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South Florida housing in recovery but lenders still too cautious

SOUTH FLORIDA – April 28, 2009 – President Barack Obama took aim at the housing crisis during his first 100 days with a broad plan to stabilize the market by trying to prevent foreclosures, pushing down mortgage rates and offering a handsome tax credit to new buyers.

But has the effort helped South Florida, where foreclosures are soaring, many homeowners have little or no equity and price declines show no sign of abating?

The answer: A little bit – at least, so far, according to real estate analysts, distressed homeowners and the people trying to help them.

Interest rates and lower prices have spurred sales, but the steep fall in South Florida home values has kept hundreds of thousands of borrowers from refinancing and is prompting otherwise solvent homeowners to abandon their properties. Meanwhile, loan modifications remain time-consuming and difficult to obtain.

Perhaps the biggest roadblock to recovery in South Florida is that banks, for the most part, still aren’t lending.

“The administration … is clearly having an impact in mitigating this disaster,” said Mike Larson, a real estate analyst with Weiss Research in Jupiter. “But ultimately, it’ll be the passage of time with lower prices and a turn in the broader economy that will finally put this housing downturn behind us.”

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(Home Sales are Rising as Prices Have Reached Lows.. First-Time Buyers, Investors of Rental Property, & Second Home Buyers Are Jumping In..)

Florida’s existing home, condo sales rise in March 2009

ORLANDO, Fla. – April 23, 2009 – Florida’s existing home sales increased in March, making it the seventh month in a row that sales activity demonstrated gains in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors® (FAR). March’s statewide sales also increased over the previous month’s sales level in both the existing home and existing condo markets.

Existing home sales rose 30 percent last month with a total of 13,085 homes sold statewide compared to 10,080 homes sold in March 2008, according to FAR. Statewide existing home sales in March were 32.7 percent higher than February’s statewide sales.

Florida Realtors also reported a 25 percent rise in statewide sales of existing condominiums in March, continuing a trend in recent months for higher statewide sales of both the existing home and existing condo markets compared to year-ago levels. Statewide existing condo sales last month increased 37.2 percent over the total units sold in February.

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(Homeowners Insurance Can be a Burden to Read.. But, as a Real Estate Agent who cares about his clients, I always encourage a thorough Reading & Understanding of What your Policy Covers & what it Doesn’t.. Overpaying for Insurance is More Common, than Undervalued Coverage.. Read on..)

Survey: Americans’ low insurance IQ hurts finances

CHICAGO (AP) – March 10, 2009 – Americans are lacking in basic knowledge about insurance that might help their finances during the recession, according to a new survey.

In fact, we know a lot less about insurance than we think we know, according to the National Association of Insurance Commissioners (NAIC), which sponsored the poll. That disconnect can end up costing them money or gaps in their long-term insurance protection, says the NAIC, which represents state insurance regulators.

“Now more than ever, consumers need to be mindful of the impact their insurance decisions can have on their financial future,” said Terri Vaughan, the group’s chief executive. “By arming themselves with the facts – and improving their insurance IQ – consumers can make sure they are adequately protected, without paying more than they should for that coverage.”

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(This is a nice example of how a Homeowners Association Breaks Down its HOA fee, billed to Residents.. This Particular Development is the Collegiate Villa Condominiums, located in Manhatten, Kansas & is Very Well Maintained & One of My Favorite Communities in Manhatten.)

Condo and homeowner associations have tough time covering budgets

SOUTH FLORIDA – Feb. 24, 2009 – The pain being experienced by Florida’s condo and homeowner associations in the state’s epic foreclosure crisis worsened in the last half of 2008, forcing more to cut back services and levy special assessments to meet their budgets, according to a survey released Tuesday by the Hollywood-based Community Association Leadership Lobby.

The survey of 1,589 Florida property owners by CALL, a group formed in 2003 by Hollywood-based law firm Becker & Poliakoff, comes as Florida lawmakers begin to look for ways to address the impact of foreclosures on community associations, particularly condominiums.

