Is the real estate market continuing to Improve?

Here are 7 info graphics and their importance on current real estate trends not just for the South Florida Luxury Real Estate Market but real estate markets in general which is provided by Emh3.com Luxury Real Estate Brokers and CoreLogic.

New Home Sales Trends

In this graphic we see new home sales showing volume and median price from January 2002 to the first quarter of this year. What is interesting in this New Home Sales Trends report is that current median prices are actually higher than their peak during the euphoria of 2005/06. What keeps this from becoming an alarming statistic is the Volume data that accompanies the graphic showing historically low monthly sales.  This reviewers take is that we are in a very controlled slow growth mode on new home residential real estate sales. In addition, a good portion of new home sales are in the upper price points which also skews the median price upward. The scenario of limited new projects and pricier developments has driven market values on New Home Sales in a manner that should see some price correction or adjustment downward as more new home projects begin coming into the market.

The next graphic shows the price point of sales as a percentage of total sales.

Here we see how 200k+ market (a gigantic subset, should be broken down further) was the main driving force in the last collapse and that it currently is again taking the lions share of sales nationally. What is interesting to note is that the 0-100k sales share really took off during the recover period up till about the middle of last year. A strong possibility is the downward price pressure during the recovery period placing 200k+  properties within the 100k price tier which could lead to a mistaken push for lower income housing on a national level when in fact it was distressed and REO inventory changing hands.

Distressed Sales as a percentage of total sales volume

Some good news from this graphic is that short sales continue to decline from their September 2012 high nationally and are retreating into the sub 3% of the market realm. REO sales continue to be a big part of the real estate sales landscape though. At current rates, it would be expected that REO properties will become less than 10% of the overall market by the begin or middle of next year putting it at twice it's historical highs from 2006.

Distressed Sale Share for the 25 highest rate States

Like it or not, the state of Florida was one of the top Distressed sales markets and remains high compared to other states who also felt the brunt of the most recent economic correction. A silver lining is that little red dot you will find on the line that represents Florida's activity compared to other high incident states. Florida still ranks in the top five on a percentage basis but when taken into account our overall market growth compared to other states, this is not as painful.

Serious Mortgage Delinquencies for the 25 highest Rate States.

Here is a telling measure of whether or not we will see more shorts sales, foreclosures, modifications, etc. The answer is yes. we are going to keep seeing these events. Florida, finally is showing some easing of it's statewide delinquency rate as it begins to near 10% which is off of it's historical high of almost 12%. With the current government programs to refinance, consolidate, and reduce principal and interest payments beginning to work, it is believed that the we should see fewer short sales come up and a continuing reduction of REO properties holdings.

30 year mortgage instrument being replaced by shorter term refinancing

Over 40% of the mortgage refinance market is trending toward shorter term financing. This is a clear sign that Americans are becoming more aware and active participants of more aggressive payment strategies for their real estate investments. What is also on the rise but not represented in this graphic is the 40 year mortgage term. Lenders have opened up the possibility to lowering your monthly payments by amortizing your mortgage over a longer period of time much in the same manner as Europe has done for decades.

Overall Mortgage Performance compared to foreclosures and delinquent debt.

Some positive signs from the mortgage front can be seen in this graphic showing 90+ day delinquent filings dropping nationally. Foreclosures also keep moving downward on the whole. There is an uptick since February of last year in REO activity. The REO activity can be interpreted in a number of ways. The courts fast tracking old case logs. Lenders clearing out REO portfolios they have been holding on to (known by some as shadow inventory).

Overall we see marked improvement and stability both nationally but also within the South Florida real estate markets. We see this both in lender activity which is increasing both for national as well as foreign buyers. We also see buyers increasingly interested in lending options and being more risk averse than in the past.

...It's official! The Homebuyer Tax Credit is going to be sticking around for a while and is essentially as we reported in our earlier posts. Read Below for the main points and catch the video above for a great intro to how it works. Then....... Call us! This bill basically flew through the House and Senate and may be signed as early as tomorrow!

Back in February, the economic stimulus package known as the “American Recovery and Reinvestment Act of 2009” was signed into law by President Obama. The Act includes provisions intended to revitalize the housing market, while the U.S. Treasury Department’s plan simultaneously helps mitigate foreclosures and encourages new lending in their tandem effort to bring about a housing recovery.

The video is actually cute but also straightforward in it's message.

EMH3 has the tools needed to help potential homebuyers and sellers benefit from these new programs.

Right now though time is running out! The Tax credit Ends April 30 2010.

Here is a link with some additional details of the homebuyer tax credit.

Click HERE

This just In!

