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Florida Foreclosure’s Secret Inventory

admin — Sat, 26 Sep 2009 22:59:42 +0000

Around Fort Lauderdale, it has become extremely clear just how big a hit its economy has taken as a result of the real estate market’s collapse. It’s like a different world compared to what it was like just a few years ago: overgrown grass rises above many curbs and sidewalks; homes and businesses sit empty and abandoned; most blocks display multiple “for sale” or “for rent” signs. The state’s ongoing foreclosure glut has resulted in an interesting phenomenon — a “secret” inventory of foreclosures.

Legal snarls, bureaucracy and well-meaning efforts to keep families in their homes are slowing the flow of properties headed toward foreclosure sales, even when borrowers are in deep distress. While that buys time for families to work out their problems, some analysts believe the delays are prolonging the mortgage crisis and creating a growing “shadow” inventory of pent-up supply that will eventually hit the market.

Families can live in their homes as long as two years without paying, because the banks haven’t gotten around to foreclosing. And that’s a problem. Until the real estate market recognizes all its losses — including accounting for all foreclosures — it won’t be able to regain real stability and move on. Of course, that has implications for the broader economy as well.

Here are two journal sources explaining how bad they think this problem is:

“There’s going to be a flood [of bank-owned homes] listed for sale at some point,” says John Burns, a real-estate consultant based in Irvine, Calif. When that happens, Mr. Burns believes, home prices will fall further, particularly in markets with large numbers of foreclosures. Overall, he expects home prices to decline 6% next year.

Ivy Zelman, chief executive of Zelman & Associates, a research firm based in Cleveland, believes three million to four million foreclosed homes will be put up for sale in the next few years. The question is whether the flow of these homes onto the market will resemble “a fire hose or a garden hose or a drip,” she says.

All of that sounds pretty ugly. But what are the actual numbers as they pertain to this shadow inventory of foreclosures? They’re hard to get exact, given the very nature of the problem — these foreclosures have not yet been completed. But the Journal does provide some statistics to work with:

As of July, mortgage companies hadn’t begun the foreclosure process on 1.2 million loans that were at least 90 days past due, according to estimates prepared for The Wall Street Journal by LPS Applied Analytics, which collects and analyzes mortgage data. An additional 1.5 million seriously delinquent loans were somewhere in the foreclosure process, though the lender hadn’t yet acquired the property. The figures don’t include home-equity loans and other second mortgages

Moreover, there were 217,000 loans in July where the borrower hadn’t made a payment in at least a year but the lender hadn’t begun the foreclosure process. In other words, 17% of home mortgages that are at least 12 months overdue aren’t in foreclosure, up from 8% a year earlier.

The first quoted paragraph shows that there are at least 2.7 million foreclosures that have yet to hit the market. Some of those may be modified, but the vast majority probably won’t. The second paragraph explains that the problem is getting much worse: the portion of homes not in foreclosure despite its borrowers not making a payment in a year has more than doubled compared to last year.

So why do we have this shadow inventory?

It’s taking quite a long time to figure out which borrowers qualify for the Obama administration’s mortgage modification program. It’s also taking time to process the deluge of applications. During the wait, borrowers remain in their houses which, otherwise, would be in foreclosure. Those who don’t get the modification will ultimately face foreclosure.

With so many foreclosures, banks likely just have logistical issues getting them all processed in a timely manner. There’s a heap of paperwork and other red tape involved in making a foreclosure happen. Banks have never experienced a flood of foreclosures like this, so they aren’t equipped to handle so many very quickly.

Banks may not want to foreclose on all of these homes immediately. A WSJ source above used the analogy of foreclosures hitting the market like “a fire hose or a garden hose or a drip.” Which do you think would be better for housing prices? The drip. If you have a huge inventory, then it’s more of a buyer’s market, where few buyers can drive down the prices of many homes. If you have the foreclosures spread out over a longer amount of time, new buyers may enter the market over that lengthened period. I have heard the theory (from a Floridian friend of mine who knows the real estate market there) that banks are purposely holding back foreclosures for exactly this reason.

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If you want to sell your Seminole County or Orlando area home in the next 6 to12 months, now is the time to begin putting your plan into place while time is still on your side. Please contact us for any real estate assistance you may need.

We’re experts at putting people together with homes they love and can afford. Contact us today for information on Orlando and Seminole County real estate, Orlando & Seminole County homes for sale, Orlando & Seminole County relocation information, a free market analysis of your Orlando area or Seminole County home or statistics on homes in Orlando & Seminole County Florida or the surrounding Central Florida area, including Seminole County, Orange County, Lake County and Volusia County. We’re always available to answer your questions.

