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Archive for the 'home values' Category

Real estate and Palm Harbor: Is this the best market for buyers ever?

If I were to ask you to describe your income, would you use words like “reliable,” “dependable,” or “steady?”  Do you think there’s a very good chance that your job (or your business) will be around in a year, or two, or five?

If you took out some sort of loan tomorrow, would you worry about your ability to pay it back because of future income issues? Or would you be confident that your job would remain in place over the long term?

Some people have jobs that pay really well, but which probably won’t be around for long periods.  I’ll give you an example: I have a relative who is working right now as an electrical contractor in Iraq. He’s making REALLY good money, but he doesn’t expect (or want) the job to last forever. After a year or so, he’s going to want to shake the sand out of his jeans, come back to the States, and resume a more normal life.

My relative’s big but short-term income puts him in a great position to pay off debt and accumulate cash. However, it does NOT make him a great candidate for a 30-year mortgage or a five-year car loan.

But YOU, on the other hand, might be sitting on a bigger asset than you realize, if you have a steady and dependable job or other source of income.

Why? Because this may be the best time in the past, oh, 75 years or so, to buy a house.

Which brings me to my second question:

Do you know what the S&P/Case-Shiller Home Price Indices is? Okay, I’ll tell you – it is a monthly report that measures the residential housing market. It tracks home values in 20 metro markets in the U.S.

And the Case-Shiller report for October, released just this week, shows a couple of things: 1. Home values in October were flat, and 2. in spite of that, home values during 2009 have generally been in slow but steady recovery mode.

Case-Shiller reports that home values have fallen a full 30% since their peak in 2005. That drop has been stunning – nothing like it has been seen since the Depression, and perhaps even earlier than that. For people who need or want a new home, it is an opportunity of stunning proportions.

And there is even more good news; interest rates have dropped, too, If you wanted a 30-year fixed rate mortgage three years ago, it would have likely cost you around 6.4 percent. Apply for that same mortgage today, and you’ll pay more like 5 percent.

What that means is that median home prices are now about where they were in the mid-1990s, a time when just about every agrees was a really great time to buy. What makes the current conditions even more attractive than then, however, is the difference in mortgage rates – something like 5 percent now, more like 9 percent back then.   

The Wall Street JOURNAL recently did some numbers-crunching, and came up with this conclusion: Buy an average home now, finance it with a 5 percent 30-year mortgage, and the cost comes out to be around 19 times today’s average weekly earnings. Conditions haven’t been that favorable for homebuyers since the 1970s, according to the JOURNAL.

Still not good enough for you? Okay, fine – then throw in the $8,000 first time home buyer tax credit, which is scheduled to run through the spring season.

Which brings us back to my original question: How would you characterize your income? Would you describe it as “reliable,” “dependable,” or “steady?”

If it is, and you can feel pretty good about relying on your income over the long term, this is probably the best time to buy a home that has come along during your entire lifetime, and probably your parents’ lifetime, and maybe even your grandparents’ lifetime as well.

The real question is the reliability of your income. These are uncertain economic times, and no one needs additional uncertainty in times like these. Unstable or unreliable income down the road could result in a foreclosure, no matter how attractive the selling price of the home is now.

But if income unreliability is not a major concern, unprecedented real estate opportunities await you.

Tags: pinellas, real estate and clearwater, real estate and palm harbor

New homeowner tax credit may mean tax windfall for builders

Last week, the Congress extended the first time homeowner tax credit. But what wasn’t so obvious about that legislation is that it provides some really big tax breaks for home building companies.

Big builders like Lennar and Pulte could end up with hundreds of millions of dollars in refunds from the U.S. Treasury on taxes they paid as far back as five years, according to the Wall Street Journal. Those refunds are designed to help the companies cope with the big losses they have experienced in the past two years or so.

The tax break will apply to large companies of all kinds. But it may be of particular benefit to the country’s biggest home builders, because they have experienced some really hefty losses as the economy has tanked over the past couple of years.

Some critics say they home builders don’t really need that much help because they have been selling off assets, such as land and unsold inventory, and bargain prices and then hoarding the proceeds. One source estimates that the 10 largest home building companies are sitting on average of $1.2 billion in cash each, quite a lot more than the $616 million cash average they had just a couple of years ago.

Pulte Homes says it may receive more than $450 million in tax refunds; Lennar Homes may get refunds of as much as $300 million.

One benefit to the tax refund news: stock prices for Lennar and other builders went up last week as the legislation was announced.

Tags: home builders, tax credit

Home refinance program expanded

     We’ve written here in the past about tax credits and about government programs aimed at saving homes from foreclosure and making home payments more affordable. Now, it looks as though the Obama Administration wants to expand those programs to make them apply to more borrowers than before.
 

    Until now, those government programs have been available to people whose mortgage amounts are up to 105 percent of a home’s value. This week, the administration announced that it wants to raise that limit to 125 percent of value.
Here are some of the conditions that apply:

• The mortgages in question must be owned or backed by Fannie Mae or Freddie Mac.
• The applicants for new financing must be current on their mortgage payments.

     It is estimated that 30 percent of all mortgages are for amounts that exceed their homes’ values.
     The expansion of this federal home refinance program is an acknowledgement that the original program fell far short of expectations. When it was announced in March, the Obama Administration said it hoped that it would help 4-5 million homeowners who were upside-down on their mortgages. But in the middle of June, the administration admitted that only about 20,000 homeowners had applied to refinance their mortgages under the plan.
One problem has been rising interest rates. Current rates are around 5.5 percent, up from 4.84 percent in April. That rate increase has put a damper on refinances. The government hopes that the new expansion will encourage more homeowners to refinance their homes, and those refinances will make the homeowners less likely to default on their mortgages.
     Got a home in Palm Harbor, Dunedin, Clearwater, or anywhere else in Pinellas County with a mortgage bigger than the home’s value? This expanded program may be for you.

