NEW YORK – Aug. 31, 2009 – To determine whether it makes more sense to rent or buy in the current economic climate, experts encourage people to examine the price-to-rent ratio, or the average cost of purchasing a house divided by a year’s worth of rent payments.
The ratio reached 24.7 in 2005, according to Economy.com, meaning that individuals could spend 24.7 years in a rental for what it would cost to buy a house. The ratio has fallen to 17.4, and Economy.com notes that the historical average since 1986 is 16.5.
While some believe falling house prices make homeownership a better choice right now, an Economy.com analysis of the price-to-rent ratios in 54 metropolitan areas shows that renting is a better deal than homeownership in 21 cities. Some of the so-called “renter –friendly” cities are Portland, Ore., Baltimore, Raleigh, Charlotte, Salt Lake City, San Antonio, Trenton, Philadelphia, Honolulu, and Seattle.
Center for Economic and Policy Research Co-Director Dean Baker says the price-to-rent ratio should not be the only consideration. People weighing whether to rent or buy also should consider that renting makes more sense if they plan to move in a couple of years, and renting allows them to live in neighborhoods where homeownership might be too costly. Additionally, they do not have to perform maintenance tasks if they live in a rental.
Source: Time (08/31/09)
Monday, August 31, 2009
Friday, August 28, 2009
Survey: People moving for happier reasons
ORLANDO, Fla. – Aug. 28, 2009 – People have gone back to moving in hopes it will improve their lives rather than moving to escape foreclosure or other aspects of the economic crisis, according to a survey of recent movers released this month by Relocation.com.
In the June survey, nearly 42 percent said they were in the process of buying a home or planning to buy one. Poll participants said their reason for moving was:
• To live in a bigger or better home (26 percent).
• To live in a better neighborhood or area (24 percent).
• To be closer to family or friends (12 percent).
• To live in an area with a lower cost of living (9 percent).
• To accommodate a change in marital status (6 percent).
Moving because of school, job loss, retirement or foreclosure each generated 3 percent or less.
Responses to this survey are substantially different from the responses to a similar survey in March, when 41 percent said the recession was, at least partially, driving their move.
Source: Relocation.com
In the June survey, nearly 42 percent said they were in the process of buying a home or planning to buy one. Poll participants said their reason for moving was:
• To live in a bigger or better home (26 percent).
• To live in a better neighborhood or area (24 percent).
• To be closer to family or friends (12 percent).
• To live in an area with a lower cost of living (9 percent).
• To accommodate a change in marital status (6 percent).
Moving because of school, job loss, retirement or foreclosure each generated 3 percent or less.
Responses to this survey are substantially different from the responses to a similar survey in March, when 41 percent said the recession was, at least partially, driving their move.
Source: Relocation.com
Thursday, August 27, 2009
Economy: What’s good, bad
MIAMI – Aug. 27, 2009 – Real estate agent Dave Gervase recently witnessed an astonishing spectacle: a bidding war for a house in South Florida.
When he showed a home to a client, he discovered that 23 other shoppers had already put in bids. “We offered 6 percent over the asking price – and lost out,” Gervase says.
What Gervase saw was an extreme example of a nationwide phenomenon: signs of life in the battered housing market and the overall economy. Housing prices rose 2.9 percent from the first quarter to the second – the first quarterly increase in three years, Standard & Poor’s reported Tuesday. Meanwhile, a business group announced Tuesday that amid signs of economic improvement, consumer confidence rebounded this month.
The S&P/Case-Shiller Home Price Index and the Conference Board’s consumer confidence index were the latest reports to suggest that the U.S. economy is staggering toward recovery. The progress is agonizing, and many ordinary people won’t see the payoff for a while. The Congressional Budget Office expects unemployment to rise from July’s 9.4 percent and average double digits next year.
But for all the caveats, the signs of recovery strike many economists as a huge relief. After the collapse of Lehman Bros. last Sept. 15, the United States and the world seemed to be teetering on the edge of a second Great Depression. And some say the improving outlook vindicates the aggressive actions taken since last fall by Federal Reserve Chairman Ben Bernanke. A student of the economic cataclysm of the 1930s, he slashed interest rates to zero and pumped hundreds of billions into the financial system.
President Obama is sold. Taking time off his vacation in Martha’s Vineyard in Massachusetts, the president announced Tuesday that he would reappoint Bernanke when his first four-year term as Fed chairman expires in January. “Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and outside-the-box thinking that has helped put the brakes on our economic free fall,” Obama said.
Bernanke “has done a first-rate job,” says S&P economist David Blitzer. “The risks were incredible, and the Fed had to step in.”
The Fed chief “deserves a significant amount of credit for ending the recession,” says Mark Zandi, chief economist at Moody’s Economy.com. “If he hadn’t acted as aggressively and creatively as he did, we would still be in a recession, and we’d be talking about a depression.”
Long climb ahead
Even so, the economy is a long, long way from a full recovery, and Bernanke has plenty of critics. The Congressional Budget Office predicts economic output will fall 1 percent this year and unemployment will average 10.2 percent in 2010. Housing prices are still down 30 percent from their 2006 peak, household incomes are shrinking, employers are still cutting jobs and consumer confidence is struggling back from rock-bottom levels.
Critics say Bernanke was slow to see trouble brewing, as President Bush’s chief economic adviser in 2005 and as Fed chairman. By not moving faster to counter the economy’s slide, Bernanke made “a huge, huge mistake,” says Dean Baker, co-director of the left-leaning Center for Economic and Policy Research in Washington D.C. “And millions of people are suffering for it.”
But after the Lehman Bros.’ collapse sent the world economy into a tailspin last fall, Bernanke sprang into action. He pushed the rate that banks charge each other for short-term loans as low as zero and kept it there; and he announced unprecedented plans to pump up to $1.75 trillion into parched financial markets by buying government debt and mortgage-backed securities. He kept investment banks afloat with billions in loans and made unorthodox cash infusions into the inter-bank lending market and the commercial paper market that companies rely on for short-term financing. “It stopped the plumbing from backing up,” says Bruce Kasman, chief economist at JPMorgan Chase.
The idea was to get credit flowing and, along with Obama’s $787 billion stimulus program, jump-start the stalled economy.
It may be working. Unemployment fell unexpectedly last month, though partly because many discouraged workers stopped looking for jobs.
Industrial production rose in July for the first time in nine months. “We’ve had some nice, pleasant upbeat reports,” Blitzer says. “We could haggle over whether it’s June, July or August that the recession ends.”
Even the housing market appears to be recuperating from a three-year bloodbath. Home prices rose in 18 of the 20 cities tracked by the S&P/Case-Shiller index from May to June. Month-to-month comparisons can be unreliable and overall prices are about where they were in early 2003. Still, “The numbers are telling us prices may have already hit bottom,” says Patrick Newport, economist at IHS Global Insight. That helps by producing:
• More consumer spending. Rising home prices give homeowners more confidence to spend. They tend to tighten their belts if they owe the bank more than their house is worth.
“Everyone is very cautious, and there is instability in employment,” says Jackie Williams, a real estate broker in Middletown, Conn. “But people will spend if (their home is worth) a reasonable price. Consumer confidence will build a little.”
• More buyers moving into the housing market. Rising prices may nudge more potential homebuyers off the fence. Ryan Burns and his wife are renters in Bellingham, Wash., now, and their lease is almost up. “We were considering extending our lease another six to 12 months in order to pack away a larger downpayment,” Burns says. “But if prices are on the rise, we might just speed up our search.”
• Fewer toxic assets on the books for banks. Rising home prices are an elixir for banks stricken with questionable mortgage loans and foreclosed property. “It improves the balance sheet of the bank. That will hasten the end of the credit crunch,” says Joel Naroff, of Naroff Economic Advisors. “Do I think it will happen very fast? No.”
Worries about winter
Moody’s Zandi expects the housing market to be depressed this winter when banks auction off foreclosed property. Lenders have delayed the sales, he says, while trying to figure out how to qualify for a government program to modify troubled mortgages; eventually, the foreclosures will continue.
Other government programs may be providing a one-time boost. An $8,000 tax credit for first-time homebuyers ends Nov. 30. “Once this credit expires,” Newport writes, “home sales, housing starts and house prices will take a hit. Unknown is how big this hit will be.”
An uptick in prices “is encouraging,” Blitzer says, “but happy days are not here again in the real estate business. ... If you bought a house at exactly the wrong point in Miami or Las Vegas or Phoenix, say in 2006, you aren’t going to sell it for that kind of money for a long time.”
Even the South Florida house that drew 24 offers was a special case: An owner who owed more than the house was worth, was working with a bank to sell it for $65,000 less than the mortgage. But real estate agent Gervase says he’s seen market-priced homes set off bidding wars, too.
Critics also fret that Bernanke and the Fed will fail to keep inflation under control once the economy picks up strength. But for now, many economists say Bernanke’s audacious intervention has averted disaster.
“Given where we are now and where we come from, he has been vindicated,” Blitzer says. “My guess is that five years from now, he will still be vindicated.”
Bad: Unemployment projected to hit 10 percent
In a new economic forecast, the Congressional Budget Office estimated the unemployment rate – 9.4 percent in July – will be 10.2 percent at the end of 2010 and 9.1 percent at the end of 2011.
Copyright © 2009 USA Today
When he showed a home to a client, he discovered that 23 other shoppers had already put in bids. “We offered 6 percent over the asking price – and lost out,” Gervase says.
What Gervase saw was an extreme example of a nationwide phenomenon: signs of life in the battered housing market and the overall economy. Housing prices rose 2.9 percent from the first quarter to the second – the first quarterly increase in three years, Standard & Poor’s reported Tuesday. Meanwhile, a business group announced Tuesday that amid signs of economic improvement, consumer confidence rebounded this month.
The S&P/Case-Shiller Home Price Index and the Conference Board’s consumer confidence index were the latest reports to suggest that the U.S. economy is staggering toward recovery. The progress is agonizing, and many ordinary people won’t see the payoff for a while. The Congressional Budget Office expects unemployment to rise from July’s 9.4 percent and average double digits next year.
But for all the caveats, the signs of recovery strike many economists as a huge relief. After the collapse of Lehman Bros. last Sept. 15, the United States and the world seemed to be teetering on the edge of a second Great Depression. And some say the improving outlook vindicates the aggressive actions taken since last fall by Federal Reserve Chairman Ben Bernanke. A student of the economic cataclysm of the 1930s, he slashed interest rates to zero and pumped hundreds of billions into the financial system.
President Obama is sold. Taking time off his vacation in Martha’s Vineyard in Massachusetts, the president announced Tuesday that he would reappoint Bernanke when his first four-year term as Fed chairman expires in January. “Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and outside-the-box thinking that has helped put the brakes on our economic free fall,” Obama said.
Bernanke “has done a first-rate job,” says S&P economist David Blitzer. “The risks were incredible, and the Fed had to step in.”
The Fed chief “deserves a significant amount of credit for ending the recession,” says Mark Zandi, chief economist at Moody’s Economy.com. “If he hadn’t acted as aggressively and creatively as he did, we would still be in a recession, and we’d be talking about a depression.”
Long climb ahead
Even so, the economy is a long, long way from a full recovery, and Bernanke has plenty of critics. The Congressional Budget Office predicts economic output will fall 1 percent this year and unemployment will average 10.2 percent in 2010. Housing prices are still down 30 percent from their 2006 peak, household incomes are shrinking, employers are still cutting jobs and consumer confidence is struggling back from rock-bottom levels.
Critics say Bernanke was slow to see trouble brewing, as President Bush’s chief economic adviser in 2005 and as Fed chairman. By not moving faster to counter the economy’s slide, Bernanke made “a huge, huge mistake,” says Dean Baker, co-director of the left-leaning Center for Economic and Policy Research in Washington D.C. “And millions of people are suffering for it.”
