Florida Home Buyers and Investors Blog

I have been curious lately about all the chatter of cash buyers, and how they are really making it difficult for the average Joe to buy a home with financing.

The best place for agents to look for answers is the Regional Association of the Palm Beaches MLS system.

Here are some interesting facts.  Palm Beach County ONLY.

In the past 12 months, there were a total of 9,866 properties purchase without financing.  971 of the properties sold from $500,000 - $12.5 Million all cash.

• 3,575 Single Family Homes
• 4,634 Condos
• 1,572 Townhomes/Villa
• 85 Other (Mobile Homes)

It appears there were a large number of people sitting on the sidelines like sharks circling their prey, waiting for this moment in time.  When cash buyers are willing to commit their money to purchase Real Estate, the general consensus is they feel we are at or close to rock bottom prices.

Frustration form ready willing and able buyers to purchase good homes at fair prices are at an all time high.  We have not see this amount of frustration since 2003-2005, when homes were selling the same day over list price.

REO Sellers, are rarely considering any FHA buyers, due to the restrictions and difficulty in getting homes approved.  Forget condos, financing is next to impossible.

Condo financing must meet FHA guidelines, which require the Condo association to have less than 15% owners delinquent paying their dues, and less than 50% investor participation, as well as having 10% or more in reserves.  This criteria knocks out 80% of the condos in South Florida.  These restrictions have a negative impact on prices, the buyer pool is left to cash buyers only.

OK, the news is out and Citigroup is out with their latest and greatest scheme.  Now for those of you that don't always read my BLOG, you may not know how I really feel about banks, but I'll just say this.  Banks DO NOT have your best intests in mind EVER.

Citigroup wants you to play nice and not have them go to all that hard work of actually foreclosing on your home.  Well, if you have a Foreclosure Defense Attorney, they will make sure, Citygroup does NOT take advantage of you, so consider that.

For those going through Foreclosure, you know it's not fun or easy, and the stress can be overwhelming.  I speak with you all on a daily basis.

Now, why would Citigroup want to offer you this option.  Plain and simple, it's all about MONEY.  Isn't it always!  If you agree to take care of the property, and give them the deed without going to court, they will allow you 6 months to relocate from the house.

Gee, how generous.  Lets see, if you fight the foreclosure, you can probably stay atleast a year or more, and still have time to Short Sale the property to avoid the foreclosure anyway.  Deed in Lie, or "Lieu" is a FORECLOSURE, and will be on your Credit record as such.

A Short Sale will be settled debt, much less difficult to overcome.  So, if a bank offers you a deal too good to be true, you know the lesson.  Don't fall for it!

Also, some are also considering Strategic Defaults.  BEWARE, these are rarely strategic and you need to understand what is at stake.  Download our FREE report about Strategic Mortgage Defaults.  Click Here.

January 2009/2010 Palm Beach County Housing Market Statistics:

Condos under contract:

2009: 344            2010: 716  108.1% increase.  We feel the increase in condos under contract is the large number of foreclosures and short-sales in this market, unfortunately the majority will not close due to lack of financing for this product.

Condo Units Sold:

2009: 230            2010: 288  25.2% increase in number of units sold.  The number of investors in the market is contributing to the greater volume in Palm Beach County sales.  These are mainly cash transactions.  December 09- January 2010 volume decreased signifigantly from 444 in Dec09 to 288 in Jan2010.

Condos Median Price Sold:

2009 $65,500       2010: $65,000  .8% decrease in values.  This is a good sign that condo prices are remaining steady, but vlaues are down considerably from 2006-2008 levels.

Residential Single Family Homes Under Contract:

2009: 597            2010: 995    66.7% Increase in homes under contract is similar to the condos, with high under contract numbers, but low actual closings.  Again, this is a factor of the Short-Sale problems that will remain for some time.

Residential Single Family Homes Units Sold:

2009: 404           2010: 415    2.7% Increase in units sold.  Another good sign that people are buying.  The majority of homes sold are in the lower end of the market and purchased unsing government FHA financing.  December 09- January 2010 volume decreased signifigantly from 782 in Dec09 to 415 in Jan2010.

