Tuesday, August 31, 2010
NEW BANK OWNED LISTING: 3BR/2BA Single Family House in Pompano Beach, FL, $56,000 http://ping.fm/cujBe
NEW BANK OWNED LISTING: 2BR/2.5BA Townhouse w/ Dock in Boynton Beach, FL, $274,900 http://ping.fm/aCYG6
Monday, August 30, 2010
South Florida: Great Investment Opportunities, Properties For 50K and Under
Image by thinkpanama via FlickrAccording to CondoVultures.com, roughly 6,000 condos, townhouses and single-family homes priced at $50,000 or less are for sale across South Florida.
Some examples are:
- A Coral Springs condominium on Riverside Drive is listed for sale at $50,000.
- On Haverhill Road in West Palm Beach, a house is going for $40,000.
- And on Southwest 36th Street in Hollywood, you can buy a two-bedroom house for $34,900, or roughly the cost of a 2011 Ford Expedition.
Many of the properties on the market today are owned by lenders and "underwater" owners trying to complete short sales, in which they sell for less than the mortgage amount. The collapse in home prices during the past five years has left plenty of bargains for the taking, but many of the properties are shoe-box tiny, need new roofs or have some other major flaw that doesn't make financial sense for buyers on a budget.
Typically, investors will buy the homes, renovate them and then resell the properties for a profit within a few weeks or months. Rick Henderson, who recently bought a West Palm Beach home for $42,000, said he and other investors negotiate good deals with contractors and spend $10,000 to $20,000 fixing the homes. He states: "It would cost twice as much for a regular homeowner. There truly is no way that a regular homeowner could get the kinds of prices on material and labor unless they're in the trades."
While most of these homes have structural problems or other issues, they're not necessarily in poor, unsafe areas, real estate agents say. The single-family homes are mostly in older, working-class neighborhoods in the central parts of Broward and Palm Beach counties. The condos are more spread out, located in buildings hit hard by foreclosures or facing steep assessments for repairs. Some of the condos could not be sold by developers after they converted the units from rentals during the boom.
According to the Florida Realtors, the median price for an existing home in Broward County in July was $207,500, and in Palm Beach County the median was $226,000. In both counties, the medians are nearly half of what they were in 2005. July's median condo prices in Broward and Palm Beach counties were below $100,000, having plummeted by at least 60% since the peak. The median means half the properties sold for more, half for less.
During the early part of the past decade, speculators helped fuel the run-up in home prices by purchasing homes and quickly "flipping" them for large profits. When prices plunged, investors left the market. Now they're back, this time capitalizing on the low prices and helping to clear the supply of foreclosed homes. David Dabby, a housing analyst in Coral Gables states: "It's ironic. Now these investors are serving a very useful purpose." If first-time buyers are interested in bidding for homes priced at $50,000 or less, they're likely to face steep competition from investors
Judy Trudel of Balistreri Realty in Lighthouse Point states that most buyers need mortgages, but banks typically won't lend money for a house that has structural problems or is missing major appliances. Investors paying cash don't have that worry. She says: "Investors are sitting out there and swooping in. Cash is king."
David Dweck, a real estate agent and founder of the Boca Real Estate Investment Club, said investors must do the proper research to ensure the deals make financial sense. He states: "It's very hard to go wrong when you're buying this cheap." As long as they do that, most of his members find the industry lucrative.
Trebatch, 31, a former banker, expects to buy and sell three or four homes this year. She concludes: "It's a great time to be buying. Banks are trying to get rid of their inventory. Buy low and sell low. Don't be greedy."
Thursday, August 26, 2010
Why Aren't People Buying Houses?
Even with mortgage rates are less than 5%, home prices in Broward and Palm Beach counties are about half of what they were at the peak of the housing boom in 2005.
It’s seams like a great time to buy – why are people so hesitant?
The government tax credits are gone, and potential buyers either don’t have jobs or are afraid of losing them. Some people don’t want to take on a mortgage because they think prices are destined to keep falling.
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It’s seams like a great time to buy – why are people so hesitant?
The government tax credits are gone, and potential buyers either don’t have jobs or are afraid of losing them. Some people don’t want to take on a mortgage because they think prices are destined to keep falling.
Wednesday, August 25, 2010
South Florida Home Sales Decline as Federal Tax Rebates Disappear
South Florida home sales slowed in July directly following the expiration of two federal tax credits for buyers.
According to Florida Realtors yesterday, Broward County had 720 sales of existing homes last month, down 21% from a year ago, while Palm Beach County sales fell 7% to 802.
According to Florida Realtors yesterday, Broward County had 720 sales of existing homes last month, down 21% from a year ago, while Palm Beach County sales fell 7% to 802.
The National Association of Realtors said also claimed that statewide, sales dropped 14% from a year ago. Nationally, single-family sales, which account for the bulk of the transactions, are at the lowest level since May 1995.
