Were You Improperly Foreclosed Upon?

A nationwide federally mandated review by mortgage servicers of potentially improper foreclosures from 2009 and 2010 began yesterday, November 1. The review is meant to determine whether any owners suffered financial harm as a result of illegal or punitive foreclosure proceedings, such as robo-signing, inaccurate fees or having been foreclosed upon while seeking a loan modification.

Homeowners can call 888-952-9105 to request a free review by April 30, 2012. Letters are also supposedly being mailed to those who might qualify. Homeowners who are currently in foreclosure will have their foreclosures halted until the review is completed. People who are found to have been financially harmed may be compensated (potentially around $1500, according to one review of the deal I read in the New York Times), but banks aren't known for being generous with compensation for their own errors.

The program resulted from an agreement between bank regulators and 14 of the country's largest mortgage servicers reached after the robo-signing scandal was uncovered last fall. Unfortunately for homeowners, the banks get to choose their own auditors, which creates a conflict of interest. Ultimately, this is probably a long-shot since the banks obviously have an interest in not finding fault with their practices and not compensating injured homeowners.

1stdibs.com Moves into Real Estate

The luxury website www.1stdibs.com has made the move into high-end real estate in Palm Beach and it is featuring homes from Coldwell Banker! The website is showing the finest in luxurious Palm Beach real estate, such at John Kluge's compound at 89 Middle Rd. Other locations featured include Manhattan, San Francisco and, next month, Paris. Getting your listing on www.1stdibs.com is excellent exposure and as a Coldwell Banker agent, I can make that happen for you!

Keeping my readers informed of developments in Palm Beach real estate is exactly what the Palm Beach Real Estate blog is all about.

Did You Know?

Below are some interesting home buying myths and facts, according to Zillow.

- 42 percent of buyers think that home values appreciate by 7 percent per year. Historically, appreciation has been between 2 and 5 percent per year.

- 56 percent of buyers believe an appraisal determines the home's condition. In fact the appraisal is meant to determine fair market value for the purposes of the bank approving the mortgage or for the buyer to know that they are paying a fair price. An inspection is what details the home's condition.

- 47 percent of buyers believe a home is sold once the purchase and sale contract is signed by both the buyer and the seller. In fact this is only the first step in the closing process. An appraisal must happen (if there is a mortgage. If it is a cash purchase the buyer can choose to forgo the appraisal), as well as an inspection. For instance, if an inspector were to find black mold in the house that was previously undiscovered, the buyers could have the option of backing out of the deal with no penalty. Alternatively, they could negotiate with the seller to have the problem fixed.

- 41 percent of buyers believe they are required to purchased private mortgage insurance (PMI) regardless of the size of their downpayment. But the truth is that only buyers whose down payment is less than 20 percent need to do so.

Were You Turned Down for a Mortgage?

Have you been turned down for a mortgage? Did you know that under the Equal Credit Opportunities Act you are entitled to receive within 30 days a written explanation of specifically why you were denied the loan? Once you receive this explanation you have some options. You can work to address the reasons for the rejection (like improving your credit score or saving more for your down payment). You can also go to different lenders, especially those with whom you have had a long relationship, to see if their lending standards are different.

Another option is to try for a different type of loan. FHA loans require only 3.5 percent down, although the loan level is capped at roughly $417,000 (it varies depending on where you want to buy). The USDA also makes mortgage loans for rural areas. There are a lot of loan options out there, so you should educated yourself about all of your options. Finally, perhaps you need to revise your expectations for what kind of a home you can truly afford. After revisiting all of these issues it is likely that you can get yourself approved for a mortgage to buy yourself a place to call home.

Drop the Price or Hold Firm?

It has been my experience recently that properties that are not priced aggressively- and by that I mean priced at or slightly below market value- are receiving only lowball offers, whereas properties that are priced aggressively are receiving reasonable offers. I don't have any data that I can share to present you to back-up my theory, but I believe it is because opportunistic buyers (often investors) are not worried about offending a homeowner with a low offer. Less aggressive buyers don't seem to feel comfortable making offers significantly below asking even if they are making a market-value offer. Furthermore, everyone loves a bargain. So if your property is perceived as being an excellent deal, you might very well end up with multiple offers. Ultimately it appears that the more unreasonable your price is, the more you are going to attract unreasonable buyers.

Read this New York Times article if you want further anecdotal support of this theory.

http://www.nytimes.com/2011/10/30/realestate/long-island-in-the-region-homes-priced-to-sell.html?ref=realestate

30-year Fixed Rate Mortgage at 4.10 Percent

The average 30-year fixed rate mortgage fell to 4.10 percent from 4.11 percent last week, says Freddie Mac. The average 15-year fixed rate mortgage remained unchanged at 3.38 percent.

HARP Eases Refinancing Restrictions

The Federal Housing Refinance Authority (FHFA), which regulates Fannie Mae and Freddie Mac, announced that changes are being made to the Home Affordable Refinancing Program (HARP) so that the program can help more homeowners. HARP is an important program because it is the only program that allows homeowners who are underwater to refinance their loans. The program is available to owners whose loans were purchased by Fannie Mae or Freddie Mac before June 1, 2009 and whose current loan-to-value ratios are greater than 80 percent. This program is available until December 13, 2013.

