The drop means the number of people losing their homes will start to fall. But some pain from the crisis is sure to persist. Because millions of people are already in foreclosure, deeply discounted houses will put pressure on home prices for years.

“Housing is on a path to recovery,” said Mike Larson, a real estate analyst with Weiss Research. “It’s going to be a very long, gradual process.”

In high-foreclosure cities like Las Vegas, Phoenix and Miami, homes have lost roughly half their values from their peaks. But a report Friday from the Mortgage Bankers Association showed Nevada, Arizona and Florida had some of the biggest declines in new delinquencies.

The figures probably mark “the beginning of the end” of the crisis, said Jay Brinkmann, the trade group’s chief economist.

However, more than 15 percent of homeowners with a mortgage have missed at least one payment or are in foreclosure, a record. Worse, nearly half of all delinquent borrowers were at least three months behind on their payments, up from a typical level of less than 20 percent.

“The bad news is that we still have a big problem,” Brinkmann said. “The good news is it looks like it may not get much bigger.”

That’s because the percentage of borrowers who missed just one payment on their home loans fell to 3.6 percent in the October-to-December quarter from 3.8 percent in the third quarter, according to the Mortgage Bankers Association. That decline was even more surprising because delinquencies usually rise at that time of year due to higher heating bills and holiday spending.

In another encouraging sign, the number of borrowers who had missed at least one payment but were not yet in foreclosure also fell for the first time since the beginning of 2007.

Banks are delaying the foreclosure process, traditionally between four and six months, as they evaluate borrowers for help under the Obama administration’s $75 billion mortgage-relief effort. It lowers borrowers payments to as low as 2 percent for five years and extends loan terms to as long as 40 years.

But experts warn that hundreds of thousands of borrowers will not be eligible or will not complete the process. So far, only 116,300 borrowers out of 1 million who enrolled have had the terms of their mortgages changed permanently.

Despite the government’s efforts, there may be 6 million foreclosed homes that are put on the market over the next three years, according to Barclays Capital.

Timing is key. If banks unload them suddenly, “it will be much more detrimental to the housing recovery than if it’s a slow, gradual bleed,” said Michelle Meyer, a Barclays economist.

On Friday, Obama announced that housing agencies in the five hardest-hit states of Arizona, California, Florida, Michigan and Nevada will receive $1.5 billion in financial rescue money.

It will go to local programs to help unemployed homeowners, “under water” borrowers who owe more than their home is worth, or to give lenders incentives to assist borrowers with second mortgages. The programs will need to be approved by the Treasury Department.

“Government alone can’t solve this problem,” Obama said. “But government can make a difference.”

In a briefing with reporters, administration officials acknowledged that the effort was just a small one. But they said it could help develop broader national solutions. “What we’re trying to do here is foster innovation,” said Herbert Allison, an assistant Treasury secretary.

Sarasota real estate market remains hot as temperatures cool

The Sarasota real estate market remained hot in November 2009 with overall sales nearly 86 percent higher than November 2008.  Total sales stood at 578 in November, mirroring last month’s total of 574 and much higher than the 311 sales reported in November 2008. The breakdown was 417 single family homes and 161 condos sold last month.
 
The fall has proven to be a busy one for many local Realtors®, and the trend doesn’t seem to be slowing down. Pending sales stood at 793 in November, just below last month’s total of 839, and far higher than last November, when only 504 pendings were reported. The statistic is a strong indicator for the next two or three months of sales, as pending sales are an indicator of current buyer activity. Some experts had predicted pending sales might slow because of the uncertainty over the extension of the first-time homebuyer’s tax credit. But that fear has proven unfounded in the Sarasota market.

 The tax credit was extended and expanded to include many other homebuyers on Nov. 6, so the home buying sales rush could easily continue through the season and the first quarter of 2010. The recent statistics continue to point to a local market in a prolonged recovery period.
 
The median sale prices for single family homes and condominiums have apparently stabilized after the extended drop experienced in 2008. The median sale price for single family homes actually jumped by approximately 6 percent to $162,500 from October’s level of $151,000. The median was only 4.4 percent below the November 2008 median sale price of $170,000.
 
The condominium median prices continue to see-saw, dropping to $178,750 in November after rising to $220,000 in October. In September 2009, the median was only $162,500. In November 2008, the median sale price was $195,000, which is very near the median condominium sale price for the 11 months of 2009 ($198,500).
 
