The evolution of the buyer

Buyers are evolving, and for the better. Up until the beginning of 2009, an abundance of inventory, coupled with a 'sky is falling" mentality lead many to believe that the real estate market was theirs for the taking. They were now in the driver's seat! And as a result they were submitting such ridiculously low ball offers that most often didn't stand a chance of being considered. They made these types of offers very often because "a friend of a friend of a friend" got such a phenomenal deal on a home , that it must be possible to do. And they tried it again, and again,........and again; only to ultimately be disgusted, disillusioned, and fed up with the idea of buying altogether.



Fast forward to today. Buyers are stepping up to the plate. They're actually making very competitive offers, yet procuring a property still for many is still challenging. The issue has now become the sellers. Unfortunately, many sellers have yet to undergo an evolution of their own, refusing to come to grips with what the market values of their properties really now are. I am, however, quite optimistic that home sellers will soon come to the table with more realistic expectations. And the end result will be a vibrant, healthier, and more balanced market .

The Velocity of Money

The velocity of money is a term used by economists to describe the speed at which money makes its way through our economy. During boom times money moves quickly through the system as it's spurred on by consumer spending and investment, and in recessionary times it's velocity is diminished.
Why should you care?
Well, if you've been thinking about buying a home, then the "velocity of money" should be of concern to you. The Federal Reserve uses interest rates to control the money supply flowing throughout the system; low rates=more money in the system, and higher rates=less money in the system. In order to encourage borrowing, one tool that the Fed has is to lower the discount rate(the rate at which banks borrow money from the Fed). The net result is more borrowing, subsequently contributing to an increase in the "velocity of money".
Historically speaking, this monetary strategy has been used to encourage the country out of a recessionary cycle. However, over playing this card can be have unintended negative consequences. In the 1970's the increased "velocity of money" netted a 13% increase in the money supply, and interest rates skyrocketed to as high as 20%! Fast forward to 2009. In the hopes of increasing the velocity of money the Federal Reserve has exponentially increased the supply of money compared to the net increase in the 70's; I've heard some estimates as high as a 100% increase in money supply over the past 14 months! Now I'm not an economist or financial guru; I'm simply taking a historical example, looking at what we're doing today, and extrapolating a possible end result.
In short, higher rates mean less buying power, higher mortgage payments, and more difficulty in securing financing. So as you ponder whether to take the plunge or not, remember that the 'velocity of money"can put a real damper on you future plans. :(

How to buy a bank owned home

Buying a foreclosure can be a really stressful undertaking for many people. After all, you're buying the property As/Is. Many times these properties are distressed and in dire need of repair. But before you even get that far, the lenders are usually very specific about how those offers to be submitted. And if your agent omits or modifies even a seemingly benign part of that process, then rest assured that your offer is not going to go very far. I came across this very satirical approach on buying these types of properties on Yutube; enjoy!

http://www.youtube.com/watch?v=SM7oWKgCVo4

luxury at a discount

As I examine the outstanding available inventory of homes in Miami Lakes, particularly in Royal Oaks, it occurs to me that there has not in recent memory been a better time to pick up a high end property. There is such an array of available property types to suit almost any taste. Most of these homes are either nearly new or completely remodeled. There are at least 5 homes on the market that have over 1 million dollars invested into construction costs that any serious buyer could likley pick up for a fraction of that amount!
If you'd like to learn about some of these great deals, shoot me an email:
carlos.lobato@floridamoves.com

I need I need I need...

The phrase "I need" seems to be popping up more and more in my recent conversations with would-be home sellers, and it usually rears its head particularly early in the conversation. I think that many home owners want to make sure that I understand right from the get go what it is that they "need", monetarily speaking, that is, from the sale of their home. It's perfectly normal for a seller to have expectations and subsequent plans for the proceeds from the sale of their home. Quite often though, those "needs" are not necessarily in sync with what's actually achievable in the current marketplace.
So if turns out that the home owner's"needs" are not realistically achievable, is he/she really a seller in the true sense of the word? Fact is, that approximately 50% of the homes that are on the market today will not sell the first time that they're brought to market. As a matter of fact, many will be listed for two or even three times before they eventually sell, that is if they ever sell at all. Were these home owners real sellers? No! Yet they were placated by Realtors who were so caught up with trying to fullfill their "needs", that they wound up wasting time for both themselves, and the home owner; a lose-lose situation.
facts about market value
Home owner "needs" have absolutely nothing to do with the property's market value. It bears repeating, home owner "needs' have absolutely nothing to do with the property's market value. Nor is a property's market value determined by what the property down the street sold for 3 months ago, last week, or even yesterday. Furthermore, market value has nothing to do with what a well-intentioned appraisal might reveal. Additionally, market value is not determined by what the home owner paid for the property, or improvements made to that property.
Which begs the question,"how is one to surmise what the true market value of a property is?". In the interest of keeping this post short, I'll refer you to the posts titled The real real estate market, parts 1,2,and 3.
Needless to say, it has nothing to do with "I need"...

