I have recently read several news stories regarding predicted home values. The reports indicate that the 2 worst performing housing markets in the country in the next 12 months will be Miami with aprox a 30% drop in "median" value, then Orlando...but not far behind, and of little comfort that we're not number 1, is the report for West Palm Beach area home prices that predicts values to dip another 21.7 percent from a median price of $229,000 to $179,307. The report used the Case-Shiller index of home prices along with foreclosure data to formulate the prediction.
However, I always advise my readers and clients to keep in mind that the "median" can be easily skewed and is not an accurate predictive statistic for individual home values. Along those same lines, the property value sites like Zillow can be wildly innacurate. As it has always been, the undisputed most accurate way to determine a homes value at any point in time is by comparable sales and comparable offerings.
As is especially true in this market, buyers ultmately determine a homes value and they do this by "comparison shopping", as you most likely did when you purchased the home you now own.
10/26/09
10/23/09
Lakeview Estates market activity recap
Below you'll see the recent market activity for your community
A search of the Palm Beach County courthouse records reveals that there are currently 5 homes that have had a "Lis Pendens" (default/foreclosure notice) filed. None of the 5 are currently on the market.
- There are currently 6 homes on the market
- 1 of the 6 is a short sale
- 1 of the 6 is a bank-owned property
- The remaining 4 are regular sales at this point
- In the previous 90 days, there has been only 1 closed sale reported
- There are currently no homes under contract
A search of the Palm Beach County courthouse records reveals that there are currently 5 homes that have had a "Lis Pendens" (default/foreclosure notice) filed. None of the 5 are currently on the market.
Price reduction
The sellers are the original owners who purchased the home in October, 1999 for $167,400.
10/20/09
New on the market...Antigua
10/16/09
10/14/09
Aspen, price reduction...
The sellers purchased the home in March of '99 for $167,400.
10/12/09
10/7/09
Pulling the rug out?
Since the initial decline of the housing market and associated collapse of the banking and mortgage industry, FHA loans have taken over a majority of the lending being done here.
I have often thought that these FHA loans were going to be our next "wave of defaulting loans" for the following reasons: Most FHA loans made here are with only a 3.5% down payment and allow the seller to contribute up to 6% towards the buyers closing costs. And generally, a lot of the buyers go "FHA" for 2 main reasons...they don't have much cash AND they have lower credit scores than required by conventional lenders.
In essence, all of these newly issued FHA loans are the same "no money down" loans that are currently contributing to the explosion in defaults. It has been shown that homeowners are more likely to default when there is no equity in the home....this seem obvious.
Well, in a declining market, like we are in, it won't take long for all of the FHA loans made in the previous 12 months to be "upside-down". Combine "upside-down", with lower credit scores and what do you get? The recipe for more defaults!
I believe that the above reasoning has prompted the following:
The FHA Taxpayer Protection Act of 2009 — HR 3706 , introduced in Congress Monday would increase the minimum down payment for Federal Housing Administration (FHA)-insured mortgages from 3.5% to 5% and would also prohibit financing initial service charges, appraisals, inspections, or other fees or closing costs with any part of an FHA mortgage. (seller-paid closing costs)
The bill’s author, Rep. Scott Garrett (R-NJ), said the current policy of allowing closing costs to be rolled into the mortgage effectively reduces FHA down payments to as low as 2.5% (and sometimes greater than 100% financing) because borrowers don’t have to have as much (any) cash on hand at closing.
“As we have learned repeatedly throughout the mortgage crisis, the amount of equity a homeowner has in their home directly correlates to the credit risk associated to their mortgage.”
The bill also calls for an examination of the housing market’s dependence on the fund (FHA) since the mortgage crisis began.
The inspector general for HUD, Kenneth Donohue, also appeared before the House subcommittee calling for more resources. To illustrate the explosion of FHA’s presence in the market since the development of the near-third statistic often exchanged by industry players and media outlets, Donohue said data show the FHA’s endorsements (or guarantees of mortgages) rose from 24% of the single-family market in the first quarter of 2008, to 63% of the market in Q109, including home sales and refinance.
So, if the above bill does pass and the FHA lending criteria "tighten", then I believe that here, locally, the housing market will suffer. When you make it more difficult to obtain the loan that the majority of our buyers are utilizing...there is only 1 conclusion. Then, combine this change with the expiration of the 1st time homebuyer tax credit AND a potential rise in mortgage interest rates! Not good for us homeowners here in South Florida.
Shoot me an email and let me know which way you see the market heading.
I have often thought that these FHA loans were going to be our next "wave of defaulting loans" for the following reasons: Most FHA loans made here are with only a 3.5% down payment and allow the seller to contribute up to 6% towards the buyers closing costs. And generally, a lot of the buyers go "FHA" for 2 main reasons...they don't have much cash AND they have lower credit scores than required by conventional lenders.
In essence, all of these newly issued FHA loans are the same "no money down" loans that are currently contributing to the explosion in defaults. It has been shown that homeowners are more likely to default when there is no equity in the home....this seem obvious.
Well, in a declining market, like we are in, it won't take long for all of the FHA loans made in the previous 12 months to be "upside-down". Combine "upside-down", with lower credit scores and what do you get? The recipe for more defaults!
I believe that the above reasoning has prompted the following:
The FHA Taxpayer Protection Act of 2009 — HR 3706 , introduced in Congress Monday would increase the minimum down payment for Federal Housing Administration (FHA)-insured mortgages from 3.5% to 5% and would also prohibit financing initial service charges, appraisals, inspections, or other fees or closing costs with any part of an FHA mortgage. (seller-paid closing costs)
The bill’s author, Rep. Scott Garrett (R-NJ), said the current policy of allowing closing costs to be rolled into the mortgage effectively reduces FHA down payments to as low as 2.5% (and sometimes greater than 100% financing) because borrowers don’t have to have as much (any) cash on hand at closing.
