NAR: 4Q Existing-Home Sales Surge in Most States

12 02 2010

Strong gains in existing-home sales were the predominant pattern in most states during the fourth quarter, with many more metro areas seeing prices rise from a year earlier, according to the latest survey by the National Association of Realtors (NAR).

Sales increased from the third quarter in 48 states and the District of Columbia; 32 states saw double-digit gains. Year-over-year sales were higher in 49 states and D.C.; all but three states had double-digit annual increases.

Total state existing-home sales, including single-family and condo, jumped 13.9 percent to a seasonally adjusted annual rate of 6.03 million in the fourth quarter from 5.29 million in the third quarter, and are 27.2 percent above the 4.74 million-unit level in the fourth quarter of 2008. Distressed property accounted for 32 percent of fourth quarter transactions, down from 37 percent a year earlier.

Lawrence Yun, NAR chief economist, says the first-time homebuyer tax credit was the dominant factor. “The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,” he says. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 4.92 percent in the fourth quarter from 5.16 percent in the third quarter; it was 5.86 percent in the fourth quarter of 2008.

In the fourth quarter, 67 out of 151 metropolitan statistical areas reported higher median existing single-family home prices in comparison with the fourth quarter of 2008, including 16 with double-digit increases; one was unchanged and 84 metros had price declines. In the third quarter only 30 MSAs showed annual price increases and 123 areas were down.

The national median existing single-family price was $172,900, which is 4.1 percent below the fourth quarter of 2008; the median is where half sold for more and half sold for less. “This is the smallest price decline in over two years, with the most recent monthly data showing a broad stabilization in home prices,” Yun says.

“Because buyers are taking on long-term fixed rate mortgages, avoiding adjustable-rate products, and trying to stay well within their budgets, the price recovery process appears durable,” Yun says.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., says near-term market conditions remain favorable. “Mortgage interest rates are expected to trend up later this year, but right now we have very good conditions with steadying home prices and favorable inventory in most areas, especially in the higher price ranges,” she says. The biggest issue is for repeat buyers who will have to accelerate their buying plans if they want the expanded tax credit. Since you must have a contract in place by the end of April, the best advice is to consult a Realtor now about qualification criteria and options in your area.”

Repeat buyers do not have to sell their existing home, but all buyers must occupy the property they purchase as a primary residence to qualify for the tax credit. Buyers who have a contract in place by April 30, 2010, have until June 30, 2010, to finalize the transaction to get a credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

In the condo sector, metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $177,300 in the fourth quarter, down 4.8 percent from the fourth quarter of 2008. Eleven metros showed increases in the median condo price from a year earlier and 43 areas had declines; in the third quarter only four metros experienced annual price gains.

Regionally, existing-home sales in the Northeast rose 11.1 percent in the fourth quarter to a pace of 1.03 million and are 33.6 percent higher than a year ago. The median existing single-family home price in the Northeast declined 5.6 percent to $234,900 in the fourth quarter from the same quarter in 2008, but with widely varying conditions.

“In the Northeast, markets with lower median prices that have avoided wide swings, such as Buffalo, are generally showing consistent price gains,” Yun says. “Even so, some of the higher cost areas are showing signs of stabilization, such as Nassau-Suffolk, N.Y., and Boston.”

In the Midwest, existing-home sales jumped 14.5 percent in the fourth quarter to a pace of 1.38 million and are 29.9 percent above a year ago. The median existing single-family home price in the Midwest rose 1.1 percent to $141,100 in the fourth quarter from the same period in 2008, with the region accounting for the majority of metro areas experiencing double-digit gains.

Yun says markets with high unemployment rates in Ohio and Michigan experienced large price swings. “Big price gains in many Midwestern areas are due to a more normal range of home sales in contrast with predominately foreclosed sales a year ago,” he says.

In the South, existing-home sales rose 13.8 percent in the fourth quarter to an annual rate of 2.23 million and are 28.2 percent higher than the fourth quarter of 2008. The median existing single-family home price in the South was $153,000 in the fourth quarter, down 2.4 percent from a year earlier.