But after the Lehman Bros.’ collapse sent the world economy into a tailspin last fall, Bernanke sprang into action. He pushed the rate that banks charge each other for short-term loans as low as zero and kept it there; and he announced unprecedented plans to pump up to $1.75 trillion into parched financial markets by buying government debt and mortgage-backed securities. He kept investment banks afloat with billions in loans and made unorthodox cash infusions into the inter-bank lending market and the commercial paper market that companies rely on for short-term financing. “It stopped the plumbing from backing up,” says Bruce Kasman, chief economist at JPMorgan Chase.
The idea was to get credit flowing and, along with Obama’s $787 billion stimulus program, jump-start the stalled economy.
It may be working. Unemployment fell unexpectedly last month, though partly because many discouraged workers stopped looking for jobs.
Industrial production rose in July for the first time in nine months. “We’ve had some nice, pleasant upbeat reports,” Blitzer says. “We could haggle over whether it’s June, July or August that the recession ends.”
Even the housing market appears to be recuperating from a three-year bloodbath. Home prices rose in 18 of the 20 cities tracked by the S&P/Case-Shiller index from May to June. Month-to-month comparisons can be unreliable and overall prices are about where they were in early 2003. Still, “The numbers are telling us prices may have already hit bottom,” says Patrick Newport, economist at IHS Global Insight. That helps by producing:
• More consumer spending. Rising home prices give homeowners more confidence to spend. They tend to tighten their belts if they owe the bank more than their house is worth.
“Everyone is very cautious, and there is instability in employment,” says Jackie Williams, a real estate broker in Middletown, Conn. “But people will spend if (their home is worth) a reasonable price. Consumer confidence will build a little.”
• More buyers moving into the housing market. Rising prices may nudge more potential homebuyers off the fence. Ryan Burns and his wife are renters in Bellingham, Wash., now, and their lease is almost up. “We were considering extending our lease another six to 12 months in order to pack away a larger downpayment,” Burns says. “But if prices are on the rise, we might just speed up our search.”
• Fewer toxic assets on the books for banks. Rising home prices are an elixir for banks stricken with questionable mortgage loans and foreclosed property. “It improves the balance sheet of the bank. That will hasten the end of the credit crunch,” says Joel Naroff, of Naroff Economic Advisors. “Do I think it will happen very fast? No.”
Worries about winter
Moody’s Zandi expects the housing market to be depressed this winter when banks auction off foreclosed property. Lenders have delayed the sales, he says, while trying to figure out how to qualify for a government program to modify troubled mortgages; eventually, the foreclosures will continue.
Other government programs may be providing a one-time boost. An $8,000 tax credit for first-time homebuyers ends Nov. 30. “Once this credit expires,” Newport writes, “home sales, housing starts and house prices will take a hit. Unknown is how big this hit will be.”
An uptick in prices “is encouraging,” Blitzer says, “but happy days are not here again in the real estate business. ... If you bought a house at exactly the wrong point in Miami or Las Vegas or Phoenix, say in 2006, you aren’t going to sell it for that kind of money for a long time.”
Even the South Florida house that drew 24 offers was a special case: An owner who owed more than the house was worth, was working with a bank to sell it for $65,000 less than the mortgage. But real estate agent Gervase says he’s seen market-priced homes set off bidding wars, too.
Critics also fret that Bernanke and the Fed will fail to keep inflation under control once the economy picks up strength. But for now, many economists say Bernanke’s audacious intervention has averted disaster.
“Given where we are now and where we come from, he has been vindicated,” Blitzer says. “My guess is that five years from now, he will still be vindicated.”
Bad: Unemployment projected to hit 10 percent
In a new economic forecast, the Congressional Budget Office estimated the unemployment rate – 9.4 percent in July – will be 10.2 percent at the end of 2010 and 9.1 percent at the end of 2011.
Copyright © 2009 USA Today
Wednesday, August 26, 2009
Index shows home prices increase from 1Q to 2Q
NEW YORK (AP) – Aug. 26, 2009 – Home prices across most of the country have started to rise from the depths of the housing slump, a critical trend that will help stabilize the broader U.S. economy, according to new figures released Tuesday.
Nationally, prices in the second quarter posted their first quarterly increase in three years, according to the widely watched Standard & Poor’s/Case-Shiller’s U.S. National Home Price Index.
While home prices are still 30 percent below the mid-2006 peak, their new direction should bring relief to both lenders and homeowners. Falling property values have wiped out $4 trillion in homeowner equity, and thousands have walked away from homes that are worth far less than their mortgage balance. Lenders have written off billions of dollars in bad loans and to sell foreclosed homes at a fraction of their former cost.
“People are much more inclined to stay where they are and work something out,” if they have equity in their homes, said Sanjiv Das, chief executive of Citigroup’s mortgage unit.
And as consumers feel more confident in the value of their residences, they will feel safer about spending again. Consumer spending makes up about 70 percent of U.S. economic activity. In August, consumer confidence rose to the highest level since the recession began, the New York-based Conference Board said Tuesday.
Case-Shiller’s monthly index of 20 major cities also rose from May to June, with Dallas and Denver clocking their fourth-straight increase. Only Detroit and Las Vegas saw prices fall in June.
There are concerns, however, that the momentum behind home prices will stall at the end of November with the expiration of a federal tax credit for first-time homebuyers. These newbie buyers are snapping up one in every three homes sold.
First-time buyers get a credit of 10 percent of the sales price of a home, up to $8,000. The credit phases out for singles earning more than $75,000 and couples earning more than $150,000. The real estate industry is lobbying to have the credit extended.
“If the tax credit is making a significant impact, then housing will take a big hit when it expires,” said Pat Newport, an economist at IHS Global Insight.
Here’s a look at this month’s Case-Shiller report:
The news: The U.S. National Home Price Index rose 1.4 percent from the first quarter to 133, though was still down almost 15 percent from the second quarter of last year.
Home prices, on a seasonally adjusted basis, are at levels not seen since early 2003.
The monthly index of 20 major cities increased 0.7 percent to 142 from May to June, the second straight month the index didn’t decline. It was still 15.5 percent below June a year ago.
Every metro showed annual declines, with fifteen reporting double-digit drops.
The report: The Case-Shiller indexes measure home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.
What it shows: The 20-city index is a three-month moving average of repeat sales of a designated group of single-family homes in each city. By measuring the sales price of the same properties over time, the index prevents the data from being skewed by a change in the types of homes sold. Sales between related parties, such as family members, are excluded because they may not reflect true market values.
The Case-Shiller quarterly index is a composite of home price indexes for the nine U.S. census divisions.
What it doesn’t show: The indexes only measure price data in 20 major metropolitan areas in 15 states and the District of Columbia. So, many areas of the country are not represented.
Why it matters: Investors closely watch the Case-Shiller indexes to gauge the level and direction of home prices. The indexes include a broader mix of properties compared to the index created by the Federal Housing Finance Agency. That index excludes many high-end properties, as well as homes bought with riskier mortgages or all cash.
The quote: “For the second month in a row, we’re seeing some positive signs,” said David M. Blitzer, chairman of the S&P index committee, adding, “There are hints of an upward turn from a bottom.”
Copyright © 2009 The Associated Press
Nationally, prices in the second quarter posted their first quarterly increase in three years, according to the widely watched Standard & Poor’s/Case-Shiller’s U.S. National Home Price Index.
While home prices are still 30 percent below the mid-2006 peak, their new direction should bring relief to both lenders and homeowners. Falling property values have wiped out $4 trillion in homeowner equity, and thousands have walked away from homes that are worth far less than their mortgage balance. Lenders have written off billions of dollars in bad loans and to sell foreclosed homes at a fraction of their former cost.
“People are much more inclined to stay where they are and work something out,” if they have equity in their homes, said Sanjiv Das, chief executive of Citigroup’s mortgage unit.
And as consumers feel more confident in the value of their residences, they will feel safer about spending again. Consumer spending makes up about 70 percent of U.S. economic activity. In August, consumer confidence rose to the highest level since the recession began, the New York-based Conference Board said Tuesday.
Case-Shiller’s monthly index of 20 major cities also rose from May to June, with Dallas and Denver clocking their fourth-straight increase. Only Detroit and Las Vegas saw prices fall in June.
There are concerns, however, that the momentum behind home prices will stall at the end of November with the expiration of a federal tax credit for first-time homebuyers. These newbie buyers are snapping up one in every three homes sold.
First-time buyers get a credit of 10 percent of the sales price of a home, up to $8,000. The credit phases out for singles earning more than $75,000 and couples earning more than $150,000. The real estate industry is lobbying to have the credit extended.
“If the tax credit is making a significant impact, then housing will take a big hit when it expires,” said Pat Newport, an economist at IHS Global Insight.
Here’s a look at this month’s Case-Shiller report:
The news: The U.S. National Home Price Index rose 1.4 percent from the first quarter to 133, though was still down almost 15 percent from the second quarter of last year.
Home prices, on a seasonally adjusted basis, are at levels not seen since early 2003.
The monthly index of 20 major cities increased 0.7 percent to 142 from May to June, the second straight month the index didn’t decline. It was still 15.5 percent below June a year ago.
Every metro showed annual declines, with fifteen reporting double-digit drops.
The report: The Case-Shiller indexes measure home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.
What it shows: The 20-city index is a three-month moving average of repeat sales of a designated group of single-family homes in each city. By measuring the sales price of the same properties over time, the index prevents the data from being skewed by a change in the types of homes sold. Sales between related parties, such as family members, are excluded because they may not reflect true market values.
The Case-Shiller quarterly index is a composite of home price indexes for the nine U.S. census divisions.
What it doesn’t show: The indexes only measure price data in 20 major metropolitan areas in 15 states and the District of Columbia. So, many areas of the country are not represented.
Why it matters: Investors closely watch the Case-Shiller indexes to gauge the level and direction of home prices. The indexes include a broader mix of properties compared to the index created by the Federal Housing Finance Agency. That index excludes many high-end properties, as well as homes bought with riskier mortgages or all cash.
The quote: “For the second month in a row, we’re seeing some positive signs,” said David M. Blitzer, chairman of the S&P index committee, adding, “There are hints of an upward turn from a bottom.”
Copyright © 2009 The Associated Press
Tuesday, August 25, 2009
$8K buyer tax credit extension possible
WASHINGTON – Aug. 24, 2009 – Bills to extend the maximum $8,000 tax credit for first-time homebuyers, which expires Nov. 30, are pending in both the U.S. House and the Senate.
Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate Banking, Housing, and Urban Affairs Committee, is co-sponsor of a bill with Georgia Republican Sen. Johnny Isakson that would raise the credit amount to a maximum of $15,000.
Senate Majority Leader Harry M. Reid of Nevada favors an extension of the current credit. He was quoted by the Las Vegas Sun saying, “It’s something we can get done.”
Odds are that the credit will be extended and broadened to cover all buyers next year, but the chances of the amount increasing aren’t as good, observers say.
Source: Washington Post Writers Group
Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate Banking, Housing, and Urban Affairs Committee, is co-sponsor of a bill with Georgia Republican Sen. Johnny Isakson that would raise the credit amount to a maximum of $15,000.
Senate Majority Leader Harry M. Reid of Nevada favors an extension of the current credit. He was quoted by the Las Vegas Sun saying, “It’s something we can get done.”
Odds are that the credit will be extended and broadened to cover all buyers next year, but the chances of the amount increasing aren’t as good, observers say.
Source: Washington Post Writers Group
Monday, August 24, 2009
Report: Chinese drywall has no radioactive threat
MANATEE COUNTY, Fla. (AP) – Aug. 24, 2009 – State and federal officials say homeowners shouldn’t worry about radioactivity from Chinese drywall.
The U.S. Consumer Product Safety Commission asked the U.S. Environmental Protection Agency and the Florida Department of Health to test drywall samples for phosphogypsum, or calcium sulfate.
According to a report released Friday, traces of the material were found but the radioactive levels were no higher than what ordinarily would be found in the natural environment.
Officials are continuing to investigate more than 1,100 drywall-related complaints. Chinese drywall has been blamed for emitting putrid odors and corroding metal air conditioning parts, and homeowners nationwide have complained about nosebleeds, headaches, sore throats and other ailments.
