February 3, 2014

Getting Into Bidding Wars And Overpaying

The Bradenton Herald reports from Florida. “According to RealtyTrac, Manatee County saw a 55 percent increase in residential property flips between 2011 and 2013. ‘Personally, I’m not seeing them,’ said Mike Polachek, a Realtor with Keller Williams on the Water in Bradenton. ‘Investors are buying the properties and holding them.’”

“Polachek said about 35 percent of his residential sales are to investors, most of whom are planning to hang onto properties between two and five years. A strong rental market has enticed investors to collect rental income until they feel they can get a solid profit out of selling a property.”

The Sun Sentinel. “House flipping in South Florida rose only 8 percent last year after nearly doubling a year earlier as investors start to focus on other areas, a new report shows. Lex Levinrad, head of the Boca Raton-based Distressed Real Estate Institute, said South Florida flippers are struggling to find properties that make sense financially. In some cases, novice investors are bidding up prices. He said one flipper recently bid $75,000 on a two-bedroom home that would have only been worth that amount after it was renovated.”

“Levinrad tells investors to buy a home for no more than 65 percent of the market value after repairs. ‘There’s just not enough spread in there to fix up and flip a property,’ Levinrad said. ‘People are getting into bidding wars and they’re overpaying.’”

“Housing prices are rising. Wages aren’t. The combination makes South Florida worst in the nation for overburdening families with housing costs, local officials say. Broward housing experts said the statistics are shocking, and must be addressed. Home prices in Fort Lauderdale are $155,000 higher than a median-income family can afford, county officials said. Just two years ago, the gap was much lower, at $49,000.”

“Ralph Stone, director of the Broward Housing Finance and Community Development Division, said the gap has risen dramatically in just two years. ‘We now have seven cities that have six-figure gaps,’ he told city and county leaders this week, as they met to grapple with the problem.”

The Orlando Sentinel. “The cost of a home in Metro Orlando is climbing as buyers face a triple whammy of higher prices, increased interest rates and tougher mortgage rules for customers who have a lot of debt. The biggest shift has been a 20 percent increase in home prices during the past year. ‘We’ve been looking for a year. The housing market has definitely gone up,’ said Cocoa resident Teresa Myers, who has been house-hunting in Orlando to lessen her husband’s commute to work. ‘Our maximum budget is $200,000, and we’ve just stopped looking and put it on hold for a while.’”

From Miami Today. “Developers across South Florida are rapidly building condo projects. People buying are not speculators said Sam Beznos, principal at Beztak Companies, and are putting up large deposits and are going to close. They aren’t going to flood the market for whatever income they can get. The new, hip projects coming to the market will be appealing to young professionals and they will be willing to pay the rental price, he said. ‘I see the rental market going up, but obviously it’s going to be very much dictated by the overall economy in Florida, too,’ Mr. Beznos said. ‘I think you are going to see a rise in rents anyway because other costs are going up – real estate taxes, insurance.’

“He added, ‘When these condos deliver, people can’t rent them at what they were before because you just can’t maintain those costs.’”

“In Edgewater, the Melo Group completed construction of rental property 22 Skyview last September, said principal Carlos Melo. Rental rates for 22 Skyview’s one-, two- and three-bedroom units range from approximately $1,500 to $2,800 a month. He said building a rental property uses the same manpower and materials as building a condo, yet condos can demand a high price per square foot. With rentals, he said, you have to charge what people can pay.”

From 10 News. “The Bay area has one of the highest foreclosure rates in the county and as a result squatters are popping up all around. With thousands of foreclosed homes in the Bay area, it’s attracting some unwanted visitors in many parts of the city; something Tampa police officers have caught on to. Corporal Lisa Parashis recently came upon what seemed to be a normal home with two women living there. The problem is, it wasn’t their home to begin with. ‘They had electricity on and everything,’ says Parashis.”

“Tampa Police says if you notice someone moving into a home that you don’t think they own, give them a call. Because, with foreclosed homes, it could take some time to kick the unwanted neighbor out. ‘It can get very difficult because in the foreclosure process, it’s hard to find who is the owner,’ says Corporal Parashis.”

The Tampa Bay Times. “Still waiting to see whether you’ll get a share of the Florida Hardest Hit Fund’s $350 million in mortgage principal reductions? Join the club. In the four months since a flood of 25,000 underwater home­owners applied for the state-distributed relief, only 750 have had their loans paid down, state officials said. The rules for program approval are strict: Homeowners must be current on their mortgage, owe more than 25 percent over a home’s market value, and earn household wages less than 40 percent over the area’s median income, which in Tampa Bay puts them at about $80,000.”

“But in Florida, where 29 percent of all homeowners with a mortgage are underwater, those limits barely made a dent in demand for help. Barbara Taylor, a 66-year-old former snowbird who bought a south St. Petersburg condo at the peak of the bubble, said she has been frustrated by the lack of communication on whether her up-to-date loan could qualify.”

“‘I can understand getting an email that says, ‘Give us 30 days and we’ll update you,’ Taylor said. ‘But when I (called my contractor and) got that response — ‘Don’t call us, we’ll call you’ — that burned me.’”

Bits Bucket for February 3, 2014

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