Bank-owned property sales and short sales are still accounting for almost half of the single-family home sales and a third of the condo sales in November, and still represent the biggest factor in the overall lower sale prices. For normal arm’s length sales the median sale prices are almost double the figures for the distressed properties.
 
“We are experiencing a very active real estate market during the early seasonal months, when our northern visitors and winter residents return,” said Bill Geller, 2009 SAR President. “Even during these times of higher unemployment and slower national economic activity, it’s very encouraging to see that the Sarasota area remains an attractive place to purchase a home. The statistical trends indicate the market is returning to health. Higher sales and pending sales, stabilizing prices, lower inventories – all of these numbers point to a return to a vibrant real estate market.”
 
While the inventory level rose slightly in November, from 6,226 to 6,261 properties on the market, it is still at the lowest level since late summer of 2005 and the years prior to the boom period from 2003 – 2005.
 
The “months of inventory” – the number of months it would take to sell all the available properties at the current sales rate – dropped to 14.6 months for condos. That’s the lowest figure in the past three years, and far lower than the 40.5 months reported in November 2008. The months of inventory is now 9.4 months for single family homes, slightly higher than October’s 9.3 months, but far lower than last year’s figure of 27.6 months. A figure of 6 months is considered to be a market in equilibrium between buyers and sellers.

For Assistance with Purchasing or Selling a Home, Contact Justin Shirley @ 941-448-4872

WASHINGTON (AP) – Oct. 27, 2009 – Top Democrats in the Senate are pressing a plan that would extend a popular tax credit for first-time homebuyers but gradually phase it out over the course of next year.

The proposal, by Majority Leader Harry Reid, D-Nev., and Senate Finance Committee Chairman Max Baucus, D-Mont., would extend the $8,000 tax credit – which expires Nov. 30 – through March 31. Its value would drop by $2,000 for each of the subsequent three quarters of 2010.

The plan, which could face a vote in the Senate this week, appears aimed at countering a far more generous $17 billion bipartisan plan that would extend the $8,000 credit through June 30, 2010, boost the income cap for eligibility and open the credit to all buyers, rather than first-timers.

Senators are maneuvering to add the homebuyer tax credit extension to legislation to extend unemployment benefits by up to 20 weeks. That bill faces a key test vote on Tuesday.

Supporters say the tax credit has helped revive the housing market and say that if it’s cut off as scheduled at the end of next month, home sales could drop off.

Reid sought to schedule a vote on the competing measures on Monday but was blocked by top Senate Republican Mitch McConnell of Kentucky, who is demanding votes on unrelated GOP proposals.

One such proposal would require people receiving unemployment insurance to be processed through the E-Verify program to prove legal immigration status and would require all federal contractors to use E-Verify. E-Verify is an Internet-based system that employers use to check on the immigration status of new hires.

The Democratic plan also would extend the ability of money-losing businesses to claim refunds on taxes paid during profitable times up to four years ago. All businesses could take advantage of the credit; when passed in February it was limited to smaller companies with annual revenues of $15 million or less.

The provision is especially popular with homebuilders who made huge profits in the housing boom but are struggling today. Critics say it’s a giveaway to some of the very companies that helped build up the housing bubble years ago.

Copyright © 2009 The Associated Press, Andrew Taylor, Associated Press writer

September sales skyrocket as market approaches equilibrium
 
Real estate expert Barbara Corcoran listed Sarasota as the number one place in the nation to buy a property in her latest “hot market” prognostication. She cited the lower property prices – 30 percent below last year at this time – combined with a recent price surge of 13 percent in the last quarter, plus Sarasota’s unique “metropolitan” cultural appeal for boosting this area to the top spot.
 
On the Oct. 6th Today Show, Corcoran said Sarasota was the top place to buy real estate in the nation today, an opinion shared by SAR and most area real estate professionals.
 
As a confirmation of Corcoran’s report, home and condo sales jumped by 35 percent in September 2009, compared to the same month last year, and 9.7 percent from the August 2009 stats in the Sarasota market. Total sales stood at 554 in September, compared to 409 total sales in September 2008. The breakdown was 399 single family homes and 155 condos sold last month.

