Sarasota Real Estate Market News

Should you rent or buy in Southwest Florida?

The house — 1,500 square feet, two bedrooms, three baths in Bradenton’s Tara Preserve — was too good to pass up. “We’re on a golf course and a lake,” said John Waters. “It doesn’t get better than that.” 

For four years, Waters had been renting, most recently in a nearby condo. He and his wife, Francesca, closed on the new property on a Thursday. By Friday they were moved in. “We’re excited,” said Waters. “Before, my office was in the kitchen. We needed more space, and we wanted a two-car garage. Owning my own home was always in the back of my mind, and the price on this was so good, it was impossible to pass up.”

For decades, conventional wisdom held that people should rent for as short a time as possible and buy a home as soon as they could. Renting, it was suggested, was like throwing money away. But when the economy foundered and properties lost value, it made more sense to rent than to buy in many markets.

How does the equation work out now? While there’s no universal answer — the outcome is influenced by how much the buyer can put down on a purchase, how much upkeep is required, and how much appreciation is expected — industry observers seem to be re-gathering in the smarter-to-own camp.

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May 15, 2011 Posted by | News related to Buyers, News related to Investors, News related to the Market | Leave a comment

Mortgage rates at 2011 low, but many won’t benefit

NEW YORK – May 13, 2011 – Mortgage rates have hit lows for the year and could soon near the decades-low levels of last year.

Those rates are providing an incentive for buyers, along with falling home prices. They’re tempting for refinancers, too.

Still, analysts say the combination isn’t likely to lift the depressed housing industry or contribute much to the overall economy. In many metro areas, real estate is straining under the weight of foreclosures, higher downpayment requirements, tighter credit, still-high unemployment and buyers’ expectations of even lower prices.

“If people aren’t confident about the economy, about jobs and home prices, they certainly aren’t going to sign up for the biggest purchase of their lives,” said Greg McBride, a senior analyst at Bankrate.com.

But for those with jobs, money and creditworthiness, today’s rates can be tantalizing.

This week, a qualified buyer could expect to finance a home over 30 years at an average fixed rate of 4.63 percent, according to mortgage buyer Freddie Mac. That’s the lowest average rate in five months. In November, the rate hit a four-decade low of 4.17 percent.

The 15-year fixed mortgage, popular with refinancers, is down to 3.82 percent. That’s also the lowest point since December.

Mortgage rates have fallen for four straight weeks, tracking the yield on the 10-year Treasury note. The 10-year yield has dropped as investors have snapped up Treasurys and other safe securities because of uncertainties about the global economy and the volatile prices of oil and other commodities.

Weak sales and a growing belief that prices have yet to hit bottom five years after the housing bubble burst have become a major obstacle for the economy. Homebuilding is down. Fewer first-time buyers are entering the market. The pace of home sales remains far below the level economists view as healthy.

But the biggest threat is foreclosures, said Mark Vitner, a senior economist at Wells Fargo. A wave of foreclosures is forcing down prices in most major U.S. cities.

About 3.7 million homeowners are at serious risk of losing their houses, according to the Mortgage Bankers Association. Foreclosures typically drag down the prices of nearby homes, putting even more homeowners in a financial bind.

More than a quarter of homeowners can’t sell their homes because they owe more on their mortgage than their house is worth. And many would-be buyers are holding off on a purchase, mindful that prices might fall further.

“What good is a low rate if you’re upside down on your mortgage?” said J. Philip Faranda, who runs a real estate firm in Westchester County, N.Y.

Even those who do feel ready to buy are having a harder time qualifying for a mortgage. The average credit score for a loan backed by Fannie Mae and Freddie Mac has jumped to 760, compared with 720 four years ago, according to the government-run mortgage buyers that back 90 percent of new loans. Fewer than half of American adults have credit scores as high as 760.

And banks are insisting on higher downpayments. The median downpayment rose to 22 percent last year in at least nine major U.S. cities, according to a survey by Zillow.com, a real estate data firm. That’s up from 4 percent in 2006.

“Lenders are reluctant to hand out loans unless you can bring some skin to the deal, in the form of a bigger deposit,” said Patrick Newport, U.S. economist for HIS Global Insight. “Until that changes, low mortgage rates aren’t going to make that much of a difference. Credit is simply hard to get.”

