Tag: Real Estate News

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.

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.