Buyers who signed contracts by April 30 and close by the end of September qualify for the $6,500 to $8,000 tax rebates. Analysts expected demand for homes to wane once the program ended.
Lawrence Yun, chief economist for the national Realtors’ group, said in a statement he expects a soft sales pace to continue through September. He states: “However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs."
The median price in Broward County in July was $207,500, down 5% from a year ago. Palm Beach County’s median was $226,000, off 8% from July 2009. While, Broward’s existing condominium sales fell 12% last month, and the median price of $74,000 was down 8% from a year ago.
Palm Beach County condo sales rose 16%, but the median dropped 15% to $93,400.
Buyers who signed contracts by April 30 and close by the end of September qualify for the $6,500 to $8,000 tax rebates. Analysts expected demand for homes to wane once the program ended.
Lawrence Yun, chief economist for the national Realtors’ group, said in a statement he expects a soft sales pace to continue through September. He states: “However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs."
The median price in Broward County in July was $207,500, down 5% from a year ago. Palm Beach County’s median was $226,000, off 8% from July 2009. While, Broward’s existing condominium sales fell 12% last month, and the median price of $74,000 was down 8% from a year ago.
Palm Beach County condo sales rose 16%, but the median dropped 15% to $93,400.
July Home Sales Plummet: 2nd Recession Ahead?
New home sales nationwide plunged in July to their lowest level since the government started keeping track in 1963.
This follows Tuesday’s dismal report for existing homes and raises fears that the economy is poised for another recession – a so-called double dip.
New home sales dropped 12% from June and 32% from July 2009 to an annual pace of 276,000, the Commerce Department said Wednesday.
Analysts expected the April 30 expiration of two federal tax credits to curtail demand for homes later in 2010. But buyers clearly are spooked by unemployment concerns, even thought mortgage rates are at historical lows and homes are affordably priced.
New home sales dropped 12% from June and 32% from July 2009 to an annual pace of 276,000, the Commerce Department said Wednesday.
Analysts expected the April 30 expiration of two federal tax credits to curtail demand for homes later in 2010. But buyers clearly are spooked by unemployment concerns, even thought mortgage rates are at historical lows and homes are affordably priced.
Monday, August 23, 2010
Average Mortgage Rates Hit 4.42%, Lowest in Decades
Mortgage rates fell to the lowest level in decades for the 8th time in 9 weeks. According to Freddie Mac, the average rate for 30-year fixed loans this week was 4.42%, which is down from 4.44% last week.That's the lowest since Freddie Mac began tracking rates in 1971.
The average rate on 15-year fixed loans dropped to 3.9%, down from 3.92% last week and the lowest on records dating back to 1991. Rates have fallen since spring as investors sought the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.
Falling rates have pushed refinancing of home loans to the highest level since May 2009. But it's still lower than during the first three months of that year, when rates first fell to around 5%.
Despite these extremely low mortgage rates, home sales are still down. They remain hobbled by the weak economy and tight credit standards. Rates have fallen since spring as investors sought the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.
To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
Average rates on five-year adjustable-rate mortgages were unchanged at 3.56%.
Rates on one-year adjustable-rate mortgages also were unchanged at an average of 3.53%.
The average rate on 15-year fixed loans dropped to 3.9%, down from 3.92% last week and the lowest on records dating back to 1991. Rates have fallen since spring as investors sought the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.
Falling rates have pushed refinancing of home loans to the highest level since May 2009. But it's still lower than during the first three months of that year, when rates first fell to around 5%.
Despite these extremely low mortgage rates, home sales are still down. They remain hobbled by the weak economy and tight credit standards. Rates have fallen since spring as investors sought the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.
To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
Average rates on five-year adjustable-rate mortgages were unchanged at 3.56%.
Rates on one-year adjustable-rate mortgages also were unchanged at an average of 3.53%.
Thursday, August 19, 2010
Wednesday, August 18, 2010
Should Banks be Forgiving Mortgage Principal in Foreclosure Mediations?
Jerron Kelley, a foreclosure defense lawyer in Delray Beach thinks foreclosure mediation can be beneficial for troubled borrowers, provided they go into it with realistic expectations.
As of July 1, lenders and borrowers have to go through mediation before the lenders can ask judges to foreclose. The requirement, which is mandated by the Florida Supreme Court, covers only homesteaded properties.
The American Arbitration Association runs Broward mediations, while Palm Beach County mediations are handled by the Palm Beach County Bar Association.
Kelley says his clients complain that the banks are unresponsive to their pleas for help. With mediation, the lines of communication are opened because a decision-maker for the bank must be present. In most cases, Kelley said, the borrower leaves the process with some sort of mortgage modification offer.
The problem is that it often doesn’t satisfy the borrower.
