Houses, houses everywhere and not one to buy !!!!

Want to know what is really going on in the Orlando real estate market 2 months before mainstream media reports on it?

As always this newsletter is lengthy and even intimidating in its size and scope, I suggest you take the 15 minutes and read it line by line. I promise to give you great return on your time. I value time as the most important resource in life, I do not take yours lightly.

The reports are so conflicting and the data so misinterpreted, it is difficult to know what is really going on. I am here to tell you what is really going on in our local real estate market and more importantly where the market is going.  For the last few years I have been very accurate, the last 2 months in particular are going exactly like I said they would.

First lets get the raw data on the table and then we can talk inteliigently:

Just the Facts

As always, all Orlando housing data is derived from the Orlando Regional Realtors Association (ORRA),

The median sales price for June remained unchanged at $110,000 ( 4.35% off 6/10 median of $115,000)

What has changed and what I expected to change was the median sales price of “normal sales” … 40% price increase from 6/10 from $112,700  to $158,000.

Median for REO $80,310… steady from last months $80,000

Median for short sales $99,000 slightly off of the $102,900 from last month

Normal sales increased in market share to 39.83% of all closing in June ( again no surprise, if anything thought it would be higher)

Closed transactions for June 2,418  (20% less than 6/10)

REO down 39.58% from 6/10

Inventory supply at current sales pace:  4.37 months ( has not been this low since 12/05 !)

Inventory continues to shrink and is at 10,559, lowest since 2005…before the real estate boom.

Average days on market…103

List /sales price ratio  95.15%

Interest rate … down from 4.66 in may to 4.56 in June

Condo sales down 36% from june of last year

Like every month I provide you with the best links to all the sales data for the Orlando market…. most important being the Market Pulse , probably the best compiled stats in any real estate market in the country.

Even further detailed reports:

Housing Trends Summary

MSA 8 Year History

Orlando 8 year history

Orlando actives by price

Orlando MSA by County

Orlando recap

Orlando sales by price

Orlando sales by zipcode

Foreclosure News:

 ”An increase in home sales could be prompting banks to foreclose and replenish the market,” said Rick Sharga, vice president of marketing at RealtyTrac.

 Banks had slowed foreclosures, in part because they were worried about a flood of homes hitting the market and depressing prices and also as a result of a scandal involving alleged irregularities in their processing, Sharga said.

 ”It may sound counterintuitive to say that because foreclosures are being delayed, the economic recovery is being delayed, but in fact that is happening.”

 Here are some disturbing numbers I have researched:

2,670,000 homes are at least 60 days late in United States currently

Foreclosure sales down from 73,000 (4/11)  to 68,000 (5/11)

Foreclosure filings up from 163,000 (4/11) to 176,000 (5/11)

The number of homes receiving foreclosure filings in the first six months of 2011 dropped by a quarter over the last half of 2010 and by 29 percent over the same period last year to 1,170,402 homes. One in 111 homes received at least one foreclosure filing in the first six months of this year.

 Second-quarter data also showed a decrease in foreclosure filings, with only 608,235 receiving notices, the lowest since the fourth quarter of 2007

 $304,600,000,000 in mortgage writeoffs in 2010 on foreclosed home !

only $126.7  Billion for all of 2006 and 2007 combined

So far it has been calculated that $319,700,000,000 of first mortgages underwritten in 2006& 2007 have already been written off due to foreclosure.

Equifax states that 2/3 of the current 2.67 million defaulting households are of loans generated 2005-2007, so the number directly above is going to most likely hit a trillion plus in bad debt.

 The time it takes to complete a foreclosure grew this quarter to an average 318 days, up from a revised 298 days in the first quarter and up from 277 days in the second quarter of last year. Foreclosures took longest in New York — 966 days.

 Articles that some of these numbers are generated from :

http://www.dsnews.com/articles/shadow-inventory-and-reos-loom-over-national-recovery-2011-07-05

http://www.dsnews.com/articles/foreclosure-sales-decline-for-second-straight-month-2011-07-11

http://www.reuters.com/article/2011/07/14/us-usa-economy-realtytrac-idUSTRE76D0GN20110714

What does this mean, Rons take …

Short and direct…if you are thinking of selling in the next 6 months or so… DO IT NOW !

Bank of America just settled an 8.5 BILLION suit with the government regarding foreclosure violations and are currently up on 8 charges, well 4, because 4 were just dismissed… for HAMP violations (Home Affordable Modification Program)

The government may go after another 13 Billion in fines.

