Real estate prices have dropped about 30 percent since their peak in 2006. As a result, something like ten million American homeowners owe the bank more than their houses are now worth. More than half of them are stuck with mortgages that are more than 20 percent higher than the value of their homes. They could simply walk away from the home, stop paying the mortgage, let the lender foreclose, and be better off. More and more people are taking this option. Is it moral?
It may not even be legal. Your mortgage contract says that you "promise to pay" the bank however much you borrowed from it. Many states have laws allowing mortgage lenders to pursue your other assets to get their money back. But that can be difficult and expensive. You may even be able to live in your house payment-free for months while the bank goes through foreclosing on you. Then you can rent another house—possibly one the bank unhappily repossessed from someone else who walked away.
There are other practical problems: your credit rating will be trashed, and you won’t be able to get another mortgage for a few years. Don’t be surprised if your former neighbors don’t take kindly to the effect you have on property values. And there are the hassles of moving under any circumstances: new schools for the kids, and so on. But the main deterrent is honor and shame. If you literally can’t make the payments and still feed your family—that is, if you’re bankrupt—then these things don’t matter. But increasingly, people are walking away from underwater mortgages who could keep paying but choose not to. These cases are called "strategic defaults." Can there really be any justification other than necessity for ratting on a promise and keeping money that you owe to others? (For a firm and eloquent “no,” see our colleague Megan McArdle’s post.)
Perhaps surprisingly, the answer is "yes." There are strong arguments that any feeling of shame or dishonor about walking away from a mortgage is misplaced. Whether these arguments are persuasive is up to you.
First, the bank may not be wholly innocent. Traditionally down payments are supposed to prevent this situation from arising. The larger the down payment, the more a “walker” is walking away from. But in the recent real estate bubble, banks demanded smaller and smaller down payments for larger and larger mortgages to less and less qualified buyers. They encouraged people to take second mortgages every time their house value increased. There was no gun to the head of the home buyer, but there was no gun to the head of the bank, either. It was a folie a deux. Both sides of the deal were foolish. Why shouldn’t both sides suffer when the deal goes bad?
Lenders cannot claim to have been blindsided by defaults. Generally, lenders require borrowers to purchase Private Mortgage Insurance if the loan is greater than 80 percent of the property’s value. This is precisely to off-load some of the risk they are voluntarily taking on.
In the financial world, companies and individuals default on loans all the time, with no stigma. Recently the purchaser of an 11,000-unit housing complex in Manhattan turned the keys over to its creditors and walked away. Tishman-Speyer had paid $5.4 billion for the property late in 2006. It is now worth $1.8 billion. Dan Gross offers several other juicy examples in Slate.
In fact, enabling business people to walk away from debts is vital to capitalism. The corporation was invented to facilitate this very thing. The essence of a corporation is "limited liability." By doing business in corporate form, the shareholders are putting everyone on notice that their liability for the corporation’s debts is limited to the amount they have invested. No matter how much money they may have, and no matter how much the corporation may owe, they can never be asked for more. No one even suggested that "honor" required the shareholders of General Motors, their equity already wiped out, to reach into their own pockets to make good on GM’s obligations.
On the other hand, if many of those 10 million Americans whose mortgages are underwater choose to walk away, it would be a catastrophe for the housing market and probably for the economy. Some people feel that paying your mortgage—even if the house you used it to buy is worth less than what you owe-- is not just honorable but a patriotic duty.
Source: http://www.theatlanticwire.com/opinions/view/opinion/How-to-Think-About-Underwater-Mortgages-2422
The Criscitos has been selling South Florida luxury and commercial real estate for over a decade and has sold over $1 billion dollars of property. They work as a multi-lingual team speaking english, Spanish, Italian and Portuguese. They carved out a niche as a leading boutique real estate company with two distinct divisions -residential and commercial- both personally overseeing by Marcela and Anthony Criscito.
Wednesday, February 10, 2010
Monday, February 8, 2010
Miami Residential Real Estate Sales Rise While Prices Fall
Miami residential real estate transactions maintained their three year high in December 2009, even as median sales prices for new and resale homes and condos declined from December 2008. While new home sales continued to remain a low percentage of overall sales, December 2009 sales of existing condos increased significantly from November 2009 and from December 2008.
Miami metro area home sales remained at a three-year high in December as sales of existing condos, whose prices have fallen most sharply from peak levels in 2006, continued to claim a higher-than-average share of transactions. The median price paid for all new and resale houses and condos combined didn't budge from November and declined from a year earlier by the lowest amount - 22.5 percent - since late 2008, a real estate information service reported.