The changes include:
- Removing some of the risk-based fees for owners who refinance with a shorter term and lowering those fees for other owners
- Eliminating the existing 125 percent loan-to-value maximum for fixed-rate mortgages
- Ending some of the representations and warranties previously required from lenders
- Not requiring a new property appraisal if Fannie Mae or Freddie Mac can provide a reliable estimate

It is a relief to see the government becoming more realistic about how many homeowners need the opportunity to refinance. Allowing homeowners to refinance loans that have become burdensome will help to stabilize the housing market by preventing more foreclosures, whether they are unavoidable foreclosures or strategic defaults. Fannie Mae and Freddie Mac and 12 Federal Home Loan Banks provide over $5.7 trillion in funding for the U.S. mortgage market and financial institutions.

Should You Refinance?

Interest rates just hit an all-time low and that means just as much for current homeowners as it does for potential buyers. But the questions of whether to refinance is more complicated than simply asking whether you want a lower interest rate on your loan- of course you do! Refinancing also means that you are going to pay around 3 to 6 percent of your principal balance in costs and fees and in some cases you might be required to pay down some of your principal balance. In order to figure out whether refinancing makes sense you need to figure out how long you plan to stay in your home and amortize the amount the refinancing will cost you over that time period. So if you plan to stay in your home for another 18 months, will the savings from refinancing with a lower interest rate be greater than the cost of refinancing?

It is also important to remember that interest rates are not written in stone. The interest rates that I discuss on this blog are an average of interest rates from many banks, meaning the bank that holds your mortgage might not be offering the absolute lowest rate. Don't drive yourself crazy trying to get the lowest rate anyone has ever seen. 

The New York Times recently had an informative article on refinancing. I encourage you to read it.

http://www.nytimes.com/2011/10/23/realestate/mortgages-knowing-when-to-refinance.html?ref=realestate

Housing Drought

The rain may have ended our summer drought but it didn't nothing for the dwindling level of homes for sale. Housing inventory was down to 9900 single-family homes for sale in September, a decrease of 39 percent from September 2010. A large portion of that is due to the robo-signing scandal that hit in October 2010 when banks halted their foreclosures; they have since resumed foreclosing but at a much slower rate.

What is deceptive about these numbers is how many homes are abandoned and bank-owned but are not for sale. The banks are not putting these homes up for sale nearly as fast as they should be in order to fuel a recovery. The empty homes are wasting away because they are unoccupied, the banks are not maintaining them and it devalues them even further. What we need is for the banks to clean up their foreclosures processes, resume speedier foreclosures and put the homes immediately on the market. Instead our inventory is artificially depressed, buyers can't find what they are looking for and therefore cannot take advantage of the record-low interest rates that are available.

Senate Votes to Extend Loan Limits

The Senate approved a two-year extension for the higher loan limits that the federal government would insure. The loan limits expired on Oct. 1, decreasing the maximum loan limit to $625,000 from $729,750. Neither the House nor President Obama have taken action on this issue yet. It is important for the real estate market's recovery that the loan limits are extended so that purchase power is not further restricted.

Interest Rates

Freddie Mac said the average 30-year fixed mortgage rate decreased last week to 4.11 percent from 4.12 percent. Two weeks ago the rate fell to an all-time low of 3.94 percent. The average 15-year fixed mortgage rate increased to 3.38 percent from 3.37 percent. Just two weeks earlier it reached a historic low of 3.26 percent.

How to Make Your Home More Sellable

Here are eight projects that are not very expensive but will add a lot of value to your home. Remember, these days when you make improvements to your home you might not recoup that investment in your sale price but you will make your home more attractive to potential buyers. The less time it sits on the market, the lower your carrying costs and the sooner you can move on.

1. Replace the kitchen sink and faucet.
2. Add a backsplash to your kitchen.
3. Replace dated vanities, cabinets and toilets. If you don't want to replace the toilet, just replace the toilet seat.
4. Paint in neutral colors. I favor a cream color with a light pink tint to it because it is a neutral that casts a flattering glow upon a room and the people in it. Avoid totally flat paint, it makes rooms look dull.
5. Add crown moldings.
6. Add cabinets and shelving to your closets and garage for added storage space.
7. Replace the front door.
8. Landscape.

Most importantly, your your house and yard clean! I once went to a property that was such a mess from the outside that I was certain it was abandoned- then I saw that people lived there! When potential buyers see a mess they automatically lower their offer. A pristine property is a valuable property. No buyer wants to clean up the previous owner's mess.

Thirdhand Smoke and Its Effects on Buyers and Sellers

We all know what secondhand smoke is. But thirdhand? It is the newest emerging concern in the very distressing discoveries of the ills of smoking. Thirdhand smoke refers to the carcinogenic chemicals that linger in the walls, flooring, railings and dust in a home well after the smokers have moved out. Their harmful residue can be ingested by new occupants, particularly children and pets, and lead to to health problems.

Before you rent or buy a home, try to find out if the previous occupants smoked. Owners are not required to disclosed this information, but not knowing could be very bad for your health. And if the owners won't tell you, rely on your senses. Does the house smell of smoke? That smells means you are breathing in carcinogens. Is there a yellowing on the walls or ceilings? New paint, new carpets or flooring and a serious cleaning will help, but your best bet is to wait as long as possible before moving in so that the deadly chemicals have time to dissipate.

And for the smokers out there? My advice to you is to stop smoking in your home. As this information becomes more commonly known potential buyers will offer less for your house because of the health risks they face from your smoking and they will expect remediation at your cost. Plainly put, your smoking is decreasing the value of your home.

