Fort Lauderdale Beach Real Estate

Jon C. Mumford, REALTOR-ASSOCIATE, CRS, ePRO, GRI, GREEN, RECS, SFR, SRES

Archive for August, 2007

July Sales Statistics for Fort Lauderdale

Posted by fortlauderdalebeachrealestate on August 27, 2007

Here are the most recent statistics for activity in our market; new listings, available inventory, number of closed sales and sale prices.  Pretty encouraging, I’ve pulled the same numbers from 2005 to 2006 and all indications point to a stabilizing real estate market.

New Listings

  • Single Family- 2,355(17% lower than ‘06, a year ago it was 59% higher)
  • Condo-Townhouse- 2,810(5% lower than ‘06, a year ago it was 55% higher)
  • Total all Property Types-7,989(4% lower than ‘06, a year ago it was 52% higher)

Total Available Inventory

  • Single Family-12,272(17% higher than ‘06, a year ago it was 249% higher)
  • Condo/Townhouse-16,748(28% higher than ‘06, a year ago it was 332% higher)
  • Total-38,528(25% higher than ‘06, a year ago it was 197% higher)

Single Family Sold

  • 618 closed sales, 21% down from ‘06, a year ago it was down 25%
  • Median sales price, $365,000, 3% lower than last year

Condo/Townhome Sold

  • 569 closed sales, 30% down from ‘06, a year ago is was down 29%
  • Median sales price, $182,500, down 14% from ‘06, a year ago it was up 5%

Again, more signs of the real estate market stabilizing.

Jon

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The current real estate market

Posted by fortlauderdalebeachrealestate on August 27, 2007

I read this article recently and wanted to share it with you, it sheds a different light on our market…

Consumers are hearing a lot in the media about the correction in housing, and they’re understandably concerned about whether now is a good time to get into the housing market. This hesitancy is evident in home sales volume: Even though interest rates fell to 6.2 percent in early 2007 from 6.8 percent in August 2006, and the economy added 3.5 million new jobs, existing-home sales were down 8.5 percent in 2006, with further softening expected in 2007. The irony, of course, is that although declines in sales volume have hurt real estate practitioners, they may be a plus for consumers.

To a great extent, we can thank steady media coverage of the real estate market “correction” for unfounded consumer concerns. In Columbus, Ohio, for example, the median home price is about $150,000, and price appreciation during the boom years was modest. So when Columbus buyers stay out of the market, you know there’s a lot of misunderstanding about today’s markets.

If there’s a correction in markets today, it’s in home sales volume and housing starts, not in home prices. You see the effects of those declines in weakening practitioner income and construction employment. There’s pain out there.

But there’s no real correction where consumers are concerned. Yes, home price appreciation has slowed considerably, and nationally we’re expecting a price drop of 1 percent for 2007. But that drop comes at the tail end of a five-year spurt that increased home prices by 53 percent. We may have taken one small step back, but that’s after taking 53 steps forward.

Even a relatively large price decline, such as the 12 percent drop we saw in Sarasota, Fla., cannot reasonably be called a correction when that market had a 150 percent price increase during the boom.

When today’s consumers look at real estate markets, they need to use the same analytical approach as investors in the stock market. Those buyers aren’t generally concerned about the volume of stock trades on a given day. Why should they be? They’re focused on price trends. And by that measure, now is a great time for consumers to be in the housing market: Prices have steadied, and inventories are healthy.

The media aren’t making the distinction between what’s happening to you — fewer home sales, fewer homes coming online — and what’s happening to consumers, more buying opportunities. But you can make that distinction for your customers.

Jon

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Mortgage Industry Update

Posted by fortlauderdalebeachrealestate on August 18, 2007

I received this letter from Jim Monninger, the president of Alliance Mortgage Funding.  They are affiliated with our offices and provide mortgage services for our clients.  In light of all of the negative press regarding the mortgage industry, I wanted to share this with you-

Whereas, we at Alliance Mortgage consider an educated realtor one of our most valuable assets, I would like to give you my take on the current lending situation and how it might affect your customers and Alliance Mortgage.

