February 4, 2013

Getting In On The Action

The Birmingham News reports from Alabama. “There are signs that a housing recovery could be around the corner for Alabama. But could the debt currently being accrued by college students get in the way? In Alabama, 54 percent of college graduates left school with at least some student debt in 2011. The average debt load for Alabama graduates in that year was $25,192, just slightly less than the national average, according to The Project on Student Debt. ‘Higher student loan debt can inhibit sales, particularly with starter homes,’ said Steve Fleming, senior VP at Birmingham-based National Bank of Commerce. ‘If starter homes lag, that causes a ripple effect in the market that prevents current owners from moving up.’”

“Ronnie Bell, a 2008 graduate from Auburn University, confirms that outstanding student loan debt balances are impacting his and his peers’ home-buying plans. And in some cases, those outstanding balances are having a strange effect — motivating some recent graduates to go back to school. By entering into a graduate program, recent grads are often able to defer payments on their existing debt. If payments are deferred for 24 months or more, the existing accounts no longer count toward a loan applicant’s debt-to-income ratio, Bell explains.”

“It’s not a solution for every prospective home buyer, though. ‘It’s really hard,’ Bell says, ‘and you have to be able to make payments [on deferred loans] to get ahead.’”

The Morning News in South Carolina. “Numbers released last month show that the Greater Pee Dee area was a standout in the state’s recovering real estate picture with increased home prices, increased listings and a tightening supply. Despite record low mortgage rates, around 3.4 percent for 30-year fixed mortgages, Forrest Stanley, chairman of the Pee Dee Realtor Association Board, said in a note to realtors that government regulations from the Dodd-Frank Act and Consumer Protection Act, both spawned from the economic crisis, could impact housing this year.”

“‘Dodd-Frank was created to address abuses in the industry,’ Stanley said. ‘While realtors recognize the need for additional regulation, regulators must avoid adopting unrealistic requirements that will affect homeowners and potential buyers, as well as do harm to the recovering housing market.’”

The Sun News in South Carolina. “Michael Atwood, broker in charge for Coldwell Banker Chicora Real Estate’s office in North Myrtle Beach, said the low interest rates now are helping fuel buying. He said rates in the 2004-2006 boom were from 6.5 percent to 7.5 percent. Today, they’re half that and mean that people can buy more expensive homes than if the rates were higher. ‘People who can afford a $100,000 house now can buy a $140,000 house,’ he said.”

“But banks remain skittish about mortgage lending, and Atwood believes that depresses the local market by as much as 15 percent. He said current bank caution about loans mean there’s a 20 percent fallout, where potential buyers don’t buy because they can’t get loans. ‘We traditionally never had more than 3, 4, 5 percent fallout,’ he said.”

The Sun Sentinel in Florida. “Q: With home prices increasing lately, I am hearing more about people ‘flipping’ properties again. How do I get in on the action? – Anonymous. A: Flipping is a perfectly legitimate business – as long as you aren’t lying to a lender about your intentions or otherwise scamming the system. A prospective buyer’s lender may have requirements that the investor (you) own the property for a certain period of time or that the increase in the resale price not exceed a certain ratio. For these reasons, most flips involve an end buyer paying cash. And cash buyers usually are experienced, so you could be stuck with the home for a long time if you don’t purchase it at the right price.”

The Palm Beach Post in Florida. “Palm Beach County’s condominium and townhome prices edged up in December, ending the year at their highest level in 12 months as inventory dropped, investors bought in bulk and developers hurried plans for new communities. Real estate experts say the condo market is exceedingly attractive to investors, who can rent out units and rely on associations to maintain the property.”

“In December, 79 percent of condo sales in Palm Beach County were cash deals — typically a sign of an investor purchase. Cash was used to pay for about 50 percent of Palm Beach County single-family homes bought in December. Palm Beach billionaire Jeff Greene is responsible for taking hundreds of units off the market in recent months. The Related Group took over control of Boynton Beach’s 14-story Promenade condominium in December and plans to market the estimated 300 unsold units to South American and Canadian investors.”

“Brian Saver, a West Palm Beach-based broker, said investors buying today are doing so when the market is on the upswing and that some of his clients who bought earlier are already cashing out with decent returns. One investor he works with bought several downtown West Palm Beach condo units for $100,000, rented them out, and recently sold them for about $150,000. ‘We’ve done that over and over again,’ Saver said.”

The Miami Herald in Florida. “Six Florida cities rank among the best places to buy foreclosures in 2013, according to RealtyTrac. The No. 12 ranking for the metropolitan area of Miami, Fort Lauderdale and Pompano Beach was based on the area having a 29-month supply of foreclosures, with foreclosures accounting for 28.7 percent of all sales during 2012. The average price discount on a foreclosed home in the Miami-Fort Lauderdale-Pompano Beach area was 31 percent in 2012, when foreclosure activity rose 36 percent from a year earlier, RealtyTrac said.”

