Higher Home Prices Cool Buying Frenzy

Daily Real Estate News | Thursday, June 06, 2013

The recent rise in home prices has more investors concerned that it will be increasingly difficult to turn a profit from their rental investments. Nearly half of U.S. real estate investors say they expect to purchase fewer rental homes in the next year, according to a recent survey conducted by polling firm ORC International.

Just 10 months ago, the percentage of investors who said they intend to buy fewer homes stood at 30 percent—compared to 48 percent today. Only about 20 percent of the investors surveyed say they plan to buy more homes in the next year—a drop from the 39 percent who reported they intend to buy more homes last August.

More than half of the investors surveyed who own rental properties say they plan to hold them for at least five years or more, and 33 percent plan to hold them for 10 years or more.

“Higher prices are reducing returns on investment and investors are responding by cutting back on their purchasing plans until conditions sort out,” says Chris Clothier, a partner in MemphisInvest.com and Premier Property Management Group. “Fewer foreclosures, rising property values, and competition from hedge funds are making it tough to find good ideals on distressed sales. On the other hand, investors are planning to hold onto their rental properties for at least eight to 10 years and realize the benefits of rising rents and low vacancy rates. Cash flow is much more important than appreciation.”

Source

A Primer on Real Estate’s Shadow Inventory

By Sarah Parr

The real estate industry and the consumer economy have some recent, positive news. CoreLogic published a report last week indicating that the shadow inventory of homes is down 28 percent from when it peaked in 2010. CoreLogic determined the shadow inventory figure by calculating the number of very delinquent homes, properties in foreclosure and homes held as REOs (real estate-owned) by mortgage servicers, but are not yet listed on multiple listing services (MLS).

As of January 2013, the shadow inventory includes 2.2 million housing units, or in real estate terms, nine months of supply. Florida currently has 16 percent of the total shadow inventory in the United States.

Defining the shadow inventory

In real estate, the shadow inventory refers to all of the homes held by banks, but not offered for sale, and homes that people are waiting to put on the market when prices increase even more. Vacant houses in some stage of foreclosure, known as “zombie foreclosures,” also comprise about half or more of the shadow inventory. Many homeowners anticipate foreclosure and move out of the house, leaving it vacant for a period of time.

What creates the shadow inventory?

The finalization of the National Mortgage Settlement in April 2012 caused the shadow industry to grow because of a 59 percent spike in properties in some stage of foreclosure, according to RealtyTRAC. Because of the settlement, banks have been required to work with homeowners on loan modifications, and their homes are kept off the market. The states in which the shadow inventory grew are mostly judicial process states since these states are more prone to having court backlogs of foreclosure cases. Foreclosure cases in these states typically take much longer to process.

The effects on real estate

Real estate professionals initially feared properties in the shadow inventory would be listed all at once and depress surrounding property values. Reuters reported that properties in the shadow inventory have been listed in miniature spurts, though, and the small inventory has actually caused an increase in prices in some areas. Investors have also helped mitigate potential flooding of the market by buying up some of the shadow inventory, according to a TIME article. These investors are a part of firms that buy out distressed real estate when it first hits the market. They often beat individual buyers with cash offers, sometimes before properties are listed.

All the same, a shadow inventory can create ambiguity for homeowners looking to sell their homes and for predicting when a local market can expect full recovery in the housing market. The shadow inventory can also affect overall housing inventory data.

Sarah Parr is a Central Florida-based writer who blogs about foreclosure issues for Altamonte Springs foreclosure lawyers.

Kylemont – Lansbrook – Palm Harbor, FL

5252 Karlsburg Place
Palm Harbor, FL 34685
MLS #: U7577047

6 bedrooms, 4 full baths, 3-car garage, 4,058 square feet, pool/hot tub: List Price $498,300

Luxurious 2-story block home with 4,058 sq. ft., 6 beds, 4 FULL baths and a huge bonus room/loft. Enter through impressive double doors into the grand foyer with formal dining and living rooms on either side. Special touches such as crown molding, plantation shutters, high ceilings and arched doorways. Kitchen features gorgeous granite countertops and high-end appliances including a convection microwave and a double oven. Family room offersan entertainment inset and large pocketed glass sliders leading to the sparkling swimming pool, heated spillover spa and screened lanai. First floor features a den/office and 5th bedroom with hardwood floors and pool bath. Upstairs you’ll find 4 large bedrooms with an especially large master bedroom with French door. Master bath has two vanities, garden tub and separate walk-in shower. Located in the very desirable Lansbrook community close to the YMCA, Starbucks, numerous golf courses, great schools, shopping, theaters and restaurants. Lansbrook offers a multitude of amenities – golf, dock and boat ramp, access to Lake Tarpon, basketball, tennis, racquetball, soccer, playground, park and more.

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Ozona Shores – Palm Harbor, FL

JUST SOLD!

130 Harbor Drive
Palm Harbor, FL 34683

Ozona Shores in Palm Harbor, FL

MLS #: U7562945

4 bedrooms, 4 full baths, 1 half bath, 2-car garage, 3,021 square feet, List Price $897,900, WATERFRONT

One of a kind view on the Gulf of Mexico with private boat dock! This impeccably maintained Ozona home features magnificent views of the Gulf you can’t find anywhere else. This unique home boasts custom builder designs throughout. Spacious at over 3,000 sqft of living space. You will appreciate that the four separate bedrooms each have their own bathroom. There’s an expressive outdoor patio that’s a great place to relax and sit by the pool. And as you look out from the pool you’ll enjoy having your own unique view of Florida sunsets. You might never leave unless it’s to drop your jet ski/boat right into the Gulf off your own personal dock. This quiet golf cart friendly community has much to discover. So come enjoy the Florida lifestyle that you know you deserve.

