Luxury Home’s Market Report

I am a very visual person and I am sure many are too.  The link below has numerous charts that show how the luxury real estate market is doing.  I feel there is more liquidity coming back to the market for Jumbo mortgages (loan amounts above $417,000) which could be helping sales of these higher priced homes.

The supply of luxury homes is coming down, the percent of price decreases is stabilizing, etc.  Make sure to take a look at the charts of the different cities.  Miami isn’t looking too bad.  I know in Fort Lauderdale, Broward County, we are along the same lines as Miami due to the steep price reductions over the 12 months. 

http://www.luxuryhomemarketing.com/real-estate-agents/ILHM-Luxury-report.html 

FHA’s Loan Modification

HUD just released an updated mortgagee letter with regards to their modification program.  It is kind of confusing because HUD states if your interest rate is 50 basis points (.5%) or more above market rate then they will lower your interest rate to no more than 50 basis points above market rate.  Huh?  I know but the bottom line is that they want to lower your payment instead of modifying it and it increasing like so many other modifications that are out there.

If you have seen the statistics on the amount of loans modified and the percentage that are back in default, it was somewhere around 60%.  What they leave out or people tend to miss is that a large percentage of that 60% had payment INCREASES.  Yeah, not much of a modification. 

To read the full letter click on this link

http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/letters/mortgagee/files/09-35ml.doc 

Is Countrywide More Prudent Than FHA?

An article in The Wall Street Journal thinks so.  Although I wouldn’t go quite that far it isn’t too far from the truth.  Potomac Partners sent out an informative message about the current “potential” plight the FHA has, along with some predictions that make sense. First, with $30 billion in current cash reserves to pay claims, the FHA could pay claims for 50 months without considering any premium income from existing or new originations given their current rate. As for the future, Potomac Partners expects that the FHA will not only tighten their underwriting standards, especially in poorly performing products, but also develop their own automated underwriting system. Watch for increased post-endorsement reviews, greater counter-party responsibilities and indemnifications, and increased vigilance on wholesalers. Seller-servicers will be held accountable for the production of the originator, and “the FHA proposal, in effect, would be substituting the Direct Endorsement lender for the GSE seller-servicer.  We would expect the DE lender would have to underwrite and close the loan in its name.”

I would imagine this WILL happen. My personal opinion is that you should be required to have a 640 or 660 middle credit score, max debt to income ratio of 45%, 2 months of reserves, etc.  If you cannot save money then you shouldn’t be buying a home because there are extra costs that come with it.  You are responsible if something breaks, if your taxes and insurance go up, etc. 

http://online.wsj.com/article/SB10001424052970204488304574428970233151130.html?mod=rss_opinion_main 

Let The Tax Credit Expire

That is the headline in an article on MSNBC and if you read my Blog about this you would know that I agree with it on many levels.  It is a privilege to own a home and people who are going to buy will buy with rates so low and properties being so affordable.  Just to put it in perspective for you and the costs involved:

“Extending the credit and expanding its scope is a bad idea on multiple levels. For starters, let’s look at the program’s return on investment. According to the IRS, 1.4 million homes have been bought since the credit’s inception; the National Association of Realtors gives a somewhat higher figure of 1.8 million to 2 million. (Either way, the program is already going to cost about $15 billion if it winds down as planned, according to the Associated Press .) And yet, according to the NAR’s own math , the tax credit was the make-or-break factor in only 350,000 of those sales. The National Association of Homebuilders, another industry group lobbying to extend the credit, places this figure even lower, at 150,000 . In other words, the vast majority of homebuyers would have signed on the dotted line even without the government’s incentive.”

http://www.msnbc.msn.com/id/33059733/ns/business-the_big_money/ 

A Million Dollars Gets You More Home Now

It is a good time to buy luxury real estate as the article below points out.  Prices are down substantially and you can get a lot more for $1 million than you could a couple of years ago.