In December, 8,259 new and resale houses and condos closed escrow in the metro area encompassing Miami-Dade, Palm Beach and Broward counties. That was up 19.1 percent from November and up 41.3 percent from 5,846 in December 2008, according to MDA DataQuick of San Diego, Calif. The firm tracks real estate trends nationally via public property records.
Total escrow closings were the highest for a December since 2006, but they were still the third-lowest for that month since 1997, when DataQuick's complete Miami-area stats begin.
December's increase in total sales from November was normal for the season, though the 19.1 gain was below the average November-to-December increase of 29.6 percent since 1997.
December marked the tenth consecutive month in which the region's overall sales rose on a year-over-year basis. Existing (not new) single-family detached house and condo sales have risen year-over-year for 13 consecutive months, while new-home sales in December fell below the year-ago level for the 42nd time in the last 43 months.
The December 2009 new-home tally rose nearly 31 percent above the November level but was still the lowest for the month of December since at least 1997. New-home sales, which have suffered as builders struggle to compete with low-cost foreclosures, made up 8.6 percent of total December sales. That compares with the new-home market's monthly average of 20.3 percent of total sales over the past decade.
The 3,611 sales of existing condos in December marked a gain of 18 percent from November and 61.5 percent from a year earlier, to the highest level for a December since 2004, when condo resales totaled 4,407. Condo resales made up 43.7 percent of total Miami-area home sales in December, compared with 38.2 percent a year earlier and a monthly average of 31.5 percent over the past decade.
Propelled by strong condo sales, December sales of all homes priced $50,000 to $150,000 shot up 98.5 percent from December 2008. The $50,000 - $150,000 sales represented 47.5 percent of total home sales in December, up from 33.9 percent in December 2008 and 15.2 percent in December 2007.
Sales also picked up in December at the opposite end of the price spectrum: The number of homes sold for $1 million or more rose to 243 in December, up 51 percent from 161 in November and up 28.6 percent from 189 in December 2008. The figures are based on an analysis of public property records, where there was a purchase price or purchase loan amount of $1 million or more. During all of 2009, sales of $1 million-plus homes totaled 2,061, down 32.3 percent from a 2008 total of 3,044. The peak month for $1 million-plus home sales was in June 2005, when 583 sold, and the peak year was 2005, when 5,452 homes sold for $1 million or more.
The median price paid for all new and resale houses and condos sold in December was $155,000, the same as in November but down 22.5 percent from $200,000 in December 2008. It was the smallest year-over-year decline for the overall median sale price since the median fell 22.2 percent, to $210,000, in November 2008.
December's median was 46.6 percent below the peak $290,000 median in June 2007. The Miami area's median price has fallen on a year-over-year basis for 27 consecutive months.
The median price paid for resale condos in December held steady at $105,000 - the same as in November but down 23.7 percent from a year ago and down 54.8 percent from the peak $219,000 resale condo median in July 2006. The resale condo median hit a cycle low of $99,000 in September 2009.
The median paid for resale single-family detached houses rose slightly in December to $188,000, up 1.7 percent from 184,800 in November but down 14.5 percent from a year ago and down 44.1 percent from a June 2007 peak of $340,000.
Another price gauge analysts watch, the median paid per square foot for resale single-family detached houses, held steady in December at $109, the same as in November but down 11.4 percent from $123 in December 2008. It was the lowest year-over-year decline for any month since November 2007. The December 2009 median paid per square foot stood 48.3 percent below the region's $211 peak in summer 2006. The measure has fallen year-over-year for 39 straight months.
A popular form of financing used by first-time home buyers - government-insured FHA loans - accounted for 42.5 percent of all home purchase loans in December, down from 48.5 percent in November but up from 35 percent a year ago and 5.4 percent two years ago.
Absentee buyers purchased 29.3 percent of all homes sold in the Miami area in December, up from 28.8 percent in November and 26.6 percent a year ago, according to public property records. Absentee buyers are often investors, but could include second-home buyers and others who indicated at the time of sale that their property tax bill would be sent to a different address.
About 2.8 percent of the homes sold in December had been "flipped" within a three-week to six-month period, meaning they had been bought on the open market and then re-sold within that window. That's down slightly from a flipping rate of 3.1 percent of all sales in November but up from 1.7 percent in December 2008, based on public records. Flipping rates were higher before the housing market correction: In December 2005 the Miami-area flipping rate was 4.5 percent, while it was 5.0 percent in December 2004.
Buyers who appear to have used cash to purchase their homes accounted for 54.0 percent of all December sales, and those buyers paid a median $120,000 for their homes. Specifically, these were transactions where there was no indication of a purchase loan recorded in the public record at the time of sale. Some of these "cash" buyers could have used alternative financing arrangements outside of a typical purchase mortgage, and in some cases these buyers might be taking out mortgages after their purchases. All-cash deals are popular in markets where prices have dropped sharply and sellers favor the relative speed and certainty of cash transactions.
