Tampa Bay Real Estate

It had to happen at some point. The inventory of homes for sale in Tampa Bay has been steadily declining over the past 3 years. In September of 2009, there were nearly 28,000 homes for sale in Hillsborough, Pinellas, and Pasco counties. Fast forward to 2012 and that number has dwindled to just over 14,000 houses on the market.

In September of 2009, the number of homes that sold and closed in the Tampa Bay area was 2,833. This month over 3,300 properties closed. Half the inventory and over 500 more sales. That’s a good indication of a recovering Tampa Bay real estate market.

Home sales are 30% higher than 2 years ago and 40% higher than the same time in 2008.

There is still only a 4 month supply of homes for buyers in the Tampa Bay area, and the biggest reason the supply is that high is the thousand or so foreclosures that become available for sale on a monthly basis.

There was a slight scare last week when news started circulating that a large Wall Street investment firm-Blackstone-was looking to spend a billion dollars buying up distressed Tampa Bay properties. Homebuyers are having a difficult enough time finding a house as it is, and in many cases are paying above the asking price in order to get the property they want.

Fortunately that news, which was circulated by a local realtor who supposedly had ties to Blackstone, proved to be inaccurate. An investor that big could cause major problems for local home buyers.

The good news for homeowners is that prices are steadily increasing as the inventory is depleted.

There are still many Short Sales available in Tampa and the surrounding communities, but the number for sale dropped for the 7^th month in a row.

Foreclosures across the Tampa Bay area dropped slightly as well, but are still higher than they were 6 months ago, a sure sign that banks are moving to get some of these houses off their books.

The number of negotiated and closed Short Sale properties remained about the same as it was last quarter-10% of the pending sales closed in the 30 days tracked. I had expected that number to rise, but all signs seem to be that the banks will continue to take their time approving these types of sales. Almost Three Quarters of the homes currently under contract are Short Sales.

New home builders in Tampa Bay continued to sell homes at a steady pace and there are more new houses under contract and scheduled to close than there were last month.

Available foreclosures in the Tampa-St. Petersburg-Clearwater area dropped slightly from last month, as did the number that were sold and closed. But pending bank owned properties are higher, and the trend of buyers snapping these homes up almost as soon as the hit the market continues.

The Monthly Stats:

Pending sales fell for the 4th month in a row.  

10% of the Short Sales under contract closed.

The median sale price of a home in Tampa Bay was $120,000, down $5,000 from last month.

Distressed properties accounted for 40% of all home sales over the 30 day period tracked. This number reversed a 3 month trend.

An amendment that would affect property taxes in a positive way for current and future homeowners in Florida has been put on the November 6th state ballot as a legislatively-referred constitutional amendment.

Amendment 4 is a great deal for Tampa Bay homeowners, first time homebuyers, as well as commercial and rental property owners.

The proposed amendment would prohibit increases in the assessed value of homestead property if the fair market value of the property decreases and reduces the limitation on annual assessment increases to non-homestead property. For first time homebuyers it provides an additional homestead exemption.

Under the current law, taxes on your home can be increased, even if the value of your property goes down. This is a flaw in the 2008 Amendment 1 that was voted on and approved by Florida voters. At the time, I argued that this would mean higher taxes on home owners, even as properties lost value. That point seemed to be lost on voters.

Non-homestead or commercial property would have their assessment increases capped at 3 percent per year instead of 10% under the 2008 law. According to reports, this will put non-homestead or commercial property owners in line with the benefit received by homestead owners.

The measure would also implement an extra homestead exemption for first-time buyers equal to 50 percent of the median home price in the county. This additional exemption would be gradually reduced until it expires within 5 years.

The amendment requires 60% voter approval for adoption.

As a first-time home buyer you get a property tax break that would save $1,000’s of dollars.

Property owners who don't claim a homestead exemption, including investors, businesses, and owners of rentals and second homes would save a substantial amount of money as well, since any annual increases would be capped.

