Florida’s Existing Home and Condo Sales Up in July 2009

22 08 2009

Florida’s existing home sales rose in July – the 11th month in a row that sales activity increased in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors (FAR). Statewide existing home sales in July also rose over the previous month’s sales level.

Existing home sales rose 37 percent last month with a total of 15,882 homes sold statewide compared to 11,595 homes sold in July 2008, according to FAR. Statewide existing home sales in July increased 0.2 percent over June’s statewide activity. Florida Realtors also reported a 48 percent rise in statewide sales of existing condos in July.

Eighteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in July; the same number of MSAs also showed gains in condo sales. A majority of the state’s MSAs have reported increased sales for more than a year (13 consecutive months).

To gain insight into current trends in Florida’s real estate industry, the University of Florida’s Bergstrom Center for Real Estate Studies conducts a quarterly survey of industry executives, market research economists, real estate scholars and other experts. According to the recent second quarter 2009 survey, investor confidence in the outlook for business and availability of money are reasons for cautious optimism.

“I think we’re on the road to recovery and even though most markets report they’ve seen the bottom, it’s going to be a long climb,” said Timothy Becker, the center’s director. He noted that the investment outlook for single-family development increased to its highest level since the survey began, with more respondents than ever believing it is a good time to buy.

Florida’s median sales price for existing homes last month was $147,600; a year ago, it was $193,800 for a 24 percent decrease. According to housing industry analysts with the National Association of Realtors (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in June 2009 was $181,600, down 15 percent from a year earlier, according to NAR. In Massachusetts, the statewide median resales price was $306,000 in June; in California, it was $274,740; in Maryland, it was $274,008; and in New York, it was $189,900.

Several positive market factors are influencing the housing sector, notes NAR’s latest industry outlook. “Historically low mortgage interest rates, affordable home prices and a large selection are encouraging buyers who’ve been on the sidelines,” said NAR Chief Economist Lawrence Yun. “Activity has been consistently much stronger for lower priced homes. We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions.”

In Florida’s year-to-year comparison for condos, 5,035 units sold statewide compared to 3,396 units in July 2008 for a 48 percent increase. The statewide existing condo median sales price last month was $108,300; in July 2008 it was $168,700 for a 36 percent decrease. The national median existing condo price was $183,300 in June 2009, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.22 percent last month, down significantly from the average rate of 6.43 percent in July 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s smaller markets, the Pensacola MSA reported a total of 371 homes sold in July compared to 321 homes a year earlier for a 16 percent increase. The market’s existing home median sales price last month remained level compared to a year ago at $157,800. A total of 48 condos sold in the MSA in July, up 23 percent over the 39 units sold in July 2008. The existing condo median price in July was $250,000; a year earlier, it was $325,000 for a 23 percent decrease.

Source: Florida Association of Realtors

Reverse Mortgage Loan for Purchase Program

22 08 2009

There is a new program designed to help seniors use a reverse mortgage to help buy a home, provided they can come up with a large down payment. In fact, it’s a significant down payment (twice the amount of a normal down payment.) It is the same underlying product that has been around for 21 years but it allows people to use it for purchase finance as opposed to a refinancing tool.

Before the Home Equity Conversion for Purchase program rolled out in January, seniors 62 years and older could only use reverse mortgage loans to draw out tax-free payments from the equity held in an existing home while continuing to live in it. Many lenders are now starting to offer these new loans in addition to traditional reverse mortgage products. But as with traditional reverse mortgages, there are costs involved that can add thousands of dollars to the loan amount, which grows over time and has to be repaid after the last borrower leaves or sells the property or dies and the home is passed on to heirs.

Program participants are required to make a downpayment typically ranging from 30 to 40 percent. The reverse mortgage loan amount is used to pay off the balance of the new home’s purchase price.

People who have a traditional reverse mortgage on an existing home cannot refinance it into a reverse mortgage for purchase to buy a new home. Instead, the reverse mortgage on the existing home would have to be paid off before applying for the reverse mortgage for purchase.

The reverse mortgage for purchase program requires that the new home be the primary home, which means living it in for at least six months of the year. The home can be located anywhere in the United States.

Borrowers never have to make a mortgage payment as long as they live in the primary home. Unlike with traditional reverse mortgages that require seniors to be homeowners, renters are not excluded from the new program. And if you already own a home, there is no requirement to sell it. In fact, you could rent it out.

Before taking out a reverse mortgage for purchase loan, borrowers are required to receive counseling from a nonprofit agency approved by the Department of Housing and Urban Development.

