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Naples Real Estate News 02/28/08
The real estate news today is more from national perspective than from the Naples, Bonita Springs and Estero focus, but still has an impact on the local real estate markets.
MORTGAGES - The federal regulator for Fannie Mae and Freddie Mac said yesterday that it would lift restrictions on the amount of mortgages the Government Sponsored Enterprises can hold on their books, effective Saturday. The move should ease turmoil in the mortgage market. Per Wikipedia -
"The government sponsored enterprises (GSEs) are a group of financial services corporations created by the United States Congress. Their function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent. The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors: agriculture; home finance; and education. Congress created the first GSE in 1916 with the creation of the Farm Credit System; it initiated GSEs in the home finance segment of the economy with the creation of the Federal Home Loan Banks in 1932; and it targeted education when it chartered Sallie Mae in 1972 (although Congress allowed Sallie Mae to relinquish its government sponsorship and become a fully private institution via legislation in 1995). The residential mortgage borrowing segment is by far the largest of the borrowing segments in which the GSEs operate. Together, the three mortgage finance GSEs (Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks) have several trillion dollars of on-balance sheet assets."
COUNTRYWIDE - A federal lawsuit initiated by a Boynton Beach homeowner seeks class action status against Countrywide, accusing the company of overcharging homeowners facing foreclosure through “inflated, unverifiable or false” charges. The mortgage note says Countrywide should be “paid back” for costs, but litigants say that isn’t the same as “make a profit.”
ECONOMY - The U.S. economy skidded to a near halt in the final quarter of last year, with the nation’s gross domestic product increasing at a scant 0.6 percent pace, according to the Commerce Department. For all of 2007, the economy grew by 2.2 percent, the weakest showing in five years.
Naples Real Estate News 02/27/08
FORECLOSURES - The White House has pledged to veto a bill that it claims would slow a housing recovery. Among other proposals, the bill would change bankruptcy laws and empower judges to change borrowers’ mortgage terms; and it would provide $4 billion to buy and rehabilitate foreclosed homes.
HOME PRICES - The bad news: Home prices fell in fourth quarter 2007, according to Office of Federal Housing Enterprise Oversight (OFHEO), the government arm that tracks real estate prices.
The good news: Prices declined by only 0.3 percent compared to fourth quarter 2006, and 1.3 percent compared to third quarter 2007.
Looking at the local real estate market:
Naples prices decreased 1 percent compared to the fourth quarter 2006. Compared to the third quarter of 2007 the decrease was 0.6 percent.
Bonita Springs home prices rose 22.4 percent over the fourth quarter of 2006. The comparison between the third and fourth quarters of 2007 is an increase of 0.2 percent.
In Estero the median price paid in the fourth quarter of 2007 increased 2 percent over the same quarter in 2006. The median price increased 17 percent over the third quarter of 2007.
GLIMMER OF HOPE - Toll Brothers announced their financial results for the quarter end today. In statements by Robert Toll, company founder and CEO - said he did see “a few glimmers of hope” in the Naples, Florida area and the suburban Washington DC markets."
"Fears of recession were helping to keeping buyers out of the market," Mr Toll added.
“We believe this drumbeat, coupled with concerns over mortgages, the direction of home prices, and foreclosures, has kept pent-up demand on the sidelines,” he said.
COMMERCIAL - While some Wall Street analysts predict that commercial real estate will follow in the footsteps of the subprime mortgage crisis, the outlook isn’t that bleak. Delinquency rates on commercial mortgages remain very low and the risks simply aren’t the same as with residential loans.
NEW HOME SALES - Sales of new homes fell in January for a third straight month, pushing activity down to the slowest pace in nearly 13 years. The median price dropped to $216,000, the lowest level in more than three years.
Naples Real Estate News 02/26/08
HOUSING MARKET - The National Association of REALTOR’s housing report yesterday had some good news. While the sales numbers were down, they weren’t as dismal as many economists expected. Some investors saw that as positive news, and a sign that the housing downturn is on the verge of bottoming out.
