Monday, December 27, 2010

The Value of Long Term Ownership

Owning a home has been and perhaps shall always be the fundamental core of the American Dream. However, the recent spell of foreclosures, robo-signing scandals, bank failures, high unemployment rate, diminishing home values, tight credit and a weak economy have all battered the housing industry so badly, that a lot of people have begun to doubt the value of long-term home ownership and even question if the benefits are over hyped. Let’s analyze the benefits.

Any discussion on the benefits of home ownership without underscoring the words “long term” is incomplete. The rules that apply to the stock market apply to home ownership as well. Only the long-term stock investor reaps the riches of compound interest and capital growth. The same is generally true for home ownership as well. Even in today’s tough market, real estate is still considered the best hedge against inflation.

Despite declining prices, the typical home owner that purchased a home eight year back has experienced a median equity of $33,000, which is a 24 percent gain. Similarly, sellers that lived in their homes for 11-15 years got a median increase of 40 percent. Despite the declines in home values in recent years, the fact remains that most long-term home owners get healthy returns on their property value over time.

The need for a roof over our heads is perpetual. Population growth creates a natural, ongoing demand. Young couples raising families prefer to move to larger houses in better school districts, while empty-nesters choose to downscale to a newer and smaller home after the last child has enrolled in college. The prevailing low interest rates have also made housing very affordable. The desire to own a home of their own is cited as the number one reason to buy by 53 percent of first-time home buyers. The second biggest reason for buying  was the desire for a bigger home, followed by other reasons such as a change in family situation, benefits of home buyers tax credit, job-related relocations, and home affordability.

Despite a severe and relentless beating, the long term benefits of home ownership are here to stay. According to a recent NAR survey, 85 % of recent home buyers see their home as a good investment, and nearly half think that investment is better than stocks. NAR underscores two simple facts that support the benefits of long-term ownership. Home ownership fosters stability, and the longer you own a home, the better returns you get on your investment.

Thursday, December 16, 2010

A Category 5 Hurricane named “Foreclosure Crisis” and its ill-effects on the Sunshine State

While the U.S. was spared the wrath of the 2010 Atlantic hurricane season, many states have encountered the wrath of a man-made hurricane named “foreclosure crisis,” which in many states including Florida has reached a category 5 status in terms of its destructive power.

This gargantuan hurricane continues to wreak havoc on the mortgage industry and destroy thousands of homes in its path since the time it made landfall several months ago.

Besides Nevada and Arizona, Florida is the third hardest hit state in the nation, thanks to the deadly blend of the national financial abyss, bank failures and the foreclosure crisis. Just this year alone Florida was socked with 27 bank closures, which is a whopping 19% of the nation’s share. The ripple effect of this financial swamp has caused huge volatility in the rental and owner-occupied residency rates. Jacksonville led the nation with a 14.4% rental vacancy rate, which is almost twice the national average.

Back in September, Ally GMAC’s mortgage division stopped foreclosures in Florida and 22 other states to investigate a fraudulent practice called “robo-signing,” in which their employees were allegedly signing off and improperly filing paperwork with questionable or cursory review processes. Other banks followed suit by halting foreclosures in these 23 states.

In mid-October, this domino effect prompted the attorneys general of all 50 states and mortgage regulators in 30 states to announce a joint investigation of the foreclosure practices of mortgage servicers. Preliminary reports from the investigators indicate that the robo-singing allegations may just be the tip of the iceberg and there may be numerous other shoddy practices which could have started over 3 years ago.

The investigation committee which has 12 top legal bigwigs from various states continues to uncover deceitful practices. For example, in a deposition filed at a West Palm Beach court in December of 2009, a GMAC employee, who was a member of a 13 people team responsible for reviewing and signing 10,000+ affidavits, was many times not bothering to verify the accuracy of the documents and information given to him.