Shadow Inventory Declining

The July 2011 national residential shadow inventory of foreclosed homes declined to 1.6 million homes. This is a decrease from April 2011 when there were 1.7 millions units and a decrease from 1.9 million homes in July 2010 and 2 million homes in January 2010. Simply put, banks are selling foreclosed properties faster than they are foreclosing on new properties. It is important to remember that in October 2010 the many banks stopped foreclosing as the robo-signing scandal was revealed. It remains to be seen whether banks will continue to dispose of foreclosed properties at a higher rate than they foreclose on new properties as they continue to refine their foreclosure processes. Banks are also making more efforts to prevent homes from falling into foreclosure.

The shadow inventory is defined as the number of homes that are seriously delinquent in mortgage payments (90+ days) that are not listed in the MLS and that are likely to become foreclosures.

Record Low Interest Rates

For the first time ever the average 30-year fixed rate mortgage has fallen below 4.00% to 3.94%. The average rate on a 15-year fixed loan fell to 3.26%. Mortgage rates are now lower than they were in the 1950s!

Bank of America Offering $20,000 For Short Sales

Bank of America has begun a test program in Florida that offers homeowners between $5,000 and $20,000 to short sell their homes instead of letting them fall into foreclosure and to leave the homes in good condition. The bank will also consider waiving the deficiency judgement (which is their right to come after the homeowners later for the difference between what the home sold for and what the homeowners owed). The program is available to homeowners who do not currently have offers on their homes, whose short sales are submitted for approval by November 30 and who closings occur before August 12, 2012. The program is not applicable for Ginnie Mae, VA and FHA loans.

This is a fantastic plan that homeowners who are underwater with their BoA mortgage and want to sell should consider. It is also a good idea for the banks because the average length of a Florida foreclosure is 676 days (the national average 318 days), according to RealtyTrac. And homeowners whose homes fall into foreclosure have no incentive to maintain the property. The lack of property maintenance while the home is in foreclosure often leads to more than $20,000 in remediation, particularly in Florida where mold is prevalent in homes that are not kept sufficiently ventilated, and previously pristine pools become swamps. It also prevents the homeowners from taking the appliance with them when they leave.

Wells Fargo and J.P. Morgan Chase have similar programs.

30-Year Fixed Rate Mortgage at 4.01%

This 30-year fixed rate mortgage fell to 4.01% last week. That makes the financing of a home more affordable than it has been in most of our lifetimes. For those interested in becoming landlords, the combination of the low interest rates and the lower housing prices and rising rents (projected to increase 4 percent in 2012) make now a very good time to get into that business. Furthermore, with interest rates so low money that is sitting in the bank is making very little in interest. Right now it is smarter to put your money to work rather than keep it in a bank.

Do Incentives Make Cents?

When selling your home, is offering an incentive to potential buyers a good investment? Some sellers are getting creative in this tough market and are offering cars, boats, club memberships or large gift certificates to their buyers. But as enticing as it might seem to offer something lavish with the purchase of your home, it probably won't influence a buyer's decision. What it will do is drive up the cost of selling your home because the buyers would have probably made an offer anyway but then you have to pay for whatever incentive you offered. In this market all that matters to buyers is the price and whether they like the home. So instead of offering $20,00 in incentives, knock $20,000 off your price. That is the best incentive you could offer any buyer.

One incentive that I do support is offering a cleaning service to renters. Who would turn down free housekeeping? And it gives the landlord the opportunity to keep an eye on the property and make sure that it is being properly maintained. Nothing is worse for a landlord than finding out that the nice couple you rented to never cleaned once and now the formerly white toilet bowls are black. The cost of this incentive is a good investment in the property's upkeep and would be less than any serious remediation.

New Census Data: Housing Stats

According to new Census data released last week:

- Nationally 53.0 percent of renters spent 30 percent or more of their household income on housing in 2010. That number was 51.9 percent in 2009 and 50.0 percent in 2008. National median household incomes dropped in 2010 and rents increased because demand for rentals increased. Rents are forecasted to rise 4.0 percent in 2012, according to Zillow.

- 60.40 percent of renters in Florida spent 30 percent or more of their household income on rent in 2010 and that was the highest percentage in the nation (California was second at 57.2 percent and Hawaii was third with 56.2 percent).

- 48.8 percent of Florida homeowners spent 30 percent or more of their household income on housing in 2010. Nationally that number was 38.0 percent, meaning that Floridians spend more of their income on housing than the national average.

4.09% Fixed Rate Mortgage

The rate for a 30-year fixed rate mortgage fell to 4.09 percent! This is the third straight week of record lows. Homeownership is often more affordable than renting when you look at the monthly mortgage of a home versus what it would command for rent.

Bifurcated Market?

There is some data suggesting the country's housing market appears to be splitting in two, albeit into two very unequal parts. While we are still awaiting the recovery for the majority of the market, according to Zillow the much smaller luxury market has seen improvements. The 1.5 percent of the market that consists of luxury homes like we have in Palm Beach County (think pools, spas, outdoor kitchen, screening rooms, massive master suites, waterfront) have seen a small turnaround. Since February prices of $1 million-plus properties have risen 0.7 percent since February 2010, while prices for $1 million-under homes have decreased 1.5 percent. Historically these two market segments have moved in tandem.