Banks express hope for fed short-sale effort

admin — Sun, 09 Aug 2009 21:02:35 +0000

WASHINGTON – Aug. 7, 2009 – The federal government is launching a program to simplify and speed up the short-sale process by providing standardized documentation, cash incentives to lenders, and a $1,500 moving allowance to borrowers. Holders of second liens will get up to $1,000 to relinquish their claims.

Banks say the short-sale process has been taking so long because both their employees and real estate practitioners are learning as they go.

David Sunlin, vice president in charge of short sales at Bank of America, says he hopes the new government plan will help. “About half of short sales never close. We see it as a big lost opportunity, and we need to improve the rate we close them,” he says.

Wells Fargo says it has cut its short sale average turnaround time from 90 days to 30 days by preparing a guide from real estate practitioners and putting in place procedures to handle short-sale requests.

The federal government first announced its short sales initiative in May at the annual Washington meetings of the National Association of Realtors®.

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Is A Short Sale Right for Your Situation? Find out today: If you live in Central Florida, contact The Orlando Property Group, your experienced short sales agents, specializing in real estate in Lake, Seminole, Orange, and Volusia Counties.

Seaching for a great real estate value in Central Florida? Need help with a short sale? Call or email me TODAY to go over your options!!!!!! Looking for specific information regarding Orlando Florida real estate prices and communities? Get Your Free Market Snapshot Read Also: Orlando Florida Relocation Resource Guide Read Also: Business 2.0 Magazine has named Orlando the number 1 hottest market with America’s best jobs. Read Also: Orlando Florida Facts & Resources Read Also: Orlando Florida City – Everything You Need To Know! If you are wanting to sell your Seminole County or Orlando area home in the next 6 to12 months, now is the time to begin putting your plan into place while time is still on your side. Please contact us for any real estate assistance you may need. We’re experts at putting people together with homes they love and can afford. Contact us today for information on Orlando and Seminole County real estate, Orlando & Seminole County homes for sale, Orlando & Seminole County relocation information, a free market analysis of your Orlando area or Seminole County home or statistics on homes in Orlando & Seminole County Florida or the surrounding Central Florida area, including Seminole County, Orange County, Lake County and Volusia County. We’re always available to answer your questions.

Highest Foreclosure Rates Remain in CA, FL, NV and AZ

admin — Thu, 06 Aug 2009 00:38:46 +0000

(IRVINE, CA) — There is still no good news on the nation’s residential foreclosure front.

Experts report cities in California, Florida, Nevada and Arizona still top the country’s foreclosure pole in the first half of this year.

In its Midyear 2009 Metropolitan Foreclosure Market Report, the four states accounted for 35 of the 50 highest foreclosure rates among metro areas with a population of 200,000 or more.

While some of the most foreclosure-saturated metro areas in Michigan, Ohio, Indiana and California posted declining foreclosure activity in the first six months of 2009, other areas of the country not previously considered foreclosure hot spots have seen increased levels of activity.

”More than 20 percent of the metro areas which showed above average levels of foreclosure activity were in states such as Oregon, Idaho, Utah, Arkansas, Illinois and South Carolina, suggesting that much of the new foreclosure activity may be more directly related to growing unemployment than continuing fallout from subprime and adjustable rate loans,” Saccacio says.

“Foreclosure activity continued its upward trajectory nationwide and in the majority of metro areas in the first half of the year, but there are some significant differences beginning to show up in the data.

“While some of the markets that had the highest saturation of foreclosures over the past few years have seen declining rates, new markets like Provo, Utah, and Boise, Idaho, have seen large increases.

“As unemployment rates increase in different parts of the country, it’s very likely that we’ll see similar patterns develop elsewhere.”

Top Metro Foreclosure Rates

Las Vegas posted the nation’s highest metro foreclosure rate, with 7.45 percent of its housing units (one in 13) receiving at least one foreclosure filing in the first half of 2009 — more than six times the national average.

A total of 58,691 Las Vegas properties received a foreclosure filing during the first half of 2009, a 22 percent increase from the previous six months and a 56 percent increase from the first half of 2009.

The Cape Coral-Fort Myers metro area in Florida documented the second highest metro foreclosure rate in the first half of 2009, with 7.20 percent of its housing units (one in every 14) receiving at least one foreclosure filing, and Merced, Calif., documented the third highest metro foreclosure rate, with 6.89 percent of its housing units (one in 15) receiving at least one foreclosure filing.

Both Cape Coral-Fort Myers and Merced reported a slight decrease in foreclosure activity from the previous six months but still reported increasing foreclosure activity from the first half of 2008.

All seven of these metro areas except for Stockton and Modesto reported increasing foreclosure activity from the previous six months and from the first six months of 2008.