He used this hypothetical example: A borrower with a mortgage payment of $2,000 and a 6% interest rate seeks mediation. The bank agrees to cut the rate to 3 or 4%, reducing the monthly payment by $150 to $200. But the borrower was looking to shave $800 a month off his payment.
About the only way to achieve such a sizable reduction is to forgive part of the principal balance on the mortgage. And banks aren’t willing to do that, Kelley said, largely because that would encourage other borrowers to stop paying in hopes of cashing in on a principal reduction.
Bottom line: do banks have an obligation to reduce principal and help end the housing crisis?
As of July 1, lenders and borrowers have to go through mediation before the lenders can ask judges to foreclose. The requirement, which is mandated by the Florida Supreme Court, covers only homesteaded properties.
The American Arbitration Association runs Broward mediations, while Palm Beach County mediations are handled by the Palm Beach County Bar Association.
Kelley says his clients complain that the banks are unresponsive to their pleas for help. With mediation, the lines of communication are opened because a decision-maker for the bank must be present. In most cases, Kelley said, the borrower leaves the process with some sort of mortgage modification offer.
The problem is that it often doesn’t satisfy the borrower.
He used this hypothetical example: A borrower with a mortgage payment of $2,000 and a 6% interest rate seeks mediation. The bank agrees to cut the rate to 3 or 4%, reducing the monthly payment by $150 to $200. But the borrower was looking to shave $800 a month off his payment.
About the only way to achieve such a sizable reduction is to forgive part of the principal balance on the mortgage. And banks aren’t willing to do that, Kelley said, largely because that would encourage other borrowers to stop paying in hopes of cashing in on a principal reduction.
Bottom line: do banks have an obligation to reduce principal and help end the housing crisis?
Friday, August 13, 2010
Foreclosures Up 77% in Palm Beach County
Image via WikipediaAccording to RealtyTrac, foreclosures surged last month in Palm Beach County. The county had 3,759 homeowners in some stage of foreclosure in July, up 77% from June and 42% from a year ago. Palm Beach County had the 11th-highest foreclosure rate of Florida’s 67 counties. Normally, its ranking is in the low-20s.
Broward County had 6,471 foreclosure filings in July, down 24% from a year ago and up 5% from June. Broward had the state’s fourth-highest foreclosure rate.
Florida continues to be a hotbed for troubled borrowers. One in every 171 Sunshine State homeowners received a filing last month.
Still, many more ultimately will go back to the banks. And analysts say it's these bank-owned homes that could push overall inventory levels higher and hurt the housing market's recovery.
Florida continues to be a hotbed for troubled borrowers. One in every 171 Sunshine State homeowners received a filing last month.
Still, many more ultimately will go back to the banks. And analysts say it's these bank-owned homes that could push overall inventory levels higher and hurt the housing market's recovery.
Wednesday, August 11, 2010
Short Sales Triple to 400,000 Nationally Since 2008
According to a study released yesterday by CoreLogic, the number of annual short sales nationally has tripled in two years to about 400,000, and the estimated industry impact of fraud from the transactions is $310 million.
The study also found that risk of “unnecessary losses” to lenders happens in one in every 53 short sales. The average amount of unnecessary loss is $41,000 per transaction. CoreLogic says the definition of fraud continues to evolve but indicated “an egregious flip” is part of many short sales.
Tim Grace, a CoreLogic executive, concludes: “By definition, short sales constitute a financial loss to lenders but will continue to be a necessary part of the mortgage industry as it seeks stabilization. The primary objective for lenders is to eliminate unnecessary loss. The best way to mitigate fraud risk and unnecessary loss is through a collaborative effort where lenders collectively share pre-closing and post-closing information.”
South Florida: Real Estate Inventory is Shrinking
An encouraging sign for the region's battered housing market is the number of homes and condominiums for sale across South Florida has steadily declined over the past two years,
Still, industry observers worry about a sizable "shadow inventory" of foreclosed homes that could complicate any real estate recovery.
According to a multiple listing service report compiled by the Keyes Co., Broward County had 19,869 properties on the market in July, down 35% from July 2008. While Palm Beach County's inventory of homes and condos slid 31% to 23,947 during the same period.
Still, industry observers worry about a sizable "shadow inventory" of foreclosed homes that could complicate any real estate recovery.
According to a multiple listing service report compiled by the Keyes Co., Broward County had 19,869 properties on the market in July, down 35% from July 2008. While Palm Beach County's inventory of homes and condos slid 31% to 23,947 during the same period.
Brad Hunter of the Metrostudy research firm in Palm Beach Garden stated that the supply of new homes being built in the two counties also has decreased sharply in the past two years.
In 2005, sellers rushed to list their homes, hoping to fetch record prices during the housing boom. But the frenzy led to a collapse and prices plummeted.
Thousands of foreclosures and short sales have clogged the market ever since, giving buyers plenty of choices and little reason to pay top dollar.
