Running out of time in Orlando Latest statistics show the market is changing – fast
There’s a couple of important USA related topics I’d like to cover in today’s opinion piece, although as always, you can skip straight to the property deals of the week by scrolling down or by clicking on the quick links to your right. We have some great new Spanish and Birmingham projects for you to look through. Orlando – Foreclosed Window Closing FastAs regular readers will remember, we first identified the potential of this market around June 2008 and since an official launch in October 2008, we have been selling fairly large amounts of Orlando condos and single family homes to Irish, British and Scandinavian clients. There were also quite a few investors who wanted to buy but preferred to wait a little until the market bottomed out – an understandable concern. However, as any honest broker would have admitted – bottoms can’t really be identified until after they’ve happened and we weren’t afraid to say so. We’re almost in June now and I’m pretty certain that the foreclosure market in Central Orlando bottomed out about three months ago. According to statistics gathered by the Orlando Realtors Association, almost 50% more homes were sold this April compared to the same month last year. They are also selling 15% quicker than last year and there is now 20% less inventory to choose from – these are all enormous changes. The consequence of this is that well priced properties are now much harder to get and price rises are more common. Under asking price bids on foreclosed properties are now being rejected immediately by the realtors. Government ActionTwo big government stimulus packages had a big impact on this market. One was the generous measures taken by the Bush Administration in August 2007 to help credit worthy homeowners who missed payments after their teaser rates expired. Many of these borrowers have been able to refinance at more manageable interest rates and 97% loan to values. This created much needed stability. Demand for property was also increased this year by a tax credit for first time buyers. This can be up to 10% of the value of the house (max $8000), doesn’t have to be repaid and is available for any home purchased between January and December 2009. The US Foreclosure Market is UniqueIn short, there isn’t really much time left to make the most from what is very possibly a once in a generation opportunity. Let us not forget that prime residential and cash flow postive properties in high end resorts can be purchased for as little as £31,000 / €36,000 – up to 75% less than previous purchase prices. What else in the world can an investor find deals like that? Maybe a couple of places in SE Asia, maybe a couple in South America. But what’s the average monthly salary in these areas compared to a wealthy, diverse and sophisticated market like Orlando? Where do you think has a stronger resale market?We still have a few units left in the Madison Development, which contains completed and tenanted properties in Metro West direct from a distressed developer. Sales were sluggish in February and March but they’ve recently taken off like you wouldn’t believe (30 units in the last 10 days). Perhaps you’d like to fill in the enquiry form contained in the link above in order to receive the latest availability list before it sells out. Torcana Blog Many of the issues mentioned in this newsletter are explored in more detail in my Torcana blog, so please feel free to visit and to leave your comments & suggestions.
Knox County and Surrounding Area Housing Market ? Tell Me Something Good!
I watch television every morning when I am getting ready for work and without fail, I regularly view some negative report connected to the mortgage industry, and sometimes, home sales. I see the same thing in the newspaper, magazines, on the web, etc. You get the picture. There is a gloomy cloud hanging over this industry. But the truth of the matter is things just aren’t that bad in our neighborhoods.
If you check the statistics listed at Knoxville Area Association of Realtors (KAAR) website, people are still buying homes, selling homes and obtaining mortgage financing. In July of last year, there were 1644 homes financed. This year July saw 1547 homes financed. Not off by much. Also, the average time on the market for a newly listed home only went up from 79 days to 88. Just 9 days longer to sell your home on average. Not that big of deal. And most positive, the average price (in the thousands) of a home increased from last year from $227. 8 to $236. 4. According to the Office of Federal Housing Enterprise Oversight (OFHEO), 131 of 287 metro cities recorded decreased housing prices. The Knoxville metro area showed a 2nd quarter increase 2. 29% and yearly increase of 7. 85%.
I think numbers will be a little bit worse in the third quarter, but not compared to the national scene. Even with the barrage of negative reporting we swallow, this area of East Tennessee seems to be moving right along. The same is true for our neighbors in Asheville and Charlotte. The same cannot be said for California, Florida and Nevada.
