Fed Rate Drops .5 Percent
In a surprise move, the Fed slashes rates by 50 basis points today.
How will this effect interest rates on mortgages?
Federal Reserve cuts in the federal funds rate have an unpredictable impact on long-term mortgage rates. So it’s impossible to know for sure when — or even if — rates will fall as a result of the Fed’s emergency rate cut.
Adjustable rate mortgages (ARM’s) may be more sensitive to Federal Reserve rate decisions, especially if the spread between the federal funds rate and the London Interbank Offered Rate — more commonly known as LIBOR — narrows. There could be an impact due to other countries also dropping their interest rates by their central banks.
Depending on the exact nature of their mortgage, some people with ARMs may see their rate adjust downward the next time the mortgage resets.
Naples Condo Market Update
August Naples Condo Activity:
Listings:
During the month of August 458 Naples condominiums were listed for sale. For the same month in 2007, 560 condominiums were listed for sale; this represents a decrease of 18.2 percent. The decrease from 2006 was 32.7 percent from the 680 new listings.
In July 2008 there were a total of 499 condominiums listed for sale.
The available for sale Naples condominiums have dropped from 5582 in February 2008 to 4675 at the end of August. This represents a reduction of 907 or 16.3 percent.
The number of months of inventory or the absorption rate is presently 29 months down from February’s 37 months.
Naples Home Market Update
Prior to presenting the analysis for August we need to reflect on the events which took place last August 15 - the sub-prime and liberal loan programs came to a screaming halt along with liquidity issues for lenders lasting for a couple of months. The result was a further weakening of already weak real estate market. Sub-prime and liberal loan programs accounted for about 16 percent of the purchases which had taken place previous to August 2007.
Going forward the monthly statistics will bear monitoring to assess the strengthening or weakening of the of the Naples home market.
Strengthening does not necessarily mean price appreciation, but takes into effect a lower volume of new listings (even though it is anticipated more listings will come on the market due to seasonal fluctuations), pending sales increasing, and closed sales over the previous year.
Weakening of the market will reflect just the opposite.
Another consideration to be explored is how developments or subdivisions where subprime borrowing took place may affect the overall performance statistics for the overall Naples home market, and leaving both sellers and buyers with what could be incorrect perceptions. An example of this is being seen in the drastic decline of the median price paid for homes during the month August in the year over year analysis; however, after excluding some developments or subdivisions the median price decline is not quite so drastic. Proving once again that real estate is so local that it has to be looked very closely. Read more
Hurricane Ike Update
Hurricane Ike’s cone is still showing it is tracking to south and west. For the Naples, Bonita Springs and Estero areas of Florida it means the center of the storm may pass within about 200 miles of the coastline which disminishes the chances of the area feeling the full brunt of Ike.
The track towards the south does not help our friends in the Gulf Coast areas as the storm appears it will not pass over the mountainous areas of Cuba. It the storm passes over the mountainous areas of Cuba the storm will weaken. Currently the storm is a CAT-4 with winds of 145 mph.
The Florida Keys have started evacuations and hurricane preparations.
Hurricane Ike
Hurricane Ike’s projected path as of this morning shows the cone just south the Naples area. This is better positioning than yesterday mornings projected path and cone. The Naples area may not be affected by Hurricane Ike. With this cone it does appear that Bonita Springs or Estero areas will have any affects from the hurricane. However it is advisable to prepare for the worst and hope for the best.
Updates will be posted throughout the day on this blog.
Naples Condo Market Update
June Activity:
Listings:
During the month of June 490 Naples condos were listed for sale. For the same month in 2007, 654 condos were listed for sale; this represents a decrease of 25.1 percent. The decrease from 2006 was 38.4 percent from the 795 new listings. In May 2008 there were a total of 556 condos listed for sale. The lower number of new listings has an impact on the reduction of the number of month’s supply of available condos in the Naples, along with the activity of closed sales and pending sales.