 
Sales in September 2009, traditionally a slow month at the end of the summer, were unexpectedly higher than in August 2009, perhaps signaling an early end for the traditional slower season as we head into a hoped for robust fall and winter.
 
The median sale prices continued to be held down by the high number of bank-owned property sales and short sales, which accounted for half of the single-family home sales and a third of the condo sales. But the “discount rack” is beginning to thin out, and once the bargains are gone, there is the potential for price appreciation on a stronger scale. The median sale price for single family homes was $165,000 last month, up slightly from the previous month, but down 21.8 percent from a year ago. The condo median sale price was $162,500, down significantly from September 2008′s $190,000 figure.
 
The future price trend might well be upwards, as about half of the single family sales and one third of the condo sales involved short sales and foreclosures. Once these distressed properties are off the market, the normal, arm’s length sales should bring the median prices to higher, true value levels.
“We certainly agree with Barbara Corcoran, and her conclusions are what we’ve been saying for many months,” said Bill Geller, 2009 SAR President. “This is an amazing time to buy Sarasota properties at prices not seen since the early 2000s, or even earlier. But the public needs to understand – these prices won’t last. Once the market reaches equilibrium, and we’ve exhausted the distressed property pool, we will start to see more and more multiple offers on choice homes.”
 
The $8,000 first-time homebuyer tax credit was one of the factors in the recent market resurgence, which produced sales in September that nearly topped the 600 level for the second time in 2009. In addition, investors seem to have returned to take advantage of the price drops. Pending sales in September have also continued to show strong levels – very near the 800 mark – as the real estate market recovers after a two-year recession.
 
Pending sales have now exceeded the 800 level for seven out of nine months in 2009, after lingering in the 400 to 500 per month range for much of the previous two years. The statistic is a strong indicator for the next two or three months of sales, when many of these pendings will become closed sales. Pending sales are sales where an offer has been accepted during the month, but the sale has not yet closed. Even though some pending sales never close, pending sales are an indicator of current buyer activity.
 
Most of the statistics continue to point to a market in the initial stages of recovery. Inventory levels continued to decline and are now at the lowest point since the boom ended – a good sign for a market in recovery. There are now only 3,915 active single family listings and 2,337 active condo listings, figures not seen since August 2005 and earlier when the boom first started.
 
The “months of inventory” – the number of months it would take to sell all the available properties at the current sales rate – was down for both single family and condos. The figure is 9.8 months for single family and 15.1 months for condos. A figure of 6 months is considered to be a market in equilibrium between buyers and sellers.
 
Sarasota Association of REALTORS®

Unbundling the Real Estate Transaction:
Providing fee-based services as a real estate consultant
Julie Garton-Good, DREI, GRI

As a broker of twenty-five years, I’ve always had a problem with how our industry is designed. We spend eons of time consulting with buyers and sellers-for free. We receive no up-front fees, even though we’re expected to expend hundreds of dollars per listing (our stock in trade, even though we have no control over it) just to make the phone ring (as well as appease the seller, even though he has no earthly idea what goes into a marketing campaign!) We then spend dozens of hours each month driving buyer prospects around educating them, often to have them purchase from someone else–oftentimes a for-sale-by-owner. And last, but certainly not least, there’s the concept of service — we service the seller, we service the buyer. We provide service at every turn, hoping that the consumer will see value in all this service and reward our efforts by selling or buying with us. Then, and only then, do we get paid.
Correct me if I’m wrong, but is it likely that Bill Gates or Mary Kay Ash would use our current real estate sales model to design a multi- billion dollar business empire? No, I don’t think so either.

SERVICE DOES NOT EQUATE RESULTS

I believe that too much service may be part of our industry’s problem. Think about it — that which is readily available and given freely is often discounted. And are there times when too much real estate service could actually break down communications with the consumer, causing us to move away from, instead of toward, results?

Let’s say that you’ve had a seller listed for four months with very few showings. You service the seller, ad nauseam, mailing ads to him, calling on a weekly basis — even holding a broker’s open. If you could just get an offer on the home, you think you could sell it to the owner. After all, you’re keeping him informed with copious service.

While all this is happening, the seller is thinking, “If that agent would just DO something to get this house sold! He keeps sending me all this mail, but I’ve yet to see even one offer.”

Extended into the future, the seller is likely to change companies, assuming that the first agent/company was incapable of achieving the seller’s desired result of selling the house.