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(When you Flat List with Shirley International Realty, anywhere in the State of Florida, we will also market your home across the top 20 Real Estate Web Search Portals on the Internet.. Our MLS Listing Service is Second to None, & Staged to Sell Your Home While Saving You Money..)

‘Freaky’ side of real estate economics
Flat-fee brokers may put pressure on traditional commissions
Friday, June 23, 2006

By Glenn Roberts Jr.
Inman News

SAN FRANCISCO — Traditional pricing for real estate services is bound to crumble, and flat-fee brokers will likely deliver the deathblow — at least according to Steven D. Levitt, co-author of “Freakonomics,” a book that takes an unconventional approach to economics.

Levitt, who spoke to attendees Thursday at the PCBC builders’ conference and trade show at San Francisco’s Moscone Center, also said that the real estate brokerage industry is in some ways its own worst enemy, as low barriers to entry lead to proportional surges in agent population during housing market booms.

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(Shirley International Realty offers the most detailed & highest quality MLS Listings in the State of Florida. Ask how we can put you on MLS, without having to pay high listing commissions. Saving money, while selling your home is our goal in selling real estate..)

Commissions pressured beyond discounting
Savvy buyers, sellers tap new business models for more savings
By Susan Romero
Inman News Features
The competition for listings between so-called “traditional” realty brokerages and commission discounters kicks up a lot of dust, but when the air clears it’s apparent that cut-rate brokerages aren’t the only force putting downward pressure on realty commissions as a percentage of the home sales price.

Fee-for-service brokerages, Internet-savvy buyers, skyrocketing home prices, a dearth of listings in some markets and some sellers’ notion that they can sell their home without paying an agent are among the other factors bearing down on conventional realty pricing structures.

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(Durability is a key tenet of a good green home plan. A green home plan will strive to use eco-friendly building materials and furnishings and will incorporate leftovers wherever possible. A green home design will make use of materials that are renewable and long lasting.. This is the future of real estate construction..) 

Green home features grow in demand

WASHINGTON – Jan. 20, 2009 – Today’s home buyers are asking for more green features as a means of lowering costs, becoming more environmentally friendly, and adopting a healthier lifestyle.

“Green features are becoming one of the top three priorities, after price and location,” says Joseph Himali, Washington’s Greater Capital Area Association of Realtors Board of Directors president.

Green features focus on energy efficiency, water efficiency, resource efficiency and indoor air quality and include such elements as Energy Star appliances, low-flow shower heads, carpets and paint with low volatile organic compounds, and building materials procured from local suppliers.

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(President O’Bama takes office today with sights on aiding the US Economy.. The release of the second $350 Billion in Bailout Money is expected to have positive effects on foreclosure rates & mortgage debts. Banks are pitching a strong need for this support..) 

WASHINGTON (AP) – Jan. 20, 2009 – President-elect Barack Obama is taking office at a time the escalating troubles facing major banks around the world couldn’t be clearer.

On Monday, the British government swooped in to boost its stake in troubled Royal Bank of Scotland to almost 70 percent and offered to insure banks against large-scale losses on risky assets in exchange for binding agreements to lend out more money.

It was the second major British bank bailout in three months. Shares of ailing RBS lost two-thirds of their value in Monday’s trading. Shares of other European banks plunged as investors worried that one or more banks could be nationalized after RBS said last year’s losses could reach $41.3 billion – the biggest ever for a British corporation.

In the United States, banks and financial markets were closed Monday for the federal holiday honoring slain civil rights leader the Rev. Martin Luther King Jr.

Officials on both sides of the Atlantic have failed to contain the most severe credit crisis in decades, which has ravaged banks in places as diverse as Ireland, Iceland and Switzerland, along with the U.S. and Britain. 

Now top officials in London, Washington and Brussels are scrambling to figure out how to stop the bleeding. They are trying to find the best way to prod banks into lending out more money, struggling for a solution 18 months after the most severe credit crisis in decades sent investors reeling.