Copyright © 2009 The Associated Press
The U.S. Consumer Product Safety Commission asked the U.S. Environmental Protection Agency and the Florida Department of Health to test drywall samples for phosphogypsum, or calcium sulfate.
According to a report released Friday, traces of the material were found but the radioactive levels were no higher than what ordinarily would be found in the natural environment.
Officials are continuing to investigate more than 1,100 drywall-related complaints. Chinese drywall has been blamed for emitting putrid odors and corroding metal air conditioning parts, and homeowners nationwide have complained about nosebleeds, headaches, sore throats and other ailments.
Copyright © 2009 The Associated Press
Friday, August 21, 2009
23% of Florida home loans past due or in foreclosure in second quarte
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WASHINGTON – Aug. 21, 2009 – As home prices fell and the job picture worsened, the percentage of Florida home loans either past due or in foreclosure hit 23 percent in the second quarter, outpacing any other state in the nation.
The figure represents 807,000 loans, a staggering sum of the roughly 3.5 million mortgages outstanding in Florida.
“Florida deserves special mention as the worst state in the country,” said Jay Brinkmann, chief economist of the Mortgage Bankers Association that released the numbers Thursday. “Nevada is a close second, but everyone else is far behind.”
Florida, along with California, Arizona and Nevada – states that saw some of the headiest home price increases during the boom – represented 44 percent of the total number of loans in foreclosure nationally.
Twelve percent of all Florida loans were in some stage of the foreclosure process as of June 30, with 10.8 percent past due by a month or more.
Nationwide, 4.3 percent were in foreclosure and 9.2 percent were 30 or more days delinquent.
Barring loan modifications that would help homeowners stay in their properties, the high number of foreclosures will likely result in more homes being put on the market for resale by lenders, potentially contributing to further price declines.
Florida’s mortgage hardships swept across all loan categories, with so-called prime borrowers, or those with good credit, showing the biggest increases in delinquencies. This indicates job losses and falling home prices are taking a toll on a new set of homeowners.
Between the first and second quarter, the percentage increase in delinquencies and foreclosures among borrowers with fixed loans even outpaced borrowers with subprime loans – or those sold to borrowers with spotty credit histories and staggering default rates.
Delinquencies and foreclosures among prime borrowers rose from 10.7 percent to 12.42 percent in the second quarter.
Among subprime loans, 52 percent of roughly 536,000 subprime loans tracked by the MBA were past due or in foreclosure in the second quarter, up from 51 percent in the previous three-month period.
Delinquencies among prime-fixed borrowers are key because they reflect problems with the underlying economy rather than problems arising from the structure or underwriting of loans.
“This is further confirmation of what we have been saying and expecting for the last year or more,” that these problems are being driven by fundamental issues in the economy, Brinkmann said.
Falling real estate values often lead borrowers to walk away from their homes rather than continue to pay off loans worth far more than the properties. Until the employment picture improves – sometime in the middle of next year, Brinkmann predicted – delinquencies will continue to rise.
Foreclosures should start tapering off about six months after that as the foreclosures cases are worked through the system and the homes are taken back by lenders or sold at auction.
Copyright © 2009 The Miami Herald
WASHINGTON – Aug. 21, 2009 – As home prices fell and the job picture worsened, the percentage of Florida home loans either past due or in foreclosure hit 23 percent in the second quarter, outpacing any other state in the nation.
The figure represents 807,000 loans, a staggering sum of the roughly 3.5 million mortgages outstanding in Florida.
“Florida deserves special mention as the worst state in the country,” said Jay Brinkmann, chief economist of the Mortgage Bankers Association that released the numbers Thursday. “Nevada is a close second, but everyone else is far behind.”
Florida, along with California, Arizona and Nevada – states that saw some of the headiest home price increases during the boom – represented 44 percent of the total number of loans in foreclosure nationally.
Twelve percent of all Florida loans were in some stage of the foreclosure process as of June 30, with 10.8 percent past due by a month or more.
Nationwide, 4.3 percent were in foreclosure and 9.2 percent were 30 or more days delinquent.
Barring loan modifications that would help homeowners stay in their properties, the high number of foreclosures will likely result in more homes being put on the market for resale by lenders, potentially contributing to further price declines.
Florida’s mortgage hardships swept across all loan categories, with so-called prime borrowers, or those with good credit, showing the biggest increases in delinquencies. This indicates job losses and falling home prices are taking a toll on a new set of homeowners.
Between the first and second quarter, the percentage increase in delinquencies and foreclosures among borrowers with fixed loans even outpaced borrowers with subprime loans – or those sold to borrowers with spotty credit histories and staggering default rates.
Delinquencies and foreclosures among prime borrowers rose from 10.7 percent to 12.42 percent in the second quarter.
Among subprime loans, 52 percent of roughly 536,000 subprime loans tracked by the MBA were past due or in foreclosure in the second quarter, up from 51 percent in the previous three-month period.
Delinquencies among prime-fixed borrowers are key because they reflect problems with the underlying economy rather than problems arising from the structure or underwriting of loans.
“This is further confirmation of what we have been saying and expecting for the last year or more,” that these problems are being driven by fundamental issues in the economy, Brinkmann said.
Falling real estate values often lead borrowers to walk away from their homes rather than continue to pay off loans worth far more than the properties. Until the employment picture improves – sometime in the middle of next year, Brinkmann predicted – delinquencies will continue to rise.
Foreclosures should start tapering off about six months after that as the foreclosures cases are worked through the system and the homes are taken back by lenders or sold at auction.
Copyright © 2009 The Miami Herald
Thursday, August 20, 2009
New credit rating guidelines cut homeowners no slack
WASHINGTON – Aug. 20, 2009 – Facing one of the worst housing markets in memory, struggling homeowners now have another incentive to walk away from an investment gone bad.
It’s hard enough to modify terms of a home mortgage, despite the federal government’s efforts to ease those procedures for individuals desperate to hold onto their houses. Unfortunately, the “Big Three” credit bureaus – Equifax, Experian and TransUnion – have issued new guidelines that allow lenders to report new mortgage loan modifications as “partial payment status,” a designation that could lower an individual’s credit score by more than 50 points.
A loan modification doesn’t reduce the principal, but makes it easier for homeowners to repay what’s owed by reducing the interest rate and stretching the length of the original loan. Credit agencies are paid to assess credit risks, and that includes people who can’t pay their mortgages. But these are extraordinary times. Penalizing a homeowner for successfully re-negotiating a loan could have the unwanted consequence of inducing more foreclosures.
First American CoreLogic, a real estate analysis firm, says more than 15 million mortgage holders, or 32.2 percent, are “upside down” on their mortgages, meaning they’re paying more than their houses are worth. In Florida, the negative-equity picture is worse at 49 percent, and the figures are even higher in South Florida, hovering around 51.5 percent in the Miami-Fort Lauderdale area.
Now, thanks to the credit-rating agencies and an indifferent government bureaucracy of financial regulators, there will be homeowners who will unnecessarily become credit risks. While a loan modification provides a better outcome than a short sale, foreclosure or bankruptcy, punishing homeowners who work with their lenders is counterproductive.
Copyright © 2009 Sun Sentinel, Fort Lauderdale, Fla
It’s hard enough to modify terms of a home mortgage, despite the federal government’s efforts to ease those procedures for individuals desperate to hold onto their houses. Unfortunately, the “Big Three” credit bureaus – Equifax, Experian and TransUnion – have issued new guidelines that allow lenders to report new mortgage loan modifications as “partial payment status,” a designation that could lower an individual’s credit score by more than 50 points.
A loan modification doesn’t reduce the principal, but makes it easier for homeowners to repay what’s owed by reducing the interest rate and stretching the length of the original loan. Credit agencies are paid to assess credit risks, and that includes people who can’t pay their mortgages. But these are extraordinary times. Penalizing a homeowner for successfully re-negotiating a loan could have the unwanted consequence of inducing more foreclosures.
First American CoreLogic, a real estate analysis firm, says more than 15 million mortgage holders, or 32.2 percent, are “upside down” on their mortgages, meaning they’re paying more than their houses are worth. In Florida, the negative-equity picture is worse at 49 percent, and the figures are even higher in South Florida, hovering around 51.5 percent in the Miami-Fort Lauderdale area.
Now, thanks to the credit-rating agencies and an indifferent government bureaucracy of financial regulators, there will be homeowners who will unnecessarily become credit risks. While a loan modification provides a better outcome than a short sale, foreclosure or bankruptcy, punishing homeowners who work with their lenders is counterproductive.
Copyright © 2009 Sun Sentinel, Fort Lauderdale, Fla
Wednesday, August 19, 2009
Rules for tenants in foreclosed homes
WASHINGTON – Aug. 19, 2009 – On May 20, 2009, the “Helping Families Save Their Homes Act of 2009,” P.L. 111-22, was signed into law. Title VII of the law, the “Protecting Tenants at Foreclosure Act,” included provisions to protect to tenants faced with eviction if their rented property goes through foreclosure. The provisions took effect May 20, 2009, and expire on Dec. 30, 2012.
The tenant protection provisions apply for any foreclosure on a “federally-related mortgage loan,” or on any dwelling or residential real property. Under the provisions, “any immediate successor in interest” in a foreclosed property – including a bank that takes title to a house after foreclosure – assumes it subject to the rights of any bona fide tenant and certain notice requirements.
Under this law, tenants must receive notice at least 90 days before eviction. Additionally, tenants must be able to stay in the residence until the end of their lease, with two exceptions: (1) where the property is sold after foreclosure to a purchaser who will occupy the property as their primary residence, and, (2) where there is no lease (or where the lease is terminable at will under state law). However, even when these exceptions apply, tenants must still receive 90 days’ notice before they may be evicted.
The legal protections apply only to “bona fide” tenants – meaning that the lessee is not the mortgagor or a child, spouse or parent of the mortgagor; the lease is the product of an arm’s-length transaction; and the rent is not substantially less than fair market rent (unless a government subsidy). Also, it does not affect the termination requirements of any federal- or state-subsidized tenancy, or of any stricter state law that provides longer notice requirements or other additional tenant protections.
The U.S. Office of the Comptroller of the Currency (OCC) advised national banks to adopt policies and procedures to ensure compliance with the new tenant protection provisions; and it will evaluate bank compliance.
Questions can be directed to the OCC. For more information, visit the webpage at: http://www.occ.treas.gov/mail1.htm
© 2009 FLORIDA ASSOCIATION OF REALTORS®
The tenant protection provisions apply for any foreclosure on a “federally-related mortgage loan,” or on any dwelling or residential real property. Under the provisions, “any immediate successor in interest” in a foreclosed property – including a bank that takes title to a house after foreclosure – assumes it subject to the rights of any bona fide tenant and certain notice requirements.
Under this law, tenants must receive notice at least 90 days before eviction. Additionally, tenants must be able to stay in the residence until the end of their lease, with two exceptions: (1) where the property is sold after foreclosure to a purchaser who will occupy the property as their primary residence, and, (2) where there is no lease (or where the lease is terminable at will under state law). However, even when these exceptions apply, tenants must still receive 90 days’ notice before they may be evicted.
The legal protections apply only to “bona fide” tenants – meaning that the lessee is not the mortgagor or a child, spouse or parent of the mortgagor; the lease is the product of an arm’s-length transaction; and the rent is not substantially less than fair market rent (unless a government subsidy). Also, it does not affect the termination requirements of any federal- or state-subsidized tenancy, or of any stricter state law that provides longer notice requirements or other additional tenant protections.
The U.S. Office of the Comptroller of the Currency (OCC) advised national banks to adopt policies and procedures to ensure compliance with the new tenant protection provisions; and it will evaluate bank compliance.