Declining Foreclosure Activity In Some Foreclosure Hot Spots

Foreclosure activity in Stockton decreased nearly 4 percent from the previous six months and nearly 13 percent from the first half of 2008, and foreclosure activity in Modesto decreased nearly 3 percent from the previous six months and more than 9 percent from the first half of 2008.

With 1.86 percent of its housing units receiving a foreclosure filing in the first half of 2009, Detroit’s foreclosure rate continued to rank among the top 50 metro foreclosure rates, but foreclosure activity there decreased 8 percent from the previous six months and 16 percent from the first half of 2008.

Detroit’s foreclosure rate ranked highest in the nation in RealtyTrac’s 2006 and 2007 reports.

Foreclosure activity in Cleveland, which posted the nation’s sixth highest foreclosure rate in 2007, decreased 11 percent from the previous six months and 30 percent from the first half of 2008.

With 1.36 percent of its housing units (one in 73) receiving at least one foreclosure filing, Cleveland’s foreclosure rate was still above the national average but was not among the top 50 metro foreclosure rates in the first half of 2009.

Other hard-hit Rust Belt cities posting year-over-year declines were Indianapolis and the Ohio cities of Toledo and Columbus.

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Foreclosure Sales: A Real Estate Paradise

admin — Sun, 26 Jul 2009 20:13:06 +0000

Business is booming in Greater Fort Myers in Lee County, near the southern end of Florida’s west coast, where realtor Suzanne Sherer is working seven days a week. Sherer says sales at her six-person firm are back at 2005 levels.

“We’re seeing bidding wars on entry-level homes,” says Sherer. “Within three days of listing, we have multiple offers.”

Sales there are up 116 percent year to date through June. Inventory is down to a 3.5-month supply, about a third of what it was last summer.

Before you conclude the real estate boom of a few years ago is alive and well, consider one word: Foreclosures. What was once a bane is now a boon for some players in the real estate game, but there’s considerable debate about whether it signals the coming of overall housing market recovery.

“You have to be able to evolve with the market,” says Sherer, who’s also president of the area Realtor association. “You have to be knowledgeable about foreclosures, short sales, and guide people through the whole process.”

“In some of the worst markets, it’s not usual in any given month for 80 percent of the sales to be distressed properties,” says Rick Sharga, whose foreclosure rate data are widely followed. “In some of the worst markets, we’re starting to see that the market has overreacted. We’re seeing bidding wars similar to what we saw in the boom.”

The National Association of Realtors first started polling members on foreclosures and short sales in March 2008 and has been doing so monthly since last October. Nationwide, such transactions have ranged between 31 percent and 49 percent of total sales this year.

Of the 1,551 single-family units sold in June, 939 (61 percent) were foreclosed properties—or REOs, meaning the property is owned by the lender after an unsuccessful foreclosure auction. Another 241 (15.5 percent) were short sales (last-minute desperation sales to avoid foreclosure). That pattern has been in place since last November.

Foreclosed properties were selling at a 60-percent discount to the median sales price for a conventional transaction. Short-sale properties were fetching 40-percent less.

“Distressed homes have definitely influenced our pricing in the current market,” said Sherer. “We’re seeing a strong contingent of investors, gobbling these properties up, with a quick turnaround, paying cash. Cash is king.”

Across the country, in the greater Las Vegas area, single-family home sales hit a record 4,702 in June, according to the local realtor association. Prices there are down 37.3 percent from a year ago. The state has the highest foreclosure rate in the nation.

No wonder then, that 74 percent of June sales were bank-owned properties. Four out of 10 transactions were paid for in cash and 62 percent of all homes sold within 60 days.

“(Foreclosed) properties are almost selling faster than we can get inventory,” says long-time realtor Rick Shelton. “Inventory is extremely depressed.”

Shelton says sales have been increasing 15-20 percent a month lately and expects his 200-agent firm to sell a record 3,000 properties this year.

Shelton says he’s “challenged” selling conventional homes. “It’s very tough for them. Once in a while you’ll get a hit and miss.”

By comparison, in Iowa, whose foreclosure rate was the 41st lowest in June, sales were down about 10 percent on a yearly and quarterly basis in the first quarter. Prices in the biggest metropolitan areas such as Des Moines and Waterloo-Cedar Rapids were down 7.2 percent and 6.4 percent respectively. In neighboring Nebraska, 45^th in foreclosures, the trends are even more pronounced.

In Corpus Christi, Texas (29^th in foreclosure rate), mortgage broker Jim Pair, says foreclosures “are not helping or hurting the market,” which he describes as a relatively stable one. The median home price there was down about 8-percent from a year ago in the fourth quarter.

