The last time I blogged here, the economic impact felt across Florida and now the entire planet can only be calculated in the trillions of dollars and the losses cannot be overstated. The real estate market in Tallahassee saw a significant drop (30% ) in the number of homes sold. Across every range, homes have been selling for prices not seen since the birth of the boom in 2004. Today, a new year begins with optimism that the real estate market, stock market, financial institutions and consumer confidence has hit bottom and there is no place to go but up from here. You can be sure that selling prices today are for less than the cost to actually reproduce the property. People who were smart enough to be greedy when others are fearful are sitting pretty in a great deal. It is not too late, but soon will be, for buyers can take tremendous advantage of the supply of homes and cost of money. Rates are as low as 4.87% according to one reliable banker in town and the others will not be far behind, I predict. A savvy buyer will incorporate an interest rate buydown into their purchase offer, get the seller to pay for the title insurance in addition to other closing costs up to 3% of the purchase price, and then secure a sweet 15 year fixed rate mortgage. The year 2009 is upon us, and 2024 will be here before you know it! A remarkable note in Tallahassee's condominium market is that it is faring the worst of all property types with three bedroom three bath units being hardest hit. These properties were selling for nearly $170,000 two years ago in 2006, and I have personally seen several listed around $109,000 and selling in the low 90's. The rental rate has plummeted from as high as $1,320 for 3/3's to $850 or less in some areas. There are hundreds of 3/3's on the market. Now is the time to buy and make your best deal on a house or investment property. After the inauguration, and come spring all bets are off. Buyers, I believe, having three years of pent up desire to take advantage of the undeniable rollback in prices, will be in the market for low prices, cheap money and equity the day they close. Meanwhile, many investors are positioning to short sale or outright give up their investment property and take the hit on selling their realty investment for less than what is owed or renting it for as much as possible to offset the before tax cash flow-- after taxes they might break even.

January 1, 2009

Get out of the car and push! The last four months our local market has been going through the same percentage decline in the number of homes sold across the country (30%) but the average sale price dip is a only around 1% which is a healthy figure considering the 10-20% and greater declines in sale prices of homes and properties in major metropolitan areas. Does this mean Tallahassee metro real estate values are destind to follow suit? Great thing is our local economy is supported by a healthy state worker population togetherwith a trio of universities and a tremendous service sector. The cost to build is finite and I do think that $140 per square foot is the minimum you will find for new contruction on your land. Houses are selling for $120-$170 per foot right now which means many of them are selling far below what it would cost to replace them. We are currently going through a massive reorganization. Brokers like myself are scaling down their operations, reevaluating staff and marketing, and finally getting their sellers to understand the market is the lowest since before 2000 and that they must be competitive in quality and pricing. This period reminds me of the late 80's where after the oil crisis and inflation, it took a few years for buyers to regain their confidence in the stability of the real estate and stock markets. The Savings and Loan problems of the '80's are similar to the current sub-prime meltdown we are hearing so much about. But interest rates are exceptionally low right now and buyers have many choices if they have decent credit scores and a few bucks to put into the purchase. We have been selling a number of investment properties and currently manage more than 100 units in and around Tallahassee. We expect this figure to double with more people opting to rent and wait out the market until after the Presidential election and perhaps an economic change in the months to come. No doubt inflation and the fear of a recession are weighing heavily on consumers' minds. In Florida, there are many obstacles to our prosperity but I believe there are solutions and given hard working people, they can be overcome. If you have been waiting to get out there--get out there and make the world go 'round!

