Summer is close to ending, with this so is the traditional buying season.
There is a lot of changes in the real estate market, this newsletter will be a little lengthy to explain what is now the new world order of things. I will  do my best to explain the new laws that have just come in to effect, and as always give you personal input of how this is going to affect our local market.
I am going to get right into quite possible the most influential act that has been passed, The New Truth in Lending Act. Just like the HVCC guidelines that the Obama Administration had put into place in May, this act in theory is suppose to protect us from ourselves. ( if you recall in last months newsletter, I discussed in great detail the impact of this new guideline, where Realtors and Mortgage Brokers can not even speak to the appraiser, it is construed as influencing the appraiser. When in reality the appraiser is no where near as familiar with the subject property or the comparables they are using to establish what in their opinion is current market value. For the record I have encountered flawed appraisals every week, always significantly lower than contract price and even the appraisers own calculations to rebuild the property in todays market (the cost of replacement approach), this HVCC law has personally "killed" 4 deals for my sellers on what were fair arms length transactions with numerous comps to back up value. )
Just like the HVCC policy which is suppose to protect the consumer, it is going to ever increase the issues of our real estate markets.The 2009 Truth in Lending Act is basically a disclosure Act. Under the new Act, that is now required for any mortgage applied for after 7/29/09, the mortgage broker or Lender will have to send a detailed Good Faith Estimate (GFE) to the borrower within 3 days of making initial application, this is nothing new. Here is where the Act changes how we have done business and how it will impact buyers and sellers for years to come, changing the way real estate will be done, and not for the better !
1. The lender/ broker can not collect any funds up front except credit report fees, this delays the appraisal which I have already discussed has been the largest deal killer this summer. Now Sellers and Buyers will need to wait at least 3 extra business days to find out if the appraiser selected out of a blind pool has the experience and knowledge of the area to do their job right.
2. A loan can not close for at least 7 days after the 3 day period, this does not really impact the industry too much, I have only closed 11 deals in my entire career with mortgages in less than 10 days from the effective date, but it is worth mentioning here since it is part of the guideline.
3. This is where they have really hurt the real estate market, if the interest rates move by more than 1/8 of a point the Lender / Broker needs to send another GFE to the borrower. So if the buyer does not lock in his rate and floats it, there could be unforeseen delays with a change in interest rate. So now not only does a seller have to overcome inaccurate appraisals, when they cross that hurdle they now have to hope the buyer has locked in their rate or at the very least has a competent mortgage broker/ lender that has the systems in place to not miss a beat. In my experience with the industry, this is going to take a long time for many of the people in the mortgage fields to get up to speed, causing closing delays and possibly another loop hole for buyers to walk.
With the market continuing to slide down (ignore media reports that we are in the clear I will discuss them later in the newsletter), this will open up Sellers to even more liability. The seller will not be able to pack and move with confidence. We are in the strongest buyers market I have ever witnessed and these 2 laws/acts pushed thru the Obama Administration have only slated it further to the Buyers side.
Traditional sellers now are sitting on even more pins and needles. How can we recover from this recession/ quite possible depression when our government keeps passing laws to drive down real estate values and stifle home purchasing ? I have harped for last 2 years that the key to our great country getting out of this economic mess is the recovery of our real estate sector as soon as possible.
* The one positive this Act does do is it inhibits the changing of any fees from the GFE to the closing table. I have been at many a closing table where the buyers numbers or rate changed last minute and they had a tough choice to make, close or walk. None of these buyers were my clients or used my recommended brokers but I have seen the pain and stress that has caused to the buyer.
I have made this my lead off section because I feel all of us will be impacted by it in some way or another, I don't think it will be a positive affect either. This is just another example of how things will go wrong when the government tries to regulate capitalism and the free markets for what they consider the protection of us poor victimized citizens.
Here is the link to FDIC website on the entire act....
http://www.fdic.gov/news/news/financial/2009/fil09026.html
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Housing Stats !
My second part of my monthly newsletter, raw housing data and my interpretation of the data plus dispelling what the drive by media is spinning off said data.
Taken directly from ORRA's website:
Members of the Orlando Regional REALTOR® Association in June sold 43.12 percent more homes than in June of last year, contributing to the area’s year-to-date sales increase of 43.76 percent. There were 2,131 closings in June, which brings the year’s total to 9,993, while a total of 6,951 homes had changed by this time last year. Of those June sales, 45.99 percent of the homes were either bank-owned (832) or distressed (148). The remaining (1,151) “normal” sales made up 54.01 percent.
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The significant percentage of bank-owned and distressed home sales continue to have an influence on Orlando’s reported median price. The median price of all Orlando homes sold in June is $131,200 (a 39.26 percent decrease compared to June 2008 and an 0.92 percent increase compared to May 2009). The median price for “normal” sales is $172,500 (up 4.55 percent from last month’s $165,000). The median price for bank-owned sales is $79,900 (down 2.56 percent from last month’s $82,000) and the median price for distressed sales is $152,000 (up 8.57 percent from last month’s $140,000).

