Price Cuts Rouse Housing Market
By Stephen Frater
Sarasota Herald Tribune, Feb. 26, 2008
January home sales in Southwest Florida gave further credence to Realtors who contend that the market is ahead of the rest of the state if not the nation in recovery.
The 4 percent increase in sales for Sarasota-Bradenton and the 13 percent increase for the Charlotte County-North Port marked 2 of only 3 sales gains for Florida's 20 largest markets. Panama City had a 1 percent gain, the Florida Association of Realtors reported Monday.
But the sales gain came at a cost, with the median sales price dropping -- 13 percent in Sarasota-Bradenton and 21 percent in Charlotte County-North Port -- as sellers continued to adjust to the realities of today's marketplace.
Lower pricing is the only way to attract buyers, said Florence Tanner, a Realtor with the Punta Gorda office of Shells Realty.
Waterfront neighborhoods like Punta Gorda Isles are seeing the most action, but the lower end also is seeing some positive signs, Tanner said.
"There has been more activity in the sector for homes priced under $200,000, and many more such homes are now going to 'pending sale' status," Tanner said.
"There is generally more activity, more open houses, more sales pending and hopefully more closings in coming months."
FORECLOSURES STILL HIGH
The news of the sales gains came with a more sobering note on Monday. Southwest Florida had 1,924 foreclosure actions in January, only slightly fewer than December.
At this time last year, Manatee, Sarasota and Charlotte counties had only 198 foreclosures, according to RealtyTrac, a company based in Irvine, Calif., that tracks foreclosures.
On a per-capita basis, Charlotte County's January foreclosures ranked it No. 7 in the state and No. 42 nationally, followed closely by Sarasota County at No. 8 and No. 45, respectively.
Nationally, the 233,001 foreclosure actions filed in January rose 8 percent from December and nearly 57 percent from a year ago.
"January's foreclosure numbers demonstrate that foreclosure activity is continuing on its upward trend," though slower than the 19 percent spike at this time last year, said James J. Saccacio, RealtyTrac's chief executive, in a statement. "Several key states actually experienced decreasing foreclosure activity from the previous month."
Florida was third in foreclosure activity behind Nevada and California, two other states marked by speculative buying during the 2004-05 housing boom.
"There is some relief in that fixed mortgage rates are lower than they have been for quite a while, so affordability is better than it has been," said West Palm Beach economist David Levin. "Additionally, the lenders are reluctant to take back a home in a foreclosure process. With values falling, the lenders would prefer to keep the homeowner in place rather than take the property back, resell it and face substantial losses."
POSITIVE OUTLOOK
Despite grim foreclosure figures, market watchers were encouraged by January.
Robert Milligan, a 26-year-old broker and owner of Shells Realty in Sarasota, says he is convinced that the market has hit its nadir, a notion shared by some Florida economists like Hank Fishkind.
"We have hit bottom in Sarasota," Milligan said. "I am eating my own cooking by purchasing property now."
Milligan has bought six houses and plans to hold them as rentals. He has found single-family homes in Sarasota that sell for $150,000 or less, and can finance them as rental property for $1,200 to $1,300 per month to cover his expenses.
"Rentals are more favorable in Sarasota than in Charlotte or North Port since they had such a huge building boom there," Milligan said.
Pricing remains the focus for most of the region's agents, said Brandon Kekich, a Lakewood Ranch-based team leader for Keller Williams Realty, who added that the current environment is testing the skills of Realtors, separating the "the pros from the Joes."
"We are having a big push of proper-pricing clinics because a Realtor is not not doing his client any good by wearing rose-colored glasses," Kekich said. "He should be telling his sellers to drop the prices" to a realistic point "or get out of the market."
NATIONAL PICTURE
The rise in Southwest Florida sales came against the backdrop of a January national sales decline to the lowest level in nearly a decade. The median price for a home dropped for the fifth straight month.
The National Association of Realtors said that sales of single-family homes and condominiums dropped by 0.4 percent last month to a seasonally adjusted annual rate of 4.89 million units, the slowest sales pace on records going back to 1999.
The median price of a home sold in January slid to $201,100, a drop of 4.6 percent from a year ago.
Sales were weak in all parts of the country except the Midwest, where there was an increase of 3.4 percent. Sales dropped by 3.6 percent in the Northeast, 2.1 percent in the West and 0.5 percent in the South.
Lawrence Yun, the Realtors' chief economist, said he believed the housing market may be on the verge of bottoming out with a rebound expected to start toward the end of this year.
"Subprime loans and other risky mortgage products have virtually disappeared from the marketplace, and over the past five months, this has been reflected in soft but fairly stable home sales," Yun said.
He expects demand to be bolstered in coming months by congressional action on the economic stimulus bill that raised the caps on the size of loans that can be backed by Fannie Mae and Freddie Mac and the Federal Housing Administration.
But other economists are not nearly as optimistic, noting that there is a huge overhang of unsold homes, which rose in January to a 10.3 months supply. That overabundance will continue to depress sales and prices for some time to come, they said.
"Expect sales and prices to keep falling," said Ian Shepherdson, chief U.S. economist for High Frequency Economics. "There is no end in sight for the housing disaster."
MARKET COMPARISON
January sales in the region and state:
Sarasota-Bradenton Realtors sold 490 homes in January, compared with 472 in the same month a year ago.
Charlotte County-North Port Realtors sold 175 homes last month compared with 155 in the same month a year ago.
Declines in other parts of the state ranged from 6 percent in Fort Walton Beach to 51 percent in Ocala.
During January, Sarasota-Bradenton pricing declined 13 percent to $246,300 and Charlotte County-North Port 21 percent to $156,800 -- roughly on par with pricing during the last several months.
Only 6,737 homes changed hands in Florida last month, down 28 percent from the same month last year. The median sales price was $208,600, down 14 percent.
Prices dropped in every market in Florida except Panama City, which reported a 13 percent rise, and Pensacola, which reported a 3 percent increase. The biggest drop was 27 percent in Fort Pierce-Port St. Lucie.
FORECLOSURES:
Southwest Florida had 1,924 foreclosure actions last month compared with 2,116 in December. In January 2007, Manatee, Sarasota and Charlotte counties had 198.
On a per-capita basis, Charlotte County's foreclosures ranked it No. 7 in the state and No. 42 nationally, followed closely by Sarasota County at No. 8 statewide and No. 45 nationally. Manatee County was 14th in the state and 91st nationally.
Source: Florida Association of Realtors, RealtyTrac Inc.
Information from The Associated Press was used in this report.
Last modified: Tuesday, Feb. 26, 2008 at 2:04 a.m.
