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Get used to weak real estate market

DALLAS — If it was gloom you wanted, there were second and third helpings to be had last week when the National Association of Real Estate Editors met in Dallas.

Speaker after speaker, expert after expert, predicted: Wait till next year, or longer. It ain't over.

"We're 18 to 24 months away from a real recovery" in the housing market, said Debbie Dunn, executive vice president at CTX Mortgage, the lending arm of Centex Homes.

"There's a confidence crisis," Dunn said, with "declining home values . . . at the core." Buyers are still sitting this one out, she said, until they're sure the home they buy this month won't be worth less next month.

But she offered this ray of light: "Ninety percent of homeowners make their payments" on time. Everyone's not a foreclosure victim.

Charles McMillan, the new president-elect of the National Association of Realtors, complained that home buyer relief measures enacted by Congress a few months ago are taking too long to trickle down to consumers.

"It's worse than — what's that country? It starts with an M," McMillan said. He was referring to the slow pace of getting relief supplies to Myanmar, where a cyclone May 3 left more than 100,000 people dead or missing and another 1.5-million face hunger, disease and homelessness.

McMillan acknowledged that there will be "few changes in the next few months," but predicted a 6 percent increase in existing-home sales next year, to 5.7-million homes.

"There's no national market," McMillan said, although his 1.2-million-member association routinely reports national sales figures. "All real estate is local. It's our job to restore confidence in the market."

A questioner in the audience asked about an NAR promotional campaign that started a few years ago, just as the market was going into free fall — "There's never been a better time to buy a home." If someone had taken that advice and bought a home, the questioner said, in some markets that house is worth less today. Why should people listen to NAR?

McMillan dodged that bullet. "Realtors can't guarantee a property will ever increase in value," he said, and started talking about mortgage fraud.

The weakness in the for-sale market has been a mixed blessing for the apartment market, said Sue Ansel, chief operating officer of Dallas-based Gables Residential, a private investment trust that owns apartment communities. Renters are staying longer because it's harder to get a mortgage.

Typically 25 percent of tenants move out each year to buy a home. During the go-go times a few years ago, that jumped to 28 to 32 percent. Now only 16 percent are leaving to buy homes, she said.

The downside, however, is that there are lots of single-family homes for rent — homes that the owners can't flip to buyers, so they turn them into rentals. "Apartments can't grow when there are lots of single-family homes for rent," Ansel said.

Fifty-five to 60 percent of the nation's rental units are single-family homes, mobile homes and properties with fewer than five units. Big apartment communities represent only 40 to 45 percent of rental units.

Background checks for prospective tenants "are less rigorous in shadow markets" — single-family homes intended for owner occupancy that become rentals, said Greg Willett, vice president for research and analysis at M/PF YieldStar, which tracks the multifamily market. People who lose their homes to foreclosure tend to move to single-family homes, not apartments, and some landlords are willing to overlook the foreclosure on a credit report.

The Tampa Bay area was among the worst-performing apartment markets last year, scoring 47.8 against a national index of 100. The score is compiled from a dozen factors. The markets are ranked from 1 to 57 to come up with an overall score.

This area was hurt by excess apartment and condo construction (some of those condos will end up back in the rental pool): The Tampa Bay score was 45. On rent growth, Tampa Bay scored 53.

It could be worse: Phoenix had an overall score of 23.6 and Jacksonville of 31.7. By contrast, San Francisco scored 163.6.

"I don't think Tampa's scores will come as a surprise to anyone," Willett said.

Judy Stark can be reached at jstark@sptimes.com or at (727) 893-8446.

Get used to weak real estate market 05/16/08 [Last modified: Friday, May 16, 2008 4:30am]
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