“Affordable markets in the South that have relatively better local economies are seeing healthy price gains, such as Houston, Oklahoma City and Shreveport, La.,” Yun says.

Existing-home sales in the West jumped 16.2 percent in the fourth quarter to an annual rate of 1.38 million and are 18.2 percent above a year ago. The median existing single-family home price in the West was $227,200 in the fourth quarter, which is 8.9 percent below the fourth quarter of 2008, but with many areas showing notable gains.

“Markets in the West such as San Francisco, San Jose and Denver are showing double-digit price increases, and other markets like San Diego and Anaheim have begun to firm up,” Yun says.

Source: Florida Realtors





Florida’s Existing Home, Condo Sales Rise in 4Q 2009

12 02 2010

Sales of existing single-family homes in Florida rose 44 percent in fourth quarter 2009 compared to the same period a year earlier, according to the latest housing statistics from Florida Realtors. A total of 43,926 existing homes sold statewide in 4Q 2009; during the same period the year before, a total of 30,610 existing homes sold. It marks the sixth consecutive quarter that Florida has seen higher existing year-to-year home sales, according to the state association.

Statewide sales of existing condominiums in the fourth quarter rose 93 percent compared to the same time the previous year. This marks the fifth consecutive quarter for increased statewide sales in both the existing home and condo markets compared to year-ago levels.

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. The survey noted uncertainty over the tight credit market, foreclosures and the jobs outlook.

On the positive side, private investors – both foreign and domestic – are starting to “kick the tires” in many markets, said Timothy Becker, the center’s director. In addition, investor expectation for returns is starting to fall to more realistic levels, helping to close the spread between bidding and asking prices, he said.

“These developments bode well for the transaction market when quality properties start coming to the marketplace,” Becker added.

Eighteen of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in the fourth quarter compared to the same three-month-period a year earlier, while all of the MSAs showed gains in condo sales.

The statewide existing-home median sales price was $140,000 in the fourth quarter; a year earlier, it was $160,600 for a decrease of 13 percent. According to 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 a typical market price where half the homes sold for more, half for less.

In the year-to-year quarterly comparison for condo sales, 16,255 units sold statewide for the quarter compared to 8,410 in 4Q 2008 for a 93 percent increase. The statewide existing-condo median sales price was $105,500 for the three-month period; in 4Q 2008, it was $136,600 for a decrease of 23 percent.

Low mortgage rates remain another favorable influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 4.92 percent in 4Q 2009; one year earlier, it averaged 5.86 percent.

Florida Sales Report – 4th Quarter 2009
Single-Family, Existing Homes

Realtor Sales Median Sales Price
————- ——————
Statewide &
———–
Metropolitan
Statistical 4th 4th
Areas (MSAs) Qrtr. Qrtr. % 4th Qrtr. 4th Qrtr. %
———— —— —— — ——— ——— —
2009 2008 Chge 2009 2008 Chge
—- —- —- —- —- —-
STATEWIDE* (1) 43,926 30,610 44 $140,000 $160,600 -13
————– —— —— — ——– ——– —
Daytona Beach 2,309 1,413 63 $126,400 $148,100 -15
————- —– —– — ——– ——– —
Fort
Lauderdale 2,314 1,764 31 $203,800 $234,100 -13
———- —– —– — ——– ——– —
Fort Myers-
Cape Coral 4,430 2,440 82 $93,800 $117,500 -20
———– —– —– — ——- ——– —
Fort Pierce-
Port St.
Lucie 1,689 1,122 51 $110,800 $132,400 -16
———— —– —– — ——– ——– —
Fort Walton
Beach 680 467 46 $184,900 $184,100 –
———– — — — ——– ——– —
Gainesville 507 341 49 $162,000 $170,000 -5
———– — — — ——– ——– —
Jacksonville
(2) 3,376 2,339 44 $147,300 $164,700 -11
———— —– —– — ——– ——– —
Lakeland-
Winter Haven 996 1,125 -11 $106,200 $132,500 -20
———— — —– — ——– ——– —
Melbourne-
Titusville-
Palm Bay 1,361 1,189 14 $109,400 $135,000 -19
———– —– —– — ——– ——– —
Miami 1,649 1,250 32 $188,700 $227,600 -17
—– —– —– — ——– ——– —
Ocala 920 550 67 $91,500 $121,900 -25
—– — — — ——- ——– —
Orlando 6,889 4,247 62 $139,000 $171,700 -19
——- —– —– — ——– ——– —
Panama City 311 249 25 $165,500 $185,000 -11
———– — — — ——– ——– —
Pensacola 899 733 23 $142,500 $151,700 -6
——— — — — ——– ——– —
Punta Gorda 791 601 32 $107,300 $108,200 -1
———– — — — ——– ——– —
Sarasota-
Bradenton 2,468 1,634 51 $160,600 $167,000 -4
——— —– —– — ——– ——– —
Tallahassee 493 344 43 $173,400 $171,500 1
———– — — — ——– ——– —
Tampa-St.
Petersburg-
Clearwater 7,163 5,579 28 $138,800 $149,400 -7
———– —– —– — ——– ——– —
West Palm
Beach-Boca
Raton 2,423 1,706 42 $239,500 $252,200 -5
———- —– —– — ——– ——– —