True, sellers don’t really understand what we do. But perhaps part of our problem as professionals is that we haven’t prioritized the aspects, of our business that SHOW value. We’ve been “majoring in minors” as the phrase goes; and we’ve awakened to a brave, new world where cheaper, more flexible, online products are empowering consumers and replacing much of what we’ve previously done as real estate agents.

AGENTS GIVE SERVICE: CONSUMERS WANT RESULTS

One reason our current real estate model is irreparably broken is that we erroneously equate service with results. In today’s “one size no longer fits all” environment, this couldn’t be further from the truth! That shop-worn yard sign on the seller’s lawn does no good for the agent’s/company’s image. In fact, it screams that “we haven’t gotten the job done–but we’re servicing you to death in the meantime!”

You’re probably saying, “‘Julie, this is the way we’ve always helped people sell and buy real estate!” While it may be the old way, it ain’t the only way! What if we could throw out the non-productive activities (those that could be done by someone else, maybe even the seller) like showing the house, in exchange for concentrating on our professional, personal, high-level talents like negotiating and troubleshooting the sale? If you had an ironclad agreement with the seller, what would be the harm in having him show the property — (being the one to announce to potential buyers “this is the kitchen”.) especially if it could free you up to render higher-level, more personalized, more valuable skills — and get paid for them?

“What about the control issue?” you ask. Wouldn’t the seller and buyer find a sneaky way to get out of paying the fee once they got together? (I’d retort, “And they don’t now?) It’s been my experience that far fewer people haggle with professionals whose performance is incumbent upon a high-skill level (like a brain surgeon, or a CPA defending you against the IRS) especially when the skills can’t be duplicated by automation or technology. That professional has a much easier time getting paid and perfecting a niche as an invaluable, and necessary piece of the business puzzle in the new millennium.

OUR SKILL MODEL IS UPSIDE DOWN!

In fact, when you look at what we charge for (showing the house, servicing the seller, driving buyers around) it’s no wonder our industry is in a state of turmoil. If you turn the skill model upside down, we should be giving away what we’re perceived as charging for, and vice- versa! For example, instead of “throwing in” the negotiating and advocacy services and burying them deep in the added-value aspects of working with an agent, we should reframe them, prioritize them, and CHARGE for them! (Wow — what a novel concept — getting paid for our skills!) Contrarily, we should avoid, delegate, and/or reprioritize those activities (like showing property, driving buyers around, etc.) that could be performed by the seller, a licensed personal assistant, or a chauffeur. (When was the last time you saw your attorney escorting his client to court?) Then, and only then, will our skills be taken seriously and adequately compensated.

ONE SOLUTION: REINVENTING OURSELVES AS CONSULTANTS

WHAT  CONSUMERS’  WANT  AND  DON’T  WANT  FROM  US

Consumer Reality #1: Sellers don’t care about service.  If working with an agent didn’t result in a successful sale (i.e. generate results) service was valueless.

Consumer Reality #2: Our skill model is upside down.  When asked what segments of the agent’s skills/services were deemed most valuable to the consumer, 85% rated the CMA (Comparative Market Analysis) as the most vital tool—far overshadowing the obvious people-related, strengths of negotiating and counseling.  The industry lesson is that we have not properly showcased the value of one-on-one skills to the consumer; in other words, that which is not differentiated or constantly visible is discounted (like late-night negotiating with a buyer.)

Consumer Reality #3: Consumers want what they want, when they want it and will gravitate to the most cost-effective source to obtain it.  Why?  Because our “one-size-fits-all” approach to working with sellers and buyers is archaic and won’t allow consumers to access various segments of help they need in a timely fashion.  That’s why .com web start-ups are finding a receptive audience in real estate consumers and why for-sale-by-owners are burgeoning.

HOW   DO  WE  START  TO  UNBUNDLE  SERVICES?

The easiest target, fastest-growing target for unbundling services is also the most overlooked and under-serviced—FSBOs.  The buoyant real estate market of the past several years has drawn us to more lucrative targets for listings and sales.  But the prediction is that for-sale-by-owners will double in the next ten years to comprise as much as 40% of all properties for sale in the marketplace.  That’s a statistic to pay attention to.  And even if online services help FSBOs to lease signage, write ads, etc. there’s still money to be made offering those personalized services of negotiating, advocating, and troubleshooting the transaction.