 As you know several months ago sub-prime lenders started to experience a dramatic increase in mortgage defaults.  The seed was actually planted two – three years earlier by banks caught up in the housing frenzy, became greedy and made foolish lending decisions.  The sub-prime customer, as a general rule, is one having a credit score ranging from 500 – 600.  In order to get a score in this range a person does not have the “mind set” of meeting their financial obligations on time.  It is true that some people are the victim of a life crisis event such as the loss of employment or major health problem but the majority of credit challenged individuals just don’t care about paying their bills on time or spend more than they can afford and get “over their head” in debt.  A sub-prime loan is typically a 2 or 3 year ARM (adjustable rate mortgage); the starting interest rate remains fixed for the first two or three years.  The idea is for the borrower to make timely payments during this time and then refinance into a conventional loan at a lower rate.  In realiy many borrowers did not follow the plan and made late mortgage payments.  In this case they were not eligible to refinance and at the end of the “fixed rate period” their interest rate increased as much as 5%.  Not many people are able to absorb a 5% increase in their home mortgage interest rate and this, coupled with a possible decrease in the value of their home, forced them into foreclosure.All lenders, including major banks, sell the loans they fund to someone on the “secondary market”.  If you think about it, even an institution like Bank of America does not have enough checking and savings account customers to keep them from running out of money if they did not sell the home loans they fund to someone else.  Loans classified as “conforming” are usually bought by either Fannie Mae or Freddie Mac.  The definition of a “conforming loan” is one that conforms to the guidelines set by Fannie and Freddie.  The guidelines generally deal with maximum loan amounts, documentation requirements and LTV (loan-to-value).  Sub-prime loans are usually sold on Wall Street to hedge fund managers, REITs (Real Estate Investment Trusts) and other investors.Most recently, lenders have seen an increase in loan defaults by “Alt-A” loans.  An Alt-A loan product requires a borrower with a high credit score but exceeds the guidelines set by Fannie and Freddie.  Alt-A loans are also typically bought by investors on Wall Street.  When defaults on these loans started to increase, coupled with the already shaky sub-prime market, investors on Wall Street started to get nervous and over reacted by ceasing to purchase any Alt-A or sub-prime loans.  This is how some of the companies such as HomeBanc, American Home Mortgage, New Century, National City Home Equity and Country Wide have found themselves in a difficult situation.  Since there was no longer a buyer on the secondary market, they did not have the money to fund the loans for which they made a commitment.  As we know in real estate, Perception is Reality!  The media has had an adverse affect on the housing market as well as the lending market but will also be there to spread the upcoming good news.  I guarantee you that as soon as the storm passes you will see many of the loan products that have disappeared from the market reappear.  After all, this is not the first time this has happened.  In the early nineties there was a similar situation initiated by the greed and mismanagement of many to the Savings & Loan institutions.In the meantime, the vast majority of loan products, including 100% financing, still exists; especially for borrowers who have a reasonable credit score and can fully document their income, assets and employment.  Some excellent news was released this morning by the Federal Reserve via a reduction in the Federal Funds Rate by ½%.  This means that anyone with a Home Equity Line Of Credit had a ½% interest rate reduction TODAY.  Although there is not a direct correlation between the Fed Funds Rate and conventional mortgage product rates, the perception by the investors on Wall Street can only BE A GOOD THING.Alliance Mortgage Funding, Inc. is about to celebrate its 10 year anniversary.  We operate by high ethical stands of honesty, integrity and trust and have the “Customer for Life” mentality.  Alliance is a licensed correspondent lender in Florida and Massachusetts but does not lend its own money.  Therefore there is not a chance of one of our loans not funding or us having to “buy back” a bad loan.  I assure you we are committed for the long haul and maintain a relationship with a vast array of the strongest banks in the industry in order to offer your customers the best possible loan products. I appreciate your business and want to reiterate the point that I am available to address your questions or concerns at any time; I assure you that none of the brokers affiliated with Alliance will take a call to me personally or as an insult to them.