(1) * Statewide figure includes data from the Naples Area Board of
Realtors; it also includes data from the Marco Island Association of
Realtors.
(2) Data from the Amelia Island-Nassau County Association of
Realtors for November and December is not available.

Editor’s note: Sales numbers represent totals of Realtors’ closed
transactions from local Realtor boards/associations within the
MSAs.

This information is based on a survey of MLS sales levels from
Florida’s Realtor boards/associations. MSAs are defined by the 2000
Census. Source: Florida Realtors(R) and the University of Florida
Bergstrom Center for Real Estate Studies.

Florida Sales Report – 4th Quarter 2009
Existing Condominiums

Realtor Sales Median Sales Price
————- ——————
Statewide &
———–
Metropolitan
Statistical 4th 4th
Areas (MSAs) Qrtr. Qrtr. % 4th Qrtr. 4th Qrtr. %
———— —— —— — ——— ——— —
2009 2008 Chge 2009 2008 Chge
—- —- —- —- —- —-
STATEWIDE* (1) 16,255 8,410 93 $105,500 $136,600 -23
————– —– — ——– —— —
Daytona Beach 431 178 142 $158,700 $177,300 -10
————- — — — ——– ——– —
Fort
Lauderdale 2,771 1,588 74 $83,700 $107,200 -22
———- —– —– — ——- ——– —
Fort Myers-
Cape Coral 1,139 476 139 $118,000 $157,400 -25
———– —– — — ——– ——– —
Fort Pierce-
Port St.
Lucie 349 192 82 $95,000 $120,000 -21
———— — — — ——- ——– —
Fort Walton
Beach 260 120 117 $248,000 $270,600 -8
———– — — — ——– ——– —
Gainesville 59 46 28 $113,000 $134,500 -16
———– — — — ——– ——– —
Jacksonville
(2) 413 183 126 $87,500 $130,800 -33
———— — — — ——- ——– —
Lakeland-
Winter Haven 69 22 214 $71,500 $60,000 19
———— — — — ——- ——- —
Melbourne-
Titusville-
Palm Bay 306 220 39 $101,400 $118,300 -14
———– — — — ——– ——– —
Miami 2,022 1,203 68 $145,400 $183,700 -21
—– —– —– — ——– ——– —
Ocala 14 5 180 $38,800 $85,000 -54
—– — — — ——- —— —
Orlando 1,765 446 296 $54,000 $85,800 -37
——- —– — — ——- —— —
Panama City 153 95 61 $195,900 $227,100 -14
———– — — – ——– ——– —
Pensacola 112 77 45 $269,200 $203,600 32
——— — — — ——– ——– —
Punta Gorda 117 64 83 $82,100 $109,100 -25
———– — — — ——- ——– —
Sarasota-
Bradenton 798 344 132 $148,600 $190,000 -22
——— — — — ——– ——– —
Tallahassee 88 6 1367 $71,100 $153,300 -54
———– — — —- ——- ——– —
Tampa-St.
Petersburg-
Clearwater 2,283 1,195 91 $104,400 $124,900 -16
———– —– —– — ——– ——– —
West Palm
Beach-Boca
Raton 2,219 1,366 62 $108,100 $123,000 -12
———- —– —– — ——– ——– —

(1) *Statewide figure includes data from the Naples Area Board of
Realtors; it also includes data from the Marco Island Association of
Realtors.
(2) Data from the Amelia Island-Nassau County Association of
Realtors for November and December is not available.