In 2005, sellers rushed to list their homes, hoping to fetch record prices during the housing boom. But the frenzy led to a collapse and prices plummeted.
Thousands of foreclosures and short sales have clogged the market ever since, giving buyers plenty of choices and little reason to pay top dollar.
Mike Pappas, president of Keyes Realty states: "You won't get price appreciation until you get the inventory in balance. We're making great strides."
Declines in homes for sale already have helped stabilize prices recently. The median price in Broward rose 7% during April, May and June to $209,800 from a year ago, the FloridaRealtors said Wednesday. Palm Beach County's median increased at the beginning of the year but dipped 2% in the second quarter to $235,500.
Pappas said his firm is handling fewer transactions involving foreclosed homes, and he thinks that's an indication the foreclosure market has peaked.
But some analysts disagree, pointing to a recent surge in homes repossessed by lenders that is pushing inventory levels higher in recent months.
According to CondoVultures.com, banks are on pace to take back nearly 50,000 properties in Palm Beach, Broward and Miami-Dade counties this year. Many lenders are careful to hold off listing those properties for sale all at once to prevent widespread price declines.
Declines in homes for sale already have helped stabilize prices recently. The median price in Broward rose 7% during April, May and June to $209,800 from a year ago, the FloridaRealtors said Wednesday. Palm Beach County's median increased at the beginning of the year but dipped 2% in the second quarter to $235,500.
Pappas said his firm is handling fewer transactions involving foreclosed homes, and he thinks that's an indication the foreclosure market has peaked.
But some analysts disagree, pointing to a recent surge in homes repossessed by lenders that is pushing inventory levels higher in recent months.
According to CondoVultures.com, banks are on pace to take back nearly 50,000 properties in Palm Beach, Broward and Miami-Dade counties this year. Many lenders are careful to hold off listing those properties for sale all at once to prevent widespread price declines.
Tuesday, August 10, 2010
Zillow: Fewer Underwater Borrowers in South Florida
A new report by a national real estate firm suggests that parts of South Florida’s beleaguered housing market are showing modest improvements.
At the end of the second quarter, 44% of the 838,350 single-family homeowners with mortgages owed more than the properties were worth. That’s down from 47$ a year earlier, Zillow.com said Monday.
Meanwhile, 42% of single-family homes sold for a loss in June, down slightly from June 2009. Roughly 46% of condominiums sold for a loss, essentially unchanged from a year ago, according to the report for Palm Beach, Broward and Miami-Dade counties.
While the declines are encouraging, the percentages still remain elevated, an indication that the region’s housing recovery will be slow, analysts say.
“This is a market plagued by high numbers of distressed sales and high unemployment,” said Greg McBride, senior financial analyst with Bankrate.com, a North Palm Beach consumer website. “Those factors will be with us for a while.”
Many borrowers who owe more than their homes are worth put little or no money down and paid near-record prices in 2004, 2005 and 2006. Some refinanced their homes during that period.
“Underwater” mortgages drag down the housing market and the economy as a whole. It also affects people’s psyche, said Mark Vitner, a senior economist for Wells Fargo.
“You restrain your spending and restrain your risk-taking,” Vitner said. “One of the reasons people started businesses in their garage was because they had equity in their house.”
Underwater homeowners face limited options. They can’t refinance to lower their mortgage payments. Some will take hits to their credit scores by negotiating short sales – selling for less than the mortgage amount -- or letting the homes fall into foreclosure.
The vast majority will remain in the homes and keep paying their mortgages as long as they stay employed. Because prices have tumbled by nearly 50% since the peak of the housing boom, it could be 10 or 20 years before some borrowers break even in a sale.
“That’s certainly a daunting thought,” said Tim Becker, director of the Bergstrom Center for Real Estate Studies at the University of Florida.
Nationally, about 22 percent of single-family homes with mortgages were underwater at the end of the second quarter. South Florida ranks 17th in the country with 44%. Las Vegas is first at 74%, and Orlando is third at 65%.
In most cases, when homes are resold after a foreclosure, the properties no longer are underwater because the new owners have bought at drastically reduced prices. But those gains are being offset in South Florida by falling prices that pull additional mortgage holders underwater, Zillow says.
The Seattle-based real estate company compiles data from local property records. Its report for underwater mortgages did not include condos.
Stan Humphries, the firm’s chief economist, expects housing prices nationally to hit bottom in the third quarter of this year. But he said South Florida’s bottom likely will come later because the housing market here has been exceptionally soft for nearly five years.
While fewer homes sold for a loss, more than three-quarters of homes and condos in Palm Beach, Broward and Miami-Dade counties lost value over the past year, Humphries said. The rate of decline has increased in the region while values in most metro areas have risen or had slower declines.
“That gives you some sense of how much economic stress is being placed on households,” Humphries said. “A lot of Americans’ wealth is tied up in their houses.”
