Orlando Real Estate

The largest indication that the region’s and the state’s mortgage despair is far from over is the recent spike in the number of property owners defaulting on their home loans. In the seven counties surrounding Orlando, the number of monthly loan defaults recorded in court has jumped from 611 in January to 3,181 in August. Statewide, monthly loan defaults increased from 2,919 in January to 18,676 in August. According to Mortgage Bankers Association data, in Florida, one in every 33 homeowners with an adjustable-rate loan was in foreclosure as of June, compared with less than one in every 100 homeowners with a fixed-rate loan. Florida buyers who used sub prime loans to finance their purchase have been 10 times more likely to lose their property than homeowners with conventional-rate loans, according to MBA data. Even some homeowners who built up some equity are losing their dwellings because they took out second mortgages to pay such things as credit-card debt buy new toys and finance things that were once considered out of reach. Whatever the reason for falling behind, a homeowner who misses three monthly payments faces added bills that include lender’s fees, court costs and other expenses. The average $1500 monthly payment once missed will increase and compound monthly. By the third month as much as $5500 depending upon applicable surcharges, late fees and interest. Most homeowners do not seek financial assistance until it is too late. Options exist and lenders are readily available but, if notified too late they are more than likely to not comply.

Nearly twice as many people face losing their homes in Central Florida this year compared with 2006 mostly due to the high volume of investors that purchased property and adjustable rate mortgages. The hardest hit county in the area is Osceola, with more than triple the number of defaults compared with 2006. All other counties in the Central Florida region have more than doubled. Communities with widely divergent income are affected and the aspects of the communities also vary. The ZIP codes most-affected range from Taft and south Poinciana, to Windermere and Davenport. Public auctions are becoming more popular as Single-family homes Dominate as 9 out of every 10 homes are up for bid. You may wonder what is going on with condominiums well they are running a distant second, with about one in every 20 defaults comparatively. Experts say the blame lies on builders for overbuilding, investors trying to make a quick dollar, a flood of amateur real estate agents ill advising buyers, buyers over extending themselves, faulty loan practices, and too many resort-home subdivisions. Now, with home prices dropping, many first-time owners have no equity with which to refinance their mortgages, and investors who had hoped for a quick and lucrative resale cannot sell for what they must repay. More than 12,000 homeowners in a seven-county area throughout Central Florida have started the foreclosure process by getting behind on their payments and going into default. This is up by more than 85% compared to the year prior.

What is a Short Sale?

A short sale is an alternative to foreclosure. If you are a homeowner and you can no longer afford to make your mortgage payment this may be the alternative for you. A short sale occurs when the lender agrees to accept a payment that is less than the mortgage balance. Not all lenders will accept short sales or discounted payoffs. You must be able to qualify for a lender to agree to a short sale on your property. Things you need to do if you are a distressed owner and would like your lender to consider a short sale on your property.

Items Lenders Typically Require to Consider a Short Sale

Letter of Authorization

Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a mitigation company, real estate agent, closing agent, title company or lawyer, the lender will cooperate with your representative by providing the with written permission to talk with those specific interested parties about your loan. The letter should include the following:

Date, OwnerName, Property Address, Loan Reference Number and Your Agents name and contact information

Preliminary HUD

This is an preliminary (estimated) closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions and mitigation fees, if any. The mitigation agent, closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees.

Hardship Letter

This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or had a life altering event. This letter should describe in detail the events that have caused you to become delinquent with your mortgage payments.

Proof of Income and Assets

Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders require assurance that you cannot pay back any of the debt prior to accepting short sale terms. Bank StatementsThe lender is going to want to see several months worth of bank statements. They only want to accept short sales if the debtor is unable to pay the loan.

Comparative Market Analysis

A real estate agent can provide you with documentation that substantiates the price you need to sell your home for. The lenders want to understand recent sales in the area for homes that are comparable to yours.

The lender is going to want an extremely comprehensive package that details the purpose of accepting a short sale package. Timing is extremely important. You may want to consult your lawyer or accountant to ensure this is the best route for you.