Editor’s note: Sales numbers represent totals of Realtors’ closed
transactions from local Realtor boards/associations within the
MSAs.

This information is based on a survey of MLS sales levels from
Florida’s Realtor boards/associations. MSAs are defined by the 2000
Census. Source: Florida Realtors(R) and the University of Florida
Bergstrom Center for Real Estate Studies.

Source: Florida Realtors





New FHA Rules Affect Condo Purchase After 2/1/10

7 02 2010

The new FHA guidelines announced by The Department of Housing and Urban Development (HUD) last November is causing more headaches for lenders and buyers/sellers alike.

With the new condominium approval process, there will be fewer condo properties that are eligible for FHA financing which prevents first-time buyers from purchasing any condos that are for sale on the market. There will be less than 10-20% of FHA approved condos available in any given market in the U.S. so you can see why this presents major problems in the condo world. What will happen to the rest of condo projects that are not FHA approved? The answer is the pool of buyer will be limited to cash buyers or conventional buyers with 20% to 30% down payment only.

Beginning 2/1/10, new FHA rules are in effect:

– FHA spot approval is gone. FHA condo loans that required an FHA spot approval are no longer available. This mean no more spot appraisals after 2/1/10 so it will be harder to get an approval on a condo project unless it has been approved by HUD or one of HUD’s approved lenders. Effective for all case numbers issued on or after 2/1/10, all previous FHA condo approvals will be eliminated and condominium projects must be re-certified by HUD. (Previously, FHA spot approval allows an FHA-approved direct lender to approve a specific condo unit even if HUD hasn’t FHA-approved the building. Spot eligible condo buildings must be 4 units or larger, 90% sold, 51% owner-occupied, and no single entity can own more than 10% of the project. Unit owners must be in control of the HOA for 1 year, and the HOA must have roughly 50-60% of annual budget in reserves.)

– Going forward there will be two approval methods for FHA Case numbers ordered after February 1, 2010:  HUD Review and Approval Process (H-RAP), DE Lender-Approval and Review Process (DEL-RAP).

– All FHA case numbers issued AFTER 4/5/10 will require the up-front PMI of 2.25% (this is increased from 1.75% today.)

– Early summer – Seller contributions on ALL FHA loans will be reduced to 3% (this is reduced from an allowed 6% today.)

– FHA has waived the flipping rule for all purchase made after 2/1/10. Private sellers and investors can now sell their properties to FHA buyers without having to wait 90 days (seasoning.)

After 2/1/10, Spot Approvals are eliminated and HUD must directly approve entire condo buildings, a 1-3 month process. If a buyer who is looking for an FHA condo loan on a non-FHA approved project, now it will be very difficult to do so.

Currently, there are 67 condo projects in Jacksonville Florida market that are on FHA approved list. Most condos in Jacksonville no longer qualify for the FHA loan. Most lenders will not lend on condos unless you have 20%-30% to put down. This will definitely slow sales and end up decreasing values in certain segments of the condo market throughout the country.

Right now if you are looking to buy a condo, you have two choices:

1. Choose the projects that are listed on the FHA approved list.
2. If the projects are not currently on the FHA approved list, seek condo approval directly with HUD (which administers the FHA mortgage program)

My recommendation is to buy NOW and buy new construction as most builders will pay up to 6% in sellers contribution (this will be limited to 3% soon.) If you need to buy a resale, you need to find out first if the condo you are interested in is on the approved list at https://entp.hud.gov/idapp/html/condlook.cfm.

