Archive for January, 2010


UF: Fla. real estate stalled, future unclear

January 28, 2010

GAINESVILLE, Fla. – Jan. 28, 2010 – Uncertainty continues to influence Florida’s real estate outlook in the latest University of Florida (UF) quarterly survey, with fears that stagnant financial markets, rising unemployment and another round of foreclosures could make things worse in 2010.

“Our respondents report that we will continue to see increasing vacancies and decreasing rents throughout most property types,” says Timothy Becker, director of UF’s Bergstrom Center for Real Estate Studies. “One person summed up the current situation by saying that ‘unemployed people don’t need office space, don’t shop, don’t pay rent and don’t buy houses.’”

Adding to the angst is the unavailability of financing, Becker says. Respondents continue to worry about their ability to refinance existing mortgages coming due, even if they are able to meet the obligations right now, he said.

Many adjustable rate mortgages taken out five to seven years ago soon reset, which compounds the problem in the housing market as it increases monthly payments and throws some property owners into financial peril.

“I think we’re going to see more foreclosures coming down the line because of that and because of the rising joblessness,” Becker says. “The longer people are out of work, the less opportunity they have to make payments on their house.”

Florida’s unemployment rate climbed to 11.8 percent in December, its highest level since 1975, and there are concerns that it may rise even higher. “Until we start seeing significant job gains, it’s going to be a rough road to hoe for residential and commercial properties,” Becker says.

Mortgage refinancing also stands to increase the number of foreclosures in commercial real estate, the weakest sector of the market.

“Many commercial property owners can still pay their mortgage based on the rents they collect, but with the terms of their mortgages ending, they will have to figure out how to get financing, and there is no financing out there,” Becker says. “With values continuing to decline, the amount of money that banks would be willing to offer if they did finance is considerably less than what is owed on the mortgage.”

On the positive side, the survey indicates that private investors both foreign and domestic, are starting to “kick the tires” in many markets. In addition, investor expectation for returns is starting to fall to more realistic levels, helping to close the spread between bidding and asking prices.

“These developments bode well for the transaction market when quality properties start coming to the marketplace,” Becker says. “Unfortunately, there are few good quality deals to bid on.”

One trend found in the survey is a growing marketplace of larger national companies that have taken over small regional and local firms. Because the bigger companies are in a better position to get financing to acquire property, they are more positive about the outlook for their own business than are neighborhood “mom and pop” firms” or companies concentrated solely in Florida.

Apartments are the only sector with funding readily available for ownership transfer, as a direct result of the willingness of Fannie Mae, Freddie Mac and Housing and Urban Development to provide financing for such properties, Becker says.

Apartments continue to be the strongest segment of the market, with expectations for dramatic occupancy increases as people continue to lose their homes. “Because foreclosures have had such an adverse effect on homeownership and people have to live somewhere, there is no shortage of folks in the market to rent,” he says.

Until the backlog of housing foreclosures has been reduced, the outlook for prices for new single-family homes is pessimistic, Becker says. Respondents expect prices to rise at a rate slower than inflation or to remain at present levels in the near future.

“I think it’s going to be a ‘wait and see what happens’ type of year, but problems with unemployment and financing will continue to weigh us down,” he says.

The Sunshine State’s unhealthy real estate picture places it in the company of such problem-prone states as Nevada and California, with their high foreclosure rates. “Florida is still competing with the top of the worst and it’s likely to stay that way,” Becker says.

The quarterly survey of Florida professional real estate analysts and investors is conducted on an ongoing basis. The recent survey of 319 participants covers 13 urban regions of the state and up to 15 property types.

© 2010 Florida Realtors®


Short Sale Mess

January 22, 2010

I feel badly for people who come to me and want to do a short sale on their home. It’s an alarming statistic at just how few of them really go through.

According to Brittany Dunn at 

Although short sales are likely to increase in 2010, the jump in these transactions is unlikely to have any real impact on the housing market, according to a new study by Housing Predictor.

While more at-risk homeowners are turning to short sales as an alternative to foreclosure, Housing Predictor says the small number of short sales that are actually approved by banks represent less than 1 percent of all homes facing foreclosure. In the first half of 2009, only 40,000 short sales were completed, according to the most recent data available from the Office of the Comptroller of Currency shows.

In addition, Housing Predictor said only an estimated 8 to 12 percent of all homeowners who request short sales accomplish a completed transaction. Because lenders only write off short sales as a loss when a property is sold, this small percentage of completed transactions leaves a gaping hole in the troubled banking industry’s problem with short sales.”