The use of adjustable-rate mortgages ("ARMs") to buy homes was steady in December at 5.7 percent of all purchase loans, the same as in November but up from a decade low of 4.4 percent in May 2009. However, December's purchase ARM level was down from 6.9 percent a year earlier. Miami's monthly average for ARM use over the past decade is 49.7 percent of purchase loans. In December, the median ARM purchase loan amount was $280,000.
Source:http://www.nuwireinvestor.com/articles/miami-residential-real-estate-sales-rise-while-prices-fall-54588.aspx
This article has been republished from DQNews. You can also view this article at DQNews, a real estate research and news site.
Miami metro area home sales remained at a three-year high in December as sales of existing condos, whose prices have fallen most sharply from peak levels in 2006, continued to claim a higher-than-average share of transactions. The median price paid for all new and resale houses and condos combined didn't budge from November and declined from a year earlier by the lowest amount - 22.5 percent - since late 2008, a real estate information service reported.
In December, 8,259 new and resale houses and condos closed escrow in the metro area encompassing Miami-Dade, Palm Beach and Broward counties. That was up 19.1 percent from November and up 41.3 percent from 5,846 in December 2008, according to MDA DataQuick of San Diego, Calif. The firm tracks real estate trends nationally via public property records.
Total escrow closings were the highest for a December since 2006, but they were still the third-lowest for that month since 1997, when DataQuick's complete Miami-area stats begin.
December's increase in total sales from November was normal for the season, though the 19.1 gain was below the average November-to-December increase of 29.6 percent since 1997.
December marked the tenth consecutive month in which the region's overall sales rose on a year-over-year basis. Existing (not new) single-family detached house and condo sales have risen year-over-year for 13 consecutive months, while new-home sales in December fell below the year-ago level for the 42nd time in the last 43 months.
The December 2009 new-home tally rose nearly 31 percent above the November level but was still the lowest for the month of December since at least 1997. New-home sales, which have suffered as builders struggle to compete with low-cost foreclosures, made up 8.6 percent of total December sales. That compares with the new-home market's monthly average of 20.3 percent of total sales over the past decade.
The 3,611 sales of existing condos in December marked a gain of 18 percent from November and 61.5 percent from a year earlier, to the highest level for a December since 2004, when condo resales totaled 4,407. Condo resales made up 43.7 percent of total Miami-area home sales in December, compared with 38.2 percent a year earlier and a monthly average of 31.5 percent over the past decade.
Propelled by strong condo sales, December sales of all homes priced $50,000 to $150,000 shot up 98.5 percent from December 2008. The $50,000 - $150,000 sales represented 47.5 percent of total home sales in December, up from 33.9 percent in December 2008 and 15.2 percent in December 2007.
Sales also picked up in December at the opposite end of the price spectrum: The number of homes sold for $1 million or more rose to 243 in December, up 51 percent from 161 in November and up 28.6 percent from 189 in December 2008. The figures are based on an analysis of public property records, where there was a purchase price or purchase loan amount of $1 million or more. During all of 2009, sales of $1 million-plus homes totaled 2,061, down 32.3 percent from a 2008 total of 3,044. The peak month for $1 million-plus home sales was in June 2005, when 583 sold, and the peak year was 2005, when 5,452 homes sold for $1 million or more.
The median price paid for all new and resale houses and condos sold in December was $155,000, the same as in November but down 22.5 percent from $200,000 in December 2008. It was the smallest year-over-year decline for the overall median sale price since the median fell 22.2 percent, to $210,000, in November 2008.
December's median was 46.6 percent below the peak $290,000 median in June 2007. The Miami area's median price has fallen on a year-over-year basis for 27 consecutive months.
The median price paid for resale condos in December held steady at $105,000 - the same as in November but down 23.7 percent from a year ago and down 54.8 percent from the peak $219,000 resale condo median in July 2006. The resale condo median hit a cycle low of $99,000 in September 2009.
The median paid for resale single-family detached houses rose slightly in December to $188,000, up 1.7 percent from 184,800 in November but down 14.5 percent from a year ago and down 44.1 percent from a June 2007 peak of $340,000.
Another price gauge analysts watch, the median paid per square foot for resale single-family detached houses, held steady in December at $109, the same as in November but down 11.4 percent from $123 in December 2008. It was the lowest year-over-year decline for any month since November 2007. The December 2009 median paid per square foot stood 48.3 percent below the region's $211 peak in summer 2006. The measure has fallen year-over-year for 39 straight months.