All the best!

Jim

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More Tax Reform Information

Posted by fortlauderdalebeachrealestate on August 18, 2007

During the June 2007 Special Legislative Session on Tax Reform, the Legislature required local governments to roll back millage rates to 2006-07 revenue levels, and enact an additional rollback of up to 9% based upon a particular local government’s 5-year history of cutting taxes.  

In addition, the Legislature approved for an amendment to appear on the January 29 ballot enacting a “Super Homestead Exemption.”  If approved by the voters, homeowners will be allowed to opt out of the current “Save Our Homes” cap and $25,000 exemption and opt into a new 2-tiered exemption.  Tier 1 will exempt 75% of the first $200,000 of assessed value.  Tier 2 will exempt 15% of the next $300,000 of assessed value.There are many other details completing this plan.  Click or cut and paste the following link for complete details about the reforms passed by the Legislature, some of which still require voter approval.  http://www.floridarealtors.org/LegislativeCenter/TopInitiatives/upload/HGS_property_reform.pdf
Jon

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Century 21 CEO: Not Joining ‘Real Estate Pity Party’

Posted by fortlauderdalebeachrealestate on August 18, 2007

Tom Kunz, president and CEO of Century 21 Real Estate, says he’s upbeat about the market. And, he adds, he refuses to join “ the real estate pity party.”

“You have to remember we’re just a year-and-a-half or two years off the greatest real estate market we’ve ever seen,” Kunz says. “There’s no question that there are declines in the marketplace on a national basis, but real estate is a really localized market. And if you have to sell your home for less [than you could have two years ago] that doesn’t mean you are going to lose money.”

Are you saying this is a strong housing market?

“If you look at past cycles and you look at declines we’ve had over the last 20 to 50 years, you’ll see that we had high unemployment, no job increases, and double-digit interest rates. This situation’s a lot different. The economy is almost at full employment: Everybody who wants a job has a job. And we have single-digit, midrange interest rates,” Kunz says.

How long can we expect to see this downturn?

“If I knew that answer we probably would not be having this conversation right now!” Kunz says. “But when you look at the fact that inventory was down 4.2 percent [in June] to 8.8 months’ supply of homes for sale, and the median home price increased [0.3 percent], that looks pretty good.”

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What Buyers Want, Top Home Preferences

Posted by fortlauderdalebeachrealestate on August 14, 2007

The number of buyers expressing a desire for oversized garages grew 16 percentage points since NAR’s last survey of buyer preferences in 2004. About 57 percent of home buyers surveyed now say they want an oversized garage. What’s more, among buyers who purchased homes without big garages, 56 percent said they would have paid more for an oversized garage, compared to only 6 percent in the 2004 survey.
NAR’s latest home buyer preference survey, which reports responses from buyers who purchased homes in 2006, asks buyers about the importance of 75 home features and room types.

What They’re Shopping For , other priorities for today’s home buyers include:

  • Air conditioning: three out of every four respondents surveyed ranked this as “very important.”
  • Master bedroom walk-in closet: 53 percent of buyers rated this as an important feature in a home.
  • Hardwood floors and granite countertops: each gained 7 percentage points in popularity since the 2004 survey; 28 percent and 23 percent, respectively, of buyers labeled these home features as very important.
  • Cable/satellite TV-ready: 46 percent, a growth of 6 percentage points from the 2004 survey, said this was important.
  • Energy efficiency: especially among new-home buyers 65 percent of new-home buyers said energy efficiency home features are very important compared to 39 percent for buyers of existing homes.

Buyers also said they’re willing to pay more for these extras. For example, 65 percent of buyers said they would be willing to pay a median $1,880 extra for a home with central air conditioning. One out of four buyers also was willing to pay a median of $4,760 more for waterfront property.

