Market Watch 3rd QTR Report

Economic and Market Watch Report3rd Quarter, 2010

© 2010 Northeast Florida Multiple Listing Service, Inc. and NATIONAL ASSOCIATION OF REALTORS®

Reproduction, reprinting, or retransmission in any form is prohibited without writtenpermission.

RealtyWEB.NET Economic and Market Watch Report

Index

RealtyWEB.Net a service of the Northeast Florida Multiple Listing Service, Inc. and owned by the Northeast Florida Association of REALTORS®, is the largest multiple listing service in Northeast Florida, with more than 5,000 licensed brokers, agents, and appraisers. Customers have access to more than 15,000 active listings and an archive of a quarter of a million comparable and sold properties. In excess of two million public records from 21 counties containing tax information about tax properties is available in the expanded RealtyWEB.NET coverage area. Over 20,000 properties are sold through RealtyWEB.Net each year. This report reflects strictly single family residential homes entered and reported through RealtyWEB.Net. RealtyWEB.Net is pleased to offer this quarterly economic and market watch report which is designed to help real estate practitioners identify current and future economic and real estate trends that affect our industry.

Local ReportFlorida

1 Baker County ...............................................................................................................2 Bradford County .........................................................................................................3 Clay County .................................................................................................................4 Duval County ...............................................................................................................6 Flagler County .............................................................................................................7 Nassau County .............................................................................................................8 Putnam County ............................................................................................................

10 St. Johns County ..........................................................................................................

12 Others ...........................................................................................................................

13Trends ...............................................................................................................................................14Chief Economist's Commentary* ...................................................................................................16Economic Monitor* .........................................................................................................................

*Reprinted from Real Estate Outlook: Market Trends and Insights. ©2010 NATIONAL ASSOCIATION OF REALTORS ®.Used with permission. Reproduction, reprinting, or retransmission of this article in any form (electronic media included) is prohibited without permission. For subscription information please call 1-800-874-6500.

Local Report

Baker County, FL

1 2 3 4 5 Seller's Market

Buyer's Market

Employment increased by 3 jobs in Baker County during August and September. However, the number of job seekers also increased. The combined effect of these two trends was an increase in the average monthly unemployment rate from 10.9% for the second quarter to 11% in the first two months of the third quarter. Solid job growth will help confidence, while record low mortgage rates boost affordability.

Labor Market :

Housing Market :

(Forecast)Q2' 10 Q3' 10 Q4' 10

$128,600Average Price $124,900

136# Homes on the Market * 131

34# Homes Sold ** 29

11# New Homes Built *** 6 ***

124Avg # of Days on Market 107 * Available as of Sep. 30, 2010.

*** During the first two months of 3rd quarter. ** May not add to total of zip codes.

Zip Code Average Price Price Change***

Total #Homes Sold

(Quarter)

% Change in #Homes Sold

***

Average Dayson Market

% of Asking Price(Sold/

List Price)

Data by Zip Codes for Q3 2010

32040 $149,800 -26.78% 9 80.00% 93.2%10432063 $116,300 -15.66% 17 70.00% 94.1%11232072 $38,000 N/A 1 N/A 97.7%5032087 $159,000 13.57% 1 0.00% 97.6%153

OTHER $99,900 N/A 1 N/A 91.2%58

1

*** % Change of current quarter compared to the same quarter to year ago.

Local Report

Bradford County, FL


Buyer's Market

Employment declined by 53 jobs in August and September. The job losses brought about an increase in the average monthly unemployment rate from 9.3% in the second quarter to 10.5% for the initial two months of the third quarter. Layoffs continued to rise, which will weigh buyer confidence and demand in Bradford County. However, mortgage rates have once again hit record lows, creating a favorable buying environment for those with a job.

Labor Market :

Housing Market :

(Forecast)Q2' 10 Q3' 10 Q4' 10




NA# New Homes Built *** NA ***




Total #Homes Sold

(Quarter)


***



List Price)


32058 $94,300 109.56% 2 100.00% 75.5%31832091 $93,600 -10.26% 19 46.15% 86.9%180

OTHER $131,000 6.50% 3 50.00% 90.3%44

2


Local Report

Clay County, FL


Buyer's Market

Employment increased by 21 jobs in Clay County during August and September. However, the number of job seekers also increased. The combined effect of these two trends was an increase in the average monthly unemployment rate from 10.2% for the second quarter to 10.7% in the first two months of the third quarter. Solid job growth will help confidence, while record low mortgage rates boost affordability.