There are some government officials complaining that the cost of this will require more cuts to services offered by cities and counties, but studies show that the Amendment would have little impact on the portion of property taxes that pays for public schools and Counties would still have the ability to raise millage rates if they feel that the amendment will cut too deeply into their budget. That move could prove to be unpopular.

Support in the Legislature is strong, and most believe Amendment 4 will help attract businesses to Florida by making property taxes more manageable without huge yearly increases. Florida Realtors say will boost home ownership.

Ben Fairbrother of the TaxYourAssetsOff campaign said that Florida's housing market, “has suffered because many potential first-time buyers have left the market in the wake of the housing crisis.” He says the added incentive would boost demand and increase the number of first time buyers and help with the recorvery of the Tampa Bay real estate market.

Florida Realtors agree that lower property taxes would lead to more home sales. Florida TaxWatch has projected that the amendment would result in the creation of about 20,000 jobs and boost home sales by more than 320,000 properties during 10 years.

Amendment 4 is an attempt to reduce inequities produced by the state's current property tax system, particularly that which resulted from the Save Our Homes amendment in the 1990s and Amendment 1 of 2008.

It capped annual assessment increases for primary (or homesteaded) homes at 3 percent. Over time, that has caused recent home buyers to pay increasingly larger tax bills than longtime owners, even on homes with the same market value.

Other long-term impacts of Save Our Homes: owners of non-homestead properties, like second houses and commercial and rental properties, have paid more to make up for savings that have gone to primary homeowners. And owners of homesteaded properties were discouraged from moving because they would have lost their increasingly considerable tax advantage.

Amendment 4 provisions:

• Reduce the 10 percent cap on increases in property values on non-homesteaded properties to 5 percent.

• First time home buyers, defined as those who have not owned a home in Florida in the past three years, would receive an additional homestead exemption on half the appraised value of their home (up to $150,000), phased out over five years.

• Allows the Legislature to repeal Florida's "recapture" rule. That allows the taxable value on Save Our Homes parcels to rise even as property values decline, if the home is still assessed below market rate.

All in all, Amendment 4 looks like a winner for all property owners in Tampa Bay and across the State.

A foreclosed property located at 4715 W. Prescott in South Tampa recently came on the market and was offered at $29,900. The property had over 45 bidders and the final sale price-$86,100!!

This is why I don’t understand the recent article I saw about Fannie Mae’s bulk foreclosure auction.

Their first recently held auction of foreclosed homes to be managed as rentals sold for $78.1 million, approximately 96 percent of the properties’ estimated value, according to the Federal Housing Finance Agency.

The purchase of these 699 homes in Florida was the first to be completed in Fannie Mae’s auction of almost 2,500 repossessed properties in six states. The buyer was San Diego, California- based Pacifica Companies LLC and the homes had a total value of $81.5 million.

Across the country, investors are buying up single-family homes in an attempt to capitalize on rising demand for rentals, and with real estate prices that have dropped anywhere from 30 to 50 percent from their July 2006 peak, why wouldn’t they? According to interviews with big investment companies, their firms plan to spend about $8 billion buying foreclosed properties to rent.

Many investors are guessing that since the properties sold at such a high value, more pool sales will be coming their way.

But with a low inventory of homes available in most of Florida, and foreclosed homes selling for much more than the prices they are offered at, is this really the thing to be doing? Are they giving investors great deals and shorting the general home buying public?

The inventory of homes for sale in the Tampa Bay real estate market is at an all time low and buyers are fighting for them. Many of the homes sold and closed over the past 6 months have had multiple offers and sold at prices much higher than what they were listed at.

Local investors and small time property buyers from out of state are desperate to buy houses and can’t because of the competition. When they do find a home to purchase they are paying much more due to the lack of inventory.

So why are they giving them to investment companies at prices lower than they could get on an open market?

It seems to me that with a market like that, selling in bulk below actual value to a select few is not only unfair, but bad business.