“In the 20 largest U.S. metro areas, about 2,800 homes sold for more than $1 million in July — down by more than half from July 2005, according to MDA DataQuick. Nationwide, overall home sales  were down about 27 percent, according to the National Association of Realtors.”

http://www.msnbc.msn.com/id/33045568/ns/business-real_estate/ 

Where Are Home Prices Bottoming?

Miami made the list again which I like to include Fort Lauderdale and Palm Beach counties in this too, South Florida in general.  I don’t know if I would say that we are bottoming or hit bottom, I will say there are so many great deals in South Florida and once prices do bottom out you are going to see a little bit of a jump in value.  That is once more of the normal sellers start selling since the bulk of sales are foreclosures and short sales. 

I just feel that homes are artificially deflated where as a couple years ago they were artificially inflated.  There are bidding wars going on in South Florida, a lot of cash buyers which in my opinion would mean investors, and most importantly it is affordable to buy a home now.

http://www.msnbc.msn.com/id/32970895/ns/business-forbescom// 

Should You Sell Your Current Home At A Loss & Buy At A Discount?

It isn’t a bad idea unless you can rent your current place out and cash flow it until the right time to sell.  If you waited to sell you would get more for your current home but most likely would also pay more money for the new home.

In South Florida, it can be very hard to cash flow your property especially if you bought in the past 5 years with very little money down. 

http://money.cnn.com/2009/09/28/real_estate/real_estate_market.moneymag/index.htm?section=money_realestate

Tips On Buying A Foreclosure

I am not a real estate agent nor do I pretend to be one so make sure to always consult one and make sure they are an expert when it comes to foreclosures. 

The article below has some neat websites you can check out to search for foreclosures but my personal opinion is to have a real estate agent do it for you.  As a buyer it doesn’t cost you any money other than maybe a $300 realtor processing fee. 

The most important thing to do is to get an inspection by an expert.  I would personally use a contractor I know to find out the real costs involved in the home. 

“Sometimes, people set their sights on bank-owned properties “like the word ‘foreclosure’ equals ‘good deal,’ ” says Mark Goldman, a mortgage broker with Cobalt Financial and a real-estate lecturer at San Diego State University. But that’s not always true.”

http://online.wsj.com/article/SB125399707660143695.html?mod=rss_PJ_Main 

Should You Do A Rent-To-Own?

I personally don’t think you should.  The article below shows the pros and cons especially in this current environment.  The way these loans work are you get a credit towards your purchase for the amount that you pay above market rent.  For some who have trouble saving it might not be bad but then if you have trouble saving you might want to seek a Financial Advisor and have the devise a financial plan for you. 

You have no idea where home values will be in 1 to 2 years or if you will even qualify for a mortgage so why risk it entering into an agreement to buy a home. 

http://money.cnn.com/2009/06/02/real_estate/rent_to_own/index.htm 

What Happens If The Tax Credit Isn’t Extended?

It doesn’t appear like much will change according to a recent survey that was done.  What is my opinion?  I think there are a lot of organizations that make a bigger deal out of things then they should.  I am not going to name any names but….. the NAR, NAMB, NAHB, etc. always do.

“According to a survey commissioned by real-estate Web site Zillow.com and released this week, 18% of prospective first-time home buyers said an extended credit would be the primary influence on their decision to buy a home next year. Twenty-five percent said the credit would be a “significant influence,” 27% said the credit would have “some” influence, and 31% said it would have no influence on their decision.”

Yes extending it may help but how do you really determine how many people bought just because of it?  It certainly helps but bigger than that in my opinion is that rates are at historic lows and homes are more affordable than they have ever been. 

Not everyone should own a home.  I am blown away by how many people think they can buy a home right now and aren’t even close to qualifying.  There is nothing wrong with renting.  Owning a home is a privilege. 

http://www.marketwatch.com/story/most-home-buyers-would-act-tax-credit-or-not-2009-09-25?siteid=rss