Although it’s impossible to predict the bottom of our real estate market with anything other than months of perfect hindsight after the fact, who can blame home buyers in this economy for at least attempting to time it to their advantage? In the best of times, saving big on one of life’s biggest purchases is as American as apple pie. In troubled times, it’s a daily crusade.
Yet, even if one could magically time bottoming home prices to the split second, you would still make a tactical mistake as a would-be borrower if you failed to notice a similar bottoming-out of mortgage interest rates. Indeed, by allowing interest rates to climb while you wait for prices to fall, you can easily end up paying more for a property than if you actually bought it at today’s price while locked into today’s historically low interest rate. That rate is presently hovering around 4.88%, give or take.
Meanwhile, there’s scarcely an expert on the market who doesn’t fully believe that mortgage rates have but one way to go—up. Rates have essentially been held as low as they’re likely to go for quite some time now in order to stimulate sales. However, March 31st is expected to mark the beginning of a trend toward fewer stimuli and more tough love for the housing market—mainly in the form of higher interest rates.
That day—the last of this year’s first fiscal quarter—is the deadline the Federal Reserve has given itself to begin scaling back on its widespread purchases of mortgage-backed securities. Once this deadline has passed, most experts believe the Fed will begin in earnest to wean itself from propping-up a market that is already showing encouraging signs of sustaining itself through the lowest prices of a decade.
We asked Ann Stickel-vice president of Affiliated Services for Michael Saunders & Company Mortgage, LLC-what government programs are available for distressed homeowners? Also, how these government loans help keep people in their homes and the foreclosure rate at a minimum.
If you have questions for Michael Saunders, email AskMichael@michaelsaunders.com.
Our nation has been experiencing a one-day-at-a-time economic recovery, punctuated by fits and starts. Finally, however, the good news is consistently outweighing the bad; allowing for a sustained measure of confidence to seep back into our battered psyches. In fact, consumer confidence across the U.S. rose in January to the highest level since September 2008 as new signs of recovery caused Americans to feel more optimistic about their immediate futures. Florida’s consumer confidence index also rose unexpectedly in January—by five points, to 74—with the biggest jump being in the perception of whether it is a good time to buy big-ticket consumer items.
For sure, confidence has at long last trumped fear and trepidation with respect to our local housing market. The months-long buying binge in the price tiers below $400,000 is showing no signs of letting up; especially as season revs into high gear and buyers continue to compete for pared-down inventories of lower-priced properties.
This should come as welcome news to everyone—including pundits, prognosticators and seasoned market watchers—who believes a recovery in the housing and labor markets are the essential ingredients for restoring our nation’s overall economic health. Moreover, while virtually every housing market in Florida continues to grapple with the twin hurdles of high unemployment and record foreclosures, Southwest Florida’s has been on a solid trend toward recovery and price stability for the better part of the last six months in spite of these serious and ongoing obstacles.
While the U.S. experienced a 16.7 percent dip in existing home sales between November and December of last year—the largest such monthly decline in more than 40 years—Sarasota-Manatee veered hard in the opposite direction; notching a 43 percent increase in existing home sales; while Charlotte County posted an equally impressive 42 percent increase. Furthermore, while December’s decline in national sales was largely attributed to buyer belief that time had run out on the first time home buyers tax credit, that perception did nothing to put the brakes on sales in Southwest Florida. In fact, the last time our region saw a monthly decline approaching 17 percent in unit sales of existing homes was between July and August of last year. Since then, sales and pendings have shown nothing but consistent improvement.
Ann Stickel, Vice President of The Michael Saunders Division of Affiliated Services, discusses the changes in the mortgage industry over the past six months. These changes will help protect the consumer as well as give the consumer a better understanding of their mortgage product.
The St. Armands area offers a variety of lifestyle options.
Barbara Roberts, managing broker of our St. Armands Circle offices, reports an increase in walk-in activity. During the Thanksgiving holiday weekend, the agents of her office noted return customers coming in to inquire about the status of the real estate market.
St. Armands Office Agents – News and Notes
We are pleased to welcome Karen Lyons Nowadly to our St. Armands offices. Karen brings over 10 years of real estate experience Michael Saunders & Company.
A premier property was just listed by Jenifer Schwell in the Grand Bay condominium community on Longboat Key. This residence is elegant and sophisticated with top-of-the-world views of the city and Sarasota Bay. This newly listed property is priced at $1.295 million. (more…)
The Michael Saunders & Company video team is pleased to present Marianne LeBar’s listing at 4745 Maid Marian Lane. This beautiful home is located in the Sherwood Forest Subdivision in Sarasota, FL.
Homebuyers probably don’t see themselves this way, but as they step up to take advantage of the best housing values in more than a decade each becomes their own personal economic stimulus package, securing for themselves a fabulous long term investment even as they help rescue the economy from the mess it’s in. More likely, they see themselves as grand prize winners in the housing sweepstakes; smartly timing the market just as prices are bottoming, interest rates are at an all-time low and the first time homebuyer tax credit is on hand to add an extra dollop of icing to the cake. Moreover, if you also happen to be a newcomer to Florida your decision to move your primary residence to one of the least-taxed states in America will be the gift that keeps on giving.