DO  THE  MATH  AS  A  REAL  ESTATE  CONSULTANT

Crank out your calculator.  How many hours would it take to negotiate between the FSBO and a qualified buyer and monitor the sale to a successful closing?  My research shows a median timeframe of ten hours for these tasks.  What if the parties to the transaction were willing to pay you, say (for the purpose of example only) $150 per hour, capped at a maximum fee of $1,500?  And what if they’d give you a $500 retainer against that fee? (passed through your broker’s escrow account, of course.)  So on a 50/50 split with your broker, you’d gross $750 per FSBO  transaction as a consultant.  And if you closed just two of these assignments per month, that would be an extra $18,000 a year!  Certainly nothing to sneeze at and a professional activity that mixes well with commissioned-sales business.  (And don’t forget that satisfied FSBOs are an especially good source of recommending you to others.  After all, they’ve won, so they’re willing to help you win.)

EASE  IN  WITH  CONSULTANCY  AS  AN  ALTERNATIVE  CHOICE

 Yes, most real estate markets are booming (but predicted to soften.)  And, yes, it’s true, most of us would rather have a root canal than spend time hammering a FSBO to list.  But what if in lieu of listing, a consumer would choose to actually pay us for services rendered? Would that be worth the effort?

 Give it a try the next time you have the opportunity.  Offer it to a FSBO as an option to a formal exclusive listing (after receiving the blessing of your broker, of course.)   In my experience, you’ll receive one of two responses from the consumer:  1.  “Read my lips, I want to sell my house myself.”  Or,  2. “That’s interesting.  It could be exactly what I need.  How much will it cost?” 

WHAT  TO  CHARGE  &  HOW  TO  DECIDE

 Now for the question every one wants a panacea to—how much to charge.  The answer?  Ya gotta figure it out for yourself.  (Not what you want to hear; but truly what you NEED to hear.)   Why?  Because one of the beautiful things about being a real estate consultant is determining the TRUE value of your expertise.  We’ve long been slotted as “just another real estate agent, charging the same X percent.”  Now (using much more than fee differentiation) we can niche our market by being the best at a certain task while being rewarded in proportion to our ability—much like the CPAs and attorneys you refer business to.

 When deciding what to charge, you first must determine the:

1) skill level required to perform the service (broker, agent, licensed/unlicensed assistant?)
2) cost of any new training required to satisfactorily do the job;
3) per hour dollar-value of the person performing the task (allowing for a factor of  “lost opportunity” time that could better be spent doing or developing other higher-paid opportunities); and
4) block of time it would customarily take to perform the unbundled activity (including a factor for additional administrative or clerical assistance, cost of supplies, technology required, and more.)

ANALYZE  RESULTS

After performing this cost-analysis gyration, a broker/agent might find that it:

1) is unrealistic that a consumer would pay enough for the unbundled service to be profitable to the brokerage;
2) could work financially, but not with top producers; or
3) could make financial sense to begin the unbundling process with “troubleshooting-the-sale-services” for FSBOs, using existing administration personnel. 

The alpha and omega is the principal broker.  He/she not only makes decisions for the brokerage about whether unbundled services is a logical fit for the brokerage, but typically dictates the services offered and a range of fees for those services.

BOTTOM  LINE:  CONSUMERS  WILL  GET  WHAT  THEY  WANT

The good news is that consumers want what they want and will compensate experts who provide it to them.

The bad news is that real estate consumers want what they want and will gravitate to professionals who provide it.  And since the real estate industry is the last of  the financial industries to unbundle services, it’s merely a matter of time before empowered consumers vote with their feet, and their wallets, in the move to unbundled, results-oriented, cost-effective real estate answers.

Julie Garton-Good, DREI, is an international speaker and author of five books on real estate, most recently “The Frugal HomeOwner’s Guide to Buying, Selling, and Improving Your Home.”  The overview for her real estate consultant designation program, “Consumer-Certified Real Estate Consultant™” (C-CREC™) through the National Association of Real Estate Consultants® (NAREC®) can be found at www.juliegarton-good.com

Record streak continues for pending home sales

WASHINGTON – Oct. 1, 2009 – Pending home sales have increased for seven straight months, the longest in the series of the index which began in 2001, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in August, rose 6.4 percent to 103.8 from a reading of 97.6 in July, and is 12.4 percent above August 2008 when it was 92.4. The index is at the highest level since March 2007 when it was 104.5.

