912 homes sold in November of 2006 (the most recent month of completed statistics) while 17,088 homes sold in November of 2005. This is a decrease in volume of roughly 30%, and at the same time median sales prices slipped 3% to $242,500. David Lareah, chief economist for NAR predicts that this period of price adjustment is nearing its conclusion and that all markets will feel a lift in consumer confidence and sales in the first quarter of 2007 (Source FAR). The Sarasota market’s individual numbers were up for the first time in a while, with the November sales mark of 294 homes besting October’s numbers by 9.6%. In these sales the median was up about 3% to $315,000 (Source SAR). We are still in a tough market, but indicators show that more sales are occurring and the consumer confidence is rising. Most forecasters look for this to be the 3rd best year on the books, with activity returning to 2001-2003 or comparable levels.

A Glint of Hope in Recent Stats

For the most recent MLS sales data, most numbers continued to show a negative trend for real estate values and market strength overall. These numbers are comparing December of 2005 with December of 2006. The average sales price for a residential dwelling was down 10% with $567,412 being the average for 2005 and $510,848 being the average for 2006. Active listings went up 29%, number of sales was down 20%, expired listings were up 279%, but the promising figure for me is that the total number of listings taken was down 45% for the residential market. So we must be getting to the end of some of this inventory- it is not being created as quickly as developers are losing confidence and inventories are starting to get absorbed. The condominium market was down in listings by 40% as well showing that with less coming onto the market there may be an end in sight to this lopsided market.

What's On Tap for 2007- Sarasota Markets

To my readers I must apologize for the gap between my last posting and now- I have been working on updating www.drewrussell.com to serve my clients better and took a break from posting blogs. For my first blog of the new year, I thought I would answer the question that virtually all of my clients are asking me- and that is "where do you see the market going in 2007?"

My prediction is that 2007 will feel vaguely like 2006 except without the bleak Winter-Spring the real estate industry saw last year. The first three months of last year were so quiet that most everyone was scared of what was in store. We are on the other side of that now, and from what I can see prices are beginning to stabilize and buyers are making moves on the properties that they had been waiting for. Couple that with low rates- my last closings featured rates at 5.875%- and I see absorption increasing in the coming months. It will take us a good long while to get out of this funk, but better times are ahead in a more equalized market. 2006 was still a great year to do business. My personal sales volume was higher than 2005, and I was able to find many clients great deals on the buying side. The listing side was a bit more challenging, but many sellers who were savvy took my advice on pricing and still made large profits.

On a bit more sour note, I did serve some investors who got some bad advice from other sources and ended up losing a lot of money. That was tough to be a part of, but as amateur investors are getting flushed out of this market, so are those are wanting to sell and move back up north. Another factor that is going to affect this market greatly is the segment of sellers who are looking to make in town moves. As soon as their houses sell, they will be out hunting for new homes as well. As this market starts to slowly gain momentum, I think everyone will be surprised at the speed of the rebound- especially in unique residential sections. This does not apply as much to cookie cutter developments and condos overwrought with irrational investors.

For those of you who like cold hard numbers with your highly speculative real estate forecasts, consider some of these. In late December the Main Street Office of my company had a $20 million dollar day- that's right- $20 million in about 6 contacts- all high end sales. For the year of 2006- the worst year in several- 397 properties closed escrow for over $2 million. This shows me that there is confidence at the top of the market- and regardless of how you feel about trickle down economics on a macro scale, I do think we are going to see this confidence trickle down and help revive a weak market.

That's the update for now- be sure to email your comments to drewrussell@michaelsaunders.com.

Finally A Decent Piece of Journalism

Most of you who subscribe to our local newspaper have probably had it with negative real estate reporting in the news. I know I have- so Kenneth Hearney's article in last Sunday's paper was a welcome moderate voice, even if we did have to rely on the AP for some good reporting. The article concludes by stating that a lot of the recent news media rhetoric has been superfluous and severe. Hearney's conclusion is that this faulty rhetoric, while terribly effective at selling papers, really cripples the market in the long term. I share this sentiment with him.

People always ask me where I see the market going... so here goes.

The U.S. economy is in an interesting position- the Dow is hitting record highs, unemployment is low, oil prices are down, and the long term interest rates have slowly been falling each week. Also the luxury housing market is very strong. All of these externals lead me to believe that serious buyers and sellers don't need to sweat the larger forces of the economy. Although we are in a correcting market I think we are seeing greedy and frivolous investors get what was coming to them. These are the true horror stories- otherwise I think things are getting back to normal. Normal means that the drastic 30-40% run up in prices is easing back to the normal patterns of what prices would have increased to incrementally without the boom. The day to day vicissitudes of being a real estate practicioner model to me more of a correction than a bust.

More Growth for Lakewood Ranch

Despite the slowing real estate market Lake wood Ranch is planning for more massive future growth. I was astonished to learn that SMR is planning to add over 8,000 more homes north of State Route 70 in South Bradenton. In an effort to make Lakewood Ranch a more autonomous community the focus will be on growth not only in residential units, but also in commercial and industrial sectors as well. Although building is not supposed to start until next year, and build out wont be until 2019, this news is a bit surprising since much of Lakewood Ranch is for sale right now. This shows us that big developers are still buying into the long term viability of the Sarasota Real Estate Market. One thing that you can bet on about this new development is that much of it will be "affordable" in comparison to other Lakewood Ranch areas. For those who enjoy the Lakewood Ranch lifestyle, now is a great time to buy. A source at Neal Communities told me about a new community in the Country Club that is starting in the $380's- a very modest price for the luxury that lies behind the gates.