A news feature about Michael Carlson’s case which was published on November 9th in the St. Petersburg Times has the potential to push the foreclosure crisis into unchartered waters. Carlson’s home in Dunedin, FL was foreclosed in 2008 by Bank of America. Carlson is contesting the foreclosure, stating the bank’s failure to notify him about the legal proceedings until after the foreclosure was completed. The problem is Bank of America sold that home to another owner more than a year ago. The current owners had assumed they were buying a bank-owned foreclosed property. They could lose their home and be evicted if Carlson wins his case. If that happens, those owners would almost certainly file a case against Bank of America. Legal pundits believe if Carlson wins the case, this could set a national precedent and if one or more such cases are filed, the snowballing effect could create a legal tsunami which could potentially rattle the housing market even further and the put the nation’s shaky economy into a tailspin.

Wednesday, December 15, 2010

5 Things to Do Now in Order to Buy a Home in 2011

There are lots of purchases that are highly prone to impulse buying: shoes on sale, puppies at the pound, and carrot cupcakes with cream cheese buttercream frosting come instantly to mind. (But that's just me.)

But houses?  Not so much. Savvy, regret-free homebuying can take weeks or months of financial and lifestyle research and planning.  If you want 2011 to be the year you become a homeowner, here are 5 things you should be doing, as we speak.

1.  Minimize your holiday spending and save your cash. Instead of using the holiday sales to acquire a new winter wardrobe of cashmere sweaters, hold the discretionary spending down so you can give yourself the gift of homeownership!  If you are serious about buying a home next year, don't run up additional credit card debt on gifts this year. Instead, make homemade cards or write holiday letters this year for everyone except the kiddos.  And even for the kids, consider scaling back on the stuff, spending more of your time with them than your money, and getting started now saving toward your home purchase. (I don't think too many folks would argue that a less materialistic holiday season would hurt anyone, at any age.) 

Kickstart your 2011 homebuying resolution by starting a "Home" savings account at an high-interest, online bank (the discipline-boosting goal is a bank that isn't super easy to transfer funds out of when you run low on cash), and set up an automatic deposit into it every payday. To get specific about your savings goal, if you're cash-flush, obviously a 20% down payment will get you top notch interest rates and provide you with the maximum ability to manage your monthly payments. If you're going to be more of a bootstrapping buyer, an FHA loan might be right up your alley - they offer a down payment of 3.5% of the purchase price. 

All buyers should plan to have at least 3 percent of the purchase price saved up for closing costs, even if you want the seller to chip in.  The lower-priced the home you want to buy, the more percentage points you should be willing to chip in for closing costs.  It's easy for closing costs on an $150,000 FHA loan to run as high as $4,000 or more, considering transfer taxes, inspections, appraisals and mortgage insurance fees. So, even the scrappiest buyer should have a savings target somewhere around 6.5% of their target home's price.  To buy a $200,000 home, for example, that would mean a savings target of $13,000.

Local real estate and mortgage pros can help you clarify realistic "cash to close" expectations and savings targets for your area - ask them, on Trulia Voices.

2.  Research financing, areas homes, prices, agents and online. Smart homebuying takes a lot of research and knowledge-gathering.  Since most buyers find it much harder to qualify for a mortgage than it is to find a home you'd love to live in, start with studying up on home financing and what it will take for you to get a home loan (note: FHA loans are preferred by the average homebuyer on today's market who has less than a 10% down payment, so start your research there). 

If you're considering relocating next year, now's the time to start narrowing down states, cities and even neighborhoods that may or may not work for you. Take into account the job market, housing and other costs of living, and income and property tax rates, as well as the critical lifestyle inputs that vary from state-to-state, like weather and whether the place is a personality fit for you and the life you want to live, be it urban sophisticate or outdoors adventurer. 

Also, start to develop a feel for home prices in a what-you-get-for-your-money type way, and start narrowing down the home styles and even neighborhoods that might fit your aesthetic preferences and lifestyle.  If you're one of those rare buyers-to-be who is not already obsessively house hunting, hop on Trulia and start regularly checking out homes and neighborhoods, making sure to take advantage of the neighborhood ratings and reviews feature, which empowers you to surface what other folks think and say about an area. 