April 5, 2008

The quarter point rate cut of December 11, 2007 tells the tale of what is to come in every real estate market. When things are bad, interest rates are lower; When things are good and looking better, interest rates will rise. A move downward by only a quarter point speaks volumes about what the Federal Reserve interprets as positive and sustainable growth. The resilence of other market sectors proves the point. Unemployment is low, wages are up, gold is falling as are energy prices relative to the last three months. Banks can still make attractive loans and all of the banking powers have cleaned house. They have either marked down assets, changed their practices or have closed their doors. Liquidity of banking money is solid and buyers should really start thinking of taking advantage of great real estate values and cashing in on what may be the cheapest borrowed money we will see for an indefinite period of time. The Tallahassee market is taking a whoopin' like the Seminoles of late, and like almost every city in America. But I have noticed a fairly large increase in the estate style high end homes sold since August as there were 90 homes that closed over $300,000 from October 1, 2007 through December 12, 2007. There were only 36 that sold over $300,000 in the month of September and the preceding eight months of 2007 averaged about 60 home sales a month over $300,000. This is very encouraging so late in the year and after the subprime meltdown. But as a whole the under $300,000 market is weathering a storm that has cleaved sales down by 30% or as much as 80% on the coast. I have also been tracking the supply index I use which takes into account all homes that hit the market, are withdrawn, canceled, pended, contingent or sold on every day of the year and the function produces a number of available homes in every price range on any given day. I have decided to use the northeast sector of Tallahassee as a data slice to measure the number of homes on the market. The "measurement" is made almost every day and I have been doing it since October 1, 2007 when there were 1027 homes on the market (NE only) The number has been steadily decreasing as would be seasonally expected. When homes sold in one day the daily measure would be 500 homes for sale. So the ideal index is in the 750 range more or less depending if you are the buyer or the seller. But activity will be vigorous at this level. Almost every client and customer I have spoken with is getting mentally poised and in the starting blocks for March '08. This could pose a real problem for you if you still want a good deal and low rate when everybody else wants one too. That is why we are now at the bottom, because the only direction from here is up...as in costs more to own, build or buy. That said, I am thinking the progressive buyer is hedging into the home of their dreams and locking in both a good rate and a great price. Everybody can win and move onto bigger and better things or scale down like they want to. Pent up desire to buy something valuable along with getting a bona-fide historical low rate should be enough to get buyers off their butts :) and into the market. It seems lately the stock market wins and loses bigtime based on variables outside the control of most people. At least with real estate you can touch it, feel it, improve it and build equity. So get out there and buy something and make the world go round while building your wealth! Have a great Christmas holiday and best wishes from my family to all of my absolutely loveable friends and family.