According to a new study by SMR Research Corp, specializing in mortgage and home equity loan industry research, the housing market may have hit bottom, setting the stage for a mild housing recovery to begin prior to year-end 2008. The market’s recovery is likely to be gradual, rather than returning to the strong growth seen from 2002 to mid-2006, with house prices merely firming or increasing slightly, the firm said. An SMR study was among the first to declare (in 2002) that a housing price bubble existed, defined as prices rising faster than consumer incomes. In a 2004 study, SMR forecast that a “perfect storm” in credit quality would cause an explosion in foreclosures within two years. “Our prior forecasts were accurate but widely disbelieved when issued,” says SMR President Stuart A. Feldstein. “We similarly expect a skeptical reaction now to a recovery forecast, which is not the common view. But the numbers are what they are.” The new recovery forecast was published within SMR’s annual spring study. “Homes are now affordable again,” Feldstein says. “Consumer psychology is the biggest remaining hurdle to recovery.”

Florida’s housing sector continues to face mortgage turmoil in February. Sales of existing single-family homes totaled 8,310 in the past month while 11,132 homes sold in February 2007 statewide. This is a decrease of 25 percent in the year-to-year comparison, according to the Florida Association of Realtors® (FAR).The National Association of Realtors® (NAR) forecasts the volume of existing-home sales is expected to hold steady through late spring, with a gradual recovery during the second half of the year as the mortgage situation improves in high-cost areas.  The median sales price for existing single-family homes in Florida last month was $198,900; a year ago, it was $237,000, at a 16 percent decrease. The national median sales price for existing single-family homes in January 2008 was $198,700, down 5.1 percent from a year earlier, according to NAR. In comparison California’s statewide median resale’s price was $430,370 in January; in Massachusetts, it was $321,000; in Maryland, it was $286,520; and in New York, it was $240,000.Florida existing condominium sales decreased last month, with a total of 2,765 condos sold statewide compared to 3,375 in February 2007, a decline of 18 percent according to FAR. The statewide median sales price for condos last month was $175,600, down 20 percent from February 2007’s condo median price of $218,900. As reported by NAR the national median existing condo price was $220,400 in January 2008.

Florida existing home sales:  -28% Florida existing condo sales: -30% Florida existing home median price: $208,600 Florida existing condo median price: $190,200Florida consumer confidence: 74 National existing home sales:  -0.4%National existing home median price: $198,700National (Freddie Mac) mortgage rate: 6.13%

The Attorneys’ Title Insurance Fund Inc. finds that Florida’s housing market slowed in 2007 in nearly every county. The sub prime mortgage crisis in August knocked markets down another 10 percent across the state from the already flattened real estate markets in spring 2007. Since then, the state’s housing market is expected to begin to recover during the next several years.Using deed data for more than 30 Florida Counties, The 2008 Fund Real Estate Forecast, commissioned by Florida-based Attorneys’ Title Insurance Fund’s Consumer Education Campaign was created to provide a snapshot of the national economic outlook and 33 county-specific forecasts for 2008 through 2010. 

Another section details how actual 2007 data compared to projections that were made in last year’s Fund 2007 Real Estate Forecast report. Dr. Henry Fishkind, one of Florida’s premier economic consultants stated the following: “Florida is one of the leading states for job creation and outperformed the rest of the country despite the housing market meltdown”.  ‘The state’s population growth also slowed, but is still nearly greater than all of the other Southeastern states put together. Florida has a very large and powerful economy that has gone through a cyclical downshift, but it is still outperforming compared to the rest of the nation.” Due to Florida’s large share of fast-growing industries, such as tourism, healthcare, education and defense manufacturing, the Fund’s 2008 Real Estate Forecast shows that Orlando continues to be the strongest residential real estate market in the state.

However, according to Fishkind, not all markets in Florida mirror Orlando’s resiliency, Miami-Dade is currently going through the worst condominium bust cycle that Florida has seen since 1975.  Additionally, Fort Myers and Cape Coral markets will not begin to absorb the significant excess supply of single-family homes until 2010 as stated in the report. “With Florida’s real estate market, it is important to maintain some perspective as recent reductions in home prices come after a very lofty and unsustainable peak, and prices are still up considerably compared to 30 years ago,” said Fishkind. “Florida has created a tremendous amount of wealth and – despite many of the problems that loose lending practices and subprime mortgages have caused – the state now has the highest level of homeownership ever. The market has some indigestion now, but housing markets will return to normal during the next few years; the damage for some is significant, but in the aggregate, Florida still had some significant economic gains.”