3.  Rehab your credit, if you need to.  Go to AnnualCreditReport.com and check out your credit reports - from all 3 bureaus - for free. (Note - these will not give you your credit score for free - that costs extra, but it will give you the actual detailed credit reports.)  Audit them for errors and do the work of disputing inaccuracies to have them corrected. Pay particular attention to: accounts that are not yours/you never opened, derogatory information that should have "aged off" your report by now (i.e., 7 years for late payments, 10 for bankruptcies) and balances or credit limits that are inaccurate (i.e., your credit card balance is listed at $2500, but you actually only owe $250.)  These are the errors most likely to foul up your financing, so follow the instructions each bureau provides to correct them, stat. While you're at it, don't close any accounts, even if you are able to pay some down or off - actually, check out these tips for getting the bank to give you the best possible home loan, without unintentionally making your score worse!

4.  Run your numbers. In the past, some overextended homeowners complained that they felt pushed into a mortgage they couldn't afford. Pundits blamed that on the real estate and mortgage industry, but I have witnessed firsthand many a homebuyer push themselves or their spouses into buying too expensive of a home. Eliminate this issue entirely by doing this - run your own numbers, before you ever even talk to a salesperson or start looking at homes beyond your means. (I assure you, once you see the million dollar home you think you can afford, the $250,000 home you can actually afford will be underwhelming.)

Get your monthly finances in order, and get a clear read on how much your monthly bills are - outside of housing. Decide how much you can afford to spend every month for housing, when you buy your home.  Get clear on exactly how much cash you plan to have at hand to put into your transaction up front.  When, in the next step, you begin working with a mortgage broker, you'll want to share these numbers with them, early on in your conversation, to empower them to tell you what home price you can afford - not based on their rubrics, but based on what you say you want to spend every month and what you want to put down.

5.  Talk to a real estate and mortgage broker (1 of each). Trulia is a great place to find an engaged, communicative, tech-savvy real estate broker or agent in your area.  You can use our Find a Pro directory or simply start participating in the Trulia Voices Community, asking your questions and tagging them for the town where you plan to buy a home, and paying attention to the agents who give timely, thorough responses to your questions, and communicate in a language you understand. 

Drop one (or a few) an email, letting them know you'd like to work on putting an action plan together for buying a home next year, and would like to talk with them about what action steps need to go on the list. Ask them to brief you on the timeline of a transaction in your local market, and to point out for you things like when along the process you'll need to bring money in, when you'll need to miss work and come into their office or the closing office, whether they offer conveniences like digital document signing, and generally the local standard practices about which buyers you'll need to know.  Depending on your target home purchase timeline, they might even want you to take a spin with them and look at a few properties to reality-check your expectations or narrow down a broad wish list. 

In addition to chatting with them about timing your purchase vis-à-vis your other life events and plans for the year, make sure to ask for referrals to a local, trustworthy mortgage broker or two - preferably one that has worked with them and closed a number of transactions with their clients.  (In fact, many busy real estate pros will want you to talk with their trusty mortgage partner before they get too involved in your planning process.  You may think you only need a month to get ready to buy, but once the mortgage folks weigh in, it might turn out that you actually need a few.)  When you do get in touch with the mortgage maven, if you're serious about buying, you will want them to actually pull your credit report, check the actual FICO scores that come up on their system and give you their professional recommendations for what final tweaks you can do to your debts to get your credit score where it needs to be.

By Tara-Nicholle Nelson | Broker in San Francisco, CA

Monday, December 13, 2010

The Great Real Estate Bargains of Central Florida

Crisis and opportunity are like two sides of a coin. The foreclosure crisis which has depressed the real estate market in Florida and most of the nation has also created some great opportunities for home buyers and investors. This is especially true in the Central Florida region.

What caused the crisis?
Where do we begin? The easy loans, low interest rates, construction binge, over inflated home values, robo-signing scandal, toxic titles, the falling dollar, a sputtering economy, job losses, Fannie Mae & Freddie Mac fiascos, bank closures…and the list could go on.

