‘The Numbers Tell You Where We’re At’ In Sarasota
The Herald Tribune has this report on the Florida housing bubble. “John Lafabregue Jr. dropped off monthly spreadsheets dating back to July 2003 the other day, and the statistics contained in them painted a vivid picture of just where the Sarasota realty market has been. But in March 2004, absorption rates jumped to 30.4 percent for houses and 30.9 percent for condominiums.”
“Three months later, the market peaked with 718 house sales out of 1,167 listings, for an incredible absorption rate of 61.5 percent. That same month, 47.9 percent of listed condos sold. Put on a chart, the market looked something like the Grand Tetons, with peaks in June 2004 and March through June 2005, before dropping precipitously each month to the current absorption rates of about 5 percent for houses and 3.6 percent for condos.”
“At the ‘power marketing’ meetings, where agents from a number of brokerages get together to promote their listings, the mood has changed recently. ‘At a meeting a couple of weeks ago,’ Lafabregue Sr. recalls, ‘Somebody got up and said, ‘I got a buyer,’ and he got a round of applause.’”
“His outlook for 2006: ‘I think a lot of agents are going to do a lot more business at lower prices. I’m not sure in Sarasota that the agents will do as well as they did last year. Looks to me like prices are down about 15 percent.’”
“‘The numbers sort of tell you that’s where we’re at. I just sold a house that we listed in November at $510,000. Then we went to $490,000, then $460,000. (After a similar nearby property closed for $430,000) I said, that’s where this market is going to be. So I said, ‘Go down to about $440,000, and you’ll probably end up at $430,000.’ (The seller) said, ‘How about four and a quarter?’ So we reduced it to four and a quarter and we sold it for $412,000. In November, that house priced out at $510,000 (a 19.2 percent reduction.’”
“He says a big factor is how soon the market will find a balance between listings and sales, sellers and buyers. A thousand houses for sale is too few, and 5,500 is too many. ‘We have to work off some of this excess inventory. I’m not sure it’s ever going to be back at 3,000 (houses for sale). It might be 3,500 (that represents a balanced market).”
“‘But to get rid of the 2,000 houses from 3,500 to 5,500 is going to be very painful, and it’s going to take I don’t know how long,’ he said.”
Checking the Sarasota-Bradenton sales numbers for January 2006, the yoy sales volume was down 48%.
The charts that accompany that story are amazingly grim. I mean, the worst I’ve seen in practically ANY market. How anyone can expect a “soft landing” in places like that is completely beyond me. Wow.
I do a portion of my work in this particular market. This article is not a huge surprise but provides additional detailed evidence as to what anyone who drives around Sarasota is seeing. Multiple For Sale, Open House, FSBO, etc. on every street
This like the biggest RE train wreck in the nation right now…
OT. I am a firm believer. I started reading this blog six months ago. I’ve seen the RE frenzy first hand in Orange County and in the Inland Impire. I’ve been saving to buy a home for six years and I have become very discouraged because the house $ target kept moving further away. I currently live with my wife in San Luis Obispo and we rent. I’ve been following the RE listings daily. Every day five new homes are added to the MLS. A 30 yr old-3 bedroom goes for 650K to 750K. But nothing is selling. I don’t know anyone that can buy at these numbers. The only people that had been able to buy these homes are baby boomers that could sell their homes in LA or SF. But as you know it has become very difficult to sell as of lately. RE has become deadlocked. Nothing is selling and nothing can be bought. Most of the homes are vacant and were recently remodeled. Starting to see price reductions. The fallout from this bubble may be the largest financial crisis this nation has ever seen. And no major media outlet or government agency will touch the subject. It’s pretty frikin sad.
I live and rent in Irvine after selling my home last year and the attitude that these RE sales associates have is O.C. is a place that will never go down in price because IT is the PLACE to live if you are anyone with an ATTITUDE!! They market OC with a total disconnect to value,economics and how much you make. They just say they have a loan that will fit you and you need to buy now befor they are gone. What an attitude!
Who wants to be the messenger that gets killed? At times like these, it is great to be an anonymous blog poster with insights to share…
Same situation here…I don’t think SLO will ever come down to where I can afford to buy…and I make around 100k/year. We currently rent a nice 3acre property out in See Canyon for $1100…but if that ever ends, we will leave the state, and probably pay cash for a house someplace else.
It’s nice here, but there are a lot of other nice places out there.