Pair, the new president of the National Association of Mortgage Brokers, says the “last three-four months have been pretty good,” but estimates business is down 30-percent from its 2006 peak.

In one way, the boom is a shot in the arm for the beleaguered real estate industry, which has seen single-family unit sales fall from an annual pace of almost 6.5 million units in 2006 to 4.6 million through May of this year.

To be sure, with the median price tumbling from $222,000 to $168,000 during the same period, and buyers and sellers both balking at the traditional 6-percent commission rate, the average transaction is less lucrative. At the same, it takes less time to market and sell a foreclosed property.

Five years ago, it took an average of 120 days from listing to closing on a foreclosed property, now its down to 105 days, according to real estate giant Realogy, which handles foreclosures for many lenders across the country and has about 600,000 homes listed for sale in the 50 states.

What’s good for realtors, however, may not be good for the overall real estate market as well as homeowners across the nation.

“It depresses prices because people are using them in their comps [comparative pricing], which is incredibly unfair; it’s a deep discount to market and they’re selling for that reason,” says Richard A. Smith, CEO of Realogy, whose holdings include Century 21 and Coldwell Banker and ERA.

The foreclosure crisis has been crushing for those losing their homes, but it is also claiming less obvious victims.

“The downside is that there is a loser in every equation,” says Shelton. “All of this doesn’t doesn’t bode well for the guy who owes $800,000 on his house and it’s worth $600,000.”

Whether the foreclosure boom is a precursor to an overall housing recovery or the real estate version of a stock market false bottom is a matter of some debate.

“In the initial phase it was a drag on the market, bringing overall prices down,” says Lawrence Yun, chief economist for the NAR. “Now buyers are saying, ‘That’s a good price’, meaning a low price. Because there are buyers, a bottom is forming.”

Smith of Realogy sees no silver lining. “Take the REO [foreclosure] business away, and you are back to 1997-1998 levels and that is a scary proposition.”

For information on great real estate buys in Orlando and nearby suburbs,
contact the Orlando Property Group, your short sale and luxury home specialists.

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Loan balloons will Explode Foreclosures

admin — Sun, 26 Jul 2009 19:54:28 +0000

A coming wave of mortgage adjustments threatens to prolong, and possibly worsen, the foreclosure crisis, industry analysts warn. Estimated 2.8 million option adjustable-rate mortgages are scheduled to reset in the coming years, with the peak in mid-2011. Those resets will cause those borrowers’ monthly payments to balloon, potentially triggering a third wave of foreclosures.

“We do believe there is another wave coming, and I personally believe it will be the tsunami,” said L.R. “Chip” Waterman of Hunt Real Estate ERA in Sarasota, who specializes in foreclosed and bank-owned properties. “There’s no way we’ve begun to see the end of this.”

“I think we’re past the absolute tsunami of foreclosures, but we still have many more to go through,” said Ken Chapman Jr., a Sarasota attorney and president of the Sarasota-Bradenton Attorneys Real Estate Council.

As of the close of business Friday, lenders have filed 3,602 foreclosure suits this year in Manatee County Circuit Court, court records show. There were 3.034 filed at the same point in 2008, which went on to set a local record with 5,592 in all. The state and national pictures are not much better. More than 1.5 million U.S. properties received a foreclosure filing or were seized by lenders in the first half of 2009.

More are on their way: More than 10 percent of Florida homeowners with a mortgage were at least 30 days behind on their payments during the first quarter of 2009, the Mortgage Bankers Association said. Another 10 percent already were in foreclosure.

The national delinquency and foreclosure rate was one in every eight, the highest in records going back to 1972, the bankers group said.

Many took out option adjustable-rate, or Alt-A mortgages, which allowed them to buy more house than they could have afforded using a traditional 30-year mortgage during the housing boom. Under most so-called option ARMs, initial monthly payments often covered just part of the interest, with the unpaid interest portion added to the loan’s balance. After a set amount of time, the loan resets and the borrower is required to also begin paying off the balance.

That will cause the monthly payment to balloon, something many borrowers had planned to avoid by either selling the house for a profit or doing a refinance. But housing prices slumped and credit tightened, leaving borrowers owing more than their homes were worth, unable to sell them for a profit or refinance, and struggling with higher payments.

“A lot of those people have gotten a rude awakening,” Chapman said.

As of April, more than half of such loans in the United States were either at least 60 days’ delinquent or in foreclosure, according to First American CoreLogic. Those numbers likely will increase, as resets are not set to peak until mid-2011.

Job loss a threat

Another threat to prolong the foreclosure crisis is growing unemployment.

“You can’t make the house payment if you don’t have a job,” Waterman said.