Questions can be directed to the OCC. For more information, visit the webpage at: http://www.occ.treas.gov/mail1.htm
© 2009 FLORIDA ASSOCIATION OF REALTORS®
Home insurance: Shop around for the best price, coverage
TALLAHASSEE, Fla. – Aug. 19, 2009 – State Farm, Florida’s largest private property insurer, plans to leave the state. Major insurers, including Nationwide, Allstate and State Farm, have dropped more than 350,000 policies in recent years. And state regulators have licensed more than two dozen new insurers in just the past three years.
Now, perhaps more than ever, it’s important to know how to shop for insurance. Even though the current hurricane season has been quiet, Florida’s stormy property insurance industry is undergoing rapid changes.
And even if you’ve had the same insurer for years, consumer advocates say it’s a good idea to do some comparison shopping.
Here’s why: State Farm plans to shed its 1.2 million property insurance policies, including about 900,000 residential policies, by the end of 2011. The company hopes to resolve a dispute with the state about its exit plan at hearings in October.
“I haven’t had to shop for insurance in 30 years,” said former State Farm policyholder Chuck Clymer, a retired homeowner in Lake Worth, after the insurer’s announcement. Soon after, Clymer said he found a new home insurer even though he was reluctant to drop his State Farm policy.
“I don’t care how many Florida companies there are. At some point, these companies are going to reach their limit and say, ‘We’re not going to take any more (customers)’”, Clymer said.
Florida Insurance Consumer Advocate Sean Shaw said last week that State Farm policyholders should “start looking as soon as possible.” The company plans to eliminate certain discounts starting in November.
That “is essentially a rate increase,” Shaw said. “Consumers should shop around to make sure they are getting the most coverage for their premium.”
To help you get started, here are some answers to common questions from Sun Sentinel readers on shopping for home insurance.
Some Florida insurers stopped selling new policies or dropped customers after the 2004 and 2005 hurricanes. What insurance options do South Florida homeowners actually have?
In short, there are many options. Since 2006, the Florida Office of Insurance has licensed more than 28 new home insurers with more than $1.1 billion in capital. That doesn’t include eight existing insurers that have added home coverage to their offerings since 2006.
But insurers limit how many homes they’ll cover in any one area so you may need to do a broad search contacting many insurers or multiple insurance agents about coverage and costs.
When should State Farm policyholders switch to new insurers?
Insurance companies can issue new policies during hurricane season, unless there’s an active storm or storm watch, but consumer advocates say it’s best to wait until the season ends on Nov. 1. That’s also when State Farm can start eliminating some of its discounts and its statewide rates are expected to increase by an average of 28 percent.
State Farm plans to shed its policies over the course of two years and only when policies are up for renewal. They must warn customers their policies will be dropped 180 days before it happens.
What’s the best way to start shopping for property insurance?
Check out which insurers have the most policies in your county, their contact information and a comparison of their rates for two particular types of homes at the state’s Shop and Compare Rates website, http://shopandcomparerates.com.
Consider trying the state’s free referral service, the Florida Market Assistance Program. It matches customers who can’t find property insurance with licensed agents and insurers selling new policies.
Enlist the help of one or more independent insurance agents, an agent that sells policies for multiple companies. You can find one by searching the Florida Association of Insurance Agents website, http://faia.com/Custom/agentlocator.aspx.
Are national insurers better than Florida insurers?
National insurers theoretically can spread risks over a broader range of policyholders but most in Florida don’t have that advantage. That’s because they created Florida-only subsidiaries to protect policyholders in other states from Florida’s hurricane risks.
Established companies – whether they’re local or not – have the advantage of experience and a track record. That said, you should aim for an insurer that offers you the most coverage for the best premium.
How do you assess the quality of an insurer?
Ask relatives, neighbors and friends about their experiences with particular insurers. Ask your agent to check ratings done by A.M. Best, Demotech and other rating agencies for insurers you’re considering. Rating agencies typically evaluate the financial health of an insurer by examining, among other things, how much cash it has compared to its potential risk. Some rating agencies provide summaries of their evaluations on their websites.
You also can check an insurer’s license and financial health because all fully regulated insurers are carefully vetted by the Florida Office of Insurance Regulation, and there is a state backup fund that handles claims in case an insurer folds.
Licensing and financial information for insurers can be found on the websites of the insurance regulation office, http://fldfs.com, and the National Association of Insurance Commissioners, http://naic.org.
The Florida Department of Financial Services tracks insurance policyholders’ complaints. Look up the complaints at SunSentinel.com/insurance.
Consumers with questions also can call the state’s insurance consumer help line at 850-413-3089 or 877-693-5236.
Copyright © 2009 Sun Sentinel, Fort Lauderdale, Fla
Now, perhaps more than ever, it’s important to know how to shop for insurance. Even though the current hurricane season has been quiet, Florida’s stormy property insurance industry is undergoing rapid changes.
And even if you’ve had the same insurer for years, consumer advocates say it’s a good idea to do some comparison shopping.
Here’s why: State Farm plans to shed its 1.2 million property insurance policies, including about 900,000 residential policies, by the end of 2011. The company hopes to resolve a dispute with the state about its exit plan at hearings in October.
“I haven’t had to shop for insurance in 30 years,” said former State Farm policyholder Chuck Clymer, a retired homeowner in Lake Worth, after the insurer’s announcement. Soon after, Clymer said he found a new home insurer even though he was reluctant to drop his State Farm policy.
“I don’t care how many Florida companies there are. At some point, these companies are going to reach their limit and say, ‘We’re not going to take any more (customers)’”, Clymer said.
Florida Insurance Consumer Advocate Sean Shaw said last week that State Farm policyholders should “start looking as soon as possible.” The company plans to eliminate certain discounts starting in November.
That “is essentially a rate increase,” Shaw said. “Consumers should shop around to make sure they are getting the most coverage for their premium.”
To help you get started, here are some answers to common questions from Sun Sentinel readers on shopping for home insurance.
Some Florida insurers stopped selling new policies or dropped customers after the 2004 and 2005 hurricanes. What insurance options do South Florida homeowners actually have?
In short, there are many options. Since 2006, the Florida Office of Insurance has licensed more than 28 new home insurers with more than $1.1 billion in capital. That doesn’t include eight existing insurers that have added home coverage to their offerings since 2006.
But insurers limit how many homes they’ll cover in any one area so you may need to do a broad search contacting many insurers or multiple insurance agents about coverage and costs.
When should State Farm policyholders switch to new insurers?
Insurance companies can issue new policies during hurricane season, unless there’s an active storm or storm watch, but consumer advocates say it’s best to wait until the season ends on Nov. 1. That’s also when State Farm can start eliminating some of its discounts and its statewide rates are expected to increase by an average of 28 percent.
State Farm plans to shed its policies over the course of two years and only when policies are up for renewal. They must warn customers their policies will be dropped 180 days before it happens.
What’s the best way to start shopping for property insurance?
Check out which insurers have the most policies in your county, their contact information and a comparison of their rates for two particular types of homes at the state’s Shop and Compare Rates website, http://shopandcomparerates.com.
Consider trying the state’s free referral service, the Florida Market Assistance Program. It matches customers who can’t find property insurance with licensed agents and insurers selling new policies.
Enlist the help of one or more independent insurance agents, an agent that sells policies for multiple companies. You can find one by searching the Florida Association of Insurance Agents website, http://faia.com/Custom/agentlocator.aspx.
Are national insurers better than Florida insurers?
National insurers theoretically can spread risks over a broader range of policyholders but most in Florida don’t have that advantage. That’s because they created Florida-only subsidiaries to protect policyholders in other states from Florida’s hurricane risks.
Established companies – whether they’re local or not – have the advantage of experience and a track record. That said, you should aim for an insurer that offers you the most coverage for the best premium.
How do you assess the quality of an insurer?
Ask relatives, neighbors and friends about their experiences with particular insurers. Ask your agent to check ratings done by A.M. Best, Demotech and other rating agencies for insurers you’re considering. Rating agencies typically evaluate the financial health of an insurer by examining, among other things, how much cash it has compared to its potential risk. Some rating agencies provide summaries of their evaluations on their websites.
You also can check an insurer’s license and financial health because all fully regulated insurers are carefully vetted by the Florida Office of Insurance Regulation, and there is a state backup fund that handles claims in case an insurer folds.
Licensing and financial information for insurers can be found on the websites of the insurance regulation office, http://fldfs.com, and the National Association of Insurance Commissioners, http://naic.org.
The Florida Department of Financial Services tracks insurance policyholders’ complaints. Look up the complaints at SunSentinel.com/insurance.
Consumers with questions also can call the state’s insurance consumer help line at 850-413-3089 or 877-693-5236.
Copyright © 2009 Sun Sentinel, Fort Lauderdale, Fla
Tuesday, August 18, 2009
Fla. population drops for 1st time since 1946
JACKSONVILLE, Fla. (AP) Aug. 18, 2009 – Florida’s population has declined for the first time in 63 years, state researchers said Monday as they blamed the recession for plunging tax revenues and a steep drop in new residents.
The decline — 58,000 people over the past year — is the first since large numbers of military personnel left the state in 1946 after World War II.
“There have been booms and busts over the time, but this is the first time it has declined,” said Stan Smith, director of the University of Florida’s Bureau of Economic and Business Research.
Florida’s economy relies on population growth, so when the flow of new residents slows, jobs in construction, real estate and mortgage lending disappear, creating a less attractive environment. Florida’s unemployment rate crept up to 10.6 percent in June, the highest rate since 1975, and the state’s foreclosure rate is among tops in the nation.
The population estimates were produced using data from residential electric hookups, building permits and homestead exemptions, Smith said. The university is expected to release details of city and county populations Wednesday.
Florida’s population is about 18.3 million, according to the U.S. Census Bureau.
Part of the reason fewer people are moving to the state is their inability to sell their homes in other states, Smith said. The leading source for domestic migrants to Florida continues to be New York, but the pace of migration is slowing, Smith said.
The study did not measure the number of people leaving Florida.
“Historically, they have gone to other Sunbelt states,” he said.
The population drop has left empty seats in classrooms. The state’s estimated public school enrollment for 2009-10 is down 10,000 from the previous school year, according to the Florida Office of Economic and Demographic Research.
The future is not all gloom and doom, Smith said. Demographers expect Florida to resume growth again, just not as fast as in the past.
“As the country moves out of the recession, we expect growth to increase,” Smith said. “But not as high as levels we’ve seen over the last three or four decades.”
In an ideal world, the pause in growth may allow policy makers to make better planning decisions, said Charles Pattison, president of the smart growth advocacy group, 1,000 Friends of Florida.
“The state has always had ups and downs on the population curve,” Pattison said. “We think there is still going to be pressure to have more population growth.”
Other elements contributing to the population slowdown include frequent hurricanes, high coastal property insurance and a rising cost of living, he said.
“The whole Florida phenomenon is based on low cost, low taxes, cheap to live,” Pattison said. “I think most people think, regardless if we’re in a recession or not, those factors are different than anything we’ve seen before.”
Sen. Don Gaetz, chairman of the Florida Senate’s Select Committee on Florida’s Economy, said changes are needed in the way Florida manages its economy.
“Our economic policies need to be tied to economic reality,” the Niceville Republican said. He said the Legislature began removing some impediments that restricted business activity.
“In the ‘80s and ‘90s, the No. 1 issue was growth management,” he said. “Now we wish we had some growth to manage.”
Copyright © 2009 The Associated Press
The decline — 58,000 people over the past year — is the first since large numbers of military personnel left the state in 1946 after World War II.
“There have been booms and busts over the time, but this is the first time it has declined,” said Stan Smith, director of the University of Florida’s Bureau of Economic and Business Research.
Florida’s economy relies on population growth, so when the flow of new residents slows, jobs in construction, real estate and mortgage lending disappear, creating a less attractive environment. Florida’s unemployment rate crept up to 10.6 percent in June, the highest rate since 1975, and the state’s foreclosure rate is among tops in the nation.
The population estimates were produced using data from residential electric hookups, building permits and homestead exemptions, Smith said. The university is expected to release details of city and county populations Wednesday.
Florida’s population is about 18.3 million, according to the U.S. Census Bureau.