Why is this important ?…. For last 8 months I have been driving home the robosigning lawsuits and the halt on all foreclosure evictions.  I have said many of times, it was going to have an enormous impact on the nations housing recovery….

All the data above that I have laid out in the just the facts section points to a housing recovery to the general public and 99% of the mainstream journalists… inventory way down, prices going up, lower interest rates, increase in normal sales, decline in foreclosure sales… except for one significant number… 2,677,000 homes 60 days late or more.

Couple this with the estimated 1.5 million homes stalled in re-foreclosures and on the banks desks already foreclosed on… you have unprecedented shadow inventory.

Here I am going to break down each factor and explain “the why”.

The shortgage of inventory is man-made… well government made actually. Drive down any street and you can identify one, two, three… maybe more homes in some level of distress,  there is not a shortage of inventory , there is just a shortage of inventory ready to be marketed… huge difference.

Increase in Normal Sales…. it is the summer, buying season for families. Of course more normal, well maintained homes will be sold. Biggest issue there are not enough normal sales to pick from because most of the proeprties are underwater in the Orlando area, especially communities built after 2002.

Decrease in foreclosure sales…. banks havent been able to foreclose for 8 months, there is nothing to buy…couple this with an 318 day average nationwide per foreclosure, no wonder the banks can not get homes on the market. I have not seen so limited of choices in the REO sector since 2007.

Low interest rates…. this to me does not make much sense, glad it is this way, but like everything else manipulated by the government, it is  against the rules of basic economics and laws of commonsense. Inflation is around the corner due to the Feds consistant and blatant defiance of economics 101 here….guess they are too busy printing money.

Prices going up…. increase in normal sales and decrease in options has caused a feeding frenzy on any homes within marketable price ranges. Summer also causes a run on prices , most sellers that care for their home put their homes on the market during peak buying months of May- July. Nothing new here but the media and the experts are trying to grab onto anything to create a story.

Bottom line if you are looking to sell now…RIGHT now… is the time to do it. The foreclosure machine is ramping up yet again and the competition will stabilize the increasing prices… I do not forsee a price decrease, we already have hit the bottom at many price points and areas at end of 2010.

You will have the best chance of attracting strong qualified buyers for your home in the next 5 weeks. I can not stress this enough, pricing your home correctly is the key to selling in this market.

BUYING?

Catch 22 comes to mind. There are limited options on properties right now, especially under 450k. Interest rates will be going up at some point, they should have already.

The government is looking into lowering the FHA loan limits, while it is unlikely, they are considering it. Here is an article on the subject:

http://www.bradenton.com/2011/07/11/3335627/new-fha-loan-limits-spell-trouble.html

I know alot of lenders in town and I have discussed this with several, one who has lobbyists on the ground at the capital says that he is not expecting this to happen but some “experts” are calculating a reduction in the loan limits across the board would only impact 4.67% of the buyer pool? This is what was concerning was how they came to this number ? It is inaccurate… over 80% of all financed deals are done thru FHA currently. But they are the experts.

As for investment real estate, this drastic uptick in prices in desirable areas due to lack of inventory has caused quite an impact on investing right this minute.

I am always for my clients best interest and right now patience is the key. There are occassional deals out there every week , if we do not act fast they are bid up with multiple offers into unworkable price ranges for my threshholds of success.

Even with the uptick we have so much further to go, it jsut comes down to finding the best buys and then obtaining the winning bid. Rentals are scarce in many areas I specialize in and I forsee a 25-40% increase in values in selected communities I recommend over the next 18-24 months.

The market will continue to increase in inventory as time continues…. I strongly believe that with the last 6 months of inventory shortage the banks will not flood the market and will continue to release at a controlled volume to keep values consistant if not increasing.

 They have been blessed in a way by the foreclosure freeze, it is all on TARP fund dime and the market is starting to establish new 6 month values for appriasals significantly higher than the previous 6 months in many areas…. allowing the market to stablize. This is one of the largest factors in my recovery predictions.

I know the media is saying something else but when have you seen a journalist handle a real estate transaction….they are always 60-90 days behind. Even then they are wrong 80% of the time.

What the future holds in Central Florida Real Estate

First, I want to stress that not all markets are created equal, what is going on in Central Florida is completely different than another state. National averages are just that, national averages… our local median sales price is $110,000, I could not find a home in a stable community for 110,000 I could endorse, it is this low due to the number of 50k and under condos sold every month. The median is always skewed.

