Sarasota Real Estate Market News

Siesta Key – 2012 Year End Market Analysis

Since all real estate markets are local, I periodically complete a market analysis based specifically on Siesta Key.  This is designed to provide you with timely and valuable information based upon data compiled from local sales statistics and other sources to help you better understand what is happening in the Siesta Key Real Estate market.  As expected, single family home sales prices are continuing to show considerable strength.  However, there are some surprises contained in the Siesta condo market.

The analysis covers 2010-2012 and the full report can be found here:

Year to Date Sales Comparisons on Siesta Key Jan 2013

February 9, 2013 Posted by | News related to Buyers, News related to Sellers, News related to the Market | Leave a comment

Sales in 2012 were fourth highest in history of SAR

Property sales for the year 2012 were the fourth highest in the 90-year history of the Sarasota Association of Realtors®, achieving 9,169 total sales. In 2003, sales in our market hit 9,697, followed by 11,267 in 2004 (the current all-time high) and 10,562 in 2005. The annual sales dropped to 6,358 in 2006 and bottomed out at 5,820 in 2008 before beginning the steady climb to the current level.

 

 SAR members sold 828 properties in December 2012, representing an 8.3 percent increase from November’s 764 sales and a huge 28 percent increase over last December’s figure of 644 total sales.

 

The category totals in December were 606 single family homes and 222 condos sold, compared to last December when only 471 single family and 173 condos were sold. The available inventory remains near the lowest level in a decade. Other positive factors helping to propel the real estate market recovery include the low mortgage interest rates and improvement in the national and local economies.

 

“The Sarasota housing market has clearly weathered the storm of the Great Recession,” said SAR President Roger Piro. “We are so fortunate to live in this area – a beautiful coastal community with every attractive amenity imaginable.”

 

Looking forward, Piro noted the normal peak period of the buying season has yet to come.

 

“Our market is enjoying an amazing resurgence, and the traditional busy season still has several months to go. Last year, our strongest sales months were in March, April and May,” said Piro. “We’re all hoping for a repeat performance in 2013, and agents are continuing to report steady, strong foot traffic at open houses and multiple offers on many properties.”

 

The median sale prices for both single family homes and condos also rose for the full year 2012 to $175,000 in both property categories, another indicator of the ongoing real estate market recovery in Sarasota. In 2011, the full year median prices were at $155,925 for single family homes and $156,600 for condos, or roughly 13 percent lower.

 

The median sale price for single family homes in December 2012 was at $189,500 – almost 9 percent higher than November’s figure of $174,450 and 18 percent higher than last December’s total of $160,000. Condo median sale prices were also up, hitting $182,500 in December. Last December condo prices were at $150,000 – 21.6 percent below the current level.

 

The available inventory of homes on the market remained near the decade low, rising slightly to 3,657 from last month’s 3,543. The level is still 25 percent below December 2011, when the inventory was at 4,567 properties for sale.

 

Pending sales (which represent properties that went under contract during the month) dropped in December 2012 to 782 from the November 2012 figure of 905. The total was almost identical to last December, when there were 783 pending sales reported.

 

The months of inventory remained near 10-year lows. The December figures were 3.9 months of inventory for single family homes and 5.9 months for condos. Months of inventory represents the time it would take to deplete the current inventory at the current sales rate. Last December, there were 6.3 months of inventory for single family homes and 9.2 months of inventory for condos. At the worst point of our market in November 2008, there were 24 months of inventory for single family homes and 41.7 months for condos.

 

Currently, only 475 properties for sale in the MLS are listed as short sales or foreclosures, almost identical to last month’s figure. This represents about 12.9 percent of available properties, down from last month’s figure of 13.2 percent and down from the start of the year when the figure represented 17 percent of the market.

Distressed sales represented 32 percent of the overall market in December 2012, down significantly from the 51 percent figure experienced in the fourth quarter of 2010. While still at historically high levels, the downward trend has been encouraging.

