Miami condos prices rise 28.4 percent

September 20, 2012 09:45AM

 

The median sales price of Miami-Dade County condominiums rose 28.4 percent in August compared to the same period in 2011, according to a report from the Miami Association of Realtors. That was accompanied by a 10.8 percent increase in the median sales price of single-family homes. The median sales price for condos now stands at $146,500, and $195,000 for single-family homes. Home prices have risen for nine consecutive months in Miami. “Despite the shortage of housing inventory, Miami home sales remain strong and continue to drive significant price appreciation,” said Martha Pomares, 2012 chairman of the board of the Miami Association of Realtors. “There is evident demand for Miami properties, particularly from foreign buyers and investors who recognize Miami’s desirability and profitability.” — Alexander Britell

Rental rates rise in South Florida

September 20, 2012 11:15AM

The mean rental rate in South Florida’s coastal markets rose 11 percent in the second quarter compared to the same period in 2011, according to a new report from brokerage and consultancy Condo Vultures. The mean rental rate stood at $1.60 per square foot, according to the report, up from $1.44 in the second quarter of 2011. Leasing activity also increased by 2 percent in the same timeframe. The rate represents a significant increase from the $1.35-per-square-foot mean rate in the same markets in 2009. — Alexander Britell

Broward County single-family home prices see 12.5 percent rise

September 19, 2012 11:15AM

 

The median sales price of a single-family home in Broward County rose 12.5 percent in August compared to the same period in 2011, according to a report from Greater Fort Lauderdale Realtors. The median price rose to $214,950 from $191,000 in August 2011, although the number dropped by $50 compared to July 2012. Broward’s townhome and condominium market saw a 7.6 percent year-over-year increase in August. Single-family inventory in the county fell by 51 percent in August, with a 44.1 percent drop for condos and townhomes. — Alexander Britell

Bill seeks to stop second-lien holders from killing short sales

WASHINGTON – July 27, 2012 – Second-lien holders are being blamed for derailing many short sale transactions. But a bill working its way through Congress – the Fast Help for Homeowners Act – would, if approved, require second mortgage lenders on federal mortgages to report their final decision on a short sale agreement within 45 days. If the second-lien holder doesn’t do that, the deal would automatically be approved on the 46th day. U.S. Rep. Jerry McNerney, D-Calif., proposed the legislation.

Greg Galli, a broker with Suburban Realty in Palmdale, Calif., supports the bill after seeing some of his recent short sale transactions fall through because second-lien holders refused to negotiate. He recalled one incident in which the second-lien holder refused a $6,000 payment from the first-lien holder in order for a short sale to move forward. Instead, the second-lien holder demanded $1,400 more, amounting to a total of $7,400, and all from the homeowner.

“(Second lien-holders) can really delay the deal if they don’t want to respond, or if they just don’t want to do anything,” Galli told HousingWire. “It doesn’t make sense. If they let it go to foreclosure, the second lien is going to lose out completely. It would make sense for us to work through the process, and then they can negotiate.”

Some in the housing industry aren’t in favor of legislation that might push a second-lien holder to make a faster decision on a short sale. Critics argue that first-lien holders need to be more willing to work with second-lien holders on an agreement that favors both parties.

“I am always hesitant to force second-lien holders or any lender to do something that they didn’t contractually agree to upfront, because ultimately that will add to the cost of future credit and reduce its availability,” Mark Zandi, Moody’s Analytic’s chief economist said.

Source: “Evasive Second-Lien Holders Thwarting Short Sales,” HousingWire (July 25, 2012)

© Copyright 2012 INFORMATION, INC. Bethesda, MD (301) 215-4688

Buyers frustrated by lack of inventory

SEATTLE – Aug. 31, 2012 – Redfin released a quarterly survey of homebuyer attitudes, with opinions less than two weeks old. According to the company, data was collected from active home shoppers – people who expressed an interest in buying within the next twelve months. The survey included 829 home shoppers in 19 cities.

