The Housing Market, In A Nutshell
Two readers wrote in todays topic. The first, “We built our custom Southeast FL home in late 2004 and it was completed in 2006. Unfortunately during the construction process the home was completely destroyed in a hurricane. We missed the deadline for completing construction and lost our fixed rate jumbo loan. The only thing available to us was a pick-a-pay loan. We had no other choice - the construction loan had to convert and we thought that there would be no problem because we could refinance into a fixed rate loan at some point in the future because we had 30% on the house.”
“My husband’s business income is down - he is self employed - by over 40% this last year. We attempted to modify our loan. They said no - 75% of your income on housing is no problem. We are forced to make negative amortization payment on our pick-a-pay loan. We have had the home for sale for over a year with no takers. We are pursuing a short sale, but the bank has basically told us that they might not want to go the short-sale route b/c we are current on our payments (even though it’s negative am.).”
“We contacted them last week to offer a deed-in-lieu because even though we have the price of the house 50% less than the appraised value from 2006, we have been chasing the market down and now it’s just dead. Again, the negotiator said they are not likely to accept this because we are current on our payments.”
“I told my husband not to pay next month. That is the only way to end this. If we continue to pay negative am, they will never allow us to short sale or deed-in-lieu. He feels torn because it feels wrong not to pay *something* because we can afford negative am.”
“But under the contract, we can jack the mortgage up with negative am up to 125% of the original loan - that doesn’t seem right either. Because we will most certainly have to walk away when we get to 125%.”
“We want to do the right thing. What would you do?”
The second, “Ben, With this $8000 credit being offered up, I am wondering if that should be the push to get into housing. I have not own a home of my own ever and I am older. I am in Orlando and wonder with the lower prices, is it time, or will they go even lower than what I could negotiate and the $8000. I mean I am thinking of offering like 60,000 on 135,000 list homes. The other thought is mobile home senior parks 55+ I could get for about 35,000. But the lot rents are about 500 and goes up 5% a year and you are locked into the park as long as you own a home on the lot. Mobile have gone back to depreciating assets but owners don’t know that.”
“Rents are about 1000 in a safe neighborhood like the Williamsburg section of Orlando but even that is changing as the elderly have sold out or moved out the they had to change it from 55+ back in 1989.”
“I look at the crime statistics and wonder - maybe I just need to go somewhere else but where. Raleigh is cheaper but dull and boring. Just need to know your thoughts on first time home buyers and the new credit and if it is worth jumping in now if I can.”
The Orlando Sentinel. “Lower-priced homes and condos sent resales soaring again last month in the Orlando area, continuing a rebound that began six months ago. Pending sales by Orlando Realtors rose to 4,348 in February, compared with 2,175 a year earlier, when the local market was still pulling back sharply from its mid-2005 peak.”
“February’s median sale price for homes of all types was $145,500. That was down about 2 percent from January’s median — and a record 34.8 percent annual drop from February 2008, mostly because so many of the homes sold last month were in some stage of foreclosure. Also helping boost local sales: the federal government’s new-homebuyer tax credit, and mortgage-interest rates that remained below 6 percent.”
“‘Conditions are aligning very favorably in Orlando for buyers,’ said Les Simmonds, president of the Orlando Regional Realtor Association.”
“Still, the market’s relative lack of liquidity continues to frustrate many Central Floridians who would like to sell their home or would like to move to another area and buy a home. While the 1,219 resales reported last month by the Orlando Realtors was a marked improvement from the 951 homes sold in February 2008, it was still the second-worst showing for a February since 1999.”
“Tom Winfield, 72, of Altamonte Springs has just about given up on his dream of moving to Texas to be near a daughter in the Dallas area. ‘You can’t find a buyer, and if you find one, they can’t get a loan. So the housing market, in a nutshell, is still lousy,’ Winfield said.”
“David Senra, 24, and his friend Krizia Wake, 23, just bought a unit in the Star Tower condominium in downtown Orlando. They got a good deal and shortened their commutes to work — but they have been unable to sell their previous residence, a town house in Avalon Park. ‘It’s a good time to buy, but it’s a tough time to sell,’ Senra said. ‘I’ll hold on to it for a few years.’”
