WEST PALM BEACH, Fla. – Sept. 20, 2012 – A new home sales measure says Florida prices hit a soft bottom in 2009, years earlier than what some experts have declared as the low point for real estate.
The measure, similar to the respected national Standard & Poor’s/Case-Shiller price index, was created by Florida Realtors Chief Economist John Tuccillo to be a more accurate reflection of sale prices in the state.
Tuccillo said he was surprised that the index pointed to 2009 as a bottom, but said that was also a time when investors began eyeing Florida for real estate deals.
“Since then we’ve been sort of rocking along on a bumpy road,” said Tuccillo, who developed the index over about a year’s time. “It’s essentially been flat – but in this context, flat is probably good news after the large run-up and drop.”
According to the index, Florida sales prices increased 152 percent from January 2000 to the peak of the market in November 2006. They fell 43 percent from the peak to mid-2009.
Realtors have long complained that the current method of reporting monthly median home sales prices doesn’t offer a true measure of increasing and decreasing values. The median, which means half of homes sold above the price and half below, can be greatly influenced if a large number of either distressed properties or luxury homes sell in one month.
Florida’s new index is considered a “repeat sales index.” It combines Florida Department of Revenue data with prices of the same individual properties sold over time. The index is expected to be released quarterly but because of a lag in some statewide data, the first index runs only through August 2011.
Like Case-Shiller, the Florida home price index measures sales as compared with January 2000 when the index was set at 100. Case-Shiller’s Florida data include Tampa and South Florida, which combines Palm Beach, Broward and Miami-Dade counties.
National Association of Realtors spokesman Walter Moloney said he’s not aware of another state that has its own price index. California releases an “affordability index” that measures the percentage of all households that can afford to purchase a single-family home, but its sale prices are reported as a median.
While the public may prefer a median sales price that reports an actual dollar figure over an index, the index is considered more accurate.
Still, Palm Beach County Realtors said a statewide index doesn’t always reflect regional specifics.
Kevin Kent, a broker-associate with Platinum Properties, which has offices in Jupiter, Juno Beach and Stuart, said South Florida’s home sale prices probably hit a bottom later than 2009.
“When you step back and look at the entire state, that’s probably accurate,” Kent said. “But when you break it down into pockets and certain areas that were hit the hardest, the numbers wouldn’t be the same.”
In April, analysts at the online real estate database Zillow said South Florida sale prices hit bottom at the end of 2011. Case-Shiller’s index shows a bottom in Palm Beach, Broward and Miami-Dade counties in April 2011, but that prices had stabilized some before that.
Florida International University real estate professor Ken H. Johnson agrees that 2011 marked the bottom.
“Back in November, I thought it was pretty clear we had bottomed and housing was as affordable as it’s been in 40 years,” he said. “I said that was the turn, and we’ve not seen prices go down.”
© 2012 The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services
Thursday, September 20, 2012
Tuesday, September 11, 2012
Where'd all the REO's go?
FHFA sells 699 Fla. REOs to investor
WASHINGTON – Sept. 11, 2012 – A controversial move to sell 699 Fannie Mae- and Freddie Mac-owned homes in bulk to an investor was closed last week, according to the Federal Housing Finance Agency (FHFA). Pacifica Companies LLC purchased the homes as part of a real estate owned (REO) pilot initiative.
Pacifica has not released details on how it will oversee the properties. Based in San Diego, the company’s website claims it has an office in Tampa, as well as Austin, Texas; Riverside, Calif.; and four cities in India.
Pacifica paid $12.3 million upfront in a joint venture agreement. It will pay an additional $49.3 million by sending Fannie Mae 90 percent of future proceeds. After that, Pacifica will collect a 20 percent management fee and pay Fannie Mae 50 percent of future proceeds. FHFA projects the total value of all payments to be $78.1 million. The total price paid by Pacifica doesn’t represent a significant discount; however, the relatively low downpayment and profit-split deal would make it attractive to most investors.
“When FHFA proposed this program, the nation was worried about an onslaught of distressed home sales and too few buyers,” says Florida Realtors’ Senior Vice President of Public Policy John Sebree. “However, NAR and Florida Realtors have always taken the position that Realtors know their neighborhoods and are in the best position to move REOs into the hands of buyers.”
The Florida REO sales impacted homes throughout the state, including Central and Northwest Florida, Southeast Florida and the West Coast. It’s still unclear if Pacifica agreed to rules regarding a future sale. NAR says it’s setting up a meeting with FHFA to find out more details.
“Going forward, FHFA, Fannie Mae and Freddie Mac may decide that we no longer need bulk sales to investors,” Sebree adds. “Florida buyers are coming out in force and many say they now face multiple bids and a limited inventory of homes to consider. If we do discover any problems with the current deal, it will hopefully be an isolated incident.”
Alan Zibel, a writer for The Wall Street Journal, thinks Fannie Mae may focus now on sales to single buyers because it’s more profitable. “In the second quarter of this year, (Fannie Mae) recovered 59 percent of outstanding mortgage balances” when it sold a REO, Zibel says, “compared to 54 percent a year earlier.”
© 2012 Florida Realtors®
Pacifica has not released details on how it will oversee the properties. Based in San Diego, the company’s website claims it has an office in Tampa, as well as Austin, Texas; Riverside, Calif.; and four cities in India.
Pacifica paid $12.3 million upfront in a joint venture agreement. It will pay an additional $49.3 million by sending Fannie Mae 90 percent of future proceeds. After that, Pacifica will collect a 20 percent management fee and pay Fannie Mae 50 percent of future proceeds. FHFA projects the total value of all payments to be $78.1 million. The total price paid by Pacifica doesn’t represent a significant discount; however, the relatively low downpayment and profit-split deal would make it attractive to most investors.
“When FHFA proposed this program, the nation was worried about an onslaught of distressed home sales and too few buyers,” says Florida Realtors’ Senior Vice President of Public Policy John Sebree. “However, NAR and Florida Realtors have always taken the position that Realtors know their neighborhoods and are in the best position to move REOs into the hands of buyers.”
The Florida REO sales impacted homes throughout the state, including Central and Northwest Florida, Southeast Florida and the West Coast. It’s still unclear if Pacifica agreed to rules regarding a future sale. NAR says it’s setting up a meeting with FHFA to find out more details.
“Going forward, FHFA, Fannie Mae and Freddie Mac may decide that we no longer need bulk sales to investors,” Sebree adds. “Florida buyers are coming out in force and many say they now face multiple bids and a limited inventory of homes to consider. If we do discover any problems with the current deal, it will hopefully be an isolated incident.”
Alan Zibel, a writer for The Wall Street Journal, thinks Fannie Mae may focus now on sales to single buyers because it’s more profitable. “In the second quarter of this year, (Fannie Mae) recovered 59 percent of outstanding mortgage balances” when it sold a REO, Zibel says, “compared to 54 percent a year earlier.”
© 2012 Florida Realtors®
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