The NAR’s 2007 Profile of Florida Homebuyers and Sellers report describes the characteristics and motivations of recent homebuyers and sellers in Florida to help real estate professionals track the changing demands of consumers in a dynamic market. Here’s a summary of the report’s findings:

Characteristics of homebuyers

• The median age of homebuyers was 43 years old. Among first-time buyers, the median age was 32.
• The 2006 median household income of homebuyers was $67,500 compared to $74,000 among homebuyers nationally.
• Sixty-four percent of homebuyers reported that there were no children under age 18 residing in the home.
• Fifty-nine percent of homebuyers were married couples, 21 percent single females, 12 percent single males, and 6   percent were unmarried couples.
• Eighteen percent of Florida homebuyers reported they were born outside the United States, compared to 9 percent nationally.
• First-time homebuyers accounted for 38 percent of homes purchased in 2007.
• Forty-nine percent of first-time homebuyers were between 25 and 34 years old.
• The median income of first-time homebuyers was $58400 compared to $58,600 among all first-time buyers nationally.
• Sixty-five percent of homebuyers between 18 and 24 purchased a home because of their desire to own a home of their own and establish a household.
• Thirty-eight percent of homebuyers reported using social networking Web sites, such as, MySpace, Facebook, LinkedIn, and Friendster. Among homebuyers   aged 18 to 24, 76 percent reported using social networking sites.
 
Characteristics of homes purchased
 
• Twenty-seven percent of recent homebuyers purchased newly built homes.
• Fifty-eight percent of homes purchased were detached single-family homes.
• The typical homebuyer purchased a home 14 miles from their previous residence.
• The median price of homes purchased was $230,000 compared to $215,000 in the U.S.
• The typical buyer purchased a home that was 1,700 square feet in size.
• Recent homebuyers plan to live in their home a median of 10 years.
 
The home search process

• Twenty-five percent of recent buyers reported that their first step in the home-buying process was looking online for properties for sale. Eighteen percent of first-time buyers and 24 percent of repeat buyers reported their first step was to contact a real estate agent.
• Eighty percent of homebuyers used the Internet to search for homes.
• The typical homebuyer searched for a home for a median 8 weeks and saw a median 10 homes.
• Eighty-four percent of homebuyers used a real estate professional during their home search.
• Among homebuyers, the typical Internet searcher was 40 years old and visited a median 10 homes. The typical homebuyer that did not use the Internet to search for homes was 53 years old and saw a median 5 homes.
• Thirty-seven percent of homebuyers first learned about the home they purchased from a real estate professional; 19 percent first learned about the home they purchased through the Internet.
• Seventy-two percent of buyers viewed the Internet as a very useful tool in their home search.
• Real estate agents were viewed as a very useful information source by 67 percent of buyers, and as a somewhat useful information source by an additional 23 percent of buyers searching for a home.
 
Home buying and real estate professionals • Seventy-one percent of homebuyers purchased their home through a real estate agent or broker.
• Buyers searched for a median of two weeks on their own before contacting an agent.
• A friend, family member, neighbor or relative referred 52 percent of first-time buyers to their agent.
• Ninety-eight percent of buyers ranked honesty and integrity as a “very important” factor when choosing a real estate professional to assist with a home purchase.
• When asked about their agent’s performance on those qualities considered important, 80 percent reported they were “very satisfied” with the honesty and integrity of their agent.
• Sixty-eight percent of recent buyers will definitely use their agent again, and an additional 19 percent will probably use the agent again or recommend to others.
 
Financing the home purchase

• Fifty-nine percent of sellers contacted only one agent before selecting one to help assist in the sale of their home.
• When selecting a real estate professional, 36 percent of sellers received a recommendation from a friend, neighbor or relative.
• The reputation of the agent was the most important factor when choosing a real estate professional for 39 percent of recent sellers.
• Twenty-six percent of sellers used the same agent for their home purchase.
• For 37 percent of sellers, their most important expectation is that the real estate agent will help sell the home within a specific timeframe.
• Eighty-six percent of sellers reported that their home was listed or advertised on the Internet.
• Eighty-two percent of sellers used an agent that provided a broad range of services and managed most aspects of the sales transaction.
• Sixty-two percent of sellers reported they would definitely use the same real estate agent again.
 
For sale by owner (FSBO) • Seventeen percent of sellers sold their home without the assistance of an agent compared with 12 percent of sellers nationally. Among all sellers, 3 percent were FSBO sellers who knew the buyer.
• Eighty percent of FSBO sellers sold a detached single-family home.
• For 19 percent of FSBO sellers, the most difficult task in selling their home was understanding and performing the necessary paperwork to complete the transaction, for 3 percent it was preparing the home for sale, and for 12 percent the most difficult task was getting the price right.

Today is a great day to purchase Orlando real estate … blah blah blah blah…. Read more…