Short sales remain a blight on the housing recovery and it’s such a shame because most people who would benefit never get the opportunity.

To read the full article you can follow this link:


What are Buyers looking for in a home?

January 16, 2010

Sellers ask me all the time…what should I do to help sell my home? Should I put in granite countertops, should I paint, etc? I read so many articles a day on the Top Ten Ways to Sell Your Home and How to Sell Your Home in 7 Steps. You get the drift.


It needs to be CLEAN – I mean super clean – I mean Mr. Clean, clean. NOTHING and I mean NOTHING turns off a buyer more than a dirty home that smells like food, dog, and dirt. Nothing says AWFUL more than a messy home where it looks like a clothes bomb has exploded. Your home must be clean and neat and tidy. Super tidy. Clean and neat trumps paint, carpet, or granite anytime. I promise.

I had a very sweet home (over $400K) with a charming and quaint exterior. But the minute people walked in – they walked out. It is not because the home is awful – it’s because the owners (who had moved out) had a dog and the odor was overwhelming. It was absolutely pungent with stench. We had over 30 showings and no offers and they all said the same thing. IT STINKS.

Buyers don’t want to move into a home that they feel has not been well cared for and if it looks bad – they automatically assume you have not taken care of your home. If you paint a pig – it’s still a pig. So CLEAN UP YOUR HOME – I mean cleaner than your Momma would have cleaned. Everything should shine – everything should sparkle. It is the one time in your life you have to be diligent and have a spotless home without a strong sense of odor. And speaking of odors, those plugs in that you can buy at the store don’t REALLY mask bad smells. If the carpet stinks – get new carpet and keep the dog off of it.

In short (and I know I am beating a dead horse here) – KEEP A CLEAN HOUSE and you will have a SOLD HOUSE.


You should be worried!

January 8, 2010
Friday, Jan. 08, 2010

Bank Lending Is Still Down. Should We Be




Move over, commercial lending and home foreclosures. The falling number of bank loans is emerging as the No. 1 economic concern of 2010. But while many expect the credit crunch to continue, the problem of bank loans might not be as bad as many people think.

“If the economic indicators were not recovering, then bank lending would be prime culprit,” says top Wall Street strategist Edward Yardeni. “The weak borrowing market just doesn’t seem to be stopping the economic turnaround.”

Nonetheless, many policymakers and analysts are worried. In late December, President Obama summoned the heads of the nation’s largest banks to the White House to urge them to make more loans to small and medium-sized businesses. Federal Reserve Chairman Ben Bernanke, too, has mentioned in recent speeches the continued credit crunch as an economic concern. (See how Americans are spending now.)

Indeed, the numbers are eye-catching. As of Dec. 23, which is the latest date for available data from the Federal Reserve, bank lending at nearly $6.7 trillion was down $100 billion from the month before. In the past year, the volume of loans outstanding by banks in the U.S. has fallen just over $500 billion. Bank loans have been trending down for a while. Worse, most analysts don’t see bank lending turning around anytime soon. Paul Miller of FBR Capital says a combination of banks wanting to take fewer risks and lower demand for credit from consumers and businesses will cause banks to continue to make fewer loans this year than last.

“Available credit for the U.S. is receding and that’s the economy’s real lifeblood,” says Christopher Whalen of research firm Institutional Risk Analytics. “This is a disaster.”

But while bank loans are falling, the well of credit for corporations is far from dry. In fact, the 22 largest banks in the Treasury’s Troubled Asset Relief Program issued or renewed $127 billion in business loans in November, roughly the same as five months ago. And at a recent $6.7 trillion, bank lending is at the same level it was in the end of 2007, when the economy was still expanding. That would be a problem if we had serious inflation. When asset prices rise and loan values don’t, that can signal economic stagnation. But at a time when many asset prices are falling, it makes sense that loan volumes would be falling as well. After all, the collateral is worth less. (See pictures of TIME’s Wall Street covers.)

What’s more, unlike during the height of the credit crunch, corporations are able to raise money from investors. On Tuesday alone, corporations sold $23.5 billion in bonds, which was the second most active day in debt sales by companies on record. In 2009, corporations issued $712 billion in investment-grade bonds, up from $646 billion in 2008.

Bank analyst John McDonald of Wall Street firm Bernstein Research says most people are focused on how the lack of loans will hurt bank earnings. Lending is after all how banks make money. But in the past year or so banks have had to sock more and more cash away into their reserves to account for their growing bad loans. That’s caused earnings to plummet. With loans falling, reserve ratios — the measure of reserves to loans — are growing. That means banks will be able to divert less of their operation profits into those rainy-day accounts, which should boost bottom lines.