A popular form of financing used by first-time home buyers - government-insured FHA loans - accounted for 42.5 percent of all home purchase loans in December, down from 48.5 percent in November but up from 35 percent a year ago and 5.4 percent two years ago.
Absentee buyers purchased 29.3 percent of all homes sold in the Miami area in December, up from 28.8 percent in November and 26.6 percent a year ago, according to public property records. Absentee buyers are often investors, but could include second-home buyers and others who indicated at the time of sale that their property tax bill would be sent to a different address.
About 2.8 percent of the homes sold in December had been "flipped" within a three-week to six-month period, meaning they had been bought on the open market and then re-sold within that window. That's down slightly from a flipping rate of 3.1 percent of all sales in November but up from 1.7 percent in December 2008, based on public records. Flipping rates were higher before the housing market correction: In December 2005 the Miami-area flipping rate was 4.5 percent, while it was 5.0 percent in December 2004.
Buyers who appear to have used cash to purchase their homes accounted for 54.0 percent of all December sales, and those buyers paid a median $120,000 for their homes. Specifically, these were transactions where there was no indication of a purchase loan recorded in the public record at the time of sale. Some of these "cash" buyers could have used alternative financing arrangements outside of a typical purchase mortgage, and in some cases these buyers might be taking out mortgages after their purchases. All-cash deals are popular in markets where prices have dropped sharply and sellers favor the relative speed and certainty of cash transactions.
The use of adjustable-rate mortgages ("ARMs") to buy homes was steady in December at 5.7 percent of all purchase loans, the same as in November but up from a decade low of 4.4 percent in May 2009. However, December's purchase ARM level was down from 6.9 percent a year earlier. Miami's monthly average for ARM use over the past decade is 49.7 percent of purchase loans. In December, the median ARM purchase loan amount was $280,000.
Source:http://www.nuwireinvestor.com/articles/miami-residential-real-estate-sales-rise-while-prices-fall-54588.aspx
This article has been republished from DQNews. You can also view this article at DQNews, a real estate research and news site.
Friday, February 5, 2010
Friday, 2/12 from 9-midnight: Valentine's Prom Night Benefitting South Pointe Elementary at SET
Buy Tickets online at at www.fospe.org also join Friends of South Pointe Elementary on Face Book!
Please forward this flyer to your friends! It should be a super fun night and a chance for us parents to get out and shake our bones on the cheap as vips!
Set: 320 Lincoln Rd, Miami Beach RSVPVALENTINEPROMNIGHT@GMAIL.COM
*all purchases benefit FOSPE, the non-profit that put 4 paraprofessional to assist teachers in the SPE classrooms this year. All donations are tx deductable.
Please forward this flyer to your friends! It should be a super fun night and a chance for us parents to get out and shake our bones on the cheap as vips!
Set: 320 Lincoln Rd, Miami Beach RSVPVALENTINEPROMNIGHT@GMAIL.COM
*all purchases benefit FOSPE, the non-profit that put 4 paraprofessional to assist teachers in the SPE classrooms this year. All donations are tx deductable.
The 10 Must-Have Features in Today's New Homes
Americans want smaller houses and they are willing to strip some of yesterday's most popular rooms -- such as home theaters -- from them in order to accommodate changing lifestyles, consumer experts told audiences at the International Builders Show here this week.
"This is a traumatic time in this country and the future isn't something we're 100% sure about now either. What's left? The answer for most home buyers is authenticity," said Heather McCune, director of marketing for Bassenian Lagoni Architects in Park Ridge, Ill.
Buyers today want cost-effective architecture, plans that focus on spaces and not rooms and homes that are designed 'green' from the outset," she said. The key for home builders is "finding the balance between what buyers want and the price point."
For many buyers, their next house will be smaller than their current one, said Carol Lavender, president of the Lavender Design Group in San Antonio, Texas. Large kitchens that are open to the main family living area, old-fashioned bathrooms with clawfoot tubs and small spaces such as wine grottos are design features that will resonate today, she said.
"What we're hearing is 'harvest' as a home theme -- the feeling of Thanksgiving. It's all about family togetherness -- casual living, entertaining and flexible spaces," Lavender said.
Paul Cardis, CEO of AVID Ratings Co., which conducts an annual survey of home-buyer preferences, said there are 10 "must" features in new homes.
1. Large Kitchens, With an Island
"If you're going to spend design dollars, spend them where people want them -- spend them in the kitchen," McCune said. Granite countertops are a must for move-up buyers and buyers of custom homes, but for others "they are on the bubble," Cardis said.