Labor Market :

Housing Market :

(Forecast)Q2' 10 Q3' 10 Q4' 10


1,818# Homes on the Market * 1,843






Total #Homes Sold

(Quarter)


***



List Price)


32003 $233,400 -16.58% 73 -23.16% 96.3%9732043 $173,500 -4.62% 52 -21.21% 96.1%10732065 $164,900 -9.35% 107 -17.69% 96.7%8532067 $65,000 N/A 1 N/A 96.3%3632068 $125,600 -18.18% 147 0.00% 96.6%7132073 $137,500 -11.75% 76 -20.83% 96.1%10732656 $76,300 -37.36% 24 -4.00% 94.7%102

OTHER $95,400 -5.07% 4 33.33% 90.9%66

3


Local Report

Duval County, FL


Buyer's Market

Employment increased by 97 jobs in Duval County during August and September. However, the number of job seekers also increased. The combined effect of these two trends was an increase in the average monthly unemployment rate from 11.6% for the second quarter to 12.6% in the first two months of the third quarter. Solid job growth will help confidence, while record low mortgage rates boost affordability.

Labor Market :

Housing Market :

(Forecast)Q2' 10 Q3' 10 Q4' 10



2,272# Homes Sold ** 1,843





Total #Homes Sold

(Quarter)


***



List Price)


32202 $231,000 77.42% 3 0.00% 83.5%23932204 $110,600 -41.67% 6 -45.45% 98.3%13632205 $128,100 2.48% 69 -6.76% 93.1%10732206 $88,100 -9.64% 17 -37.04% 88.8%7732207 $132,800 -11.82% 67 34.00% 92.5%10332208 $56,600 -26.21% 30 -30.23% 93.7%9632209 $35,300 -44.15% 9 80.00% 92.7%4032210 $119,700 -16.93% 126 -15.44% 93.0%8832211 $92,600 13.06% 47 -41.25% 95.4%74

4


Local Report

Duval County, FL


Total #Homes Sold

(Quarter)


***



List Price)


32216 $118,200 -15.45% 74 12.12% 95.4%10032217 $143,900 -13.05% 31 -6.06% 91.7%7732218 $130,400 -7.91% 136 -9.93% 96.5%11032219 $112,000 -7.97% 23 4.55% 96.6%8232220 $121,300 -22.14% 27 35.00% 95.2%9132221 $118,400 -19.07% 57 -8.06% 96.3%8532222 $140,600 -16.46% 30 -6.25% 98.1%12132223 $254,000 24.45% 66 -2.94% 93.1%10832224 $274,600 -3.24% 86 2.38% 95.1%10632225 $193,400 -3.54% 143 -13.86% 94.4%8432226 $194,500 -5.81% 52 -7.14% 95.1%11932233 $263,100 -12.53% 59 7.27% 94.1%9932234 $73,100 -49.59% 5 0.00% 88.2%9132244 $92,200 -17.46% 141 -9.62% 97.1%7832246 $151,300 3.91% 120 29.03% 96.4%8132250 $321,000 -17.35% 65 20.37% 91.2%10432254 $106,200 53.91% 12 50.00% 99.1%5632256 $270,800 -8.94% 68 33.33% 93.3%11332257 $189,000 -1.00% 57 -9.52% 93.2%8932258 $179,400 -5.28% 136 8.80% 97.1%8632266 $293,400 -17.91% 12 -36.84% 93.8%8732277 $122,600 -5.18% 64 42.22% 95.2%109

OTHER $197,800 11.94% 5 150.00% 99.8%102

5


Local Report

Flagler County, FL


Buyer's Market

Employment declined by 208 jobs in August and September. The job losses brought about an increase in the average monthly unemployment rate from 15.4% in the second quarter to 16.1% for the initial two months of the third quarter. Layoffs continued to rise, which will weigh buyer confidence and demand in Flagler County. However, mortgage rates have once again hit record lows, creating a favorable buying environment for those with a job.