Lawrence Yun, NAR chief economist, said not all contracts are turning into closed sales within an expected timeframe. “The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules,” he said. “No doubt many first-time buyers are rushing to beat the deadline for the $8,000 tax credit, which expires at the end of next month.”

The Pending Home Sales Index in the Northeast jumped 8.2 percent to 85.3 in August and is 12.0 percent higher than August 2008. In the Midwest the index rose 3.1 percent to 90.8 in August and is 7.6 percent above a year ago. In the South, pending home sales increased 0.8 percent to an index of 104.6 and is 8.2 percent above August 2008. In the West the index surged 16.0 percent to 130.5 and is 22.3 percent above a year ago.

“There is likely to be some double counting over a span of several months because some buyers whose contracts were cancelled have found another home and signed a new contract to buy,” Yun explained. “Perhaps the real question is how many transactions are being delayed in the pipeline, and how many are being cancelled? Without historic precedents, it’s challenging to assess.”

Yun also noted that the data sample coverage for pending sales is smaller than the measurement for closed existing-home sales, so the two series will never match one for one.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said first-time buyers need to act now. “Potential first-time buyers must make a contract offer very soon to have a reasonable chance of qualifying for the tax credit,” he said. “Congress needs to extend and expand this program because it’s stimulating the economy and reducing inventory close to price stabilization points.”

McMillan said a sizable number of homebuyers already in the pipeline could be let down because of the tight deadline. “We know there is a pent-up demand because sales are below normal levels for the size of our population. The faster we absorb excess inventory, the sooner we’ll turn the corner on home prices, prevent additional families from becoming upside-down in their mortgages, and give Wall Street the confidence to extend credit to other sectors,” he said. “Each home sale pumps an additional $63,000 into the economy through related goods and services, so the benefits of extending and expanding the tax credit far outweigh the costs.”

Yun said the forecast for home sales and prices depends very much on whether a tax credit is extended. “All we can say for certain is sales will decline when the tax credit expires because we are not yet on a self-sustaining recovery path. It also raises a risk of a double-dip recession,” he said. “Extending and expanding the tax credit is the best tool in our arsenal to encourage financially qualified buyers to stimulate the economy and help reduce the budget deficit.”

© 2009 Florida Realtors®

Good news about housing and stocks lifts Florida’s consumer confidence

GAINESVILLE, Fla. – Aug. 26, 2009 – Rising housing prices, stock market gains and the lack of any new setbacks in the national economy boosted Florida’s consumer confidence three points to 70 this month, according to a new University of Florida (UF) survey.

“We had anticipated an increase in consumer confidence in August based on what appeared to be an unjustifiable two-point drop in July following what was already a two-point decline the previous month,” said Chris McCarty, survey director of UF’s Bureau of Economic and Business Research. “While the economic environment is by no means bright, the decline in July seemed unsustainable given the lack of any very bad economic news and some encouraging signs in Florida’s housing market and the stock market.”

Three of the five components in the index rose, one fell and one stayed the same. Perceptions of personal finances now compared with a year ago remained unchanged at 43, still only four points above its all-time low of 39. Perceptions of U.S. economic conditions over the next year jumped 10 points to 73; perceptions of U.S. economic conditions over the next five years rose eight points to 80; and perceptions of personal finances a year from now increased five points to 84. The only component to drop was perceptions of whether it is a good time to buy big-ticket items, which fell five points to 72.

“We are not out of this recession yet, particularly here in Florida, but things are not nearly as bad as they were a year ago,” McCarty said.

Home sales have picked up both nationally and in Florida, and falling prices suggest a bottoming out of the housing slump, McCarty said. The latest report from the Florida Association of Realtors® shows median prices for existing single-family homes flat from last month and still up for the year.

If foreclosures continue, they could depress home prices, McCarty said. The Mortgage Bankers Association has reported that 23 percent of Florida mortgages in the second quarter of 2009 were either in foreclosure or late on payments.

The hardest hit area for foreclosures is along the southwest coast, including Fort Myers, Sarasota and Punta Gorda, all of which are disproportionately dependent on retirees, McCarty said. A slowing of the retiree housing market is a big factor in Florida’s population decline last year for the first time since 1946, which the bureau reported last week, he said.

