The Real Estate Broker's Corner

I had been away in Florida, so I am tardy in returning to my blogging duties, and apologize. Having looked at some property there and talked with several Realtors, I can say with certainty that the Florida "high end" market will not be great until they have meaningful property tax reform. The present system, without commenting on the justness of it, locks people into homes and  hinders the liquidity of the homeowners' asset.

Consider someone in Ft. Lauderdale who wants to sell a house for $2 million that they own for $300,000, and have been in for 20 years. They pay current property taxes of about $9000 on an asset valued at 2 million. The next guy will pay about $45,000 for the same property, because the system uses recorded sales as the catalyst for revaluation. The seller then has to deal with a gains tax, and the reality that everything else being equal, their budget for property taxes will have to increase by 40k, not an easy thing to do for older, fixed income people.

The result is that the huge equity build enjoyed by these people may be something they cannot easily realize, and for the Florida home buyer, do not be surprised if prices stay high off Las Olas Boulevard.

My observations up here are that things are starting to make sense. There are multi units pricing at less that 100 times rent roll, (cap rates of 12%), and that starts to make sense as you evaluate risk free alternative investments. Single family housing is still expensive, but we have been steadily correcting. Things that are priced right seem to be moving, and with the stock market doing well, maybe people don't feel so jittery about making a purchase. Rates, both for borrowing and employment, remain good.

Do these things ad up to a housing market ready to break out? I don't know. The one thing I do know is this, those waiting for a bottom in the market usually see it in the rear view mirror, and by then the opportunity has passed.

Anyhow, watch for our buyer seminars to start in late June (behind schedule, but they will be worth the wait).

Regards

Mike Powers

Earlier this week, the NAR issued its numbers, and went on to say, we see stability in the market (maybe). Nothing like a forceful display of conviction. Thankfully, the NAR deals with the national scene, and every real estate pro I know, myself included, practices locally.

Yes, like politics, all real estate is local. In the Southcoast, things that are priced right get traffic, and move. The problem with the market is not a shortage of buyers, or liquidity. It is a shortage of rational sellers.

But that is not the real problem. In every market there are irrational sellers. The problem is really a shortage of real estate brokers who are willing to say "no" to the irrational seller and his listing. The boom market brought lots of new folks into the realty business, and these people have very little experience in dealing with the a down market, and more specifically, how to properly evaluate what a house will sell for in a down market. Too often, the price they put out is designed to capture a listing (which worked in the boom), and not to inform the seller what his house will likely sell for.

So if you want to list, you should think about if you really want to sell, and ask yourself, would I pay what i am asking for this house? If you would, it is probably priced to sell. If you wouldn't, why would anybody else?