Labor Market :

Housing Market :

(Forecast)Q2' 10 Q3' 10 Q4' 10








Total #Homes Sold

(Quarter)


***



List Price)


32137 $224,500 47.41% 5 150.00% 93.1%5332164 $136,800 N/A 6 N/A 91.1%94

6


Local Report

Nassau County, FL


Buyer's Market

Employment increased by 8 jobs in Nassau County during August and September. However, the number of job seekers also increased. The combined effect of these two trends was an increase in the average monthly unemployment rate from 10.6% for the second quarter to 10.9% in the first two months of the third quarter. Solid job growth will help confidence, while record low mortgage rates boost affordability.

Labor Market :

Housing Market :

(Forecast)Q2' 10 Q3' 10 Q4' 10








Total #Homes Sold

(Quarter)


***



List Price)


32009 $169,400 -10.23% 5 0.00% 95.2%8032011 $129,500 -13.44% 21 110.00% 93.6%10332034 $184,800 -9.10% 35 16.67% 94.4%10232046 $124,600 3.49% 7 40.00% 97.2%4432097 $125,900 -19.50% 21 -12.50% 91.7%118

7


Local Report

Putnam County, FL


Buyer's Market

Employment declined by 839 jobs in August and September. The job losses brought about an increase in the average monthly unemployment rate from 12.9% in the second quarter to 14.2% for the initial two months of the third quarter. Layoffs continued to rise, which will weigh buyer confidence and demand in Putnam County. However, mortgage rates have once again hit record lows, creating a favorable buying environment for those with a job.

Labor Market :

Housing Market :

(Forecast)Q2' 10 Q3' 10 Q4' 10








Total #Homes Sold

(Quarter)


***



List Price)


32112 $84,600 -21.08% 10 -16.67% 83.2%17332131 $127,100 32.95% 5 66.67% 94.8%14332139 $158,200 97.75% 5 150.00% 109.8%14532140 $93,300 195.25% 2 0.00% 79.7%11532147 $114,000 197.65% 1 0.00% 98.4%22432148 $65,800 -14.10% 10 -16.67% 86.0%10132177 $111,200 -13.93% 23 -23.33% 90.2%11932181 $127,700 74.69% 3 -50.00% 92.8%569

8


Local Report

Putnam County, FL


Total #Homes Sold

(Quarter)


***



List Price)


32187 $160,500 25.88% 2 0.00% 98.2%12532189 $93,500 27.91% 13 -18.75% 87.5%25132193 $118,700 -1.08% 4 33.33% 81.3%72332666 $89,300 -59.41% 5 400.00% 92.4%50

OTHER $93,400 41.95% 4 100.00% 97.7%117

9


Local Report

St. Johns County, FL


Buyer's Market

Employment increased by 21 jobs in St Johns County during August and September. However, the number of job seekers also increased. The combined effect of these two trends was an increase in the average monthly unemployment rate from 9.4% for the second quarter to 9.8% in the first two months of the third quarter. Solid job growth will help confidence, while record low mortgage rates boost affordability.

Labor Market :

Housing Market :

(Forecast)Q2' 10 Q3' 10 Q4' 10








Total #Homes Sold

(Quarter)


***



List Price)


32033 $166,800 -5.60% 7 133.33% 94.4%8632080 $343,300 9.65% 42 133.33% 90.4%15032081 $322,200 -2.72% 35 6.06% 95.0%10032082 $625,200 16.86% 86 38.71% 90.9%17132084 $190,200 4.05% 45 -8.16% 92.2%12632086 $149,700 -9.44% 25 -35.90% 94.1%8332092 $213,000 -18.67% 132 -2.22% 95.5%11432095 $259,900 -4.52% 24 -27.27% 95.0%97

10


Local Report

St. Johns County, FL


Total #Homes Sold

(Quarter)


***



List Price)