2. Energy-Efficient Appliances, High-Efficiency Insulation and High Window Efficiency
Among the "green" features touted in homes, these are the ones buyers value most, he said. While large windows had been a major draw, energy concerns are giving customers pause on those, he said. The use of recycled or synthetic materials is only borderline desirable.
3. Home Office/Study
People would much rather have this space rather than, say, a formal dining room. "People are feeling like they can dine out again and so the dining room has become tradable," Cardis said. And the home theater may also be headed for the scrap heap, a casualty of the "shift from boom to correction," Cardis said.
4. Main-Floor Master Suite
This is a must feature for empty-nesters and certain other buyers, and appears to be getting more popular in general, he said. That could help explain why demand for upstairs laundries is declining after several years of popularity gains.
5. Outdoor Living Room
The popularity of outdoor spaces continues to grow, even in Canada, Cardis said. And the idea of an outdoor room is even more popular than an outdoor cooking area, meaning people are willing to spend more time outside.
6. Ceiling Fans
7. Master Suite Soaker Tubs
Whirlpools are still desirable for many home buyers, Cardis said, but "they clearly went down a notch," in the latest survey. Oversize showers with seating areas are also moving up in popularity.
8. Stone and Brick Exteriors
Stucco and vinyl don't make the cut.
9. Community Landscaping, With Walking Paths and Playgrounds
Forget about golf courses, swimming pools and clubhouses. Buyers in large planned developments prefer hiking among lush greenery.
10. Two-Car Garages
A given at all levels; three-car garages, in which the third bay is more often then not used for additional storage and not automobiles, is desirable in the move-up and custom categories, Cardis said.
Source: http://finance.yahoo.com/family-home/article/108701/the-10-must-have-features-in-todays-new-homes.html?mod=family-love_money
"This is a traumatic time in this country and the future isn't something we're 100% sure about now either. What's left? The answer for most home buyers is authenticity," said Heather McCune, director of marketing for Bassenian Lagoni Architects in Park Ridge, Ill.
Buyers today want cost-effective architecture, plans that focus on spaces and not rooms and homes that are designed 'green' from the outset," she said. The key for home builders is "finding the balance between what buyers want and the price point."
For many buyers, their next house will be smaller than their current one, said Carol Lavender, president of the Lavender Design Group in San Antonio, Texas. Large kitchens that are open to the main family living area, old-fashioned bathrooms with clawfoot tubs and small spaces such as wine grottos are design features that will resonate today, she said.
"What we're hearing is 'harvest' as a home theme -- the feeling of Thanksgiving. It's all about family togetherness -- casual living, entertaining and flexible spaces," Lavender said.
Paul Cardis, CEO of AVID Ratings Co., which conducts an annual survey of home-buyer preferences, said there are 10 "must" features in new homes.
1. Large Kitchens, With an Island
"If you're going to spend design dollars, spend them where people want them -- spend them in the kitchen," McCune said. Granite countertops are a must for move-up buyers and buyers of custom homes, but for others "they are on the bubble," Cardis said.
2. Energy-Efficient Appliances, High-Efficiency Insulation and High Window Efficiency
Among the "green" features touted in homes, these are the ones buyers value most, he said. While large windows had been a major draw, energy concerns are giving customers pause on those, he said. The use of recycled or synthetic materials is only borderline desirable.
3. Home Office/Study
People would much rather have this space rather than, say, a formal dining room. "People are feeling like they can dine out again and so the dining room has become tradable," Cardis said. And the home theater may also be headed for the scrap heap, a casualty of the "shift from boom to correction," Cardis said.
4. Main-Floor Master Suite
This is a must feature for empty-nesters and certain other buyers, and appears to be getting more popular in general, he said. That could help explain why demand for upstairs laundries is declining after several years of popularity gains.
5. Outdoor Living Room
The popularity of outdoor spaces continues to grow, even in Canada, Cardis said. And the idea of an outdoor room is even more popular than an outdoor cooking area, meaning people are willing to spend more time outside.
6. Ceiling Fans
7. Master Suite Soaker Tubs
Whirlpools are still desirable for many home buyers, Cardis said, but "they clearly went down a notch," in the latest survey. Oversize showers with seating areas are also moving up in popularity.
8. Stone and Brick Exteriors
Stucco and vinyl don't make the cut.
9. Community Landscaping, With Walking Paths and Playgrounds
Forget about golf courses, swimming pools and clubhouses. Buyers in large planned developments prefer hiking among lush greenery.
10. Two-Car Garages
A given at all levels; three-car garages, in which the third bay is more often then not used for additional storage and not automobiles, is desirable in the move-up and custom categories, Cardis said.