All pretty simple to understand really…
Demographics of an aging populace will take it all down.
80 million boomers/Gen X’ers are gonna try to unload their McMansions lemmming style in order to downsize because they got zlich for retirement and have to adopt a lower-key financial lifestyle in order to survive.
Who are f*ck are suppose to be the buyers?
Gen Y kids graduating with $50 to $100k in college debt who are on the hook for bazillions in SS; Medicare; and Medicaid pay-outs?
Oh yes, excuse me it’s gonna be all those hard-saving immigrants who mow the lawns and work at the convenience stores.
This country’s f*cked…Thank’s easy Al…
I agree with you hd74man. Sad to see. My brother, an excellent engineer was laid off after 15 years with a company 3 weeks ago. He has so many qualifications and letters after his name it is amazing. What kind of severace package did he get ? Nada. Luckily, he & his wife have developed a thriving home business because she is a talented and personable designer, and he is also doing graphic design on his own. He said Delphi ( ! ) offered him a job yesterday. He said “no thanks”. A very secure company, to be sure. He said he might as well continue to develop his own business.
AGREE WITH YOU COMPLETELY. THIS IS TRULY A SLOW MOTION TRAIN DERAILMENT. WON’T HAPPEN OVERNIGHT. RIGHT NOW I THINK WE’RE AT THE POINT WHERE PEOPLE ARE JUST BEGINNING TO REALIZE WE ARE AT A STALEMATE. ONCE THE SELLERS BEGIN TO CRACK DUE TO INABILITY TO CARRY THE DEBT ANY LONGER, THE SLIDE WILL COMMENCE IN EARNEST, ALBEIT SLOWLY. ONCE ONE NEIGHBOR DROPS HIS/HER PRICE THERE WILL BE A SLOW DOMINO EFFECT.
This is not surprising at all. Here is a re-post of something I wrote last weekend:
I’m as bearish on housing as they come but after what I saw today, even I’m in shock. I’m in the Sarasota/Bradenton area and we decided to take a drive to take a look at which communities we liked so we know where to focus our attention in about a year or so. We drove through no less than 10 communites in the Sarasota/Bradenton/Ellenton area which had newer houses in the $280k-$450k range (most them still had some construction going on). I was shocked by the number of For Sale signs in each one we drove through. It seemed there were streets where half the houses had sale signs. We got to one court where there were 6 houses and no lie, every one was for sale, one right next to the other. We saw many Open Houses where there wasn’t a single car there (except for the Realtor’s 700 series BMW or Mercedes). The sales office parking lots were pretty much vacant in all of the comunities excpet for one. We’re talking a sunny, Sunday afternoon with temps in the mid 80’s. Never in my life have I driven anywhere and saw the huge amount of houses for sale, it is just amazing. We pulled some of the flyers and it seemed people are still pricing way too high. A few of them had the price crossed out and they marked it down $5k-$10k less…..big deal. 1/3 of houses for sale were ‘FSBO’. I see no way at this point this will end in anything but an ugly way if all of these people indeed have to sell their houses. Let the fun begin…..
Sarasota/Bradenton Inventory (3 bed/2 Bath, $300k-$400k):
07/22/05 234
07/26/05 258
08/03/05 260
08/11/05 293
08/14/05 304
08/21/05 333
08/26/05 347
09/03/05 370
09/09/05 415
09/15/05 435
09/25/05 534
09/30/05 582
10/05/05 605
10/09/05 617
10/17/05 683
10/26/05 709
11/06/05 842
11/12/05 850
11/20/05 891
11/26/05 920
12/03/05 939
12/08/05 949
12/15/05 999
01/06/06 1043
01/10/06 1081
01/13/06 1126
01/17/06 1140
01/19/06 1167
01/24/06 1204
01/27/06 1224
02/02/06 1237
02/06/06 1292
02/10/06 1318
02/19/06 1401
02/28/06 1465
03/06/06 1483
03/09/06 1538
03/15/06 1568
That is a rather spectacular inventory crash! It is qualitatively no different from the one underway in San Diego, except it is taking place far more quickly.
Unless I made an arithmetic error, then inventory has increased from 234 to 1568 over the course of 239 days. On an annualized basis, that inventory increase is occurring at a rate of 1727% (more than eighteen times the original number of homes on the market one year later if this rate continues unabated):
[(1568/234)^(365/239)-1] X 100% = 1727%
hey stucco, i’m getting an annualized increase of 871%
{(1568-234)/234)}/(239/365)
=(1334/234)/.654
=5.70/.654
=8.71
if the inventory dumping becomes logarythmic, then i will be undershooting.