“We expect consumer confidence to stay mired in the upper 60s and low 70s as the recovery develops,” McCarty said. “Unfortunately, while Florida housing is showing signs of improving, the overall state economy in the long run will likely lag other parts of the country given the prospects for a turnaround in employment.

“As the country moves into recovery over the next year, real estate, construction spending and tourism – all of which have been major sectors in Florida economy’s over the past two decades – will certainly stabilize, but not grow as they had,” he said. “Florida needs a new approach.”

The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for August was conducted from 425 responses. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year.

© 2009 FLORIDA ASSOCIATION OF REALTORS®

High-end homes: is the tide turning?

HORSHAM, Penn. – Aug. 14, 2009 – High-end homes appear to be selling better than analysts thought.

Toll Brothers (TOL), the nation’s largest luxury homebuilder, on Aug. 12 announced its first year-over-year increase in signed home contracts since 2005, suggesting that first-time buyers might not be alone in driving improving U.S. home sales.

The Horsham [Pa.]-based builder said that signed contracts in the quarter ended July 31 – though still low by historic standards – rose 3 percent, to 837, compared with the same period a year ago. But revenues fell 42 percent in the quarter, to $461.3 million. The company also said it has been able to reduce buyer incentives in several markets as demand and contract cancellations improve.

“Mood has changed”

No other major builder has matched Toll Brothers’ 3 percent increase in contracts signed, though a few reported a 2 percent improvement in the most recent quarter, said Barclays Capital analyst Megan McGrath in New York. The average quarterly decline in new home contracts for major public builders was about 14 percent, she said.

Toll Brothers attributed the improvement to low interest rates, government homebuyer incentives, the recent stock market surge, and decreased competition from smaller and midsize builders now frozen out of credit markets. “The mood has changed,” Chief Executive Robert Toll told analysts during a conference call. “Our traffic still stinks but those people that are coming in are more serious. They’re not just fishing any longer. Now, there’s fear on both sides. We fear not selling and they fear missing.”

McGrath said Toll Brothers is selling homes for an average of $582,000 – far below the multimillion-dollar price tags for the estates of the rich and famous commonly referred to as “luxury real estate.” The market for million-dollar homes is weak, but Toll Brothers’ homes are more modestly priced and generally don’t require “jumbo” mortgages. Those are loans that generally exceed $417,000. Toll said the company’s strongest markets are in the Northeast, particularly Connecticut, the New York suburbs, and New Jersey. But sales are also strong in the Virginia suburbs of Washington, D.C.; Delaware; Raleigh, N.C.; Orlando; Northern California; and Naples, Fla.

Too soon to tell

Shares of Toll Brothers closed 14 percent higher Wednesday, at 23.42. “There are a lot of stories in the press about how poor the luxury market has been doing,” McGrath said. “Some of it is a misunderstanding about what is luxury and Toll’s actual business.”

Michael Widner, vice-president of Stifel Nicolaus Research (SF), said it’s too early to say whether Toll Brothers’ performance represents a change in the market because the small improvement in contracts signed might be a temporary blip. “If we have seen a rebound in something other than the first-time homebuyer market, this is the first real sign of it,” Widner said. “It’s a little early to celebrate too much.”

Copyright © 2009 The McGraw-Hill Cos., Prashant Gopal. All rights reserved

 
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‘Freaky’ side of real estate economics
Flat-fee brokers may put pressure on traditional commissions
Friday, June 23, 2006

By Glenn Roberts Jr.
Inman News

SAN FRANCISCO — Traditional pricing for real estate services is bound to crumble, and flat-fee brokers will likely deliver the deathblow — at least according to Steven D. Levitt, co-author of “Freakonomics,” a book that takes an unconventional approach to economics.

Levitt, who spoke to attendees Thursday at the PCBC builders’ conference and trade show at San Francisco’s Moscone Center, also said that the real estate brokerage industry is in some ways its own worst enemy, as low barriers to entry lead to proportional surges in agent population during housing market booms.

“It turns out that the median real estate agent is making the same amount of money today that they were 10 years ago, despite the fact that housing prices are up 50 to 60 to 70 percent during that time period nationwide. In the end … you’ve got to feel sorry for the real estate agents. Now, instead of selling six houses a year, the typical agent sells two or three houses. My own feeling is that if you were thinking about getting into the real estate business, I wouldn’t do it,” he said.