This split is due in part to cash-rich foreign buyers who think American real estate is currently undervalued. They don't need mortgages and thus are not hamstrung by the difficulty of getting a mortgage. In Florida in 2007 foreign buyers accounted for 10 percent of sales; in 2010 they made up 33 percent of sales. So while this news might not matter much for the majority of the country, it does matter for us. The concept of the market bottoming out needs to be asked on a more regional and then price-conscious level and right now it appears that the luxury market is going to have an earlier recovery.

To create an analogy for all of the fashionistas out there, consider the recent sale of Missoni goods at Target. Shoppers lined up to get a shot at owning a designer, luxury good for a more affordable price. The shelves were cleared within hours and the website crashed. We are still in a recession and normally no one would line up to buy Target clothes but the rules changed when it was a luxury brand.

Cast in a Different Light

This photo of the columns in the front hall at The Breakers deftly illustrates the importance of excellent lighting. Notice how the details in the ceiling are so much more vibrant because of the direct lighting. One of the easiest ways to make any home appear more grand is to invest in decorative outdoor and indoor lighting. By illuminating your landscaping, pathways, doorways (especially the front door), art and other decorative detailing, you are maximizing a home's potential.

Regarding your choice of lighting fixtures for your front door and front pathway, homeowners often choose fixtures that are too small. Homes are very big! Don't be afraid to use large lights.

Best Door in West Palm Beach

I spotted this door at one of the condominium buildings in West Palm Beach and it is the most whimsical front door I have ever seen! It has me wondering whether Snow White and the Seven Dwarfs winter down here...

Citizens' Property Insurance

Florida's Office of Insurance Regulation approved a statewide average 6.2 percent increase in property insurance premiums and a 32.9 percent increase for sinkhole premiums from the state-backed Citizens' Property Insurance. These increases will take effect on January 1, 2012 for homeowners and dwelling fire policies and February 1, 2012 for wind-only policies.

What are Riparian and Littoral Rights?

Riparian Rights- Property owners whose property abuts the banks of a river, stream or other watercourse have the right to use that water. The rights to the use of the water can only be transferred or sold when the land is transferred or sold. Riparian rights can include the right to swim, boat, fish, and erect a dock, a pier or a boat lift. These rights also include the right to the land created by reliction. So if water levels in a river permanently decreased and suddenly added five more feet to the length of your property, that new land would belong to you.

Littoral Rights- Apply to properties that abut an ocean, sea or lake and usually related to the use and enjoyment of the shore.

When purchasing a home in Florida that abuts water it is very important that you understand whether you have any riparian or littoral rights. Very often the essence of a home's value is in the riparian or littoral rights and the views that accompany them.

Loan Limits from U.S. Department of Housing and Urban Development

The U.S. Department of Housing and Urban Development has a website (https://entp.hud.gov/idapp/html/hicostlook.cfm) where you can find the loan limits for the loans the Federal Housing Administration (FHA) and Fannie Mae/Freddie Mac are willing to purchase. Nationwide the limit for Fannie Mae and Freddie Mac is $417,000 but some areas with more expensive housing were granted temporary loan limit increases. But on October 1, 2011 these increased limits will be lowered back to $417,000. In addition to the West Palm Beach/Boynton Beach/Boca Ration region, five other regions in Florida qualified for the limit increases, with Key West having been the largest at $729,750. (Note: Key West and Naples-Marco Island will not have their loan limits decreased to $417,000. Their new limits will be $529,000 and $448,500, respectively).

FHA limits vary by city in Florida and nowhere is the limit less than $271,050. Until October 1 the Palm Beach loan limit is $423,750. After October 1 the limit will be lowered to $345,000.

Often buyers have a tougher time getting their FHA loan approved for a condo than for a single-family home. Only condos that are on the approved list at the FHA can be purchased with FHA loans. That means that in terms of resale it can be easier to sell a condo that is on the approved list than one that is not.

Through June 2011 single-family home loans that Freddie Mac purchased had an average down payment of 29% and an average FICO credit score of 751. In 2007 the average downpayment was 23 percent with an average FICO score of 707, according to Freddie Mac. FICO scores go up to 850 and the national median is 711, says FICO.

FHA loans are popular with buyers with small down payments, though those borrowers must have high credit scores. From January-March 2011 the average credit score of a borrower was 704, whereas in 2007 it was 631.

Florida Had Highest List Price Increases in Nation in August

Florida had the largest increase nationwide in median list prices for homes from August 2010 to August 2011, according to MLS data aggregated by Realtor.com. Fort Myers-Cape Coral had a 33 percent increase to $213,000; Miami had a 24.5 percent increase to $249,000; Naples increased 20 percent to $359,900 and Punta Gorda rose 13 percent to $169,900. Palm Beach County's median list price increased just 2.9% to $199,973. Palm Beach County had a 25 percent decrease in the number of listings during that same time period.

These significant changes are most likely due to the stoppage and subsequent slowdown of the foreclosure process. The numbers that will be most indicative of where the market is at won't be available until we can do a year-over-year comparison after October 2011, when it will have been a year since the banks temporarily halted foreclosures.

Interested in Becoming a Landlord?