32145 $52,800 -36.00% 5 -50.00% 90.9%13232259 $276,100 0.80% 168 0.60% 96.3%88

OTHER $229,300 -2.59% 2 100.00% 126.8%4

11


Local Report

Others


Total #Homes Sold

(Quarter)


***



List Price)


32054 $154,900 N/A 3 N/A 98.1%13732060 $565,000 N/A 1 N/A 90.4%20332141 $52,000 N/A 1 N/A 89.7%8432327 $77,000 N/A 1 N/A 99.4%15032615 $104,900 N/A 1 N/A 105.0%732631 $29,900 N/A 1 N/A 100.0%832640 $99,000 N/A 2 N/A 92.1%4632666 $239,000 N/A 1 N/A 89.9%33234786 $365,000 N/A 1 N/A 85.1%43

12


PByM ThmHoREThsathovdewfilab Thprthag2.hocoFlinbuye

Atdi3r

thhogrThthho ThInth

Pricing Dy Ken Fears

Manager, Regi

he tax credit hmomentum in owever, July’EALTORS® alhe gap in yeaales eased in Ahat gap persisverhang of suemand has giould‐be buyelled sellers wibout prices.

he national mrice was stabihrough Augusgain in Septem4%. Locally, ome price in tovered by theorida Multiplcreased fromuy homes, whear earlier in o

t the transactifficulty bridgrd quarter of 2he same time omes that solreater than 5%he increased hat sellers muomes.

he tax credit bn some areas,hat sellers ma

Concessionthan 5% Concessionthan 5%

During tonal Econom

had a robust May, draggins 25.3% dropike into a panr‐over‐year August, but sts. The upply relative ven some ers pause andith anxiety

median home ile from April st, but stumblmber falling the average the area e Northeast e Listing Serv

m July of this yhich are largeorder to illum

tion level, maing that gap. 2010 comparethe average ld in the 3rd q% was less thshare of salesust be more re

brought manthis backlash

ay need to low

D32

n Less

n Greater

the Postics

impact on thng inventoriesp in national ynic.

d

led

vice, Inc was 1year. Rememer on averageminate the tru

any REALTORS Locally, the sed to the samnumber of dauarter of 201an during thes with large ceceptive to re

y buyers to thh has pushed wer their expe

Days on MarkeRd Quarter 009

39.2

136.7

t‐Credit

e national hos lower and syear‐over‐yea

1.3% higher inmber that hom. Consequenue price trend

S® report to share of homme period in 2ays on marke10 with a conce 3rd quarter ooncessions sue‐pricing to m

he table, but buyers and sectations for

et 3Rd Quarter 2010

40.5

126.7

t Hango

ousing markettabilizing pricr sales volum

n September me prices tendtly, it is best td.

Home priceaverage prNortheast from 12.6%of the ratiothis fall.

NAR a growinme sales with a2009. At t for cession of 2009. uggests move their

may also havellers apart. the sale price

over

t. Sales surgeces. This was me sent many

of this year td to rise durinto compare h

es only tell parice concessioFlorida Multi% in July to 13o suggests tha

ng divide betwa concession

ve fed a buyerThe upward e in order to b

Concession than 5% Concession than 5%

ed in April andan importantwould‐be bu

than in Septeng the summhome prices f

art of the stoon in the areaiple Listing Se3.8% in Septeat home price

ween buyers of greater th

r backlash whtrend in pricebe ready for s

Sh3Rd

20Less 3Greater 6

TR

d maintainedt shift in the muyers, sellers,

mber of 2009er as familiesrom the same

ry, though. Ta covered by tervice, Inc incember. This ees may track

and sellers aan 5% rose d

hen it was take concession successful ne

hare of Total Sd Quarter 009

32

34.5%

65.4%

RENDS

d this market. and

9. This gap s move and e period a

The the reased expansion downward

nd uring the

ken away. suggests egotiations.

