Wednesday, August 16, 2006

Something Smells in the Bay Area (and its not Red Tide)

As you know, the NAR (National Association of Realtors) and the FAR (Florida Association of Realtors) just released their 2nd quarter numbers.

Once again, I look at what they are showing for the "Tampa-St. Petersburg-Clearwater" sales, and I am shocked. Not that the prices are not lowering (they haven't) nor that the number of sales has dropped (they have). What is shocking is the median sales price they are listing for the area.

From FAR August 15, 2006 report, median sales price for 2nd Qtr: $232K

Okay, lets do a quick check on Realtor.com to verify what's currently for sale.
Tampa - median price $280K
St. Petersburg - median price $300K
Clearwater - median price $305K

Also, in Orlando, a town just up the road (I-4) with very similar demographics (and much more available land to build on) reports a median price of $265K

What's going on here? It looks like a far rosier picture than reality is being painted here in the bay area. How can the prices for the 3 major cities in the region be $50-$60K higher than what the FAR is reporting? And how does Orlando have a $30K higher price with more available land?

Here's my theory.... Although you can't find it anywhere on the FAR website, the "Tampa/St. Pete/Clearwater" area should be defined as Hillsborough, Pinellas, (and sometimes Pasco) counties. What I believe is happening is that, to keep the numbers down, they are also adding such areas as Hernando, Citrus, and even Levy and Polk counties. If you cherry-pick which geographic region to add or subtract the numbers, you can make the median price trend anyway you want.

"So, it's obvious they are under-reporting the median price here in Tampa. The next question is: Why keep the numbers down?" you may ask.

A great question, and one I've put a lot of thought into. Choose one or more of my postulates:

1. After decades of being one of the cheapest places to live in the country, Tampa is now one of the most expensive (as a % of median income). To attract employers, the chamber of commerce (which includes all of our good friends in the realtor business) needs to keep the "official" housing costs artificially low. Sorry folks, funny numbers or not, unless you just made a ton of money selling your house in NY/CA/PA/NJ/AZ/DC/MA, it is VERY expensive to move here.

2. This is related to postulate #1 above. Nobody wants to be known as the town with the highest increases in the country (see also Naples and Phoenix). It scares away employers and retirees.

3. What goes up usually comes down. If the numbers are correctly reported, the drop in prices (which is already happening) will look even more precipitous. Nothing will ruin a market worse than a perception that prices are falling - who wants to "catch a falling knife"? Instead, with weak appreciation being reported, it gives a look of positive return. Furthermore, in the future when they can no longer hide the fact that prices are dropping, they can say, "Yes, the prices are dropping, but look how small the drop is!"

4. This is also interrelated with all of the above. What, you may ask, is the #2 industry in Florida after tourism? Excellent question, and I'll give you the answer: CONSTRUCTION. Without people constantly moving into this state, the #2 engine in the Florida economy sputters. How else could we afford schools, roads, plumbing, parks, habitat protection, AND no income tax? Answer: we couldn't. The housing numbers HAVE to look good to outsiders. Without a massive and continuous influx of out-of-staters, unemployment goes through the roof and state revenues fall through the floor.

Of course, its just my opinion, and I may sound like a conspiracy theorist, but the numbers don't lie. What the FAR is reporting does not correlate in any way to what the actual sales prices are.

End of story.

23 comments:

davenjax said...

Right on. Up here in Jax, I think the numbers are a bit fudged, but not like you guys in the bay area. I love how the media just takes everything from the NAR for granted - they are the experts, you know!

(not!)

zippo said...

Okay, okay. Your theory makes sense, but do we have a way to find out what each geographic region is specifically bounded by? It's pretty obvious that if it keeps changing, you can't do QxQ, YxY, or even MxM comparisons.

That's what kills me about these statistics. Change the numerator along with the denominator and (bing!) instant fudged numbers!

North_Pinellas said...

Yea, I've been trackin' the numbers myself for quite some time, and up here (Tarpon/Palm Harbor) area, I'm seeing MUCH higher prices than those quoted by the FAR.

Granted, we're in a newer section of the bay area, but sheesh, those numbers quoted by FAR don't make any sense at all.

FL - Paradise Lost said...

Thanks all,
I'm up in NW Hillsborough, and I'm seeing a LOT more inventory lately, but no real drop in prices. Its going to take more time before we'll see a turn.

Late_night said...

Interesting....very interesting. You do sound like a bit of a conspiracy person, but I did some checking of the numbers myself. I have no idea if the reasons you are providing have any validity, but it definitely looks like you are right on with the median sales prices being under-reported.

Very interesting, indeed!

Boot Up said...

NAR = NAL

(National Association of Liars)

Anonymous said...

Better break out your tinfoil cap before big brother tunes in on your brainwaves. Mr. Palmroos, I've already showed you condos throughout the area selling for well under $100k. HAH!

4 th gen florida said...

Good stuff.

Anonymous said...