Such views have not won Levitt and co-author Stephen J. Dubner any popularity contests within the ranks of the National Association of Realtors trade group, Levitt readily acknowledges. Particularly because one of the chapters in the book draws parallels between real estate agents and the Ku Klux Klan. “We’re not big favorites with the National Association of Realtors right now,” he said.

But Levitt explained that the book is not intended “to imply that real estate agents are bad people in any way, shape or form,” he said. His research has raised questions, though, about whether real estate agents always seek to get the best deal for their clients.

In an analysis of 100,000 home sales in the Chicago area, Levitt found that real estate agents tend to sell their own homes for about 3 percent or so more than the selling price of their clients’ homes. When he speaks to real estate agents, he inevitably will hear a familiar range of responses, he said, such as: “Well, that’s just because we have better taste. We’re better at showing houses. We have good paint colors and that makes people want to jump in our houses and pay more.”

The research also found that real estate agents tend to leave their own homes on the market about 10 percent longer than their clients’ homes. “If they have such great taste in paint you’d think their homes would sell faster than their clients’ (homes),” he said, adding that he was not surprised by the findings.

He shared a personal story about a home he was interested in buying in the suburban Chicago area. The home had been on the market for about six or eight months, and he decided to call the listing agent directly.

“I had learned already that I didn’t want to have a buyer’s agent,” he said, since he knew that a buyer’s agent shares in the total commission paid by the seller to the listing agent. By going directly to the seller’s agent, that agent and the agent’s broker could keep all of the commission for themselves.

“I said to her, ‘I’m interested in this house and I don’t believe in buyer’s agents.’ I could hear her voice really pick up on the other side of the line.” Then, he asked a very direct question. “Can you just tell me the absolute lowest price at which the homeowner is willing to sell this house for?”

Her response, “You should be ashamed of yourself. That would be a complete violation of my client relationship to tell you any information like that and you should know better than that. It’s not right to ask me questions like that.”

Later, as the phone call came to an end, Levitt said the agent volunteered some information that led to his offer on the property: “Let me just tell you one last thing. The owner of this home is willing to sell this house for less than you can possibly imagine.”

He made an offer for $50,000 less than he had planned to offer, and the offer was accepted without any back-and-forth. “Basically, in order for that agent to put an extra $20,000 or $30,000 back in her pocket she basically stole $50,000 from her client.”

Levitt added, “When I tell this story in front of real estate agents, I always get the same reaction, completely predictably, ‘I would never, ever do something like that to my client. It’s just patently absurd.’ But you wouldn’t believe the people I interact with on a daily basis – every other real estate agent is doing this every time I turn around.”

Lately, Levitt has focused his attention on flat-fee real estate brokers that charge a flat rate for listing a home for sale in a multiple listing service. He has studied three markets, and so far has concluded that there isn’t much difference in the price that sellers get for using a flat-fee broker versus a traditional, full-service real estate broker.

“In some markets it may take 10 to 15 days longer to sell my house — in other markets I see no difference at all. In the end, if this is true, it’s really going to be bad, bad news for real estate agents, which I think is actually really good news for everybody else.

“I just don’t see how the real estate agents can maintain the level of pricing they have,” he said, referring to a commission rate that has traditionally hovered around 6 percent of the sale price of a home. “And I think that the way it will crumble is not through FSBOs (for-sale-by-owner transactions). What’s really going to be the undoing of real estate agents is going to be flat-fee brokers. It seems to me that’s a very viable option, unless (Realtors are) successful in the end in getting legislation passed which will preclude it from happening.”

Levitt said that lawyers for the National Association of Realtors asked about the source of the MLS data used in his and threatened litigation. But Laurie Janik, general counsel for the National Association of Realtors, said today, “NAR never at any time ever threatened Mr. Levitt with litigation nor did any member of my staff ever speak to him or contact him.”

And Steve Cook, a spokesman for the National Association of Realtors, said that the Realtor group has not taken any legal action against Levitt or the real estate professional who supplied the MLS data.

New doors opened to his research after the release of “Freakonomics,” Levitt said. “Suddenly, everybody wants to give me data.”

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