Is Now Really the The Time To Buy? A question I hear all day long. The recent surge in sales activity suggest the answer would be "YES". Florida was in the forefront of the housing market crash six months before the nightly news reported we had a problem.
At one point Osceola County was the fastest growing county in Florida- that was back in 2005. As prices surged due to a low inventory of existing homes and an anbundance of building new homes, and creative financing, no money down loans, stated income loans, and 125% financing- buyers were frantically trying to cash in on what seemed to be the endless media feed of the fast moving housing boom. The boom soon went Ka-Boom when predictably the market crashed.
Opening the flood gates to a massive tidal wave of loan defaults and delinquencies. When the buyer pool evaporated due to market saturation, and overpriced housing it was a ripple effect which eventually went around the globe.
Banks were going belly up and public waited and wondered what would happen next in the Housing Market. Homeowners who over-extended themselves on High Priced Housing pleaded with lenders to modify their adjustable rate mortgage loans. The so called "ARM loans" offered teaser rates such as "No interest Loans" but buried in the fine print was the re-adjustment clause.
When these loans re-adjusted, the borrowers payment skyrocketed. Doubling and in some cases tripling what they were paying to a level they could no longer afford. The rest as they say was history.
The threat of foreclosure and lenders aggressively pursuing it, eventually resulted in struggling borrowers "Letting the bank have it" by defaulting on their loans and allowing the banks to foreclosure on their homes, second homes, vacation properties and investment properties purchased too late in the boom to recover from. As the molehill of defaulted borrowers quickly became a mountain of debt, bank inventory continue to bloat on the rotting loans that were now unrecoverable.
The feable attempts at loan modification proved to be anemic and under utilized, as borrowers sought help from lenders and housing prices plummeted to historic lows. The recession more resembled a depression (of global impact) affecting Central Florida which is a melting pot of tourists both Nationally and Internationally who had invested heavily when the Housing Market began it rise. The market tanked like the Titantic and there were not enough life boats to rescue everyone.
In the wake this catosptrophic event, the market sank along with the hopes and dreams of boroowers who could not bail out in time. That was almost 5 years ago.
Florida may have been the first to sink, followed by California, and Nevada; it held its position firmly as one of the highest foreclosure rate states in the country. Now five years later the underwater homeowners may be seeing a different picture on the horizon.
Home prices have fallen to levels not seen since 1992. In areas where the home value has fallen the greatest the loss in value is as high as 50%.
So what does that mean now?
It means homes are priced at or below market value. It means if you were not in the housing market in 2005-2007 and your credit is fairly intact, you are in a prime position to take advantage of historically low interest rates, fixed rate loans, and cash in on the well priced homes now available.
Buyers are indeed making a return to the housing market. Albeit under the radar of the nightly news. They are stealthy.
Sales of existing homes have risen in May , June and July compared to the same time periods last year.
These quiet gains are slowly contributing to the rise in prices not seen since the market collapsed five years ago. The gains are expected to continue as the inventory of foreclosed homes rotates off the market, and are replaced with new foreclosures commanding prices 9% above those seen last year at least in my market of Osceola County in Central Florida.
The success rate of short sale properties, (where the seller owes more than the home is currently worth) takes a little longer to negotiate, but the substantial discounts new buyers are gettin,g justify the prolonged paperwork and decision process the banks are still requiring. The time frame has tightened somewhat under new guidelines and expedited processing is greatly improved as well as incentives from the government to stall the glut of foreclosures entering the market. Have a little patience and you may get a heck of a good deal.
Benefit to Borrowers
The benefit to borrowers of negotiating a short sale is the preservation of their precious credit rating. A foreclosure leaves a nasty blemish on the face of their credit report which can linger as long as ten years. A short saleis not reported the same way- as the agreement of the lender to accept less than is owned harms the borrower to a much lesser degree.
Benefit to Sellers:
Reduced Purchase Price
Homes in better condition than some foreclosure which have been trashed
Availability of Mortgage Money
Possibility of gaining equity at a moderate rate (on average 6-9% per year)
Warren Buffett gave some sage advise on this matter. He said the "best time to buy is when prices are low,"
Looking at how much ahome will cost today- the answer is a resounding "YES"
Cashing in the price re-adjustment we are currently seeing in Central Florida will allow a buyer now to find affordable housing, have reasonable payments, and gain LONG TERM equity in their investment.
The surge in quiet sales indicates that many buyers are realizing that if they buy a home today they will indeed see a return on their investment.
Stats for St. Cloud Florida Existing Home Sales
24% of all sales reported in Osceola County were in the $150,000-199,000 price range (these homes formerly sold upwards of $300,000 in 2005-2007
21% of current sales sold in the $100,000-149,000 price range.
The average price for a home today is $140,000 UP from $126,750 just one year ago.
Homes advertised below market value are recieiving Multiple Offers.
Highest and Best Offer will prevail.
TIPS:
Do not ask for closing closts- in fact you may have to pay seller's closing costs.
Do not clog your offers with conditions- banks have their own guidelines of sale conditions
Avoid making a low ball offer- there are buyers competiting for the same property you are trying to buy.
Low ball offers, are replaced by better ones. So make a good clean offer that has a chance to getting to an Asset Managers Desk.
Ask for comps- know what has sold in the area and for how much.
Seek the help of a qualified* REALTOR® to assist you.
*Ask them is they are Distress Sale certified.
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