Monday, August 9, 2010
6,000 Homes in South Florida for 50K or Less
IAccording to a report Friday from CondoVultures.com, Palm Beach, Broward and Miami-Dade counties boast more than 5,400 townhouses and condominiums and 600 single-family homes for sale at $50,000 or less.
Broward leads the pack with 2,400 properties. So far this year, buyers have scooped up roughly 7,000 homes at below $50,000 across South Florida, more than half of the sales were in Broward.
Peter Zalewski, principal of Condovultures.com states: “At the peak of the real estate bubble, parking spaces in new condominium towers were sold at prices that today can purchase homes,"
While prices have plummeted, many of these properties are listed this low because they need serious renovations. That makes investors more willing to buy them than families who plan to live there long-term.
Thursday, August 5, 2010
Is Obama Shifting Focus Away From Homeownership?
The Obama administration could be abandoning its focus on homeownership and instead will promote rental housing. That’s the assertion of the American Homeowners Foundation, a nonprofit educational and research group. They believe this ultimately could mean larger down payments for buyers, higher mortgage rates and reduced levels of homeownership among lower-income consumers.
This is an excerpt from their most recent newsletter:
“There are emerging signs that the President is in the process of shifting away from programs that will preserve home values and/or support homeownership, in favor of programs that will bolster the rental market. Signs include statements from Department of Housing and Urban Development Secretary Shaun Donovan. He has been involved in urban housing issues for much of his career and believes that they deserve more focus. In Congressional testimony he said that "While we continue to promote affordable homeownership, for many Americans, renting will continue to be the only or preferred option." Other senior Administration figures are sending similar signals.”
Wednesday, August 4, 2010
South Florida Real Estate Market is Looking Sunny Compared to Rest of the Nation
According to figures released yesterday, in July pending home sales in Miami-Dade County stood at 10,113, up 40.5% from July of 2009. In Broward, pending sales stood at 7,830 in July, up 25.4% from a year earlier.
South Florida sizes up well when compared to the national picture, where the pending home sales index hit a record low 75.7 in June, according to the National Association of Realtors. It was the second monthly falloff after the April 30 deadline to enter the federal homebuyer tax credit program, with June's pending sales down nearly 19% from the same month a year earlier.
The local market hasn't been completely immune from the post-tax-credit slump. In the past three months, pending home sales are down 3.2% in Miami-Dade and down 5.1% in Broward.
Jack H. Levine, chairman of the board of the Miami Realtors, stated: ``We are encouraged by the statistics for pending home sales in the South Florida real estate market even after the expiration of the homebuyer tax credit. While the number of pending sales has dropped slightly month-over-month, they are still significantly higher than they were a year ago.''
About 60% of South Florida sales have gone to foreign buyers, who are more likely to pay with cash and were never eligible for the tax credit.
Additionally, more than half of recent sales in Miami-Dade and Broward counties involve short sales or bank-owned home sales. In the last 12 months, the number of bank-owned condos and single-family homes sold has more than doubled.
According to analysis by Esslinger-Wooten-Maxwell Realty, t here were 944 short sales in Miami-Dade and Broward in June, up from only 379 a year earlier.
That's a reason to be cautious while interpreting pending homes sales data in a market like South Florida's, said Doug DeWitt, Miami-based real estate broker.
Many short sale contracts are rejected by the bank after a seller agrees to sell for a price below what they owe, meaning those pending sales don't lead to closings. Additionally, because short sales take months to process, many remain in the ``pending'' stage longer than normal, boosting pending sales numbers for multiple months.
In Miami-Dade County, more than half of the pending single-family home sales on the Multiple Listing Service are short sales, said DeWitt. `I'd say at least half of those are not going to close. I would say stick to the actual closed sales to make the true comparison, because there's a lot of different ways that these pending sales can fall through.''
The increasing number of short sales and bank-owned properties coming to market has put downward pressure on prices in South Florida, said Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach. In June, median prices of existing homes stood at $203,300 in Miami-Dade, down about 4% from the same month a year earlier. Median existing condo prices, at $128,000, were down about 9% in Miami-Dade.
McCabe concludes: ``When you're in a neighborhood that has two foreclosures and a short sale that are priced $50,000 or $75,000 below what you thought you could get for your home, you do not set the barometer for the other [home] prices. They set the prices for you.''
According to a report by Trulia, one in five home sellers in the Miami area slashed prices last month, with an average reduction of 13%.
South Florida sizes up well when compared to the national picture, where the pending home sales index hit a record low 75.7 in June, according to the National Association of Realtors. It was the second monthly falloff after the April 30 deadline to enter the federal homebuyer tax credit program, with June's pending sales down nearly 19% from the same month a year earlier.
The local market hasn't been completely immune from the post-tax-credit slump. In the past three months, pending home sales are down 3.2% in Miami-Dade and down 5.1% in Broward.