In 2007, foreclosures and short sales had been virtually unheard of for many years in the Sarasota market. That’s when distressed sales began to skyrocket in the Sarasota market and across the nation, reaching epidemic rates in 2010, before improving markedly in the last 24 months.

From 2007 to 2008, short sales and sales of foreclosed properties jumped markedly, from less than 1 percent in 2007 (only 47 total) to 18 percent (979) in 2008, while traditional market sales dropped by an equivalent 18 percent. This rise in distressed sales and decrease in market sales continued through 2009 and 2010.

In 2011, the Sarasota real estate market began to see a reversal of this trend. Distressed sales dropped by 4.5 percent from 2010 to 2011, while market sales rose by 19 percent. From 2011 to 2012, this positive trend accelerated, with distressed sales dropping by 7 percent while normal market sales rose by 25 percent. If these trends continue, we should see improved health of the local real estate market in 2013 and beyond.

 

Click HERE for the complete press release in PDF format, plus several pages of statistical charts.

February 9, 2013 Posted by | News related to Buyers, News related to Sellers, News related to the Market | Leave a comment

Are home prices rising too fast?

WASHINGTON – Feb. 7, 2013 – In a historical context, home prices typically increase about 3 to 4 percent a year.

But in the years preceding the housing crash, prices in 2002 started soaring 7 percent a year, then 8 percent in 2004, and 12 percent by 2005, CNBC.com reports.

A “new bubble” may be forming, CNBC columnist Diana Olick writes. CoreLogic’s latest housing data shows home prices rose 8 percent in December year-over-year, the largest gain in more than six years. In some places, home prices are up by double digits from a year earlier; in Phoenix, prices are up 26 percent year-over-year.

Inventories of for-sale homes are very tight, and experts point to the tight inventories as a cause of rapidly rising home prices. Inventories of for-sale homes are at their lowest supply since May 2005, according to the National Association of Realtors®.

“The greatest concern in the market is the inventory situation,” says Lawrence Yun, NAR chief economist. “Even if we see an increase in the spring and summer, if home sales hold at the [current] level or even a five- to six-month supply, price increases are guaranteed. We don’t want to see rapid appreciation in prices faster than income.”

“Healthy housing market gains are historically driven by increasing employment and income, not by lack of supply,” reports CNBC reporter Diana Olick. “The latter leads to price bubbles.”

But low inventory is not the only cause of rising prices. In many markets, a flood of investor demand has also cause a shortage of listings. Investors are cashing in on once hard-hit markets by the foreclosure crisis. Many investors are hedge funds turning single-family homes into rentals.

However, quickly rising prices could cause these investors to take profits quicker than they originally planned by selling the rental homes now. That would add inventory to the market and slow price increases, Olick says.

“What we had thought were safer, long-term buys, may now turn into flips of the last decade,” Olick says. “The question will be if there are enough non-investor buyers out there to support those sales?”

But the home price gains may be sustainable, others say. Consumer confidence is increasing, employment is improving, and price gains may soon allow more homeowners who are seeing equity to once again trade-up.

Source: “Housing Market Already Shows Signs of New Bubble,” CNBC.com (Feb. 5, 2013) and “New Housing Fears: Home Prices Are Rising Too Fast,” CNBC.com (Jan. 22, 2013)

February 9, 2013 Posted by | News related to the Market | Leave a comment

Survey: Economic uncertainty keeps renters renting

CHICAGO – Feb. 6, 2013 – The average monthly apartment rental cost in the U.S. was $1,048 in fourth quarter 2012, up 3.8 percent from a year earlier, according to Reis. At the same time, the nation’s apartment vacancy rate continued a steady decline to 4.5 percent in the fourth quarter – its lowest level in more than a decade.

In response, Apartments.com conducted a nationwide survey of more than 1,300 renters to gain insights into their moving plans this year. In looking at the survey results, Apartments.com says a growing number of former homeowners are choosing to rent, while others make a move based on employment relocation, cost savings and apartment size.