U.S. officials are talking about establishing a new government-backed bank to remove bad loans and other toxic assets from banks’ balance sheets, Treasury Secretary Henry Paulson said last week. In theory, with those assets gone, banks would be freer to make more loans.

Still, figuring out a successful strategy for how to unclog the credit markets is a vexing challenge for Obama when he takes office. Obama’s top economic adviser, Larry Summers, said on CBS television Sunday that under the new administration, “the focus isn’t going to be on the needs of banks. It’s going to be on the needs of the economy for credit.”

Obama will have a “strong message for the bankers,” adviser David Axelrod said Sunday on ABC television. “We want to see credit flowing again. We don’t want them to sit on any money that they get from taxpayers.”

While the British government moves closer to a full takeover of that country’s banking system, Americans are more leery of such intervention, and that’s likely to continue even with Democrats in charge of the White House and Congress, analysts say.

“We’re much less comfortable with nationalization,” said Simon Johnson, former chief economist to the International Monetary Fund and a professor at the Massachusetts Institute of Technology’s Sloan School of Management. “We’re generally more skeptical of the ability to run things better than the private sector.”

The U.S. government has so far provided $192.3 billion to 257 large and small financial institutions in 42 states and Puerto Rico in a financial bailout program that has proven extremely unpopular with the public. Now the government is facing calls to use its power to fire executives at banks that receive government aid.

“What you really need is … a change of management in these banks,” Johnson said. “The banks have been run by incompetent bunglers.”

There is a precedent for the idea of a government-run “bad bank” that would take toxic assets off the books of banks and thus make it easier for them to loan new money: the Resolution Trust Corp., created in 1989 to dispose the assets of nearly a thousand failed savings and loans.

One key question, though, is how much the new bank would pay for distressed assets. Buying assets at too high a price would reward them for taking too much risk. Buying them at too low a price would mean banks will have less money to lend out in the future, said Stephen Lewis, chief economist at Monument Securities in London.

Plus, with the government acquiring billions in potentially bad loans, “it would leave the taxpayer fully exposed to any future losses,” Lewis said.

American officials are considering other ideas to cope with the credit crisis, which started in August 2007 and has proven far more severe than all but the most pessimistic analysts had expected. Last week, Federal Reserve Chairman Ben Bernanke offered a series of options, including guarantees under which the government would agree to absorb part of the future losses on portfolios of rotten assets, presumably in exchange for warrants or some other form of compensation.

However, some question whether the government should be pressing banks to lend more, calling the tightening of lending standards an inevitable reaction to a period in which they were far too loose.

“Banks are in the business of lending, but they’ve got to lend prudently,” said Bert Ely, a banking industry consultant in Alexandria, Virginia. With the economy contracting, many consumers are inclined to reduce their outstanding debt, Ely said, and don’t want to borrow.

The current U.S. rescue program has come under heavy criticism from lawmakers unhappy that the Bush administration provided billions of dollars to banks to shore up their finances, but did not impose enough restrictions to make sure they would increase their lending.

Many lawmakers are pushing the incoming Obama administration to devote more of the money to halting a tidal wave of mortgage foreclosures, and to impose more limits on the compensation of top executives working at the banks receiving the money. The incoming administration has pledged to revamp the rescue program to address objections from lawmakers.

Last week, new cracks appeared among the two largest U.S. banks.

Citigroup Inc. last Friday reported an $8.29 billion loss in the fourth quarter and announced it was splitting itself in two. Bank of America reported a $2.39 billion fourth-quarter loss, hours after ironing out a deal for a fresh $20 billion government lifeline to digest troubled brokerage Merrill Lynch.

Copyright © 2009 The Associated Press, Alan Zibel (AP Business Writer). Associated Press Writers Robert Barr and David Stringer contributed to this report from London. All rights reserved.