Finally, unlike the stock market or consumer confidence, bank lending is a lagging indicator. Businesses look for loans to expand once the economy is growing and orders are coming in again. And banks, since they get hurt so badly in recessions, particularly this one, become very risk-adverse at the beginning of economic cycles. “In the initial stages of a recovery banks are never handing out cash,” says Lakshman Achuthan, who is a managing director at Economic Cycle Research Institute. “It never happens that way, and we have had plenty of recoveries.”


2010 Real Estate Predictions – No Crystal Ball

January 6, 2010

Where will housing be this coming year? That’s a great question and I have some predictions. Some of them are painful and some of them just might come true – let’s see what you think.

1. Home prices – Home prices will continue to fall in the coming year.  This is almost a certainty. With a backlog of foreclosures and short sales waiting on the market, we will see a decrease in pricing. However, if you discount the unrealistic pricing in the 2003-2005 years, homes are actually selling at fair market value – it’s just not the value you thought or anticipated. So many people borrowed against their inflated equity which resulted in their homes being worth less than their mortgages. People who didn’t over-borrow will be just fine.

2. Foreclosures – watch for this debacle to continue and grow before it starts to wind down by the end of the year. I know people still living in homes where they have not made mortgage payments for over a year. The banks are taking their “time” working these homes through the system – if they foreclosed on all the outstanding bad loans – it would send shock waves through our economy and Wall Street. You will see high-end foreclosures with homes over $700,000 taking a big hit. Builders are especially affected and many will not be able to stay in business.

3. Banks – Lending institutions now basically control everything. While they had a stronghold on real estate in the past – they dictate price in the future. Many homes today are under-appraised to ensure that the bank is mortgaging a home that is below fair market value. It’s a new tactic. In addition, banks borrowed a LOT of money from the federal government (taxpayers) to stabilize their banks BUT THEY DID NOT GIVE LOANS TO THE PUBLIC AND DID NOT RENEGOTIATE TERMS OF OUTSTANDING DEBT NOR DID THEY AGREE TO MANY SHORT SALES. It is still a startling statistic that only 1 in 10 short sales actually occur. Banks are not cooperating and as a further insult – they gave the money they borrowed (after strengthening their banks through investments) back to the federal government to avoid federal oversight. In so doing, they guaranteed themselves large bonuses at the end of the year. I am constantly shocked that our elected officials haven’t been outraged at this practice. Banks= greed.

4. Who’s Buying? – First time homebuyers and move up buyers represent the strongest potential for purchase in the coming year. The thing to consider is that they will stay in the FHA price ranges which mean if your home is under $360,000, you have a strong chance of selling your home. If your home is under $200,000 – you may have an even better chance. If you are a buyer – BUY A HOME NOW – the prices won’t be this low again after the year ends. 2010 is THE TIME TO BUY if you are a buyer and are credit-worthy.

5. Variables. I have often said – as the housing industry goes – so goes the economy. This is still true. These past two years are proof that the housing market affects every facet of our economy from families eating at restaurants to lumber sales. There will be homes selling and there is increased buyer traffic. 2010 will most certainly see an upswing in purchasing power for buyers and it will be a good year for real estate. So many things hinge on banks giving out home loans and creation of new jobs. If the job market improves then we are REALLY going to see a strengthening of the sales in Florida and in the United States. Job uncertainty creates fear and fear is the worst thing that can happen when it is time to sell a home.

6. What will sell – Home buyers still want a home that requires little to no repair or renovation. The home that reflects tender love and care is going to fly off the market. So many homes today are in disrepair and the foreclosure market is not always a bargain hunters dream when you mix in the cost for renovation. But the homeowner who maintains their home, shows it beautifully and has it staged will see eager buyers. Of course, the lower price points will be the most desirable. Smaller is becoming the new “hot” home.

Everyone would like to know how much longer? What will it take to turn our economy? What do I think about our government? These are all good questions and I would encourage you to be ACTIVE and take a strong interest in your elected officials in Congress. It really does make a difference. While health insurance is a good thing – it’s not THE MOST IMPORTANT thing in the lives of average citizens at this time. AMERICANS NEED JOBS and they need the jobs NOW.  I believe that the average American understands this well – let’s hope our elected officials wake up in time to save our nation. I’m prepared to vote and campaign for anyone who understands this.

2010 is going to be a year of change and I think it will change for the better. I’ll know I’ll keep blogging about it.