Year-over-year home sales were up in Miami-Dade County in August and median prices fell, opposing the dreary national picture.
By TOLUSE OLORUNNIPA
tolorunnipa@MiamiHerald.com
Since a federal tax break expired June 30, home sales have fallen 20.9 percent in Phoenix, 32.5 percent in Las Vegas, 19.9 percent in San Diego, and even 25 percent in Austin's recession-resistant housing market.
But in Miami-Dade, which continues to battle massive amounts of foreclosures, a bloated inventory of homes and high unemployment, sales have outperformed the national market for the past two months, ignoring the post-tax credit hangover. Since June, Miami-Dade combined sales are flat, according to data from the Florida Association of Realtors.
Miami-Dade's numbers stack up well next to national numbers, an indication that falling prices and international interest in South Florida real estate are sustaining sales.
Nationally, August sales rose slightly from July's 15-year lows, but were still down 19 percent year-over-year and 22.5 percent since June, the National Association of Realtors said.
The federal homebuyer's tax credit expired in April, so most markets saw a bump in sales in May and June, as buyers closed sales before the program's original June 30 deadline.
Miami-Dade sales of existing homes, condos and townhouses increased 31.3 percent in August compared to the same month of 2009, figures released Thursday show.
The picture is not as pretty in Broward County, where year-over-year existing sales slumped 11.6 percent in August for all home types, and sales have slipped 18.7 percent since June.
Comparing South Florida to some of the headline markets in the most troubled states - Nevada, California and Arizona - gives a more nuanced picture of the factors that have distinguished the Miami area from the rest of the country.
"Miami hit its peak in the fourth quarter of 2005, the other markets didn't hit their peaks until the fourth quarter of 2007," said Peter Zalewski, a principal at Bal Harbour-based consultancy Condo Vultures.
"In Miami, the prices have been cut since 2009. If you go to Southern California, you're not going to see those price cuts yet."
As home prices rise nationally, South Florida continues to see its prices slashed, fueling the appetite of bargain-hungry international buyers and local investors.
In August, condo prices fell 28 percent to $104,800 in Miami-Dade, and single-family home prices fell 6 percent to $182,900. In a lending environment where many struggle to obtain loans for the discounted properties, cash-wielding investors have ramped up their activity, propping up sales.
MIAMI VS. LAS VEGAS
Las Vegas, by many measures, is the housing market most similar to South Florida. Its second-home purchasers and retirees, tourism-fueled economy, and federally-protected land boundaries all mirror South Florida, which has a limited supply of land because it's sandwiched between the Atlantic Ocean and the Everglades.
Like Miami, Las Vegas went through a housing boom cycle of giant proportions, as a rush of developers built up the area. When the economy tanked, foreclosures, stalled projects and short sales became the norm.
The region appears to have relied more on the federal tax credit for its housing recovery than South Florida.
Las Vegas existing sales drooped 18.5 percent in July, and 9.7 percent in August compared to those same months last year.
Low prices in Sin City have also sparked investor activity -- a median priced condo costs $68,000 in Las Vegas -- but those investors have not been as aggressive as they have been in Miami. For one, the international investors that have propped up South Florida's market have been far less active in Las Vegas.
Only about 4 percent of the country's international buyers purchase in Nevada, according to a report by the National Association of Realtors. In Florida, which has the nation's largest crop of international home buyers, that figure is 22 percent. And a large chunk of them are buying in the Miami area, said Oliver Ruiz, residential president of the Miami Association of Realtors.
"We continue to see strong demand from international buyers in all price points, including the high-end market," he said in a statement.
"These buyers are willing to outbid competing offers and are 89 percent cash, a factor that automatically expedites their transactions."
MIAMI VS. PHOENIX
Like Florida, Arizona ranks consistently among the top five states for foreclosure activity, in the aftermath of mid-decade exotic mortgage loans and speculator activity.
Home prices doubled in Phoenix between 2002 and 2006, and the ensuing crash was just as extreme, leaving two-thirds of homeowners underwater, according to the real estate firm Zillow.
Like Miami, Phoenix's condo market continues to see prices slashed -- the median was down 33 percent in August to $70,000 -- and investors have shown up to cash in on low prices. All-cash buyers made up 42 percent of Phoenix home sales last month, according to Dataquick, a real estate information firm. But Phoenix's inventory of condos pales in comparison to Miami, where a building boom created more than 20,000 units in five years.
Phoenix has one condo listed for sale for every five houses while Miami-Dade has nearly twice as many condos for sale as single-family homes. The remaining 16,000-unit inventory in Miami has helped push prices down more than 40 percent since 2008.