Home-loan financing has remained tight despite a wave of hiring, stronger consumer and business spending and a steadily rising economy. About 92 percent of banks say credit standards on mortgage loans have remained basically unchanged, according to the Federal Reserve’s senior loan office opinion survey released last month. About 45 percent said demand for home loans has been moderately weaker.

“There aren’t many buyers with deep enough pockets who can put 20 to 25 percent down,” said Julie Longtin, a real estate agent with RE/MAX Cityside in Providence, R.I.

And only two-thirds of Americans view homeownership as a safe investment, down from 83 percent in 2003, according to a Fannie Mae survey this year. Few economists see home values rebounding this year.

“The concern is, ‘Are values going to go up at this point, or go down or flatline?’” said Ben Coleman, broker-owner of Century 21 Hartford Properties in San Francisco. “I’ve seen where interest rates were dropping, and it’s almost like a ‘ho-hum.’”

The rate on the 30-year mortgage has spent most of the past year below 5 percent. Until last year, that would have been considered a bargain. This time, even those who could afford to buy will likely take a pass.

“What really may be the catalyst for buyers is when rates start moving back up,” said Mark Zandi, chief economist at Moody’s Analytics. “Rates are low and still seem to be falling, so there’s no pressure now to pull the trigger.”
AP Logo Copyright © 2011 The Associated Press, Janna Herron and Derek Kravitz, AP real estate writers. All rights reserved.

May 15, 2011 Posted by | Uncategorized | Leave a comment

NAR forecast: Rise in housing activity

WASHINGTON – May 13, 2011 – Home sales are expected to stay on an uptrend through 2012, although the performance will be uneven with mortgage constraints weighing on the market, according to experts at a residential real estate forum today at the Realtors® Midyear Legislative Meetings & Trade Expo here.

“If we just hold at the first-quarter sales pace of 5.1 million, sales this year would rise 4 percent, but the remainder of the year looks better,” says Lawrence Yun, NAR chief economist. “We expect 5.3 million existing-home sales this year, up from 4.9 million in 2010, with additional gains in 2012 to about 5.6 million – that’s a sustainable level given the size of our population.”

Mortgage interest rates should rise gradually to 5.5 percent by the end of the year and average 6.0 percent in 2012 – still relatively affordable by historic standards.

“A huge volume of cash sales, supported by the recovery in the stock market, show that smart money is chasing real estate. This implies that there could be a sizeable pent-up demand if mortgages become more readily accessible for qualified buyers,” Yun said. “The problem isn’t with interest rates, but with the continuation of unnecessarily tight credit standards that are keeping many creditworthy buyers from getting a loan despite extraordinarily low default rates over the past two years.”

Yun said that if credit requirements returned to normal, safe standards, home sales would be 15 to 20 percent higher. He added that some parents are buying homes with cash for their children, and offering them loans, which provide better returns than bank accounts or CDs.

Yun projects the Gross Domestic Product to grow 2.5 percent this year and 2.7 percent in 2012, adding 1.5 million to 2 million jobs yearly over the next two years. The unemployment rate should decline to 8.8 percent by the end of 2011 and average 8.6 percent next year, returning to a normal level of 6 percent around 2015.

Housing starts are forecast to rise but remain below long-term trends, reaching 603,000 in 2011, up from 595,000 last year, and to continue growing to 908,000 in 2012. New-home sales are seen at a record low 320,000 this year, rising to 487,000 in 2012. “A recovery in new homes will be slow because of the extra price discount in the existing home market,” Yun noted. In March, the typical new single-family home cost $53,300 more than an existing home.

Inflation appears to be relatively modest for now, with the Consumer Price Index rising 2.9 percent this year. “We’ll be closely watching the impact of fuel costs on consumer spending and inflation – that would slow economic growth, job creation and home sales,” Yun said.

Apartment rents are trending up, and are likely to rise at faster rates as vacancies decline. Following the correction in home prices, it has now become more affordable to buy in most of the country. “Twice as many renters had enough income to buy a home in 2010 in comparison with 2005, so we have a much larger pool of financially qualified renters,” Yun said. “Rising rents and excellent housing affordability conditions will encourage potential buyers who’ve been on the sidelines.”