Residential Single Family Homes Price Sold:

2009: $219,000    2010: $238,000   8.5% Increase.  This is a good sign that prices are remaining consistant and in some cases increasing.  My opinion is the increase in prices is due to the lack of good inventory, and banks holding the line on prices.  Remember, the banks control the inventory and price.

We are continuing to struggle through the recovery, but there are some positive signs.  Lets hope things continue on the path.

I'm here to help!

Craig Fialkowski GRI, CDPE

Herman Group Real Estate

Those Who Wait Will Pay Thousands More This Spring

Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).

Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.

Here are a few reasons why:

On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

There is only one way to avoid being affected by all of these costly changes that lie ahead – submit all FHA mortgage applications by the last week of March.

Tax Season is upon us and now is the time to look at tax saving improvements for your home.

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• 

  Tax Credits for Solar Water Heaters

  A federal tax credit makes energy-efficient solar water heaters a more affordable and sustainable option for many homeowners. Read
• 

  Tax Credits for Replacing Heating and Cooling Systems

  Upgrading to an energy-efficient heating and cooling system can save hundreds on your utility bills and earn you a tax credit worth as much as $1,500. Read
• 

  Tax Credits for Replacing Your Roof

  Replacing your roof with a qualifying energy-efficient metal or asphalt roof can cut your cooling bill and earn you a $1,500 tax credit. Read
• 

  Tax Credits for Adding or Replacing Insulation

  A federal tax credit makes adding insulation an even cheaper way to improve your home’s energy efficiency and cut your heating and cooling bills. Read
• 

  Tax Credits for Replacing Windows, Doors, and Skylights

  If money seems to be escaping through drafty windows, doors, and skylights, this federal tax credit might make energy-efficient replacements more affordable. Read

FNMA Announcement 09-37  Dec 30, 2009.

Amends these Guides: Selling

This Announcement contains the following updated policies:

• Discontinuance of accepting FHA-approved condo projects for conventional mortgage loans
• Acceptable credit score versions for manual underwriting
• Acceptable subordinate financing for DU Refi Plus™ and Refi Plus™
• Changes to existing mortgage loan eligibility for Refi Plus mortgage loans

Each of these changes is briefly described below. With this Announcement, Fannie Mae is beginning a regular process of simultaneously updating the affected topics in the Selling Guide and publishing an updated version of the Guide. The affected topics are noted for each policy

change and are linked to the updated Selling Guide. Lenders should review each topic to gain a full understanding of the policy changes. (Note: For lengthy topics the specific paragraph(s) that was updated is also noted.) The updated topics are dated December 30, 2009.

In addition, the Selling Guide has been updated to incorporate the following items. Refer to the Attachment to this Announcement for the details:

• Announcement 09-28, Retirement of HomeStyle® Construction-to-Permanent
• Announcement 09-29, Updates to Minimum Credit Scores, Mortgage Insurance, Pricing for

Several other miscellaneous clarifications or error corrections

As of the December 30, 2009 publishing of the Selling Guide, all announcements have been incorporated and the Guide is up-to-date. (Prior versions of the Selling Guide are available on efanniemae.com.

OK, Basically, all condo financing in Florida is gone.  The only project eligible for financing are on the list provided below, only if the project meets other guidelines related to investor ownership and percentagle of delinquencies.  If you add it all up, 95% of all condos in Florida are not eligible for any financing even with 20%-25% down.  Conventional investors follow FNMA guidelines.  This is going to make a bad situation worse and condos struggling with foreclosures, and delinquent homeowners are going to fail. 

I wish I had an answer on how to mitigate the problem, but this one is a meteor headed for earth with no stopping it.

Click Here for Approved Projects

Please download our FREE report "Your First Steps To Avoid Foreclosure" with our compliments.

Please feel free to download our FREE report Deed In Lieu vs. Short-Sale with our compliments.

Knowledge is power.  Also remember the bank will not take back a property with more than 1 loan.