Investors have scooped these condos up at a fast clip, sometimes buying in bulk, and hoping to capitalize on the rental market in the short term.
In August, Miami-Dade condo sales anchored the rising sales numbers, as 857 condo purchases represented an increase of 51 percent from last August. However, drooping prices couldn't sustain sales in Broward, where August saw median prices fall 14 percent to $73,300. Sales there dropped 7 percent to 818.
MIAMI VS. SAN DIEGO
San Diego was also a leading victim of the housing crash, but home prices have already begun to rebound there, as they have throughout California for the past two years. The median San Diego home sold for $338,000 in August, compared to just $280,000 in January last year, a sign its market may have hit already its nadir.
Bargain hunters in South Florida still have hope for market-bottom prices, as August figures showed prices falling across the board. Median prices for single-family homes fell a further 6 percent to $182,000 in August compared to the same month last year.
Evan Goldman, a local Realtor and member of the Master Brokers Forum, bought a five-bedroom home in Pinecrest in August, after the price was slashed from the mid-$700s to $629,000.
"I really saw prices going down and down, and from my standpoint I felt as if they were bottoming out," he said.
MIAMI VS. AUSTIN
Miami's August sales report even bests cities like Austin, Texas, which is considered one of the country's most stable housing markets. The region dodged the boom-bust cycle and the city has a 7.2 percent unemployment rate, compared to Miami-Dade's 12.7 percent rate.
But in the post-tax credit market, Miami can claim supremacy over Austin in the home sales arena. Austin sales were down 15 percent year-over-year in August, while Miami-Dade sales jumped by a third.
Likewise, Miami-Dade outperformed Portland, Ore., Des Moines, Iowa, Los Angeles, Denver and many other markets in August sales.
Rochelle Oliver, 26, who recently put an offer in on a three-bedroom house in Miami Beach, believes now is a good time to make her first home purchase.
The house was a bargain, but she faces competition.
"Someone else has put an offer on it - higher than my offer," she said. "I'm waiting to hear back. Hopefully their deal doesn't go through."
Read more: http://www.miamiherald.com/2010/09/24/v-fullstory/1839897/active-miami-dade-home-sale-market.html#ixzz10UW3pWXW
Friday, September 24, 2010
Friday, September 17, 2010
4 Real Estate Lessons from a 97-Year-Old - September 17, 2010
More than 7 decades in the business have given him wisdom; he shares a few gems.
By John Roach of SwitchYard Media
Buy a house today if you can, but don't sell one if you don't have to, says George W. Johnson, a 97-year-old real-estate agent who has been working the Seattle market since 1936.
Johnson, who is reluctant to call himself America's oldest real-estate agent — he says he just learned of a 99-year-old broker in Florida — has seen his share of housing booms and busts since he hung his first real-estate shingle 74 years ago.
"I've been through a lot of these ups and downs," he says, remembering the property boom that followed World War II, as well as the deep downturn in the 1970s when Seattle's biggest employer, Boeing, laid off thousands of workers.
Through it all, Johnson says he has learned many enduring lessons. Chief among them: After every housing recession, the market has "gone higher than the one before." You have to have the stomach to hang on through all of the twists and turns, he says.
This market a 'baby' compared to days past
Johnson wasn't always a real-estate guy. He was born to a farming family in South Dakota on Dec. 22, 1912, and moved to Seattle at the height of the Great Depression to attend college and pursue a teaching career. To make ends meet, Johnson juggled three jobs at one time. He delivered milk for a while. "Whatever you could do to get by with, you did it."
Then, in 1936, he started dabbling in real estate. Unemployment hovered around 30%, soup lines stretched around blocks, homelessness was rampant.
"You could have bought the best house in (the Seattle neighborhood of) Ballard for $3,500." Times were tough. The current real-estate market, Johnson says, is "a baby" by comparison.
"In addition to the Depression, we had the drought at the same period, so it was just compounded. You wouldn't believe the things that happened during that period."
Johnson, a natty dresser who drives himself to work every day — including Saturdays – managed to carve out a niche as a service-oriented agent. When the economy turned at the end of World War II, he opened up his own shop in Ballard, north of downtown. He and his sons have run George W. Johnson Realtors ever since, weathering the ups and downs in the market with confidence that profits are there for the making.
"I've lost a lot of money in a lot of things, but I've never lost in real estate," Johnson says. He remembers selling his first house in the 1930s for about $1,500. "It's probably worth $300,000 now."