Yun expects the median existing-home price to remain near $170,000 over the next two years, which would mark four consecutive years of essentially no meaningful price change.

Frank Nothaft, chief economist at Freddie Mac, holds similar views on the outlook. “Economic activity will accelerate this year – there will be no double dip in the economy,” he said. Nothaft is more optimistic on job growth, expecting 2.0 million to 2.5 million jobs created in 2011 with unemployment dropping to 8.4 percent by the end of the year.

Nothaft expects the 30-year fixed-rate mortgage to trend up to 5.25 percent by the end of the year, and for home sales to rise 5 percent. “National home price indices are close to a bottom and prices are likely to bottom sometime this year,” he said.

Refinancing activity in 2011 will be only half of what it was last year. “As a result, banks may become more willing to lend to homebuyers,” Nothaft said.

© 2011 Florida Realtors®

May 15, 2011 Posted by | News related to Buyers, News related to Financing, News related to Investors, News related to Sellers, News related to the Market | Leave a comment

Florida foreclosures down in April

TALLAHASSEE, Fla. – May 13, 2011 – Foreclosures in April were a whopping 59 percent lower in Florida than a year ago, but observers say the drop is not necessarily a sign that Florida’s housing industry is turning the corner.

According to statistics compiled by RealtyTrac, a national service that’s been tracking foreclosures since 2005, 19,649 Florida properties received a foreclosure filing in April. That’s still second highest in the country, but represents a significant improvement from April 2010.

Florida’s overall foreclosure activity in April was still up marginally from a 46-month low set in February, the Irvine, Calif.-based company reported.

Nationwide, foreclosure proceedings in April dropped 34 percent from April 2010 and were 9 percent lower than March, a decline that RealtyTrac officials say may be more about longer processing times and less about a systemic housing recovery.

“Foreclosure activity decreased on an annual basis for the seventh straight month in April, bringing foreclosure activity to a 40-month low,” said James J. Saccacio, chief executive officer of RealtyTrac. “This slowdown continues to be largely the result of massive delays in processing foreclosures rather than the result of a housing recovery that is lifting people out of foreclosure.”

To back up the assertion, Saccacio points to national figures that show it took an average of 400 days from the initial default notices to completion in the first quarter of 2011. That’s up from 340 days a year ago. In 2007, it took an average of 151 days to complete a foreclosure.

In Florida, where courts in some jurisdictions have set up expedited “rocket dockets” to get through foreclosure cases, the average foreclosure still took 619 days to complete during three months ending March 31. To put that in context, that’s more than three times higher than the 169 days it took in the first quarter of 2007.

In April, the ACLU joined in a lawsuit challenging the expedited hearings, saying the procedure systematically denies homeowners a fair opportunity to defend their homes against foreclosure.

The so-called “rocket docket” system has been in place since December 2008 and operates under special rules to speed up the process. Critics, however, contend many Florida homeowners don’t have the chance to prepare their cases.

Sean Snaith, economist at the University of Central Florida, told the News Service on Thursday that the bottleneck of cases in the court system is likely the reason Florida’s numbers are down. The state still has a huge backlog of distressed properties that have to be dealt with before true growth can occur.

“The moratorium slowed the process down,” Snaith said. “It may have delayed the inevitable, but it’s a process that has to work itself out.”

Nevada still leads the nation in the percentage of homes in foreclosure, a spot it’s held for 52 straight months. One in every 97 homes was involved in some type of foreclosure filing in April, down 27 percent from April 2010. Las Vegas led the nation’s cities, with one in 82 housing units in foreclosure.

Ten states accounted for 70 percent of U.S. foreclosure activity in April, led by California with 55,869 properties receiving a foreclosure filing during the month. No Florida cities were among the nation’s top 10.