Sales 3Rd Quarter 2010

33.0%

66.7%

Sstuart

Typewritten Text

13

Economist’s Commentary

14

Inflation or Deflation? by Lawrence Yun, NAR Chief Economist How low can we go? We saw another historic low in the 30-year fixed-rate mortgage as the average rate touched 4.3 percent recently. The low rates are certainly welcome in this current post homebuyer tax credit environment to entice more buyers into the market. Mortgage rates are exceptionally low right now for a couple of reasons. One is low inflation. Another reason: the Federal Reserve recently announced it may again start purchasing longterm bonds – which may include mortgage backed securities (MBSs). Even if MBSs are not included in the Fed’s repurchase program and it instead focuses only on government bonds, the bottom line impact will be roughly the same: such action will lower rates for any long-term borrowing. Because the bond market nearly always prices-in new information quickly, there may not be any downward movement on rates when the Fed actually does purchase bonds at later date. That is, from a practical point of view, the rate may have already reached the bottom. It is possible for rates to still go lower from this point onward, but more likely than not the rates will go higher. The path and the pace of change will be strongly influenced by changes in consumer prices. With so high an unemployment rate (in September it was 9.6 percent), there is not likely to be any wage and inflationary pressure, some say. Hence we can expect a continuing low interest-rate environment for quite some time. If anything, we should focus heavily on avoiding deflation – a condition of generally declining prices. Deflation could lead to us into 20 years of Japanese-economy-style stagnation. Recall if you will that Japan recovered from its utter destruction after World War II (yes, with the help of an “administering” U.S. presence and support). The Japanese economy took off. The country became so wealthy that its citizens started buying property (including land) all over Hawaii and trophy buildings across the mainland U.S. in the 1980s. Then came deflation in the early 1990s. All that progress suddenly halted as if the Japanese economy smacked into a brick wall. With that historical example in their minds, some policymakers are likewise – and perhaps rightly – very concerned about deflation and the possible accompanying future lost decades. After a slight CPI decline in 2009, the Federal Reserve opened the monetary spigot to avoid such a deflation scenario in the U.S. Some calm and economic growth returned. But our economy has been showing fresh signs of sputtering. Officials at the Fed have recently hinted at another opening of the monetary spigot via purchasing bonds – with freshly printed money. But wait a second. Can a society’s standard of living improve simply by printing money? Is there a free lunch? Doesn’t too much paper money eventually lead to too high a rate of inflation? The data is mixed. Let’s take a look. The consumer price index (CPI) rose 1.2 percent from August 2009 to August 2010. The more carefully watched core CPI figure which excludes the volatile energy and food components showed a tamer inflation rate of 1.0 percent. That is the lowest core CPI in more than 50 years. A key reason for this historic low core inflation rate has been tame housing rent growth over the past two years. If the housing rent component of the CPI – which accounts for nearly 30 percent of the “weight” of the CPI basket) were to pick up, then overall CPI would also surely rise. Rent for residential housing slid ever so slightly over the past two years to June of 2010 before starting to rise in the past two months. In fact, several apartments in the Washington D.C. region raised rents by 10 to 20 percent recently. While the D.C. area is no doubt unique (it has little employment troubles, especially compared to other markets), but if such a rent growth trend was to spread to many parts of the country then alarmingly high inflation will be with us – and likely for quite some time. In addition to a slight upturn in the housing rent component, some of the pipeline inflation measures have also been rising. The Producer Price Index (PPI) for final products rose by 3.0 percent in the past 12 months. PPI for intermediate products rose by 5.0 percent. PPI at the very early stage of production, for the crude goods, rose by a whopping 18.2 percent. Some commodity prices are rising as well. Wheat and

