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Is Cold Weather Driving People To Florida?

Yes it’s mighty cold up north with record low temperatures and snowfall particularly in New England and Western New York. Could that be driving the increased sales here in the Tampa Bay area?

Yes single-family home sales are up all across the Tampa Bay area compared to January of last year.

  • Pinellas was up 11.9%
  • Hillsborough was up 6%
  • For all Tampa Bay counties it was up 9.1%

So is this about snowbirds making the move permanently?

Maybe that is part of it, but there are a lot of other factors too.

  • Mortgage rates are still low.
  • The economy is steadily improving.
  • Home prices in the area are still low compared to the rest of the state.

But realtors are still not happy.

The demand is out stripping the supply say many realtors. There is just not enough inventory for all the buyers.

Good homes sell quickly so realtors and buyers have to be “first in the door” to take advantage.

Inventories were down compared to last year. There’s only a 5-month supply of available homes according to many realtors.

Prices Are Up

The median sale price in the greater Tampa Bay area was at $145,000 which is a 6% over last year. Pinellas was at $156,000 and Hillsborough was at $160,000 for a median price.

And with supply so low those prices are bound to continue to go up.

A few of the particularly bright spots for home sales are the cute little “small town” areas like Dunedin and Safety Harbor.

According to one realtor, “People really like the little downtowns. They’re looking for areas they can walk and bike to.”

Single-family homes and condos in these towns are hot right now.

Florida As Whole

Across Florida, sales and prices are up as well. Florida was up 10% in sales compared to a nationwide drop of 5%. Much of that could be attributed to the weather up north however. And who can blame them for wanting to get out of the cold. Isn’t that why many of us are here.

But prices are also a factor.

Home prices in Tampa Bay are still some of the lowest in the state. Only Jacksonville and Pensacola were lower. Miami was at $278,000 and Naples was $708,000. Even Fort Myers was at $171,000. So Tampa Bays relatively modest $156,000 seems like a bargain, particularly when you consider the quality of life and perks available in the area (beaches, sports teams, downtown areas, nightlife).

Yes the real estate market is looking up. Now if can only increase the supply of homes for sale, the market might be able to really get into high gear.

When Foreclosures Can Be A Good Thing

Let me be clear. A foreclosure is never a good thing for a homeowner. It signifies not only a loss off financial security but also perhaps a loss of cherished memories — not to mention good credit.

But in the big picture, having a lot of foreclosures completed means the real estate market is getting healthier.

So the fact that the Tampa Bay area is tops in the country in completing foreclosures may be a good thing for the recovery of the housing market in the local area.

Yes, Tampa Bay led all major U.S. metro ares in completed foreclosures last year as lenders took back almost 18,400 homes and condos. That’s up 5.3% from 2013. Most of the rest of the nation saw a decline in completed foreclosures according to CoreLogic.com, a leading real estate tracking website.

Most realtors say that the sooner the foreclosure properties are cleared out, the sooner the market can get back to normal and begin to grow.

Local Market Is Active

With strong real estate demand in the area, foreclosure properties are still in demand. Realtors say that most properties have multiple offers and that average days on the market are less than 30 days. This covers the entire range of the market from low-priced homes to those selling for up to $1 million.

  • In Hillsborough, 3,259 single family homes that had been foreclosed sold last year. That’s up 32% from the previous years. Median price rose 9%.
  • In Pinellas sales shot up 34% from 2,891 to 3,875. Median price was up 8% to $81K.

Lenders Spending To Improve Property

In a new development, it seems the market is so strong that banks are investing in rehabbing the properties to make them more competitive and get the selling price up. This can only help all homes in the area. With an improved neighborhood all values will go up and the distressed homes will sell more quickly.

Also homes in good condition can more easily get loans. This leads to more sales and more homeowners — always a good thing for a market.

Even homes in the very low end of the scale are getting some attention. If the home is not valuable enough to renovate then some lenders will “white box” the home by removing all cabinets and sprayin the entire interior with white paint to remove dirt and smells.

Legal System Is Helping

Judges seem anxious to move things along too. Pinellas County judges in particular seem ready to clear the books and move the foreclosure process along. This can only help in the long run to stabilize the market.

Yet it’s clear to real estate experts, that until the backlog of foreclosures and distressed homes is finally cleaned up, the market will continue to lag and housing prices and sales will be sluggish and slow to grow at a pace that is deemed healthy.

