By STEPHEN FRATER
stephen.frater@heraldtribune.com
 

SARASOTA — In what seemed part of a campaign to arm real estate agents against naysayers and fence-sitting buyers, the National Association of Realtors’ top economist was in the region Thursday offering strong words of encouragement.

The softness that has bedeviled Southwest Florida’s residential real estate market for almost a year has just about run its course and will not last beyond another six to 12 months, said Lawrence Yun.

“Do not bet against this region,” he said. “In the long term, Sarasota will have faster home price growth than the rest of the country.”

Yun’s comments coincided with a report released Thursday by the University of Central Florida that stated flatly in its opening sentence: “For those with a house on the market, there’s good news, the worst is over.”

“The first quarter of 2007 will have been the worst of it, although in some markets, it may be a year before we get out of the housing doldrums,” said Sean Snaith, director of UCF’s Institute for Economic Competitiveness.

Nationally, Snaith is calling for a slow upward climb through 2009, but he said that because of Florida’s growth, geography and demographics, the Sunshine State is likely to recover faster than the broader market and that the Sarasota-Manatee market might be among the first in the state to rebound.

To some, there have been some strong signs of that already occurring.

The Sarasota-Bradenton market posted sales increases of 16 percent in both March and April compared with the same months in 2006, according to the Florida Association of Realtors.

Nearly every other of Florida’s top 20 markets posted double-digit declines.

Others remain skeptical, especially given the huge inventory of homes for sale in Southwest Florida that accumulated in the wake of the boom.

As of mid-May, there are 8,136 homes for sale in the Sarasota Multiple Listing Service, about the same as a month earlier but an improvement from the record 8,411 of March 15.

But looking long-term, Yun predicted that Florida real estate remains one of the safest bets in the nation.

During the next 40 years, Southwest Florida homeowners will enjoy values about 20 times higher than now.

That would mean a $500,000 home bought today will be worth about $10 million in 2045, or double the national appreciation average, Yun said.

The Sarasota market has enjoyed a 150 percent run-up in value in recent years.

In the current downward cycle, it has given back about 10 percent to 20 percent of that.

“That’s not a crash,” said Yun, especially when compared with what happened to the Nasdaq after the technology bubble burst earlier this decade: a 45 percent drop in value in one year followed by another 25 percent annual drop.

“Now that’s a correction.”

Yun’s market predictions were delivered Thursday to about 200 Realtors during the Florida Association of Realtors District 13 Technology and Business Expo at the Hyatt Sarasota.

He called Southwest Florida one of the “top-tier attractive regions in the country without a doubt.”

Yun noted that with median home values in the $300,000 range, the region was not really overpriced compared with other coastal markets such as San Francisco at $700,000 and Washington, D.C., at $400,000.

The region’s housing fundamentals compare very favorably with those of San Diego and Miami, he said.

“One can safely say that there is more accumulation of wealth in Sarasota than there is in the rest of the country,” Yun said.

The economist delivered talking points designed to help Realtors rebut negative impressions that buyers have been exposed to.

Predicting rents will rise and a local housing comeback will occur within a year, Yun noted:

Southwest Florida’s job growth is strong.

The departure of speculators has removed an artificial stimulus from the market that had greatly boosted sales and prices during the recent boom.

State government is working to address insurance and tax problems.

Nationally, mortgage rates remain near 45-year historic lows.

Yun also tried to knock down fears about the impact of subprime loans on the market.

Subprime refers to loans made to borrowers with a credit rating that would not normally qualify them to borrow.

Subprime loans account for far less of the total than generally imagined, Yun said.

Given a cluster of 100 homes in most of the nation’s neighborhoods, Yun calculated that 33 are owned “free and clear with no mortgage,” while the remaining 67 have some type of mortgage.

Of those, 57 have prime loans or government loans, with the remaining 10 with subprime.

Of that 10, eight are current and two are delinquent and only one of the two delinquent loans at most would fall into foreclosure, for a rate of only 1 percent.

Home ownership, Yun said, remains the key to wealth accumulation, though he acknowledged that “local markets do go through cycles.”