Source: http://finance.yahoo.com/family-home/article/108701/the-10-must-have-features-in-todays-new-homes.html?mod=family-love_money
Thursday, February 4, 2010
Now may be the time to buy a house
If you have a good job and good credit, the next few months might be a sweet time to go house hunting. Then again, maybe not.
Fence-sitters take the risk that Congress may let a rich tax credit expire, and that interest rates may rise. So, let's walk through some factors for buyers and sellers to consider as they consider jumping in.
-Mortgage rates are blissfully low, and that may not last. The rate on a 30-year mortgage averaged 5 percent last week, according to Freddie Mac. Rates are low in part because the Federal Reserve has been buying up about $3 trillion in mortgage-backed securities and mortgage agency debt. The aim is to hold down interest rates and keep mortgages available. But the Fed is slowly removing that financial crutch as the economy improves. It has no plans to buy any more past March 30. The likely result is an uptick in rates.
Meanwhile, the recovering economy by itself should raise rates as the year goes on. Economists at the Mortgage Bankers Association expect to see a 6.1 percent rate by year end. Such a rise would add about $104 to the monthly payment on a $150,000 mortgage
-The home-buyer tax credit expires on April 30, and no one knows if Congress will renew it a second time. Expect a clash between the real estate lobby and fiscal conservatives worried about the $1.35 trillion federal deficit.
To qualify for the credit, you must sign a purchase contract by April 30 and close by July 1. First-time buyers get up to $8,000. "First-time" is defined as someone who hasn't owned a home in three years. Move-up buyers get up to $6,500 when they purchase a new primary residence. To get the credit, you have to have lived in the old home for at least five out of the last eight years. The credits start phasing out at $125,000 in adjusted gross income for singles and $225,000 for joint filers.
-There are indications that home prices are near a bottom in St. Louis and may actually be rising a bit. That statement is dicey, because conditions vary by neighborhood and the data can be tricky.
First American CoreLogic tracks real estate prices across the nation. In November, its housing price index for St. Louis was down 0.46 percent from a year before. That's an improvement from October, when it was down 2.8 percent.
Stats from the St. Louis Association of Realtors tell a happier story. For the last four months, median sale prices in St. Louis city and county have been above the level of a year before. That breaks a long pattern of falling prices.
Things might look different if you're a seller. Do you want to put your house on the market near the bottom of a price cycle? Homeowners who have a choice in the matter - those who can still pay their mortgages - are largely saying no.
Inventories of homes for sale are down about 10 percent from this time last year, and 30 percent from the mid-decade peak of the housing boom, says Kevin Cottrell, chief economist at Kelsey Cottrell Realty Group.
On the other hand, if you're planning to move up to something grander, you might find a bigger bargain when you buy. And that $6,500 tax credit could swing a close decision.
Home sales in St. Louis peaked in October and November, as buyers raced the expiration date of the original first-time homebuyer's credit. Congress later extended and expanded it.
That rush satisfied some pent-up demand, but real estate agents are hoping for another rush around April. "People will wait to the very last second," said Mike Travaglini, a vice president of Coldwell Banker Gundaker's office in south St. Louis County.
It's still a buyer's market. Letty DeMay, president of the St. Louis Association of Realtors, tells sellers to expect to wait 90 to 100 days for an offer. Meanwhile, sellers are dropping prices to entice buyers, she said.
The quickest sales come in the $150,000 and below range - prime territory for first-time buyers. But job losses, fear of job losses and tight credit may keep buyers scarce, despite the government giveaway.
Mortgage lenders have been tightening credit standards, which means fewer eligible buyers, says John Frank, president of Paramount Mortgage in Creve Coeur. Mo. "It's getting tighter and tighter," he said.
Lenders are insisting on credit scores of 640 to 660 for loans sold to Fannie Mae, Freddie Mac and 620 for FHA guaranteed loans. Those standards are higher than the federal agencies themselves insist on. FHA - which guarantees loans for people with low down-payments - has been raising its own insurance charges to borrowers and demanding higher premiums from people with poor credit scores.
Fence-sitters take the risk that Congress may let a rich tax credit expire, and that interest rates may rise. So, let's walk through some factors for buyers and sellers to consider as they consider jumping in.
-Mortgage rates are blissfully low, and that may not last. The rate on a 30-year mortgage averaged 5 percent last week, according to Freddie Mac. Rates are low in part because the Federal Reserve has been buying up about $3 trillion in mortgage-backed securities and mortgage agency debt. The aim is to hold down interest rates and keep mortgages available. But the Fed is slowly removing that financial crutch as the economy improves. It has no plans to buy any more past March 30. The likely result is an uptick in rates.