There is a very strong possibility the tax credit may will get extended out to April of next year AND people looking to upgrade their homes will ALSO get a tax credit for doing so.

So, here is skinny on the deal. The $8k credit for first time homebuyers keeps rolling with the following rules. Adjusted gross income of less than $125k for single filers or $225 for couples filing jointly. Also, the credit would only apply to homes for 800k or less (that would mean almost all of us can get in on this 🙂 ..). Something new is the ability to earn a credit of up to $6500 dollars for those looking to trade up to a bigger primary residence and who have already lived in their home for 5 of the past 8 years. That means you folks who held out during all this madness can now come play musical houses with the rest of us!

This is good news in that this second measure opens up another big portion of what has historically been an important part of the real estate market. The relocation gang! Better known as those folks who moved from a house to an apartment and vice-versa locally or those who took the plunge and decided to come down to Florida and avoid those "lovely" North East winters...

Hit the link below to the CNN Market Watch article. And.... don't forget. When you move to Florida, call us!

But they are not impossible either. Just annoying to all involved.

It should be said that we do short sales as a company and hold  a CDPE designation (Certified Distressed Property Experts). We do not shy away from them but the incredible reaction to this type of transaction is somewhat surprising considering that they have been around for decades. What follows is a short history of what got us here in the real estate market and the general feelings of frustration that abound. In the end we are big believers of the following. Life is 10% what happens to you and 90% your attitude. Short sales are just that. An attitude adjustment.

In the ever changing landscape of real estate transactions there has emerged the new standard of real estate sale. The real estate Short Sale in Florida followed closely by it's brother-in-arms known as the bank foreclosure or REO sale. By definition a short sale is a circumstance where the value of a home has fallen below it's current loan value. This is a known situation by most people nowadays. What is not so clear or understood is how these transactions make it from listing to closing? Owners and realtors alike tend to marvel at both the aptitude and general ineptitude of it all. But there are reasons for these things! Not necessarily reasons to give you comfort but reasons none the less.

What follows is a quick history of what got us here  and a random walk through a typical real estate short sale in Florida. The idea is not to drown anyone in the minutiae and the subtle differences between a regular real estate sale versus a short sale but rather to hit the major points between regular and short sales. Having this in hand will give color to the nuances that make up the verbal and written discourse of these transactions both for those in the business and to those whose homes are in such a situation.

Your mileage will (like anything) vary as each situation is unique but they share some basic traits.

Here are some scenarios:

So, today you decide for any one of a number of reasons that it is time to sell your home. If you are one of the fortunate who has no debt on their real estate you find a realtor you trust who understands your goals and your market. Together, you do an analysis of the market and find that in most cases you are taking a serious hit to value. Especially if you bought within the last 3-5 years in say, Miami, Vegas or any other major market growing it's urban core. Outside of this time frame and within certain markets you might find you have flat equity value versus negative equity value (no debt but worth less than what you paid for). Again, real estate is very local in nature so differences will abound.

Now, for the rest of us (the vast majority actually), being debt free on what is typically our biggest purchase is something lovingly contemplated when nearing retirement age and a distant thought for the 30 and 40 something crowd. For the rest of us we have fluctuating mortgages, credit card debt, school loans, 401k's, car payments, shaky jobs and no where near the savings we would like in times of need. Hold on though just one minute! Think back for a minute... While in the heyday of the real estate boom everyone banked on the notion of perpetual equity increases in real estate value and the ability to constantly trade these real estate assets to others having the very same expectation of increase and return but lacking one key element. Nobody was living in these great places?! Another interesting thing happened as well. The stock market got involved and started getting really creative with the creation of new capital to feed this frenzy even further known as derivates but that is a conversation for another day. The SEC blinked, sneezed and kept a business as usual stance only glancing occasionally at these new fangled financial instruments.

The inevitable bubble burst and with it came the blame, anger, shame and general disgust that began to be hurtled in all directions with a keen emphasis on banks and financial institutions. You know them all too well. Those big, easy, slow moving, cash bloated targets of hate. Then came the appraisers, mortgage brokers, politicians, regulators and those greedy developers producing all these units in the first place. But we are forgetting one key player in all of this. Without this one group all the others would simply be looking for another product to pitch. Can you guess? ...No?

All of us! As in you, me (well, actually I sat this one out on the sidelines from day one) and just about everyone else in the current real estate market. We collectively lost our aggregated marbles... Without us none of this would be possible. We gave credence and validity to the creation of this new wealth and now suffer along with everyone else in it's lower valuation and lost dream of immediate leaps of increasing equity.