Source: News Service of Florida, Michael Peltier

May 15, 2011 Posted by | News related to Short Sales and Foreclosures | Leave a comment

1 in 4 homes with mortgages underwater

SEATTLE – May 11, 2011 – Home values in the United States fell faster in the first quarter of 2011 than they have in any quarter since 2008, according to Zillow’s first quarter Real Estate Market Reports. The Home Value Index fell 3 percent from the fourth quarter of 2010 to the first quarter of 2011, and declined 8.2 percent year-over-year to $169,600. Home values have fallen 29.5 percent since a peak in June 2006.

About 28.4 percent of single-family homeowners with mortgages were underwater at the end of the first quarter, up from 27 percent in fourth quarter 2010. A homeowner is underwater when they owe more on their mortgage than their home is worth.

Meanwhile, foreclosures rose through the first quarter as banks unfroze moratoriums and allowed foreclosures to resume following a late-2010 slowdown caused by the “robo-signing” controversy. In March, one out of every 1,000 homes in the country was lost to foreclosure.
 
“We did expect substantial payback from the homebuyer tax credits, which buoyed the housing market last year, but underlying demand post-tax credit, as well as rising foreclosures and high negative equity rates, make it almost certain that we won’t see a bottom in home values until 2012 or later,” says Zillow Chief Economist Dr. Stan Humphries.

Very few markets were exempt from home value declines in the first quarter. The vast majority (97 percent) of the 132 markets covered by Zillow logged home value declines.

Only the Fort Myers, Fla., Champaign-Urbana, Ill., and Honolulu, Hawaii metropolitan statistical areas (MSAs) experienced quarterly increases, with home values rising 2.4 percent, 0.8 percent and 0.3 percent, respectively. Home values in the Sarasota, Fla., MSA remained flat.

© 2011 Florida Realtors®

May 15, 2011 Posted by | News related to the Market | Leave a comment

Florida’s existing home, condo sales rise in 1Q 2011

ORLANDO, Fla. – May 10, 2011 – Florida’s existing home and existing condo sales rose in first quarter 2011 compared to the same period a year earlier, according to the latest housing statistics from Florida Realtors®. Existing home sales increased 13 percent in 1Q 2011 with a total of 44,531 homes sold statewide; during the same period the year before, a total of 39,406 homes changed hands according to Florida Realtors. Statewide sales of existing condos in the first quarter rose 29 percent compared to the year-ago sales figure.

The statewide existing-home median sales price was $123,600 for the three-month period; in 1Q 2010, it was $131,100 for a decrease of 6 percent. Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in 1Q 2011 compared to the same three-month-period a year earlier, while 18 of the MSAs showed gains in condo sales, according to Florida Realtors.

Looking at Florida’s housing sector in the first quarter of 2011, Dr. Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness, pointed out that the recovery is gaining strength. “Florida Realtors’ first quarter report shows sales picking up significant momentum after decelerating in the fourth quarter of last year, though prices are continuing to slip,” Snaith said. “The labor market recovery is just starting to blossom – once it is in full bloom it will provide some needed curb appeal for Florida’s struggling housing market by creating a new pool of qualified buyers and preventing other homeowners from falling victim to foreclosure.

“Distressed properties are proving to be an ongoing complication in the healing process of Florida’s housing market,” he added. “The foreclosure moratorium and Florida’s overburdened court system have slowed the process of handling foreclosures. Until these properties can move through this process, complete recovery will be difficult to attain.”

In the year-to-year quarterly comparison for existing condo sales, 23,375 units sold statewide in the first quarter compared to 18,170 units in 1Q 2010 for a 29 percent increase. The statewide existing-condo median sales price was $80,700 in 1Q 2011; a year earlier, it was $96,100 for a decrease of 16 percent. 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, according to the National Association of Realtors® (NAR). The median is a typical market price where half the homes sold for more, half for less.

Low mortgage rates continued to be available during the first quarter of the year. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 4.85 percent in 1Q 2011; one year earlier, it averaged 5.0 percent.

© 2011 Florida Realtors®

May 15, 2011 Posted by | News related to the Market | Leave a comment

Rental costs rise with economy

WASHINGTON – May 6, 2011 – Apartment rents are rising at their fastest pace in years as the U.S. economy creates jobs and spurs demand for rental housing.