A recent news article reported that U.S. homes are selling more quickly as supplies dwindle; offering more evidence the housing market recovery is gaining momentum.

"As inventory has tightened homes have been selling more quickly," said NAR chief economist Lawrence Yun. "A notable shortening of time on the market began this spring, and this has created a general balance between home buyers and sellers in much of the country."

In the Tampa Bay area, that balance has shifted to the home Seller.

According to the report, the average time a home was listed for sale on the market before it went under contract fell nearly 30% to just 69 days, which is down substantially from a year ago according to the National Association of Realtors.

But in the Tampa Bay real estate market, the median time on the market was only 46 days, much lower than the national average.

As an added bonus to home sellers, sales in the Tampa Bay area were 15% higher than this same time last year.

It was also reported that one-third of the houses bought in July had been on the market for less than a month on the national level, but once again the Tampa-St. Petersburg-Clearwater area showed how active the home buying market is with over 40% of the houses for sale going to contract in 30 days or less.

These numbers are comparable to the median selling time of 4 weeks during the housing boom of 2004 and 2005, a time when housing inventories averaged 4.3 months. During the recession, the average time on market for non-distressed sellers peaked at 10 weeks.

Another positive sign in the Tampa bay area is that of the 4000 homes closed in August, 655 of those properties sold for more than the original asking price.

The findings indicate that the housing market recovery continues.

The jackpot of a lifetime arrived last month inside a letter from GMAC Mortgage: an offer to make more than $200,000 in debt instantly disappear.

The lender, the letter said, would slash what the homeowner owed to ribbons, including shrinking her $204,000 mortgage principal to about a third its size.

Far be it from a hoax, the letter was one of thousands sent to homeowners across the country. The offers, free and unsolicited, proved nearly impossible to resist.

"When they first came across, I thought they were certainly a scam," said St. Petersburg foreclosure attorney Matt Weidner. "The next thing I thought was, where's mine?"

For legions of troubled home­owners, it's nearly the same as winning the lottery: mortgage principals, sliced and diced, with little paperwork and instant action.

Already the offers have shaved more than $115 million from Florida mortgage principals. Since March, more than 1,000 borrowers across the state learned their principals were dropping by an average of $114,000.

Credit the National Mortgage Settlement, the $25 billion foreclosure agreement between attorneys general across the country and five of the nation's largest banks.

Investigated during the "robo-signing" scandal for pushing faulty documents to foreclose and repossess homes, the country's largest consumer financial protection settlement in history put banks on the hook for billions in direct homeowner relief.

That money, including $8.4 billion going toward Florida homeowners, is being paid out through modifications on monthly mortgage payments, home refinancings and cash incentives.

But it's the prized principal reductions, the Holy Grail of mortgage relief, that is turning so many heads, as homeowners see their swollen mortgage costs shrink through little work of their own.

The settlement has already quashed $1.3 billion in mortgage principals across the country, an independent monitor reported Wednesday. Short sales, refinancing and other consumer relief accounted for another $9 billion.

In Florida, the five banks — Ally Financial, Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo — have allowed for $1.7 billion in relief to more than 23,000 borrowers through short sales and forgiven debt.

That relief could make up just a glimmer of the final payout. Banks have three years to meet the settlement's requirements, which mandate that at least $10 billion must go toward principal reduction for homeowners who are underwater, delinquent or at risk of default.

Nearly $500 million more in further relief for Florida home­owners, the report states, is already in the works.

The offers are preapproved, but banks' requirements differ. Generally, homeowners must owe more on their mortgage than their property is worth, be at least a few months behind on their mortgage payments, and face a financial hardship or impending default.

After that point, bank representatives said, signing up could barely be simpler. Some refinancings are automatic, with lower interest rates appearing suddenly on homeowners' monthly statements. Some banks' loan modifications need only a signature to kick into action. At least one offer also comes with free postage.