Key findings

• 46 percent believe now is a good time to buy, down two quarters in a row; and 32 percent believe now is a good time to sell, up two quarters in a row

• 61 percent believe prices will increase, up two quarters in a row

• 62 percent “very interested” in conventional sales, up from 57 percent in the second quarter and 48 percent in the first quarter

• 31 percent would step back from competing against other buyers for a home, compared to 28 percent in the second quarter

• 27 percent of respondents cited general economic weakness as a concern about buying this year, up from 24 percent in the second quarter and 20 percent in the first quarter

“Even as prices have begun to rise, the overwhelming issue for most of today’s buyers is the selection of homes for sale, not what they cost,” says Redfin CEO Glenn Kelman. “The value-driven investors scooping up foreclosures for pennies on the dollar have largely been replaced by first-timers seeking to buy a pretty house now when mortgage rates are below 4 percent. With so few houses for sale, many will come up empty. The only homeowners willing to sell now mostly are the ones who have to – for a job in a new city or for a new baby.”

© 2012 Florida Realtors®

Why you shouldn’t pay down your mortgage faster

NEW YORK – Aug. 31, 2012 – The impulse to pay off your mortgage more quickly than you need to is understandable, especially these days.

Interest rates are near historic lows, so it’s possible to replace a 30-year mortgage with a 15-year loan and still afford the monthly payments. Or, if you’ve already refinanced at a dirt-cheap rate, you can take those savings and pay down your principal faster.

But the allure is more emotional than financial. Mortgage debt provides great financial flexibility, and paying it down fast probably isn’t the best way to grow your nest egg.

“Generally speaking, there’s no advantage to paying down a mortgage earlier than you need to,” says Greg McBride, senior financial analyst at Bankrate.com

That’s because the interest on mortgages is low, it helps lower your taxes, and paying less every month gives you chance to reinvest the savings in more productive ways. Among the better options: paying down higher-interest credit cards, or saving for retirement.

Start with rates on 30-year mortgages. The average rate is 3.66 percent, close to the lowest level since the 1950s.

But in reality you pay an even lower rate when factoring in tax breaks. The federal government gives borrowers a break by allowing them to deduct mortgage interest from their income. And if instead of using the extra cash to pay down your mortgage you put it in a tax-advantaged retirement fund like a 401(k), your taxes are reduced even further.

Jim Sharvin, a certified public accountant with the firm McDowell Dillon & Hunter in Torrance, Calif. says if you are thinking of paying down the principal of a mortgage more quickly than necessary – either by switching to a shorter-term loan or sending extra principal payments to the bank – consider first doing the following:

• Pay down all high-interest debt, like a credit card. It’s the first priority because it’s very expensive debt, and it has no tax or other financial benefit.

• Build a cash cushion to cover unexpected expenses or loss of income.

• Bolster your retirement savings by putting the maximum amount allowed by law into a tax-sheltered plan such as a 401(k), a 403(b), or IRA. This also reduces your taxes.

• Fund a college savings program such as a 529 plan for your children, especially if you live in a state with an income tax. These programs shelter the money from state and local income taxes.

Once these priorities are taken care of, the next step is a matter of preference.

You could take the money you borrowed at 3 percent and try to reinvest it in a way that earns more than that. If you have time to ride out ups and downs of the market, 3 percent should be relatively easy to beat.

Or you could pay down your mortgage quickly. If you are just going to park your money in money market funds or certificates of deposit that yield less than 3 percent, it makes sense to pay down that mortgage debt. And it sure would be nice to have no mortgage when you retire.

There are other situations where it’s smart to pay down a mortgage early.

The first scenario is when you’re trying to eliminate the cost of private mortgage insurance, or PMI. That’s the insurance you must carry if you put down less than 20 percent on your home. It makes sense to speed up payments on your principal until you’re allowed to drop the insurance.

It’s also good to pay down your mortgage if you don’t have the discipline to reinvest extra money wisely. Handing the money to your mortgage company is one way to protect you from yourself.

