Southwest Florida Sales Improbing

Southwest Florida is seeing supplies of homes well below the six-month threshold that is considered indicative of a healthy market.

In Sarasota County, there was a 4.3-month supply of available properties based on the current rate of pending sales, down from a 6.6 months in December and a nearly 7-month supply a year ago, according to an analysis of TrendGraphix data.

There is a 4.5-month supply of properties in Manatee County compared with 6.9 months in December and 7.5 months a year ago.  In Charlotte County, the supply is about 5.1 months' worth. That compared with 8.1 months in December and 8.2 months in January 2011.

While total sales are fairly static, there are signs that activity will be picking up in coming months.

January 2012 property sales throughout Southwest Florida showed a slight improvement over last January. Historically, January sales typically fall off after the end of each year. The major news was in pending sales, which jumped by 56.1% vs. December and were up by nearly 22.8% vs. last January.

There also are strong signs of movement in the narrower luxury market, or homes of $1 million or more in Sarasota, Manatee and Charlotte counties.

Home Sales hit 11 Month High

WASHINGTON (Reuters) - Home sales hit an 11-month high in December and the number of properties on the market was the fewest in nearly seven years, pointing to a nascent recovery in the housing sector.

The National Association of Realtors said on Friday existing home sales increased 5 percent to an annual rate of 4.61 million units, with all four of the nation's regions recording gains.

Sales of both multifamily and single-family homes rose.

"It seems that the housing sector may be slowly picking itself up off of the mat," said Omair Sharif, an economist at RBS in Stamford, Connecticut.

The fairly upbeat data and reports that debt-stricken Greece was close to a deal with its private-sector creditors pushed U.S. Treasury debt prices lower. Stocks on Wall Street were mixed, while the dollar was little changed against a basket of currencies.

While the home sales pace was a touch below economists' expectations, December marked the third straight month of gains, adding to hopes that a tentative recovery was taking shape.

But a glut of unsold properties that is weighing down on prices and stringent lending practices by banks is likely to make progress painfully slow.

SHADOW INVENTORY WORRIES

There were 2.38 million unsold homes on the market last month, the fewest since March 2005. That represented a 6.2 months' supply at December's sales pace, the lowest since April 2006 and down from a 7.2 months' supply in November.
The Realtors group noted, however, that the inventory of unsold homes tends to decline in winter.
A supply of 6 months is generally considered ideal and anything higher suggests prices will decline further.

The median sales price fell 2.5 percent to $164,500 in December from a year ago. For 2011 as a whole, prices dropped 3.9 percent to an average of $166,100, the lowest since 2002.

Further pressure could come in the months ahead as banks finish working out kinks in the foreclosure process and push more homes onto the market.

"That so-called 'shadow' inventory has to come to the market eventually and will keep downward pressure on home prices long after a pickup in building and sales activity," said Ellen Zentner, a senior economist at Nomura Securities in New York.

LOOKING TO HELP

The Federal Reserve has suggested a number of ways other policymakers could step in to help the beaten-up market, including giving government-controlled mortgage finance firms Fannie Mae and Freddie Mac a bigger role in refinancing loans.

Some officials at the Fed say the central bank should consider further purchase of mortgage-backed securities as a way to help spur a stronger recovery, but no action is expected at a policy meeting next Tuesday and Wednesday.

The data on previously owned homes was just the latest in a number of signals on housing to show improvement, gains economists pinned to an improving labor market.
Data earlier this week showed single-family home starts rose for a third straight month in December and optimism among builders this month was the highest in four-and-a-half years.
"It is very encouraging that the current phase of the recovery is being driven by economic fundamentals as opposed to being fostered by temporary stimulus," said Millan Mulraine, a senior macro strategist at TD Securities in New York.

Existing home sales in December were up 3.6 percent from a year earlier. A total of 4.26 million homes were sold last year, up 1.7 percent from 2010.

But the road to recovery will be bumpy. Distressed properties, foreclosures and short sales, which typically occur at deep discounts, accounted for 32 percent of overall sales last month, little changed from November.

A third of pending existing home sales contracts were canceled, the NAR said.

"There is every reason to believe that banks are not going to reduce credit standards back to pre-recession days, when all that was required was the ability to fog a mirror - and only a faint fog was necessary," said Steven Blitz, a senior economist at ITG Investment Research in New York.

"This, plus the slow pace of the upturn, will keep the housing market from a dynamic turn. It is, however, increasingly safe to say the market has finally turned positive."

