Economy

Housing Affordability Hits New High

Jun 15th, 2011
by edsmith.
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According to a report issued by the National Association of Homebuilders and Wells Fargo, housing affordability hit a new record high this year, surpassing the previous high set in fourth-quarter 2010. In fact, it is the highest level recorded in the more than 20 years the index has been in existence.

In a nutshell, this means that nearly 75 percent of the homes sold in the first quarter of 2011 were considered affordable, based on the national median family income of $64,400. To put the significance in perspective, the index had never even hit 70 percent before 2009. 65 percent was rare.

Florida Takes Aim at BP

Jun 15th, 2011
by edsmith.
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State economists convening in Tallahassee today will attempt to place a dollar amount on sales tax and other revenue losses attributed to the BP oil spill last year. State and local governments in Florida have received close to $150 million through the Ken Feinberg Gulf Coast Claims Facility so far. According to BP, $1.56 billion has already been paid to federal, state, and local governments in Florida, Texas, Alabama, Mississippi and Louisiana. This number probably includes the tourism marketing  dollars that BP contributed as well.

Towns like Destin will see little if any BP dollars. This is primarily because Destin sees very little return in sales taxes collected here. While Destin contributes approximately 35% of Okaloosa county’s ad valorem taxes and 40% of the sales taxes, very little actually comes back to the city as expenditures are allocated based on the permanent resident population. Destin has a permanent population of 12,300.

In a nutshell, if Destin could be annexed by neighboring Walton County to the east, Okaloosa County’s budget would be would be devastated.

The Real Estate Prognosis for Florida’s Emerald Coast

Jan 14th, 2011
by edsmith.
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The prognosis for 2011 is good!  We expect actual closed sale transaction numbers to improve considerably in 2011. An increase in sales numbers is the precursor to appreciation. More demand equates to higher prices. It will take a while for the inventory levels to subside, but this market is on the way to seeing better days!

Alive and Well Despite BP and the Media

Jul 16th, 2010
by edsmith.
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So, BP has finally succeeded in capping the Deepwater Horizon well … While that is great news, there will still be little mention in the media of the fact that our beaches here along the Emerald Coast are oil and tar ball free.  Over the past two weeks, Terri and I have traveled by boat from Perdido Key to Port St. Joe.  The only oil we have seen is called Banana Boat or Coppertone or No Ad, etc etc … And it was most definitely smeared all over the beachgoers, locals and tourists alike.

 

The cable news networks have been bad enough in their irresponsible coverage of this event, but what about the print media!!! My God!! With huge declines in readership and shrinking ad dollars, some of the print media has been the most reckless and desperate of all. Photos of sludge on the beach at Grand Isle Louisiana with headlines indicating it to be Florida??? Criminal!!

 

Even more criminal is the fact that BP is NOT paying reasonable claims as they would like to have everyone believe. Dragging their feet and digging in their heels, these Keystone Cops are going to deny the majority of legitimate claims.  When BP says “We are going to make this right”, it really means “If you don’t like it, sue us”.

 

After nine consecutive months of increased sales transactions over the previous year, the month of June fell flat. That is because there is a 30 – 60 day lag between cause and effect in real estate sales. The impact of April and May will be felt in June and July.  Over time, the public will come to realize that all is well and that life is still good on the Emerald Coast.   Most Gulf Coast regulars are already aware but had already cancelled their plans for this year. So business-wise, fall and winter will most likely be fairly normal.  By spring, business should be much improved. Time will tell.  It always does.

BP Oil Spill – A Box Office Flop?

May 17th, 2010
by edsmith.
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The Gulf of Mexico BP oil spill remains the biggest news story today. The economic impact to our area could be significant, not a result of any environmental impact, but rather the result of a runaway news media, unwilling or unable to curtail its overwhelming obsession with the sensationalization of this event. 

My God, the St. Petersburg Times (who by the way is just left of Karl Marx) ran a story today titled  ”Oil Spill May Be Worse Than Recession”.  An AP story today states that “The Gulf Coast oil spill could eclipse Exxon Valdez”. No wonder tourism is down. I’ll be willing to bet that another today story ”Gulf oil spill: Tar balls found in Florida Keys not from Deepwater Horizon slick” will get little exposure.

OK, I don’t want to waste a lot of time on the drive-by media. The real point is, what can we along the Emerald Coast do about it? 

In a nutshell, we have a situation that may NEVER impact the Emerald Coast. The hysteria so far is not the result of any actual negative impact on the mainland, but rather the fear that it might. No one ever mentions that it may be just as likely to NOT impact us.