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(I’m representing more Real Estate Investors than ever due to the depreciating prices in our market.. Sarasota, & much of Florida, traditionally has made for rough rental investments due to expensive prices & contrasting low rent rates.. With correcting values, investors are re-entering the market & buying homes that earn them 10% a year on their capital investment.. Purchasing a home below market value, & finding a tenant to pay market value for rent is a common package in our current market & something Shirley International Realty Inc. offers to anyone looking to make money off of Real Estate. Read on about the experiences from other Real Estate Professionals & Investors uncovering opportunities Post-”The Bust”..

Bright side of housing bust

OCALA, Fla. – Nov. 26, 2008 – Ron Boatright had more business than he could handle during the housing boom.

His Ocala drywall business employed as many as 60 people in the home construction heyday. Back then, it looked like there would be good times for a long time.

“It was wide open. I was in The Villages for 12 years working and the most we did was 16 (homes) a week. That’s a lot,” Boatright said.

Fast forward three years and Boatright’s thriving drywall business is anything but. That’s because with almost no new homes being built, there’s little need for drywallers and Boatright’s telephone, which once rang off the hook, went silent.

“Now we’re lucky if we do one home a week,” Boatright said. “And I think it’s going to get worse.”

But the 50-year-old Boatright also saw a new housing niche and a way he and his family could cash in on it. He saw hundreds of homes for sale with sticker prices significantly less than what their owners had paid for them just a few years ago.

So Boatright took his savings and looked for homes costing about $50,000 or less. He found one this year, bought it for $50,000 and put his family and in-laws to work restoring it. Three years ago the home cost $110,000.

Boatright put in about $8,000 worth of repairs, tacked on another $2,000 for a Realtor to list the house for $70,000 and sell it. Within two weeks he had a potential buyer. The only problem was the buyers didn’t qualify for a bank loan.

So Boatright decided to hold the mortgage for five years. By doing that, he made some extra money and ensured the sale went through. At 8 percent interest, Boatright is planning to make an extra $10,000 in interest in addition to proceeds from the sale of the house.

Now Boatright said he’s accepting buyers that many banks would probably reject, and he accepts a smaller down payment than most financial institutions. He is in the process of buying his fourth investment house this year.

“If I can find somebody with halfway decent credit and a steady job, I can get them in the (house),” Boatright said.

Even though he’s charging higher interest, Boatright said he’s offering homes that buyers can afford, something most banks didn’t do before with sub-prime mortgages.

Dawn Rickabough, a broker and mortgage consultant in California, said that in today’s tough housing market, offering homes at lower cost and owner financing gives sellers an edge.

“Depending on the area, it can be critical and the difference between making a sale and not,” said Rickabough, who lectures on holding mortgages.

Although there are no statistics readily available about how many homes are sold through owner financing, Rickabough said an informal study she commissioned showed that in 2006, about one in every 400 properties sold had some form of owner financing.

That jumped to one in every 50 this year, and Rickabough predicts the number will only grow during the next few years.

Rickabough said that while the market has been a tough road for sellers these past couple of years, there is a niche and people like Boatright are filling it.

“I think he’s got a good system going there,” she said. “(He’s) getting a decent return on his money and doing better than the stock market. I think it’s a fabulous strategy.”

But buying a home cheap, fixing it and selling it by holding the mortgage isn’t for everybody.

Rickabough said sellers need to understand the risks and whether they can afford to keep the property if the buyers stop making payments.

Sellers need a reliable source of equity to buy properties, and set the buyers’ payments according to the risk. Sellers should also make sure they have all the financial documents in order, such as proof of buyers’ income, tax returns and credit history, in case the seller wants to sell the mortgage one day to another investor.

Michael Malkasian, president of the Web site FSBO.com (For Sale by Owner) said that during the past couple of years he is seeing about double the number of people buying inexpensive homes, repairing them and then selling them through owner financing or renting them in hopes the market will improve later.

“In a market like today, sellers are forced to come up with more creative ways to get their properties sold and owner financing is one of the oldest ways,” he said.

The market in Ocala is tough, but one in which Boatright can flourish, with more than 6,000 properties listed for sale.

And with sales stagnant, Boatright is working in an environment in which investors can buy homes at a fraction of what they sold for just a few years ago.