Rate on 30-year fixed mortgage hovers at 4%

WASHINGTON – Dec. 2, 2011 – The average rate on the 30-year fixed mortgage hovered above its record low for a fifth straight week. Despite the great opportunity, few have the means or stomach to buy or refinance in the depressed housing market.

Freddie Mac said Thursday the rate on the 30-year home loan rose slightly to 4 percent from 3.98 percent the week before. Eight weeks ago, it dropped to a record low of 3.94, according to the National Bureau of Economic Research.

The average rate on the 15-year fixed mortgage was unchanged at 3.30 percent. Eight weeks ago, it too hit a record low of 3.26 percent.

Rates have been below 5 percent for all but two weeks this year. Yet this year could be the worst for home sales in 14 years.

Mortgage rates track the yield on the 10-year Treasury note. The yield rose this week after investors, encouraged by central banks’ joint effort to ease lending standards, shifted their money into stocks. Treasury yields rise when buying activity decreases.

Low mortgage rates haven’t translated into higher home sales. Mortgage applications have dropped over the past few weeks, according to the Mortgage Bankers Association.

High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many Americans don’t want to sink money into a home that could lose value over the next three to four years. And most homeowners who can afford to refinance already have.

The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent.

The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year was unchanged at 0.7 and 15-year fixed mortgages rose from 0.7 to 0.8.

The average rate on the five-year adjustable loan ticked down to 2.90 percent from 2.91 percent. The average rate on the one-year adjustable loan also fell, declining to 2.78 percent from 2.79 percent.

The average fees on the five-year and one-year adjustable loans were unchanged from 0.6.

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Sarasota amount Top-Ten Turnaround Real Estate Markets Nationwide

Though the past four years have seen many cities suffering from large numbers of foreclosures and a loss in home values, ten of these real estate markets are now leading the nation towards a general recovery and stability of the housing sector.

Realtor.com’s Top 10 Turnaround Town Report, based on third quarter 2011 data, includes six Florida markets: Miami, Orlando, Fort Myers-Cape Coral, Fort Lauderdale, Sarasota-Bradenton, and Lakeland-Winter Haven.

Each of these markets has experienced positive year-over-year median price appreciation, reductions in year-over-year median age of inventory and inventory counts, while also experiencing lower unemployment rates on a year-over-year basis. Florida’s success can also be tied to foreign buyers; the number of foreign buyers purchasing homes there increased from 10 percent in 2007 to 31 percent in 2011.

Sarasota-Bradenton, FL: A total of 11 percent of all foreign buyers in Florida are in Sarasota-Bradenton specifically. Number six on the turnaround report, the market has seen a list prices increase of more than 17 percent year-0ver-year and a decrease of inventory of 32 percent according to the Realtor.com October data. The market still has a long way to go, after losing more than 55 percent of home values from 2006 to the second quarter of 2011 due to foreclosures.

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$500,000 Home Purchase comes with Residency Visa

Newly-proposed legislation that would grant resident visas to international buyers who spend at least $500,000 in cash on residential properties in the U.S. is one of the most intriguing ideas we’ve heard to help shore-up the nation’s hardest hit housing markets. The concept is part of a broader immigration package aimed at boosting foreign travel and investment in the U.S.

The bill, entitled The Visa Improvements to Stimulate International Tourism to the United States of America Act (or VISIT-USA Act), shows early signs of bi-partisan support; with it’s co-sponsors, Senators Mike Lee (R-Utah) and Charles Schumer (D-N.Y.), representing each side of the political spectrum.

Foreign buyers—particularly from Canada and Great Britain—have a strong propensity for purchasing vacation homes in Southwest Florida. Basically, the only thing preventing more of them from cashing-in on today’s reduced home prices are the restriction that typically reduces their annual stay in the U.S to the equivalent of six months—usually in 90 day increments. This bill bets that by removing this restriction baby boomers from around the world will join their U.S counterparts in retiring to Florida—with much of their accumulated wealth in tow.

The legislation proposes a three-year residential visa for foreign nationals who invest no less than $500,000 in residential real estate in the U.S. A minimum of $250,000 must be spent on a primary residence where the visa holder is required to reside for at least 180 days each year while faithfully paying U.S. taxes. The balance—or more—can be spent on other residential properties, which can be rented out. Moreover, buyers must pay in cash; thus placing no additional burden on our already stressed-out financial system.

