Leading U. S. economists: Fla.’s housing market bouncing back

ORLANDO, Fla. – Dec. 7, 2011 – Despite national and global headwinds, Florida’s real estate market is entering 2012 on an upward trend, according to three leading U.S. economists.

“Our state is in a mini-recovery,” said Florida Realtors® Chief Economist Dr. John Tuccillo at the state association’s 2012 Real Estate and Economic Forecast Conference in Orlando. “Sales are trending up, listing inventories are falling, the supply of lender-related properties has stabilized, and we are seeing multiple offers on homes in some local markets.”

In fact, Florida homes today may be undervalued, Tuccillo added. “That may seem like a drastic statement,” he said. “But a buyer who plans to own the home for five to seven years can get some great bargains today.”

Mark Vitner, senior economist at Wells Fargo in Charlotte, N.C., said the U.S. economy will continue to face significant challenges, particularly financial concerns related to the European debt crisis. But he expects the U.S. economic recovery will continue next year, making it easier for Midwesterners, for example, to buy Florida homes.

“Florida’s economy is recovering, with tourism and healthcare leading the way,” Vitner said. “International tourism has been particularly strong in Miami and Orlando.”

Looking around the state, Vitner said Jacksonville’s unemployment rate has dropped and home prices are stabilizing. In Orlando, prices have not yet reached bottom, he said, but the winter tourism season should help the regional economy. Tampa and Southwest Florida have seen solid job growth, with little new home construction.

South Florida’s economy is growing thanks to trade relationships with Latin America and the Caribbean, while in the Panhandle, Fort Walton Beach is outperforming Panama City and Pensacola, according to Vitner.

Dr. Lawrence Yun, chief economist for the National Association of Realtors®, said many Florida markets are showing sharp drops in inventories of homes for sale – a sign that demand is picking up and prices are stabilizing. “That’s a major change from just a year ago,” he said. “Buyers have stepped back into the Florida market.”

Noting the state’s powerful appeal to international buyers, Yun said he was particularly optimistic about the outlook for South Florida. “Don’t be surprised to see a gain in home prices in the Miami and Naples markets in the next 18 months,” he said. “From there, the recovery is likely to roll northward to Central Florida and then North Florida.”

Tuccillo noted that foreclosed and distressed properties will remain a significant part of the Florida market in 2012, but lenders are feeding these properties into the market at a gradual pace rather than pushing them out all at once.

The event also featured a panel of Florida real estate professionals, who discussed the 2012 outlook for several sectors of the state’s real estate market from a practitioner’s point of view. Panelists were Clark Toole, president and COO, Coldwell Banker Residential Real Estate Inc. in Florida, discussing residential real estate; Cynthia Shelton, 2009 president of Florida Realtors and a director at Colliers International in Orlando, discussing the commercial market; and Dean Saunders, accredited land consultant and broker-owner of Coldwell Banker Commercial Saunders Real Estate in Lakeland, covering the market for land and undeveloped property.

Florida Realtors real estate and economic summit was webcast to 32 local association or satellite sites around Florida. “Turnout was high for our statewide event,” said 2011 Florida Realtors President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart. “We hope to hold more of these forums on a regular basis – sharing knowledge of market trends is a powerful way for our Realtor members to connect with buyers and sellers.”

A PDF of PowerPoint slides used during the 2012 Real Estate and Economic Forecast Conference is available on the floridarealtors.org research page.

November 16, 2011 - Revamed Refinancing Program

The Federal Housing Finance Agency acknowledged that the 894,000 mortgages refinanced under the Home Affordable Refinance Program had not lived up to the Obama administration's expectations.

The reworked effort certainly will attract the attention of homeowners in hard-hit housing markets like Chicago, where home values are about 30 percent off their September 2006 peak. But not every consumer with an upside-down mortgage will qualify, and it remains to be seen how many mortgage lenders will participate.

Q: Who may be eligible?