Single-family home sales in the third quarter of this year were down 10 percent in the Ocala area compared to the same period in 2007, according to a study released Tuesday by the Florida Association of Realtors. The median sales price dropped 16 percent. During the same period from 2006 to 2007, Ocala single-home sales dropped 53 percent and sales prices dropped 6 percent.

Sales in Gainesville weren’t much better. The number of home sales in the Gainesville area dropped 33 percent during the third quarter of 2008, compared to the same period in 2007. Median sales prices dropped 11 percent. During the same period last year, home sales dropped 10 percent from 2006 and 2007 and prices fell 4 percent.

Bert Meadows, president elect of the Marion County Association of Realtors, said there is money to be made in the housing market if investors buy cheap, make modest repairs and offer owner financing. Boatright said he plans to continue buying and selling homes because he doesn’t see the demand for drywall work picking up soon.

Flipping houses and offering mortgages has kept some of his family members and in-laws off the unemployment line.

“And I just see it getting worse,” he said. “So I’m going to keep doing what I’m doing.”

Copyright © 2008 Ocala Star-Banner, Fla., Fred Hiers. All rights reserved. Distributed by McClatchy-Tribune Information Services.

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Foreclosure reprieve gives hope to families

TAMPA, Fla. – Dec. 1, 2008 – Tiffany Edwards thought she was running out of time to persuade her lender to work out a new loan so her growing family could stay in their Tampa home.

She had been out of work for more than a year, and her husband’s income wasn’t enough to cover all the family’s bills. She found a job a few weeks ago, but her lender was already set to foreclose on the house – likely before Christmas.

With a 3-year old daughter and a baby on the way, Edwards panicked. Then came last week’s announcement that Fannie Mae and Freddie Mac – the nation’s two largest providers of mortgages – will postpone foreclosures until early January. In the meantime, they will try to work out loan modifications so more homeowners can keep their homes.

“What a stress relief,” Edwards said. “Now I have hope we’re going to be able to work something out.”

The Edwardses are one of about 16,000 families nationwide who are eligible for the help. The foreclosure suspension is exactly the kind of action some economists and industry leaders say is needed as the foreclosure crisis weighs down the entire economy. Florida Gov. Charlie Crist is contemplating a way to get lenders to agree to a moratorium on foreclosures until after the holidays.

There were cheers when Fannie and Freddie agreed to hold off on some foreclosures. But now that the dust is settling, many wonder how significant the action will really be.

That’s because after Jan. 9, the people helped by the reprieve could still lose their homes. Even if all those people work out new loans, they still represent a small percentage of the more than 2 million homes that are expected to be lost in foreclosure before late 2009.

“This is great, it really is,” said Debbi Colon, a Catholic Charities foreclosure counselor who has worked with the Edwards family. “But it’s just a first step.”

After the announcement last week, her phone rang all day and night from clients wondering if they qualified for the reprieve, Colon said. Most don’t, she said, because their loans are held by private companies.

That’s the downside of the plan, Colon said. Only homeowners with loans owned by Fannie Mae and Freddie Mac are eligible. Together, the two companies own only about 20 percent of the nation’s delinquent loans.

Of the loans that Fannie and Freddie own, not all of them are eligible for the reprieve. Homeowners must be still living in the home and must be at least three months behind on their payments.

For those who are lucky enough to get a second chance at a loan modification, Fannie and Freddie’s new program could be a big help. It calls for mortgage payments – including taxes and insurance – to total no more than 38 percent of homeowners’ pretax monthly income.

Officials for the Center for Responsible Lending said they are encouraged by Fannie and Freddie’s holiday reprieve, but know it’s not a solution.

“This is a solid step in the right direction,” said Ginna Green, spokeswoman for the center. “But we must also aim for solutions – like streamlined modifications – that keep families in their homes for the long term as well as the short term.”

Even so, Edwards and her family say they are thankful for the extra time in their home. No matter how long that ends up being.

Copyright © 2008 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.

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