“There is a growing trend toward previous homeowners choosing to rent after carefully considering economic factors such as affordability, employment opportunities and unaffordable homeownership expenses,” said Dick Burke, senior vice president and general manager, Apartments.com. “The fiscal cliff our country was headed toward in December seems to have motivated all renters to take a realistic approach toward budgeting for 2013.”

Top 5 reasons renters choose to rent

• Renting is a more affordable option: 22.2% (down from 26.3% in 2012)
• Flexibility: 15.7% (down from 21.2% in 2012)
• Can’t afford to keep up with homeownership expenses: 14.2% (up from 10.5% in 2012)
• Relocate for employment: 13.3% (down from 20.5% in 2012)
• Lost home due to foreclosure or divorce: 11.2% (up from 5.9% in 2012)

Reasons renters plan to move in 2013

• Relocating for employment opportunities: 15%
• Shopping for a less expensive apartment: 13.2%
• Looking for a bigger apartment: 11.2%
• Change in marital status: 10.8%
• Wanting to live in a different neighborhood: 9.8%
• Relocating for educational reasons: 6.7%
• Other family reasons: 5.2%
• Recent college grad moving to their own place: 4.6%
• Looking for a smaller apartment: 3.3%
• Wanting to live alone: 2.5%

Resources used in an apartment search

All renters surveyed had used Apartments.com, but they also reported using other online apartment listing websites (such as Craigslist), search engines and review websites.

The opinions of others seem to play a more important role in searches than in previous years. More than half of respondents said they use review websites during their apartment search, versus 32.6 percent in 2012; 45.1 percent relied on word of mouth versus 31.5 percent in 2012.

Apartment share arrangements nearly identical to 2012

• Husband/wife/significant other and/or kids: 49.6%
• Living alone: 40.3%
• Roommate(s): 10.1%

© 2013 Florida Realtors®

February 9, 2013 Posted by | News related to Investors, News related to the Market | Leave a comment

Money’s not easy, but it’s less tight

WASHINGTON – Feb. 5, 2013 – Banks are slightly loosening standards for many kinds of loans, and cutting into their own profit margins to try to make more loans, especially to businesses and real estate developers, the Federal Reserve says.

The central bank’s quarterly survey of bank lending officers said most banks haven’t made it materially easier to get business loans and commercial real estate loans in the last three months. But more than half of banks said they are accepting interest rates closer to what they pay for deposits, or other sources of money they lend out, according to the survey released Monday.

The report is one of the Fed’s primary ways to assess how credit is making its way into the economy, powering both business investment and consumer spending.

Demand for car loans rose since the October report, and demand for mortgages was little changed, the Fed said. About 16 percent of banks are easing car-borrowing standards slightly, including lengthening the maximum term of loans and downpayment requirements.

“This is another sign that the economy is gaining traction,” said Andrew Wilkinson, chief economic strategist at brokerage firm Miller Tabak. “While interest rates will likely remain low for a long time, the Fed is unlikely to need to keep the pedal to the metal in terms of bond purchases as 2013 develops.”

Banks are also trimming their markups, also known as spreads, on car loans, but have not been willing to make the same concessions to credit card customers, the Fed found. Standards for new credit cards remain tight, the Fed said: Just over 90 percent of banks said their standards for approving credit cards haven’t changed since the fall.

The report shows few signs that banks are returning to the business of offering high-risk credit, as they did in the middle of the last decade.

More than 20 percent of banks said they have actually tightened standards for “subprime” residential mortgages in the last three months. For mortgage loans to consumers with good credit, credit standards are still about the same, more than 90 percent of the banks said. And just fewer than 90 percent of banks reported no change in standards for home-equity lines of credit.

Demand for many loans is picking up, the Fed said.

About a quarter of banks said they were seeing more applications for commercial loans, slightly less than the number that said they were seeing more applications for mortgages and cars.

Banks expect credit quality to improve this year in nearly all categories of loans, meaning fewer write-offs to cut into bank profits, the Fed said.