A sellers market?

That's right folks. I'm going to go out on a limb here and declare that in some market sectors we indeed have ourselves a "seller's market".


At the peak of South Florida's so called "bubble" it was commonplace for a property to sell very quickly, with multiple offers, and at above askng price. This, of course, happened because demand was consistently exceeding the supply, subsequently contributing to the 'perception of value' for real estate.


Today, almost every offer that I've put in on behalf of buyers has been at above list price, and in 50% of those cases those buyers were out bid by someone else. What type of market would you call that?


Here are two examples:
West Hialeah-single family homes priced under 200K in barely acceptable condition are selling quickly and with multiple offers

Royal Oaks(Miami Lakes)-Here, the demand for properties remains strong, and often homes priced well in comparisn to the competition again sell quickly and with multiple offers.


One can extrapolate from these two simple examples that any seller can create a buyer's market for their property, because even when the forces of supply and demand don't seem be in the seller's favor, the seller can create the all important 'pereption of value' that will always get a property sold, regardless of market conditions. In short, the seller's ultimate weapon is the asking price!

Why isn't my house selling?

Here's a great post from one of my colleagues in Illinios:

http://activerain.com/blogsview/1201953/6-reasons-why-your-house-won-t-sell-

I must say that she's hit all of the bases...

Where did all the great deals go?

It's happening as we speak. All of those so called great deals on foreclosure properties are vanishing. Here in South Florida, it's becoming very common for properties to sell at more then asking prices! As fears over interest rate hikes, coupled with the awareness of the upcoming deadline for the $8000.00 tax credit loom near, properties are flying off the shelf at a speed that we haven't seen since the market boom.
So take this as a word of warning. If you're procrastinating that buying decision you run the risk of losing out to competing buyers. We've all but reached the bottom, so go make your best deal!!!

Single family home market outlook

The market
As you may have noticed, prices are beginning to bottom out, and we are at the beginning of the end of this depreciating cycle. The next six months will specifically reveal exactly where that bottom actually was. As with any economic cycle, you never know the exact bottom until you've past it. The foreseeable future for the single family home market in Dade County is that we will soon return to a state of predictable equilibrium, where the forces of supply and demand create a balanced market with roughly six months of inventory; we now have twelve months of inventory. In other words, single family homes will once again return to a "normal" appreciation rate of 4-5% per year. This was the historical appreciation rate for real property in the U.S. from 1900 to 2000. From 2000 to 2006 political and economic influences, coupled with unregulated and unrestrained lending practices, led us to an unrealistic bubble.

I need a home!

Here's a new friend to anyone out there that wants a great family pet... This is real estate related.................Right????

please call:Monica Gaitan (305)668-1629

mortgage rates

Check out this really informative video on rates:

http://www.mortgagesuccesssource.com/go/inflation/index.html

Big Homes Big Lots!

Here are the propertesties that I currently have on the market that have large lots in a the exclusive neighborhood of Hialeah Gardens Estates:

floridamoves.com/Property/propertydetails.aspx?SearchID=9047947&PropertyGUID=AB093A99-10EB-4415-9235-DB19B9B8D4EA&RowNum=1&abrand=72985

floridamoves.com/Property/propertydetails.aspx?SearchID=9047947&PropertyGUID=AB093A99-10EB-4415-9235-DB19B9B8D4EA&RowNum=1&abrand=72985

floridamoves.com/Property/propertydetails.aspx?SearchID=9047947&PropertyGUID=A0264D58-BD26-43AB-B3FA-837F73F7B856&RowNum=4&abrand=72985

floridamoves.com/Property/propertydetails.aspx?SearchID=9047947&PropertyGUID=7DE4E450-C971-4913-B3CC-6DE5D29DC539&RowNum=5&abrand=72985

Predictable Equilibrium

Predictable Equilibium
Everybody wants to know when the depreciation will finally stop. Truth is, that you can ask 10 different real estate professionals where the bottom of the market is, or whether we're perhaps there already, and you'll get 11 different answers. So for the already skiddish consumer, the seemingly contradicting advice that they're getting from us further contributes to their anxiousness about buying or selling real estate. Furthermore, the mass media with their all-too-common "sky is falling" reporting now has many consumers in a state of sheer panic.

