This week I had the pleasure to attend a breakfast presentation by Diane McFarlin, who is the Publisher of the Sarasota Herald Tribune. I think it's worth taking a few minutes to discuss how it is that the Herald Tribune (a New York Times owned daily newspaper) is weathering the downturn in the economy.
From my perspective, the world revolves around real estate. In the newspaper business, the world revolves around advertising and to a lesser degree, subscriptions. Interestingly over the last three or four years, the Herald has lost more than half their advertising base, albeit their readership is holding pretty well. The loss of their advertising has been to the internet, some of it to other fragmenting media, and some of it to the general slow-down and loss of business. They have lost most of their real estate advertising and a meaningful amount of their national advertising. The likes of Craig's List and eBay have heavily impacted their classifieds in all categories.
They are countering these changes by adding new websites and serving their readers with other electronic and print products, and of course by continuing their effort to cut expenses. They have sold 60% of their bureaus throughout the three counties they serve, they have halved their personnel and are considering additional changes to the newspaper to save on their financial outgo. These are severe cuts that were difficult decisions, but have resulted in their staying in business, even though more cuts may be necessary.
But these hard decisions should result in future health. And hard decisions are the very thing we are asking our Senators and Congressmen to make before--unlike the newspaper--we are blindsided by our unwillingness to get our head out of the sand. The paper realized that times had changed, and that only well managed and tightly run businesses would survive. Now we—you and I-- have to be sure our lawmakers at every level do the same.
So what's up with real estate? Well things are looking up a little. Home buyers scooped up more previously owned homes last month slowly putting a dent in the huge inventory on the market. Sales of existing homes rose 1.4% last month to an annual rate of 4.97 million homes, the National Association of Realtors reported.
Foreclosures and short sales dropped to 28% of sales in October, down from 30% in September. Even as the stockpile of homes on the market eases, housing prices are continuing to dip. The median price for an existing home was 4.7% lower than a year ago. That means it's still a great buying opportunity for house hunters.
But one of the problems preventing the housing market from making a full recovery is that many of the home buyers attempting to buy houses are seeing their mortgage applications rejected. Contract failures, which include declined mortgage applications or failures in loan underwriting because of problems including appraised values coming in below the negotiated price, jumped to 33% in October, up from 18% in September.
Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales, such as job creation, rising rents and high affordability conditions.
New-home sales edged slightly higher last month, as more Americans hunted for bargains in the struggling housing market. The Census Bureau reported an annual sales rate of 307,000 new homes last month, up 1.3% from a downwardly revised rate of 303,000 homes in September.
Compared to new home sales a year ago, there were about 162,000 new homes on the market by the end of October. That represented a 6.3-month supply at the current rate of sale. The median sale price was $212,300.
Last week, a separate report showed that more house-hunters are also eyeballing previously owned homes. Inexplicably, an increasing number of home builders are planning to build houses and are breaking ground on new construction, with building permits and housing starts climbing.
Dane Hahn is a real estate professional practicing in Englewood Florida and New Hampshire. He can be reached at 941-681-0312 or 603-566-5460 or try http://www.danesellsflorida.com/