Jack H. Levine, chairman of the board of the Miami Realtors, stated: ``We are encouraged by the statistics for pending home sales in the South Florida real estate market even after the expiration of the homebuyer tax credit. While the number of pending sales has dropped slightly month-over-month, they are still significantly higher than they were a year ago.''
About 60% of South Florida sales have gone to foreign buyers, who are more likely to pay with cash and were never eligible for the tax credit.
Additionally, more than half of recent sales in Miami-Dade and Broward counties involve short sales or bank-owned home sales. In the last 12 months, the number of bank-owned condos and single-family homes sold has more than doubled.
According to analysis by Esslinger-Wooten-Maxwell Realty, t here were 944 short sales in Miami-Dade and Broward in June, up from only 379 a year earlier.
That's a reason to be cautious while interpreting pending homes sales data in a market like South Florida's, said Doug DeWitt, Miami-based real estate broker.
Many short sale contracts are rejected by the bank after a seller agrees to sell for a price below what they owe, meaning those pending sales don't lead to closings. Additionally, because short sales take months to process, many remain in the ``pending'' stage longer than normal, boosting pending sales numbers for multiple months.
In Miami-Dade County, more than half of the pending single-family home sales on the Multiple Listing Service are short sales, said DeWitt. `I'd say at least half of those are not going to close. I would say stick to the actual closed sales to make the true comparison, because there's a lot of different ways that these pending sales can fall through.''
The increasing number of short sales and bank-owned properties coming to market has put downward pressure on prices in South Florida, said Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach. In June, median prices of existing homes stood at $203,300 in Miami-Dade, down about 4% from the same month a year earlier. Median existing condo prices, at $128,000, were down about 9% in Miami-Dade.
McCabe concludes: ``When you're in a neighborhood that has two foreclosures and a short sale that are priced $50,000 or $75,000 below what you thought you could get for your home, you do not set the barometer for the other [home] prices. They set the prices for you.''
According to a report by Trulia, one in five home sellers in the Miami area slashed prices last month, with an average reduction of 13%.
Miami Foreclosure Auction Brings in 9.3 Million Dollars
During the August 1 REDC Auction at the Miami Beach Convention Center, thrifty South Floridians spent nearly $9.3 million on 154 foreclosed properties. That comes out to $60,390 per property.
REDC, the auction company, said a Fort Lauderdale home sold for $20,000, 91% less than its previous high value. And a Delray home went for $99,750, 51% off its high value.
This auction is part of an eight-city tour through Florida in which REDC is set to sell more than 1,500 foreclosures.
For more details, click here.
Tuesday, August 3, 2010
Countrywide to pay $600 Million to Settle Shareholder Lawsuits
Countrywide Financial Corp., which epitomized the home-loan industry's boom and bust, has agreed to pay $600 million in the largest settlement yet of shareholder lawsuits stemming from the mortgage meltdown.
The agreement, given preliminary approval Monday by U.S. District Judge Mariana Pfaelzer in Los Angeles, would end several class actions brought on behalf of investors in Countrywide stock.
The Calabasas company, once the nation's largest mortgage lender, offered a full range of loans to customers whose credit varied from top flight to subprime. It was near failure when Bank of America Corp. acquired it in 2008. The lawsuits said Countrywide had fraudulently concealed its mounting risks as it and other lenders embraced ever-looser standards during the housing boom.
Countrywide's outside accounting firm, KPMG, which signed off on the lender's financial statements at the height of the boom in 2005 and 2006, has agreed to pay an additional $24 million under the settlement.
By ending the lawsuits, the accord would benefit a number of former Countrywide executives and directors who were named as defendants in the litigation. They would not have to help fund the payments to shareholders. The defendants include longtime Countrywide Chief Executive Angelo Mozilo, former President David Sambol, former Chief Financial Officer Eric Sieracki and ex-board members including former California Treasurer Kathleen Brown, 12-time NBA all-star Oscar P. Robertson and onetime U.S. Housing Secretary Henry G. Cisneros.
The settlement also would clear the liability of a list of financial firms that underwrote the Countrywide stock offerings and were named as defendants.
The defendants admitted no wrongdoing, and they have contested the allegations in the shareholder suit and other legal actions.
"Countrywide denies all allegations of wrongdoing and any liability under the federal securities laws," Bank of America legal spokeswoman Shirley Norton said in a statement. "We agreed to the settlement to avoid the additional expense and uncertainty associated with continued litigation."
Joel Bernstein, attorney for the New York state and city pension funds that were the lead plaintiffs, said the settlement was the result of long mediation by Eric Green, a Boston University law professor, and A. Howard Matz, a federal district judge in Los Angeles.
"It is the largest settlement of any shareholder case to come out of the subprime crisis this far," Bernstein said.
The settlement doesn't cover investments in mortgage-backed securities sold by Countrywide.