Manatee’s jobless rate hit 11.8 percent last month, the highest since the state began calculating it in 1975. The state and national unemployment rates also are near record highs.

“Unemployment is going to be driving it,” Chapman said.

While that could fuel new foreclosure filings, there’s still the thousands of already-filed cases that have yet to make their way through the courts.

“You’ve got a buildup out there that hasn’t even happened yet,” Waterman said.

Lenders held back in pursuing judgements and taking back homes late last year and in early 2009, the result of temporary moratoriums and the rollout of government programs designed to prevent foreclosures.

But those programs have had limited success to date, and even that might not be permanent. The rating agency Fitch recently said it expects three of every four homes that the government’s “Making Home Affordable” program saves from foreclosure will end up there eventually, largely because the homeowners have too much debt beyond their mortgage.

That has led to fears that lenders will flood the market with repossessed homes and drive down prices even more, thus delaying recovery of the housing market and the broader economy.

Chapman hopes that scenario doesn’t happen, and that the foreclosure crisis will ease.

“We’re nearing the end of the down cycle, but we’ve got a long way to go before we climb out of that hole,” he said. “We just don’t know how deep that hole is and how long it will take to climb back up.”

For information on great real estate buys in Orlando and nearby suburbs,
contact the Orlando Property Group, your short sale and luxury home specialists.

Or Search Now for Real Estate & Homes in the Orlando Florida Area

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Read Also: Low Priced Foreclosures Incite Bidding Wars

Orlando Foreclosures the way to Make your Dream a Reality

admin — Sun, 26 Jul 2009 19:41:27 +0000

The economic slowdown has brought a major mortgage crisis in Orlando city too. As a result, a large inventory of Orlando Foreclosures is available and are cheap – almost 10- 50% low in cost as compared to the open market and have the best of locations and properties to choose from. Most of the Orlando Foreclosures are centrally located in the city, where property prices were earlier untouchable.

Orlando is no less than a dream land; more so, for the following reasons –

1.      This hi-tech city, earlier famous for its citrus growing farms is world renowned for the Walt Disney world resorts as well.

2.      Orlando houses over 150 international companies from over 20 different countries. This might interest prospective Orlando Foreclosures investors.

3.      The economy of the city balances on two strong pillars – technology and tourism.

4.      The technology industry, worth $1.3 billion approximately, employing around 53,000 people, is the strength of the economy. It is diversified into various sub categories like – agritechnology, digital media, aerospace and software as well. Thus, giving the Orlando Foreclosures investors a clear picture of the various career opportunities available in the city.

5.      Tourism on the other hand thrives on the world famous attractions offered by the city in the form of – the Walt Disney World Resorts, The Sea World Orlando and The Universal Orlando Resorts.

6.      The country’s 7th largest research park is also located in the city. It caters to the simulation related research demands of the defense forces of the nation. Over 120 companies, employing 8500 people are located within this park.

7.      The Orlando Foreclosures buyers must keep in mind that job and business opportunities are ample in this city as it also has a budding film, television and gaming industry, growing at a fast pace due to the Disney’s Hollywood Studios and the Universal Studios.

8.      There are two non-profit hospitals also in Florida. These are – Florida Hospital and Orlando Health. The Florida Hospital is famous for its brain attack facility world over.

9.      It is the fastest growing retail market of the United States, with shopping malls like –Orlando Fashion Square, Festival Bay Mall and The Florida Mall, as the main attractions.

10. In addition to the various private colleges, the city of Orlando has the famous University of Central Florida. This university has had the largest number of student enrollments in the whole of U.S. Thus, education should not be a worry for the Orlando Foreclosures investor.

When a city holds so much of promise, it is only wise to invest in these great foreclosure opportunities and live your dream.

For information on great real estate buys in Orlando and nearby suburbs,
contact the Orlando Property Group, your short sale and luxury home specialists.

Or Search Now for Real Estate & Homes in the Orlando Florida Area

Looking for specific information regarding Orlando Florida real estate prices and communities? Get Your Free Market Snapshot

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Short Sale is an Excellent Option for Homeowners Facing Foreclosure

admin — Sun, 26 Jul 2009 19:28:05 +0000

A short sale can be the best option for the homeowner facing foreclosure , in today’s market homeowners need to be proactive instead of reactive.

Orlando, FL July 22, 2009 – Short Sale vs. Foreclosure: A short sale is a better option than: Deed in lieu of Foreclosure, Bankruptcy, or Foreclosure,

There are many, many reasons for this.

If you are behind on your mortgage, and do not feel you will be able to keep up with the maintenance, taxes, insurance and mortgage payments then a Short Sale may be the best option for you.

