On January 11, 2012, the My Florida Regional Multiple Listing Service (http://www.mfrmls.com) which covers most of the Central Florida area released the December 2011 Real Estate Sales & Inventory Report for the Lake and Sumter County region. While home values have flipped-flopped all year, the month of December saw a sharp decrease of 12.8% in regards to the average sale price of a home in both counties. More interesting is the average sale price since January 1, 2012 ($128,042.00) which is virtually the same as it was at the end of the year ($127,677.00). Are we in-store for more of the same in 2012? Let's take a look at the numbers and you can draw your own conclusion. The number of home sales that closed in December increased by 14.9% to 354 units. This is an increase of only 1.1% from December 2010. While inventory is being absorbed, there is still over 3,500 active homes for sale in the marketplace. MFRMLS is currently reporting a 10.2 month supply of inventory, but these numbers are significantly distorted due to the huge number of pending short sales which will most likely reenter the active inventory, or end up in foreclosure.
In regards to the average list price of a home, values decreased by a whopping 11.9% from November to December and are down over 7.9% from December 2010. While the recession may be over, it appears the bleeding has not stopped if you are a homeowner trying to sell your home. If you are serious about making a deal, I'd suggest you do extensive research in truly understanding the "current" market value of your home. Also consider getting an upfront appraisal which will either keep you real, or help support your asking price when an offer is presented. From my experience, making an investment of $350.00+/- to get an appraisal can net you thousands of dollars extra at closing, or keep you from wasting months of time trying to obtain a sale price on a transaction that will never close. We are looking at the same trend when it comes to the average sale price with an sharp decline of 12.8% from November to December. But, in regards to the past 12 months, pricing is down 7.1%. To illustrate the monthly change, on a $150,000.00 property, your home decreased on average $19,200.00 in value. But, don't worry! If the roller-coaster trend continues, values will probably trend back up as fast as they went down. One last thought...please accept the fact, Buyer still have the upper hand in the current market. There are some great buys in the marketplace and many bank are dumping properties, especially severely distressed homes, just to get them off their books. While this is not great for neighborhood values, it does create huge opportunities for investors looking for flips or income properties. Also consider the dynamic between Sellers and Buyers during the negotiating process. As of November, Buyers were negotiating on average 6% off the asking price of a property. In December, that number had increased to 7% most likely meaning Seller are having to be more flexible with their pricing to get a deal under contract. If you are currently a Seller in this market, pricing your home close to market value will show Buyers and their Agents you are serious, realistic, and ready to sell. "Be real to make the deal"!!!
Year-to-date, the number #1 selling price category in Lake & Sumter Counties is still the $1-$49,999 range and accounting for 14.21% of the yearly sales. Furthermore, the $0.00-$99,999 range accounted for 40.94% of sales, while the $100,000-$159,999 range accounted for 31.41%. Additionally, the $160,000-$200,000 range accounted for another 12.79% of sales. Collectively the $0-$200K range makes up 85.14% of all sales in the area. Where is the market heading from here? It's anyones guess but there is rumbling in the default industry regarding the millions of properties sitting in the shadow inventory. Also, it is currently estimated that their are tens of thousands of bank foreclosures still sitting in the courts. If these properties get released in-mass, we could see the bottom fall out of pricing. It's anyones guess, but my prediction is 2012 is not going to see any real gains and possibly some additional downside. Hold on, it is bound to be another bumpy ride. If you currently are a potential Buyer or Investor, there are tremendous opportunities in the Lake & Sumter market. To receive a full copy of the Sale & Inventory Report, please email joe@rockspringsrealty.net and I will forward you a copy at no charge or obligation.
Rock Springs Realty is a full-service Real Estate Brokerage working with Buyers, Sellers, and Investors throughout the Central Florida Area. We cover all areas of Lake, Sumter, Orange, Seminole, Osceola, and Volusia Counties. Our sales staff has extensive experience in the REO (Bank Owned Foreclosures) sector and welcomes the opportunity to discuss your real estate needs. You can reach us toll free at (877) 333-2811 or on the web at www.rockspringsrealty.net
P.S. - If you would like a "Free List" of bank-owned foreclosure properties in your area, please contact me at the toll free number and I will forward you a detailed list within 24 hours.
Best Regards,Joe Bornstein, Broker/OwnerRock Springs Realty, LLC3780 Rochelle LaneApopka, FL 32712
That’s the conclusion of a study just released by the Pew Charitable Trusts in which Cornell University researcher Michael Lovenheim looks at data from the 2001-2005 housing boom and finds a direct correlation between higher-education attainment and housing wealth for middle-class families.