Looking at the local statistics for Naples, Bonita Springs, and Estero - there really is reason for believing the downturn is bottoming out.
REAL ESTATE TAX PORTABILITY - Only 3 days remain: Friday is the deadline for homeowners to apply for a homestead exemption, and, for 2007 homebuyers, the last day to apply for real estate tax portability – the right to take tax savings from a home protected by Florida’s Save Our Homes Amendment and transfer it to a home purchased last year.
Speaking of real estate taxes the Taxation and Budget Reform Commission will now consider two possible amendments that offer all property owners about a 25 percent tax savings, and possibly a 1 percent sales tax increase to make up for local governments’ shortfall.
CONSUMER CONFIDENCE - Passage of the national economic stimulus package and state property tax amendment helped boost Florida’s consumer confidence by four points to 74 in February after last month’s decline to its lowest level in 16 years, according to the latest University of Florida study.
FORECLOSURES - The number of U.S. homes facing foreclosure jumped 57 percent in January compared to a year ago, according to RealtyTrac Inc. Florida had 30,178 homes on the foreclosure track, up about 158 percent from a year earlier but down 3 percent from December’s figure. According to the report, the Cape Coral-Fort Myers metro area had the highest foreclosure rate of any metro area, with one of every 86 homes in some stage of foreclosure.
Naples Real Estate News 02/25/08
FLORIDA HOME SALES - The mortgage credit crunch and a sluggish economy continued to affect the sales pace of existing homes and condos in Florida in January, with a total of 6,737 existing single-family homes sold statewide, a decrease of 28 percent from January 2007, according to the Florida Association of REALTORS. The statewide median sales price for existing single-family homes was $208,600.
For comparison purposes the sale of existing single-family homes in Naples was 111, a decrease of 20 percent, with a median sales price of $450,000. In Bonita Springs 26 homes were sold, a decrease of 16 percent, the median price was $802,500. Estero single-family homes sold were 16, an increase of 23 percent, with a median price of $463,750.
The areas of Naples, Bonita Springs and Estero are performing stronger than the statewide sales volumes.
HOMEOWNERS INSURANCE - State Farm Insurance, Florida’s largest private property insurer, plans to essentially shut the door to the Sunshine State. State Farm Insurance officials told the state last week that the company would essentially stop selling new homeowners policies in Florida.
HOME TRENDS - Because of their style, relative affordability and durability, metal roofs are becoming a popular alternative to asphalt-shingle roofs. Architectural metal roofs in new-home construction reached a projected 30 percent of the market in 2007, up from 23 percent in 2004, according to the National Roofing Contractors Association.
Naples Real Estate News 02/22/08
MORTGAGE RATES - Buyers waiting for lower property prices could lose out even if prices do drop a bit more. Rates on 30-year mortgages rose to the highest level in seven weeks, breaking above the 6 percent level, and heightened worries about inflation could cause further increases. To put this into perspective for those looking to purchase in Naples, Bonita Springs or Estero, for every $10,000 drop in the purchase price you will save about $60.00 per month or less than $15.00 per week at an interest rate of 6.0% for a 30 year fixed rate mortgage. Another way to look at is for every 0.125% increase in the mortgage interest rates you pay an about additional $2.83 per month in interest over the life of a 30 year fixed rate mortgage this amounts to approximately $1,020.
HOMEOWNERS INSURANCE - As the big insurance companies continue to pull up stakes in Florida, smaller unheard-of companies have filled some of the void, lowering rates and giving homeowners an alternative to state-run Citizens Property Insurance Corp., which has about 9 percent fewer policies than it did in November 2007.
FORECLOSURES - The Senate could vote on a proposal as early as next week that would empower bankruptcy judges to change the terms of a homeowners’ mortgage, a move opposed by financial groups. Meanwhile, a bankruptcy judge is considering a ban on unexpected and somewhat questionable fees lenders sometimes levy against homeowners emerging from bankruptcy, a move also opposed by lenders.