Regional Preferences

What home buyers want in the South, however, is not always what buyers in the West want. The survey identified some of the following regional preferences in home features:

  • Home buyers in the South and Midwest viewed central air conditioning as a priority, with 91 percent and 81 percent, respectively, saying this feature was very important.
  • Sixty-six percent of buyers in the South thought a walk-in closet in the master bedroom was very important, while 61 percent of Midwesterners valued an oversized garage.
  • In the Northeast, the highest percentage of buyers placed a premium on a backyard or play area (53 percent), followed by central air conditioning at 41 percent.
  • Two-thirds of buyers in the West want oversize garages (66 percent), followed by central air conditioning at 59 percent.

Fixing up the Nest

According to the survey, nearly six out of 10 recent home buyers took on remodeling or home improvement projects within three months of their purchase. Close to half of home buyers who remodeled or made improvements updated their kitchen, and nearly half remodeled or improved their bathroom.

New-home owners spent a median of $4,350 on home improvement or remodeling projects undertaken within three months of purchase.

“The fact that a majority of home buyers quickly remodel key areas of their homes ties into the fact that their home is a good, long-term investment,” says Paul Bishop, NAR manager of real estate research. “Regardless of market conditions in the short term, when purchased for the long term, housing is one of the safest investments consumers can make.”

Indeed, more than half of home buyers said they believe their home has high investment potential, and another four out of 10 say it has moderate investment potential. Only 3 percent felt their home’s investment potential was low.

Generational Differences

Age was the biggest differentiation in what buyers were looking for in a home. Buyers 75 years old and older wanted a single-level home (74 percent) that was less than 10 years old (43 percent) with a walk-in closet in the master bedroom (74 percent).
On the other hand, most buyers between the ages of 25-34 wanted a backyard or play area (60 percent).
More than half of buyers over 65 wanted a separate shower enclosure in the master bathroom, compared to only one-fourth of buyers ages 25-34.
Also, older buyers placed a higher priority on energy efficiency home features than did younger buyers — 63 percent of buyers 75 and older said it was very important, but only 32 percent of buyers who were 18-24 agreed.

Home Growth

Overall, the survey also revealed that while homes are getting bigger, the number of bedrooms is shrinking. From 2004 to 2006, the size of the typical home purchased increased by about 100 square feet to 1,840 square feet, while the median number of bedrooms dropped from four to three during that same period.
The median age of the home reported in the current survey is 12 years, down from 15 years in 2004.
Real estate practitioners see hundreds, if not thousands, of houses with their buyer clients every year and know exactly what buyers are looking for in a home, says NAR President Pat V. Combs. “This insight is one more way REALTORS® add value to the real estate transaction,” Combs says.

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GREAT NEWS

Posted by fortlauderdalebeachrealestate on August 1, 2007

jon-web.jpgSales in my office year-to-date are up 68% over last year!  Thinking of buying or selling?

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June Sales Statistics for Fort Lauderdale

Posted by fortlauderdalebeachrealestate on August 1, 2007

Here are the most recent statistics for activity in our market; new listings, available inventory, number of closed sales and sale prices.  Pretty encouraging, I’ve pulled the same numbers from 2005 to 2006 and all indications point to a stabilizing real estate market.

New Listings

  • Single Family- 2,408(16% lower than ‘06, a year ago it was 74% higher)
  • Condo-Townhouse- 2,811(7% lower than ‘06, a year ago it was 79% higher)
  • Total all Property Types-8,029(2% lower than ‘06, a year ago it was 62% higher)

Total Available Inventory

  • Single Family-12,314(22% higher than ‘06, a year ago it was 295% higher)
  • Condo/Townhouse-16,980(33% higher than ‘06, a year ago it was 383% higher)
  • Total-38,819(31% higher than ‘06, a year ago it was 213% higher)

Single Family Sold

  • 603 closed sales, 28% down from ‘06, a year ago it was down 25%
  • Median sales price, $381,000, no change from last year

Condo/Townhome Sold

  • 577 closed sales, 32% down from ‘06, a year ago is was down 32%
  • Median sales price, $196,000, down 8% from ‘06, a year ago it was up 11%

Just some reassurance that things are cyclical and coming around.  The number one factor for selling in today’s market is pricing, I’ll write more about that later.

Jon

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