“Higher education decisions are highly sensitive to fluctuations in family resources,” says the report, called Housing Wealth and Higher Education: Building a Foundation for Economic Mobility. “The model shows that low- and middle-income students whose families experienced increases in housing wealth just before reaching college age were more likely to attend college, more likely to attend higher-quality universities, and more likely to graduate.”
Unfortunately, there’s a negative flip side to that: “The recent housing bust and resulting decrease in wealth could negatively impact the post-secondary decisions of low- and middle-income families.”
Among the findings:
http://www.economicmobility.org/assets/pdfs/HousingWealthandHigherEd.pdf
On January 3, 2012, in Breaking News, Economics, by Robert Freedman and reported on the NAR, National Association of Realtors website (www.realtor.com)NAR released its latest pending home sales index figure last week and for the second month in a row the index is up. But more than that, the index has broken 100. This is significant because the only time since the housing boom collapsed that the index has broken 100 is when the home owner tax credit was in effect. The fact that the index has returned to that level a year since the credit has been in effect means the housing market is strengthening completely on its own, without any stimulus.
NAR Chief Economist Lawrence Yun is upbeat about 2012 because in a number of areas indicators are pointing upward. Not only are home sales up but housing starts are up and home prices are stabilizing in many markets and heading up in some. In areas where they’re still down, the declines aren’t that great. More fundamentally, broader U.S. economic signs are looking positive, including the all-important jobs picture. About 100,000 job are being created a month, and that could rise to 150,000—still not a quick enough pace to get us back to where we were before the downturn but the headwinds are in the right direction.
In the video, Yun talks about what the latest figures mean.http://link.brightcove.com/services/player/bcpid424522365001?bckey=AQ~~,AAAAAFdYoqM~,hGPKFRRe3LpAGaKyoT1OjRv3WPzoHah_
As reported on the Trulia Blog (www.trulia.com) website January 3, 2012 by Jed Kolko, Trulia's Chielf Economist.
Government, lending changes, and forces of nature all shook the housing market in 2011. They had both an immediate impact and slow-burning effects. They set the stage for a bumpy 2012 with more foreclosures, political battles and local market risks – which will affect the industry and how agents do business.
The “robo-signing” scandal – where banks were accused of approving foreclosures with incomplete or incorrect documentation – exploded in October 2010, but where are we now? Banks want a settlement in order to avoid costly, drawn-out lawsuits. One is shaping up that could reduce loan balances or interest rates for current homeowners, give payments to people who lost their homes and establish new mortgage servicing standards for the future.
Even if you think there’s money coming to you because you lost your home, don’t start spending against your settlement windfall just yet. One estimate from the Wall Street Journal is for a settlement of $25 billion if all states participate. Another report from TIME says that will translate into $1,500-$2,000 for households who were mistreated in the foreclosure process. A couple thousand dollars will give people some breathing room, but it won’t change anyone’s financial lives. And, be patient: it could be months before a deal is reached, an administrator is in place and the details are finalized.
Until that’s all figured out, here’s the immediate drama: who’s in and who’s out? Some states might hold out for a better deal or decide to sue these mortgage servicers directly, as Massachusetts has. California was the first and most vocal state to back out, and New York, Delaware, and Nevada have spoken out, too.
What Really Mattered: The threat of robo-signing lawsuits made banks gun-shy about pursuing foreclosures in 2011, which left many homes stuck in the foreclosure process. But once a settlement is reached, we’ll see a rush of foreclosures in 2012.
What It Means for Agents: More foreclosures will hurt prices and consumer confidence. Short sales could be harder to get approved if the foreclosure process gets easier.
The federal government is running a deficit — it is spending more than it collects in taxes and other revenue – so it borrows to cover the gap by issuing debt. When there’s a deficit, we add to the pile of debt. To shrink this pile, the government needs to collect more than it spends (or, if you prefer, spend less than it collects) and use the surplus to reduce the debt.
In August, the government played a game of chicken over whether to raise the debt ceiling – which is really just a formality acknowledging that the deficit requires issuing debt to keep the government going. However, the right way to deal with the debt is to reduce the deficit – not by fighting over the debt ceiling.
Long before the debt ceiling debate and Standard & Poor’s federal credit-rating downgrade, we all knew that the federal budget was in bad shape. The debt ceiling debate rattled the markets and consumer confidence temporarily but interest rates stayed low. The important effect was that Congress created a bipartisan supercommittee to tackle the deficit – but it couldn’t reach agreement by its November deadline.
What Really Mattered: The deficit-reduction supercommittee teased us with some policy proposals that will surely rear their heads again. One idea that both Republicans and Democrats didn’t totally disagree about was reducing the mortgage interest and other tax deductions. If and when that happens, high-income homeowners with mortgages would pay a lot more in taxes.