Now is a fantastic time for would-be investors to take the plunge into buying investment properties. Interest rates are at historic lows for both 30-year and 15-year terms and housing prices are hovering around 2002 levels (and if you buy a distressed property at a discount, you're looking at prices unseen since the 1990s). But the incentive isn't just in the low cost of acquiring a rental because while home prices have decreased, rental rates have increased. Here are some of the juicy facts:

- Four million former homeowners who went into foreclosure are now renters.
- Almost 35% of occupied homes were rentals in 2010, a staggering 33.8% increase from 2001.
- Demand for rentals has increased as banks have become more restrictive with their lending policies.
- Nationally rents increased 11.6 percent to $1,320 a month from 2009 to 2010, according to   Hotpads.com.

President Obama Looking to Make Refinancing Easier

In his speech last week, President Obama said that he wants to "take executive action to remove the barriers that exist in the current federal refinancing program (HARP, the Home Affordable Refinance Program) to help more Americans refinance their mortgages at historically low rates, save money and stay in their homes."

Although no formal action has been taken, this is an excellent idea. All homeowners should have the option to refinance, it does not make sense to restrict it to homeowners who are not underwater with their mortgages. It benefits the real estate market, neighborhoods and the recovery to have homeowners be able to afford to remain in their homes. It is better to have a homeowner who is underwater with their mortgage to be able to refinance it at these currently incredibly low rates instead of lose it to foreclosure. The cost of foreclosure to a bank must surely be greater than allowing homeowners to refinance.

In addition to negative home equity being an impediment to refinancing, a spotty income history is also a roadblock. Banks typically want to see an applicant with at least six months of tenure at their current job. Those who are recently retired or are self-employed might face more obstacles as well.

In order to receive the best rates for a 30-year fixed mortgage, credit scores of 740 or better are generally needed. However, banks are more flexible with credit score requirements if the homeowner is applying for a 15-year fixed mortgage; in that case a score in the mid-600s could be sufficient to receive the best rate.

30-Year Mortgage Falls to 4.12 Percent

According to Freddie Mac, last week the average interest rate for a 30-year fixed mortgage fell from 4.22 percent to 4.12 percent, the lowest rate in six decades. The average rate for a 15-year fixed mortgage declined to 3.33 percent from 3.39 percent, which is likely the lowest it has ever been. Five years ago the average 30-year fixed rate was around 6.5 percent.

With homes prices having declined and interest rates at historical lows, purchasing a home is now more affordable than ever for buyers with excellent credit and strong down payments. The low rates are not quite as low for buyers with lower credit scores or smaller down payments.

Existing Homes, Condo Sales Rise

According to Florida Realtors, sales of existing homes in Florida rose 12 percent in July 2011 from July 2010, for a total of 15,517 homes sold, up from 13,874. The statewide single-family median sales price was $136,500, which is a slight decrease from the $137,700 in July 2010. Existing condo sales also increased 12 percent, from 5904 units to 6619 units. The median condo sales price was $90,900, a four percent increase from July 2011, when it was $87,800.

More Homeowners Getting Shorter Mortgages

In the first quarter 2011, 34 percent of those who refinanced switched to a 15- or 20-year loan term from a 30-year term, which is the highest level since 2004, according to Freddie Mac. A vice-president at Lending Tree said requests for 15-year mortgages has increased 30 percent in the last year. And Quicken Loans reports that the most popular loan term in their new Yourgage program (which allows borrowers to select their desired term) is eight years, followed by 13 years.

In fact, rates are so low that some borrowers could switch to a 15-year term at 3.5 percent from a 30-year term at 6 percent and not see their payments go up. However, not everyone can qualify to refinance. Borrowers usually need a credit score of 720 and at least 20% equity in their home to obtain the best rates. If you don't qualify, you can always make extra mortgage payments in order to pay down your principal more quickly.

Founder of ForSalebyOwner.com Uses Broker to Sell His Condo

Colby Sambrotto, the founder of ForSalebyOwner.com, used a real estate agent to sell his Manhattan condo when he failed to sell it on his own after six months of trying. But the best part is that the agent convinced Mr. Sambrotto that he had underpriced his condo and got him to agree to raise his asking price. After multiple offers were submitted the condo closed for $150,000 more than his original asking price.

It is easier, faster and often more lucrative to use a real estate agent to sell your home. Sellers believe that they will save themselves the sales commission, but buyers expect that savings to be on their end and thus subtract roughly what they think the commission would be from their offer.

Existing Home, Condo Sales Rise

According to Florida Realtors, existing home sales rose 1 percent statewide in the second quarter of 2011 compared with a year earlier. The second quarter of 2010 saw 51,973 homes sold and that rose to 52,421 for 2011. Condos saw a much larger gain of 14 percent, from 22,137 to 25,263.

The good news does not stop there, however. Statewide existing home sales increased 17.7 percent from the first quarter 2011 to the second quarter and condo sales rose 8.1 percent for the same period. The median existing home sales price rose 8.9 percent from the first quarter to the second quarter and the median price for condos rose 17.3 percent.

Existing Home Sales Rise 18 Percent in Palm Beach County

Existing homes sales in Palm Beach County rose 18 percent in the second quarter of 2011 over the same time last year, as compared to a statewide increase of 1 percent. Nationally existing homes sales fell 13 percent. The median sales price for single-family homes in Palm Beach County decreased 13 percent to $206,000; the statewide median sales price decreased 5 percent to $134,600, according to Florida Realtors. Nationally the median existing single-family home prices was $171,900, a decrease of 2.8 percent from a year earlier.