Countrywide remains the target of several other lawsuits and investigations, including a Securities and Exchange Commission civil lawsuit accusing Mozilo, Sambol and Sieracki of misleading investors.
The company and Mozilo also are under criminal investigation by the Justice Department and are targets of lawsuits brought on behalf of borrowers by the attorneys general of California and other states.
Bernstein said he couldn't estimate how many individual investors would be affected by the pending settlement. If Judge Pfaelzer gives final approval at a hearing in November, he said, checks could go out within six months to a year.
Word of the settlement follows news Friday that 13 former officers and directors of New Century Financial Corp., the largest publicly traded lender that focused on subprime mortgages, had agreed to pay more than $90 million to settle civil claims stemming from the Irvine company's collapse.
Nearly all those payments would be made by insurers under policies bought to protect New Century's officers and directors, according to court filings.
In addition, KPMG has agreed to pay nearly $45 million to settle claims related to New Century, whose books the accounting firm also audited. And Wall Street firms that underwrote New Century stock would kick in $15 million toward the settlement, bringing the total to more than $150 million.
The New Century agreement, which needs federal court approval, would cover shareholder class actions, a Securities and Exchange Commission lawsuit, a bankruptcy trustee's claim and a suit by a private equity firm.
The agreement, given preliminary approval Monday by U.S. District Judge Mariana Pfaelzer in Los Angeles, would end several class actions brought on behalf of investors in Countrywide stock.
The Calabasas company, once the nation's largest mortgage lender, offered a full range of loans to customers whose credit varied from top flight to subprime. It was near failure when Bank of America Corp. acquired it in 2008. The lawsuits said Countrywide had fraudulently concealed its mounting risks as it and other lenders embraced ever-looser standards during the housing boom.
Countrywide's outside accounting firm, KPMG, which signed off on the lender's financial statements at the height of the boom in 2005 and 2006, has agreed to pay an additional $24 million under the settlement.
By ending the lawsuits, the accord would benefit a number of former Countrywide executives and directors who were named as defendants in the litigation. They would not have to help fund the payments to shareholders. The defendants include longtime Countrywide Chief Executive Angelo Mozilo, former President David Sambol, former Chief Financial Officer Eric Sieracki and ex-board members including former California Treasurer Kathleen Brown, 12-time NBA all-star Oscar P. Robertson and onetime U.S. Housing Secretary Henry G. Cisneros.
The settlement also would clear the liability of a list of financial firms that underwrote the Countrywide stock offerings and were named as defendants.
The defendants admitted no wrongdoing, and they have contested the allegations in the shareholder suit and other legal actions.
"Countrywide denies all allegations of wrongdoing and any liability under the federal securities laws," Bank of America legal spokeswoman Shirley Norton said in a statement. "We agreed to the settlement to avoid the additional expense and uncertainty associated with continued litigation."
Joel Bernstein, attorney for the New York state and city pension funds that were the lead plaintiffs, said the settlement was the result of long mediation by Eric Green, a Boston University law professor, and A. Howard Matz, a federal district judge in Los Angeles.
"It is the largest settlement of any shareholder case to come out of the subprime crisis this far," Bernstein said.
The settlement doesn't cover investments in mortgage-backed securities sold by Countrywide.
Countrywide remains the target of several other lawsuits and investigations, including a Securities and Exchange Commission civil lawsuit accusing Mozilo, Sambol and Sieracki of misleading investors.
The company and Mozilo also are under criminal investigation by the Justice Department and are targets of lawsuits brought on behalf of borrowers by the attorneys general of California and other states.
Bernstein said he couldn't estimate how many individual investors would be affected by the pending settlement. If Judge Pfaelzer gives final approval at a hearing in November, he said, checks could go out within six months to a year.
Word of the settlement follows news Friday that 13 former officers and directors of New Century Financial Corp., the largest publicly traded lender that focused on subprime mortgages, had agreed to pay more than $90 million to settle civil claims stemming from the Irvine company's collapse.
Nearly all those payments would be made by insurers under policies bought to protect New Century's officers and directors, according to court filings.
In addition, KPMG has agreed to pay nearly $45 million to settle claims related to New Century, whose books the accounting firm also audited. And Wall Street firms that underwrote New Century stock would kick in $15 million toward the settlement, bringing the total to more than $150 million.
The New Century agreement, which needs federal court approval, would cover shareholder class actions, a Securities and Exchange Commission lawsuit, a bankruptcy trustee's claim and a suit by a private equity firm.
New Fannie Mae Website Helps Distressed Borrowers With Next Step
Yesterday, mortgage giant Fannie Mae launched a new website for distressed homeowners who need help figuring out what to do next.
Knowyouroptions.com offers information on refinancing, repayment plans, forbearance agreements, mortgage modifications and other possible solutions.
Homeowners who no longer can afford their mortgages but want to avoid a foreclosure on their credit history can learn about graceful exits -- short sales and deeds in lieu of foreclosure.