Part of the reason fewer people are moving to the state is their inability to sell their homes in other states, Smith said. The leading source for domestic migrants to Florida continues to be New York, but the pace of migration is slowing, Smith said.
The study did not measure the number of people leaving Florida.
“Historically, they have gone to other Sunbelt states,” he said.
The population drop has left empty seats in classrooms. The state’s estimated public school enrollment for 2009-10 is down 10,000 from the previous school year, according to the Florida Office of Economic and Demographic Research.
The future is not all gloom and doom, Smith said. Demographers expect Florida to resume growth again, just not as fast as in the past.
“As the country moves out of the recession, we expect growth to increase,” Smith said. “But not as high as levels we’ve seen over the last three or four decades.”
In an ideal world, the pause in growth may allow policy makers to make better planning decisions, said Charles Pattison, president of the smart growth advocacy group, 1,000 Friends of Florida.
“The state has always had ups and downs on the population curve,” Pattison said. “We think there is still going to be pressure to have more population growth.”
Other elements contributing to the population slowdown include frequent hurricanes, high coastal property insurance and a rising cost of living, he said.
“The whole Florida phenomenon is based on low cost, low taxes, cheap to live,” Pattison said. “I think most people think, regardless if we’re in a recession or not, those factors are different than anything we’ve seen before.”
Sen. Don Gaetz, chairman of the Florida Senate’s Select Committee on Florida’s Economy, said changes are needed in the way Florida manages its economy.
“Our economic policies need to be tied to economic reality,” the Niceville Republican said. He said the Legislature began removing some impediments that restricted business activity.
“In the ‘80s and ‘90s, the No. 1 issue was growth management,” he said. “Now we wish we had some growth to manage.”
Copyright © 2009 The Associated Press
Monday, August 17, 2009
Home prices now affordable, but fear keeps many from buying
TAMPA – Aug. 17, 2009 – Homes haven’t been this affordable in decades. Real estate agents have plenty of business. Desirable properties can be had for less than half the price of two years ago.
So why aren’t sales booming?
Fear.
“I had a deal fall through the week before closing because the buyer lost his job,” said Joe Perez, a real estate agent with ERA The Polo Group in Tampa.
People worry about losing their jobs in this economy, worry values will continue to freefall. Primarily, first-time homebuyers and investors are buying. The first group is motivated by a government incentive. The last by the desperation of sellers of distressed properties.
Home prices in the Tampa Bay metro area are more affordable now than they have been over the past 20 years, according to Moody’s Economy.com.
The median home price in the Tampa-St. Petersburg-Clearwater metro area was $139,400 in June, down 22 percent from $178,700 during the same month last year.
A bright spot this week came in a report from the Florida Association of Realtors. Sales of existing homes for the most recent quarter shot up 24 percent in the Tampa-St. Petersburg-Clearwater area compared with a year ago. But prices continued to slide, with the median price falling to $137,000.
Industry watchers say brand-new homeowners are to thank.
First-time homebuyers are taking advantage of the deals, which include an $8,000 government tax credit. Home sales were up 21 percent. There were 2,848 sales of existing homes in June, up from 2,346 a year ago.
But given how affordable homes are now, sales should be much higher, said Chris Lafakis, an economist who covers the Bay area for Moody’s. There are still tens of thousands of for sale signs dotting lawns across the Bay area.
In the first quarter of 2009, Moody’s affordable housing index for the Tampa area was 195.7. That means that a family making a median income of $58,000 could afford to buy a home for nearly double the median home price. (The median home price for the area was $142,000 during the first quarter.)
The area’s affordability index reading has never been higher since Moody’s started tracking the index in 1973.
For perspective, consider the second quarter of 2006, when the index peaked at 94.6. “Affordability has nearly doubled since the peak of the housing market.”
“Given the prices, more people should be buying,” Lafakis said. “Consumers expect home prices to go down more, so many won’t buy.”
Also, Lafakis said, buyers are concerned about the overall economy. Unemployment is expected to keep rising until the second quarter of 2010, when Moody’s expects it to hit 12.9 percent.
Jack Rodriguez, president of the Greater Tampa Association of Realtors, said real estate agents are hopeful that sales are rebounding. Many are swamped with business, especially distressed properties. Those sales are dragging down prices, he said, which translates to bargains for buyers.
“Prices haven’t been this low in a very long time,” he said.
Nancy Otten, a real estate agent with Keller Williams Tampa Properties, said she’s been amazed to find apartment-to-condo conversions for as low as $20,000 a unit.
Deals abound even for more expensive homes, Perez said. He pointed toward a 2,400 square-foot home with a pool in the North Dale neighborhood of Tampa. It’s in excellent condition, and the price is just under $200,000.
A condo on Clearwater Beach (with a water view) is for sale for just under $300,000. Units like it sold for between $700,000 and $800,000 during the housing boom, Perez said.
“I’ve been in this business for 28 years, and some of these prices are lower than when I started,” he said.
Even so, Perez said he’s hearing from worried buyers who don’t want to miss out on good deals but also don’t want to get in over their heads.
“Confidence is a problem, but I think that will go by the wayside if prices start going back up again,” he said. “You’ve gotta take a chance sometime in life.”
Copyright © 2009 Tampa Tribune, Fla
So why aren’t sales booming?
Fear.
“I had a deal fall through the week before closing because the buyer lost his job,” said Joe Perez, a real estate agent with ERA The Polo Group in Tampa.
People worry about losing their jobs in this economy, worry values will continue to freefall. Primarily, first-time homebuyers and investors are buying. The first group is motivated by a government incentive. The last by the desperation of sellers of distressed properties.
Home prices in the Tampa Bay metro area are more affordable now than they have been over the past 20 years, according to Moody’s Economy.com.
The median home price in the Tampa-St. Petersburg-Clearwater metro area was $139,400 in June, down 22 percent from $178,700 during the same month last year.
A bright spot this week came in a report from the Florida Association of Realtors. Sales of existing homes for the most recent quarter shot up 24 percent in the Tampa-St. Petersburg-Clearwater area compared with a year ago. But prices continued to slide, with the median price falling to $137,000.
Industry watchers say brand-new homeowners are to thank.
First-time homebuyers are taking advantage of the deals, which include an $8,000 government tax credit. Home sales were up 21 percent. There were 2,848 sales of existing homes in June, up from 2,346 a year ago.
But given how affordable homes are now, sales should be much higher, said Chris Lafakis, an economist who covers the Bay area for Moody’s. There are still tens of thousands of for sale signs dotting lawns across the Bay area.
In the first quarter of 2009, Moody’s affordable housing index for the Tampa area was 195.7. That means that a family making a median income of $58,000 could afford to buy a home for nearly double the median home price. (The median home price for the area was $142,000 during the first quarter.)
The area’s affordability index reading has never been higher since Moody’s started tracking the index in 1973.
For perspective, consider the second quarter of 2006, when the index peaked at 94.6. “Affordability has nearly doubled since the peak of the housing market.”
“Given the prices, more people should be buying,” Lafakis said. “Consumers expect home prices to go down more, so many won’t buy.”
Also, Lafakis said, buyers are concerned about the overall economy. Unemployment is expected to keep rising until the second quarter of 2010, when Moody’s expects it to hit 12.9 percent.
Jack Rodriguez, president of the Greater Tampa Association of Realtors, said real estate agents are hopeful that sales are rebounding. Many are swamped with business, especially distressed properties. Those sales are dragging down prices, he said, which translates to bargains for buyers.
“Prices haven’t been this low in a very long time,” he said.
Nancy Otten, a real estate agent with Keller Williams Tampa Properties, said she’s been amazed to find apartment-to-condo conversions for as low as $20,000 a unit.
Deals abound even for more expensive homes, Perez said. He pointed toward a 2,400 square-foot home with a pool in the North Dale neighborhood of Tampa. It’s in excellent condition, and the price is just under $200,000.
A condo on Clearwater Beach (with a water view) is for sale for just under $300,000. Units like it sold for between $700,000 and $800,000 during the housing boom, Perez said.
“I’ve been in this business for 28 years, and some of these prices are lower than when I started,” he said.
Even so, Perez said he’s hearing from worried buyers who don’t want to miss out on good deals but also don’t want to get in over their heads.
“Confidence is a problem, but I think that will go by the wayside if prices start going back up again,” he said. “You’ve gotta take a chance sometime in life.”
Copyright © 2009 Tampa Tribune, Fla
Investors eye Florida
NEW YORK – Aug. 17, 2009 – “Florida is overdeveloped, over-speculated, and overleveraged,” says Greg Rand, managing partner at Better Homes and Gardens Rand Realty.
Florida is also a great buying opportunity, he insists.
With 78 million baby boomers expected to retire in the next two decades, the Sunshine State’s prospects are good, Rand says.
The smart money is coming back to Florida, agrees Harvey E. Green, president and CEO of commercial real estate brokerage Marcus & Millichap. Green has been investing in real estate for more than 40 years.
Ruth Trettis, a broker at Premier Properties in Naples, Fla., says she has sold nine homes in Port Royal, the city’s most affluent area, to one buyer. That buyer, who purchased the properties at deep discount, hasn’t done anything with them, even though the costs of just holding them are high. The buyer, Trettis says, bought the properties because he has a strong belief in real estate as a long-term investment.
The key is patience, says Green. “Real estate was never a short-term investment.”
Source: The New York Times
Florida is also a great buying opportunity, he insists.
With 78 million baby boomers expected to retire in the next two decades, the Sunshine State’s prospects are good, Rand says.
The smart money is coming back to Florida, agrees Harvey E. Green, president and CEO of commercial real estate brokerage Marcus & Millichap. Green has been investing in real estate for more than 40 years.
Ruth Trettis, a broker at Premier Properties in Naples, Fla., says she has sold nine homes in Port Royal, the city’s most affluent area, to one buyer. That buyer, who purchased the properties at deep discount, hasn’t done anything with them, even though the costs of just holding them are high. The buyer, Trettis says, bought the properties because he has a strong belief in real estate as a long-term investment.
The key is patience, says Green. “Real estate was never a short-term investment.”
Source: The New York Times
Friday, August 14, 2009
High-end homes: is the tide turning?
HORSHAM, Penn. – Aug. 14, 2009 – High-end homes appear to be selling better than analysts thought.
Toll Brothers (TOL), the nation’s largest luxury homebuilder, on Aug. 12 announced its first year-over-year increase in signed home contracts since 2005, suggesting that first-time buyers might not be alone in driving improving U.S. home sales.
The Horsham [Pa.]-based builder said that signed contracts in the quarter ended July 31 – though still low by historic standards – rose 3 percent, to 837, compared with the same period a year ago. But revenues fell 42 percent in the quarter, to $461.3 million. The company also said it has been able to reduce buyer incentives in several markets as demand and contract cancellations improve.
“Mood has changed”
No other major builder has matched Toll Brothers’ 3 percent increase in contracts signed, though a few reported a 2 percent improvement in the most recent quarter, said Barclays Capital analyst Megan McGrath in New York. The average quarterly decline in new home contracts for major public builders was about 14 percent, she said.
Toll Brothers attributed the improvement to low interest rates, government homebuyer incentives, the recent stock market surge, and decreased competition from smaller and midsize builders now frozen out of credit markets. “The mood has changed,” Chief Executive Robert Toll told analysts during a conference call. “Our traffic still stinks but those people that are coming in are more serious. They’re not just fishing any longer. Now, there’s fear on both sides. We fear not selling and they fear missing.”
McGrath said Toll Brothers is selling homes for an average of $582,000 – far below the multimillion-dollar price tags for the estates of the rich and famous commonly referred to as “luxury real estate.” The market for million-dollar homes is weak, but Toll Brothers’ homes are more modestly priced and generally don’t require “jumbo” mortgages. Those are loans that generally exceed $417,000. Toll said the company’s strongest markets are in the Northeast, particularly Connecticut, the New York suburbs, and New Jersey. But sales are also strong in the Virginia suburbs of Washington, D.C.; Delaware; Raleigh, N.C.; Orlando; Northern California; and Naples, Fla.
