The national news on the status of the Real Estate market appears to be looking and trending up. According to the National Association of Realtors as of the end of July 2012 pending sales for both single family homes, condos and town homes have increased for the past 15 months. Statewide closed sales of existing single family homes were up almost 10% from the previous year and prices were up 8% as well. Town homes and condos closed sales during this same time were up almost 3% with prices up almost 11%. Another important data fact is that the standing inventory of existing Single family, Town Homes and Condos was at about 5.4 months which is considered balanced, meaning right at this moment we are neither considered in a Sellers or Buyers market. When you consider where we came from just a few short years ago its incredible to comprehend the number of properties that have changed hands.
Now while the news is definitely very very good we cant forget that the markets have been digging out from under the worst real estate deflationary period since the Great Depression over 70 yrs ago, during which time most real estate values have dropped by up to and more then 50% from the 2006 peak. In fact according to Case Shillers homes price index all 20 City composite indices have shown gains for the first time since 2006 and even after 15 months of price increases, its their estimation that home prices are now back to summer 2003 levels.
That last sentence bears repeating "home prices are now back to summer 2003 levels". Ok so what does that really mean. Well my interpretation is that those homes that have dropped in price the most, have been the ones that rebounding for the last 15 months and yet even with all these gains their values are only back to 2003 levels. Thats astounding and not in a good way because it means that for most existing homeowners their homes are now worth what they were back in 2003. OUCH!
Here is where it really gets interesting and difficult for Realtors because both Buyers and Sellers are reading the same reports but getting two completely different impressions. The buyers take away is, Great, homes that I want to buy today should be priced around there 2003 levels, what a deal. The sellers take away is Great, homes prices have been going up for the past 15 months, the inventory is back to normal so I should be able to get top dollar for my property. There you have the dilemma, A buyer who wants to buy low and the Seller who wants to sell high, so in the end the more things change the more they stay the same.
NOVEMBER 1 big changes in Short Sales coming
On November 1 2012 there will be new Federal Housing Finance Agency guidelines that will be in affect. "Washington, DC – The Federal Housing Finance Agency (FHFA) today announced that
Fannie Mae and Freddie Mac are issuing new, clear guidelines to their mortgage servicers that
will align and consolidate existing short sales programs into one standard short sale program.
The streamlined program rules will enable lenders and servicers to quickly and easily qualify
eligible borrowers for a short sale.
The new guidelines, which go into effect Nov. 1, 2012, will permit a homeowner with a Fannie
Mae or Freddie Mac mortgage to sell their home in a short sale even if they are current on their
mortgage if they have an eligible hardship. Servicers will be able to expedite processing a short
sale for borrowers with hardships such as death of a borrower or co-borrower, divorce,
disability, or relocation for a job without any additional approval from Fannie Mae or Freddie
Mac.
“These new guidelines demonstrate FHFA’s and Fannie Mae’s and Freddie Mac’s commitment
to enhancing and streamlining processes to avoid foreclosure and stabilize communities,” said
FHFA Acting Director Edward J. DeMarco. “The new standard short sale program will also
provide relief to those underwater borrowers who need to relocate more than 50 miles for a
job.”
IMO- What this all means to me is there will be many more distressed homes coming on the market soon in the way of Short Sales. If you consider that 44% of South Florida mortgages are underwater, where the owner owes more then their home is valued at you can see why I say there could be a big spike in Distress sales coming to a real estate market near you. These distress sales will put downward pressure on existing homes prices hurting non distress sellers, which will be in a macabre way good for first time home buyers, investors and the Realtors who list and or sell these properties. It's also good for those owners who will be able to get out from under their debt even when current on their mortgage and without any recourse, in effect the deficiency debt is forgiven. Unfortunately we the tax payers will be the ones who will be left holding the bag, the ones required to repay this debt through higher taxes, fees etc. Dont ever forget NOTHING IS FREE, in the end somebody is going to have to pay and that somebody is going to be you and me.