You need to entrust the experience and knowledge of a local expert, even within the central florida area there are different sectors influenced by different outside factors. Unless you conduct real estate sales in an area over a long period of time and consistantly , how can you really know what the future holds for a particular area?

Along with what I have stated in the above writings this is where I believe the market is heading and reasons why….

The experts at realtytrac just revised their recovery prediction from 2014-15 to 2016….

Maybe in places like Georgia, Idaho, Mississippi, Montana, etc… but in Florida… no.

We have a lot of shadow inventory but we have a lot of advantages… here is one rarely talked about…. homestead tax exemption. With the current regimes onslaught on the wealthy… especially people making over 250k … there has never been a better time to bury a lot of their cash into a homestead property, which Florida is one of only a handful of states that offers such a tax incentive/ tax shelter.

The deflated prices make luxury real estate very attractive to buyers from the Northern states especially.

Florida also is a state that never sees snow and is a tourist destination of the world.

On and on and on… but besides homestead exemption and all the great qualities in the state there are 2 huge factors looming….

1st… the baby boomer generation has been stalled on their retirements due to the economic collapse, every year we get closer to a recovery is a year closer to Florida property values being driven up by demand. The boomers just need to sell to buy.

2nd… New building starts almost non-existant. This is a huge factor for future pricing… it will continue to limit the supply when demand will be increasing.

Real estate is cyclical…. I witnessed this same issue in 2004/2005. After the 3 hurricanes hit Orange County area the permitting office was slammed with roofing permits, so bad that it pushed new housing permits back up 4-5 months. This caused a backlog in new housing. The perfect storm basically.

This is when subprime was booming so demand was huge… buyers bought up everything, lines and lotteries formed, resales went up 10-25% a quarter.

Look at what is going on now… lowest inventory since December of 2005, lower interest rates than in 2005 and no housing starts. History setting up for a repeat?

We have already witnessed the bottom here in Central Florida on homes priced within the conventional loan limits of 417,000.

I am not saying we are prime for a real estate boom, you need a lending environment we will never see again, but I can safely state without a doubt that we will be in a supply shortage soon, even with the shadow inventory, when we do and demand increases in the area prices have to go up and they will.

I do not believe we will witness a run up on homes priced 250-500k anytime soon, at least 18 months… but we will see an uptick slightly. We will not see a decrease unless interest rates go thru the roof or we experience some sort of terrorist attack at the theme parks or airport. Taking this aside we are prime for a slow and steady recovery.

Homes priced under 250k have already started to see an increase in many areas I sell in, some as high as 12-15% over last 6 months due to multiple offer bidding wars.

Local area townhomes with garages…my favorite investment for future returns and monthly income, have in many areas already experienced 15-30% increase in last year. others have at least remained stable.

where we see the greatest vulnerability as I have stated for last 2 years is in the 500-1.5 million dollar price range. This is where jumbo loans and large cash downpayments are required… the buyer pool is severely limited currently. This is where my clients can obtain the best value. Especially if they can hold off until after summer, softening the sellers resolve and opening them up to lower offers.

I also have relationships with many major lenders for buyers in the medical fields, offering mid 4% interest rates with as little as 15% down on a jumbo loan, unheard of even 8 months ago !

Bottom line…. Central Florida will recover faster than the rest of the nation, just like it went down faster than the rest of the nation.I am excited about what the future holds in my market.

 Rons Top Buys

Every month I provide my readers with what I would consider my top 20 properties in the area I concentrate on, SW Orlando…

I do not have a top 10 for investors for the first time in a long time due to the major shortage of REO active listings.

RON’S TOP 20 BUYS

Call me if you have any interest or questions regarding any of these properties

Rons Rant

Every month this is where I puke out thoughts on paper, not real estate related usually. Mainly to envoke thought, questioning and in some occasions anger. In the end these are jsut my opinions, I do not claim to know everything. Just my thoughts, many of which are controversial. Enjoy, in no particular order…

Lets start with national debt…. if the republicans do not use this as leverage to repeal the biggest threat to our economy…obamacare… they have missed the boat. To raise the debt limit instead of cutting wasteful spending would be a travesty.

What a dispicable move by Obama holding medicare and veteran’s paychecks hostage. How about you forgo paying Acorn or maybe the foreign aid to China or Saudi Arabia ? Maybe agreeing to help Greece was not the best timing Obama? Did Palestine really need all those billions of dollars last month, I think you can send out Grandma’s 800 bucks, especially since she paid into the fund for decades. disgusting tactic period.