The following points may help put things in perspective:

 1.   The Deepwater Horizon is estimated to be spewing an amount of crude that would fill an Olympic swimming pool every three days. After a period of one month, that would equate to what? TEN Olympic size swimming pools? The Gulf of Mexico is HUGE! That is like ten people urinating in an Olympic pool on the 4th of July.  (Apologies for that analogy)

 2.  Back in 1979, Ross Perot’s deep water rig Ixtoc Uno blew out in the south end of the Gulf. It pumped an estimated 140 MILLION GALLONS of crude into the Gulf over a nine month period. Does anyone even remember it?  Did it destroy any ecosystems? Yes, some oil washed up on the South Padre Texas beaches, but it was cleaned up and life got back to normal.  Tourism survived, property values held their own and the ecosystem was not significantly impacted. 

BTW, at the current rate of flow at Deepwater Horizon, it would take until the year 2021 to rival the amount spilled at Ixtoc Uno in the Gulf in 1979!!

 3.  It is estimated that many millions of gallons of crude leech up naturally through the Gulf sea bed every single year. Where does everyone think all that crude  has been going for all these years? On the beaches? Into the estuaries  of Louisiana? Not!

Okay, granted, this is a serious event, and we don’t want more oil in the Gulf  waters, but it is simply not the end of life as we know it on planet Earth. Whatever the impact may be, we will deal with it quickly and then life goes on, much to the chagrin of the many attorneys, environmental scientists, Hazmat specialists, government contractors and news media that are now seeing green. While I just hate to disrupt all these dreams of multi-billion dollar verdicts and lucrative government contracts  that are dancing in their heads, someone out there in the media should at least be willing to consider the very real possibility that this will not manifest into the greatest environmental disaster of all time. 

If this were a Hollywood movie,  I would not invest a dime.  It just may be a  box office flop.

February Update

Feb 17th, 2010
by edsmith.
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The news of the day is the relocation of our office this month. We recently executed an agreement to lease our Main Street building to First Florida Bank. That building is 8,500 square feet and was originally built for specific use as a bank. With the vault, drive-thru lanes, night deposit and fire-proof rooms still intact, it was perfect for a bank that needs to move in a hurry.
 
So, we have moved our office into another building that we own at 725 Harbor Blvd, less than 2 blocks west of our former location. It is just less than 4,000 square feet and is perfectly suited for our use. This building was Destin’s first real estate office back in 1973 and was then called Cox and Young.
 
We are excited about the new location and the increased exposure we will gain from the Highway 98 frontage. We are easy to find — We are situated directly between Golden Corral and McDonald’s!
 
Also of note is the fact that Terri and I are ranked as the number 6 residential team in Florida by RE/MAX for 2009. The December stats will not be released until after the RE/MAX Int’l convention next month, so our final ranking may go up or down a little.
 

The Economic Front

Good news as interest rates continue their downward trend. 30 year fixed rates are now hovering around 4.75%. 5-year ARM’s are around 3.75%.
 
More good news … There are fixed rate jumbo products (stimulus) in the 5.25% range. These are loans that exceed $417,000 but are less than the established limit for the county within which the property is situated. The individual county limits may be viewed at:

 
With even lower interest rates and still declining real estate values nationwide, the housing affordability index is off the charts.

 
So, you would think that with housing affordability at an all time record high, homes should just be flying off the shelves, right?
 
Unfortunately, the credit markets are still tight and mortgage insurance is still non-existent, with the exception of course of government programs such as VA, FHA, and (Freddie Mac) Rural Housing. Consequently, cash buyers are taking advantage of the best deals out there on the market.
 
Condo financing (overall) is still about as tight as a vault door. A few portfolio programs are available and a limited number of investors are offering some end-user funding for certain individual condo units. The mortgage market has improved, but it still has a very long way to go.

The Local Trend
January was the fifth consecutive month of increased sales transaction numbers as compared with last year. As you can see from the reports below, single family, residential lots, condos and townhomes are all up.

 
There was a single $23,519,400 sales transaction for 116 condos at Waterscape on Okaloosa Island that skews the data. It appears to be a partnership buyout, so there is no significant resulting impact on market values.
 

Increased numbers of distress sales are expected, but 2010 should see continued improvement. Sales numbers are rising and appreciation may be slowly coming into focus.

Will the proposed Cap and Tax legislation require extensive energy upgrades on home resales?

Dec 4th, 2009
by edsmith.
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The National Association of Realtors (NAR) issued a “Myths and Facts” memorandum with regard to HR 2454. Fortunately,  this bill only indicates that federal funding would be offered as incentives for owners of existing properties to voluntarily improve the energy efficiency of their structures:
 
HR 2454 does not require that buildings be energy retrofitted. It does however provide for federal funding to states in order that they may offer financial incentives, such as loans or grants, to property owners who voluntarily improve the energy efficiency of their property. There are guidelines and conditions to meet in order to receive funding and also with regard to exactly how states may spend the money. Some type of verification that the energy improvements have been properly made will be required to help ensure against fraud. 
 