From 1980 to 2000 real estate prices in The United States appreciated at a rate of roughly 5% per year. From 2000 to 2006 real estate prices in The United States appreciated a total of 89%! This makes absolutely no sense, and it's easy to see why prices have come down so much from their highs in 2006. The market today is simply finding the predictable equilibrium that it enjoyed up until 2000.

Generallyspeaking. price levels today are what they were in 2001-2002; or in other words where they were before the craziness took over. The predictable equilibrium is all but upon us. Lending standards have once again returned to normal, and real estate aappreciation will soon return to a normal rate of 5% per year.

I 've had many a home seller say to me that if they can't get the price that they want for their property today, that they'll simply wait for the market to recover in 12-18 months. While it is true that we'll be well into recovery mode within that time span, and considering that the market will have found it's predictable equilibrium by then. procuring those 2005 price levels in 18 months will not be possible. In short, if one needs or wants to sell my recommendation would be to sell at today's price and then reap the benefits of a buyer's market on the other end.

The "Real" real estate market-Part II

Unfortunately, in real estate we rarely, if ever, give commodity markets any thought. If we understand what real estate really is, and by contrast what it is not, then we will be well on our way to understanding what motivates the market, and how to use it to our advantage as home sellers, regardless of market conditions. Real estate is a commodity. Real estate is a commodity. Real estate is a commodity. However, we consistently treat it like a product, expecting our marketing to be able to sell it. It never has, and never will. Two important attributes of any commodity marketplace are:

•· Consistent Buyer Pool-Every commodity marketplace has a built-in buyer pool that remains relatively constant regardless of market conditions. The preceding statement has been underlined because it is one of the most important principles that would-be home sellers must accept in order to successfully sell their properties, and maximize their profit in this marketplace. Yes, the two can coexist. In other words, we have relatively the same number of prospective buyers in 2008 than there were in 2003-05. In light of stagnant sales and an overabundance or inventory, this is a hard pill to swallow. After all, if properties are not selling, than an apparent lack of buyers is a logical assumption. Right? The truth is quite the contrary. In a commodity environment, prospective buyers will always be stimulated into action if they perceive that what the market is offering them is worth having. The general consensus today is that it is not.

•· No marketing required-This one likely scares the pants off of my industry. After all, we spend an inordinate amount of time and resources telling homeowners that because our marketing is so extensive, effective, and cutting edge, that we can sell their homes quickly and at the highest possible price. The truth is that having the most extensive of marketing resources is absolutely essential, especially in light of the thousands of home sellers competing for buyers. However, it is not for the reason that most of us think. The only thing that marketing can do is to build awareness. It cannot sell real estate. Wheat futures, for example, are a commodity that trade every single business day. However, you will never see a single ad of any kind marketing wheat futures. Marketing sells products; marketing cannot sell real estate, because real estate is a commodity! And in any commodity situation, unlike a product, there is no direct relationship between the marketing and the final results.


Yet real estate is more than just a commodity; it is an emotional commodity. This is the primary reason why properties, in certain situations, are sold at above their asking prices. After all, does it really make any logical sense to pay someone more money for something than what they are asking? However, in the recent past, we often did just that! We became emotionally involved in the process, and logic fell by the wayside as a result. If a home seller can get prospective buyers emotionally involved in the process, they will frequently pay more than they would otherwise pay. I can personally attest that this type of scenario is still playing out today for the few and far between home sellers that choose to accept, and play by the rules of, The "Real" real estate market.

The "Real" real estate market-Part I

The real estate business is perhaps one of the most competitive service industries there is. I clearly remember my first day in real estate school when the instructor said "he/she who controls the inventory, controls the market". We're conditioned from day one to do three things; get listings, get listings, and get listings! There's nothing about this notion that is necessarily untrue, and as a matter of fact I have benefited personally by concentrating on building up an inventory of properties in a certain subdivision. Some of my most successful colleagues are indeed those who have been able to carve niches for themselves, whether it be in a neighborhood, or in a specific type of property.