Applicants will remain subject to the rigorous criminal and national security background checks that have been significantly enhanced in our post-9/11 world. Those with criminal records, suspected ties to terrorist organizations or drug cartels and other troublesome activities will be barred from qualifying. Once approved, applicants will not be eligible for such government benefits as Medicare, Medicaid, and Social Security. Essentially, the legislation creates an extended travel visa that will last for three years at a time, be subject to a strict renewal process; and not allow its recipients to obtain an American job or enter the path to citizenship.

Several of the bill’s tenets are specifically written to smooth the way for Canadian buyers. Presently, Canadians without a visa are not permitted to remain in the United States for more than 180 days annually, though many would undoubtedly retire here year-round if they could legally do so. Thus far in 2011, 25% of all international buyers in the U.S. came from Canada. That percentage is even greater in Florida where 39% of this year’s international home buyers have been Canadian—up 3% from last year.
The VISIT-USA Act doesn’t venture into unfamiliar territory hoping to create a market that doesn’t already exist. For the 12 months ending in March, sales to foreign buyers totaled $82 billion, up from $66 billion in 2010, according to the National Association of REALTORS®.

For Southwest Florida, where a real estate recovery has already taken hold in the lower price ranges, this legislation exactly targets the segment of our market that remains stubbornly weak: Homes priced from $500,000. Above that, there’s no spending limit.

“This is a way to create more demand without costing the federal government a nickel,” said Senator Schumer. “Our housing market will never begin a true recovery as long as our housing stock so greatly exceeds demand. This is not a cure-all, but it could be part of the solution.”

Its purpose, adds Senator Lee, is “to support a free market method of increasing demand for housing at a time when so many working-class Americans are underwater on their homes, are desperate for prices to rise again, and big-government programs have failed to work.” With the pundits agreeing that the speed of our overall economic recovery truly hinges on the pace of housing’s recovery, that’s a sentiment that people of every political and economic persuasion can get behind. Unless the bill ends up larded with too many pork barrel earmarks, we see very little downside to this legislation and look forward to tracking its progress through Congress.

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5 Homebuyying Myths

Overall, today’s homebuyers tend to be fairly knowledgeable about the real estate market, but there are still a few points of confusion in the process, especially for buyers just entering the market. Here are the five main areas of confusion found in a survey by Zillow:

• Appreciation: About 42 percent of homebuyers believe home values will appreciate by 7 percent a year. Reality: Historically, home values in a normal market appreciate by 2 to 5 percent in a year.

• Appraisals: 56 percent of the buyers said the purpose of the appraisal was to determine if a home was in good condition. Reality: That’s the purpose of a home inspection; an appraisal estimates fair market value.

• Homeowner’s insurance: 37 percent of homebuyers think that buying homeowner’s insurance is optional. Reality: Lenders require homebuyers to purchase homeowner’s insurance if they carry a mortgage.

• Ownership: 47 percent of homebuyers said a prospective buyer owns a home after the purchase contract is signed by the seller – when the two parties reach agreement. Reality: The purchase and sales agreement is the beginning of the closing phase, but it can be a long process until they finally take ownership.

• Mortgage insurance: 41 percent of buyers think they must purchase private mortgage insurance, regardless of the amount of their downpayment. Reality: Buyers only need to purchase PMI if their downpayment is less than 20 percent of the home’s purchase price.

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What are buyers waiting for?

Bargains abound: What are buyers waiting for?

NEW YORK – Oct. 28, 2011 – With low home prices and ultra-low interest rates, the housing market now offers “perhaps the best deals of a generation,” notes a recent article by Bloomberg Businessweek.

Since the housing boom of 2006, home prices have fallen about 31 percent. Also, mortgage rates have been hovering at record lows for the past few weeks  – in the 4 percent range or even lower on 30-year fixed-rate mortgages, according to Freddie Mac’s mortgage market survey.

“It’s hard to see the possibility of losing on a home purchase right now, with these mortgage rates,” says economist Dean Baker. “Prices may go lower, but not by much.”

The article notes the following scenario: Buying a $300,000 home with a 4 percent mortgage rate and a 20 percent down payment would mean a $1,145 monthly payment. The Mortgage Bankers Association recently predicted that home prices may fall another 3.5 percent by mid-2012, but mortgage rates will increase by a half-point. Under that same loan scenario, a home would sell for $289,000 while the monthly mortgage bill would be $1,171 – only a $26 difference.

For those who can qualify for a mortgage, “playing the waiting game” won’t result in much gain, Nariman Behravesh, chief economist at IHS in Englewood, Colo., told Bloomberg Businessweek

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