Southern Florida has seen in influx of investors and foreign buyers snapping up fantastic real estate deals. While our market may have been hit hard, Palm Beach County is still one of the most beautiful and desirable places to live and buyers are taking advantage of the lower prices.

Nuisance Tax in West Palm Beach

On Monday the West Palm Beach city commission unanimously voted to pass three chronic nuisance codes that will allow for police and code services to be billed to an owner's property tax bill. The new codes say that if police respond to three nuisance calls on a residential or commercial property within 30 days that the owner will be required to present a written remediation plan and fix the problems or else the cost of code enforcement will be assessed on the property tax bill. The point of the new codes is to discourage nuisance activity and to require property owners and not taxpayers to bear the cost of enforcement.

Obviously this will present a challenge for landlords who will now be financially culpable for the transgressions of their tenants that result in complaints to the police. But it will be good for neighborhoods to finally have a way to penalize residents who violate local codes and laws. And although financial projections were not given, it certainly provides another source of revenue for the city in a time of decreasing property tax revenues.

Rate on 15-Year Mortgage at Record Low

The interest rate on a 15-year fixed mortgage fell to 3.54 percent from 3.66 percent last week, according to Freddie Mac, which is the lowest rate since Freddie Mac began tracking rates in 1991. The rate for a 30-year fixed mortgage fell to 4.39 percent from 4.55 percent.

Bank of American Demolishing Foreclosed Homes

In an effort to lower their supply of the 40,000 foreclosed properties on its books, Bank of America is donating 100 homes in Chicago, 100 in Detroit and 150 in Cleveland to area agencies and is helping to pay for their demolition. The chosen homes are their most decrepit properties, some valued at less than $10,000. The cost of restoring the homes would be higher than their resale value and by donating them and demolishing the bank is no longer responsible for the maintenance or taxes. Bank of America intends to make similar donations to nine other cities this year. The land from the homes will be used for open space, urban farming or development. Fannie Mae, JPMorgan Chase, and Wells Fargo also have similar plans.

Banks to Register Abandoned and Foreclosed Properties?

In an initial vote on July 28, Palm Beach County commissioners unanimously voted to create a foreclosure registry. Banks would be required to register the names, phone numbers and e-mail addresses for the property managers of properties in foreclosure. A final vote on the issue will be held on August 16.

The registry would be run by Federal Property Registration Corp., located in Melbourne. Banks would have ten days to register the property after a legal notice of action was filed in court. The banks would pay a $150 fee that would be split evenly between Federal Property Registration Corp. and the county. The fee paid to the county would go toward repairing abandoned home and code enforcement. The money spent on repairs could potentially be recouped when the home is sold.

While it would be excellent for the county to have contact information for abandoned properties that are in violation of local codes, there is some concern over whether it is fair to register distressed properties that are still occupied, particularly if the homeowners are pursuing a short sale or loan modification, thus ultimately avoiding foreclosure.

Foreclosure Rates Decline in Most Metro Areas

Due to the delays in processing foreclosures that resulted from the banks' improper foreclosure practices, 84 percent of metropolitan areas with at least 200,000 residents saw their rates of foreclosure slow in the first six months of 2011 as compared to 2010. That 84 percent translates to 178 metropolitan areas that saw declines, out of the largest 211 areas. The banks have also delayed taking foreclosure action against more recently delinquent homeowners while other options, like loan modification, are considered. This way the banks do not assume the costs of maintaining the homes or evicting their residents. According to CoreLogic, 1.7 million foreclosures are currently being delayed. Delays have been the longest in states, including Florida, in which foreclosures must go through the courts.

It has also been found that job loss, rather than loans that have reset to higher payments, is the most predominant reason for homeowners falling into foreclosure.

Housing Market Heating Up in Miami?

My blog doesn't normally cover Miami but some of their real estate news is worth paying attention to for those of us in Palm Beach County. According to an article in The New York Times, although one out of five homes in Miami-Dade County is in foreclosure, rich buyers, investors and foreigners are doing their part and then some to absorb the excess supply. During the first half of 2011 home sales rose 16 percent from the first half of 2010, making that the best first half of the year since 2007. Two-thirds of those sales were cash deals (and the remaining one-third was likely taking advantage of the historically low interest rates we had in the fall). From January-June 439 properties were sold for $2 million or more.

Part of this buying spree can be credited to the stoppage and subsequent slow-down of the foreclosure process. It restricted supply and buyers began purchasing the best deals. In late 2008 there were 108,000 properties for sale and now there are less than 48,000 properties on the market. The many condominium buildings that were languishing empty are now on their way to being occupied. However, foreclosure filings in Miami-Dade County in June 2011 increased 30 percent from May, making for the largest monthly total since October 2010, when the banks widely halted foreclosure proceedings as their grossly negligent and fraudulent foreclosure practices were revealed.

As foreclosure filings increase it will increase the supply of housing available for purchase. Some buyers are holding out for the shadow inventory of foreclosed homes that they hope will hit the market. But what we are seeing is that there is a segment of the global population that sees now as the opportune time to buy, even if there are some future price fluctuations. The biggest unknown factor plaguing our real estate market is what the banks and government are going to do with the foreclosed properties they own. But we are now seeing some uncertainty that those properties will in fact be the best deals available. After years of neglect and disuse, those homes are frequently going to require repairs and renovations and it is very difficult to get a loan that covers home improvements. The people who buy them are going to need cash to fix them up.

Want to Compare Insurance Rates?