Too soon to tell
Shares of Toll Brothers closed 14 percent higher Wednesday, at 23.42. “There are a lot of stories in the press about how poor the luxury market has been doing,” McGrath said. “Some of it is a misunderstanding about what is luxury and Toll’s actual business.”
Michael Widner, vice-president of Stifel Nicolaus Research (SF), said it’s too early to say whether Toll Brothers’ performance represents a change in the market because the small improvement in contracts signed might be a temporary blip. “If we have seen a rebound in something other than the first-time homebuyer market, this is the first real sign of it,” Widner said. “It’s a little early to celebrate too much.”
Copyright © 2009 The McGraw-Hill Cos.,
Toll Brothers (TOL), the nation’s largest luxury homebuilder, on Aug. 12 announced its first year-over-year increase in signed home contracts since 2005, suggesting that first-time buyers might not be alone in driving improving U.S. home sales.
The Horsham [Pa.]-based builder said that signed contracts in the quarter ended July 31 – though still low by historic standards – rose 3 percent, to 837, compared with the same period a year ago. But revenues fell 42 percent in the quarter, to $461.3 million. The company also said it has been able to reduce buyer incentives in several markets as demand and contract cancellations improve.
“Mood has changed”
No other major builder has matched Toll Brothers’ 3 percent increase in contracts signed, though a few reported a 2 percent improvement in the most recent quarter, said Barclays Capital analyst Megan McGrath in New York. The average quarterly decline in new home contracts for major public builders was about 14 percent, she said.
Toll Brothers attributed the improvement to low interest rates, government homebuyer incentives, the recent stock market surge, and decreased competition from smaller and midsize builders now frozen out of credit markets. “The mood has changed,” Chief Executive Robert Toll told analysts during a conference call. “Our traffic still stinks but those people that are coming in are more serious. They’re not just fishing any longer. Now, there’s fear on both sides. We fear not selling and they fear missing.”
McGrath said Toll Brothers is selling homes for an average of $582,000 – far below the multimillion-dollar price tags for the estates of the rich and famous commonly referred to as “luxury real estate.” The market for million-dollar homes is weak, but Toll Brothers’ homes are more modestly priced and generally don’t require “jumbo” mortgages. Those are loans that generally exceed $417,000. Toll said the company’s strongest markets are in the Northeast, particularly Connecticut, the New York suburbs, and New Jersey. But sales are also strong in the Virginia suburbs of Washington, D.C.; Delaware; Raleigh, N.C.; Orlando; Northern California; and Naples, Fla.
Too soon to tell
Shares of Toll Brothers closed 14 percent higher Wednesday, at 23.42. “There are a lot of stories in the press about how poor the luxury market has been doing,” McGrath said. “Some of it is a misunderstanding about what is luxury and Toll’s actual business.”
Michael Widner, vice-president of Stifel Nicolaus Research (SF), said it’s too early to say whether Toll Brothers’ performance represents a change in the market because the small improvement in contracts signed might be a temporary blip. “If we have seen a rebound in something other than the first-time homebuyer market, this is the first real sign of it,” Widner said. “It’s a little early to celebrate too much.”
Copyright © 2009 The McGraw-Hill Cos.,
Thursday, August 13, 2009
Foreclosures rise 7 percent in July from June
WASHINGTON – Aug. 13, 2009 – The number of U.S. households on the verge of losing their homes rose 7 percent from June to July, as the escalating foreclosure crisis continued to outpace government efforts to limit the damage.
Foreclosure filings were up 32 percent from the same month last year, RealtyTrac Inc. said Thursday. More than 360,000 households, or one in every 355 homes, received a foreclosure-related notice, such as a notice of default or trustee’s sale. That’s the highest monthly level since the foreclosure-listing firm began publishing the data more than four years ago.
Banks repossessed more than 87,000 homes in July, up from about 79,000 homes a month earlier.
Nevada had the nation’s highest foreclosure rate for the 31st-straight month, followed by California, Arizona, Florida and Utah. Rounding out the top 10 were Idaho, Georgia, Illinois, Colorado and Oregon. Among cities, Las Vegas had the highest rate, followed by the California cities of Stockton and Modesto.
While there have been numerous recent signs that the ailing U.S. housing market is finally stabilizing after three years of plunging prices, foreclosures remain a big concern. Foreclosures are typically sold at a deep discount, hurting neighbors’ home values.
The mortgage industry has been slow to adapt to the surge in foreclosures. Many lenders have needed government prodding to get up to speed with the Obama administration’s plan to stem foreclosures.
The Treasury Department said last week that banks have extended only 400,000 offers to 2.7 million eligible borrowers who are more than two months behind on their payments. More than 235,000, or 9 percent, those borrowers have enrolled in three-month trials in which their monthly payments are reduced.
“The volume of loans that are in distress simply overwhelms” those efforts, said Rick Sharga, RealtyTrac’s senior vice president for marketing.
Copyright © 2009 The Associated Press
Foreclosure filings were up 32 percent from the same month last year, RealtyTrac Inc. said Thursday. More than 360,000 households, or one in every 355 homes, received a foreclosure-related notice, such as a notice of default or trustee’s sale. That’s the highest monthly level since the foreclosure-listing firm began publishing the data more than four years ago.
Banks repossessed more than 87,000 homes in July, up from about 79,000 homes a month earlier.
Nevada had the nation’s highest foreclosure rate for the 31st-straight month, followed by California, Arizona, Florida and Utah. Rounding out the top 10 were Idaho, Georgia, Illinois, Colorado and Oregon. Among cities, Las Vegas had the highest rate, followed by the California cities of Stockton and Modesto.
While there have been numerous recent signs that the ailing U.S. housing market is finally stabilizing after three years of plunging prices, foreclosures remain a big concern. Foreclosures are typically sold at a deep discount, hurting neighbors’ home values.
The mortgage industry has been slow to adapt to the surge in foreclosures. Many lenders have needed government prodding to get up to speed with the Obama administration’s plan to stem foreclosures.
The Treasury Department said last week that banks have extended only 400,000 offers to 2.7 million eligible borrowers who are more than two months behind on their payments. More than 235,000, or 9 percent, those borrowers have enrolled in three-month trials in which their monthly payments are reduced.
“The volume of loans that are in distress simply overwhelms” those efforts, said Rick Sharga, RealtyTrac’s senior vice president for marketing.
Copyright © 2009 The Associated Press
Wednesday, August 12, 2009
Florida’s existing home, condo sales up in 2Q 2009
ORLANDO, Fla. – Aug. 12, 2009 – Sales of existing single-family homes in Florida rose 23 percent in second quarter 2009 compared to the same period a year earlier, according to the latest housing statistics from the Florida Association of Realtors® (FAR). A total of 43,125 existing homes sold statewide in 2Q 2009; during the same period the year before, a total of 35,008 existing homes sold. It marks the fourth consecutive quarter that Florida has seen higher existing year-to-year home sales, according to FAR.
Sales of existing condominiums statewide in the second quarter rose 29 percent compared to the same time the previous year. This marks the third consecutive quarter for increased statewide sales in both the existing home and condo markets compared to year-ago levels.
Statewide sales activity in 2Q 2009 also increased over 1Q 2009’s sales figure in both the existing home and existing condo markets, FAR records show. For 2Q 2009, statewide sales of existing homes rose 37.2 percent over the 1Q 2009 figure; existing condo sales statewide in 2Q 2009 increased 45.3 percent over the 1Q 2009 level.
“In spite of the challenges with the economy, most people – 83 percent – still believe that buying a home is a good financial decision, according to a recent survey from the National Association of Realtors® (NAR),” says 2009 FAR President Cynthia Shelton, CCIM, CRE, a broker and director of investment sales with Colliers Arnold in Orlando. (CCIM stands for Certified Commercial Investment Member and CRE is the Counselor of Real Estate designation). “Many homebuyers are realizing that this is the time to buy – with a good selection of housing inventory, affordable pricing and low mortgage rates.
“In fact, three-fourths of those responding to the 2009 National Housing Pulse Survey said they think now is a good time to purchase a home, a number that has increased steadily the past two years,” she says. “However, providing solid financing options for homebuyers is key to returning stability to the housing market, and buyers also need programs that help with downpayment and closing costs. That’s why the federal $8,000 first-time homebuyer tax credit and other programs enabling eligible buyers to access that tax credit for downpayment or closing costs are so important – programs like the Florida Homebuyer Opportunity Program.”
Sixteen of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in the second quarter compared to the same three-month period a year earlier, while 12 MSAs showed gains in condo sales.
The statewide existing-home median sales price was $143,600 in the second quarter; a year earlier, it was $203,200 for a decrease of 29 percent. The 2Q 2009 statewide existing-home median sales price was 1.8 percent higher than 1Q’s statewide existing-home median sales price of $141,000. According to industry analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is a typical market price where half the homes sold for more, half for less.
In the year-to-year quarterly comparison for condo sales, 14,742 units sold statewide for the quarter compared to 11,459 in 2Q 2008 for a 29 percent increase. The statewide existing-condo median sales price was $111,100 for the three-month period; in 2Q 2008, it was $179,800 for a decrease of 38 percent. The 2Q 2009 statewide existing-condo median sales price was almost 1 percent higher 1Q’s statewide existing-condo median sales price of $110,100.
Continuing low mortgage rates remain another favorable influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 5.03 percent in 2Q 2009; one year earlier, it averaged 6.09 percent.
© 2009 FLORIDA ASSOCIATION OF REALTORS
Sales of existing condominiums statewide in the second quarter rose 29 percent compared to the same time the previous year. This marks the third consecutive quarter for increased statewide sales in both the existing home and condo markets compared to year-ago levels.
Statewide sales activity in 2Q 2009 also increased over 1Q 2009’s sales figure in both the existing home and existing condo markets, FAR records show. For 2Q 2009, statewide sales of existing homes rose 37.2 percent over the 1Q 2009 figure; existing condo sales statewide in 2Q 2009 increased 45.3 percent over the 1Q 2009 level.
“In spite of the challenges with the economy, most people – 83 percent – still believe that buying a home is a good financial decision, according to a recent survey from the National Association of Realtors® (NAR),” says 2009 FAR President Cynthia Shelton, CCIM, CRE, a broker and director of investment sales with Colliers Arnold in Orlando. (CCIM stands for Certified Commercial Investment Member and CRE is the Counselor of Real Estate designation). “Many homebuyers are realizing that this is the time to buy – with a good selection of housing inventory, affordable pricing and low mortgage rates.
“In fact, three-fourths of those responding to the 2009 National Housing Pulse Survey said they think now is a good time to purchase a home, a number that has increased steadily the past two years,” she says. “However, providing solid financing options for homebuyers is key to returning stability to the housing market, and buyers also need programs that help with downpayment and closing costs. That’s why the federal $8,000 first-time homebuyer tax credit and other programs enabling eligible buyers to access that tax credit for downpayment or closing costs are so important – programs like the Florida Homebuyer Opportunity Program.”
Sixteen of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in the second quarter compared to the same three-month period a year earlier, while 12 MSAs showed gains in condo sales.
The statewide existing-home median sales price was $143,600 in the second quarter; a year earlier, it was $203,200 for a decrease of 29 percent. The 2Q 2009 statewide existing-home median sales price was 1.8 percent higher than 1Q’s statewide existing-home median sales price of $141,000. According to industry analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is a typical market price where half the homes sold for more, half for less.
In the year-to-year quarterly comparison for condo sales, 14,742 units sold statewide for the quarter compared to 11,459 in 2Q 2008 for a 29 percent increase. The statewide existing-condo median sales price was $111,100 for the three-month period; in 2Q 2008, it was $179,800 for a decrease of 38 percent. The 2Q 2009 statewide existing-condo median sales price was almost 1 percent higher 1Q’s statewide existing-condo median sales price of $110,100.
Continuing low mortgage rates remain another favorable influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 5.03 percent in 2Q 2009; one year earlier, it averaged 6.09 percent.