December 12, 2007

Looking at the closed sales of single family homes, condos and townhouses in Leon County, for September 30, 2006 to September 30, 2007, there were 3,816 sales. For the same period, September 30, 2005 to September 30, 2006, our MLS reported 5,400 sales. This is a decrease of 30%. Comparing the third quarter year to date ending September 30th, 2006 with 1420 closings to 2007's reported 991 closings, the sales activity has decreased by 30%. Investors Realty closed $15,516,721 for the period January 1-September 2006 and we closed $17,143,750 for the same period in 2007, an increase of 10% on sales and our property management division is currently managing about 150 units. For Investors, business is pretty good across the board. Statewide, the median price of a home is down about 6% to $231,900. Statewide, a 20 city MSA report from the Florida Association of Realtors reports a decrease in sales of 26% and year to date at 28% which is very consistent with our MLS reporting in Leon County. Some areas like Miami were hit harder,down 45%, Ocala down 47%, Orlando, Lakeland and Winterhaven down over 30%. The only cities that saw a marginal decrease were places like Pensacola, down 2% and Panama City, off by only 3% and Tallahassee reporting for a 9 county area, down 8%--Leon County proper is down 30%. One bright light in Naples-Marco Island, up 9%. As I review these figures I note that most of the areas that were pummeled in 2005 and 2006 are reporting sales not far from the year prior. This may indicate a leveling out and correction that usually takes a year or three. Other MSA's reporting 30% or greater reductions today, I predict, will be the next ones to take off and command higher prices down the road in 2008. Tallahassee home prices appreciated from last year by 3% from a median of $215,000 to $222,000 according to our MLS, the third best in Florida. Our area offers stability and value. The problem right now as I have personally seen in the market, there are way, way too many properties that are just not even close to what buyer's want to buy and are overpriced. Sellers who have not maintained their home or have it priced like it's good-to-go for another 20 years without having made major improvements, are distorting the market, but time will wear them down. They should not waste their time trying to convince a buyer that less is more. There are about 1000 homes and townhomes and condos that fit this description. At Investors, we are selling property and making commercial and investment transactions based on the quality of the realty, the income it generates or has the potential to generate and we are looking for real value in a not-so valuable real estate market. Our clients may see dozens of properties and our goal is to help them get into the very best option to suit their needs. Digging through the muck makes buyers uneasy, distorts appraisals, and is counterproductive to a burgeoning real estate market. Admittedly, the 2005 market got out of hand and it will take time to settle the mindset of so many interested people. Interest rate reductions will help, turning the corner on a new year should help, resolution on Iraq will certainly help, energy cost and the absence of a hurricane will make us all feel better. There are many forces at work that affect confidence in the market but at the end of the day hosuing must go on and there is a limit to how far down things will go based on what it costs to improve property. In my professional opinion, we are not out of the woods yet by a long six months because even though interest rates dropped by a half point, major banks and competition have not yeilded to the market and the cost of borrowing remains high (er) than many of us would prefer. Jumbo money (loans over $417K) is still being priced at 7%, ordinary 30 yr mortgages were up this week to 6.41%. The market cannot stand this and will hold onto their wallet until it is apparent that things are turning around either by mass refinancing or purchases made with even LOWER fixed rate money. Central banking will probably stall as long as possible to make another cut, and then another. Plan for at least six more months of instability. But don't bet on it sooner than later with insurance and property tax reform up in the air for Floridians. It is quite the perfect storm but can be weathered in an orderly fashion starting with the elimination of less than suitable properties from the marketplace and repricing. The current real estate inventory, having 3087 Homes, townhomes and condos for sale is about a 10 month supply if we look at last year same year to date closings. That's about 4 months too many listings on the market. Our market closes about 350 a month, so we are looking at 1400 extra properties of one kind or another which will either expire or be withdrawn in the coming months.

September 30, 2007

After the first quarter, sales in April closed a wide 36% gap by about 20% to a cummulative of 31% below last year. In April of 2006, 426 Homes, Condos and Townhomes closed but in 2007 only 331 closings were recorded in our MLS (a 23% decline). When we compare the first four months of 2006, with 1,621 closed sales to the first four months of 2007, with 1,121 closed sales, the data is convincing and points to a market that is off by 31% compared to last year and with sales more like those in 2003. Overall, the market is healthy with sellers starting to understand the reality of their prices and appraisers who are keeping the lid on lofty appraisals. Prices have gotten more realistic and buyers have a lot to choose from in suburbia. In-town homes and Exurban properties are fetching the highest prices, while those in the middle are clamoring for a demanding buyer who wants equity the day they close and closing costs if they can get them. The unemployment figures of last week, depressed wages and higher energy costs, togetherwith a bullish stock market may be setting the stage for an economic boost in the form of lower interest rates in the months to come, perhaps after the selling season in September or October when our economy will need it the most. Florida is currently working through a property tax and insurance crises of epic proportion and it may be later this year before owners of real property can expect some much anticipated relief.

