Lots of news this month and mostly it has to do with what the local Clearwater real estate market is really like now (and this includes the surrounding Tampa Bay areas) . This month I also have important information for both buyers and sellers.
The current real estate market is quite different than it was just a year ago. In 2009 and 2010 we saw gradually increasing sales and gradually decreasing inventory. This was a stable improvement and recovery that continued throughout the years since 2008.
2011 also saw increased sales and decreasing inventory but the change was more significant than in some of the previous years.
The number of houses, condos, townhouses and villas sold in Pinellas County as noted in the MLS has increased over 50% from the lowest year in 2008 and in 2011 the increase over 2010 alone was 15% as you can see it the chart below:
This trend is continuing as confirmed now by the January 2012 sales numbers. I didn’t expect last month to beat January 2011 since that had been a very strong January (with January typically being the lowest sales month), but as of the date I’m writing this we did see an increase last month over last January. And since there may still be sales for January not yet noted in the MLS the increase may even be a little more than is showing on the chart below:
Now this factor just by itself isn’t the reason that I’m saying we have a very different market from last year. The other factor to look at is inventory, or number of properties available for sale. As I mentioned above this has also be slowly but steadily declining since it reached its peak in January 2008 when there was 31.34 months of inventory. A normal level of inventory is considered to be in the 6 months range and in 2011 we had 10 months where the inventory levels were in the 6-8 months range.
January is typically the highest inventory level each year and last month that was only 8.61 months. See the chart below to get a better idea of this:
So what this means is that we now have a much lower inventory of properties while at the same time the demand is steadily and stably increasing. To emphasize this, the total number of Active Listings in the Pinellas MLS at the end of last January (for houses, condos, townhouses and villas) was 11,151 and as of the end of January this year there were 7,364.
How This Affects Buyers
Many buyers are still assuming that our local market is doing poorly and that they can get exactly what they want and name their price. A lot of this is based on what they hear on the news about the economy and the real estate market in general. However, that doesn’t apply to this particular market at this particular time.
What is happening now is that well-priced properties, especially those which are in at least decent condition and in a decent location, are selling more quickly and in some cases with more than one offer. Buyers are still making sure they aren’t paying above market value but they aren’t typically getting huge price reductions on properties that are appealing. One problem this creates for buyers who aren’t aware of the current market conditions is that they have a much more limited selection to choose from than in the past 3 years. I run into this with a lot of buyers who keep asking ‘what else is there’ and I have to let them know that we have already seen everything that fits their criteria in the price range they set.
Just to give you an example, I have a client who has been buying very low priced condos that need to be completely redone and his plan is to remodel them and then rent them out, he’s planning to hold them for several years as an investment. Since last winter there have been very few condos that have come on the market that were like the ones he had previously bought and the few that we did get contracts on were short sales that we couldn’t close on because the banks wanted more than they were worth. Recently a condo came on the market in one of the complexes he already owns a few condos in and is a bank-owned property. This is the first one in over a year, but when I called the listing agent he told me that they already had 7 offers in and that the bank would be choosing the one they wanted within the next several days (and this was less than 1 week after it had been listed).
So the bottom line for buyers right now is that you should know what the current market conditions are and approach your purchase in a way that fits the market. You can still get properties for good prices but it is not as easy as it has been and you should definitely have someone on your side that knows how to deal with the current conditions. 🙂
What This Means for Sellers
I only work with a limited number of listings as I am mainly a buyer’s agent, but when past clients or people who are on my email list request my help I will assist some with selling their house, condo, townhouse or villa. This past year I had 4 listings which gave me a much better insight into how the current market conditions affect those who are trying to sell their property.
What I found was that if a seller does not really want to sell their property or has unreasonable expectations on price – their property will not sell. If a seller does want to sell and has a realistic expectation on price based on the current market – their property will sell, and if marketed correctly it will sell within a relatively short period of time and in the range of the current market value.
This does not mean that all properties are selling right away and that it doesn’t take work to get a potential sale to close because there is still a lot of work involved. Even with the current market conditions, buyers are often more demanding on things they want and when a buyer is getting financing there is no guarantee they will get it – so these have to be followed closely. But I would have to say that right now is a good time to sell a property if you want to and if you are willing to accept what the current market value for your property is.
One other thing that any potential sellers should know which is quite important – if your property may be in a short sale situation (where the amount it will likely sell for is less than what is owed on loans) then you should probably get it listed within the next 30-60 days. Currently when you have a short sale and the bank forgives the balance on your loan you do not have to pay taxes on what the bank writes off. But this is only true through the end of 2012 and it is not certain at all that this will be renewed beyond the end of the year. What this means is that if you sell your property as a short sale and the bank writes off $50,000 of the loan and it closes after December 31, 2012 – you may end up having to pay tax on that $50,000. I don’t want to get into whether this is right or wrong, I just want to warn you about this because if you wait too long to sell your property and it ends up being a short sale you may end up regretting your hesitation on listing your property.
To close out this section of the newsletter I wanted to let you know that I am wrapping up the last of the listings I had and am now open to taking a few more listings if you would like my help (and they don’t have to be short sales either). If you have some interest in getting help with selling your condo, townhouse, villa or house then you can fill out the Request to List a Property form I put on my new site.
Speaking of the new site, a lot of you visited there last month and got to check out the new MLS tool and I wanted to let you know that I have added pages on several more of the Clearwater Beach condos complexes since then so feel free to go back and look if you want to.
Sorry that this got so long this month but I just felt that this information was too important right now for anyone trying to buy or sell any Tampa Bay or Clearwater real estate and hope that you find at least some of it applicable and useful for you.