LUXURY HOMES - Is now the time to buy a $1 million home? A BusinessWeek.com survey of million-dollar homes in 20 markets across the country shows that buyers have plenty to choose from, and that their money will get them a lot of space and high-end amenities.
PROPERTY RIGHTS - In a victory for private property rights, a circuit judge yesterday ruled that the destruction of about 130,000 residential citrus trees constituted a “taking” under the state constitution and homeowners must be compensated for their loss of property.
Short Sales The MAGIC Pill - Are They?
There many real estate agent professionals touting the short sale as the MAGIC pill for property owners as a cure all for any situation from loans based upon dishonest income information (stated income loans – “liar loans”) to real estate investors that are not realizing the profits they anticipated.
People are always looking for the MAGIC pill to solve their problems or shortcomings. We look for the magic pill to lose weight or increase our incomes. Over the past few years the magic pill was finding a property, maybe the wrong one, and finding a loan or mortgage to finance the purchase, maybe the wrong loan program. Now, the MAGIC pill is the short sale.
A short sale historically has been used to assist borrowers with a financial hardship caused by a change in their financial situation. Changes in financial situations involve – loss of job, loss of a spouse’s income, hospitalization, job relocation, etc. A short sale means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales. Banks and lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
Real estate investors may not qualify for a short sale, because they were investing. Investing does not guarantee a profit; it has inherent risks associated with it. Hence, banks and lenders may be more reluctant to be receptive to a short sale for a real estate investor.
Two recent cases come to mind immediately and are used to show how the MAGIC pill was used and proved unsuccessful.
Case #1 - A Bonita Springs real estate agent recently expressed on her blog the frustration of the short sale process when representing a buyer and the lender’s lack of cooperation trying to complete a short sale. Major points discussed - settling on a price for the property, needing an additional document, and at the end the bank requesting the seller pay $3,000 in closing costs.
Case #2 - A Naples real estate agent, expressed frustration with the process and the lender’s lack of cooperation in accepting an offer. An offer was presented to the bank for $175,000 on a home with a list price of $180,900. The bank declined to approve the contract. He could not understand why it was not approved since the offer was so close to the list price.
There are others expressing their frustrations as well but these are the most recent within the past few days, coming to my attention.
The short sale process is difficult to maneuver through the maze of research and documentation, in addition to lenders or holders of the mortgage can be hard to deal with. But this does not have to be the case if a buyer or seller has a team composed of qualified professionals in real estate, real estate law, and income taxes. In some situations alternatives to the short sale can be discussed and save the home owner the emotional distress of losing their home. In other cases it might be possible to determine the chances of having a successful short sale for the seller or short sale purchase for the buyer.
Why the short sale MAGIC pill failed in the above cases:
- Listing agent and seller establishing too low of a list price without due consideration towards the bank or lender. Questions – Did the seller and buyer really negotiate or was it just the seller approving the offer and contract? Was a comprehensive Broker’s Price Opinion or Comparative Market Analysis completed prior to listing and included with the package to the bank or lender?
- Inadequate research or counseling to determine if additional resources were available from the sellers.
In Case #1, the seller may not have been making payments on the loan. Did the $3,000 represent the payments not made? Did the seller use the monies for other purposes – paying down credit card or other loan balances?
Case #2, some quick research showed individual was a real estate investor with the possibility of significant equity in other real estate holdings. Does the seller expect the bank or lender to settle for less than owed when there are assets or resources to cover the deficiency?
- In Case #1, a document was not initially furnished to the bank or lender. The document was a preliminary settlement sheet (closing statement or HUD-1); in a real estate transaction it is called a seller’s net sheet. The net sheet is done at time of listing. It is done once again when an offer is presented and through-out the negotiation process.
Short sales can be a win-win-win situation for sellers, buyers and financial institutions if handled by knowledgeable real estate agents, real estate attorneys and income tax advisors.
The challenge for both sellers and buyers is to find the right professional team. The search usually starts with finding a real estate agent, rather than a real estate attorney, due to what is perceived as a cost savings. If you are starting with a real estate agent look for the following characteristics or skill sets:
- Some type of business background – accounting, finance, credit and collection, basic income tax understanding.