May 7, 2007

Make no mistake about the current real estate market when we look at Houses, Townhome and Condo sales in all four quadrants of Tallahassee, the picture becomes crystal clear. In the first quarter of 2006 there were 1193 transaction recorded in our MLS system. Compared to the first quarter of 2007, where only 775 sales were reported, or a drop of about 36%. Investors Realty sold on average of $3.7 Million per quarter since 2004 and in the first quarter of 2007, our production was a mere 3.7% lower. The market today is similar to 2002 in that buyers have lots of inventory to choose from and they are making offers below asking price and including closing costs or other incentives. Investors are out in force to pick up bargains and it is a great time to be a buyer with some cash to put down. Meanwhile the sub-prime mortgage makers are shutting down 100% financing for many borderline buyers making credit more difficult to obtain. The Fed reportedly is waiting to see what happens to employment, production and the housing market before taking a step to lower rates. There is too much good news about fatter paychecks and low unemployment, not to mention energy costs and many other markets are increasing in price. If the market continues 36% below normal, there will no doubt be another correction in prices and a sloughing off of too many agents and sellers in the market. Investors will be leading their clients through the market minimizing their risk and maximizing their profits.

April 5, 2007

By now the MLS record should be accurate with reporting home, condo and townhome sales in the metro area (1-4) of Leon County. For the period January 1, 2005 to December 31, 2005, there were 5,460 sales reported. In the same period for 2006, 4,970 transactions were reported, which represents a decline of about 9%. This is really not too bad all things considered and it will be interesting to see the figures in March 2007, which is when many sellers and perhaps buyers are waiting for the new year shopping season to begin. The Fed has too much good news unfortunately for those wanting to lock into a low mortgage rate. Buyers are sitting on the sidelines I think many are waiting for new direction in world events, national and state politics (property taxes and insurance included), the housing market bottom and lower interest rates. Until then, sellers must be sure to price their properties not according not to what they need, but rather what their property is worth. Tallahassee real estate is a good value and promises to keep sellers and buyers working hard in the market.

January 8, 2007

There is a big push in the professional real estate community these days, intended to educate the buying public that our local real estate market is somehow immune to regional and national economics. In another time, it might have been true that our state workers, university professionals and service sectors provided a cushion to regional impacts. There are many forces affecting the market right now. Out-of-control insurance rates and property taxes are having a profound impact on sellers and buyers. The evening news reports about the softening housing market, Iraq and even next years hurricane season are top of mind for nearly everyone. I am posting this blog before the final tick of the year knowing that there will be more sales dropped into our database, especially by builders who often keep the records of the sale out of the database until the end of the year and there will be dozens of closings in the next 9 days. But not enough to change the market picture. It is important to note that in our area, of the 1,800 brokers working here, 67% of them have never seen the light of day in a competitive market and their over-priced listings are expiring at a record pace. Exhuberance meets brick wall. Welcome to a normal market! The homes priced more than $225,000 took the biggest hit with scores of them selling for $5-25,000 under the asking price, or about 5% lower across the board. For the period October 1, 2005 to December 20, 2005, there were 1029 sales that closed in the Capital Area (Which is four areas, NE,SE,SW, and NW Leon County). For the same period in 2006, there were only 704, which is a decrease of 32%! The first six months of the year this market was smoking. But when I reviewed the year-to-date numbers as of December 20, 2006 from the MLS, they showed a decline of 36%. I would say the market is off by about a third. My office closed $15 Million in 2006, same as 2005 and 2004. I just ran the LAST QUARTER 2006 figures from the Tallahassee Board MLS system: The sales in every sector went south like a duck in winter in the last quarter of 2006. Sales are down 76% compared to the same time last year, October 1, 2006 to December 20, 2006. Northeast Tallahassee: Down 72%, Northwest Down 76%, Southeast, down 78%, and the southwest down 84%. Jefferson, Wakulla, Franklin and Gadsden County sales in the last quarter were pitiful, down 75%--and down 35% for the year. It's been a bloodletting for hundreds of brokers and sellers. Any way the data gets sliced, the affects of a sluggish market in larger Florida metro areas and the U.S. are sending a ripple to the Capital region, make no mistake. Buyers want change. Payback is hell. People just don't feel as rich as they did in 2004 and 2005 even though inflation appears to be in check. The situation is more psychological than reality. Last year homes sold in minutes--this year sellers are taking the money and running and often paying all or some of the closing costs. But they are selling, eventually. Bounses, plasma TV's, vacation packages and other incentives are flying into the mix, making it a good time to be a buyer now. Investors are either divesting themselves of troublesome properties and getting back into the stock market, or taking profits now that the real estate market has stalled and is making a correction. Others are buying when the after tax benefit is right for them or trading portfolios of properties in 1031 exchanges. Over the last three months of this year it has begun to settle into seller's and broker's minds and prices are being slashed to "make the numbers work". These are the only types of transactions we have been doing all year--transactions that make sense. I expect everybody is waiting until March 2007 to see what spring brings. So it will be another few months of declining prices and negotiating it out between buyers and sellers for sure. Nobody knows if the economic situation and global confidence, or lack of, will produce lower interest rates or other favorable terms to buy and sell in the short run. Nothing beats investing in real estate when you buy it right. Let's all seriously pray for peace and that things do not have to get worse to be better. Merry Christmas to everyone. Have a safe and happy New Year! Steve Wright President Broker