 

In addition to an increase in completed sales in Orlando, there is more than double the number of homes currently awaiting closings (7,230) than in June of last year (3,329). Of those pending sales 3,686 are homes that came under contract in the month of June alone, yet again marking the most in a single month this year.

 

.......

 

full article here:  http://orlrealtor.com/Main/Main.asp?CategoryID=3&

The reports are we have hit bottom we are on our way up, Home sales have increased by 40 plus percent from beginning of the year,  blah blah blah....

Let me ask you as an intelligent free thinking person, not to be all doom and gloom but to deal in reality and hard facts...

How can we be at the bottom of the housing market when these factors are still right in our face and growing as larger issues daily in our country:

1. Banks are still foreclosing, in fact every month is a new record on the books. Last month in the U.S. an 8% increase from the earlier month (the old record) and a 55% increase from last July ? In Florida it was 14% increase ! Directly from Realty Trac:

Florida foreclosure activity in July increased 14 percent from the previous month and 139 percent from July 2007. The state posted the nation’s second highest number of properties with filings — 45,884. On a year-over-year basis, bank repossessions in Florida increased 678 percent, while auction notices were up 180 percent and default notices were up 100 percent.

- These are the ones the bank has taken over there is an even greater number in some type of default. In fact the foreclosure crisis is now not just taking the spec. purchases and second homes but peoples primary homes, even people who can afford to pay are handing in the keys !

Here is the full article: http://www.realtytrac.com/ContentManagement/PressRelease.aspx?ItemID=5041

Some more articles on the foreclosure crisis that I found interesting this past month:

http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=1193993&_blg=1,1193993

http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=1193993&_blg=1,1193993

http://articles.moneycentral.msn.com/Investing/Extra/subprime-debts-new-threat-to-housing.aspx

2. Unemployment is rising every month. We are on the cusp of Double digits ! 9.5 % , almost 500,000 people lost their jobs in June alone....14.7 MILLION out of Work as of June, this leads to more foreclosures, more inventory in the future and how can you buy a home without employment... less buyers !

Here is the latest stats on this wonderful news:  http://www.bls.gov/news.release/empsit.nr0.htm

3. INFLATION/ INTEREST RATES- I put these together because they have a direct affect on each other. We are spending more money than ever in our history, printing more money in the last 2 years than all other years from  Great Depression to 2005 combined, your President Obama will not even release the national budget/debt report, which in his own words you are not ready to see it. By the way not to get on  tangent but this is the first time since 1776 a President has delayed/ withheld this report.

Inflation will be double digits soon. The FED can not keep rates this low for much longer, when rates go up, monthly payments go up. Under current lending guidelines less buyers will qualify for the homes at current pricing.  Plus lets not forget the Truth in Lending Act, when rates change by 1/8 percent the disclosures will have to be sent out again, creating delays and possibly killing deals at the new payments. In my experience rates only go down by 1/8's of a percent when they go up they go up quickly and drastically.

There are other factors but these are the big 3, you get my point. The media is stating this is the bottom because there has been a significant increase in purchases in June and July. Let me ask you something... in any market when is the busiest time for real estate? June and July !