There are several reasons a short sale may be a better option:

Your lender would much rather know that you have taken the steps to help avoid more losses for them by listing your property for sale with a reputable agent.
The costs of foreclosure cost your lender more than just the loss in not receiving your mortgage payments. They must hire attorneys, pay court costs, and maintain the property after foreclosure … all of this in addition to not receiving mortgage payments.
Your lender will see your eagerness to try to ward off foreclosure by selling the property as a good faith act on your behalf. You will have tried to reduce their losses. This is a good thing. Especially in today’s market value in a downward spiral.
When you list your property as a short sale, the most important factor is your Realtor, and the Short Sale Experience behind that Realtor.
A reputable agent should do their homework, and research the community, the lender who holds your mortgage and many other factors. It isn’t just about selling a property any longer.

It takes a very organized and experienced Agent with a Team of Knowledgeable Personnel to get it right. And Get it Right the First time.

What this means is the agent should review neighborhood data, to ensure they price the property according to what the market will bear.

If the property is priced too low you will undoubtedly receive bogus low ball offers, and getting your lender to even look at such an offer would be a hard task, plus it wastes valuable time, If a property is priced too high – you will have a hard time securing a purchase offer. The price of the properly is the most important factor in doing a short sale.

Short sale in Orlando, is very common, the short sale experts, are helping homeowners and stabilizing the real estate market.

For information on great real estate buys in Orlando and nearby suburbs,
contact the Orlando Property Group, your short sale and luxury home specialists.

Or Search Now for Real Estate & Homes in the Orlando Florida Area

Looking for specific information regarding Orlando Florida real estate prices and communities? Get Your Free Market Snapshot

Low-priced foreclosures incite bidding wars

admin — Wed, 22 Jul 2009 18:41:34 +0000

PHOENIX — Each time Lance and Kelli Thorson thought they had found their first home, someone would outbid them. It’s already happened at least 15 times.

This wasn’t how it was supposed to be in a depressed housing market like Phoenix. Buyers are supposed to be able to walk in, and get pretty much whatever they want. Now, the Thorsons have taken up a tactic not seen since the heydays of the housing bubble — they are making offers on homes before they’ve seen them, as many as three per day.

“It’s frustrating because we’ve jumped through all the hoops and there still isn’t a reward,” Kelli Thorson said.

In Phoenix suburbs and other areas of the nation saturated with foreclosed homes, low prices for bank-owned properties are sparking bidding wars that drive up sale prices, entice investors and frustrate traditional buyers who make dozens of offers and still can’t land a home.

Experts say the environment is strikingly similar to what they saw at the height of the real estate bubble.

“This market is about as abnormal as the hypermarket that we came out of a few years ago,” said Jay Butler, director of the Realty Studies program at Arizona State University.

Just as they did during the boom period, investors now are stocking up on homes, driving up prices and forcing traditional buyers to the sidelines in some areas, Butler said.

Because they often pay cash and buy several houses at once, investors are attractive to banks trying to shed dozens of foreclosures, he said. Traditional buyers add time and hassle to the process because they have to be approved for a mortgage.

The market won’t stabilize until investor influence diminishes and it is once again driven by buyers who plan to live in the home, Butler said.

The problem is centered in newer, lower-priced communities affordable for young families and other first-time home buyers. They’re the same neighborhoods that were overrun with foreclosures as mortgage rates adjusted and home values dropped.

Homes are now listed at much lower prices than when they were sold just a few years ago. In the Phoenix area, the median resale home price last month was $125,000, down from a peak of nearly $265,000 three years ago. Prices have risen from a low of $115,500 in April, when agents say they began seeing a buying frenzy.

Real estate agents have been noticing the problem for the past two to three months, said Walter Molony, a spokesman for the National Association of Realtors.

It is especially acute in heavy foreclosure areas such as Las Vegas, Phoenix, southern California and southern Florida, where prices are correcting to levels well below their peak during the boom, Molony said. In those areas, it’s not uncommon for sellers to get multiple offers.

The Thorsons thought they were ideal home buyers. They saved money, have good credit and little debt. But at house after house, the prices are being bid up above the asking price.

They made an offer on one bank-owned house, only to hear a counter offer that was $33,000 above the initial asking price of $117,000.

Federal legislation designed to help people stay in their homes has slowed the flow of foreclosures into the market, lowering the inventory and increasing the demand for remaining homes.

In Maricopa County, which includes metropolitan Phoenix, nearly 32,000 homes are on the market, down 30 percent from January.

In the Las Vegas area, home inventories are down nearly 10 percent since March, according to data from the Greater Las Vegas Association of Realtors. Last month, 4,702 homes were sold in southern Nevada, a record number; 74 percent were foreclosures.

