June 25, 2013

People Are Crazy Not To Buy

The Sun News reports from South Carolina. “Single-family home sales along the Grand Strand in May clipped along at a level not seen since before the Great Recession, but area Realtors said there are enough brakes on the local market that they’re not worried about Bubble, the sequel. Marvin Heyd, CEO of Prudential Myrtle Beach Real Estate, said there are still 12 months inventory left for short sales and foreclosures, which will hold down price pressures in the traditional market.”

“In 2014, he sees a buyers’ market emerging from the dregs of the recession, and in 2015, he believes that activity will pick up more speed and that prices will return to what they were in 2004 to 2005. But while he’s got an eye to the future, he’s enjoying the present. ‘Right now,’ he said, ‘all the Realtors are smiling.’”

The Atlanta Journal Constitution in Georgia. “Recently, an Atlanta couple became frustrated with their search to purchase a home. They made several offers on homes they liked but kept losing out to higher bidders. One day, they found a home that had hit the market that very day. They were so determined to win that bid, they immediately submitted an offer — and then asked if they could see the house for the first time the next day. They just wanted to jump in line and be considered as a buyer early.”

“The couple who recently bid on the house before they ever saw it didn’t win the bidding; they are still out there looking. They are persistent, and they will eventually be the highest bidder and be back in the housing game. That story and others like it illustrate what is happening in Atlanta’s residential real estate market today. We are witnessing the beginning of a new boom in real estate.”

From Northfulton.com in Georgia. “Rhonda Duffy, owner of Duffy Realty, recalls a period in 2007 before the crash when the metro Atlanta market experienced a record high of 110,000 homes for sale, a level that even forced Metro Brokers to switch their sign on Interstate 75 and I-85 from an analog system to digital because the number surpassed the five digit limit. ‘Ever since then we’ve slowly gone down to where we’ve been for the last two or three years which is 36,000 homes,’ Duffy said. ‘When interest rates go down like that and then they start to pick up again, it starts to freak buyers out.’”

“The averages sales price for Harry Norman Realtors is now about $350,000, Aiken said. One year ago, it was about $250,000. ‘Before you had so much inventory that you couldn’t get what they were worth, then people were underwater. Now they’re not underwater, now they can sell them, but they want more for them than they’re worth,’ Aiken said.”

“James Stephens, property and real estate appraiser, says the home appraisal problem relates to a large influx of investors that feel like the time is right for buying. ‘I think what you’re seeing in a lot of different markets in the metro Atlanta area is a shortage of available homes compared to years past,’ Stephens said. ‘Prices are appreciating rapidly and previous homes sales that have happened earlier this year don’t really reflect the current pricing.’”

AAP on Florida. “The open house on a leafy street near South Miami featured a snack wagon with cupcakes and chilled beverages, but the real draw was the newly-listed house for sale for $435,000. Over a two-hour stretch on a Sunday afternoon, 44 groups of couples and families streamed through the well-kept two-bedroom, one-and-a-half-bathroom house on a large block. They didn’t come to eat cupcakes. Five purchase offers came sailing in - three that day, two the next.”

“Mortgage rates are at historic lows, thanks to the Federal Reserve’s unprecedented manoeuvres to stimulate economic growth. Banks have begun to ease terms on mortgages, with down payments of 10 per cent and less increasingly available, widening the options for prospective buyers to jump in. ‘Interest rates are so low, people are crazy not to buy,’ said Philip Vias, a broker associate with Prudential Florida Realty in Fort Lauderdale.”

“And, with housing prices marching higher in many areas, many buyers are feeling a sense of urgency to act now or miss out. ‘We have a chance to grab something. We want to take advantage of this great market. Interest rates are low,’ said Leonard Bridgnauth, a 36-year-old courier who, with his wife Kimmy, has been scouring the Miramar, Florida, area for a house in the $US250,000 range since December, so far without luck.”

“‘Because inventory is so low, it’s creating some kind of a frenzy,’ said Chuck Bonfiglio, president of the Greater Fort Lauderdale Realtors. ‘People are pricing their homes over what the market is … Buyers know inventory is low and are willing to pay over appraisal to get the deal done.’”

The Tampa Tribune in Florida. “An investor buying spree has the Tampa Bay area’s home prices soaring, the latest housing figures show, leaving some to wonder how much longer it will continue before the investors back down. Around Florida, some Realtors are whispering about a bubble in the housing market.”

“John Tuccillo, chief economist for Florida Realtors, challenged that assumption. Investors today have sophisticated financial models that tell them how much they can pay for a house and still get a decent return from renting it out. Once prices rise too high, they’ll stop buying. That should keep investor buying from getting out of control, he said. Already, a shortage of inexpensive houses is forcing investors to move upscale and buy pricier homes, he said.”

“‘There aren’t as many unsophisticated investors out there as there was back in 2004 and 2005,’ Tuccillo said.”

The Brevard Times in Florida. “‘The numbers continue to move in the right direction,’ said Florida Realtors Chief Economist Dr. John Tuccillo. ‘We remain concerned about the rise in the percentage of sales accounted for by all cash buyers. These numbers understate the true condition of the market in that a great many sales are conducted directly with the financial institution holding the property, and thus do not appear in the Multiple Listing Service (MLS).’”

“‘But those crying doom-and-gloom who read this growth in investor activity as the sign of a new bubble are far off-base and simply don’t understand the texture of the current market,’ Tuccillo added.”

The St. Augustine Record in Florida. “A return to health of the lower end of the housing market in St. Johns County is adding to consumer confidence and to the overall economy. But those same increases in home values could also keep some middle-class families from getting into the market. One thing that has kept some lower-income families optimistic about buying a home is the continuation of low interest rates. Dirk Schroeder of Century 21 said banks have been making money available to more buyers recently. He said people with credit ratings around 580 are often getting approval.”

“Lenders are certainly reviewing files of perspective buyers more carefully (than during the housing bubble),’ he said. ‘You can have damaged credit and still be able to make purchases.’”

Bits Bucket for June 25, 2013

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