Also, the median sales price is dropping like a rock every month, what does this mean, the sales that are happening are for the low end of the market. I sell 7-12 homes/ condos under 100k every month. In zip code 32819 ( Dr. Phillips) there are currently only 2 homes PENDING from 600-800k, this used to be the normal price range in this sought after area, only 2 pendings !!! 69 active... you do the math :(

Same with zip code 32836 just south of Dr Phillips, only 2 pending in the entire zip code from 600-800k

Journalists are not Realtors, they write stories people will read.... here is a wonderful example of mis-intreprating data...

http://www.msnbc.msn.com/id/32249907/ns/business-real_estate

 

Here is the real data which I provide every month for your review, this data is taken directly from our local MLS and tracks an entire year of actives, pendings, sold, expireds and interest rates ...

http://www.orlrealtor.com/files/marketpulsearchives/MarketPulse709.html

In summary, my position is the same as it was last month, beginning of the year and in 2008- Real Estate Markets have a long time to recover, too many outside factors pushing down on it. I have preached every month, if you are purchasing with a mortgage NOW is the time to buy a home, if you have not owned a home in the last 3 years call me today the $8,000 First time Home buyers Credit is ending 12/1/09. Interest rates will rise. Even with falling prices, rate is sooo more important than price. Waiting to save an additional 10k off a sales price when rates rise is like paying 20k more for the home in the long run.

If buying all cash we watch, research and wait until the Holiday Season , then strike.

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RTR RANT......

Well besides what has been touched on earlier in this newsletter.... HVCC , Truth and lending Act, Unemployment, The media giving the masses incorrect interpretations of the data, Obama withholding our Yearly Budget/ Deficit Report for the first time in our nations history,  The printing and spending of money like never before in history...

What has been keeping me up late at night is our Government the new immigration law trying to get thru Congress...

This is not a Joke..the law the Obama Administration is trying to get passed right now borders on insanity...I have attached a WMV file for you to watch the entire CNN news report, it may or may not get blocked by your email account it is a large file 3 MB

1. Immigrants will get legal status 24 hrs after arrival even if background checks are not completed

2. Anyone deported can come back with complete Amnesty

3. Any immigrant who denounces being a gang member- come on in - amnesty

4.Permanent Temporary Visas- what an oxymoron !

5. U.S. tax payers will pay their tuition. YEP !

6. This one is rich.... No requirement to learn English until year 9 of residency

4.Any illegal immigrant- No back taxes owed ! yep.

5. Not only no back taxes, they qualify for earned income credit from our government

6. The U.S. tax Payers pay for the attorneys for all these cases !

7. In the report it states that border security is not top priority, even with these violent gangs kidnapping our citizens in the border cities (whos members would be able to just walk over say I hate gangs and become a citizen)

8. If you didn't think 1-7 is insanity... in the new immigration bill they are asking to give Mexico money as an incentive to keep the Mexicans in Mexico with funds for education and health care.

 

WTF !!!! We can not even get our own shit together and the Obama Administration wants to open up the border and give these immigrants more benefits than the tax paying citizens? Unemployment is already thru the roof and our entire system is stressed from education to health care. We keep bailing out banks, insurance companies and the GM debacle. When does the U.S. citizen get a bone ? We are taxed on top of our taxes... now this.

The bail out plan that last year I said would be ineffective and more costly than disclosed has done nothing. If you divided the money wasted by tax payers the government could have given every tax payer a check for 80k and still had a couple fo billion left over to fix a road or two. I think that would have jump started our economy !!!!

The health care bill is a joke too, what I have read 90% of the proposed changes will be paid by 2% of our population, how is this going to help our country?

The clunkers for cash program .... now this is just wonderful. This is the next mess watch and see. Our government is using our tax dollars to buy up older gas gusslers and provide financing for new cars to the old owners of these cars. What middle class family owns a car under 3500 bucks? this is for the lower middle class and below.. but they are buying high end cars at 30-40k with these guaranteed government loans of OUR MONEY. The U.S. government in 6 months is going to be in the used car business when they repo all these for non payment. This will be just another debacle you heard it here first.

Next step will be the media reporting that consumer purchases are up and the auto industry is on the road to recovery, yes because we are giving away cheap money so people who cant afford a new car have one. It is like throwing the mob some bread to make them happy. Things cant be that bad, I am driving a new Lexus? insanity

At the current program levels there are 2100 dealership enrolled. that alots to approx 10.4 cars per dealership, they ran out of cash, our government just approved an additional 2 billion in funding. As with everything lately, the project was flawed from the beginning, I have heard reports that the dealerships that have used the program are still waiting for their first checks to arrive, theya re already 30 days late !