What It Means for Agents: Scaling back the mortgage interest deduction would lower the offers buyers – especially high-income buyers – will make on homes. And some buyers will drop out of the market if the deduction, which favors homeownership, shrinks or vanishes.
In October, the Federal Housing Finance Agency (FHFA) said seriously underwater homeowners will be able to refinance through the Home Affordable Refinance Program (HARP). Originally, refinancing under HARP required a loan-to-value of less than 125% — that is, you couldn’t be more than 25% underwater – but that rule goes away for fixed-rate mortgages. But there’s a catch! Loans must be guaranteed by Fannie Mae or Freddie Mac, and – more importantly – borrowers must be current on their payments and must not have missed a payment in the last 6 months.
What Really Mattered: Some seriously underwater borrowers who fell behind on their payments in hopes of negotiating a loan modification are now kicking themselves because those missed payments make them ineligible to refinance. But those who can and do refinance will have lower monthly payments and extra money to spend — which will help stimulate the economy.
What It Means for Agents: Even if easier refinancing may not affect the home-purchase market directly, it will stimulate the economy a bit, which will raise housing demand and give buyers more confidence.
In 2011, several tornados, floodings and a hurricane temporarily halted what little construction there was to begin with, but this was just a short-term slowdown. The bigger long-term effect was the near-collapse of the federal government’s National Flood Insurance Program (NFIP). Still struggling financially under debt amassed after Hurricane Katrina, the NFIP’s insurance premiums don’t fully cover insurance claims when disaster strikes. August’s Hurricane Irene and its flood damage returned this problem to center-stage.
What Really Mattered: In flood-prone areas, you can’t get a mortgage if you don’t have flood insurance. Without NFIP, housing markets in these areas would skid to a stop. Could the program actually expire? It could, but as part of last week’s payroll tax agreement, the program got a last-minute extension until May 2012. No doubt, the political fight over this program’s long-term future will continue in into next year.
What It Means for Agents: Those working in flood-prone areas should be aware of private-sector flood insurance options for buyers in case the federal program lapses after May. And agents in these areas should follow the debate over NFIP on websites and blogs that cover the insurance industry.
Starting in October, the government lowered the upper limit for loans backed by Fannie Mae or Freddie Mac or insured by the Federal Housing Administration (FHA) from $729,750 to $625,500. Why? Government agencies now back or insure most loans, but it’s time to make the housing market less dependent on the feds. Lowering loan limits is one step in that direction; however, the real estate industry has urged the government to push the loan limits back up. And you know what? They scored a half-win in November, raising the loan limit back up for FHA loans but not for Fannie and Freddie.
What Really Mattered: Mortgage lenders are willing to charge lower rates for loans that are backed by Fannie or Freddie; with a lower conforming loan limit, a small number of loans that used to qualify for federal backing no longer do. As a result, homes that are now on the wrong side of the conforming loan limit will see fewer potential buyers and lower sales prices. This will matter more in California, New York, and other high-cost areas.
What It Means for Agents: Agents need to know the local loan limits, which may be different for FHA insurance and Fannie/Freddie backing. Homes for which loans will be above the new limits might see less buyer interest and price reductions.
One major issue that will likely affect the real estate market in 2012 is the potential settlement between Servicers and state Attorneys General. The terms set out by the AG's could free up the inventory currently slowly making its way through the pipeline. Another potential issue could be the rollout of a very lenient modification program which could most likely increase mortgage defaults because current borrowers would deliberately miss payments, hoping to qualify for debt reductions. The modification requirements could add up to 280 days to the time it takes Lenders to seize properties and increase the inventory of foreclosed homes. The costs of the delays, overhead requirements, advances and principal write-downs could be passed onto consumers. This would slow foreclosure timelines to a trickle, overflow local judicial systems and extend the recovery time for the economy as a whole.
We expect to see short sales continue to take center stage in 2012. Currently short sales have accounted for a larger percent of Lender workouts and we expect to see those levels rise in 2012. While Loan Modifications volumes have declined in 2011, performance has steadily improved over time.
Overall, the outlook for 2012 has one clear message: Be prepared for the unexpected. 2012 could be the year where the floodgates open up and volumes of foreclosures and REO begin to flow. However, the uncertainty of a Servicer settlement with the AG's and the uncertainty of new government intervention could extend today's current environment. If you are a buyer looking to take advantage of the great opportunities in the Central Florida market, please visit www.rockspringsrealty.net. You can perform a free search of the entire MLS system for all types of residential, investment, and commercial properties. www.rockspringsrealty.net/SearchMLS. Or contact Joe Bornstein, Broker, Rock Springs Realty directly at (877) 333-2811, joe@rockspringsrealty.net
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