“It’s a new way to use a reverse mortgage. It’s catching on pretty fast,” said Tricia Smith of San Mateo-based HIP Housing, a HUD-approved loan counseling agency in San Mateo.

While it may be the right move for some people, borrowers need to be aware of closing costs, fees and Federal Housing Administration mortgage insurance premiums that can add thousands of dollars to the cost of the loan. Typically, those extras are financed in the loan amount.

The loan amount available to borrowers is tied to a percentage of the current reverse mortgage $625,500 lending limit or appraised value of the purchased home, whichever is lower. The older the borrower, the higher the percentage. The $625,500 lending limit amount expires at the end of 2009 unless Congress acts to extend it.

The down payment money that borrowers have to come up with has to be from savings, retirement income or proceeds from the sale of an existing home. If the existing home is sold to provide the down payment for the new home, there are fewer closing costs involved than if the transactions were done separately.

Once the title on the home changes hands, the loan amount, along with accrued interest, mortgage insurance premiums and other fees, has to be repaid to the lender.

“It’s not free money. It’s a rising debt loan,” said Smith.

That said, the product can be used to help retirees downsize to a smaller home or help renters become homeowners, she said. “They won’t have to make a (mortgage) payment for the rest of their life,” Smith said.

Source: Contra Costa Times

US Existing Home Sales Seen at 10-Month High in July

22 08 2009

Another exciting news in the media today. Reuter just posted another article. See below:

U.S. sales of existing homes likely rose to their highest level in 10 months in July, according to a Reuters poll, as buyers rushed to take advantage of a tax credit for first-time homeowners.

The survey of 61 economists predicted sales of previously owned homes climbed to a seasonally adjusted annual rate of 5 million in July, the briskest pace since 5.1 million units were sold in September, from 4.89 million units in June.

That would also mark the fourth straight monthly gain in home resales.

As part of the American Recovery and Reinvestment Act, the Obama administration has made up to $8,000 available to qualifying taxpayers who buy homes this year. The program, credited for the signs of a turn around in the three-year housing slump is scheduled to end in November.

Adding to the picture of a steadily improving resale housing market were still relatively low mortgage rates, an improving economic outlook, and the fifth straight monthly rise in pending home sales, analysts said.

The following is a selection of comments from economists.:


Forecast: 4.99 million units

“Affordability looks good, though it’s off record highs because of firming mortgage rates and sagging incomes. Cheap, foreclosed properties still account for roughly one-third of sales, but overall demand is starting to revive.”


Forecast: 4.95 million units

“This would be the fourth consecutive rise and, if realized, sales would be roughly back in line with the level that prevailed from the fall of 2007 to October 2008. Gains in affordability over the last year, more foreclosure sales, and an improving economy could then lift sales further later in the year.”


Forecast: 4.99 million units

“Existing home sales will probably continue to firm in coming months as the economy begins to rebound, more foreclosures come on to the market, and prospective buyers take advantage of increased affordability. One possible concern is an apparent increase in the share of contracts falling through and not being counted as home resales. The increase in the share of scuttled contacts is apparently being caused by new rules that produce more conservative valuations, and have prevented some potential home buyers from obtaining financing.”

Source: Reuter

New Credit Rating Guidelines Punish Homeowners with Loan Modification

22 08 2009

It’s hard enough to modify terms of a home mortgage, despite the federal government’s efforts to ease those procedures for individuals desperate to hold onto their houses. Unfortunately, the “Big Three” credit bureaus – Equifax, Experian and TransUnion – have issued new guidelines that allow lenders to report new mortgage loan modifications as “partial payment status,” a designation that could lower an individual’s credit score by more than 50 points.

A loan modification doesn’t reduce the principal, but makes it easier for homeowners to repay what’s owed by reducing the interest rate and stretching the length of the original loan. Credit agencies are paid to assess credit risks, and that includes people who can’t pay their mortgages. But these are extraordinary times. Penalizing a homeowner for successfully re-negotiating a loan could have the unwanted consequence of inducing more foreclosures.

First American CoreLogic, a real estate analysis firm, says more than 15 million mortgage holders, or 32.2 percent, are “upside down” on their mortgages, meaning they’re paying more than their houses are worth. In Florida, the negative-equity picture is worse at 49 percent, and the figures are even higher in South Florida, hovering around 51.5 percent in the Miami-Fort Lauderdale area.

Now, thanks to the credit-rating agencies and an indifferent government bureaucracy of financial regulators, there will be homeowners who will unnecessarily become credit risks. While a loan modification provides a better outcome than a short sale, foreclosure or bankruptcy, punishing homeowners who work with their lenders is counterproductive.

Source: The Sun Sentinel

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