Real Estate Report July 2010

Prepared by Michael Moulton, CRS

The following statistical data is from information provided through the Multiple Listing Service of the Sarasota Association of Realtors. The following table summarizes what happened in each price segment. The Sold m, Pending m and Listings m columns are sales and listings for the month of the report and the Pending and Listings are the current totals of each in the MLS system. The Sold a column is the total sales for 2010 year to date, the Sold b is the closed sales year to date in 2009 and the Sold c column are the closed sales for the total 2009 year in each price category. The Listing ’09 column shows the # of listings for each price category at the end of 2009.

Houses                Sold m   Sold a  Sold b  Sold c  Pend m   Pend    List m    List     List ‘09

$250k & under       241      2158        1750     3055      204           822       213       1202     1323

$250k to $500k       58        693         541       958        49         227       123         747       938

$500k to $750k       23        173         155       273        20          70          41         319       363

$750k to $1m            9         81           44          87         6           29          18         207       244

$1m to $2m              9         77           65        106         5           24          19         275       355

$2m & above            4         28           26          43         3           13            7         196       261

Totals                     344      3210       2581      4522     287       1245       421       2946      3484

Condominiums  Sold m   Sold a   Sold b  Sold c  Pend m   Pend     List m    List     List ‘09

$250k & under      127      1135        809       1431      74           408            178       1064     1204

$250k to $500k      27        346         262        474       17            69           50         643      700

$500k to $750k     10         126          93         163        3             29           23         273      326

$750k to $1m         2 50           35          65        5             16             6         108      160

$1m to $2m           6 49           29          60        0               7             9         129      161

$2m & above          1            17          10          20         0              2             5           64        89

Totals                    173       1723      1238      2213      99           531          271      2281   2640

Grand Totals      517       4933      3819      6735      386       1776         692       5227    6124

66% of the months sales were single family homes and 34% were condominiums which is the typical monthly ratio. Of the total monthly sales 71% were properties that sold for $250,000 or less, 16% were sold for between $250,000 and $500,000, 8% sold for between $500,000 and $1,000,000 and 5% sold for over $1,000,000. The current listing inventory is 15% less then where it was at the end of 2009.

As the statistics relate to listed properties vs. sold properties we have 10 months of inventory overall based on the July closings. Based on the July closings there 8 months of inventory for properties listed under $500,000 compared with 10 months at the beginning of 2010, in the price bracket of $500,000 to $1,000,000 there is 20 months of inventory down from 22 months at the end of 2009 and over $1,000,000 there is 33 months of inventory based on the July closed sales. There are 563 less listings then the end of June. The months of available inventory does vary greatly on a month to month basis based on that months closed sales. Six months of inventory is considered a neutral market meaning it is neither a buyers or sellers market.

Real Estate Report June 2010

The following statistical data is from information provided through the Multiple Listing Service of the Sarasota Association of Realtors. The following table summarizes what happened in each price segment. The Sold M, Pend M (Pending) and List M (Listings) columns are new transactions that happened during the month and the Pending, not yet closed and Listed are the totals of each in the MLS system. The Sold column is the total sales for 2010 year to date.

69% of the months sales were single family homes and 31% were condominiums. Of the total sales 66% were properties that sold for $250,000 or less, 24% were sold for between $250,000 and $500,000, 8% sold for between $500,000 and $1,000,000 and 2% sold for over $1,000,000. The current listing inventory is 5% less then where it was at the end of 2009.

As the statistics relate to listed properties vs. sold properties we have 12 months of inventory overall based on the June closings. Based on the June closings there is only 6 months of inventory for properties listed under $500,000 compared with 10 months at the beginning of 2010, in the price bracket of $500,000 to $1,000,000 there is 17 months of inventory down from 22 months at the end of 2009 and over $1,000,000 there is 46 months of inventory based on the June closed sales. The months of available inventory does vary greatly on a month to month basis based on that months closed sales. Six months of inventory is considered a neutral market meaning it is neither a buyers or sellers market.

Real Estate Report May 2010

The following statistical data is from information provided through the Multiple Listing Service of the Sarasota Association of Realtors. The following table summarizes what happened in each price segment. The Sold M, Pend M (Pending) and List M (Listings) columns are new transactions that happened during the month and the Pending, not yet closed and Listed are the totals of each in the MLS system. The Sold column is the total sales for 2010 year to date.

63% of the months sales were single family homes and 37% were condominiums. Of the total sales 63% were properties that sold for $250,000 or less, 23% were sold for between $250,000 and $500,000, 9% sold for between $500,000 and $1,000,000 and 5% sold for over $1,000,000. The overall listing inventory is 10% less then where it was at the end of 2009.

