by Fred Seely, Editor
Better listen close when John Tuccillo comes to town. He’s an economist and he wants you to understand what to look for.
“Most real estate analysis is like watching the weather reports on your local TV station,” he said. “Ninety percent of it is worthless. They tell you about winds in Montana and storms in Texas, as if you care, and then they tell you today’s weather, which you already know. Finally, they spend a little time telling you what they think will happen.”
Tuccillo has spent most of his life studying real estate and he’s earning his living these days as chief economist for Florida Realtors, the state’s real estate association. He was here last month for a joint meeting of NEFAR and the Sales and Marketing Council at the UNF University Center.
“It’s very positive that we seeing the market balance,” he told the 150 or so who showed up. “In March 2011, inventory stayed 11 months. In March 2012, it was down to six month. In a balanced market, it’s 5 1/2 months so we’re almost there.”
Here are some of his comments:
Indicators of better times:
“We’ve been through a pretty hellish five years. The indicators say we’re coming out of it, and here’s how a recovery goes:
“First, a decline in new listings. Then, buyers come back. Finally, the ratio of the sales price to the listing price goes up. All of that is happening in Florida and Northeast Florida.”
Here’s why you should be happy:
• The economy. “It’s better. It isn’t what we want, but it’s better.”
• Employment. “The numbers are positive. You really need to follow employment because it’s a significant number. The number to watch is net new jobs. Don’t pay any attention to the unemployment rate. That can change for a variety of reasons.”
• Stabilization of distressed properties. “”We now better understand what to do. The problem isn’t going away and it will be around for the next 10 years or so. But what has happened is that we now understand the rules of the game. Everything has rules but we never played this game, so we didn’t know the rules. Now we know what to do with short sales and the like.”
• Money. “There has been a remarkable recover of wealth. Except for home equity, every category of net worth has been restored to 2007 levels.”
Why you shouldn’t party like it was 2004:
• Inventory. “There is still a lot of distressed market. There are maybe 500,000 units in Florida and they’ll be with us for a long time. These homes will keep the recovery from going full blaze.”
• Economy. “It’s still fragile. There’s a low level of consumer confidence.”
• Financing. ”The biggest factor. The ratio of pending to closing is a key statistic. In good times, it was about 9 percent that didn’t close. Now, it’s around 30 percent. I don’t need to tell you that lenders are cautious, and for good reason. No lender’s career ever was endangered because he said ‘no’.”