The national debt is disturbing to say the least, how it has grown basically overnight… well since Obama put his hand on the bible and took the oath…oh wait the oath was messed up and the bible was not used on the second go around, sorry I forgot about that.

Go to this site and enter your income… you will see what part of the national debt will be yours…

NATIONAL DEBT CALCULATOR

 

Casey Anthony trial…. the most disturbing part of the trial is how it is another example of how our country has lost it’s way… everyone involved is profiting from this debacle except the American taxpayers stuck with the bill for this circus.

One question, why are the parents of Casey not being brought up on purjury charges? They both flat out lied on the stand several times… but a 20 yr old gets 7 days in jail for the middle finger? very odd.

On to another disturbing court room case… the jury in Oklahoma that convicted Jerome Ersland to life in prison should be ashamed of themsselves. For those not aware, this pharmacy clerk shot and client one of two armed gunman who entered his pharmacy threaten to kill everyone… this jury gave him life because after the other gunman fled he went back and put four more rounds into the scumbag to make sure he was no longer a threat, it was caught on security camera

FULL STORY  the man is a hero in my opinion. Life in prison, you kidding me.

I am sickened as the father of 3 young children when I read what happened to  Leibby Kletzky, this is the reason our society is now doomed. We can not even let our children out to play anymore. Growing up I was gone dawn to dusk. Never any worries, free to make mistakes, exercise explore. My 3 kids do not have this luxury. We need castoration and stoning laws in these extreme cases (in that order preferrably) , that will curb some if not all of this… carried out by victims loved ones. You got my vote.

Lets discuss the Fast and Furious mexican gun running debacle. This is so worse than watergate, yet not much is being made of it… border patrol agent Brian Terry was killed, no one died in watergate.

Odd how the head of the ATF brought his own attorney in for his disposition and on July 4. Not using the the agencies attornies. He was going to be the fall guy for Obama…

TIME LINE 

Now a second program unearthed in Florida… this should be grounds for impeachment, Obama attempted to stack the deck against our second ammendment rights, it backfired.

http://www.foxnews.com/politics/2011/07/14/atf-florida-gun-probe-earns-congressional-scrutiny-in-wake-fast-and-furious/

Has anyone seen what is going on in Africa? we send billions in foreign aid to the middle east and our greatest competitors, hell we even funded Brazilian oil companies to do offshore drilling on our coast while banning our own companies… but we haven’t sent any help to the millions dying due to starvation?

I am not really for foreign aid of any kind, I am a strong believer in closing our border and building a wall but when it comes to humanitarian aid of this kind, I am all for it,what is a few tons of rice in the end? Yet we have not done anything to help with this issue… here is an article  about 300 kids left for dead on the main highway out of somalia… disturbing….

http://www.msnbc.msn.com/id/43755732/ns/world_news-africa/

MADE In AMERICA-thank you for sending me the sites after my July 4th post.. thought I would share with everyone…

http://madeinusaforever.com/

https://www.saveourcountryfirst.com/

https://www.saveourcountryfirst.com/

https://www.saveourcountryfirst.com/

Maybe if our elected officials would help or at least get out of the way of small business we can turn this economy around. I can still dream I guess.

Closing Statement:

Thanks for taking the time to read my newsletter.Again, you now possess more knowledge and you are more up to date with the local market than most of the Realtors in the area.

I am always available if you have any questions or interest in real estate. My business is consistantly growing due to the referrals of my past and present clients. Your referrals are always my number one priority, I know your reputation is at stake when you hand over my name and a kind word. I take it very seriously.

Currently I am ranked number 36 out of 15,571 Realtors on my MLS board and number 1 selling team for the highest producing Remax office in  Orlando yet again…. I am only as good as my last sale.

Please forward my newsletter to all your friends and family…. I also invite you to read my past newsletters, I have archived over 3 years of my monthly newsletters and have never tampered with them… you can see for yourself if my predictions are right or wrong regarding the local market and determine if I am the Realtor you can trust for honest and direct advice.

I particularly love my newsletters dealing with the first and second stimulous plan (dead on with my predictions) , the health care bill and of course 11/08 (dead on with my predictions).

Enjoy the last month of summer, I am always here if you need anything.

God Bless our troops and the families they leave behind.

Thank you again for your time, I hope I provided a return on the investment