Of course, if you are a homeowner facing a foreclosure this is not good news for you. You are still experiencing the pain and the frustration every day. If Brown & Associates can help let us know by contacting us here.

FHA Loan Fees Get Lower

One reason that the housing market has been slow to recover is lenders are very stingy with their money. They have become ultra conservative in their lending practices. As a result, getting a home loan is tough, especially for new or low-income buyers.

But things might loosen up a little.

Thanks to proposed Federal Housing Administration (FHA) fee reductions, potential home buyers will be paying less for their loan. The fees, which are added to the monthly payment amount as mortgage insurance, will go down from 1.35% to .85% according to a proposal by President Obama.

The president also asked the agency to find ways to make it easier for borrowers to qualify for FHA loans. FHA loans are typically where new and low-income buyers go to get that first loan at a reasonable rate. During the housing crisis FHA-backed loans became the only mortgages available to many of those buyers, given their tiny down-payment requirements and easier credit-score hurdles. However, FHA borrowers had to pay mortgage insurance as a result.

Stingy Credit

Now of course, this problem is being caused by stingy lenders who’s only concern is covering their butts by demanding unusually high credit scores and large down payments. The credit scores they often require are higher than even the government’s own criteria.

It all seems rather short-sighted for the banks. They could be developing new customers and growing the economy. Wouldn’t more homeowners come back to them as more successful customers and they would put more money in circulation in general.

Now the real estate industry, minus the banks, have been encouraging just this kind of thing for awhile now. The National Association of Realtors, and even the Mortgage Bankers Association, feel that lowering these fees will bring in new home buyers that had been shut out by the high cost of buying a home these days. Even with record low mortgage rates, the first-time buyer often can’t afford the payments.

What does all this mean in real money?

A borrower who wanted a $200,000 loan paid an annual premium of $91.66 per month back in 2009. With the current fee rates they would pay $225 per month, which is a 145% increase. After the fee reduction takes place their monthly fee would be reduced by $83. Not a lot but maybe enough to help the reals estate market.

So why did the FHA raise it’s fees in the first place?

During the housing crash the FHA, which guarantees loans, took a big financial hit. Their cash reserves fell so low they needed to raise fees to cover costs and build up their reserves which are used to cover defaulted loans. They also had to turn to taxpayers for help and took out $1.7 billion from the treasury.

Now that the housing market is more stable, they can begin lowering those fees and that’s just what President Obama is proposing.

The White House estimates that the lower premiums will enable up to 250,000 new buyers to purchase a home. Now that sounds like something we can all get behind.

Tampa Bay Home Sales Up Big-Time

In what has to be considered a very good sign, Tampa area home sales were up 18.4% in November. Median prices rose 6.7% too.

Now you know things have been getting better slowly over the last few years, but this may mean something more significant. Perhaps the real estate market is really getting back to normal… whatever that is.

But all the factors are in line.

Not only were sales and prices up but some other significant statistics were looking good.

  • Median home prices were up to $175K in Pinellas which puts it equal to Hillsborough which has traditionally had higher prices.
  • Bank-owned homes were selling well which is goo for clearing up the foreclosure and short-sale backlogs. Bank sales were up 53% and median prices were up to $106K from $83K. Hillsborough foreclose sales were up even more to $125K from $93K.
  • Of the 20 major Florida metropolitan areas, Tampa Bay was 5th highest in single-family home sales.
  • Condo sales in Pinellas were up 15.4%
  • Cash sales rose 13.4% in Pinellas indicating investors are still active in the market.

Compared to the nation as a whole, Florida looked mighty good with national sales rising only 2.1% in November nationally compared to Florida’s overall increase of 3.5%.

“The real estate market in Florida has settled into a nice sustainable groove,” said Florida Realtors Chief Economist John Tuccillo. “We are seeing gradual changes, mostly in the right direction, on all of our metrics.”

What Does It All Mean?

If you are an underwater homeowner, this can only be good news. Your “dry-out” is continuing and you just might get your head above water at some point.

For those who are behind on payments and might be facing foreclosure, it means banks might be a little more willing to negotiate with you.

And the option of a short sale is beginning to look less attractive, unless you are in a situation where you can get the bank to work with you. They clearly have less reason to sell low with a market where prices are on the way up.

It certainly means you want to have a good real estate attorney working for you. You need to have someone who understands the current market and can give you some clear options. Please contact Brown & Associates. We want to help you get the answers you need. Contact us here or call 813-289-8485.