© Copyright 2013 USA TODAY, a division of Gannett Co. Inc., Tim Mullaney, USA TODAY

February 9, 2013 Posted by | News related to Buyers, News related to Financing | Leave a comment

Fannie, Freddie to allow walkaways in some cases

WASHINGTON – Feb. 4, 2013 – Underwater borrowers current with their mortgage payments may be able to give up their properties and get their debts erased, according to new guidelines issued by mortgage giants Fannie Mae and Freddie Mac.

Non-delinquent borrowers who have Fannie and Freddie-backed loans and can document a hardship, such as an illness, job change or other situation, can apply for a deed-in-lieu transaction. Eligible borrowers also must have a 55 percent debt-to-income ratio. Servicers will be required to confirm that the property has been left in good condition.

Eligible borrowers will have the forgiven debt – the amount remaining between the property’s value and size of their mortgage – erased.

“The goal is to make sure people who have suffered a hardship have the appropriate options to prevent foreclosure,” says Andrew Wilson, spokesman for Fannie Mae.

Borrowers may still be required to pay some of the forgiven debt, however, if the borrower has the means to do so.

“Homeowners applying for deed-in-lieu transactions may be asked to make cash contributions of up to 20 percent of their financial reserves, excluding retirement accounts,” Bloomberg reports about the guidelines. “Or, they may be asked to sign a promissory note for future no-interest repayments. The amount and terms can be negotiated.”

Fannie and Freddie’s new eligibility for deed-in-lieu of transactions has been met with some criticism, particularly at a time with the government-sponsored enterprises are still underwater themselves from steep losses the last few years. The GSE’s have, to date, required $190 billion of taxpayer money since 2008.

“It’s an extraordinarily generous approach for companies still in debt to American taxpayers,” Phillip Swagel, a professor at the University of Maryland’s School of Public Policy, told Bloomberg. “We’re giving people an incentive to walk away, right when the housing market is starting to right itself.”

But some argue that past programs tended to penalize borrowers on the brink of foreclosure who kept making their payments, says Julia Gordon, director of housing finance and policy at the Center for American Progress. Mortgage servicers in some cases were even advising borrowers to stop making their mortgage payment so that they could qualify for more assistance.

“Fannie and Freddie are finally recognizing that some people are stuck in their homes,” Gordon told Bloomberg. “There are a lot of families who need to move who can’t do it if they’re going to have debt hanging over their heads. There’s no winner when someone is forced to default on their mortgage – not the investor, not the homeowner and certainly not the neighborhood.”

Source: “Fannie To Allow Walkaways by On-Time Borrowers: Mortgages,” Bloomberg (Jan. 28, 2013)

February 9, 2013 Posted by | News related to Short Sales and Foreclosures | Leave a comment

Concerns remain over mortgage interest deduction

WASHINGTON – Feb. 1, 2013 – Tax reform remains a possibility this year, and it could include more talks about nixing or lowering the homeowner’s tax deduction on mortgage interest.

Should that possibility be raised, a lawmaker, analysts and Capitol Hill staff speaking at a forum yesterday said that it would help legislators to hear from Realtors to reduce the chance that their decisions could hurt markets.

“We really value your judgment because of your sense of the economy, and also because you know what your neighbors think,” said Rep. Chris Van Hollen (D-Md.), ranking minority member on the House Budget Committee.

Van Hollen made his remarks before a group of politically active Realtors in town for a day of orientation on federal issues of importance to real estate.

Staff professionals who work with members of Congress told Realtors that lawmakers have a lot on their plate, and it’s difficult to predict the likelihood that they’ll tackle tax reform. But a staff person on the House’s tax-writing Ways and Means Committee says the committee chair, Rep. Dave Camp (R-Mich.), would like to see comprehensive reform passed out of his committee this year.

Would the mortgage interest deduction be part of the mix?

It can’t be ruled out, the staff aides and other speakers said, so Realtors have to remain engaged and sift through proposals that would be unacceptable.