The Opportunity
While there are many pockets of depressed housing markets in the country, the Central Florida region is home to one of the highest foreclosures in the country which has resulted in a yard sale like bargain basement opportunity like never before for investors. For example, home prices in Sarasota were averaging $350 per square foot and $250 in the Orlando area in 2006. Today, prices in some of these areas have plummeted to an unthinkable $47 per square foot in Sarasota and $140 in Orlando. With properties being sold for as little as 35 cents on the dollar in some area of Central Florida, it is no wonder that domestic and international investors from Europe and Canada have been making a beeline to the area to score awesome bargains, as if it was Black Friday.

With the U.S. and Canadian dollars almost at par, this is a fantastic opportunity for Canadians buyers and investors. Canadians are still able to get great financing in the U.S. Canadian banks are bending backwards to facilitate their citizens by offering special loan packages and expedited approvals.

Thanks to the continuously falling dollar value, the Brits are the second largest contingent to take advantage of this unprecedented buyer’s market. Some real estate agents in the Central Florida regions have been receiving 25-30 emails each day from UK investors, some of whom are willing to pay cash to buy the best deals. So what’s attracting these investors besides cheap prices? Well, the Europeans get a much bigger bang for their dough in Florida than in Europe. Commodious custom-built properties, splendid golf communities, excellent future capital growth prospects, good schools, access to beautiful beaches, the Florida sunshine, etc., are icing on the cake.

Most of the domestic buyers are the ones who ironically made their fortunes during the peak housing and condominium boom that preceded the current situation. Many of these investors are buying homes and townhomes near the University of Central Florida and renting them to students and families that want to take advantage of some of the best public schools in the state.

When will all this end?
Anyone that predicts this accurately would be listed in the Forbes richest list for years!

Monday, December 6, 2010

The Lifting/Resolution of the Foreclosure Freeze

While dust from the robo signing – a shady practice where lenders allegedly processed foreclosure documents and affidavits sloppily, without a thorough review mechanism to verify the authenticity of documents – controversy is still up in the air, Bank of America and other giant lenders announced resumption of foreclosures which put almost 2 million homes at risk.

These institutions had temporarily suspended evictions and foreclosures in 23 states that require judicial approval for foreclosures. The attorneys general of all 50 states are currently investigating the mortgage servicing industry’s foreclosure practices. While robo-signing became an overnight Internet buzz word, it wasn’t the only ingredient of this deadly concoction.  Attorneys for home owners have found evidence of missing documents, some of which may have been thrown away. Federal and state investigators now believe that they may have to go back more than three years to unearth root causes that may have contributed to the current situation.

Despite skepticism expressed by various experts, Bank of America said it would resume foreclosures in the 23 judicial states, while the freeze would continue or lifted on a case-by-case basis in the 27 states that do not require judicial approval.

Lifting the foreclosure freeze is good news for real estate agents as many of them had seen their business come to a grinding halt after major banks had frozen foreclosures in October. Conversely, homeowners who are behind on their mortgage payments could soon feel the banks breathing down their necks.

Homebuyers and investors are in a dilemma about pulling the trigger now to purchase REOs or wait until the dust settles down. The hesitation to buy is partly emotional, but largely fueled by the uncertainty of the ongoing federal investigation and the recent announcement by the nation’s three largest insurers about not offering title insurance to buyers of bank-owned homes with flawed or nebulous foreclosure paperwork. This is a catch-22 for a lot of buyers that finance home purchases through a mortgage because lenders require a title insurance policy and insurance companies won’t issue one till they are convinced that the property in question was properly foreclosed by the bank.

Friday, December 3, 2010

Mortgage refinance activity up 47% here

New data from MortgageLoan.com shows an overall increase in mortgage and refinance requests in several Florida cities, including Orlando.
The data, which tracks the period from Oct. 15-Nov. 15, found that Florida was a leader among the 50 states, with a 71 percent increase in refinance requests in Miami and Fort Lauderdale, and a 47 percent increase in Orlando.
“The dramatic increase in refinance activity in Florida markets suggests that home values may be stabilizing in many areas,” said David Coster, a residential lending expert at MortgageLoan.com.
MortgageLoan.com publishes mortgage rate information, news, consumer guides and tools for consumers, mortgage and real estate professionals.