Free money, right? Who could resist? Surprisingly, many qualified borrowers have failed to respond. Though Chase's offers for loan modification are guaranteed approval, only half of the offers mailed to borrowers have been claimed.

Unresponsive homeowners may be the victims of "borrower fatigue," jaded by the onslaught of mortgage mail and fraudulent loan-modification schemes. Perhaps, given the circumstances, they're suspicious the offer is too good to be true.

Borrowers who do sign up have been amazed at the results. Homeowners in South Tampa received a letter this month from Bank of America offering to slash their $165,000 principal to $98,000, forgive all past debt and reduce their monthly payments from $1,000 to $650.

Real estate agent Tony Delgado said the homeowners' new principal had been cut so low it was now less than the home's actual value. "If they were to turn around and sell that house right now, they could probably sell it for around $115,000," Delgado said. "So yeah, they're pretty happy."

The mortgage relief could invigorate markets for cars, trips and big-ticket spending once delayed by looming debt. Those once-trapped homeowners, suddenly lightened, might even return to the market to buy.

That's a good start, Weidner said, but banks are still getting off easy for billions of dollars of foreclosure abuse. "The reductions going back to homeowners right now are just a fraction of the fraudulent insurance claims (banks) submitted," Weidner said. "It would be like if you robbed a bank and walked away with $10,000, and you gave $10 back."

Apart from the investors who stand to lose value due to debt forgiveness, the settlement could sour a larger group: the dutiful homeowners who, in keeping up with their payments, missed out on the relief.

Louis Harris, a remodeler who fought the foreclosure of his St. Petersburg home, struggled for two years to lower his monthly mortgage payments. "It almost cost me my marriage, all the issues and the problems trying to get (the loan) modified," he said. Finally, he won: His payments were cut by $80 a month. But his neighbor, who had stopped paying the mortgage, managed to profit even more, as his mortgage interest rate and monthly payment plummeted.

"You get a bad taste in your mouth, to the point where you don't want to pay your bills," Harris said. "They're giving breaks to people who aren't even paying. It's like getting smacked in the face again."

As the inventory of homes for sale in Tampa Bay maintained its steady decline, properties sold over the last 30 days increased once again over the previous month’s sales. This continues the trend of higher home sales, even as the total number of properties for sale has fallen dramatically.

There is currently less than a 4 month supply of homes for buyers in the Tampa Bay real estate market but, the shortage is obviously not affecting sales.

Closings on residential properties are up 17% from where they were this same time last year, a sure sign that homebuyers have realized that the bottom has hit and now is the time to buy. Home loan rates at record lows and rental prices steadily increasing are contributing factors as well.

But home sales are not the only thing going up…so are the values and prices.

Recent reports showed that home values in the Tampa Bay area rose 3% in the first quarter of 2012. In some areas such as Palma Ceia in South Tampa, Westchase, and Carrollwood Village in North Tampa, the increase has been much higher. The same is true for popular areas of St. Petersburg as well.

There is no glut of foreclosures in these neighborhoods, and a limited number of houses on the market has created a situation that drives the asking prices up. Appraisals can be an issue of course, but buyers seem to be willing to take their chances.

New home builders in Tampa Bay are seeing a steady stream of home sales also, and new home communities are beginning to pop up in areas where home sales are active and inventories are low. Ashton Woods Champion Forest is an example and is located in the Westchase/Country Way area of town.

The inventory of available foreclosures in Tampa Bay rose for the 5^th month, but sales are brisk and Bank Owned properties that are priced well sell immediately.

Short Sale closings were nearly the same as last month and remain much higher than previous periods tracked.

The Monthly Stats:

Pending sales fell for the 3^rd straight month.  

10% of the Short Sales under contract closed.

The median sale price of a home in Tampa Bay was $125,000.

Distressed properties accounted for 38% of all home sales over the 30 day period tracked. This number continues to fall but would increase dramatically if banks became even more aggressive with short sale approvals. 62% of the properties under contract in the Tampa Bay area are short sales.