- Ability to review and explain the closing documents signed at a closing.
- Can explain without a computer program closing costs for both a buyer and seller.
- Ability to analysis cash inflow and outflow.
- Research techniques to discover important aspects not readily available.
- A list of real estate attorneys and income tax professionals.
In another post it will be explained why these characteristics and skill sets are important to both sellers and buyers when considering entering the area of short sales.
Naples Real Estate News 02/21/08
HOMEOWNERS INSURANCE - Homeowners insurance wasn’t supposed to be a big issue in the 2008 Legislature. But it is. “Continuing to have our friends in the Legislature keep the industry’s feet to the fire is incredibly important,” Florida Governor Crist said during an interview with The Associated Press.
JUMBO LOANS - Don’t expect sharply lower rates on jumbo mortgages anytime soon, even if the government’s economic stimulus package guarantees higher amounts. Wall Street, which operates the secondary mortgage market, still considers them riskier.
INCOME TAX DEDUCTIONS - It’s shaping up to be a less painful year for many taxpayers as new 2007 tax forms more clearly outline certain housing deductions. Plus, most filers will be getting a special payment from the government, thanks to the economic stimulus package enacted last week.
55+ HOUSING - According to data compiled by NAHB, more than a quarter of a million people will buy new housing in communities specifically built for those ages 55 or older, and more than 100,000 units constructed in 2008 will be targeted to this growing niche market.
Blog Makes Top 100 Real Estate Blogs
Today, I was very surprised to find this blog to ranked in the Top 100 Real Estate Blogs as per Top 100 Real Estate Blogs.
The ranking is determined by Google Page Rank, Technorati Rank, and Alexa rankings.
The blog is entitled Naples Real Estate News and Market Updates and does cover the communities of Bonita Springs and Estero as well.
Thank you - Top 100 Real Estate Blogs.
Naples Real Estate News 02/20/08
HOMEOWNERS INSURANCE - ALLSTATE - State regulators yesterday outlined why they want to bar Allstate Insurance Co. and its affiliates from selling policies in Florida. Allstate’s recent actions, according to the complaint, demonstrate “a continuing attempt to improperly subvert, manipulate and undermine the regulatory process.”
REAL ESTATE MARKET - Slow home sales in traditional “feeder markets” like Ohio, New York, Michigan and Massachusetts are impacting Florida’s population growth, according to some economists. People in Rust Belt states who want to move to Florida can’t sell their houses, they say.
What this means is the demand might be lower than normal. The by-product of this is pent up demand and how will it affect prices in the Naples, Bonita Springs and Estero markets when home sales in the north pick up.
HOUSING AID - The United States Congress is eyeing more incentives to address problems in the housing market, including a move to allow bankruptcy judges to change mortgage terms, and a tax break that allows companies to apply current losses to earlier years’ tax returns.
HOUSING STARTS - Among other economic news, the U.S. Commerce Department reported today that construction of new homes and apartments rose by 0.8 percent to a seasonally adjusted annual rate of 1.012 million units in January – the first increase since October.
Naples Real Estate News 02/19/08
Today’s real estate news for Naples, Estero and Bonita Springs covers the following topics - positive signal for real estate buying and affordable housing. Potential buyers and sellers of residential properties need to watch signals in the real estate market beyond just the volume and median price changes, which occur from month to month or year over year. Today, a signal is flashing with home builder stocks, even with negative reports coming out from that sector of the economy.
AFFORDABLE HOUSING - Govenor Crist appointed six new members to Florida’s Affordable Housing Study Commission, which makes public policy recommendations to the governor and Legislature to “promote the production, preservation and maintenance of safe, decent affordable housing for all Floridians.”
REAL ESTATE INVESTMENT - Investors who bought housing stocks at the beginning of the year made money. As the Federal Reserve started cutting interest rates, the stocks of several home builders started to rise dramatically; and some analysts believe it signals sunnier days ahead for the entire housing industry.