As the statistics relate to listed properties vs. sold properties we have 12 months of inventory overall based on the May closings. 2009 ended with 10.1 months of listing inventory. Based on the May closings there is only 5.3 months of inventory for properties listed under $500,000 compared with 10 months at the beginning of 2010, in the price bracket of $500,000 to $1,000,000 there is 16 months of inventory down from 22 months at the end of 2009 and over $1,000,000 there is 22 months of inventory vs. 45 months at the end of 2009 based on April 2010 closed sales. Six months of inventory is considered a neutral market meaning it is neither a buyers or sellers market.

10 Things to Know Before Buying A Home

The decision to buy a home seldom comes overnight—indeed, even seasoned investors think long and hard before putting money into real estate. For most people, it’s the single most important investment they’ll ever make. So it’s only natural, even practical, to get informed before taking that step. Here are ten things worth knowing if you want to get your money’s worth.

1. Are you ready to settle?

One sign that you’re ready to own a home is if you can see yourself staying in one place for more than a couple of years. Less than that, it’s seldom worth the trouble (and transaction costs) of reselling and moving out again. Even if the market were doing better, you’ll only lose money by buying a home when you can’t stay put just yet.

2. How’s your credit?

You’ll most likely need a mortgage to buy your home. To get the best deals, you need good credit—it’s the banks’ way of knowing how likely you are to keep up with payments. Start by getting copies of our credit report and double-checking the facts. Do this at least a few months before house-hunting so you’ll have time to fix any problems.

3. How much can you afford?

As a general rule, you should aim for a house worth two and a half times your annual income. If you’re making $100,000, you can probably comfortably afford a $250,000 home. Of course, there are other factors to take into account, such as your debts and other monthly expenses. Try talking to a financial adviser to set a more precise budget.

4. Can you afford the down payment?

Aim for a down payment of at least 20 percent of the home’s value. This will get you prime rates and terms at most major banks. You can still get financing with less—some banks will accept as little as 3 percent—but the more you can put down, the better.

5. How’s the neighborhood?

Experts recommend buying in a district with good schools, even if you don’t have school-age kids. Historically, areas with a strong educational community tend to have higher property values. This gives you solid equity for when you need to refinance, and ensures a decent profit when you need to resell later on.

6. Do you have an agent?

A professional agent can help whether you’re buying your first home or your fifth. It’s not just about getting access to listings; a good agent can also help you arrange for financing, negotiate with sellers, and plan the move. Look for an exclusive buyer’s agent—they won’t be limited to certain sellers and can give you smart bidding strategies.

7. Do you want to buy points?

A point is a small portion of the interest (usually 1% of the value) that you can pay up front in exchange for a lower interest rate. It helps the lenders stay liquid and, if you stay in the home long enough, will save you money in the long run. Sit down with your agent and decide whether or not the points are worth taking.

8. Are you pre-approved?

Getting pre-approved is becoming more or less standard in home buying—some sellers won’t even look at offers that don’t come with pre-approval letters. It also saves you the trouble of looking at homes you can’t afford, since you know at the outset what your limits are. Don’t get it confused with pre-qualification: a pre-qualification is just a quick assessment of your finances, while a pre-approval takes into account such factors as debt, income, and credit history.

9. What’s the market like?

You need a good grasp of the local market if you want to make a reasonable bid. Your agent can give you a comparative market analysis of recently sold homes similar to the one you’re buying, which you can use as a benchmark for your offer. For example, if similar homes have sold for 5 percent lower than the listed price, you should bit at about 8 to 10 percent lower to give yourself negotiating room.

10. What condition is the home in?

Most lenders will require a home appraisal, but that’s mostly to make sure the home is worth what you’re paying for it. A professional home inspection will reveal any problems in construction, wiring, and piping, which could cost you thousands later on. Inspectors should also issue home insurance, which will keep you covered in case they overlook something that causes problems down the road.

10 Common Real Estate Investing Mistakes

The slow but steady rebound of the housing market has brought about a rise in real estate investing. But investing in property is no easy business, although the dozens of money gurus on the Internet would tell you otherwise. There is a right way to go about it—it’s just a matter of finding it while avoiding the many pitfalls. Here are ten of the most common real estate investing mistakes and how you can avoid them.

Not having a game plan

Atlanta-based investor Andy Heller says many new investors take the plunge without a plan: they snap up good deal, then don’t know what to do with it. Eventually they’ll end up with a number of properties just gathering dust. Your first step should be choosing your strategy, then finding a home that fits it.