Read more: Mortgage refinance activity up 47% here | Orlando Business Journal

Thursday, December 2, 2010

Holiday Home Showing Tips

If you do not want to show the house, don't. 
Buyers are fewer during the holiday season and most understand the additional restrictions the time frame places on showings.  This said, the fewer buyers out there are more often serious buyers and while it may be more inconvenient, it might just be the buyer you are looking for!

To decorate or not to decorate...
While staging your home at its holiday best, always creates a warm happy feeling for you, it can back fire in a big way.  First you need to make sure you have the space available, do not make small room look smaller, or block walking paths, always remember bright and open spaces are best.  Secondly, you do not want to turn off a potential buyer. Make sure that any decoration is more holiday cheer than anything else, keep it somewhat secular and ethnically neutral. 

No Show Dates
The time is now, let your Realtor know your no show dates.  This information can be loaded into MLS so that showing Realtors are aware.  Nothing is more frustrating to a buyers agent than to try to schedule a showing and be told no.  This can quickly drop you off their showing list.  Keep it to a minimum, but clearly state your no show dates.

Expect Headaches
The home will be shown, when you and possibly the kids are at home, at the worst possible moment.  Know it, believe it, deal with it.  Buyers will leave the front door open, letting heat out, they will track in dirt, rain and even a little snow.  But remember, most likely they are serious buyers, so they are worth a little inconvenience. 

Sensory Staging
Personally, I recommend this one all year round!  Think comfort smells, the sense of smell can be a huge memory trigger.  Warm apple or pumpkin pie, sugar cookies, even brownies and cakes all tend to have positive, warm memories associated with them.  A quick frozen pie popped in the oven, heated up and then turned off, with the oven door cracked makes an excellent house warmer and sensory trigger. 

Think Santa
Do not forget to put on a pot of coffee and leave out some mugs and treats.  Statistics show, the longer a buyer stays in your home, the better the chance of an offer.

Monday, November 15, 2010

Mortgage rates lowest since Freddic Mac began keeping track

A 30-year fixed-rate mortgage averaged 4.17 percent in the week ending Nov. 11, down from 4.24 percent last week. A 15-year fixed-rate loan averaged 3.57 percent, down from 3.63 percent last week.

Unfortunately, historically low mortgage rates haven’t translated into gains for the residential real estate market — at least not in Central Florida.

Despite a drop in prices, sales of existing single-family homes saw little change in the third quarter in Orlando, according to the latest figures from the Florida Realtors, formerly the Association of Florida Realtors.

Orlando existing home sales rose slightly, to 6,750 single-family home resales in the Orlando area in the three months ended Sept. 30, up from the 6,724 homes sold in third-quarter 2009. The median sales price of a single-family home in Orlando was $130,300, down from $145,800 in third-quarter 2009.


Read more: Mortgage rates fall to new lows | Orlando Business Journal

Wednesday, October 20, 2010

Coming Soon

In the near future this blog will be full of information on Real Estate in Central Florida.  Information will be both for buyers and sellers. 

In the meantime, please visit our website, facebook and join our email list using the links.  Everything is under construction, so so watch us grow!

Thursday, May 20, 2010

Home prices on the way up

Orlando existing home sales increased in average price for the third month.  This month the price was up 4.5%, but don’t get to excited overall still down 11.5% compared to April 2009.

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Monday, May 17, 2010

Coldwell Banker Ackley Realty Ranks First in Southern Region Sales Production

Kissimmee-based Coldwell Banker Ackley Realty is the top-ranked Coldwell Banker affiliate in both Florida and the Southern Region encompassing 14 states for 2009.

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Friday, January 29, 2010

High Speed Rail to connect Orlando to Tampa then Miami

President Obama will be in Tampa today to unveil the plans for a new high speed rail to connect Tampa and Orlando.  The rail will be funded by grants from the American Recovery and Reinvestment Act.
Construction will bring 1000s of jobs to the Central Florida area.  Upon completition in 2014 the rail will serve residents and visitors linking the two cities together.
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