RISMEDIA, November 16, 2006— The Mortgage Bankers Association (MBA) has released its Weekly Mortgage Applications Survey for the week ending November 10. The week was a shortened one in observance of Veteran’s Day. The Market Composite Index, a measure of mortgage loan application volume, was 647.5, an increase of 4.3 percent on a seasonally adjusted basis from 620.9 one week earlier. On an unadjusted basis, the Index decreased 7.6 percent compared with the previous week and was down 0.1 percent compared with the same week one year earlier.

The seasonally adjusted Refinance Index increased by 6.5 percent to 2022.2 from 1897.9 the previous week and the Purchase Index increased by 2.7 percent to 412.9 from 402.2 one week earlier. The Refinance Index is at its highest level since October 2005. The seasonally adjusted Conventional Index increased by 4.3 percent to 961.1 from 921.1 the previous week, and the seasonally-adjusted Government Index increased 3.4 percent to 124.5 from 120.4 the previous week.

The four week moving average for the seasonally-adjusted Market Index is up 2.6 percent to 606.8 from 591.5. The four week moving average is up 1.8 percent to 393.1 from 386.2 for the Purchase Index, while this average is up 3.7 percent to 1854.9 from 1788.9 for the Refinance Index.

The refinance share of mortgage activity increased to 48 percent of total applications from 46.3 percent the previous week. The refinance share is at its highest level since February 2005. The adjustable-rate mortgage (ARM) share of activity decreased to 25.5 percent of total applications from 26.4 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.15 percent from 6.24 percent, with points decreasing to 0.98 from 1.08 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 30-year rate is at its lowest since January 2006.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.85 percent from 5.96 percent, with points increasing to 1.00 from 0.97 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 5.87 percent from 5.89, with points decreasing to 0.78 from 0.8 (including the origination fee) for 80 percent LTV loans.

 (Editor’s Note: The survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990).

The National Association of Home Builders (NAHB) told Congress that the current downswing in home sales and housing production following the record housing boom of 2004-2005 is expected to bottom out around the middle of next year and gradually move back up toward trend by late 2008.

Testifying before the Senate Economic Policy and Housing and Transportation Subcommittees, NAHB chief economist David Seiders said that while the housing downswing still has some distance to go, “various economic and financial market fundamentals figure to be supportive of housing demand for the foreseeable future.”

These fundamentals include the following:

• Payroll employment is proceeding at a decent and sustainable pace.
• Household income growth is strengthening as the economic expansion proceeds.
• The interest rate structure is favorable, mortgage credit is readily available and monetary policy has stabilized following a long run of upward rate adjustments.
• Energy prices have receded from record highs earlier this year.

Seiders also told lawmakers there are several downside risks to the housing and economic outlook he presented. These include the possibility of spikes in interest rates or energy prices, a large resale of homes back onto the markets by investors/speculators and uncertainties regarding the size of the inventory overhang in the market for new homes.

There also are considerable uncertainties about the impacts on consumer spending from a fading housing wealth effect as well as from the impacts of “payment shock” on home owners facing upward adjustments to monthly payments on “exotic” types of adjustable-rate mortgages (ARMs).

The record housing starts and sales of the past two years were well above levels supportable by demographics and other fundamental demand factors, and were fueled to a great extent by investors and speculators seeking to make a quick profit and through the surge of unconventional ARMs, according to Seiders.

“In retrospect, it was the finance- and price-driven acceleration of buying for homeownership and for investment that drove housing market activity into unsustainable territory during the boom,” he said.

After posting double-digit gains during the past two years, national home price appreciation is expected to remain relatively flat for the foreseeable future. “Indeed, some decline is a distinct possibility, and the rate of price appreciation should remain below trend for some time,” said Seiders.

NAHB’s forecast has a cumulative shortfall of housing starts of roughly 400,000 units from the middle of this year through the end of 2008, in line with the estimated excess supply generated during the recent boom period.

And while the current downswing in home sales and housing production will continue to detract from overall economic growth through mid-2007, Seiders said that much of this negative impact should be offset by strengthening activity in other sectors of the U.S. economy (spending on capital equipment and software, nonresidential structures and exports).