Expecting returns overnight

What the Internet ads don’t tell you is that a lot of work, time, and money goes into real estate. For your cash to work for you, you need to make smart decisions, develop negotiation strategies, and understand the risks of the business. It takes time, but with good direction, it’ll start paying off eventually.

Working alone

If you think real estate agents are just for first-time buyers, think again. A good network is part of any successful investor’s arsenal, both for buying his own properties and selling them off. Build strong relations with professionals in the field. Ideally, you should be on good terms with at least one realtor, a lender, a home inspector, an appraiser, and a closing attorney.

Over-valuing properties

The idea is simple: you buy a property, then you sell it off for a profit. So the point is to not pay too much for a home—but according to Heller, that’s what a lot of new investors do. Take the time you need to analyze the value of a home—how much it’s worth, what improvements will be needed—before putting your money into it.

Not doing research

First-time investors are often taken aback by the complexities of the real estate business, and this often leads to costly mistakes. Start by joining a National Real Estate Investors Association (REIA) chapter in your area. The monthly meetings touch on a wide range of topics, from buying short sales and foreclosures to leasing issues.

Counting on appreciation

A lot of buyers snapped up properties during the housing boom, thinking they can make quick profits given the strong seller’s market. But the ensuing crash taught them a hard lesson. There’s no telling where the market will go, but with sufficient research and smart analysis, you can lower your risk and find other ways to make proft.

Miscalculating costs

There’s a lot more to home ownership than the asking price. Mortgage, insurance, and property taxes add up over time. And since it takes time to lease or sell a home in today’s market, you’ll be paying them out of your own pocket for a good while. If you’re not prepared, what started out as an asset will become a liability before you know it.

Focusing on single deals

It takes more than one deal at a time to run a real estate investing business. Besides, you miss out on many opportunities by limiting your volume. Build a steady stream of prospects; with enough deals on the horizon, the good ones will naturally come to the fore.

Not having an exit strategy

So you have a plan, but what if it doesn’t work out? Make sure you have at least two backup plans so you don’t get stuck with a property. Plan A might be to work on the home before reselling it. If the market is slow, Plan B could be a lease-purchase offer. And if that doesn’t work out, you can either just rent it out. The profits may be lower with succeeding plans, but it’s better than losing money by simply holding on to it.

Underestimating rehabs

You don’t need an engineering degree to estimate costs, but you do need a good buffer. When you decide to rehab a home, always set aside twice as much time and money as what you would expect it to take—and if you can still make a profit then, it’s worth taking on. This will give you a comfortable cushion against any problems.

Real Estate Report for April 2010

The following statistical data is from information provided through the Multiple Listing Service of the Sarasota Association of Realtors. The following table summarizes what happened in each price segment. The Sold M, Pend M (Pending) and List M (Listings) columns are new transactions that happened during the month and the Pending, not yet closed and Listed are the totals of each in the MLS system. The Sold column is the total sales for 2010 year to date.

62% of the months sales were single family homes and 38% were condominiums. Of the total sales 66% were properties that sold for $250,000 or less, 21% were sold for between $250,000 and $500,000, 10% sold for between $500,000 and $1,000,000 and 3% sold for over $1,000,000. The overall listing inventory is 3% less then where it was at the end of 2009.

As the statistics relate to listed properties vs. sold properties we have 12.6 months of inventory overall based on the April closings. 2009 ended with 10.1 months of listing inventory. There is only 6.2 months of inventory for properties listed under $500,000 compared with 10 months at the beginning of 2010, in the price bracket of $500,000 to $1,000,000 there is 12.5 months of inventory down from 22 months at the end of 2009 and over $1,000,000 there is 35 months of inventory vs. 45 months at the end of 2009 based on April 2010 closed sales. Six months of inventory is considered a neutral market meaning it is neither a buyers or sellers market.

Real Estate Report for March 2010

The following statistical data is from information provided through the Multiple Listing Service of the Sarasota Association of Realtors. The following table summarizes what happened in each price segment. The Sold M, Pend M (Pending) and List M (Listings) columns are new transactions that happened during February 2010 and the Pending and Listed are the totals of each in the MLS system and the Sold column are the total sales for 2010 year to date.

66% of the months sales were single family homes and 34% were condominiums. Of the total sales 66% were properties that sold for $250,000 or less, 20% were sold for between $250,000 and $500,000, 11% sold for between $500,000 and $1,000,000 and 3% sold for over $1,000,000. The overall listing inventory is equal to where it was at the end of 2009 which when compared with the inventory at the end of February, it has climbed back up.