Spokesman Jason Vasquez states: “We want to avoid foreclosure. That’s just not good for anybody.”
The website is interactive and available in English and Spanish. Borrowers don't need Fannie Mae loans to take advantage of the site.
Monday, August 2, 2010
South Florida was "Ground Zero" for the Housing Real Estate Collapse
Mike Larson, an analyst with Weiss Research, a Jupiter-based provider of global investment information wastes not time and gets right to the point:
"South Florida was definitely ground zero for the housing bust. We had a lot of rampant speculation and fly-by-night mortgage lenders and when they went away, the market collapsed."
The result: plummeting home prices that have hammered Broward and Palm Beach counties since 2005, when the housing bubble peaked.
According to MDA DataQuick, a San Diego research firm, single-family homes in the Pompano Beach and Lighthouse Point (zip code 33064) endured the greatest percentage decline in Broward over the past five years. The median price of $75,000 in June was down 68.6% from June 2005. The 33064 ZIP code includes Cresthaven and Pompano Highlands, low-income subdivisions hit hard by foreclosures in recent years.
In Palm Beach County, the ZIP code 33407 took the biggest hit. The median price for homes in the ZIP code covering West Palm Beach and Riviera Beach plummeted 77.4% to $43,000.
However some upscale areas avoided price declines. The ZIP code for west of Boca Raton, 33496, saw its median sales price soar 39.5% to $610,500. While parts of Jupiter, Palm Beach Gardens, West Palm Beach and west of Delray Beach had smaller median price increases.
Broker Douglas Rill said Jupiter biotech giants Scripps Florida and the Max Planck Society have helped sustain home prices in the northern part of the county. "You have a bunch of highly paid people who don't want to be far from work," Rill said.
In the condominium market, only Palm Beach, South Palm Beach and parts of Fort Lauderdale avoided median price cuts compared with five years ago.
During the boom, speculators fueled the run-up in home values before getting pummeled in the downturn. Now a new wave of investors is positioned to help the market recover. They're buying foreclosures and short sales, fixing them up and reselling them for a profit.
Although slowly, bidding wars could help boost prices. However, with even more foreclosures expected to flood the resale market in the coming months, analysts predict prices will keep falling. The market might not hit bottom until next year, and even then, the prices will not just shoot up again like they did in the past. Those days are over.
"South Florida was definitely ground zero for the housing bust. We had a lot of rampant speculation and fly-by-night mortgage lenders and when they went away, the market collapsed."
The result: plummeting home prices that have hammered Broward and Palm Beach counties since 2005, when the housing bubble peaked.
According to MDA DataQuick, a San Diego research firm, single-family homes in the Pompano Beach and Lighthouse Point (zip code 33064) endured the greatest percentage decline in Broward over the past five years. The median price of $75,000 in June was down 68.6% from June 2005. The 33064 ZIP code includes Cresthaven and Pompano Highlands, low-income subdivisions hit hard by foreclosures in recent years.
In Palm Beach County, the ZIP code 33407 took the biggest hit. The median price for homes in the ZIP code covering West Palm Beach and Riviera Beach plummeted 77.4% to $43,000.
However some upscale areas avoided price declines. The ZIP code for west of Boca Raton, 33496, saw its median sales price soar 39.5% to $610,500. While parts of Jupiter, Palm Beach Gardens, West Palm Beach and west of Delray Beach had smaller median price increases.
Broker Douglas Rill said Jupiter biotech giants Scripps Florida and the Max Planck Society have helped sustain home prices in the northern part of the county. "You have a bunch of highly paid people who don't want to be far from work," Rill said.
In the condominium market, only Palm Beach, South Palm Beach and parts of Fort Lauderdale avoided median price cuts compared with five years ago.
During the boom, speculators fueled the run-up in home values before getting pummeled in the downturn. Now a new wave of investors is positioned to help the market recover. They're buying foreclosures and short sales, fixing them up and reselling them for a profit.
Although slowly, bidding wars could help boost prices. However, with even more foreclosures expected to flood the resale market in the coming months, analysts predict prices will keep falling. The market might not hit bottom until next year, and even then, the prices will not just shoot up again like they did in the past. Those days are over.
Will the State Impose a Tax on Real Estate Deals?
There have been a lot of “rumors” and e-mails saying all real estate transactions will be subject to a 3.8% sales tax and that the Democrats inserted this at the last minute into the recent health-care legislation that just passed.
Some of that is true.
There is a new federal real estate tax that will help pay for Medicare, but it only applies to sellers making more than $200,000 per year or $250,000 for couples.
A recent Washington Post article created a fictional couple with a joint income of $300,000 (over the $250,000 limit) that made a $600,000 profit on a home sale. In the example, the couple could pay a new real estate tax equal to about $1,900.
If you disagree with this new tax, I would suggest reaching out to your local political representatives and voice your concerns.
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