© 2009 FLORIDA ASSOCIATION OF REALTORS
Tuesday, August 11, 2009
You didn’t really lose in housing free fall
ORLANDO – Aug. 11, 2009 – Stan Smith has some news for longtime homeowners having a pity party over falling house prices in Central Florida: New research shows that current home values are just about where they would have been if the real-estate bubble had never inflated and burst.
A long-term view of the market reveals that, even though prices rose and fell dramatically in recent years, they appear to have settled back into historic patterns, according to an analysis by Smith, a University of Central Florida finance professor.
“Most homeowners are within 6 percent of where they would have been had there not been a bubble. The people who have been here since before 2005, they should not have been hurt,” Smith said, though he added: “... A lot of people did buy in 2005 and 2006, and obviously they have been hurt significantly.”
For about a quarter-century, starting in the late 1970s, home prices in Metropolitan Orlando increased 4.7 percent a year on average, according to Smith’s analysis of data from a federal housing-price index. Then the bubble emerged, with prices rising 20 percent in 2005 and 32 percent the following year. Homeowners were elated about their fast-growing equity – at least until the bubble burst in mid-2007.
The sharp drop in prices since then – 22 percent from the 2007 high – may have left the impression that the bursting bubble set back even long-term homeowners for many years to come. Yet prices now are about where you would have expected them to be had the dramatic rise and fall never occurred.
Steve Shapiro, who is trying to sell his Lake Mary home, hadn’t really thought about it before but said it makes sense that the price he is asking for his home of 10 years tracks the area’s long-term pricing trends.
“I think I’m about where it should be with the price,” said the retiree, who has listed his house for $269,000 with Exit Realty Central agent Julie Elrod-Boyd – the same agent who helped him buy it in 1999 for $161,000. He estimated the house would have sold for more than $300,000 about 18 months ago, so the price has retreated 10 percent since then.
“It was nice to think it was worth so much a year and a half ago, but I felt like it was a little inflated,” he said. “All the homes were.”
Volusia County Property Appraiser Morgan Gilreath has obtained results similar to Smith’s in his county.
Gilreath recently plotted home prices from 1996 to the present and concluded they are not far below where they would have been without the bubble. The mid-point, or median, for home prices in Volusia in May was $124,900 – down about $20,000 from where they would have been if they had continued on their long-range trajectory rather than inflating and deflating in recent years, he said.
A year ago, the median in Volusia was about $50,000 above the historic trend line, he said; two years ago, it was flying about $100,000 above that line.
Gilreath said his analysis was not as thorough as Smith’s research at UCF, but both indicate the residential market is not likely to decline much further.
“The point that the charts are telling us is that we’re close to where we think the bottom is going to be,” he said. “The question is: When is it going to turn around? I have evidence that it is turning around here [in Volusia].”
Smith said prices in the region may continue to fall but are less likely to do so now that they are so near the long-term trend line – a “positive indicator” for coming months.
Les Simmonds, president of the Orlando Regional Realtor Association, said people generally measure their home’s current value against what it was worth a year ago – a short-term view of the market.” I feel strongly that, had we not had this bubble, that the median price of the properties would be a little better than they are now, because of the way they’ve been pushed down [in the post-bubble market] by ... [distressed] properties,” he said.
“I said to my wife last week that, when the market was really high, if we had sold then, we could have made four times what we paid for the house.” The problem, he added, is that most of the people who sold at the peak usually then bought near the top of the market. Shapiro said that, once he sells his Lake Mary house, he is ready to retire to a log cabin in north Georgia and forget about the whims of the real-estate market for a while.
The only thing that will rise and fall on his cabin, he said, will be the runners on his front-porch rocking chair.
Copyright © 2009 The Orlando Sentinel
A long-term view of the market reveals that, even though prices rose and fell dramatically in recent years, they appear to have settled back into historic patterns, according to an analysis by Smith, a University of Central Florida finance professor.
“Most homeowners are within 6 percent of where they would have been had there not been a bubble. The people who have been here since before 2005, they should not have been hurt,” Smith said, though he added: “... A lot of people did buy in 2005 and 2006, and obviously they have been hurt significantly.”
For about a quarter-century, starting in the late 1970s, home prices in Metropolitan Orlando increased 4.7 percent a year on average, according to Smith’s analysis of data from a federal housing-price index. Then the bubble emerged, with prices rising 20 percent in 2005 and 32 percent the following year. Homeowners were elated about their fast-growing equity – at least until the bubble burst in mid-2007.
The sharp drop in prices since then – 22 percent from the 2007 high – may have left the impression that the bursting bubble set back even long-term homeowners for many years to come. Yet prices now are about where you would have expected them to be had the dramatic rise and fall never occurred.
Steve Shapiro, who is trying to sell his Lake Mary home, hadn’t really thought about it before but said it makes sense that the price he is asking for his home of 10 years tracks the area’s long-term pricing trends.
“I think I’m about where it should be with the price,” said the retiree, who has listed his house for $269,000 with Exit Realty Central agent Julie Elrod-Boyd – the same agent who helped him buy it in 1999 for $161,000. He estimated the house would have sold for more than $300,000 about 18 months ago, so the price has retreated 10 percent since then.
“It was nice to think it was worth so much a year and a half ago, but I felt like it was a little inflated,” he said. “All the homes were.”
Volusia County Property Appraiser Morgan Gilreath has obtained results similar to Smith’s in his county.
Gilreath recently plotted home prices from 1996 to the present and concluded they are not far below where they would have been without the bubble. The mid-point, or median, for home prices in Volusia in May was $124,900 – down about $20,000 from where they would have been if they had continued on their long-range trajectory rather than inflating and deflating in recent years, he said.
A year ago, the median in Volusia was about $50,000 above the historic trend line, he said; two years ago, it was flying about $100,000 above that line.
Gilreath said his analysis was not as thorough as Smith’s research at UCF, but both indicate the residential market is not likely to decline much further.
“The point that the charts are telling us is that we’re close to where we think the bottom is going to be,” he said. “The question is: When is it going to turn around? I have evidence that it is turning around here [in Volusia].”
Smith said prices in the region may continue to fall but are less likely to do so now that they are so near the long-term trend line – a “positive indicator” for coming months.
Les Simmonds, president of the Orlando Regional Realtor Association, said people generally measure their home’s current value against what it was worth a year ago – a short-term view of the market.” I feel strongly that, had we not had this bubble, that the median price of the properties would be a little better than they are now, because of the way they’ve been pushed down [in the post-bubble market] by ... [distressed] properties,” he said.
“I said to my wife last week that, when the market was really high, if we had sold then, we could have made four times what we paid for the house.” The problem, he added, is that most of the people who sold at the peak usually then bought near the top of the market. Shapiro said that, once he sells his Lake Mary house, he is ready to retire to a log cabin in north Georgia and forget about the whims of the real-estate market for a while.
The only thing that will rise and fall on his cabin, he said, will be the runners on his front-porch rocking chair.
Copyright © 2009 The Orlando Sentinel
Monday, August 10, 2009
Foreclosure bargains are disappearing
ATLANTA – Aug. 10, 2009 – Buyers of foreclosure have to be quick these days. Some houses go under contract fewer than 90 minutes after they are put on the market, says Brad Geisen, founder of Foreclosure.com.
“For every listing that comes out, we have 10 buyers,” says Cesar Dias, an associate with Approved Real Estate Group in Stockton, Calif. Dias had 15 minutes of fame after introducing foreclosure sales tours last year. Now the tours are defunct because there are not enough homes to show.
“We had a lot of inventory last summer. Now we’re down to 1,500 listings – from more than 5,000,” Dias says.
In Florida, real-estate investment companies, buying in bulk and paying cash, face competition.
Even in the hard-hit Detroit area, bargains are disappearing.
“For a good house that’s not too beat up in a good neighborhood, there’s no lack of buyers in this market,” says Andy Sakmar, founder of Century 21 Sakmar in Rochester, 20 miles north of the city. “There are a lot fewer of these properties than a year ago, and the super buys get multiple offers.”
Source: CNNMoney.com
“For every listing that comes out, we have 10 buyers,” says Cesar Dias, an associate with Approved Real Estate Group in Stockton, Calif. Dias had 15 minutes of fame after introducing foreclosure sales tours last year. Now the tours are defunct because there are not enough homes to show.
“We had a lot of inventory last summer. Now we’re down to 1,500 listings – from more than 5,000,” Dias says.
In Florida, real-estate investment companies, buying in bulk and paying cash, face competition.
Even in the hard-hit Detroit area, bargains are disappearing.
“For a good house that’s not too beat up in a good neighborhood, there’s no lack of buyers in this market,” says Andy Sakmar, founder of Century 21 Sakmar in Rochester, 20 miles north of the city. “There are a lot fewer of these properties than a year ago, and the super buys get multiple offers.”
Source: CNNMoney.com
Friday, August 7, 2009
Banks express hope for fed short-sale effort
WASHINGTON – Aug. 7, 2009 – The federal government is launching a program to simplify and speed up the short-sale process by providing standardized documentation, cash incentives to lenders, and a $1,500 moving allowance to borrowers. Holders of second liens will get up to $1,000 to relinquish their claims.
Banks say the short-sale process has been taking so long because both their employees and real estate practitioners are learning as they go.
David Sunlin, vice president in charge of short sales at Bank of America, says he hopes the new government plan will help. “About half of short sales never close. We see it as a big lost opportunity, and we need to improve the rate we close them,” he says.
Wells Fargo says it has cut its short sale average turnaround time from 90 days to 30 days by preparing a guide from real estate practitioners and putting in place procedures to handle short-sale requests.
The federal government first announced its short sales initiative in May at the annual Washington meetings of the National Association of Realtors®.
Source: USA Today
Banks say the short-sale process has been taking so long because both their employees and real estate practitioners are learning as they go.
David Sunlin, vice president in charge of short sales at Bank of America, says he hopes the new government plan will help. “About half of short sales never close. We see it as a big lost opportunity, and we need to improve the rate we close them,” he says.
Wells Fargo says it has cut its short sale average turnaround time from 90 days to 30 days by preparing a guide from real estate practitioners and putting in place procedures to handle short-sale requests.
The federal government first announced its short sales initiative in May at the annual Washington meetings of the National Association of Realtors®.
Source: USA Today
Thursday, August 6, 2009
10 best places for condo deals
MIAMI – Aug. 6, 2009 – Thanks to a huge inventory, many condominiums are bargains these days.
Forbes magazine took a look at the nationwide condo market to determine where the best deals could be found. Because financing can be hard to get, prices on luxury models have fallen the most.
The magazine suggested that the best deals come from paying cash or at least putting down enough cash so the property can be purchased with a federally-backed loan. It also suggested that buyers bid low. Since these properties are moving slowly, even a lowball offer might be accepted.
Here are the top 10 best places for condominium deals and their ZIP codes, as determined by Forbes:
1. Olympic Village, Calif., 96146
2. Tahoe City, Calif., 96145
3. Terra Linda, Calif., 94903
4. Fisher Island, Fla., 33109
5. Dallas, Texas, 75205
6. Malibu, Calif., 90265
7. Bal Harbour Fla., 33154
8. Key Biscayne, Fla., 33149
9. Lake Forest, Ill., 60045
10. New York City (Upper West Side), 10069
Forbes magazine took a look at the nationwide condo market to determine where the best deals could be found. Because financing can be hard to get, prices on luxury models have fallen the most.
The magazine suggested that the best deals come from paying cash or at least putting down enough cash so the property can be purchased with a federally-backed loan. It also suggested that buyers bid low. Since these properties are moving slowly, even a lowball offer might be accepted.