I've been tracking MLS numbers since 2/9/06 in the Orlando Tri-County Area for Single Family Homes. Listings went from 10164 on 2/9/06 to 15241 on 8/15/06. It is clear that inventory is growing. My numbers don't count FSBO.

June said...

Yay! I love this website!

FL - Paradise Lost said...

Many thanks to all for your excellent comments. It really makes this a better forum for information on what's REALLY going on with real estate down here in the Sunshine State.

I'll keep this site updated and fresh for as long as people are interested and involved with the discussion. So keep on posting, brothers and sisters!

- Jerry
(Evangelist for the Church of Truth in Florida Real Estate)
:^)

Anonymous said...

Great posts. The RE propaganda continues.

Anonymous said...

You can find a break down of average price and other information for 11 different areas in Tampa at gtar.com. That should address your theory on where they get median price. I've been following closely what has actually been selling in south tampa and I have only started to see some significant drops here and there (more than 10 percent). But big drops must be coming in the next 6 months. Keep up the good work.

shelbyville said...

Hey Anon,
Just checked gtar.com - Greater Tyler (TX) Association of Realtors? Where do you find anything related to Tampa (or FL, for that matter) on that site?

Just wondering....

Anonymous said...

Great site!! You are now on my "favorites" list. It's a rare occurrance for anyone to get on that list. good luck!

vfsv said...

Here is CA, the CAR or local county assoc of RE separate out SFH from townhomes & condos when reporting sales. DQ (& some others) lump them together. This makes the CAR (& so FAR) numbers come out higher than other sources. They're not actually cheating, but it does cause confusion. We track a lot of this on our site at: www.viewfromsiliconvalley.com

We also track DQ prices:
Santa Clara Co: http://www.viewfromsiliconvalley.com/id125.html
San Mateo Co: http://www.viewfromsiliconvalley.com/id157.html
Santa Cruz Co: http://www.viewfromsiliconvalley.com/id156.html

Anonymous said...

Opps, I mean gtar.org. But this site has monthly stats for 11 areas of Tampa. But it only has average sale price, not median. Why is it so hard to get median sale prices each month for well defined areas so that we can see what is actually happening month to month.

Does any one know how to get this information?

Anonymous said...

These statistics were pulled from Florida Association of Realtors Media center. http://media.living.net/statistics/statisticsfull.htm

It offers no explanation of what area encompasses "Tampa-St. Petersburg/Clearwater" but it does state "data from Hernando county..." not available for both 2005 and 2006.

FL - Paradise Lost said...

Yea, wonderfull! Like I said, there is no doubt that the geographical definition of "Tampa/St. Pete/Clearwater" by the FAR is nebulous at best.

Average (mean) price is always a tough one, because in housing, one multi-million $ mansion can equal 10-20 "regular folks" houses.

Either way (median or mean), Tampa's housing is a WHOLE lot more expensive than what the NAR/FAR are reporting.

I personally know of several properties that are sitting empty, investments owned by realtors who got into the business within the past 3 years. They are hurting pretty bad right now, but the pain is only going to get worse.

vsfv, thanks for the links. I'm always keeping track of what's going on out on the "left coast". I think you guys will be the bellweather for the rest of us in over-heated markets.

DC in LBV said...

I definteily agree that the median numbers are suspect, but I see the same thing in all FLA markets. The Lakeland MSA median is shown around $170k, and I haven't seen a decent home in a normal neighborhood for under $200k since 2004. As a researcher, I do know that the FAR markets are based upon the US census MSA markets, and you can get definitive market information from the US Census.

As hard as it is to believe, Orlando is actually more expensive than Tampa/St. Pete. I grew up in Largo, but now work in Orlando, and live in Lakeland, and I spend several days each week in each location. It isn'r because land is less available, but because Orlando has had more out-of-area speculators driving up prices. Orlando has been hit especially hard by UK buyers, because of the weak dollar. Around the Championsgate/Reunion area, Brits have been buying 1200-1400 ft2 2 bedroom townhomes for $350k-$400k, and thinking it's a bargain. I am not knocking your argument, all of Florida is outrageously priced right now, and FAR is very questionable with their data, but I have seen first-hand that Orlando is actually more expensive. Some of it may be that Orlando isn't much more expensive, but it is the more high end homes that have been moving there, because of the speculators. The reality is that nowhere in FLA has hit a density point were land availability has become an issue. That one is really just a realtor's myth to get people to buy (outside only a handful of markets in the whole US).

slow and low said...

dc, you are RIGHT ON. Even the FAR reports Orlando as having higher selling prices than Tampa. But I think that's only because Orlando is being more honest in their reporting. There is definitely some number-cooking going on down in the bay. As to why they feel a need to cook them so bad: I don't know if all of Frank's theories are correct, but I suspect there's a lot of truth in them.

That's is great info on the British investors in O-land. Now my question is: did they make these purchases for use as vacation homes, or did they actually expect to find some other dolts to sell them at a profit to?

Enquiring minds want to know!

David Ashley Gilbert said...

Your blog entry was very interesting. I am a realtor specializing in Tampa Bay Florida Real Estate .

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