Nationwide, rents started edging up last year after several years of little growth or even declines, market researcher Reis says. It predicts apartment rents will jump 4.3 percent this year, marking the biggest annual increase in four years. MPF Research, which also monitors apartment rents, expects them to rise more than 5 percent this year, says Greg Willett, MPF Research vice president.

Job growth is driving much of the increase. As more people get jobs, people who doubled up in homes during the recession, especially younger workers, move out on their own, says Ryan Severino, Reis senior economist. Many of those workers are choosing to rent rather than to buy, because of dropping U.S. home values and tight lending standards that make it harder to buy homes, Severino says.

Lack of construction is also helping rents. This year, Reis expects just 40,000 new apartment units added to the U.S. supply. That’s down from about 130,000 new units each year for much of the past decade.

Apartments make up about half the nation’s rental supply, Willett says. Single-family homes and condominiums account for the rest.

MPF and Reis both say San Jose and New York City are the strongest rental markets. In the first quarter, rents in those markets were up 4.6 percent and 4.4 percent, respectively, from the same period last year, Reis’ data show. Nationwide, rents rose not quite 2 percent from the first quarter of 2010 to the same quarter this year, Reis says. Vacancies fell 1.8 percentage points to 6.2 percent.

Other markets seeing first-quarter year-over-year rent increases in excess of 3 percent included suburban Virginia and Maryland; San Francisco; Rochester, N.Y.; Portland, Ore.; and Denver, Reis says.

Real estate broker Richard Gonzalez of Realty World sees the market tightening in San Jose as homeowners who lose homes to foreclosure or short sales become renters. “They’re starting over and need to rent,” Gonzalez says.

Las Vegas was one of the few metropolitan areas in which rents fell in the first quarter, Reis and MPF say. They dropped almost 3 percent year-over-year.

Las Vegas has the highest foreclosure rate in the nation, and investors are buying homes there and turning them into rentals. The city hasn’t seen apartment rents rise since the third quarter of 2008, Reis says.

Increasing demand and lack of new rental supply will boost rents for the next couple of years, predicts Paul Dales, economist at Capital Economics. Eventually, though, as rents rise and home prices drop, “homeownership becomes more valuable again,” says Jim O’Sullivan, chief economist at MF Global.

© Copyright 2011 USA TODAY, a division of Gannett Co. Inc., Julie Schmit, USA TODAY

May 15, 2011 Posted by | News related to Buyers, News related to Investors, News related to the Market | Leave a comment

30-year fixed mortgage falls to 4.71%

NEW YORK – May 6, 2011 – Fixed mortgage rates dipped to the lowest level of the year this week. The third straight weekly decline comes at the start of the peak buying season.

Freddie Mac said Thursday the average rate on the 30-year loan fell to 4.71 percent from 4.78 percent the previous week. That matched this year’s low reached in January. But it is above the 40-year low of 4.17 percent hit in November.

The average rate on the 15-year fixed mortgage slipped to 3.89 percent from 3.97 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.

Mortgage rates tend to track the yield on the 10-year Treasury note, which fell this week after a report showed slower growth last month in the service sector, which employs nearly 90 percent of the U.S workforce. That bolsters the case for the Federal Reserve to maintain its policy of keeping interest rates low to fuel the economy.

Low rates have done little to boost home sales, which are far below the level that economists consider healthy. Still, most sales occur between April and August.

Many homebuilders reported a drop in sales in the first three months of the year along with a decline in orders, a sign of future activity. Beazer Homes USA Inc. said Tuesday it booked a $54.6 million loss for its fiscal second quarter as new orders and closings fell.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable-rate mortgage fell to 3.47 percent from 3.51 percent. The five-year adjustable-rate loan hit 3.25 percent last month, the lowest rate on records dating back to January 2005.

The average rate on a one-year adjustable-rate loan fell to 3.14 percent from 3.15 percent. That marked the lowest level for the rate on the 1-year ARM in the last year.

The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year fixed loan and 15-year fixed loan in Freddie Mac’s survey was 0.7 point. The average fee for the five-year ARM and the 1-year ARM was 0.6 point.
AP Logo Copyright © 2011 The Associated Press, Janna Herron, AP real estate writer. All rights reserved

May 15, 2011 Posted by | News related to Buyers, News related to Financing, News related to Investors | Leave a comment