In sum, at least at this point, there are no point-of-sale guidelines or any other such requirements of any sort. Of course, this bill has only been passed by the House. It must still be passed by the Senate and then signed by the President to become law. It may not happen at all. Time will tell.

Housing Affordability

Jul 17th, 2009
by edsmith.
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For the first time in a long time, the real estate trend has taken a positive turn here. June single family sales in both Okaloosa and Walton Counties were actually up over the same month last year.

An anomaly? We don’t think so. Most of the rest of the state has been experiencing increases in the number of transactions as compared to last year. Perhaps the Emerald Coast simply lags a little behind?

Interest rates have ticked up a little in response to many factors, not the least of which is the threat of increased taxation. However, low demand has kept the markets competitive – at least for now.

Nevertheless, the all-important “Housing Affordability Index” now stands at a 28 year high.  Simply put, a higher percentage of Americans can afford to purchase a home today as compared with any year going back to 1981!

Check ourt website at http://www.FloridaBrokers.com for more!

Business Looking Up in Florida

May 8th, 2009
by edsmith.
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Remembering that real estate was the first “industry” to feel the impact of a weakening economy, it stands to reason that it may lead way to recovery.

Real estate sales transactions have been increasing around most of the rest of the state for the past year or so. The Emerald Coast, or Northwest Florida in general is typically believed to trail the rest of the state by from 12 to 18 months, depending upon whom you ask.

So, sales transactions are finally increasing here as well. Not as compared with last year, but as compared with recent months. This 2009 positive trend is the result of a number of things:

1. Interest rates are incredibly low.
2. Sales and asking prices are incredibly low.
3. Inventory levels are high – Choices are plentiful.
4. $8,000 tax credit for first time buyers.
5. An overall sense that prices will not decline much further.

Moreover, we have never seen low mortgage interest rates and low housing prices at the same time. This is an unprecedented opportunity for buyers. This helps to explain why we are seeing so many institutional buyers and investors coming back into the market. We are being approached by REITs and others, searching for investment properties, both residential and commercial.

You cannot turn a battleship on a  dime, and neither will this economy rebound in an instant.  What we are seeing now are the early signs of a real estate recovery. Some prices may very well go lower before they go higher, but as sales transaction numbers continue to improve, the brighter becomes the light at the end of the tunnel.

Good Economic News?

Mar 9th, 2009
by edsmith.
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Fresh look finds hope

By Jeff Harrington, Times Staff Writer

Published Friday, March 6, 2009

Ticking off reasons to be in a dour economic mood is picking low-hanging fruit: The stock market is near 12-year lows; about one-third of bay area homeowners hold a bigger mortgage than their house is worth; more small businesses are losing their credit lines while more Floridians are losing their jobs.

No wonder consumer confidence is kicking around at all-time lows.

Enough with the gloom already.

In the spirit of hope and our perpetually optimistic governor, we prefer to seize on a handful of positive economic snippets that set the stage for a turnaround. After all, Federal Reserve Chairman Ben Bernanke, who more often than not moves the market downward with a bluntness alien to his predecessors, is among those predicting the recession will end in the second half of this year.

So raise your half-full glass for a semitoast to the upside of our economic condition.

BUSINESS INVENTORIES have been dramatically pared down, leaving many small companies lean enough to weather a prolonged slump and flexible enough to adjust their products to a shifting marketplace.

THERE ARE GREAT DEALS to be had in buying a house (substitute: stock, car or marked-down consumer good of your choosing). Yes, there may be a further slump in real estate and stock prices, but history dictates they’ll eventually rise above current levels, and discounts and incentives abound.

THE FEDERAL STIMULUS PACKAGE may be assailed for lingering long-term effects on the deficit. But in the short term, Gov. Crist is counting on it to help Florida balance its budget and avoid government layoffs.

CONSUMER SPENDING rose in January after falling for a record six straight months. The better-than-expected numbers were pushed higher by purchases of food and other nondurable items.

INCOMES ALSO ROSE unexpectedly in January. The jump was helped by higher Social Security checks kicking in; nevertheless, take heart that the 0.4 percent increase was the biggest jump since May.

NEW JOBLESS CLAIMS and the total number of people receiving unemployment benefits both dropped more than expected a week ago.

A HUGE DROP IN HOUSING STARTS has helped shrink the inventory of homes on the market. When homes sales eventually stabilize, home prices should appreciate at a quicker pace because there are fewer houses out there.

© 2009 • All Rights Reserved • St. Petersburg Times

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