This intense competition for properties often leads to real estate agents and their brokerages making certain statements and claims, that I've concluded as a result of both training by Jay Shweppe and personal experience, are simply not true. Don't get me wrong; I'm not implying that there is any intended deception on the part of any real estate professional. We, as an industry, are simply passing on to consumers what we've been taught. Subsequently, we make statements like this, "Our marketing is so effective, that we'll sell your home quickly, and at the highest possible price". The implication being, that marketing can sell real estate. I humbly beg to differ. If this were true then the top three or four brokerages with the most marketing resources would be selling the vast majority of the properties. Even the top dogs in their own markets can muster, at most, a 10% market share at best. There is no doubt that having a far reaching, comprehensive marketing mix is absolutely essential. However, not for the reason that most of us think.

The not-so-evident truth is that marketing never has, and never will sell a single piece of real estate. Marketing can sell products; marketing can sell services. Real estate is neither a product nor a service; it is a commodity! And by loooking at commodity markets, how they work, and what motivates buyers in commodity situations, we will go a long way to understanding, and further educating home owners on how to maximize profit from the sale of their homes-regardless of market conditions!

Real estate as a commodity

The real estate business is perhaps one of the most competitive service industries there is. I clearly remember my first day in real estate school when the instructor said "he/she who controls the inventory, controls the market". We're conditioned from day one to do three things; get listings, get listings, and get listings! There's nothing about this notion that is necessarily untrue, and as a matter of fact I have benefited personally by concentrating on building up an inventory of properties in a certain subdivision. Some of my most successful ccolleagues are indeed those who have been able to carve niches for themselves, whether it be in a neighborhood, or in a specific type of property.

This intense competition for properties often leads to real estate agents and their brokerages making certain statements and claims, that I've concluded as a result of both training and experience, are simply not true. Don't get me wrong; I'm not implying that there is any intended deception on the part of any real estate professional. We, as an industry, are simply passing on to consumers what we've been taught. Subsequently, we make statements like this, "Our marketing is so effective, that we'll sell your home quickly, and at the highest possible price". The implication being, that marketing can sell real estate. I humbly beg to differ. If this were true then the top three or four brokerages with the most marketing resources would be selling the vast majority of the properties. Even the top dogs in their own markets can muster, a most, a 10% market share at best. There is no doubt that having a far reaching, comprehensive marketing mix is absolutely essential. However, not for the reason that most of us think.

The not-so-evident truth is that marketing never has, and never will sell a single piece of real estate. Marketing can sell products; marketing can sell services. Real estate is neither a product nor a service; it is a commodity! And by loooking at commodity markets, how they work, and what motivates buyers in commodity situations, we will go a long way to understanding, and further educating home owners on how to maximize profit from the sale of their homes-regardless of market conditions!

Look before you leap

You've been looking to buy a condo, and what a great time it is to do so. There's never been such a vast selection of attractively priced properties out there. Naturally, you've already had your mortgage pre-approved by a reputable primary lender, you call your agent, they start emailing you properties, and you're set to GO! Right? Not so fast. Chances are if you're a middle class average American you're going to take advantage of the "back by popular demand" FHA loan. Well....the truth of the matter is that not all condo complexes are 'FHA approved' and the last thing you want have happen is to fall in love with a place only to find out later that your lender will not finance it. How can you avoid this? You may ask. Here's the answer:

https://entp.hud.gov/idapp/html/condlook.cfm

And it will make it possible for you to look before you leap!

Some positive news about Commercial real estate

Commercial real estate might not go bust

NEW YORK – June 9, 2009 – In spite of all the recent gloomy talk, the U.S. commercial real estate market might not endure the belly flop everyone seems to anticipate.

The reason? More real estate investment trusts (REITs) have been warming to the concept of deleveraging in recent months, raising approximately $12 billion of equity in the stock market to either fortify their cash positions for the months and years to come or simply to pay off debt.

Analysts expect that the ability of high-profile real estate owners like Brandywine Realty Trust, Highwoods Properties Inc., Forest City Enterprises, and others to raise capital in such a difficult lending environment will help the overall stability of the commercial real estate market. As a result, fewer buildings will have to be sold at bargain-basement prices.