Mortgage Help Slow To Come In Florida

Florida’s Hardest Hit Fund program was created to help underwater homeowners reduce their mortgage amounts and get their payments to a place they can afford. It was created back in 2010 by the Federal Government to reduce the foreclosure rate in the hardest hit states like Florida. It provides as much as a $50,000 reduction in the loan amount for qualifying homeowners.

But administration of the program has been so slow some homeowners have been waiting years to find out if they qualify and get some relief.

The Federal Program earmarked $7.6 billion for all the hardest hit states. Florida’s share was $1.1 billion of which Florida has only spent out about 44%. Other states like Oregon and Rhode Island have spent over 85% of their money.

Why the foot-dragging here in Florida?

Some say it’s partly Governor Scott’s hesitancy to use Federal money of any kind. Florida also started out slowly by creating only a small pilot program in Lee County to test the waters. Meanwhile many homeowners went into foreclosure and lost their homes because they couldn’t get relief in time. For many it was just too little too late.

“If Florida is lagging behind, it an embarrassment and shows lack of concern for the folks who’ve been hit the hardest,” said Ryan Brown, a spokesperson for Sen. Bill Nelson.

At Nelson’s request, the Treasury Department has been looking into questions raised by a Tampa Bay Time’s story that said law-abiding homeowners were slow to get money, but often the program was helping felons and tax cheats to get money.

In response, the Florida Housing Finance Corporation, the agency administering the program, said they are on track to use up all the money by 2017. Again this may be “too little too late” for many struggling homeowners.

Tampa Bay Times article mentioned many homeowners who had frustrating stories of the slow process they have been faced with when trying to qualify for funding. Many have waited months just to hear from administrators after filing online. One homeowner waited so long he got behind on his payments and then no longer qualified for the program. One stipulation of the program is that the homeowner is current with mortgage payments.

Other stipulations of the program include…

  • The home must be the primary residence of the borrower
  • The unpaid balance must be less than $350,000
  • Household income cannot be more than 140% of the average median income for the area ($80,360 in Tampa Bay)
  • The homeowner must owe more than 125% of the current value
  • The homeowner must be up-to-date on payments

You can learn more about the state’s program here.

The Hardest Hit Fund could clearly be a home-saver for many homeowners. But a slow applications process and our own state government’s foot-dragging on implementing the state’s program, have left many homeowners struggling to make mortgage payments, or worse, facing foreclosure.

If you need help with this process, please contact Brown & Associates. We are anxious to help you solve your mortgage problem. Contact us here or call us directly at 813-289-8455.

Home Ownership Not For The Weak of Heart… or Pocketbook

Home ownership is at the lowest point since 1995.

Of course part of the reason is the economy is still not great. But home prices went down big-time after the real estate crisis, so you’d think that would have helped those first-timers and the lower income bracket. Plus interest rates are at some of the lowest levels in decades. So you think it would be a great time for new homeowners to get into the market.

But that’s not what is happening.

Of course, part of the reason is getting a loan is harder than ever. Lenders are being very stingy with money and a first-time buyer needs at least a 10% down payment and sometimes much more. Plus they need very good credit with a score over 750.

That leaves a lot of people out.

Affordability Factor

The fact is, depending on where you live, having a good job doesn’t mean you can afford a home. Prices are still very high in the major metro areas where many millennials want to live like New York, San Francisco, Boston, and Seattle.

Sure there are plenty of good-paying middle class jobs in those areas. But even if you make over $100K in those cities, it’s not enough to buy a decent family home. In fact, 40% of households in those cities make more than $100,000 per year, but the share of residents who own homes has been steadily declining. And that’s a big reason why that home ownership level of 64.4% is so low.

During the real estate boom years a few years ago, you could buy a home with little or no money down. At worst you had to come up with 5% down payment. Many times you didn’t need any money down.

But these days, after the real estate bust, lenders aren’t taking any chances. Of course, who can blame them. Many got burned. But some might say are taking things a little too safe.

For example…

Fannie Mae and Freddie Mac just came out with a policy that says you only need 3% down to get a Fannie or Freddie insured loan. But lenders like Bank of America say they will not be going along with that guideline. And some say that in the big and most popular areas, 3% is not enough to make much of a dent in those markets. For the typical home in those big cities, where average home prices are up around $800K, 3% is still $24,000 dollars. It’s not common for young millennials to have that kind of money sitting around. Even with help from family, there’s few young professionals that can come up with that. And some young families haven’t had time to build a good credit score.