Economist’s Commentary

15

raw coffee prices have spiked. Oil prices at $80 or so are not low by any means. And gold prices are at record highs. The U.S. government is also verbally trying to convince China to strengthen its currency, which by reverse means a weakening of the dollar. A weaker dollar also translates into higher import prices, which also add to the inflationary pressure. If rising PPI, commodity prices, and weaker dollar steadily begin to impact CPI to turn upward, then the Federal Reserve will have no choice other than to raise interest rates or lose the effectiveness of the monetary policy. My sense is that CPI inflation has already hit its low point and will rise. But the rise, hopefully, will be slight and gradual. Mortgage rates can then also rise gradually and not alarmingly. Our baseline forecast is for the 30-year fixed rate to hit 5 percent – but not until the middle of 2011 at the earliest. By that time, the economy should have added one million additional jobs -- on top of the 700,000 private sector job creations from January to September of this year. That pace of job creation is not robust, but it is still a sign of healing and a move in the right direction. Mortgage rates at near 5 percent (still amazingly attractive) and some job creation should be enough to help home sales rise above a 5 million unit annualized pace by the spring of 2011. This sales pace will still be subpar, barely matching the sales activity of 10 years ago when there were 30 million fewer people living in the U.S. But it will be adequate to keep home prices essentially stable. Under an alternative forecast scenario where the CPI rises very fast, mortgage rates will also sharply rise, perhaps, even to 7 or 8 percent. Homebuyers will clearly be put off. Homeowners, though, may see a boost in their home values, since real estate values have historically proven to rise in line with inflation. In such a scenario, oh how sweet it will be for those who locked in mortgage rates at an historic low 4.3 percent and then later experience home price gains while their monthly mortgage payments remain unchanged.

Economic Monitor

Notes: All rates are seasonally adjusted. Existing home sales, new home sales and housing starts are shown in thousands. Employment growth is shown as month-to-month change in thousands. Sources: NAR, Bureau of the Census, Bureau of Labor Statistics and Freddie Mac.

16

This table reflects data available through July 2, 2010. Likely Direction Recent Over the Next Forecast Monthly Indicator Forecast Six Months

Existing-home sales rose 7.6% in August to a seasonally adjusted annual rate of 4.13 million units. July re-sales figures were revised upward. Both single-family homes and condominium sales increased. Home values continue to stabilize; the national median existing home price was $178,600 in August – an increase of 0.8% from August of 2009. Sales still remain below par, and despite very attractive affordability conditions, housing’s recovery will be slow and gradual due to economic uncertainty.

New home sales registered a seasonally adjusted annual rate of 288,000 units in August – a level unchanged from July but 28.9% below the level a year ago. New home inventory was down only 1.1% from

Housing starts improved in August, rising 10.5% from the previous month to 598,000 units. The bulk of growth in starts remained in the multifamily sector. Housing permits – generally a reliable indicator of future starts – rose 1.8% to 569,000, with the bulk again in the multifamily segment.

Housing affordability continues to rise. NAR’s Housing Affordability Index posted a reading of 168.3 in August – up from July’s index of 162.2 as well as the 161.9 reading a year ago. The Index has been above 160 for a full 12 months.

Mortgage rates The average 30-year fixed mortgage rate continued to post new records lows, as it declined to 4.35% in September. While this is good news for “well-qualified home buyers,” according to NAR’s REALTORS® Confidence Index many REALTORS® indicate that that banks are more reluctant than ever to approve loans even to such qualified mortgage applicants.

Employment The economy shed 95,000 jobs in September – down from August’s 57,000 lost jobs and worse than most analysts expected. Private firms actually added 64,000 payrolls – for a ninth consecutive month of private job additions – but government payrolls declined by 159,000. Sectors posting job gains included health care, leisure and hospital, and retail. The unemployment rate was unchanged at 9.6%.

Economic Growth The economy grew 1.7% in the second quarter of this year. This is the third revision of second quarter GDP growth based on more complete data. The inflation measure remained unchanged. Additional data on Personal Consumption Expenditures (PCE) show that consumer spending rose 0.2% from July to August and was up 1.7% from a year ago.

Aug 2010 4,130 July 2010 3,840 Aug 2009 5,100

Slow and steady recovery

Aug 2010 288 July 2010 288 Aug 2009 405

Stock market wealth helps new home sales

Aug 2010 598 July 2010 541 Aug 2009 585

Sept 2010 4.35% Aug 2010 4.43% Sept 2009 5.06%

Aug 2010 168.3 July 2009 162.2 Aug 2009 161.9

Already at historic highs

Some loosening in construction loans will provide boost

A higher rate to compensate for a loss in future purchasing power of the dollar

Steady upward with gyrations induced by Census workers

Sept 2010 -95 Aug 2010 -57 12-month total: +344

2010:II +1.7% 2010:I +3.7% 2009:II -0.7%

Slow expansion unless business spending comes around

Documents

Market Watch 3rd QTR Report