Source: Richmond Times-Dispatch, Andrew Little (06/08/09)

A feeding frenzy

Have you tried to buy a foreclosure in the $100,000 to $150,000 lately in Miami Dade County? Then you know can certainly relate to the "feeding frenzy" that's currently happening with these properties. Homes in this price range are flying off the market in a matter of days and are selling at, or above, list prices. If you plan on going after one of these, and you want to have a fighting chance of getting it, do NOT bid any less than 95% of the asking price. I am currently working with a number of buyers who have lost out on properties for not heeding this advice. Case in point; a property in Hialeah Gardens went on the market last Saturday for $150. The buyer offered $140 on Sunday. Monday was Memorial Day. On Tuesday, the seller had 33 offers! Needless to say, this property will sell for more than the asking price. Unfortunately, many buyers will lose at least three properties by bidding too low. If you want to save yourself a lot of grief, listen to your agent and BID AGGRESSIVELY!!!

What is Area 20 anyway?

Area 20 is the area that my office services. It includes West Hialeah, Hialeah Gardens, Miami Lakes, West Miami Gardens, and Palm Springs North. And yes, there is reason to be optimistic about the real estate market in Area 20.

Months of inventory based on closed sales sales declined from 43.4 in April 2008 to 15.2 in April 2009. In other words, we have less than half the inventory of unsold homes on the market then we did a year ago. The lesser the inventory the quicker we get to the tipping point where demand we be in line with supply, and when prices will stop depreciating.

Comparing April 2009 to April 2008-the number of new listings declined 31.5%, the number of closed transactions increased 95.9% and the number of properties going under contract increased 185.9% (if we look at this same figure from January of 2008 the increase is even larger-245.3%). This is Huge!

If you're selling, then these stats prove that there are many buyers out there, and as long as you're priced competitively, YOU WILL SELL. And if you're considering buying, then rest assured that if this level of market activity continues, prices will stabilize sooner then later. Your opportunity to negotiate a good deal is NOW...

A 200% Improvement...

I'll keep this one short. In Area 20, which is the area that my office services(Miami Lakes, West Hialeah, Hialeah Gardens, Pine Springs North), Pending Sales are up over 200% over this time last year. In other words, we have over 200% more properties that are under contract for sale. This is an awesome improvement in market activity, and an early sign that there is light at the end of the tunnel. While we still have many months of inventory to absorb we are seeing the early effects of low rates, great prices, and first time buyers taking advantage of the $8000.00 tax credit.

Inflation's effect on your buying decision

Regardless of one's opinion of the recent financial bailouts, the fact is that they are happening, and by all indications will continue to happen. We're simply printing paper! Everyone knows it. And the end result of printing all of this money will be inflation. It is the inevitable result of overprinting money. In inflationary times, cash, bonds, and stocks do poorly. Only two investments thrive: precious metals like gold, and real estate. When inflation hits the Federal Reserve will raise rates to keep it in check. This is their only method of controlling it. The worst case scenario is stagflation, where we have low growth AND high inflation. We had this in the 70's, and stocks performed poorly that decade as a result. However, anyone who bought a home in the 70's can certainly attest to the fact that their property is worth a lot more today. When this inflationary cycle will arrive is a matter of debate, yet it will arrive! Hence, we are sitting on the very best opportunity to buy a home for many years now:

• Rates are at historic lows-when inflation arrives they will be high. By 1981 rates were at 18%
• Sellers are motivated to sell
• When inflation returns, the smart money will move back into real estate. Subsequently, sellers will have more options and will be less inclined to negotiate their asking prices.

In short, RIGHT NOW you can negotiate the best price, with the lowest rates, and hedge against the coming inflation. There is no other investment with all of this going for it. And let's not forget the tax write-offs!

Could I be wrong? Sure! Yet the above mentioned scenario is not only plausible and likely. It also has a historical precedent. Our economy moves in cycles, and it would be fool-hearty to think that inflation will never come back. It is the likely result of printing excess amounts of money.

I short, the case for buying now is simply overwhelming...

Over the weekend...