Tags: making home affordable, mortgages, pinellas county, refinance

Federal government offers mortgage help

Okay, so you’ve been living in your home in Pinellas County and faithfully making your mortgage payments, but your home’s value has been steadily slipping and now you owe more than the place is worth. You keep reading about new government programs that are supposed to help, but you need to find out more.

Fear not – there’s a place you can go to find the help you need.

That place is www.MakingHomeAffordable.gov. It’s a website designed to describe the benefits of a federal program called, well, Making Home Affordable. It offers homeowners a number of opportunities to either refinance their mortgages, or modify the mortgages they already have.

The Making Home Affordable program is financed with $75 billion for loan servicers and borrowers. Its designers say that it should be able to offer mortgage help to four million homeowners who need to modify their loans to make them more affordable, or who need to negotiate short sales of their properties with their mortgage providers.

Officials say that the money will allow Fannie Mae and Freddie Mac to refinance up to five million loans they own (or guarantee). Fannie Mae and Freddie Mac have set up web sites and toll-free hotlines for borrowers who need to determine if their mortgages fall under Fannie or Freddie. Fannie Mae’s is www.fanniemae.com/homeaffordable (phone number (800) 732-6643); Freddie Mac’s is www.freddiemac.com/avoidforeclosure (phone number (800) 373-3343).

Some borrowers might prefer to get information first from their own mortgage servicer. To do that, go to www.HopeNow.com and fill out an application. That web site is operated by an alliance of mortgage servicers and nonprofit counselors. You can talk to them on the phone at (888) 995-4673.

No matter where you live in North Pinellas County – Tarpon Springs, Palm Harbor, Dunedin, Clearwater, Safety Harbor, or anywhere else, for that matter – the information offered applies to you.

Tags: Add new tag, Fannie Mae, Freddie Mac, Mortgage, North Pinellas County

California leads the real estate value decline

All the data appears to be in, and we can now say with authority that the state with the biggest decline in real estate values for 2008 was….

(Drum roll, please….)

CALIFORNIA!

That’s right, California was the big winner (actually, loser) in the real estate downturn sweepstakes, losing 26.9 percent of its real estate value during the year. Next was Nevada, with a 22.8 percent value drop, followed by Arizona (19 percent) and then (ahem) Florida, with an 18.2 percent drop.

Values actually dropped in 35 states during 2008.

That’s the story for 2008, but what about the total drop in values since, say, the peak of real estate value in July 2006? California still leads the way with a 42 percent decline. Nevada protected its second place position with a 39 percent decline. Arizona and Florida are tied for third place at 33 percent.

If you want to look at actual metro markets rather than states, we see nine California markets leading the list, but then Miami-Dade in Florida captures the 10th spot.

Did any market actually gain value during 2008? Actually, several did. If you live in Binghampton, N.Y., you live in a place where real estate actually appreciated by 7.78%. Plattsburgh, N.Y., Cedar Rapids, Iowa, Rocky Mount, N.C., Auburn, N.Y. and Florence-Mussel Shoals, AL also did pretty well.

This data comes from First American CoreLogic, which follows real estate values across the country.

Tags: california, real estate, values

Don’t pack your bags just yet

Looking at those shiny new light rail cars in the previous post, you may be thinking that a move to that part of the world wouldn’t be such a bad idea. But before you start packing, consider this little tidbit.
Standard & Poor’s puts out a monthly report on home values through its Case/Shiller Home Price Indices, a fancy term for something that S&P calls “the leading measure of U.S. home prices.” It looks at home values in 20 different markets around the nation.
So guess which market has lost the most value during the past year? That’s right, Phoenix. Home prices in that area have slipped more than 32 per cent, more than anywhere else in the country.
Where is Tampa Bay in all of that? Homes in this area have dropped a little under 20 per cent — a good-sized drop, but well below the crash-and-burn experience in Phoenix. Or, for that matter, in Las Vegas, which was second on the S&P list at 31.7 per cent; or Miami, which lost 29 per cent of its real estate value (and led the Florida lost-value sweepstakes).
There’s more, if you’d like to look it over. Just visit www.standardandpoors.com/indices.

Tags: home values

Bank sues developer over home sites

Interested in building your dream home in Florida? Here’s an opportunity to buy a lot — cheap.
Wachovia Bank is suing Tampa developer Metro Development Group for $175-million, money the developer borrowed to buy distressed home lots that builders no longer wanted.
Metro Development was apparently betting that land prices would rebound, and that new home construction would be much improved by 2010. So, they borrowed millions and used the money to buy up about 9,000 Florida home lots. Home construction companies like Lennar and M/I Homes were only too glad to unload much of their home lot inventories to raise needed cash.
In all, Metro Development has accumulated around 30,000 home lots in a number of Florida communities.
Of course, as we all know now, the depth of the housing downturn is much deeper than what we may have previously thought. For Metro Development Group, that means the home lots they thought would be producing revenue by now are still languishing — and still dropping in value.
It’s not the first suit to be filed against Metro Development. Contractors, other banks and other businesses have sued Metro Development as well.
So keep your eyes on Wachovia — it may soon be the proud owner of lots and lots of lots.

Tags: Add new tag, developer, home sites, Market Trends