When will the Tampa Real Estate market stabilize?

I get this question so often. I can’t blame sellers for wanting to staunch the blood loss nor buyers looking to hit that bottom just right. I’ll cut right to the chase…it’s simple supply and demand, just like I learned in high school economics (Thanks, Mr. Cole!)

Our supply, or should I say oversupply, of homes for sale contrasts very tepid demand for these homes. Thus, more people are fighting over less buyers. Ok, but when will we stabilize? When will our “demand” return to more robust levels?
Everyone pontificates on that fact, including myself. I clearly remember the “Sharp V” bounce back being touted by the Realtors Association about 2 years ago. I was naïve and bought into it…now I’m a bit more jaded and see the glass as half-empty.

It seems as if it’s so easy to pull something out of harmony and into chaos than it is to restore it to that harmonic point. The Gulf oil leak, Middle East, and our current real estate market are great examples…we screw it up and struggle to bring it back to “normal”. (I bet I am the first person to correlate the Middle East crisis with our real estate market ;-)

Here are a few things that I believe are bringing our market to our knees (my opinion only!):

1) It becomes as cheap to own as it is to rent. Time Magazine is now touting the end of homeownership as a valuable commodity. Rents are so cheap now, why not lease a home. Until rents get back in line with owning, we will not see stabilization.

2) UNEMPLOYMENT. This is the big white elephant in the room no one is mentioning. Tampa just clocked in at 12.6% unemployment…many claim this number to be higher due to the people who have run out of unemployment and have given up. So let’s say 15%. The 12.6% number is a point above the Florida state average. How could we expect home prices to stabilize when over 1/10 of our population does not generate income?? How many people out of work have used up their savings trying to stay in their home and now must abandon it or short sell it? Until unemployment gets below 8-9%, we’ll continue to falter.

3) CONSUMER CONFIDENCE. This is the latest report on Florida’s consumer confidence measure http://www.bebr.ufl.edu/files/cci_08_2010.pdf : “Consumer confidence is entrenched at a relatively low level,” said Chris McCarty the Survey Director. “With the exception of a jump in April due almost entirely to the housing and appliance rebate programs, consumer confidence has been stuck in the upper 60s to low 70s for the past year. While the mix among the five components has changed, overall consumers’ attitudes reflect other economic indicators that don’t show a clear path out of recovery or back to another recession. We are in economic doldrums.” If we are not confident in our perceptions of our personal finances and the state of the economy, we will take less risk and choose to hold off on major financial transactions.

4) MORTGAGE INFLEXIBILITY. Those banks loved that bailout money but they sure didn’t turn around and lend it out, did they? They made it even harder for people to get a share of it in the form of a mortgage or equity line. Until we see a substantial loosening of mortgage standards – NOT like back in the heyday of mortgage fraud – we will be unable to get buyers of slightly higher risk in homes. By risk, I mean higher debt ratios and/or lower credit scores.

5) UNSTABLE SALARIES. If you are in the corporate world, you may have already experienced this. A client just related a story about a new corporation winning a government contract by being lowest bidder. The new company told the old contract employees to take a substantial 25% - 50% paycut if they wanted to stay on. Hmmm, that won’t help buoy our aging market when salaries are being reduced, people are being threatened with termination, and companies are taking back what they had given employees years ago. Multiple rounds of layoffs are commonplace at big firms as they trim their budgets…not only do the laid-off workers get hurt, but what do you think Mary in Accounting is thinking as her friends get escorted off the property? Yeah, let’s hold off on that new home.

6) FORECLOSURES & SHORT SALES. Yeah, this is obvious. Do you know foreclosures in Tampa are normally priced 20%-30% below market, sell in 5-10 days, and quite often go ABOVE list price due to the multiple bids received? That is not helpful for an area that has a higher-than-average foreclosure rate, such as new home communities, condo conversions, and other typically investment-driven complexes.

Heck, there’s probably more but I’m tired y’all. Tomorrow is another day in paradise!

TRICKS OF THE TRADE!

The following info is pertinent to Florida only. For purposes of illustration, I am using Pinellas County.

"HOW DO I FIND HOA INFORMATION, AND WHO IS THE PROPERTY MANAGEMENT COMPANY?"

Here are a few tricks to help with this mystery-

1) ASK THE SELLER....Although they might not know offhand, there’s a chance they have received correspondence from them OR know a Board member. Some communities have a web presence that only residents know about.

2) Go to www.sunbiz.org:

• In the Left column select “LOOK UP A BUSINESS NAME”
• Choose the first link “INQUIRE BY NAME”
• Type in the name of your Subdivision in question, it doesn't have to be complete (ex. Try WESTLAKE VILLAGE)
• Scan the search results for something that looks like a community association (WESTLAKE VILLAGE CIVIC ASSOCIATION, INC.)
• Now click on the link, this will tell you who is the President, VP, Sec, etc. of the association.
• 411 the President, and ask them if they are self managed and who the best point of contact is. VOILA!

3) Finding a MANAGEMENT COMPANY is a little more tricky. Often, simply GOOGLING "HOA (enter name) MANAGEMENT COMPANY" will get you the info you need.

4) Another trick is to go to the Clerk's website (www.pinellasclerk.org):
• On left side halfway down select “Recording and Official Records”
• Choose ”Search Official Records”
• Type in the name of the HOA to search
• Select a LIEN that was recently filed.

Usually, an attorney does this for them, but read the Lien itself - it will show the name of the MANAGEMENT COMPANY in the body of the Lien.