The Tampa Area

And you’d think the Tampa Bay area would be a good place for millennials to look for a home. Median home prices around here are under $200K. But there are far fewer good-paying jobs and that keeps young professionals away. Often even the good paying jobs are well under $50K and a starting teacher in Florida barely makes over $40K. So in Tampa Bay, and Florida in general, homes are still difficult to afford for a young professional. That’s why those big paychecks in the big cities are so attractive.

Generally, a lender looks for incomes that are at least one-third of the home price, or homes selling for 3-times the annual income, or a 3 to 1 ratio. Yet in some big cities with high home prices, the ratio jumps to 5-to-1 or even 7-to-1 in San Francisco for example.

Trulia.com says that a $90K salary would be enough to buy only 28% of the homes in San Francisco. In New York it would only buy about 2% of available homes — a small studio without much room for a family. And that’s income is considered middle class by most standards.

So it’s not hard to see why the real estate market, particularly in some big cities, is very slow and just doesn’t make sense for the typical first time buyer.

Makes you wonder if it ever will again.

Qualifying For Home Loans Getting Easier

Fannie Mae and Freddie Mac have changed their tune. Instead of needing a 5% downpayment to get a loan, now you only need 3% to qualify. This is great news if you are a first-time home buyer, or are a cash-strapped younger family. It might get you into your own home.

The agency’s reason for lowering the standard was to get more young and first-time buyers into the market place. With homeownership rates at a 19-year low at 64.4%, it’s not surprising that the real estate market is struggling to get back to a really healthy place.

Still, there are safeguards built into the process that will keep poor credit risks from slipping through the cracks and getting a loan and then not being able to pay it back. Freddie Mac will require homeownership counseling for new buyers and most programs will not allow “cash out” refinancing.

The question is, how many lenders will actually take the leap and offer these loans with only 3% down payments. Bank of America has already said it will not lower it’s downpayment requirement amount for new homeowners. And other banks have been slow to adopt the new downpayment option.

How Freddie and Fannie Work

Understand that Freddie Mac and Fannie Mae don’t originate loans, they just guarantee them. Lenders sell loans that meet the agencies criteria to Freddie and Fannie and then they package the loans into securities and sell them to investors. If a loan goes bad the investor is covered by Fannie and Freddie, and they in turn can force the originating lender to take the loan back if it goes bad. You can learn more about Fannie and Freddie here.

Sounds complicated, and that’s why some industry experts aren’t sure the new requirements are such a good idea. It may be too soon to loosen requirements according to some. But the real estate market is still struggling, and anything that can help move it forward must be seen as helpful. It’s still up to the lenders to make good loans. They’ve been sitting on the sidelines covering their own “butts” for long enough.

And if it helps young families and millennials to get into the real estate market it could be good for everyone. The market will improve, home values will go up, and the real estate market just might get back to a place that is healthy for all.

Now if we can just get the foreclosure mess completely behind us. I guess only time will tell. Seems like we’ve said that before.

Tampa Bay Home Sales Up In October

It was another good month for Tampa Bay homes sales in October. It was the biggest percentage gain in the last three months. And typically, October is not a very active month for real estate sales.

Sales were up 21% in October. One realtor commented that there was really no slowdown at all in this usually quieter fall buying time.

Florida overall did well. Sales were up 17.8% and prices rose 4.6% to $177K. That’s the 35th consecutive month where prices have risen.

Some say that it’s too soon to know if this is a sustainable trend or if this is just a one month spike. But it’s clear that the real estate market is heading in the right direction.

Tampa Bay Median Prices Still Low

The median sale price in Tampa Bay for single-family home is $159,900, still one of the lowest in the state. But on a county-by-county basis there are pockets of good news.

  • Pinellas’ median is $175,000 which is up 13% from the same time last year.
  • Hillsborough was at $204,231 which was a 6% increase.

Condos in general are looking good as well. They moved up 17% to $116,000.

The next question is how will the normally slow holiday period of November and December do. If things stay steady then we might just be doing well.

Who knows, maybe the early cold weather up north may have some snowbirds down here looking for a more permanent place to roost. After all, isn’t that how many of us got here?

What About Jobs

The only sobering thought is how poor the average income is in the Tampa Bay area. According to recent studies talked about in this post, average incomes in Tampa Bay are moving up very slowly. The recovery is adding many low-paying jobs and not enough middle-income jobs. This will help keep home prices down and sales weak unless things change.

But let’s focus on the good news for now.