Meanwhile, the recovering economy by itself should raise rates as the year goes on. Economists at the Mortgage Bankers Association expect to see a 6.1 percent rate by year end. Such a rise would add about $104 to the monthly payment on a $150,000 mortgage
-The home-buyer tax credit expires on April 30, and no one knows if Congress will renew it a second time. Expect a clash between the real estate lobby and fiscal conservatives worried about the $1.35 trillion federal deficit.
To qualify for the credit, you must sign a purchase contract by April 30 and close by July 1. First-time buyers get up to $8,000. "First-time" is defined as someone who hasn't owned a home in three years. Move-up buyers get up to $6,500 when they purchase a new primary residence. To get the credit, you have to have lived in the old home for at least five out of the last eight years. The credits start phasing out at $125,000 in adjusted gross income for singles and $225,000 for joint filers.
-There are indications that home prices are near a bottom in St. Louis and may actually be rising a bit. That statement is dicey, because conditions vary by neighborhood and the data can be tricky.
First American CoreLogic tracks real estate prices across the nation. In November, its housing price index for St. Louis was down 0.46 percent from a year before. That's an improvement from October, when it was down 2.8 percent.
Stats from the St. Louis Association of Realtors tell a happier story. For the last four months, median sale prices in St. Louis city and county have been above the level of a year before. That breaks a long pattern of falling prices.
Things might look different if you're a seller. Do you want to put your house on the market near the bottom of a price cycle? Homeowners who have a choice in the matter - those who can still pay their mortgages - are largely saying no.
Inventories of homes for sale are down about 10 percent from this time last year, and 30 percent from the mid-decade peak of the housing boom, says Kevin Cottrell, chief economist at Kelsey Cottrell Realty Group.
On the other hand, if you're planning to move up to something grander, you might find a bigger bargain when you buy. And that $6,500 tax credit could swing a close decision.
Home sales in St. Louis peaked in October and November, as buyers raced the expiration date of the original first-time homebuyer's credit. Congress later extended and expanded it.
That rush satisfied some pent-up demand, but real estate agents are hoping for another rush around April. "People will wait to the very last second," said Mike Travaglini, a vice president of Coldwell Banker Gundaker's office in south St. Louis County.
It's still a buyer's market. Letty DeMay, president of the St. Louis Association of Realtors, tells sellers to expect to wait 90 to 100 days for an offer. Meanwhile, sellers are dropping prices to entice buyers, she said.
The quickest sales come in the $150,000 and below range - prime territory for first-time buyers. But job losses, fear of job losses and tight credit may keep buyers scarce, despite the government giveaway.
Mortgage lenders have been tightening credit standards, which means fewer eligible buyers, says John Frank, president of Paramount Mortgage in Creve Coeur. Mo. "It's getting tighter and tighter," he said.
Lenders are insisting on credit scores of 640 to 660 for loans sold to Fannie Mae, Freddie Mac and 620 for FHA guaranteed loans. Those standards are higher than the federal agencies themselves insist on. FHA - which guarantees loans for people with low down-payments - has been raising its own insurance charges to borrowers and demanding higher premiums from people with poor credit scores.
Wednesday, February 3, 2010
Pending home sales rise in South Florida
Pending home sales rose in Miami-Dade and Broward counties during January compared to December, according to data released Tuesday by the Realtor Association of Greater Miami and the Beaches and the Southeast Florida Multiple Listing Service.
In Miami-Dade, pending sales of single-family homes increased 0.81 percent to 3,741. Sales of condominiums rose 3.5 percent to 4,647.
In Broward, pending sales of condominiums rose 9.4 percent to 4,137. Pending sales of single-family homes rose 6.2 percent to 3,310.
A sale is listed as pending when the contract has been signed but the transaction has not yet closed. Increased pending sales are an indication of increased future sales.
``Approximately six months after the South Florida real estate market touched bottom according to most economists, we continue to observe the recovery of the local market,'' Terri Bersach, chairman of the RAMB board said in a news release.
Nationwide, the National Association of Realtors said Tuesday that its seasonally adjusted index of sales agreements rose 1 percent from November to December to a reading of 96.6. That was a little lower than the 97.1 level analysts expected, according to Thomson Reuters.
The index has risen for nine out of the past 10 months as buyers scrambled to take advantage of an $8,000 first-time home buyer tax credit before its scheduled expiration Nov. 30.
Congress extended the tax credit to April 30 and added a $6,500 credit for current homeowners
Source: http://www.miamiherald.com/business/breaking-news/story/1458740.html
In Miami-Dade, pending sales of single-family homes increased 0.81 percent to 3,741. Sales of condominiums rose 3.5 percent to 4,647.