There are different ways to search but I suggest you start searching by zip code or the legal name of the condo community. A good portion of the approved condos are listed by mistakes, so if you don’t get a hit on the first try, don’t get discouraged. If the condo project you are interested in is already on the approved list, you can move forward. But the lender still has to certify things about the current condition of the condo project. Whether this is a long time approved project or one approved last week, the lender still has to verify the following:

– Is the condo project involved in any litigation?
– Are there any pending special assessments?
– Does any single entity own more than 10% of the total units?
– Are more than 15% of the owners delinquent with their association dues?
– Are at least 51% of the sold units owner-occupied?
– Does the project meet the requirements for FHA concentration (no more than 50%, unless certain conditions are met)?

The lender goes through these questions using a condo questionnaire sent to the condo association or the management company. Please keep in mind that there are new projects that are being added on to the FHA approved list . Every time HUD (or a direct endorsement lender, eventually) approves a unit, all the other units in that project (up to the maximum concentration) will also be placed on the FHA approved condo list. And HUD is bending some rules to make more projects eligible. When HUD released the new guidelines last October, all projects that were not on the approved list last year would not be included on the approved list until they are “re-certified.” HUD is now giving these properties a one year grace period, so they will be on the list as eligible up until 12/7/10. The re-approval process for these projects will be much simpler than the process for new projects (brand new constructions.)

DILEMMA:

With increasing tougher lending guidelines through conventional financing, FHA spot approval has been an answer for most lenders to obtain condo financing for their buyers. In the past, FHA was deemed unnecessary as the approval process was time consuming and paperwork intensive for developers to go through. When the real estate market was red hot, home prices skyrocketed and lending requirements were easy for most buyers to qualify (remember the time when people with no income, no asset, no money down, and no job could buy a home?) Developers didn’t have to get FHA approved for their condo projects. It’s not surprising we have a small numbers of condo projects that are on the FHA approved list. Nowadays, developers have to petition for a condo project approval when they are building a community (brand new or condo conversion) if they want FHA financing available to buyers. The FHA spot approval was a way to approve one condominium unit, not the entire building. It was part of the purchase process; while the lenders went through the work of approving the borrowers, they would approve the condo unit at the same time. It was a great program and it helped many buyers obtained FHA financing with limited cash and down payment. However, there were some issues:

– The FHA spot approval did not apply to smaller buildings so condos less than 4 units could not qualify for the program.

– The FHA spot approval did not accept condos with “First Right of Refusal” language written in condo docs. The reason being it can be used to discriminate some buyers.

From HUD’s point of view, the spot approval presents problems because HUD did not have control and loans were closed and funded on properties that did not meet the guidelines. So the new condo approval process was introduced to address these problems. The new condo approval process allows properties that have the “First Right of Refusal” language, and it can be used with projects as small as 2 units.

Under the new guidelines, lenders can approve a new condo in two ways:

1. Go directly to HUD (HRAP) and file all the paper work directly with HUD. Most developers have done this in the past.

2. FHA Direct Endorsement lenders (DELRAP) would have the authority to approve the projects on their own. This works similarly like spot approval. When the borrower buys a new condo, the lender will scrutinize the building as part of the approval process and will approve the project at the same time. Once a direct endorsement lender approves a project it will be added to the FHA approved list and then any other lenders who make FHA mortgages will be able to provide FHA financing for the entire project. However, there is a flaw in this process and I am sure they didn’t think of the consequences:

Under the new FHA condo approval process, HUD needs more documentation and more express warranties from the direct endorsement lender approving the project. The deadline for this was extended twice while HUD tried to iron out the kinks and get the lenders on board, and they allowed the spot loan to continue as a way to keep financing open. But now the spot loan is gone and the new improved process is not ready to take place.

Condo buyers can still buy anything that is currently on the FHA approved condo list, but what are the options if they want to buy in a building that has not been approved? And how about developers or sellers who own the condos? What options do they have for getting their project approved?

Being able to finance with FHA is a a real competitive advantage in this market. Any properties with FHA financing are selling quicker and this appears to make them more valuable. There are also a lot of newer properties that do not meet conventional guidelines because they have not sold and closed enough units but would be eligible for FHA financing.

The FHA saga continues…








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