It Doesn’t Add Up For Low-Income Home Buyers

Despite having one of the lowest median home prices in Florida, buying a home in Tampa Bay is far from easy for lower-income or even middle-income families.

Yes the median home price in Tampa Bay of $156K would seem to be in reach of many buyers. But the problem is incomes are even lower. The average median household income this year is $45,880 for the typical Tampa Bay family. That puts the Tampa area dead last among the top 25 metro areas.

If you look at the numbers, according to financial advisor website interest.com, Tampa Bay middle class homebuyers are 3% short if having enough money needed to buy even the average home on the market today in the Tampa Bay area.

No wonder the Tampa Bay real estate market is still struggling.

This study supports findings by another report by the United Way. They found that almost half of Florida households struggle to afford basic needs. That study says 3.2 million in the state, or about 600,000 in the Tampa area, are having trouble buying necessities let alone consider buying homes or luxury items.

This helps explain why the Rays have a hard time filling the stadium and why restaurants often close after a short time. People just can’t afford these “luxury” items if they are having a hard time meeting basic needs.

The Most Affordable Metro Areas

Of the major metropolitan areas here’s the top 5 in terms of affordability…

  1. Minneapolis
  2. Atlanta
  3. St. Louis
  4. Detroit
  5. Pittsburgh

Tampa Bay ranks 13th in terms of affordability in the interest.com list of the Top 25.

I guess the good news is, we sure would choose Tampa Bay over the cities on that list. It has so much more to offer. And that explains why so many people want to live here despite the problem with average incomes.

The Lowest Income Metro Areas

Here’s the top 5 lowest and highest income cities on the list…

Lowest

  • Tampa – $45,880
  • Miami – $49,946
  • Pittsburgh – $51,291
  • San Antonio – $51,716
  • Phoenix – $51,847

Highest

  • Washington D.C. – $90,149
  • San Francisco – $79,624
  • Boston – $72,907
  • Baltimore – $68,455
  • Seattle – $67,479

Still living in Tampa Bay is not so bad and definitely worth what it costs us to live here. It reminds me of the famous quote from Mark Twain…

“There are three kinds of lies: lies, damned lies, and statistics.”

Tampa Bay Home Prices Lag Behind State

Yes home sales continue to go up at a nice rate… a solid 4.4% over the last three months compared to last year.

But home prices are not going up at the same rate. The median home price was down 9.3%, or an average of $145,000, during that same 3-month period.

I suppose if you’re a first-time buyer, or are in a lower income bracket, this is not bad news. It does make our region one of the the most affordable places to buy a home in many ways in all of Florida.

But if you’re one of the many homeowners who are underwater with their mortgages then you’d like to see prices go up a bit more quickly.

Tampa Bay Has Always Been “Inexpensive”

Compared to other major metro areas in Florida, Tampa Bay’s median home prices are quite low. And they’ve pretty much been that way for a long time.

There are nine other metro areas with higher median home prices.

  • Naples-Marco Island – $342,500
  • Miami-Fort Lauderdale – $270,000
  • Sarasota-Bradenton-Northport – $195,850
  • Fort Walton Beach-Destin – $192,500
  • Jacksonville – $186,500
  • Cape Coral-Ft. Meyers – $180,000
  • Orlando-Kissimmee-Sanford – $179,950
  • Gainesville – $181,000
  • Tallahassee – $175,000
  • Tampa-St. Pete-Clearwater – $145,000

How come we are lagging so far behind?

Well it’s really just about our reputation. We don’t seem to attract the big-spenders or the well-healed to our area. They tend to go to Naples and Miami. You could argue that the Tampa Bay area is a well-kept secret. This can be both good and bad for home owners.

That secret may be great for some, but for homeowners looking to see their investment grow, it’s not so great.

Older Homes Bring Down Median Price

And it’s true our area has a lot of homes that are smaller and were built over 30 years ago. Most of the homes built in the last 15 years are bigger and nicer and have higher values. But those older homes and neighborhoods are still relatively inexpensive. Again, good for new home buyers but it does keep the average down a bit.

Still, we all know we live in a wonderful area with far more perks than many of the areas rated higher. Not many areas have three professional sport teams, a thriving night-life, some of the best beaches in the world — and can claim to be affordable. Personally I think Tampa Bay has much more to offer than any of the metros higher on the list. And sooner or later the word will get out and those home prices will go up.

And then we’ll be calling this time frame “the good old days.”

Maybe we just don’t know just how lucky we are.