We all watched how regulators from both the prior and present administrations have grappled with and tinkered with the money supply, TARP, first time homebuyer credits, cash for clunkers and anything else to get our beloved market economy moving again. Thankfully there are signs of life and as a nation we will survive and hopefully be the wiser after our little romp in Tulipville.

We have even had sacrificial lambs. Lehman brothers took a hit and the death march commenced from there swallowing up any financial institution whose fed induced stress test came out, shall we say... stressful to those relying on it?

Having gone through our short history of financial calamity the question remains. Why do real estate short sales take so long? Why do owners, buyers, realtors, appraisers and lenders end up frustrated? We all collectively hate to deal with real estate short sales and their reputation is simply not good. The answer though, is relatively simple.

Too Many Cooks In The Kitchen

When you sell your house in what was once a normal transaction there were only a handful of persons in the decision making process. The Buyer and The Seller. Sure, there were appraisers, lenders, inspections and a host of other things that could adversely effect a transaction but that was the whole idea behind "right to inspect" and rescission periods. To give a set time to iron these things out and decide on whether or not the real estate transaction could be done.

Today it'a whole new ballgame! A short sale has the property owner and the holder of the mortgage becoming strange bedfellows in the sale process. Statutes designed to manage the transaction process started being circumvented by the new decision making structure invoked by selling for less than mortgage value. Timelines became increasingly more opaque as it became clearer that what drives a homeowner to sell is not what drives a bank to sell the very same asset.  Granted the result is the same for both. The bank takes a hit to it's bottom line and has to account for a loss in it's books. We as individuals take the financial hit and the hit to our credit worthiness and family stability. Nobody wins but we lick our wounds, get back up and rebuild.

Think of it this way. Imagine each individual were to partake in a Fed sponsored financial stress test of their personal lives with the resulting outcome that they may be bought out or put on sale should their score not be stellar. That is a bit of a strange way to look at it but therein lies the rub. You are only one person on the auction block. Banks taking a hit to their bottom line risk disrupting their entire structural ecosystem should they be put on the chopping block. There is a certain ironic twist to this in that I can imagine more than one person out their saying "Hey, I can be bought out! If it clears my debt and get's me a clean slate without a hit to my credit like a seized bank, sure!" But banks shed people in these scenarios. I am not sure what an individual would shed in the same circumstance...

But banks like people hang on! Stubbornly clinging to that last vestige of hope. Hope in the case of the banks is time.

What do I Mean. If a bank forecloses they are on the hook for potential association fees, property taxes and other potential costs that are normally the responsibility of the homeowner. The servicing entities that manage these portfolio of loans the bank holds typically are not staffed for what has been an onslaught of non-payment activity and do not have the cost structure nor the desire to create staff around money losing propositions. The court house auction process does not recoup anywhere near the funds it used to as both the auctions and the courts are flooded and many properties remain within the banks portfolio effectively abandoned because of the servicer gap.

A short sale effectively is a bandaid on a bullet hole temporarily stanching or holding back what will be the inevitable credit worthiness hit to the individual and banking institutions books. The good news for banks is that they don't need to worry about home owners association fees (unless the association forecloses which, in Florida they can and DO do.) or taxes for at least a little while. As said, in this circumstance the loan is not written off just yet and is negotiated between owner and lender. This negotiation has become a cottage industry in and of itself and is a shame as there are many programs to help homeowners in a jam that are free!

So, the owner and the bank agree on a market price to have the property listed for sale and marketed. It goes on the market  and offers come in. The owner now has taken on a partner that in many cases has substantially different goals than a normal person in a transaction.

Multiple offers on a single property become the rule. The name of the person in charge on behalf of the bank changes often and without notice making any form of  consistency difficult at best. Financing to purchase is not considered a part of a good offer and cash deals are (unless the entity holding the short sale debt can refinance with the new buyer). The appraisal process has become onerous with the application of new HVCC rules governing the terms of communication between lenders, appraisers, owner and realtor and the use of timelines that are not conducive to good appraising. Realtor commissions and documents that are used for these transactions change regularly and continue to be under scrutiny due to the enigmatic nature of real estate today.

Effectively, Owners want to sell their real estate and move on. Take the hit to their credit and rebuild. Banks want to hold on and don't have the infrastructure nor the servicing agents to handle the short sale and foreclosure volume hitting them in the hopes of riding things out.

Result. Knee-jerk reactions abound and nothing gets done except by sheer force of will, specific knowledge and some good ole luck!

There is a silver lining.

Many markets have adjusted their rental policies, HUD homes are more plentiful, Workforce housing is seeing some potential housing opportunities and regulators and politicians are starting to address the obvious disparities that exist in the real estate short sale process.