December 20, 2006

In 2005, the Florida Capital region enjoyed 3,668 home sales with market times at 50 days. This area was one of the best values just behind Pensacola, where a Tallahassee home averaged $225,851. There have been 3,478 homes closed in the Tallahassee Board of Realtors MLS system, down only slightly (6%) from the same period ending on Sep 30, 2005. The average sale time has also been extended slightly to 63 days. The average final selling price for a home went UP, to $239,809, a handsome 6% increase ($14,000) over 2005! So Tallahassee brokers, buyers and sellers know their market and get on average 97% of the asking price. In the condo/townhome market, where in 2005 1440 townhomes/condos sold here, the average sales price was $134,266. In 2006, for the same period ending September 30, 2006, we saw fewer sales, 1300, (9% less), but the average sales price did go up to $149,875 although they did stay on the market a little longer, 54 days. Overall it's all good in the Capital Region!

October 2, 2006

For the period January 1 to September 30, 2005, the Panama City area closed 2100 homes with an average asking price of $287,891 and final closing prices averaging $277,471. The average market time back then was 66 days and the median price of a home in Panama City in 2005 for the same period of 2006 was $220,000. Currently there are 2,390 homes for sale in the PC area. The asking price average a WHOPPING $492,941 and properties are staying on the market for more than 120 days, twice as long as in 2005. For the same period January 1 to September 30, 2006, brokers reported selling only 1,510 homes or a drop of 28%. Homes today average asking $286,517, on par with 2005, and getting $273,342 in about 91 days. This represents only a slight decline in the average getting price compared to 2005 while the time it takes to sell has increased by 90 more days than the one month it used to take to sell in 2005. The housing market is fairly stable in what sellers and buyers perceive as value and it shows in the pace and sales prices of this market. It is possible the bottom has been reached here, in that for two consecutive periods, prices have been fairly predictable. In 2005, the Panama City condo market saw 1,555 condo units sell with an average list price of $376,869 and final sales averaging $366,896. The average sale time then was 96 days according to the Panama City Board of Realtors MLS. In 2006, the average list price of 3,032 actively listed condos is $438,190. On sales of condos in 2006, there were only 1259 units sold for the period January 1 to September 30, 2006, or a decline compared to 2005 of 19%. The average list price was also down signficantly to $315,108 and selling prices bottoming on average at $303,111. Sellers got about 17% less than the year before and the average market time was 329 days. There are far too many Panama City Condos on the market right now. Currently, sellers want $438,190 on average and can expect at least another six months of waiting before these figures get in line with reality. For example, the median asking price in 2006 is $390,000, but the median final sales prices in 2006 was only $290,000--Like Destin/Ft. Walton, there is $100 tug of war for equity between buyers and sellers, so there will be more bargains to come and the time to buy is getting better by the day!

October 2, 2006

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