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Orchards of Radcliffe – Port Richey, FL

JUST SOLD!

7711 RADCLIFFE CIR
PORT RICHEY, FL 34668

MLS #: U7572118

2 bedrooms, 2 full baths, 1-car carport, 1,248 square feet, List Price $46,500

Spacious 2 bedroom, 2 bath End Unit Condo in Orchards of Radcliffe, an ‘Over 55′ Gated Community. The kitchen boasts loads of counter-space & the breakfast bar overlooks the living room-dining room combo & glass enclosed porch. Master bedroom features 2 closets, one a walk-in & a private bath. Inside laundry room, carport w/outside storage room, alarm system, plus hurricane shutters on the master bedroom and porch windows. Enjoy the sparkling community swimming pool, heated spa, community pond and picnic area & very active clubhouse with stocked exercise room. Monthly fee of $330 includes everything but electricity: basic cable, lawn/ground maintenance, roof & exterior bldg maintenance, trash, sewer, water, bldg insurance, escrow reserves and your own security system. Close to restaurants, shopping, parks, medical facilities & so much more.

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Country Meadows at Wexford Leas – Palm Harbor, FL

PENDING!

712 Glengary Ln.
Palm Harbor, FL 34683

MLS #: U7575312

3 bedrooms, 2 full baths, 2-car carport, 1,357 square feet, List Price $147,900 <<< Bank Approved Price!

Short Sale. Active with Contract. BANK-APPROVED PRICE! As of June 7th we have no backups! Backup contracts WANTED!!! Experienced short sale listing agent. Great Palm Harbor 3/2/2 home in the very desirable Wexford Leas subdivision. Excellent schools – Elementary, Middle AND High. Split bedroom floor plan with vaulted ceilings and a living/dining room combo.

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Big discounts on foreclosures fading

NEW YORK – March 12, 2013 – Homebuyers may not get as great of a deal on a foreclosure as they once did, according to Paul Diggle from Capital Economics in a new report.

Foreclosure starts are falling and the inventory of foreclosures has been decreasing, which has caused the discount on foreclosures to lessen.

The discount on foreclosed homes compared to other homes has fallen to a 12 percent average, according to Diggle. That was about the same percentage prior to the housing crash, he says. Last year the foreclosure discount averaged about 30 percent.

“Ultra-low mortgage interest rates and steady, if not spectacular, job creation could mean that the delinquency rate and foreclosure start rate are falling quickly,” Diggle writes.

Source: “Those Amazing Deals on Foreclosed Homes Are Disappearing,” Business Insider (March 7, 2013)

Forget ‘improving’ or ‘rebound’ – Fla. is ‘on fire’

WEST PALM BEACH, Fla. – March 8, 2013 – Lesley Deutch, senior vice president at John Burns Real Estate Consulting, said the “Florida market is on fire” in her latest update on the state’s housing market.

Deutch says she traveled the state recently and visited more than 20 communities. While recovery reports differ between Florida cities and urban areas, she reports five major trends:

1. Land prices. While the price of land continues to rise quickly statewide, Orlando feels the most pressure. Deutch says she saw some submarkets where “land and finished lot prices have now surpassed peak levels.” In Orlando, she sees developers buying raw land “just to gain a position and market share.”

2. Home prices. Some communities, such as Orlando and Naples, are seeing 1- to 2-percent new-home price increases monthly, Deutch says. The hallmarks of a seller’s market have also returned, such as lotteries. She expects a 2013 price increase of at least 10 percent in many Florida markets.

3. 55-plus market. Deutch reports a 20- to 25-percent jump in potential buyers interested in active adult living, according to builders in Southwest Florida. She also notes a boost in customer traffic in second- and third-tier markets.

4. Foreign buyers. It’s more than Miami, Deutch says. While in Orlando, she visited a sales office that had three active buyers: One from Brazil, one from Germany and one from China.

5. Foreclosures. While the state has a notoriously long foreclosure process, Deutch says banks are slowly releasing foreclosures. But investors continue to buy new foreclosures shortly after they hit the market.

© 2013 Florida Realtors®

Chris, that is NOT a sinkhole!

Today I had to explain to a new seller of mine that you cannot toss a case or two of wine into a sinkhole and call it a wine seller.

Interest-only mortgages begin to reappear

NEW YORK – March 7, 2013 – Well-off borrowers increasingly are turning to interest-only mortgages, the same ilk of loan that drove many homeowners into foreclosure in recent years. With this product, borrowers pay interest but no principal during the first few years of the loan. The monthly payments can be 30 percent to 40 percent lower than regular mortgages.

Interest-only mortgages accounted for about 14 percent of private mortgage originations from January 2012 through October, according to the latest data from real estate analytics firm CoreLogic. Under new mortgage rules by the Consumer Financial Protection Bureau, lenders that continue to provide interest-only mortgages starting in 2014 could face greater liability in lawsuits filed by borrowers who end up in foreclosure.

Lenders say they provide these loans only to lower-risk, affluent borrowers with significant assets.

Some borrowers find these mortgages are more flexible, but they do come with risks. Borrowers will not build equity in homes with interest-only payments, and a fall in housing prices could leave borrowers owing more on the home than it is worth.

Source: “The Return of Interest-Only Mortgages,” Marketwatch (03/01/13)

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688

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