Save the date! Sept 8 at the Greater Miami Chamber of Commerce at the newly renovated Omni Mall. Learn about how to "Unstuck" the real estate liquidity bottleneck.

In this third installment of the series we will have Pedro J. Garcia who is the Property Appraiser for Miami-Dade County give perspective on the counties role and function on property value and what to expect at the municipal level. Mitchel Mestel who is a state certified Residential Real Estate Appraiser will shed light on the current appraisal climate and discuss how the industry has changed and where it is headed. Ana Cruz-Taura from the Federal Reserve Bank of Atlanta will give insight into the regulatory aspects of the banking industry and the steps the FED is currently taking. Todd Wheeler from the Home Financing Center will be on hand to discuss how current real estate buyers can be assisted taking into account the new HVCC rules, Appraisal standards and regulatory guidelines.

The event is Sponsored by Great Florida Bank and our parent company Sieckel LLC.

Hit the image below for the full invite and click here to go to the Chamber of Commerce Page to take part. Please hurry as these events tend to fill up quickly.

The Below videos have been removed from the server hosting them... We are in the process of requesting them as they still have value and meaning in this day and age (2018/2019).

Below is a brief description of the overall program and brief notes on the panelists and moderator. What follows will be the videos in chronological order

Description: The Greater Miami Chamber of Commerce held a workshop (Underwater 101 Real Estate Market Navigation) on Navigating the Housing Market on July 28, 2009 Foreclosures. Shortsales. Loan Modifications. What is the Impact? Learn about the recent local, state and federal programs such as the 11th Circuit Homestead Access to Mediation Program (CHMP) and Making Homes Affordable established to assist homeowners in their efforts to resolve the escalating real estate problems as well as what options and programs are available and their future implications. Speakers included: Judge Jennifer D. Bailey, Administrative Judge, Civil Division 11th Judicial Circuit Miami-Dade County Courthouse Ned Pope Director, Mortgage Foreclosure Mediation Program The Collins Center for Public Policy Arden Shank Executive Director & President Neighborhood Housing Services Ed Wilburn Managing Director Great Florida Bank Moderator - Adrian Diaz-Sieckel Managing Director, Broker, LCam for Sieckel LLC

In this first segment are introduced the panelists giving each member five minutes to tell us about what they in specific do and how it relates to the current lending and foreclosure crisis being faced in Miami-Dade County. The first panelist to speak is Judge Bailey.

In this second segment Arden Shank discusses his program and some of the issues that he faces when dealing with lenders and persons seeking loan modifications.

In this third segment Ed Wilburn from Great Florida Bank discusses mortgage lending and the current lending crisis offering both insight and perspective on the issues being faced by current borrowers.

The fourth segment covers Ned Pope and The Collins centers effort in mediation of the current lending crisis through the 11th judicial circuit.

In this fifth segment we get down to asking questions regarding absorption of the current foreclosure docket, ideal scenarios to clear it and manage it, costs to use mediation and counseling services and a few others.

Sixth segment and questions keep coming. First question is answered by Ed Wilburn discussing his banks perspective on the relationship between mortgage brokers and banks and the fallout rate for prospective persons looking for money to purchase a home. Discussion continues on how the face of defaulting owners has changed and the issue of promissory notes.

In this last segment we continue taking audience questions (unfortunately we ran out of time!) covering issues that cause case delays, sale dates, etc.

Update:

As a result of the success of the first in a series of talks about the current housing market, housing affordability and current practices in the market we are pleased to announce that The Miami Chamber of Commerce will be hosting another two to three forums on the subject as a part of the series we originally talked about.

The next event will be "Underwater 101" . It is geared not only toward the Chamber membership and local realtors but also the general public and should be chock-full of information regarding local housing programs, bankruptcy issues, bank loan modification programs and the product and services the federal government have been putting out to assist as well

We expect the event to occur sometime in July with two more events scheduled for later in the year. We look forward to your attendance and will post the links just as soon as we get them.

Our parent company Sieckel LLC will be a sponsor and host.

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As a member of the Miami Chamber of Commerce and participant in the workforce housing committee I would like to let everyone know about a great educational program being offered by the Chamber this coming May 8th at Chamber headquarters. New Rules Housing Market for condo lending in Miami is part of a series of discussions that EMH3's parent company helped to develop. This first series deals with condominium eligibility guidelines and the review process for lenders. In plain-speak that means what it takes to get a condo sold based on current lending guidelines. It is a series meant for practioners but all are welcome to attend as it will be very informative. There will be participants from the US Housing and Urban Development office, Fannie Mae, Becker and Poliakoff and The Continental Group for Community managements take on things

To find out more and register for this event click here.