“Some proposals will be worse than others,” Van Hollen said. He added that his sense is many members of Congress believe supporting homeownership is a “good policy choice” and that he will “certainly oppose any effort” to change or dismantle the mortgage interest deduction.

Van Hollen and Hill staffers said Congress faces three more “fiscal cliff”-like deadlines that will keep the economy in a state of uncertainty: the deadline for the automatic, across-the-board cuts to federal programs, known as the sequester, on March 1; the deadline for raising the debt ceiling on May 19; and the deadline for extending a continuing resolution, which is a temporary budget measure for keeping the federal government operating in the absence of a congressionally passed appropriations bills, which expires March 28.

A panel of analysts agreed that for most of the public and lawmakers, the issue of whether the federal government should support homeownership is largely decided, and it’s in favor of maintaining a path for a broad swath of households.

“I think that’s where the country is,” said Jaret Seiberg, managing director and financial services policy analyst for Guggenheim Securities.

“There isn’t a snowball’s chance in hell that any of these programs are going away,” said George Mason University professor Anthony Sanders, referring to FHA, Fannie Mae and Freddie Mac, among other ways the federal government is involved in homeownership.

The more immediate issue isn’t whether the programs will go away – it’s how they might be modified. On that question, analysts and staffers echoed Van Hollen’s argument: Realtors must stay engaged in the discussions. The worst thing that can happen is for lawmakers to make changes without understanding the impact of what they decide.

“Come in to see us and tell us how these different ideas impact the market,” said one of the staff aides on the House tax-writing committee.

Source: Robert Freedman, Realtor® Magazine

February 9, 2013 Posted by | News related to Financing | Leave a comment

Record low mortgage rates gone for good?

WASHINGTON – Feb. 1, 2013 – Mortgage interest rates have ticked up for three of the past four weeks, and while big increases are unlikely, further drops are, too.

The average for a 30-year, fixed-rate mortgage hit 3.53 percent this week, the first time rates pushed above 3.5 percent in more than three months, mortgage giant Freddie Mac reported Thursday.

“I do think that perhaps the all-time low is behind us,” says Freddie’s chief economist, Frank Nothaft.

That was set in November when 3.31 percent was the average for a 30-year fixed-rate loan, according to Freddie Mac’s weekly mortgage rate surveys.

For the rest of 2013, Nothaft expects rates to gradually rise, ending the year at about 3.75 percent and then moving above 4 percent next year. “There’s no point to dilly-dally” to wait for lower rates if someone is considering refinancing their home, Nothaft says.

Rising rates will affect homeowners looking to refinance more than home shoppers, says Jed Kolko, chief economist with real estate website Trulia. That’s because refinancing is mainly an interest-rate-driven decision, while home purchases have more to do with jobs and lifestyle changes, he said. Even though they’re up, rates are still near historic lows.

Along with an improving economy, rates have edged up, given less demand for “safe haven investments” such as bonds since Congress partly averted the so-called fiscal cliff of tax increases and spending cuts on Jan. 1, says Greg McBride, senior financial analyst for Bankrate.com.

McBride said mortgage interest rates may dip below current levels on occasion. He, too, expects them to hover between 3.5 percent and 4 percent for most of this year. That assumes no big shocks to the U.S. economy.

Except for a few weeks, mortgage rates have been below 4 percent for the past 14 months, Freddie Mac data show. The low rates have helped the housing market, which is showing signs of strengthening. Home prices were up 5.5 percent in November year-over-year, Standard & Poor’s/Case-Shiller data showed this week. New and existing home sales are also up. That is helping the overall economy.

“If the economy is getting better, slightly higher interest rates are a natural occurrence,” says Keith Gumbinger, vice president of mortgage tracker HSH.com. “But there’s no reason to believe that rates are headed upward in a straight line.”

© Copyright 2013 USA TODAY, a division of Gannett Co. Inc., Julie Schmit

February 9, 2013 Posted by | News related to Financing | Leave a comment

What’s the best season for home buying?