Here are the top 10 best places for condominium deals and their ZIP codes, as determined by Forbes:
1. Olympic Village, Calif., 96146
2. Tahoe City, Calif., 96145
3. Terra Linda, Calif., 94903
4. Fisher Island, Fla., 33109
5. Dallas, Texas, 75205
6. Malibu, Calif., 90265
7. Bal Harbour Fla., 33154
8. Key Biscayne, Fla., 33149
9. Lake Forest, Ill., 60045
10. New York City (Upper West Side), 10069
Wednesday, August 5, 2009
HELPING FAMILIES SAVE THEIR HOME ACT OF 2009
"Helping Families Save Their Homes Act of 2009” included some provisions to protect tenants from eviction as a consequence of a foreclosure affecting the property being rented. Many examples were seen of families living in rental housing throughout the United States who were evicted without any prior notice when the home where they had lived was foreclosed upon. Much of the time, the rental family had no idea the home was in delinquency or subject to foreclosure until their eviction.
I’m a REALTOR®. What does this mean to my business?
Notification will have to be provided to tenants of rental housing before they can be evicted following a foreclosure.
Legislative/Regulatory Status/Outlook:
Under the new law, which went into effect on May 20th, tenants will have to receive 90-days notice prior to being evicted, when their rental home is foreclosed upon. In addition, tenants must be allowed to stay in the property through the end of
their lease, with two exceptions:
The new owner wants to occupy the property as a personal residence, and there is no lease (month to
month), or there is a lease but state law allows the lease to be terminated at any time upon notice. Even under these exceptions, the tenants must be given 90-days before they can be evicted. Notification must be provided by the “immediate successor in interest”. In some cases, this notifi cation will come from the bank (when they assume the home), and in other
cases it may be the new owner.
Much will depend upon state law. A number of states have existing laws protecting tenants. This law will preempt existing state law, except where the state law offers greater protection. The protections of this law apply only to “bona fi de” tenants who have a written contract, the lease was the result of an arms-length transaction, and the rent is not substantially less than the fair market rent for the property. Under any conditions, tenants may still be evicted if they violate the lease terms. These provisions expire on December 31, 2012.
GTAR News 2009
I’m a REALTOR®. What does this mean to my business?
Notification will have to be provided to tenants of rental housing before they can be evicted following a foreclosure.
Legislative/Regulatory Status/Outlook:
Under the new law, which went into effect on May 20th, tenants will have to receive 90-days notice prior to being evicted, when their rental home is foreclosed upon. In addition, tenants must be allowed to stay in the property through the end of
their lease, with two exceptions:
The new owner wants to occupy the property as a personal residence, and there is no lease (month to
month), or there is a lease but state law allows the lease to be terminated at any time upon notice. Even under these exceptions, the tenants must be given 90-days before they can be evicted. Notification must be provided by the “immediate successor in interest”. In some cases, this notifi cation will come from the bank (when they assume the home), and in other
cases it may be the new owner.
Much will depend upon state law. A number of states have existing laws protecting tenants. This law will preempt existing state law, except where the state law offers greater protection. The protections of this law apply only to “bona fi de” tenants who have a written contract, the lease was the result of an arms-length transaction, and the rent is not substantially less than the fair market rent for the property. Under any conditions, tenants may still be evicted if they violate the lease terms. These provisions expire on December 31, 2012.
GTAR News 2009
Tuesday, August 4, 2009
Pending home sales: Upward trend continues
WASHINGTON – Aug. 4, 2009 – Pending home sales are up for the fifth consecutive month, the first time in six years for such a streak, according to the National Association of Realtors® (NAR).
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in June, rose 3.6 percent to 94.6 from an upwardly revised reading of 91.3 in May; and it’s 6.7 percent above June 2008 when it was 88.7. The last time there were five consecutive monthly gains was July 2003.
“Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines,” says Lawrence Yun, NAR chief economist. “Activity has been consistently much stronger for lower priced homes. Because it may take as long as two months to close on a home after signing a contract, first-time buyers must act fairly soon to take advantage of the $8,000 tax credit because they must close on the sale by Nov. 30.”
The Pending Home Sales Index in the Northeast rose 0.4 percent to 81.2 in June and is 5.8 percent above a year ago. In the Midwest the index increased 0.8 percent to 89.9 and is 11.6 percent above June 2008. The index in the South jumped 7.1 percent to 100.7 in June and is 8.9 percent higher than a year ago. In the West the index rose 2.9 percent to 100.4 but is 0.2 percent below June 2008.
NAR President Charles McMillan is hopeful that a recently elevated level of contract cancellations will ease. “Last month, Freddie Mac and Fannie Mae clarified that appraisals should be done by professionals with clear local expertise,” he said. “This should mitigate the situation of many valuations done by out-of-area appraisers coming in below the price negotiated between buyers and sellers. Hopefully, in the months ahead, we’ll see an even closer relationship between contract activity and closed transactions.”
McMillan said NAR is continuing to press the appraisal issue. “We have asked Congress and the Federal Housing Finance Agency to immediately implement an 18-month moratorium on the new appraisal rules to further address unintended consequences of the new guidelines,” he said.
NAR’s Housing Affordability Index remains very favorable. The affordability index stood at 159.2 in July, down from record peaks in recent months but it remains 36.6 percentage points above a year ago. Under these conditions, the typical family would devote 15.7 percent of gross income to mortgage principal and interest, well below the standard allowance of 25 percent.
The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.
“A monthly rise in home prices and somewhat higher mortgage interest rates led to a modest decline in affordability in June, but it was still the sixth highest index on record dating back to 1970,” Yun said. “Because housing is so affordable in today’s market, job security and the first-time buyer tax credit are bigger factors in influencing home sales.”
A median-income family earning $60,700 could afford a home costing $289,100 in June with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of what a median-income family can afford. The affordable price was much higher than the median existing single-family home price in June, which was $181,600.
Yun expects existing-home sales to gradually rise over the balance of the year, with conditions varying around the country. “It appears home sales are on a sounder footing and inventory is gradually being absorbed.”
© 2009 FLORIDA ASSOCIATION OF REALTORS®
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in June, rose 3.6 percent to 94.6 from an upwardly revised reading of 91.3 in May; and it’s 6.7 percent above June 2008 when it was 88.7. The last time there were five consecutive monthly gains was July 2003.
“Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines,” says Lawrence Yun, NAR chief economist. “Activity has been consistently much stronger for lower priced homes. Because it may take as long as two months to close on a home after signing a contract, first-time buyers must act fairly soon to take advantage of the $8,000 tax credit because they must close on the sale by Nov. 30.”
The Pending Home Sales Index in the Northeast rose 0.4 percent to 81.2 in June and is 5.8 percent above a year ago. In the Midwest the index increased 0.8 percent to 89.9 and is 11.6 percent above June 2008. The index in the South jumped 7.1 percent to 100.7 in June and is 8.9 percent higher than a year ago. In the West the index rose 2.9 percent to 100.4 but is 0.2 percent below June 2008.
NAR President Charles McMillan is hopeful that a recently elevated level of contract cancellations will ease. “Last month, Freddie Mac and Fannie Mae clarified that appraisals should be done by professionals with clear local expertise,” he said. “This should mitigate the situation of many valuations done by out-of-area appraisers coming in below the price negotiated between buyers and sellers. Hopefully, in the months ahead, we’ll see an even closer relationship between contract activity and closed transactions.”
McMillan said NAR is continuing to press the appraisal issue. “We have asked Congress and the Federal Housing Finance Agency to immediately implement an 18-month moratorium on the new appraisal rules to further address unintended consequences of the new guidelines,” he said.
NAR’s Housing Affordability Index remains very favorable. The affordability index stood at 159.2 in July, down from record peaks in recent months but it remains 36.6 percentage points above a year ago. Under these conditions, the typical family would devote 15.7 percent of gross income to mortgage principal and interest, well below the standard allowance of 25 percent.
The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.
“A monthly rise in home prices and somewhat higher mortgage interest rates led to a modest decline in affordability in June, but it was still the sixth highest index on record dating back to 1970,” Yun said. “Because housing is so affordable in today’s market, job security and the first-time buyer tax credit are bigger factors in influencing home sales.”
A median-income family earning $60,700 could afford a home costing $289,100 in June with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of what a median-income family can afford. The affordable price was much higher than the median existing single-family home price in June, which was $181,600.
Yun expects existing-home sales to gradually rise over the balance of the year, with conditions varying around the country. “It appears home sales are on a sounder footing and inventory is gradually being absorbed.”
© 2009 FLORIDA ASSOCIATION OF REALTORS®
Monday, August 3, 2009
In survey, many adults say they’re not sold on social networks
SAN FRANCISCO – Aug. 3, 2009 – Social-networking services such as Facebook, MySpace and Twitter may be generating lots of buzz. But old-fashioned, non-digital, face-to-face conversations aren’t out of vogue just yet.
About 87 percent of 1,000 adults questioned in June said they prefer to deal with other people in person instead of via computers or smart phones, according to a survey from Brightkite, a mobile social-networking service, and GfK Technology, a market research agency.
What’s more, half of the respondents said that they do not use social networks.
“Social networks are a great tool to connect with people, but they don’t replace the pleasure we get from meeting friends,” says Rob Lawson, Brightkite’s chief marketing officer.
Women prefer face time 70 times more than using social networks. By contrast, men prefer it 33 times more, according to the survey.
Two-thirds of respondents agree that they don’t see their friends as often as they would like.
What about tweeting on Twitter? Well, another survey shows that most people still consider that for the birds. Nearly 70 percent of 2,025 adults questioned in June said they didn’t know enough about Twitter to have an opinion about it, according to a LinkedIn Research Network/Harris Poll.
And 12 percent said that the service is used only by young people and the media.
But Twitter, which has more than 35 million users, still has plenty to crow about. About 45 percent of 1,015 advertisers questioned in a different, late-June survey by LinkedIn and Harris said that Twitter will continue to grow. Only 17 percent said they didn’t know enough about Twitter to comment.
“Awareness of Twitter is staggering, thanks to use of the platform to communicate news events like the attacks in Mumbai, the presidential elections last year and to public figures like Oprah Winfrey who use it to engage with their audiences,” says Twitter spokeswoman Jenna Sampson.
Still, she says, Twitter is exploring ways to reach additional people.
Representatives for both polling firms said they did not intend to belittle social networks.
Facebook has 250 million members, 50 million of whom joined in the last three months. In April, its members spent 13.9 billion minutes on the site, up 700 percent from April 2008, says Nielsen NetView. MySpace has nearly 130 million members.
© USA Today
About 87 percent of 1,000 adults questioned in June said they prefer to deal with other people in person instead of via computers or smart phones, according to a survey from Brightkite, a mobile social-networking service, and GfK Technology, a market research agency.
What’s more, half of the respondents said that they do not use social networks.
“Social networks are a great tool to connect with people, but they don’t replace the pleasure we get from meeting friends,” says Rob Lawson, Brightkite’s chief marketing officer.
Women prefer face time 70 times more than using social networks. By contrast, men prefer it 33 times more, according to the survey.
Two-thirds of respondents agree that they don’t see their friends as often as they would like.
What about tweeting on Twitter? Well, another survey shows that most people still consider that for the birds. Nearly 70 percent of 2,025 adults questioned in June said they didn’t know enough about Twitter to have an opinion about it, according to a LinkedIn Research Network/Harris Poll.
And 12 percent said that the service is used only by young people and the media.
But Twitter, which has more than 35 million users, still has plenty to crow about. About 45 percent of 1,015 advertisers questioned in a different, late-June survey by LinkedIn and Harris said that Twitter will continue to grow. Only 17 percent said they didn’t know enough about Twitter to comment.
“Awareness of Twitter is staggering, thanks to use of the platform to communicate news events like the attacks in Mumbai, the presidential elections last year and to public figures like Oprah Winfrey who use it to engage with their audiences,” says Twitter spokeswoman Jenna Sampson.
Still, she says, Twitter is exploring ways to reach additional people.
Representatives for both polling firms said they did not intend to belittle social networks.
Facebook has 250 million members, 50 million of whom joined in the last three months. In April, its members spent 13.9 billion minutes on the site, up 700 percent from April 2008, says Nielsen NetView. MySpace has nearly 130 million members.
© USA Today
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