Over the weekend there were an unusually high number of inquiries for my listings, regardless of price-point. A situation that I am confirming with my colleagues that is becoming increasingly common for buyers in the 500K+ range is that since these buyers typically need Jumbo Loans (over 423K/FHA max.), they are having a harder time getting approved than in prior years, or they do not have or simply do not want to invest the typically required 20% down. Whatever the case, I am optimistic that this up tick in consumer inquiries will continue for a number or reasons:

-The stock market has shown some positive signs
-The current administration has unveiled a comprehensive plan to reduce the rate of foreclosures, thus reducing the volume of inventory coming on the market
-The $8000.00 credit for first time buyers means that those (first home sellers) will now be looking for their next home (typically 450-650K).

It's important to note that the positive psychological effect of a perceived multi prong approach to our current housing woes is more important than the actual initiatives themselves. We continue to be a consumer driven economy, so positive consumer sentiment is paramount.

This is not to imply that we are at the bottom of our present market cycle, yet these conditions are starting to foster the "perception of value" that this market has long been missing since 2006.

Full steam ahead, I say!

A construction boom? Where? Now?

One of Miami-Dade County's best kept secrets for buyers looking for a home in the 500K to 1.3 million dollar range is Hialeah Gardens Estates. As a matter of fact, most people have never heard of it! It is a rare combination of both urban and country living unlike anything else in the immediate area. It is a quaint secluded neighborhood in Northwestern Dade County of only 200+ homes with two city parks on either side and has one of the lowest tax millage rates in the County.



LOCATION



In real estate the mantra has always been location location location. Here, The Estates most certainly fits the bill. This neighborhood is easily accessed in just 30 seconds from I75 with immediate access to Rt 826 and the Florida Turnpike. Furthermore, one has immediate access to an array of shopping centers including Florida's largest Home Depot. Additionally, dining and entertainment are all within a few minutes drive. And lastly, both the major airports, and down town Miami are only 30 minutes away. Traffic and congestion are virtually non-existent here.



HOMES



For starters, the initial appeal of The Estates is in the size of the lots. They range from .25 acres to 5 acres. This layout immediately lends itself to an ample separation between homes. Zero lot lines are non existent here. Additionally, horses are permitted on those properties that have at least an acre of land. The homes generally range in size from three bedroom 3000 sq. ft. homes to 6+ bedroom residences with 6000 sq. ft.+ of living area.



STATE OF THE MARKET


Market conditions being what they are, the long range prognosis for The Estates is excellent. Firstly, the foreclosure rate is very low with only three bank-owned homes brought to market in the past 12 months. Also, the general turnover rate of homes is also very low, subsequently contributing to overall neighborhood stability. And unlike the conventional market wisdom, The Estates is presently undergoing a construction boom! There are 20+ homes under construction which, in my estimate, will range in market value from $650,000 to $1.3 million at today's market prices. It's important to note that these home owners do not have to build at this time. They are choosing to do so, simply because they realize that a home in Hialeah Gardens Estates is a worthwhile investment that is sure to be in high demand. In short, now is the time to buy a home here at a great price!

The importance of a comprehensive internet presence

According to recent stats, 85% of all buyers of real estate begin their home search in the Internet; and that number comtinues to climb! This phenomena has fundamentally changed the real estate brokerage business. Coldwell Banker, for example, has dramatically increased it's online marketing, while simultaneously scaling back from ineffective print media. As a matter of fact, most of the prospective buyer inquiries for the properties that I market originate from online sources. A recent home that I sold was bought sight unseen, with the buyer relying on the extensive online presentation of the property alone!

Considering this, it only makes perfect sense for a prospective home seller to employ the services of a brokerage that can best expose their property to as many would-be Internet buyers as possible. Below is by far the best presentation of an online home marketing strategy that I've ever seen. I'd welcome your thoughts on it...

http://www.coldwellbanker.net/flipBooks/fl/

Clinking of the individual web shots will actually open up those sites! Enjoy...

Foreclosure assistance?