Las Vegas real estate agent Jonathan Abbinante said he has clients who are making three offers a day on homes they’ve never seen. If they get a response, they’ll check out the house and decide whether to continue or back out.

He said he sees a similar frenzy for houses he’s selling.

“I sell homes right over the Internet,” Abbinante said. “That’s what I did in 2004.”

Bidding wars often result in prices higher than a home’s appraised value, putting traditional buyers at a disadvantage against cash buyers who don’t need an appraisal to secure a loan. That’s happening a lot lately, said Jerry Lou Davis, a real-estate agent in foreclosure-heavy Merced, Calif. She saw similar activity early in the housing bubble.

For the Thorsons, with a lease expiring next month and a second child on the way, the pressure to find a home is growing. Kelli is eager to paint and decorate. She already has plans mapped out for their 2-year-old daughter’s room.

“Buying a first home is supposed to be a really exciting thing to do for a family,” Lance Thorson said. “But all the hoops you have to jump through kind of take away from that excitement.”

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Bidding wars break out on low-priced homes

admin — Wed, 22 Jul 2009 18:38:36 +0000

Bidding wars are returning to South Florida’s housing market, as investors and first-time buyers compete for homes and condominiums listed at $200,000 or less.

The race for properties is reminiscent of the boom years from 2000 to 2005, when multiple offers on all types of dwellings helped push prices to record highs.

Back then, a dearth of properties for sale had buyers rushing to scoop up anything they could find, for fear that prices would keep rising. Now, frustrated with a bloated inventory of foreclosed homes in disrepair, buyers go to great lengths when they spot a house or condo in pristine condition.

“When they find a good listing, people are pouncing,” said Terry Story, a real estate agent for Coldwell Banker in Broward and Palm Beach counties.

Agents say the heated competition has been building in recent months, a result of low mortgage rates and the $8,000 tax credit for first-time buyers that expires Nov. 30.

Steady sales increases during the past year gradually have worked off the inventory of available homes. Real estate agents are convinced that the overall market has hit bottom or is close to one.

Housing market researchers have a different take.

Because of mounting job losses and the lingering recession, the bidding wars are mostly confined to homes offered at deeply discounted prices. Also, housing experts say, the market needs more than investors and first-time buyers taking the plunge for a rebound to occur.

Analysts don’t expect across-the-board price increases soon and predict that prices in Broward and Palm Beach counties will keep falling, albeit at a slower rate, through this year and into 2010.

The bidding wars “are a good sign, but I don’t think it’s the sign that we’re at the bottom,” said Brad Hunter, a housing analyst with Metrostudy, a market research firm with an office in West Palm Beach.

Rising unemployment is sure to lead to more foreclosures and property sales later this year, which almost certainly will lower prices, Hunter and other analysts say.

Some observers suspect that lenders are holding back the supply of foreclosed homes, promoting bidding wars to increase prices now before the flood of new listings further depresses prices.

Banks dispute that notion. They say they’re overwhelmed with foreclosures and try to market them for sale as quickly as possible.

“The longer we hold them, the more money it costs us,” said Nancy Norris, a spokeswoman for banking giant Chase.

The bidding wars in South Florida are giving sellers more leverage after three years of buyers calling the shots.

Investor Greg Bales bought a three-bedroom home in Lauderdale Lakes three months ago for $65,000 — $1,900 less than what it sold for in 1985.

Bales, 41, beefed up the curb appeal with a new paint job, trees and other landscaping. Inside, he installed laminate floors, granite countertops, new kitchen appliances and an alarm system.

He put the home back on the market July 10 for $139,900 and fielded 10 offers, three for more than the asking price.

He selected a bid from a first-time buyer for $145,000, and the deal is expected to be complete next month.

“We would have had a bunch more offers, but my real estate agent told the people it really wasn’t worth their time if they weren’t submitting a full-price offer,” Bales said.

Eric Cormier of Philadelphia is searching for a small home for his sister-in-law in Delray Beach. He offered $120,000 cash for a house listed for $152,000, only to be out-bid by a few thousand dollars.

Another home he considered received four offers in one day.

“I was surprised,” said Cormier, 47. “I thought there was a fire sale going on in Florida.”

In some cases, first-time buyers are losing homes because sellers prefer dealing with cash investors, who don’t have to fiddle with financing.

Meanwhile, some real estate agents are creating “drama pricing” — listing properties for far less than the market value to attract bidders and drive up the eventual selling price.

“It’s like ‘Ta-da’ ” said Douglas Rill, an agent for Century 21 America’s Choice in West Palm Beach. “It creates so much of a buzz that it results in a bidding war.”

