Dania's Tampa Bay Real Estate Blog

Dear friends, colleagues, sellers and buyers. After more than a year of thinking about it, I have come to the conclusion that I can truly add value to the Tampa Bay real estate discussion by sharing my observations and, from time to time, my opinions. Of course none of us has a crystal ball (if we did, we'd never make mistakes), but I do think I can offer some meaningful insights - particularly with respect to the waterfront and luxury residential property markets in the Tampa Bay area. For starters, I am the #1 Century 21 real estate agent east of the Rocky Mountains (and currently, #2 in all of America). In addition, I am the #1 waterfront realtor in Tampa Bay and #1 in Pinellas county (which covers St. Petersburg, Clearwater and surrounding communities). So, with all of that aside, what do I want to talk about today?

Seemingly everyone I speak with wants to know where the real estate market is headed. Is it going up (should I keep my house for now? Should I buy now)? Is it going down (Should I sell my house? Should I hold off on buying)? The answer is a complicated set of national, international and local factors that are sometimes at odd with each other. At a high level, the value of a home is driven completely by the economic s of supply and demand. In a market of fewer homes for sale and many buyers, housing prices rise (we only need look at the frenzy of buying in Florida during the early 2000s to know this is true). Likewise, in a market of many homes for sale and fewer buyers, housing prices will fall (in Florida, property owners have endured this pain from 2007 - 2009). But what causes an environment of many homes for sale and fewer buyers? In today's Florida market the answer is very simple. We are still suffering the effects of the banking crisis from 2008. The crisis itself enabled the historically deep recession which resulted in very high unemployment, layoffs and cutbacks, triggering a huge number of risky loans to go bad - which of course led to the large number of foreclosures and short sales to hit the marketplaces. This has produced in a very high supply of houses and dramatically lower prices. Normally, when prices drop sharply demand increases. Unfortunately (and ironically) the banks have tightened lending so much that very qualified people with excellent credit cannot get loans. The net effect is that even as prices have fallen demand has not been able to rise. The inability of falling prices to be met by demand have caused prices to fall even further - creating a market imbalance. A person might ask, well how can you know this to be true? Well, one strong indication was the very recent flurry of market activity we observed when major banks were compelled to freeze foreclosures. An unexpected and significant spike in cash buyers came looking for waterfront properties immediately on the heels of the freeze announcement.

Locally in Tampa Bay, there have been other factors at play as well. Traditionally, the late spring and early summer months are higher sales volume months for single family waterfront and luxury homes - as buyers look to relocate in anticipation of the coming school year. This year however, the oil spill occurred just as we were entering these months. People who were planning to buy, delayed their decisions - resulting in a lower sales volume throughout the period. Now that the crisis is eliminated and everyone understands that Tampa Bay has not been effected, those buyers who held off their decisions are now back in the buying market (pent up demand). The net result is that we are seeing the best late summer and early fall buying activity we have seen in years.

So, getting back to everyone's question, "Where is the Tampa Bay real estate market headed as we enter the fall of 2010?" In the short term (next six months), we see the local residential waterfront and luxury home market remaining stable with prices staying mostly flat. Prior to the oil spill (which was clearly a special cause situation) selling activity on the waterfront had been steady, prices steady and the inventory, while higher (as a result of foreclosures and short sales), was moving.

Here in Tampa Bay, prices today are at roughly 2002 levels (adjusted for inflation, they're at 2000 levels) and present excellent value and opportunity for people who are looking to buy and hold onto a home. Since financing is a critical requirement of most residential sales, we believe that buyer demand will increase as lending institutions take a more rational yet conservative approach to mortgage lending. We expect that there will be a measured softening of underwriter loan requirements (which clearly went from one extreme to the other in the wake of the mortgage crisis) and a return to the credit verification and lending practices of the early 1990s. We also believe there will be a greater emphasis on mortgage insurance over the next five years.