For the stragglers among us—not to mention many would-be buyers who didn’t quite qualify for the first round of housing tax credits—Congress has just rolled back the clock by about six months to allow one last opportunity to take advantage of what has been an enormously popular and effective incentive. Judging by the number of homes sold since the tax credit first went into effect; this is one of the few economic stimulus measures that have truly found its way down to the grass roots level. We applaud Congress for not only renewing the credit in a landslide, bi-partisan vote, but also for broadening its benefits to include a substantially larger pool of potential move-up buyers. At the end of the day, every buyer who uses the credit to sweeten an already great deal moves the housing market one transaction closer to shoring-up the rest of the economy. Indeed, most economists are of the mind that until the housing market regains its footing, the overall economic recovery will simply stumble forward with precious little for anyone to cheer about.
Under the revised rules of the extended tax credit:
First time home buyers can now receive up to an $8,000 tax credit by entering into a binding contract on or before April 30, 2010; and closing by June 30, 2010.
Buyers who have lived in their residences for five years may now receive a credit of up to $6,500 (or, up to $3,250 for a married individual filing separately).
The tax credit is now available to individuals earning up to $125,000—or $250,000 for couples—on homes priced to $800,000
This is an audience participation post in which you are invited and encouraged to weigh-in with your opinions on one of our region’s most pressing economic issues. But first, read on.
Counting today, there are just 30 days to go before the first time homebuyer tax credit expires. For all intents and purposes, if you haven’t gone to contract on a home by now you probably won’t complete your purchase in time to qualify for the credit.
That’s bad news for many qualified buyers who have been in the market for months only to be frustrated at every turn by a system that refuses to budge. Perhaps they’ve been denied financing due to an incompetent appraisal by an out-of-town appraiser. Perhaps the appraisal was accurate, credit scores were good, but the lenders simply refuse to lend. Or perhaps they’ve been on the buyer side of a short-sale where the seller and the lender have been locked in limbo for six months or more. For these reasons—and because the tax credit has had such a positive impact on our market—we join Congress in its support for extending the deadline at least another six months. There’s agreement on both sides of the aisle—and among leading economists—that a recovering housing market is the prime catalyst that will lead the rest of the economy out of the wilderness.
The tax credit has been so effective in stimulating sales and stabilizing home prices that continuing it seems like a no-brainer in light of a housing market that still exhibits contradictory signs of recovery. Secondly, a significant new wave of foreclosures is in the pipeline that could easily undo much of the progress that has been made toward reducing inventory and firming-up prices. One of the key benefits of the tax credit is that it ignited a firestorm of sales that has helped shore-up home prices in spite of the unprecedented number of foreclosures and short sales.
(Article includes comments by Ann Stickel, VP of Affiliate Services for Michael Saunders and Company)
Photo Credit: DSNews.com
The Best of Times and the Worst of Times: The 2009 REO Market By Rick Sharga
It wasn’t all that long ago that veteran REO agents and brokers were wondering if they should be pursuing another line of work. Through the early part of the decade, foreclosure activity was at below-average levels, properties that entered the foreclosure process seldom made it as far as the foreclosure auction, and properties that made it as far as the auction were generally purchased by eager investors. As a result, very few properties became REOs, and business for REO specialists was scarce.
As it turns out, that scarcity was driven by unsustainable home price appreciation, a voracious consumer appetite for real estate investments, a seemingly endless supply of fresh capital from Wall Street and institutional investors, and lending practices that threw caution to the wind. These same forces which, through the first half of the decade, kept REO activity artificially low, eventually led to an explosion of REO activity the likes of which the industry had never before seen, and which – unfortunately – it was ill-prepared to handle.
After seeing almost 201,000 REOs in 2005, the last year before the current wave of foreclosure activity began, REO counts have spiraled upwards at a remarkable rate: Over 268,000 REOs in 2006, almost 405,000 in 2007 and nearly 862,000 in 2008. In just four years, the volume of REO activity has more than quadrupled, far outpacing the servicing industry’s ability to deal with the volume. And 2009 is on pace to set another record.
Bank properties are no longer scarce, and they’re no longer a hidden commodity. In many of the harder hit markets, especially in states like California, Florida, Arizona and Nevada, it’s not unusual for bank properties to make up more than 50% of all existing home sales. In metropolitan areas like Stockton, CA and Las Vegas, distressed properties – primarily REOs – have accounted for as much as 85% of resale activities during the first six months of 2009. Consumer interest has never been higher, either. In a recent Harris survey conducted for RealtyTrac and Trulia, almost 60% of homebuyers said they were considering the purchase of a foreclosure property.
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Although it’s impossible to predict the bottom of our real estate market with anything other than months of perfect hindsight after the fact, who can blame home buyers in this economy for at least attempting to time it to their advantage? In the best of times, saving big on one of life’s biggest purchases is as American as apple pie. In troubled times, it’s a daily crusade.
Homebuyers probably don’t see themselves this way, but as they step up to take advantage of the best housing values in more than a decade each becomes their own personal economic stimulus package, securing for themselves a fabulous long term investment even as they help rescue the economy from the mess it’s in. More likely, they see themselves as grand prize winners in the housing sweepstakes; smartly timing the market just as prices are bottoming, interest rates are at an all-time low and the first time homebuyer tax credit is on hand to add an extra dollop of icing to the cake. Moreover, if you also happen to be a newcomer to Florida your decision to move your primary residence to one of the least-taxed states in America will be the gift that keeps on giving.
This is an audience participation post in which you are invited and encouraged to weigh-in with your opinions on one of our region’s most pressing economic issues. But first, read on.