Source: National Association of Home Builders

RISMEDIA, August 11, 2006—The decision this week by the Federal Reserve’s Federal Open Market Committee to not raise the federal funds rate for the 18th straight time indicates that the Federal Reserve recognizes the value of the housing economy to the national economy as a whole, the president of the NATIONAL ASSOCIATION OF REALTORS® says.

“This move sends a very positive signal to the housing sector, which has been so robust over the past five years that it has sustained the economy while other sectors have lagged,” says NAR President Thomas M. Stevens, senior vice president of NRT Inc. “Largely as a direct result of more than two years of interest rate hikes, the housing market today is fragile in some parts of the country. The Fed’s decision indicates that it realizes the vital role housing plays in the economy.”

The decision by the Federal Open Market Committee leaves the banks’ prime lending rate, the benchmark for various consumer and business loans, at 8.25 percent. Before the Fed started raising rates in June 2004, the prime had been at 4 percent.

Stevens says the Fed’s decision indicates it realizes the economy has slowed, especially the housing economy. “We can’t continue to raise rates without expecting the housing economy to suffer. That translates into higher costs for home buyers, slower sales and a lower level of economic activity in housing, which accounts for one-fourth to one-fifth of the gross domestic product,” he says.

While the Ritz is not a golf course community, this month the Members Golf Club at the Ritz-Carlton, Sarasota was featured in the Robb Report’s special “Best of the Best” annual issue. The Tom Fazio-designed course was one of only eight golf courses in the world to be named “Best of the Best New Golf Courses.” The Ritz-Carlton Members Golf Club is a private par 72, 18-hole facility available only to Members of The Ritz-Carlton Members Club and guests of The Ritz-Carlton, Sarasota and is located on 315 acres of tropical landscape. The Ritz-Carlton Members Golf Club has been strategically sculpted by moving nearly 1.9 million cubic yards of earth to create elevation, relief, contouring and framing for each hole in a manner that gracefully rolls among the 12 picturesque lakes and extensive landscape to form a fair and memorable test of golf.

Placed among 520 acres of pines and old oaks is the ultra elite Jack Nicklaus designed golf course, The Concession, developed by Kevin Daves in east Manatee county. The 7,500 yard, par 72 course has earned high honors from the Florida State Golf Association and given ratings placing it in the highest range for difficulty. The Concession is the type of course that will attract professional events and keep the interest of the most highly skilled players, while attracting residents to its shear pristine beauty. The Concession will have but 255 homes, some worth $8 to 10 million dollars with the first phase of 82 sites already sold out. 

The Founders Club, a new and very private traditional golf club community set in east Sarasota county, entitles a privileged few to 18 exhilarating holes of signature Robert Trent Jones, Jr. designed “core” golf and the amenities of an exclusive and richly designed clubhouse.  The Founders Club is situated on 700 verdant acres accentuated by 90 acres of picturesque lakes, stands of pines, palms and old oak hammocks that also provide unique canopies above the meticulously landscaped streets. With only 262 homes and 275 memberships, the Founders Club homes are placed in an intimate setting, offering the best aspects of the community and quietude, with 200 of the lots enjoying direct golf course vistas highlighted by free-flowing fairways, wetlands and natural preserves. The entry gatehouse, the golf clubhouse and the homes themselves are designed to blend the private club nature of The Founders Club with the beauty of these most pristine surroundings.

All in all these newest golf courses cap the market with ”la creme de la creme” in golf lifestyle living.

Gone are the days of scarce inventory. The market has about five times as many listings as it did a year ago. With so much competition on the market, in order to gain an advantage, sellers are being advised to attractively price their homes to sell. The good news is that despite this factor, area homes continue to sell. 

Compared to the same time last year, for the month of June, the total number of listings on the market has skyrocketed, yet the number of units sold whether for homes or condos is up from 2005. Though this increase in inventory makes selling ones home more difficult, it is serving to correct the pricing structure and to afford home buyers much to choose from… plus the ability to be choosier without multiple offers, bidding wars and time constraints as felt in a tight market.

The fundamental driving force of the market in Sarasota/Bradenton remains the same. Our location is still one of the most sought after areas in the country due to our wonderful climate, beaches and cultural appeal. And there is the convergence of retiring baby boomers with working adults coming to the area for our job growth, which continues to outpace the rest of the nation.