“Anthony Askowitz, a broker with RE/MAX Advance Realty II in Miami, said the reality of the foreclosure market is more nuanced than such statistics suggest. ‘The inventory of foreclosures on the market is very low. It’s highly competitive right now for a foreclosure or a property put out as a quote ‘good deal,’ Askowitz said. ‘Multiple offers is the norm.’”

The Herald Tribune in Florida. “The RealtyTrac report indicates the surge in new defaults that rocked the area’s court system last year is likely to continue through at least 2013. ‘We’re going to start to see a lot more foreclosure sales,’ said Jack McCabe, a housing consultant in Deerfield Beach, who studies the Sarasota market closely. ‘There’s just so much hidden inventory. The banks were holding onto these as long as they could.’”

“That uptick could bring relief for an overall housing inventory in Southwest Florida starving for more listings to meet buyer demand. But it also will keep downward pressure on prices, while fueling the foreclosure backlog of 16,446 pending cases in the local court system — a clog estimated to take four years to clear, records show.”

The Orlando Sentinel in Florida. “Merritt Island real estate agent Lynn Jones said her office has not seen an abundance of foreclosure sales — but said that is likely to change. Jones said agents in her ERA Showcase Properties office typically get a request once a week for a broker’s price opinion on a foreclosed property. But in just the past week, Jones said, agents have been getting as many as 15 such requests a day. ‘That shows that they’re going to be opening up that pipeline with more foreclosure listings,’ she said.”

From Florida Today. “Danita Bell, an agent with Re/Max Beach Towne in Melbourne, said there are pockets of foreclosed properties in Brevard that are becoming eyesores. ‘It’s a bit of a Catch-22,’ said Bell, who specializes in foreclosed and short-sale properties. ‘The banks don’t want the homes to go into disrepair. They want to be able to sell them again. But until they take full possession, there’s not much they can do.’”

The Florida Current. “Flanked by Senate President Don Gaetz and House Speaker Will Weatherford, Attorney General Pam Bondi on Thursday reaffirmed her commitment to see all of the money from a multistate settlement with five large banks. After the press conference, Weatherford suggested some of the money could be used to pay for more judges to handle foreclosure cases. Although Florida has funded pay for retired judges to help clear foreclosure cases over the last two years, no new judgeships have been created in six years. The Florida Supreme Court is asking legislators to add 63 new judgeships this year.”

“‘I think it very well could (go to new judges). We all know that there’s a backlog, it still takes over 800 days to go through the mortgage foreclosure process in Florida. That’s one of the highest in the country. We should be ashamed of that; we need to fix that,’ Weatherford said.”

“Chief state economist Amy Baker said the amount of foreclosures, the lengthy process to move homes back into the market and the large ’shadow inventory’ of distressed homes yet to become foreclosures will continue to weigh down Florida’s housing market until 2016. ‘It’s not just the foreclosures, the 300,000 or so that are in the pipeline right now, it’s those that haven’t yet our official data that we’re concerned about.’”

The Tampa Bay Times in Florida. “Only 55 percent of the 167,000 Floridians who were foreclosed on between 2008 and 2011 have filed claims under a $25 billion settlement reached with big banks, Attorney General Pam Bondi said Friday. And efforts to gin up more responses, including paying nearly $200,000 for operators to call people directly, have still netted a response rate lower than the national average.”

“‘What happens if you’ve had your house foreclosed on and you get a letter from the bank? You’re going to toss it, probably, not thinking it’s good news,’ said Bondi.”

“Unresponsive homeowners, attorneys said, could be racked by ‘borrower fatigue’ under an avalanche of bills and bank mailings. Others may simply question the effort. Thousands of Floridians who sought similar relief from the Independent Foreclosure Review were told last month that their submissions would be discarded in favor of an $8.5 billion settlement with flat payouts. Banks could also share some blame for the tepid response. More than 300 Floridians have filed complaints over issues with the broader settlement, a monitor said in November.”

“That month, Tampa Heights homeowner Candace Savitz, 59, received a settlement letter from Bank of America and was told she had two weeks to respond. Frantic to make the deadline, she called more than 30 times before she heard an answer and was able to apply. In the weeks since, though, she said she has been run through a maze of contradictory answers and redundant requests for paperwork, with no loan relief yet to show. She worries now that the bank will tell her she does not qualify or is out of luck.”

“‘They act like they’re doing you such a big favor,’ she said. ‘It’s just a big dog-and-pony show. … I’m not optimistic. Not anymore.’”

Bits Bucket for February 4, 2013

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