The Florida Office of Insurance Regulation has a website, www.floir.com/choices, that lets users shop for various home insurance rates. The program is called the Consumer HomeOwners Insurance Comparison Electronic System (CHOICES) and it uses two homes (a $150,000 property built before 2001 and a $300,000 property built in 2005) as sample homes for the purposes of comparing rates. The program does not give specific quotes but it does give ranges of the cost of coverage from different insurers.

Insurers use different parameters for arriving at their rates, meaning that a carrier that is very expensive in one part of the state might be the cheapest in another. The systems shows different carriers' rates by county.  The rates used are those most recent rates accepted by the Florida Insurance Commission.

Comparing rates is very important for homeowners who have recently moved from one county to another. It is also smart to do annually to see where the cost of your coverage ranks among other insurers.

Government Considering Turning Foreclosures into Rentals

The Obama administration is getting creative with what to do with the glut of foreclosed upon homes that are waiting to be sold: they are considering renting them out. The homes would no longer be for sale (or not placed for sale to begin with, as we know that there are a lot of repossessed homes that are not for sale right now) and would be made available for rent. This would serve two purposes, the first being that by decreasing the supply of homes for sale, it would help stop prices from falling further. The second is that it would increase the supply of rental homes, thus helping to stop rents from increasing further due to escalating demand.

By renting out the homes the government would be able to help cover their carrying costs and it would potentially give the housing market enough time to stabilize so that the homes would eventually be sold at a higher price than they could currently command, thus further minimizing the government's losses. But before these homes can be rented out the government would have to make the homes inhabitable again. Most foreclosed properties have suffered from neglect, but many are also missing appliances or have other deferred maintenance or outright damage that make them unfit for habitation. So before they can be rented, the government must invest in them, which is not something that they have been doing. The government is used to playing landlord with public housing and VA housing, but it isn't used to renting out individual homes that are spread throughout the country. It remains to be seen how they would handle this added responsibility. 

According to the Wall Street Journal, one idea the government is considering is selling thousands of foreclosed properties to investors who would rent them out. But this doesn't seem like a good idea to me because it would enrich wealthy investors by allowing them to buy masses of deeply discounted homes. The government would not see the benefit of waiting out the market for the homes values to stabilize and the public wouldn't get the opportunity to get those bargains. The only benefit would be to the rental market. 

Fannie Mae and Freddie Mac currently sell round 50,000 foreclosed upon homes each month. If this were decreased to 30,000 homes (with the 20,000 homes being rented out), it could help to avoid further decreases in home prices. 

Existing Condo Sales, Median Price Increase

There is finally some happy news for condo sellers out there! According to the National Association of Realtor, in June 2011 7,941 condos were sold statewide, an increase of 8% over the 7,330 that were sold in June 2010. The median price rose to $93,900 from $92,300, which was a 2% increase.

This increase is modest, but we have learned our lesson about unsustainable growth. What is important to note is that lenders are particularly restrictive with condo financing, so where credit is tightest, we have actually seen some gains. I think it is a shame that lenders are so much more stringent with condo loans than with loans on single-family homes because condos make great starter homes.

Beware Craigslist Rental Scams

There is a new scam involving Craigslist and rental properties. Con artists are fraudulently listing homes that are actually for rent as though they are the owners. The properties are offered at well below market rates and therefore attract a lot of potential renters. Then the con artists charge the would-be renters up-front rent and security deposit for the home without ever showing it and say that they will mail the renters the keys. They keys never shows up, the money is gone and the home is actually for rent at a much higher price and the real owner has no obligation to honor the fraudulent agreement.

To prevent this from happening it is best to work with a licensed Realtor. It is also important to take a tour of the property before any money is exchanged. And if you have doubts about whether the person who claims to own the home actually owns it, go on the county or town's property appraiser's website to confirm the owner's name.

Were You in Foreclosure in 2009 or 2010?

If you were in foreclosure in 2009 or 2010 and the bank improperly foreclosed upon your home, today might be your lucky day. More than 2 million homeowners were in this predicament and they can now ask for a review of their case to find out whether the bank followed the law. Homeowners who are eligible should receive a letter from their bank explaining the process- though you should call your bank if you think you might have been affected.

The mortgage servicers are going to hire independent auditors to review the cases. They will determine whether homeowners are due compensation for foreclosures that did not adhere to the law. This review will also include homeowners who were denied loan modifications when they should have been eligible.

Imagine getting a check from a bank after they improperly foreclosed upon your home. Crazier things have happened, but I just can't think of what they are.

Citizens Property Insurance Corp.

Citizens Property Insurance Corp. is a taxpayer-backed insurance company that was created as an insurer of last resort for properties that could not get coverage in the private sector. There are currently 1.4 million Citizens policies and around 900,000 of them are uninsurable in the private market because they are on the coast, are older homes or are mobile homes (so I guess if you've got an older mobile home in a coastal town you've got some big insurance problems!). Currently it adds 1,000 policies every day. Citizens is the largest insurer in the state and the insurance rates are held artificially low (meaning lower than those of private companies) by state law.