“As we have learned repeatedly throughout the mortgage crisis, the amount of equity a homeowner has in their home directly correlates to the credit risk associated to their mortgage.”
The bill also calls for an examination of the housing market’s dependence on the fund (FHA) since the mortgage crisis began.
The inspector general for HUD, Kenneth Donohue, also appeared before the House subcommittee calling for more resources. To illustrate the explosion of FHA’s presence in the market since the development of the near-third statistic often exchanged by industry players and media outlets, Donohue said data show the FHA’s endorsements (or guarantees of mortgages) rose from 24% of the single-family market in the first quarter of 2008, to 63% of the market in Q109, including home sales and refinance.
So, if the above bill does pass and the FHA lending criteria "tighten", then I believe that here, locally, the housing market will suffer. When you make it more difficult to obtain the loan that the majority of our buyers are utilizing...there is only 1 conclusion. Then, combine this change with the expiration of the 1st time homebuyer tax credit AND a potential rise in mortgage interest rates! Not good for us homeowners here in South Florida.
Shoot me an email and let me know which way you see the market heading.
Foreclosure...on the market
This home is reported to be 2743 sq ft under air on the Palm Beach County tax records. But from the elevations I can see, I believe it is an Aspen, which is 2336' under air, that must have been expanded (or the tax records are incorrect). If the sq footage is correct, an asking price for a pool home in Lakeview Estates of just over $100/sq ft is quite a deal!
The previous owners paid $450,000 for the home in December of 2006.
9/25/09
What housing recovery?
Not that Moody's was very accurate in assessing and assigning risk ratings to RMBS, but, if you live in Florida and were thinking of "holding on until prices come back" you'd better have a lot of stamina according to Moody's recent projections!
Moody's predicts that home prices will not reach their previous peak prices of '05/'06 until 2023-2030's (according to the article that accompanied the graph above).
If you have reason or a desire to sell, now or in the near future, you may want to sell sooner rather than later. However, if you're planning to live in your home until the kids are married and on their own, you may be able to weather the storm. Below is the bulk of the original article.
Scary default stats...
13.16% of Mortgages Delinquent: MBA
By DIANA GOLOBAY August 20, 2009 10:04 AM CST
Single-family mortgages set a new record delinquency rate of 13.16% in Q209, according to the quarterly survey by the Mortgage Bankers Association. The delinquency rate includes mortgages at least one payment past due or in foreclosure.
The results were lead by Florida with 12% of mortgages somewhere in foreclosure, another 5% at least 90 days past due and a total 22.8% at least one payment delinquent or in foreclosure at the end of June. Nevada followed Florida with 21.3% at least one payment past due or in foreclosure.
By DIANA GOLOBAY August 20, 2009 10:04 AM CST
Single-family mortgages set a new record delinquency rate of 13.16% in Q209, according to the quarterly survey by the Mortgage Bankers Association. The delinquency rate includes mortgages at least one payment past due or in foreclosure.
The results were lead by Florida with 12% of mortgages somewhere in foreclosure, another 5% at least 90 days past due and a total 22.8% at least one payment delinquent or in foreclosure at the end of June. Nevada followed Florida with 21.3% at least one payment past due or in foreclosure.
Homes in Foreclosure in Lakeview Estates...Lis Pendens
As of today, there are 5 homes in Lakeview Estates that have had a Lis Pendens filed. Most likely there are more homeowners in Lakeview Estates that are in default (late on their mortgage payments), but lenders are not very agressive right now in moving forward on foreclosures.
In addition, there is 1 home that already is owned by the bank but has not yet been placed on the market for re-sale.
Community Stats
To begin, we'll provide some market statistics for Lakeview Estates:
As of today, there are only 4 homes listed for sale in the community...as follows:
1) A Riviera on the lake with a pool, listed at $375,000 and on the market for 130 days so far.
2) An Aspen with a pool, listed at $329,000 and on the market for 17 days.
3) A Riviera on the lake with a pool, listed at $349,000 and on the market for 46 days. This home is being marketed as a short sale.
4) An Aspen, no lake or pool, listed at $320,000 and on the market for 53 days.
There are currently NO homes under contract
There have been only 3 reported sales in the previous 6 months as follows:
1) An Aspen on the lake sold for $305,000 on 9/3/09
2) An Aspen on the lake sold for $300,000 on 7/24/09...this was a short sale
3) An Aspen, no lake or pool, sold for $295,000 on 5/31/2009...this was a short sale
There have been 3 homes that have had their listing expire or have cancelled their listing this year without having sold their property.
As of today, there are only 4 homes listed for sale in the community...as follows:
1) A Riviera on the lake with a pool, listed at $375,000 and on the market for 130 days so far.
2) An Aspen with a pool, listed at $329,000 and on the market for 17 days.
3) A Riviera on the lake with a pool, listed at $349,000 and on the market for 46 days. This home is being marketed as a short sale.
4) An Aspen, no lake or pool, listed at $320,000 and on the market for 53 days.
There are currently NO homes under contract
There have been only 3 reported sales in the previous 6 months as follows:
1) An Aspen on the lake sold for $305,000 on 9/3/09
2) An Aspen on the lake sold for $300,000 on 7/24/09...this was a short sale
3) An Aspen, no lake or pool, sold for $295,000 on 5/31/2009...this was a short sale
There have been 3 homes that have had their listing expire or have cancelled their listing this year without having sold their property.
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Lakeview Estates, Lake Worth Florida...foreclosure tracker
As of 4/1/10 there are 7 Lakeview Estates homes in some stage of foreclosure.
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