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Pinellas County Real Estate - Did We Hit Bottom Yet??

by Doug Campbell at Sun Bay Associates with Keller Wi

What a conundrum (also the name of a good wine) the real estate market in Pinellas County is. This includes Clearwater, Dunedin, Oldsmar, Tarpon Springs and the various beaches among other communities.  Sales are up. Even prices are up!! The number of listings is down. And distressed property was less than 20% of the active inventory in our area of Tampa Bay for the month of May. Better yet, bank owned (foreclosed) property was only 5% of active listings.

The median prices for non-distressed (short sale and bank-owned) properties in the Tampa Bay real estate market were 16% higher than the distressed property prices. The best news is that total sales for this year are up almost 12% compared to last year.

So why is the media still talking about the bad Tampa Bay real estate market? The short answer is, "I don't know." Today when a house in good condition comes on the market and the price is close to market value, it seems these properties are flying off the shelves. Of course, there are still those sellers who "need" to get XX dollars from the sale of their house, and their Realtor does not do a very good job of presenting the true market value, thus the house goes on the market too far above market value, sits there for months with no activity, and ends up sitting on the market after turning into a stale listing that no one even wants to see.

The best way to maximize your profits when selling a house is to price it at the market value.  In the current market for Pinellas County, when a house is priced right, buyers who  have been following the market and know the inventory is low, look at it immediately. The buyers then determine the market value by showing up to look at the house, and make offers.  The seller has the opportunity then to either sell the house at the offer price, negotiate a deal, or hold fast to a price that is too high, thus re-buying their own home. In this environment, it is not rare for the house to actually sell a little above the list price. When there is not a lot of selection, buyers get more eager when a good property comes available.

In our Tampa Bay market (St. Petersburg, Madeira Beach, Ozona, Clearwater Beach and others), houses that are currently in the $120,000 to $140,000 price range are selling fastest, making up just about 10% of the market. The number of active listings in Pinellas County in May 2012 was 3,217, a decrease of more than 34% from May of 2011. This appears to be the lowest level of active listings since before January of 2007. That is the lowest level of listings in over 5 years!! This is telling the buyers who are looking for further price drops that there probably won't be any, as the law of Supply and Demand is kicking in.

One last little statistic, in the Pinellas County real estate market, 60% of residential transactions year to date (thru May) have been cash, 24% are conventional, and 11% FHA.

The message is clear, if you are a buyer, don't wait or it will cost you more money for the same house. The other way to look at that is you will get less house for the same money. Look at the above info and you can determine if the Tampa Bay real estate market has hit bottom yet.

Tampa Bay Real Estate vs. National Trends

by Doug & Gwen Campbell at Sun Bay Associates

"Home prices went up in major markets in the US in May for the second consecutive month."  That is the lead sentence in press releases and it deals with the national real estate picture.  The Tampa Bay real estate market looks a little different.  The mean price of Tampa Bay real estate in May was down 6.6% compared to April. 

The national home prices slid 4.5% in May from the previous May.  However, in the Tampa Bay real estate market, the mean home prices went down 1.6%  when comparing May 2011 to May 2010.  The real shocker is that the median price in May 2011 was down 15.7% from May of 2010.  Taking a look at the reason for the huge difference between the mean and the median, more than 60% of Tampa Bay real estate transactions in 2011 have been cash.  The median price of homes sold indicates that there are a lot of lower priced houses selling to cash buyers, mostly cash rich investors.  At the same time, the Tampa Bay real estate statistics tell us that there are a few higher priced properties selling in the upscale market, which had been moribund for the past year.

There are indicators in a few micro-markets in the Tampa Bay area that small areas have already hit bottom and are in a recovery mode.  Unfortunately, this type of recovery may be good for a neighborhood, it just hasn't spread to the entire area - yet.

No matter how one chooses to look at the real estate market, prices are continuing to deteriorate.  According to one analyst, Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California-Los Angeles, "This reflects a market that continues to be in search of a bottom."  Not good news for sellers.  However, it can be good news for buyers and investors.  When the inventory is reduced to lower levels, the law of supply and demand should kick in to finally begin to move housing prices up in the Tampa Bay real estate market as well as nationally.

In short, as long as unemployment continues to drag down the local and/or the national economies, and people don't have income to buy homes, the real estate market will be the bellwether for the economy and its recovery.

Tampa Bay Real Estate Market, Mortgage Interest Rates Impact Your Purchase

by Doug & Gwen Campbell at Sun Bay Associates

In today's real estate market, many buyers are saying "Let's wait until the prices go down more so we can get a better deal."  This is a frequent refrain in the Tampa Bay real estate market, especially after the red hot market of a couple years ago.  Well, that can be a poor business decision.  Currently, mortgage interest rates are at or near historic lows, and housing prices are at 10 years lows, making today's real estate market a great time to buy.  For the buyer who wants to save an extra 1% or 2% on the price of a home, they could be losing far more in the value of what they can get for their money.

Let's look at a few secnarios with purchase prices, monthly income, interest rates and some allowances for increased costs to maintain a home.

With a total monthly income of $4,000, the maximum mortgage for a home at 6% = $134,267; at 5.5% = $141,778; at 5% = $149,957.  The extra 1% in mortgage interest resulted in more than a 10% drop in value or more than $15,000 less house.

With a total monthly income of $6,000, the maximum mortgage for a home at 6% = $194,590; at 5.5% = $205,475; at 5% = $217,329.  The extra 1% in mortgage interest again resulted in more than a 10% drop in value, or almost $23,000 less house.

With a total monthly income of $10,000, the maximum mortgage for a home at 6% = $388,902; at 5.5% = $410,657; at 5% = $434,347.  The extra 1% in mortgage interest again resulted in about a 10% drop in value or more than $45,000 less house.

The numbers are what they are.  Mortgage interest rates can impact your home purchase and by waiting, even if the prices are dropping, if the interest rate rises it is entirely possible that the buyer gets less house for the same amount of money.  The moral is, when you find the right house, buy it.  Don't try to outsmart the market, especially if you are looking to buy a home in the Tampa Bay real estate market.  Although the market may not have hit bottom, prices are not likely to go down a whole lot more, and mortgage interest rates are very likely to begin to rise.

Displaying blog entries 1-3 of 3

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Photo of Gwen and  Doug Campbell - The Campbell Team Real Estate
Gwen and Doug Campbell - The Campbell Team
at Keller Williams Realty
30522 US Hwy 19N, Suite 107 S
Palm Harbor FL 34684
Doug's Cell 727-741-4189
Gwen's Cell 727-741-7260
Fax: 888-447-7908