It sounds great to have a state agency protecting property owners from predatory rates from private companies. But the Citizens Chairman, James Malone, says the insurer needs to decrease the number of policies it currently holds because the exposure for the state is just too great. Translation: if we get a big hurricane, Florida taxpayers are picking up the tab for insurance payouts to all Citizens policy holders who suffered property damage during that hurricane. The questions is whether the state has to resources to cover such a major loss. Mr. Malone would like to sell off a significant portion of its business to the private sector, thus reducing its exposure and returning the company to its roots as an insurer of last resort for otherwise uninsurable properties. However, there is no need right now to fear that Citizens will not be able to meet its obligations. Through the issuance of bonds it just completed a $900 million financing deal that keeps it liquid.


Currently the state is using financial incentives to get private companies to assume some of the policies from Citizens. But privitization of a large number of policies is sure to come with big increases in insurance rates for policy holders. 

What Single Buyers Need To Considering Before Buying

According to the National Association of Realtors, in 2010 unmarried women accounted for 20% of home purchases and unmarried men accounted for 12%. In my experience the biggest mistake single buyers make in their home selection is not considering whether that home could still accommodate them if their single status changes. A single woman who has modest needs might only buy a home that is big enough for herself, but what happens if she wants her boyfriend to move in? Suddenly that cozy home for one is a tight squeeze for two.

Buyers should never spend beyond their means when purchasing a home. But they should make sure that the home can grow with them. They need to be honest with themselves about how long they plan to live in the home and what lifestyle changes could happen during that time. Below are some good questions for single buyers to answer before buying a home:

1. How long do I plan to live in this home?
2. What lifestyles changes might happen during that time?
3. If I get into a serious relationship, would I want that person to move in?
4. Is there enough space (including closet space) for two people to comfortably live here?
5. Is there enough space for each of us to have our own space?
6. Is there parking for more than one car?
7. If we have a baby, is this a home that is appropriate for a child?
8. Do I want a pet? Is there outdoor space for a pet? Would you like taking walks in your neighborhood?
9. Does this house accommodate my hobbies?

Another hint I have for all buyers is to walk through neighborhoods to really get a feel for whether you'd like to call that neighborhood home. A new place looks a lot different from a car window than it does on foot. By walking you can get a better feel for lot sizes and how close together the homes are, whether the city is maintaining the streets and sidewalks, whether the residents are maintaining their homes and whether there are other homes that you prefer to the one you are considering. Remember that you are not just buying a home, you are buying into a neighborhood.

Should You Test a Home for Methamphetamines?

Below is a link to a story about a couple in Pennsylvania who bought a home that had previously been a meth lab. Unfortunately, the presence of the drug-related chemicals sickened them and they were forced to move out. And the bill to clean up the house? $61,000. There are no laws in Pennsylvania or Florida that require disclosing whether a home has been found by the government to have been a drug house.

Before you buy a house, you should consider having it tested for methamphetamines. You should also check to see if the home is registered on the U.S. Drug Enforcement Administration's National Clandestine Laboratory Registry. http://www.justice.gov/dea/seizures/index.html

http://www.cnn.com/2010/US/11/29/couple.buys.meth.house/index.html?hpt=C1

What's the Bottom Line Difference Between a 20-Year and a 30-Year Mortgage?

Most mortgages are 30-year terms. But have you ever wondered what you are actually going to pay for your home over those 30 years? What about if you had a 20-year term? I think the difference will surprise you once you look at the math!

A $200,000 mortgage with a 4.75% interest rate and 30-year term would have a monthly payment of $1,043. At that rate the total interest you would pay over the 30 years would be $175,600! Zoinks! You're paying almost as much in interest as you did for the home. Suddenly 4.75% doesn't seem like such a low rate, does it?

However, if you had a $200,000 mortgage with a 4.5% interest rate on a 20-year term, your monthly payment would be $1,265. Total interest paid over the 20 years: $103,670! You would spend an extra $222 per month for the 20-year term, but you would save $71,930 in interest payments and own your home free and clear a cool ten years earlier.

Considering a Short Sale?

Are you trying to sell your home as a short sale or are you considering making an offer on one? Coldwell Banker has a new short sale program that takes care of all of the details for you- calling the banks, dealing with the real estate agents. Even better, the cost of this program is included in the closing costs that are paid by the bank! All of the extra help is free for you. You could navigate the very uncertain short sale world on your own, or you could call in the professionals for free. Interested? E-mail me at regis.ahern@floridamoves.com.

The Palm Beach Real Estate Blog

Welcome to the Palm Beach Real Estate blog! I live in West Palm Beach and I am a licensed Realtor with Coldwell Banker in West Palm Beach. I started this blog as a service to those who live in Palm Beach County, those who want to live here and those who are curious about the fantastic towns and neighborhoods. Palm Beach County is a fabulous place to call home!

This blog will focus on market statistics and analysis, new listings, price changes, sold listings, local businesses and relevant neighborhood information.

As a Realtor, I am able to help you sell or buy your home. If you want to make your home available for rent, I can make that happen as well. In fact, I can place your home for sale and for rent at the same time. Although my blog focuses on Palm Beach County, I can help you sell or buy a home anywhere in Palm Beach County, Martin County, St. Lucie County or Broward County. And if you are moving farther away I can find you an experienced and trustworthy agent to help you. If you have tried to sell your house with another Realtor and it did not work, I would love the chance to present you with a new marketing plan to get your property sold. For those who are trying to sell their homes themselves, I will show you a faster, more profitable way to sell your house.

If you have any real estate questions, please e-mail me. I am happy to get you the answers. My e-mail address is: regis.ahern@floridamoves.com.

Happy Hunting!

Regis