In my opinion, the constant national media coverage of areas where markets have gone sour weighs on the minds of your average local homeowner/homebuyer and accounts somewhat for the decline in the market, however slight it may be. But, the average East Tennessean didn’t finance their current home with a 1 month pay option Adjustable Rate Mortgage (ARM) with 100% financing (that’s a loan which the interest rate can adjust after one month – slightly risky). Most likely your neighbor obtained a 30 year mortgage and proved their income. They are not in foreclosure right now. And if you are local and did get an Adjustable Rate Mortgage, chances are you have equity in the house and can easily refinance with no closing costs and obtain a reasonable fixed rate.
Subprime lending is affecting the current market, and yes, this area did have its share of subprime loans that are now in default. The newly tightened lending guidelines will all but right these wrongs to a large degree. And I should say that I don’t think that these guidelines are such a bad idea. Why not insist established homeowners put a little money down on a new home purchase and provide a decent credit history, lending credence to the promise of repaying the largest debt they incur?
Oh, and of note to first time buyers – you still have access to great rates and 100% financing. You just have to come up with the documentation to prove to a lender that you’re worth the risk. And for most of you, that’s just not going to be a problem.
Please email your home loan financing questions to Kristin Abouelata, Mortgage Specialist, at question@kristinmortgage. com. Kristin will try to answer all questions on her website www. KristinMortgage. com. Some questions and answers may be published with future articles.
What Does it Mean if your Market is “significantly Depreciating”
The subject I am today is the touch regarding property values. Broward County is one of the most recent counties to be placed on a list that some lenders use this indicates this is a market where values are “significant currency depreciation.” Joined Broward counties in Florida on the following list: Brevard, Charlotte, Citrus, Collier, Escambia, Hernando, Hillsboro, Indian River, Lee, Manatee, Martin, Monroe, Okaloosa, Palm Beach, Pasco, Pinellas, Santa Rosa, Sarasota, St. Lucie, and Volusia What does this mean for owners here? Lenders to all databases of their lending practices on certain basic items, one of which is the value of the collateral (home) vs. the amount borrowed against it. This is known as your LoanSpeak LTV (Loan-To-Value). Contrary to popular belief, the property does not appreciate just what you are willing to borrow for your approval. There are entirely different rules depending on the approval of the LTV percentage. If you are 100% LTV – it means you are looking for a loan for the same amount of money that the property is worth. This became very common before the massive changes and benefits in the mortgage industry this year. Traditionally, it was difficult to obtain because the lender must always be looking at worst case – you can not repay on time. In this pessimistic scenario, they would be excluded on the property, then selling it – a company, they do not want to be in. lenders really want to loan money and return of regular monthly payments as agreed, no recovery of properties equity in them, even a lot of equity! Back on topic – the lower your LTV the more you can get a loan. Although there are still 100% financing programs available (we have these), it is much more difficult to find who was last year. As you try to borrow less, the guidelines relax. Thus, someone who may be able to obtain a 100% loan will have a better chance at 95% or 90% or 80% loan. But there are circumstances where most anyone can borrow is 65% of the value of the property (current loan is in default). And there will be a maximum LTV that people can get. Now – the markets in decline “tag” comes into play here – what lenders are doing is reducing the maximum LTV% that you can get if your property is in one of these counties. This is especially true if you are self-employed and need to use a No Income Verification Program. What is, in fact, really bad people a chance now to obtain a loan that could improve their situation. If the maximum LTV they are qualified to consider their credit status and income was 80%, they will be loaned to 75% may be simply because their property is in one of these counties! Not only do owners have to deal with the declining value of the property, but they are reduced even further for some borrowers! The danger is that it is with all the foreclosures coming onto the market, things may worsen in the short term. These seizures can really hurt comparable sales in an area – thus reducing the value of your paper now. In the long term the market will rebound, but in the immediate future (next 12 months) things are uncertain. If you have an ARM loan that is configured to fit over the next 12 months it would be wise to look at your options now if you’re concerned that your payment could become once the loan adjusts. He may wait until later in the short term, could seriously limit the type of mortgage you can get later – whether because of new difficulties in the mortgage industry, or the decline of values in your neighborhood . If you do not do something now that you put on top of your options for the future in the hands of the people in your neighborhood who already have their homes on the market. If someone decides they just want to get rid of their property, or they cannot pay and get foreclosed on, which could hurt your chances to change the loans in the future. If you want to check your options now, we would be happy to help you – the rates are very good right now on fixed rate loans – please contact our office – 877-8GB-green or 954-217 -9518 or by email @ Craig bridgecapitallending. com, or visit our Web site at http://www. bridgecapitallending. com