Hi Flic,
We are in Boynton Beach FL but are considering moving to the West Coast/Sarasota area. I’d like to be in touch with a fellow housing bear in that region.
If agreeable could you please drop me a line at:
amsteldamguard-stuff@yahoo.com
Thanks.
Could someone who knows please explain “absorption rate”? Is it an annualized rate? It somehow measures the percent of homes on the market which get bought, but I would like a clearer idea of how to interpret it…
Thanks,
GS
Here is some info in the original article:
“Basically, 2003 was a very strong year by historical standards, with about 20 percent of the listings selling in any given month. That’s called the absorption rate. Throughout the 1990s, absorption rates of 10 to 15 percent were normal.”
This says the rate is monthly, but does not clear up how the calculation deals with new listings and delistings…
Does anyone either have absorption rate stats or the raw data needed to produce them for SoCal? My guess is that the rate dipped impressively in the past 6 months, at least for SD…
Geniuses? Nut-jobs? Both? Whatever they are, it seems like the people in the northeast think they have found the magic market potion that will permit prices to grow, and grow, and, well you get the point.
So instead of “the market is going to go up in the spring” and “2006 will be the 3rd best year” we now get “I think a lot of agents are going to do a lot more business at lower prices.” Wow. That must be pretty reassuring.
You know, by looking at all of these regional markets a few things come to mind. While the symptoms (exact pricing) and timing are different, the fundamentals are the same- slowing sales, and more inventory. The problem, with looking at it all, I think, is that these markets are changing -now-. This blog, and its readers are on the cutting edge, and this is real-time stuff. We are going to have to wait and then look back to see what we are used to seeing- and by that I mean a market bubble bursting, leaking, or whatever variation you want. I mean, if you are standing on the surface of a huge balloon, do you see it pop? No- you have to step back..
On another note, we posted the Northeast’s monthly pricing and sales today. It has a bit of a surprise in it, so check it out when you get a chance:
BubbleTrack.blogspot.com
So instead of “the market is going to go up in the spring” and “2006 will be the 3rd best year” we now get “I think a lot of agents are going to do a lot more business at lower prices.” Wow. That must be pretty reassuring.
You know, by looking at all of these regional markets a few things come to mind. While the symptoms (exact pricing) and timing are different, the fundamentals are the same- slowing sales, and more inventory. The problem, with looking at it all, I think, is that these markets are changing -now-. This blog, and its readers are on the cutting edge, and this is real-time stuff. We are going to have to wait and then look back to see what we are used to seeing- and by that I mean a market bubble bursting, leaking, or whatever variation you want. I mean, if you are standing on the surface of a huge balloon, do you see it pop? No- you have to step back..
On another note, we posted the Northeast’s monthly pricing and sales today. It has a bit of a surprise in it, so check it out when you get a chance:
BubbleTrack.blogspot.com
The guy who bought the similar property at 430k is already down 18k on his purchase since the comps will show the one that sold at 412k.
Well Spring is right around the corner and I don’t think this will be the savior for the RE market like the NAR was hopping for in Jan.
—AL
Watching this bubble pop is like watching paint dry. I hope prices come down, soon…tired of sitting on the side lines for over 3 years. I sold too soon, as my house appreciated another 50% in 3 years. Lesson learned, never try to time the market going up or down!
I hear yea, Nice owning your own home, glad i’ve only been out of homeownership almost a year. But i sure don’t miss the trips to home depot almost every weekend and calling the plumber, etc. I also sure don’t miss having tenants in the rental properties..
you are lucky that you are in the US and not in Europe …
thinks seem to be developming much faster in the US RE market.
I sold my house 5 years ago (had to sell because of a stupid tax change) after +/- 350% price gain in 8 years. In the last 5 years, prices have increased another 100% or so. We are now in year 15 of the Dutch housing bubble; and by now we need a +/- 85% price correction just to get back to the historical trendline.
If home prices in the Netherlands every come back to reality we have probably more serious things to worry about
hey nhz - sit tight. we’re gonna show you the proper way to do a crash. then it’s your turn
hope so ;-(
at the end of the Dutch tulipmania in 1635, within one week tulip bulbs lost more than 90% of their ‘value’. Let’s see if we can do better in these times of telephone and internet