U.S.News & World ReportI Pay My Mortgage: What's in the Housing Bailout For Me?Friday March 6, 11:00 am ET By Luke Mullins
As Uncle Sam issued check after to check to keep Wall Street bankers afloat, American taxpayers--who were picking up the tab--grew increasingly resentful of paying for others' mistakes. But when President Barack Obama announced a $75 billion plan to lower monthly mortgage payments for up to four million distressed homeowners in mid-February, frustration turned to rage. Just ask Rick Santelli, whose now-infamous rant against government subsidization of "the losers' mortgages" turned the obscure CNBC analyst into a household name, while underscoring the nation's growing distaste for bailouts. But the Obama administration has pitched its housing fix as one that would help all homeowners--not just troubled ones. So after fresh details of the plan were released Wednesday, it's time to ask: I'm a responsible homeowner; what's in it for me?
1. How big is the foreclosure problem? Foreclosure filings were reported on more than 2.3 million American properties last year, according to RealtyTrac. That's one for every 54 housing units and an 81 percent jump from 2007. In a recent address, President Obama said nearly six million American homes are either in--or at risk of--foreclosure. And on Thursday, the Mortgage Bankers Association reported that more than 11 percent of mortgages outstanding were either past due or in foreclosure during the fourth quarter of 2008.That's a record high.
2. Who qualifies for Obama's housing plan? The $75 billion goes toward reducing mortgage payments for as many as four million "at-risk" homeowners. The program is only available for owner-occupied, principal residences with mortgages that originated before Jan. 1, 2009. To qualify, the borrower's monthly mortgage payments must exceed 31 percent of their gross monthly income. In addition, they must also have undergone some type of financial hardship--such as a loss of income--that puts them at risk of default. While you don't need to be delinquent on your mortgage to qualify, borrowers who are comfortably making their mortgage payments won't be eligible.
3. I don't qualify. How does this help me? Many Americans who purchased homes they could reasonably afford and made their payments on time are understandably upset at seeing neighbors who made reckless decisions bailed out on their dime. But the Obama administration argues that keeping people in their homes is in the best interest of all homeowners, since foreclosures--which can blight communities and nurture crime--can drive down property values for everyone. "One study in Chicago found that a foreclosed home reduces the price of nearby homes by as much as 9 percent," the president recently said. Although he considers the 9 percent figure too high, Richard Moody, the chief economist at Mission Residential, says Obama's argument is sound. "If you were to go sell your house, the first thing the realtor is going to do when they try to figure out a listing price is to look at [comparable homes in your neighborhood]," Moody says. "And if you've got all these depressed property values, that is going to definitely harm the sales value of your home." As such, if Obama's housing plan succeeds in reducing foreclosures for troubled borrowers--and that's a huge if--it may help to bolster the values of other homes as well.
4. What incentive do I have to keep paying my mortgage? A home foreclosure is an ugly stain on a credit report, and it can remain there for as long as seven years. "It's right up there with a bankruptcy," says Gail Cunningham, the spokeswoman for the National Foundation for Credit Counseling. With banks tightening their lending standards in the face of higher delinquencies, it's a particularly bad time to ruin your credit. If you have a home foreclosure on your credit report, you're likely to have a difficult time getting any type of new credit these days--from a credit card to a new mortgage.
5. I'm not in trouble now, but how can I protect myself from the threat of foreclosure? Factors that can lead to foreclosure include unemployment, exploding-rate mortgages, and reckless discretionary spending. Although homeowners may have less control over their employment situation, by addressing these other factors, they can put themselves in a better position to avoid foreclosure should they suffer job loss. Julia Rodgers, a mortgage advisor with the National Community Reinvestment Coalition, says homeowners should make sure they have sufficient savings set aside to pay their mortgage in the event of the unexpected. "Fallback savings is critical," Rodgers says. "At least have three months of your mortgage payments saved." In setting aside such savings, families should institute a household budget and review their online bank statements regularly to ensure they aren't spending wastefully. "A lot of my clients have $300 to $400 in bank fees alone," Rodgers says. "In this climate, we have to be extremely aware of where our money is going."
Consumers with adjustable-rate mortgages should see if they are eligible to refinance into a fixed-rate home loan, while those who already have fixed-rate loans should see if they can refinance into a lower rate. In doing so, consumers should first obtain their credit report and see if their mortgage is owned or guaranteed by Fannie Mae or Freddie Mac, Rodgers says. Those with Fannie or Freddie loans may be eligible to refinance into a lower rate through a second component of Obama's housing plan. "If you can, refinance," says Susan Wachter, a professor of real estate at the University of Pennsylvania's Wharton School. "The rates are low." Thirty-year fixed-mortgage rates averaged an attractive 5.15 percent for the week ending March 5, according to Freddie Mac.
6. Is there a silver lining in this mess? It's nearly impossible to spot any sort of silver lining in the current housing mess. But if there's anything good to come out of this, it's the hope that homeowners, lenders, regulators, and policymakers will learn from their mistakes and ensure that mortgages going forward will be properly underwritten and affordable. By overlooking the lessons of the crisis, we risk going through this devastating cycle again in the future.

