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.