Even if paying down a mortgage fast is the best choice, there are smarter ways than opting for a 15-year loan. That’s because the shorter term locks you into a higher payment, and that can become a burden if money gets tight.

A 30-year loan gives you options. If find yourself with extra money, then pay down the principal as aggressively as you like. But if you’re short, scale back to the regular monthly amount. That flexibility is probably worth the slightly higher interest rate on the 30-year loan these days, Sharvin says.

To compare a 15- and 30-year mortgage, consider this example: One homeowner with a $200,000 loan chooses a 3.75 percent 30-year mortgage, which costs $926 per month. Another chooses a 3 percent, 15-year mortgage, which costs $1,381 per month.

The homeowner with the 30-year loan ends each year with $5,460 in savings from lower payments and a tax break of about $770. He puts all that money into a 401(k), saving himself an additional $1,560 in taxes. That’s a total annual savings of about $7,800. If he earns a 5 percent return over 15 years, the homeowner will have accrued $170,000.

The homeowner with the 15-year loan will have no extra savings after 15 years. But then his mortgage payments will end. He’ll try to catch up, but he’s starting from so far behind that by the time 30 years are up – and both loans are paid off – the homeowner with the 30-year loan will have $124,000 more in savings.
Copyright © 2012 The Associated Press, Jonathan Fahey, AP business writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

REO inventory posts big drop from a year ago

WASHINGTON – Aug. 31, 2012 – The amount of foreclosed homes on banks’ books has dropped by 18 percent in the last year, the Federal Deposit Insurance Corp. reports. The FDIC also says that levels have been dropping since the third quarter of 2010.

As of June 30, banks held $41.7 billion in REO properties – that’s down from $51.2 billion one year prior.

But more foreclosures are likely on the way, a recent report by CoreLogic warns. About 1.3 million homes are in the foreclosure process. While that’s down from 1.5 million reported a year ago, the numbers are still elevated.

Still, while “levels of troubled assets and troubled institutions remain high … they are continuing to improve,” says Martin Gruenberg, FDIC acting chairman.

The improvements are leading more banks to post greater profits and even start to lend more. Lending rose 15 percent compared to last year, according to the FDIC report.

Source: “Bank REO Down 18% From One Year Ago,” HousingWire (Aug. 28, 2012)

© Copyright 2012 INFORMATION, INC. Bethesda, MD (301) 215-4688

Average on 30-year mortgage falls to 3.59%

WASHINGTON – Aug. 31, 2012 – Average U.S. rates on fixed mortgages fell this week and are just slightly above record lows reached earlier this year. The low rates have contributed to a modest housing recovery.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan declined to 3.59 percent, down from 3.66 percent last week. Five weeks ago, the rate fell to 3.49 percent, the lowest since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage, a popular refinancing option, slipped to 2.86 percent. That’s down from 2.89 percent last week and closer to the record low of 2.80 percent five weeks ago.

Cheap mortgages are a key reason the housing market is finally started to rebound five years after the bubble burst.

Sales of newly built and previously occupied homes are well above last year’s levels. Prices have increased consistently, largely because the supply of homes has shrunk while sales have risen. And builder confidence is at its highest level in five years.

Still, the housing market has a long way back to full health. Some economists forecast that sales of previously occupied homes will rise 8 percent this year to about 4.6 million. That’s well below the 5.5 million annual sales considered healthy. Many people are still having difficulty qualifying for home loans or can’t afford larger downpayments required by banks.

Mortgage rates are low because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was 0.6 point, down from 0.7 point last week. The fee for 15-year loans also slipped to 0.6 point from 0.7.

The average rate on one-year adjustable rate mortgages fell to 2.63 percent from 2.66 percent last week. The fee for one-year adjustable rate loans was unchanged at 0.4 point.

The average rate on five-year adjustable rate mortgages declined to 2.78 percent from 2.80 percent. The fee held steady at 0.6 point.
Copyright © 2012 The Associated Press, Marcy Gordon, AP business writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.