As the statistics relate to listed properties vs. sold properties we have 11.7 months of inventory overall which is up from February’s 9.5 months. 2009 ended with 2 months of listing inventory. There is only 6.8 months of inventory for properties listed under $500,000 compared with 10 months at the beginning of 2010, in the price bracket of $500,000 to $1,000,000 there is 15 months of inventory down from 22 months at the end of 2009 and over $1,000,000 there is 34 months of inventory vs. 45 months at the end of 2009 based on March 2010 closed sales. Six months of inventory is considered a neutral market meaning neither a buyers or sellers market so the market for properties listed under $500,000 is fast approaching this benchmark.

Real Estate Report for February 2010

The following statistical data is from information provided through the Multiple Listing Service of the Sarasota Association of Realtors. The following table summarizes what happened in each price segment. The Sold M, Pend M (Pending) and List M (Listings) columns are new transactions that happened during February 2010 and the Pending and Listed are the totals of each in the MLS system and the Sold column are the total sales for 2010 year to date.

64% of the months sales were single family homes and 36% were condominiums. Of the total sales 70% were properties that sold for $250,000 or less, 20% were sold for between $250,000 and $500,000, 5% sold for between $500,000 and $1,000,000 and 5% sold for over $1,000,000. The overall listing inventory is down 21% from the end of 2009.

As the statistics relate to listed properties vs. sold properties we have 9.5 months of inventory overall which is down from 12 months at the end of 2009. There is only 7 months of inventory for properties listed under $500,000 compared with 10 months at the beginning of 2010, in the price bracket of $500,000 to $1,000,000 there is 22 months of inventory and over $1,000,000 there is 45 months of inventory. Six months of inventory is considered a neutral market meaning neither a buyers or sellers market so the market for properties listed under $500,000 is fast approaching this benchmark. Hopefully as 2010 progresses we can put a dent into the luxury market inventory.

How Does Unemployment Affect Home Value?

The good news for the housing sector is that existing home sales in the U.S. rose 10.1% in October, 2009, and we are beginning to see signs of stabilization. [See Policy, Price, and Product Are Used to Assess Market Recovery for details.]

There is widespread agreement that problems in the housing market caused the financial crisis and led to the recession.  It’s important to note, however, that the housing market is inextricably linked to the employment sector and a sustained improvement for housing might not be realized until the broader economy, including the job market, has recovered.

Demand for housing is driven by demographics—the number of new households being created—and the jobs picture. The job picture, in particular, is crucial for residential real estate since employment allows homeowners to keep their mortgage current and avoid foreclosure.

Therefore, if you’re anxious to predict the value of your home one or two years from now, it’s worthwhile to consider the status of the labor market and the progress being made in the area of jobs creation.  Remember too, that real estate conditions vary greatly by region, so keep your eye on the local job market as well as what’s happening on a national level.

Policy, Price, and Product Are Used to Assess Market Recovery

Existing home sales in the U.S. rose 10.1% in October, 2009. This is good news for the housing sector that has been hurt by an exceedingly large inventory of unsold homes and unprecedented rates of foreclosure.

Government Policy

The ability of the housing market to stand on its own, unaided by federal stimulus, will be tested very soon. The end is nearing for two federal policies that are credited with providing a boost to the housing market this year.  The $8,000 tax credit for new home buyers was extended, but is scheduled to end in the spring of 2010. Secondly, the Federal Reserve, which purchased mortgage securities in an effort to keep mortgage rates low, has indicated that aid will soon cease as well.

The key will be to stabilize the number of unsold homes so the market can operate normally. Experts predict that the housing market has about six months to reduce inventory encouraged by government incentives.

Home Prices

The spring of 2010 may be the market’s best hope for a significant upswing in home values—the first in more than three years, says Michael Englund, chief economist at Action Economics. When the weather gets warmer in spring, home buyers are most active and housing prices often move higher.

While we don’t often equate higher prices with good news, a rise in home prices reflects equity growth. Because homes are a critical component of wealth, this will be a welcome trend for those of us whose wealth is represented largely by our homes.

Housing Inventory

Excess inventory has caused an imbalance in the housing market’s supply and demand balance. There are signs of improvement, however.  A ‘normal’ inventory of existing home supply would be equivalent to 5 ½ to 6 months supply of homes. While October, 2009, saw a seven months’ supply of existing homes on the market, this was down from an eight month supply in September.

Beyond the inventory accounted for, economists and real estate experts are still speculating about how much “hidden supply” is out there waiting to come to market. This hidden supply is in the form of buyers who are waiting for better market conditions before listing and the many foreclosed homes that are in process and not yet back on the market. On a positive note, home builders are adding very little new supply, which is helping to stall further imbalance.