In Broward, pending sales of condominiums rose 9.4 percent to 4,137. Pending sales of single-family homes rose 6.2 percent to 3,310.
A sale is listed as pending when the contract has been signed but the transaction has not yet closed. Increased pending sales are an indication of increased future sales.
``Approximately six months after the South Florida real estate market touched bottom according to most economists, we continue to observe the recovery of the local market,'' Terri Bersach, chairman of the RAMB board said in a news release.
Nationwide, the National Association of Realtors said Tuesday that its seasonally adjusted index of sales agreements rose 1 percent from November to December to a reading of 96.6. That was a little lower than the 97.1 level analysts expected, according to Thomson Reuters.
The index has risen for nine out of the past 10 months as buyers scrambled to take advantage of an $8,000 first-time home buyer tax credit before its scheduled expiration Nov. 30.
Congress extended the tax credit to April 30 and added a $6,500 credit for current homeowners
Source: http://www.miamiherald.com/business/breaking-news/story/1458740.html
Monday, February 1, 2010
Invest in an Inspection Before Buying Miami Real Estate
When buying homes in Miami, a great investment, it’s standard practice to check out equivalent sales in the area to get an idea of value. But what do you do next?
You can do a walk-through and see that the back door sticks, but why? Maybe it because a hinge is loose but it could be much worse. It’s possible with some homes in Miami that something is wrong with the foundation.
It’s unlikely you’ll be able to pinpoint the problem unless you’re a building inspector.
Claude McGavick, a board member with the Florida Association of Building Inspectors, says, “A good home inspector will look at 800 to 1,000 things in a home.” He says inspectors follow standard guidelines that tell them what to look at and how to look at it.
Here are some tips for finding an inspector:
» Word of mouth is one of the best ways to choose an inspector for homes in Miami. Home inspectors in Florida are not licensed but that will change as of July 1st.
» Search professional organizations databases. They train their members and giving them inspection guidelines. Here are three places to start:
• Florida Association of Building Inspectors 800-544-3224
• American Society of Home Inspectors 800-743-2744
• National Association of Home Inspectors 800-448-3942
According to the Florida Association of Building Inspectors, standard inspections involve a visual examination of the Miami real estate property from top to bottom. The inspector will check the heating system, the central air-conditioning system, the interior plumbing and electrical systems, the roof and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement and visible structure. The inspector should tell you about any system that may be near the end of its serviceable life or not up to par, and why. It’s very important to pay special attention to the roof and to termite damage of Miami real estate properties.
In general, expect to pay about $300 to $500 for an inspection, says McGavick, who also is an inspector with Home Check Home Inspection Services of Bradenton. The size of the Miami real estate property, the age, special structures and so on can affect the price.
It’s not up to the inspector to tell you whether or not to buy a house in Miami. No house is perfect; you must decide which imperfections and eventual repairs are acceptable.
Source: http://miami-info.com/news/category/miami-real-estate/
You can do a walk-through and see that the back door sticks, but why? Maybe it because a hinge is loose but it could be much worse. It’s possible with some homes in Miami that something is wrong with the foundation.
It’s unlikely you’ll be able to pinpoint the problem unless you’re a building inspector.
Claude McGavick, a board member with the Florida Association of Building Inspectors, says, “A good home inspector will look at 800 to 1,000 things in a home.” He says inspectors follow standard guidelines that tell them what to look at and how to look at it.
Here are some tips for finding an inspector:
» Word of mouth is one of the best ways to choose an inspector for homes in Miami. Home inspectors in Florida are not licensed but that will change as of July 1st.
» Search professional organizations databases. They train their members and giving them inspection guidelines. Here are three places to start:
• Florida Association of Building Inspectors 800-544-3224
• American Society of Home Inspectors 800-743-2744
• National Association of Home Inspectors 800-448-3942
According to the Florida Association of Building Inspectors, standard inspections involve a visual examination of the Miami real estate property from top to bottom. The inspector will check the heating system, the central air-conditioning system, the interior plumbing and electrical systems, the roof and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement and visible structure. The inspector should tell you about any system that may be near the end of its serviceable life or not up to par, and why. It’s very important to pay special attention to the roof and to termite damage of Miami real estate properties.
In general, expect to pay about $300 to $500 for an inspection, says McGavick, who also is an inspector with Home Check Home Inspection Services of Bradenton. The size of the Miami real estate property, the age, special structures and so on can affect the price.
It’s not up to the inspector to tell you whether or not to buy a house in Miami. No house is perfect; you must decide which imperfections and eventual repairs are acceptable.
Source: http://miami-info.com/news/category/miami-real-estate/
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