The Real Numbers

The Real Numbers

REAL ESTATE by Jean Gruss | Editor/Lee-Collier

The Naples Area Board of Realtors wants to change the way existing-home sales are reported statewide. The group faces an uphill battle in light of the residential downturn.

Every month, the Florida Association of Realtors publishes data reporting the latest existing-home sales.

Lately, the news has been dismal. In March, for example, the number of sales of existing single-family homes in Florida fell 28% over the same month a year ago. Median prices dropped 4%.

But those numbers don't include Naples, a city where the median sales price of a home broke the $500,000 barrier in 2005.

That's because the Naples Area Board of Realtors decided a few months ago to withhold sales figures for its area. It is the first Realtors group in recent memory to take such a bold step. Instead, it now publishes its own quarterly data on its Web site, Naplesarea.com.

Realtors concede that the data didn't hurt in the boom years. After all, the good news every month of rising sales and prices added to the frenzy of buying and selling that culminated in 2005.

But as the residential real estate market turned last year, the monthly reports from the Florida Association of Realtors (FAR) began to show the grim reality of declining sales and prices. Real estate agents now cringe every month as their hometown newspapers scream headlines of the doom in residential sales, citing the FAR statistics. Some openly criticize the media for aggravating the decline.

Into this fray entered Spencer Haynes, manager of the Fifth Avenue South office of John R. Wood Realtors in Naples, who became president of the Naples Board of Realtors in January. "I drew the great year," he quips.

Under pressure from his members, Haynes and his board examined the FAR data. Among other complaints, they say the figures cover an area too broad to be defined as Naples and the data even counts sales outside the area. What's more, the monthly data is too volatile to be useful.

Haynes is not alone in his complaints. "I understand their frustration and that's something we've been dealing with," says Joe Hembree, president of the Sarasota Association of Realtors.

"Our statistics don't look like that," says Carol Austin, chief executive officer of the Greater Tampa Association of Realtors, of the FAR data. In particular, she says the Tampa area data includes sales in distant Hernando County. "I had to explain this to our directors because it didn't make sense."

While the Tampa association still provides existing-home sales data to FAR, it also posts figures on its Web site, www.gtar.org. "The housing prices are a lot different," she says.

FAR President Nancy Riley, a sales associate at Coldwell Banker in St. Petersburg, says the organization examined its members' concerns about the data but couldn't say more. "I thought the issue had been resolved," she says.

An antiquated system

Haynes says FAR's system for collecting existing-home sale data has been in place for 13 years and hasn't changed.

For starters, Haynes and others say FAR data covers broad metropolitan statistical areas that contain many different markets. Haynes says it doesn't make sense to include Marco Island in the Naples numbers just as Austin says Hernando sales shouldn't be lumped in with Tampa's.

The second concern is that FAR data counts every sale a Realtor lists, regardless of where it takes place. That means a Realtor in Sarasota may have sold a home in Fort Myers and the sale is counted in the Sarasota numbers.

With the growth of the Internet, Realtors on the Gulf Coast are buying and selling property across city and county boundaries. It makes no sense to count a sale in Naples that actually took place in Tampa, they say.

Sometimes, FAR data counts sales multiple times. For example, if a Realtor belongs to more than one group that reports sales to FAR, one sale may be counted several times. "A broker may belong to five boards and the sales are all reported," says Hembree, though he cautions that few brokers belong to that many boards.

Lastly, Realtors argue that reporting sales monthly is too frequent. For example, Haynes says if a developer sells $400 million of beachfront residences in a single month at $2 million each, it could skew monthly median prices by as much as $45,000. Reporting quarterly, he says, evens out some of those anomalies.

Quashing conspiracy theories

Haynes says some people saw the Realtors' move not to disclose monthly figures as an attempt to hide from the bad news of falling sales and prices. It didn't help that the board's initial quarterly sales reports was skimpy on the numbers. What's more, FAR provided no details explaining why the Naples figures have been missing each of the last few months.

Haynes says the recent negative publicity about Naples' residential market in national newspapers - one writer dubbed it "Bubble City" - has been a good thing in the end. "Now, everyone knows Naples," Haynes says.

While Haynes says some members complained about the monthly FAR figures, he argues that the data his organization publishes represents a truer picture of the Naples market (see related story and table).

Since the first report a few months ago, the Naples Area Board of Realtors figures now are much more detailed and include quarterly figures going back three years. What's more, the association gave up writing an analysis, which some had viewed as spinning the numbers.

In the end, it's not clear there is a significant difference between the two methods of presenting the data, though Haynes says his organization has not gone back to compare the data. But a cursory look at data for the first quarter of 2006, for example, shows there are no significant anomalies between the figures reported by FAR and those published by the Naples Area Board of Realtors.

Working with FAR

Haynes says he's working with FAR to resolve the issue of reporting sales and prices of existing-home sales. "[FAR President] Nancy Riley has been marvelous," he gushes. "I know it's being looked at."

While he acknowledges that several other Realtor boards have contacted him to discuss how Naples publishes its data, he won't reveal who they are because he doesn't want to appear to be lobbying for change. "I don't think I should campaign," Haynes says.

As with any large trade organization, it will take time for FAR to determine how it will change reporting existing-home sales. But he says the business has changed and the data collection has to be reexamined. "We have to look at how the business works now," he says.

REVIEW SUMMARY

Industry. Residential real estate

Issue. How existing-home sales are reported

Key. Realtors question the validity of widely published data.

A buyer's market

Like most areas of Florida, Naples' sales of existing homes fell in the first quarter of 2007 compared with the same period one year ago, according to data from the Naples Area Board of Realtors.

The 25% decline in home sales combined with the 10% decline in prices means the pendulum has now shifted to a buyer's market.

However, there are some hopeful signs for sellers. Pending sales in the first quarter are down just 4% in the first quarter compared with the same quarter in 2006, suggesting a bottom in the market. Furthermore, new listings declined 14% to 5,885 in the same time period, an indication that fewer people plan to sell their homes.

Still, there were 12,123 active listings on the Naples market as of April 1. With 4,183 homes sold in the previous 12 months, that means there's a 35-month supply of homes on the market.

Here are the first quarter results for existing homes in Naples (includes single-family homes and condos):

1Q 2006 1Q 2007 %Change

Sales 1,349 939 ?25%

Median price $443,950 $399,512 ?10%

New listings 6,851 5,885 ?14%

Pending sales 1,560 1,491 ?4%

Source: Naples Area Board of Realtors