Drama pricing typically happens with short sales. Those homes aren’t as much in demand because buyers know that it can take months for the deals to close. In a short sale, a lender accepts less than what’s owed on the mortgage and forgives the remaining debt.

Tony Thomas, 44, is looking for a home about $200,000 in central Palm Beach County. He made three offers, only to be told each time that another buyer out-bid him.

His agent, Liz Golub, told him to “run like a bunny” to make strong offers as soon as properties come on the market. The strategy paid off recently when the owner of a home near Lantana accepted his offer. But because it’s a short sale, the bank must approve the deal, and that could take months.

“It’s frustrating,” Thomas said. “I have not seen the benefits of this buyer’s market right now.”

For information on great real estate buys in Orlando and nearby suburbs,
contact the Orlando Property Group, your short sale and luxury home specialists.

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Real Estate Today-Alternatives to foreclosure: the hidden power of property owners

admin — Mon, 20 Jul 2009 16:35:06 +0000

We are facing an unprecedented rise in foreclosures in the United States that threatens our financial security and the stability of our communities.

Today, every homeowner is acutely aware of the rapid decline in property values. The real estate euphoria that took place during the “boom” years at the beginning of this decade has vanished. Prices have plummeted and home equity has simply evaporated. For many owners this loss of equity poses a grave threat. Owners who bought or refinanced a home during the boom, now find themselves “underwater” owing more on their mortgage than their house is worth. Those with adjustable mortgage rates may discover that their monthly payments have risen and are now out of reach. For others the steep economic decline and dramatic job losses have cut income, leaving them no longer able to afford their monthly payments

One in every eight Americans is now late on a payment or in foreclosure, according to the Mortgage Bankers Association, (MBA) About half of the new foreclosures were in four states: California, Florida, Arizona, and Nevada. While 11 percent of all mortgages in Florida were in foreclosure, the Massachusetts foreclosure rate was 2.8 percent with 12,000 foreclosures in 2008

This foreclosure crisis though is more than a national crisis. It is a community problem that affects our town’s neighborhoods. Middlesex County leads Massachusetts with 1,741 foreclosure filings so far this year. In Billerica there have been 61 foreclosure filings since the beginning of the year, giving it the 23^rd highest foreclosure rate in Massachusetts ahead of 335 cities and towns across the state. Even though there are powerful market forces that are driving this, foreclosures can almost always be stopped.

Foreclosure can be stopped because property owners have a great deal more bargaining than they realize. Taking a property back through foreclosure is always the last resort for banks. The fact is banks do not want to own property. Rehabbing, managing and selling homes are not want banks do. In fact, foreclosure is very expensive for banks. Analysis from Freddie Mac and large banks show that the average cost of foreclosure is $60,000. That is in addition to the loss incurred on the sale which often amounts to 20 percent to 25 percent of the loan’s value. Because of this banks have a strong incentive to work out the problems with the loan and try to find an accommodation with the borrower.

In order to access their negotiating power, owners who are concerned about foreclosure must take two immediate steps, (1) understand and evaluate their options, and (2) take immediate action. The first step in this process is for the borrower to contact their lender. By simply notifying the bank, the borrower is opening a dialogue and beginning the negotiating process. It gives the bank the good news that like them, the borrower wants to do all they can to work out an alternative to foreclosure.

While there several strategies a borrower can use to avoid foreclosure, there are three that are primary, (1) refinance, (2) loan modification and (3) short sale. The new government Home Affordability and Stability plan offers incentives for all three. Borrowers who are current on their payments, but owe more than their house is worth may be eligible to refinance, lowering their monthly payments. Owners who are behind may seek to modify the terms of their loan be extending the length of the term, lowering the interest, or both.

Borrowers who owe more than their house is worth, want to move, or do not qualify for other options can sell their property through a “short sale.” A short sale enables an owner to sell their property for less than the amount they owe on their mortgage. In almost all cases this allows the owner to sell their property quickly, free themselves from mortgage debt completely and take advantage of the Mortgage Debt Relief act to not pay taxes on any forgiven debt.

Foreclosure has a direct, negative effect on both the borrower and the lender. More importantly though, foreclosures drive down property values for the entire community. Homes currently on the market become less sellable, more owners are put at risk and foreclosure becomes more likely, creating a negative, downward spiral in the housing market that effects us all. It does not have to be like this though. A property owner who arms themselves with information and takes action has the power to stop foreclosure in it’s tracks.

For information on great real estate buys in Orlando and nearby suburbs,
contact the Orlando Property Group, your short sale and luxury home specialists.

Or Search Now for Real Estate & Homes in the Orlando Florida Area

Looking for specific information regarding Orlando Florida real estate prices and communities? Get Your Free Market Snapshot

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