Every month I see more signs that our government has lost touch with reality. I love this great country but I do not know how I feel when our own citizens are dying of starvation, our Grandparents are stuck on hold with hot lines to get their Medicare benefits for hours and deal with red tape after red tape, our neighbors are losing their homes and their jobs, to stay healthy it costs you 15k a year in health insurance for an active family, our schools are overcrowded and we have the highest drop out rate int he ENTIRE WORLD,  and every other commercial is for some type of new drug to take and they wip off 87 side effects super fast at the end ?

This is my 2 cents.

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Ron the Realtor accomplishments/announcements:

The new website should be live in the next week. It has so many things that it is taking a little longer than expected. I am reinventing the way you will be able to search and track local real estate. I am so excited to bring this to you and your friends/family. www.RontheRealtor.com is going to be the site you will need for your real estate needs when it goes live.

 

1. Earned 5 star in customer service award 5th year in a row

2. Orlando hot 100 Realtor

3. Ranked in top 50 in the Entire State of Florida for REMAX

4. Ranked in top 1% in the country for sales and transactions

5. Number 1 sales team for REMAX in Orlando 27 month in a row !

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Closing Statement....

I want to first apologize for all the negativity in this newsletter, plus the length of it. I was torn on how to approach this months newsletter. In the end, as always I decided to give it to you straight. The world is messed up right now, I am hoping we will get it straight soon but as you have read in my rant, my hope is fading quickly. Real estate is and always has been a long term investment. This housing bubble burst is the best thing that could happen if you are looking to buy a home.

The downside is that if you are trying to sell your home, we are approaching what could be the worst holiday season of my career. The burst has erased over 4 trillion of our nations wealth and has rippled thru the entire world. Of the properties that do sell almost 50% are foreclosures/distressed homes driving prices down with every sale. I see no end in the near future. I have and always will sell homes, sold 3 last week and will continue thru the holiday season. I am jsut frustrated how much trouble we are experiencing trying to sell great homes that people actually take care of and make their payments to the mortgage companies. This is the portion of the market that is hurt the most.

What we as educated Americans have is the ability to be free thinkers, we can gather the data and make our own decisions based on the research. I strongly believe that if you always prepare for the worst case scenario you can never get hurt in the real event/ decision because it can only get better than the worst case scenario and you have already decided to move forward after those calculations.

There has never been a better time to buy property, the entire State of Florida is on sale. Rates are extremely low and our goverment is handing out 8k for "first time home buyers". If you have any questions regarding the market please feel free to call or emial me.

Every month I have numerous email comments regarding my opinions in this newsletter. I really appreciate them, they are almost all positive, I would like to hear your thoughts. If you ever have an article that you come across that is interesting please forward it to me. I try to back all my facts and opinions with links and articles to further prove my point. We are all in this together. I strive everyday to do the best I can for my clients.

I know that my clients are the most educated and up to date in the entire country. I strive to deliver as much data and facts as possible to you every month. I also jump in with both feet and make my predictions and personal opinions known to all. Unfortunately for the past 2 years I have been dead on with everything I have put in my newsletters, I wish I was wrong on many things .

My team now represents 17 major financial institutions helping them liquidate their "bad assets". If you are thinking of building your real estate investment portfolio please let me know I can place you on the early notification list. These listings receive 8-18 full price and above offers within 24 hrs on the market ! They are amazing deals and a great way to get in far below the curve of the falling market.

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I am ending with this interesting email that was sent by client/friend of mine:

An economics professor at a local college made a statement that he had never failed a single student before,
but had once failed an entire class.

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That class had insisted that Obama's socialism worked and that no one would be poor and no one would be rich, a great equalizer.


The professor then said, "OK,
we will have an experiment in this class on Obama's plan".


All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.


After the first test, the grades were averaged and everyone got a B.
The students who studied hard were upset and the students who studied little were happy.  


As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.  
The second test average was a D!
No one was happy.


When the 3rd test rolled around, the average was an F.

The scores never increased as bickering,
blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.  


All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.


Could not be any simpler than that.

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God Bless our Nations troops overseas and the families they have left behind.