WASHINGTON – Feb. 1, 2013 – After the holidays, buyers tend to get more aggressive with their house hunting. Search activity usually peaks around March or April in most states, according to a new study of home searches from 2007 to 2012 conducted by Trulia.

In September, searches slow down. By December, buyer searches ebb to their lowest point of the year.

“Home-search activity swings with the seasons in every state,” says Jed Kolko, chief economist of Trulia. “Buyers and sellers can use these ups and downs to their advantage. Sellers looking for the most buyers should list when real estate search traffic peaks. Buyers, however, should think about searching off-season, when there is less competition from other searchers.”

Here are the months when online real estate searches peak in every U.S. state:

January: Hawaii
February: Florida
March: Arizona, California, Delaware, Georgia, Idaho, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, Ohio, Oklahoma, Pennsylvania, Virginia, Washington
April: Colorado, Connecticut, District of Columbia, Illinois, Indiana, Kansas, Minnesota, New York, North Dakota, South Dakota, Utah, West Virginia, Wisconsin
May: Real estate activity does not peak in any state
June: Mississippi
July: Alabama, Alaska, Arkansas, Louisiana, Maine, New Hampshire, New Jersey, New Mexico, North Carolina, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Wyoming
August: Montana and Oregon
September-December: Real estate activity does not peak in any state

Source: “Trulia Reveals Best Home-Searching Season,” HousingWire (Jan. 29, 2013)

February 9, 2013 Posted by | News related to Buyers, News related to Sellers, News related to the Market | Leave a comment

FHA to tighten some loan rules

WASHINGTON – Jan. 31, 2013 – The Federal Housing Administration (FHA) announced a series of changes to be issued this week.

Commissioner Carol Galante calls the changes “essential and appropriate” as the administration tries to bolster its cash reserves in its Mutual Mortgage Insurance Fund (MMI Fund).

Changes to mortgage insurance premiums
FHA will increase the annual mortgage insurance premium (MIP) added onto most new mortgages by 10 basis points (0.10 percent). Premiums on FHA jumbo mortgages ($625,500 or larger) will go up by 5 basis points (0.05 percent). There are a few exceptions, such as some streamline refinance transactions.

In addition, most new FHA borrowers will pay the MIP for the life of their loan.

Previously, FHA automatically cancelled MIP on loans when the current principal balance reached 78 percent of the original principal balance. FHA’s Office of Risk Management and Regulatory Affairs says that cancellation has cost the MMI Fund billions of dollars in premium revenue on mortgages endorsed from 2010 through 2012.

Manual underwriting on higher-risk loans
If a buyer has a credit score below 620 and a total debt-to-income (DTI) ratio greater than 43 percent, FHA won’t allow lenders to automatically approve a loan request. Lenders must now manually underwrite these loans, document compensating factors that support their approval based on FHA guidelines.

Higher downpayment on loans above $625,500
FHA says it will raise the mandatory downpayment on jumbo loans from 3.5 to 5 percent. It will officially announce it soon in the Federal Register. FHA says the change will encourage more private lenders to participate in the housing finance market.

Home equity conversion mortgage consolidation
FHA will consolidate its Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options. This change will be effective for FHA case numbers assigned on or after April 1, 2013.

FHA loans after a foreclosure
FHA has a minimum waiting period of three years for a borrower who went through a foreclosure. However, the administration says it’s not that simple – a buyer must also reestablish good credit and qualify under other FHA loan guidelines.

“It has come to FHA’s attention that a few lenders are inappropriately advertising and soliciting borrowers with the false pretense that they can somehow ‘automatically’ qualify for an FHA-insured mortgage three years after their foreclosure,” FHA says in a release. “This is simply not true and such misleading advertising will not be tolerated.”

FHA says non-FHA lenders have also started advertising FHA mortgages. “FHA will work with other federal agencies to address such false advertising by non-FHA-approved entities,” according to the release.

© 2013 Florida Realtors®

February 9, 2013 Posted by | News related to Financing | Leave a comment