A: The program is only eligible to borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac and who have 20 percent or less equity in their homes. To check if either Fannie or Freddie backs a mortgage, go to freddiemac.com/mymortgage or fanniemae.com/loanlookup. The only loans eligible are those that were backed by Fannie Mae and Freddie Mac before May 31, 2009.

Q: When can applications be submitted and when does the program end?

A: The program begins Dec. 1, but some participating lenders may not be ready to take applications that soon. The program ends Dec. 31, 2013.

Q: Can borrowers apply at any lender?

A: Yes. Participation is voluntary for lenders, but a key component of the reworked program is designed to make lenders more comfortable with writing a new loan on an underwater property. Going forward, a HARP lender is not considered responsible if a loan it refinances goes bad because of mistakes in the original purchase loan. The change was considered critical to attracting lenders to the program and fostering competition among lenders for business. However, lenders still have underwriting guidelines to follow.

Q: What if I missed one mortgage payment?

A: The agencies don't want to see any delinquencies in the most recent six months, but a borrower can be 30 days late on one payment in months seven to 12 of the past year.

Q: What kind of extra fees are tacked on to the loans?

A: For loans that amortize in 20 years or less, all fees related to the riskiness of the loan have been eliminated. For loans that amortize in more than 20 years, fees are capped at 0.75 percent of the loan amount.

Q: What are the maximum loan-to-value ratios?

A: For 30-year, fixed-rate loans, there is no maximum LTV ratio. For fixed-rate loans of more than 30 years and less than 40 years, the maximum LTV is 105 percent.

The maximum also is 105 percent for adjustable-rate loans with an initial fixed period of 5 years or more and terms up to 40 years.

Q: Can a borrower refinance from a 30-year to a shorter-term loan, even if it means increasing the monthly payments?

A: Yes. In fact, the government is encouraging that because interest rates are usually lower on shorter-term loans and it allows the borrower to increase equity in their homes at a faster rate.

But to qualify for a shorter-term loan under the program, the borrower has to meet additional criteria, like having a credit score of at least 620 and a debt-to-income ratio of no more than 45 percent.

Have You Considered Investing in a Florida Forclosed or Bank Owned Property?

There are some very important aspects to think about when you are considering an investment in a foreclosure property or a property that is REO (real estate owned). The basic principal behind foreclosure is the property has repossessed by the lien holder. When a property is in foreclosure it will often be sold at auction to the highest bidder. Since the starting price is set be the lien holder, many auctions end without any bids.

In the event of an unsuccessful auction, the property goes back to the lien holder, and is known as REO(real estate owned) property. After taking ownership of the property the lien holder will pay off any taxes, association fees, and perform repairs required. Once the property meets all the requirements it is listed on the real estate market at a lower price than market value.

So where can you find these real estate owned properties? They are mainly published online, in newsletters, and real estate magazines. In many cases contacting a realtor experienced with these properties is a good idea. A realtor can also provide you many details about the market value and provide you with a report of current listings, pending and sold properties within the community of interest.

Now you are probably asking what this has to do with Florida? In short Florida is a very lucrative state to invest in real estate owned properties. There is two major programs in Florida that can help investors spend less money.

The first is the Florida Energy Rebate which offers a rebate and loan program for energy efficiency offered by power companies. Information is available from Energy Star, American society of heating, refrigeration & air-conditioning engineers, and Florida Energy & Climate Commission.

The second is the FHA Rehabilitation mortgage, or 203(k) mortgage program. This program helps home buyers buy a home and have enough money to repair or rehabilitate it.

As an investor interested in purchasing a bank owned property you will be allowed to preview the property to make a detailed property inspection before purchasing it. The banks that own these properties have to invest a great deal of time and money in to selling these properties. It may not be a good deal for the banks but it is a great deal to potential investors!

Keywords: Home, Condo, Investment Properties, REO Properties, Beaches, Multi Family Properties, Bank Owned Real Estate, Waterfront