Closed Sales:
A total of 173 condos were sold during June 2008. Comparing the same month in 2007 there were a total of 204 condos sold, the reduction Read more
Naples Home Market Update
June Analysis:
Listings:
During the month of June 696 Naples homes were listed for sale. For the same month in 2007, 779 homes were listed for sale; this represents a decrease of 10.6 percent. The decrease from 2006 was 15.7 percent from the 826 new listings. In May 2008 there were a total of 771 homes listed for sale. The lower number of new listings is reflected in the reduction of the number of month’s supply of available homes in the Naples.
Closed Sales:
A total of 236 homes were sold during June 2008. Comparing the same month in 2007 there were a total of 218 homes sold, the increase of Read more
Naples Condos Absorption Rate
The number of months of inventory for Naples condominiums for sale has been significantly reduced since February 2008. Using the four time frames of 12, 9, 6 and 3 month moving averages. The 12 month moving average in February was calculated to be 37 months of Naples condos for sale. As of the end of June the calculation was 32 months or a reduction of 5 months. The 9 month moving average shows a reduction of 14 months, while the 6 month moving average shows a reduction of 20 months. The 3 month average shows a reduction in the months of Naples condos for sale of 16 months. At the end of June, there was a slight up tick of one month from May.
Click to Enlarge
The downward progression for the four moving averages reflects the volume of Naples condos sold or pending sale increasing (reduction of condos for sale) as well as the reducing volume of new condo listings coming on the market.
An absorption rate is defined in the glossary for real estate terms and defintions.
Buyers should be aware of the number of months of condominiums for sale in the Naples area to determine how the market is under going subtle changes and the reduction of the more select residences on the market for sale.
Sellers likewise should be mindful of the absorption rate, as they might want to determine the specific absorption rate for homes or condominiums on the market within their price range to reduce the number of days on market for their properties.
Naples Real Estate News 07/18/08
MORTGAGE RATES
As investors’ fears that the Federal Reserve would soon tighten credit policy to stall inflation lessened, mortgage rates fell this week: 30-year mortgage rates averaged 6.26 percent, the lowest level in six weeks, according to Freddie Mac.
COUNTRYWIDE
A handful of states are suing Countrywide Financial Corp. for misleading borrowers, and Florida initiated its case on July 1. Yesterday, however, California added another charge to its roster, claiming Countrywide paid higher commissions to agents who put borrowers into loans they weren’t qualified to receive.
HOME BUYING
Builders in the Tampa Bay area and across Florida are turning to smaller homes to spur sales, figuring out how to cut down on construction costs and offer more affordable prices. They note that smaller homes are popular for first-time buyers, seasonal residents, those wanting to downsize and people who just don’t want to stretch their budgets too much.
Divosta’s Village Walk in Bonita Springs is also seeing cut backs on construction costs on their various models. The Divosta subsidiary or division of Pulte homes, is changing from its popular poured concrete with reinforcing rebar to concrete block construction.
FANNIE AND FREDDIE
Treasury officials and senior lawmakers huddled behind closed doors yesterday, searching for a way the Treasury Department might safely invest in mortgage finance giants Fannie Mae and Freddie Mac without exposing taxpayers to massive losses.
Naples Real Estate News 07/17/08
FANNIE AND FREDDIE
Federal Reserve Chairman Ben Bernanke told Congress Wednesday that troubled mortgage giants Fannie Mae and Freddie Mac are in “no danger of failing.” However, he says that “weakness of market confidence” is hurting the companies.
STATE FARM
State Farm, Florida’s largest private property insurer, asked the state for an average rate increase of 47.1 percent on homeowner policies, saying it needs the money to pay claims if major storms strike. The planned increase tests lawmakers’ efforts to curb property insurance prices that doubled or tripled in some cases after hurricanes hit in 2004 and 2005.
AMENDMENT 5
If Florida voters pass Amendment 5 in November, property taxes will drop by 25 to 40 percent, but the amendment must first face a court challenge. A Tallahassee judge will hear arguments on August 13.