Signs of a market turnaround?

Florida’s existing home, condo sales rise in January 2009
January existing-home sales fall, inventory down, says NARORLANDO, Fla. – Feb. 25, 2009 – Florida’s existing home sales rose in January, making it the fifth month in a row that sales activity showed increases in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors® (FAR). Existing home sales rose 24 percent last month with a total of 8,450 homes sold statewide compared to 6,810 homes sold in January 2008, according to FAR. “Many people are looking at today’s market and seeing opportunities to find the home or business they’ve always wanted,” said 2009 FAR President Cynthia Shelton. “With a range of available housing options, historically low mortgage interest rates and affordable prices, buyers who may have been hesitant before should take a closer look at the current opportunities for homeownership. As real estate professionals who know all aspects of their local market conditions, Florida Realtors are here to help counsel consumers making sound long-term decisions for their homes and their businesses.”Florida Realtors also reported a 13 percent gain in statewide sales of existing condominiums in January, making it the fourth recent month (following September, October and December) that statewide existing home and existing condo sales were higher compared to year-ago levels. Thirteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing-home sales in January while 11 MSAs also showed gains in condo sales; it marks the seventh consecutive month that a number of markets have reported increased sales.Florida’s median sales price for existing homes last month was $139,500; a year ago, it was $206,900 for a 33 percent decrease. According to industry analysts with the National Association of Realtors® (NAR), there remains a significant downward distortion in the current median price due to many discounted sales, including a large number of foreclosures. The median is the midpoint; half the homes sold for more, half for less. The national median sales price for existing single-family homes in December 2008 was $174,700, down 14.8 percent from a year earlier, according to NAR. In California, the statewide median resales price was $281,100 in December; in Massachusetts, it was $275,000; in Maryland, it was $267,925; and in New York, it was $220,000.NAR’s latest housing outlook shows that home prices continue to fall, but also notes a trend of increasing sales activity in the Florida, California, Arizona and Nevada markets. “It appears some buyers are taking advantage of much lower home prices,” said NAR Chief Economist Lawrence Yun. “The higher monthly sales gain and falling inventory are steps in the right direction, but buyers will continue to have an edge over sellers for the foreseeable future.”In Florida’s year-to-year comparison for condos, 2,556 units sold statewide compared to 2,266 sold in January 2008 for a 13 percent increase. The statewide existing condo median sales price last month was $113,400; in January 2008 it was $190,200 for a 40 percent decrease. In the latest data available at press time, NAR reported the national median existing condo price was $181,400 in December 2008.Interest rates for a 30-year fixed-rate mortgage averaged 5.05 percent last month, down from the average rate of 5.76 percent in January 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written. Among the state’s large to medium-size markets, the Daytona Beach MSA reported a total of 419 homes sold in January compared to 321 homes a year ago for a 31 percent increase. The existing home median sales price was $131,800; a year ago, it was $179,100 for a 26 percent decrease. In the year-to-year comparison for the existing condo market, a total of 77 units sold in the MSA last month, up 43 percent compared to 54 condos sold the previous January. The market’s existing condo median price was $167,800; a year ago, it was $230,000 for a 27 percent decrease.© 2009 FLORIDA ASSOCIATION OF REALTORS®

An $8000.00 gift!

A tax credit is now available for first time home buyers under the American Recovery and Reinvestment Act of 2009. If you buy a home between January 1, 2009 and November 30, 2009, you may be able to receive a tax credit for 10% of the purchase price of your home-up to $8000. Here are the program highlights:

• Any individual (and if married, their spouse) who has had no ownership interest in a home during the last 3 years is eligible
• Full credit for single taxpayers with incomes up to $75,000 ($150,000 on a joint return); partial credit for incomes up to $95,000 ($170,000 joint return)
• available only for the purchase of a single family home that will be used as a principle residence
• home buyers can reduce (or even eliminate) their income tax liability for the year of purchase by claiming the credit on their tax return
• if the home is sold before 3 years, the first time home buyer (who is now the seller) must pay the IRS the entire amount of the tax credit at closing

I short, this tax credit, in addition to presently historically low interest rates and the fact that home prices have become increasingly affordable, make this an ideal time to buy!