4 real-estate tips from Johnson
You can't thrive in the real-estate industry for this long without learning some useful lessons along the way. Here are some of Johnson's pearls of wisdom:
Beware one-company towns: Cities dependent on a single company or industry are more vulnerable to jarring downturns if the economy goes south. The Rust Belt's old factory towns have made that abundantly clear.
The Seattle market turned particularly grim in the late 1960s and early '70s when Boeing, the aerospace giant, laid off more than 60,000 people in the Seattle area. "Boeing was about the only major company we had other than (the University of Washington)," he recalls. "Now we've got a much broader base to help out … it is altogether a different proposition."
Johnson counsels homebuyers to look beyond real-estate values and investigate an area's fundamental economy before making a purchase.
Don't get greedy. Johnson blames "plain old greed" for the latest real-estate downturn — people got caught up in the enthusiasm of the moment and banks egged them on with cheap loans.
"Everybody was out to buy a house, raise the price, double it and make a quick buck," he says, shaking his head. "People signed up for stuff that they knew they shouldn't have and they couldn't pay (for) and of course the banks helped them."
Johnson is old-school in that way. At the heart of his real-estate philosophy is his fundamental belief in personal responsibility. "You've got to be able to hang onto a house until conditions are such that you can make a little money," he says, emphasizing that each and every potential homebuyer should make an honest assessment of his or her financial potential and should be wary of offers that seem too good to be true.
"People aren't as dumb as the media is making them out to be. They knew what they were getting into," he says.
But he is compassionate for those who have run into honest trouble. "It's tough on people who lost their jobs and are now losing their homes and that type of thing. It always is," he says.
Their pain, however, is the buyers' gain.
Timing is everything. "In this market, any young person that hasn't bought a house ought to buy one," Johnson says. "A buyers market doesn't come along that often … you just can hardly help but make money on whatever you buy today at the prices they are."
Johnson says rates are only going to go up over the long term, so borrowing will cost more.
If you don't have to sell, hang on. Unfortunately, Johnson expects sellers to continue to suffer, at least for now. Buyers, on the other hand, "know it's a buyers market – they are going to come in with offers below what we've appraised it at just because they know a lot of people have to sell," he says.
Despite the continued housing-market struggles, Johnson is confident that the latest downtrend is largely over. "We are headed up," he says, "but like I said, I think it is going to be slow. It will take a year or two at least."
And as the market heads up, Johnson hopes to be there helping his customers buy and sell homes just as he has for most of his life – out of a small, family office dedicated to service with a smile.
"We've done a good job," he says of his business. "We've been careful and honest and thorough and it's been good service, and I think that will always produce, no matter what business you're in."
http://realestate.msn.com/article.aspx?cp-documentid=25369084>1=35006
By John Roach of SwitchYard Media
Buy a house today if you can, but don't sell one if you don't have to, says George W. Johnson, a 97-year-old real-estate agent who has been working the Seattle market since 1936.
Johnson, who is reluctant to call himself America's oldest real-estate agent — he says he just learned of a 99-year-old broker in Florida — has seen his share of housing booms and busts since he hung his first real-estate shingle 74 years ago.
"I've been through a lot of these ups and downs," he says, remembering the property boom that followed World War II, as well as the deep downturn in the 1970s when Seattle's biggest employer, Boeing, laid off thousands of workers.
Through it all, Johnson says he has learned many enduring lessons. Chief among them: After every housing recession, the market has "gone higher than the one before." You have to have the stomach to hang on through all of the twists and turns, he says.
This market a 'baby' compared to days past
Johnson wasn't always a real-estate guy. He was born to a farming family in South Dakota on Dec. 22, 1912, and moved to Seattle at the height of the Great Depression to attend college and pursue a teaching career. To make ends meet, Johnson juggled three jobs at one time. He delivered milk for a while. "Whatever you could do to get by with, you did it."
Then, in 1936, he started dabbling in real estate. Unemployment hovered around 30%, soup lines stretched around blocks, homelessness was rampant.
"You could have bought the best house in (the Seattle neighborhood of) Ballard for $3,500." Times were tough. The current real-estate market, Johnson says, is "a baby" by comparison.
"In addition to the Depression, we had the drought at the same period, so it was just compounded. You wouldn't believe the things that happened during that period."
Johnson, a natty dresser who drives himself to work every day — including Saturdays – managed to carve out a niche as a service-oriented agent. When the economy turned at the end of World War II, he opened up his own shop in Ballard, north of downtown. He and his sons have run George W. Johnson Realtors ever since, weathering the ups and downs in the market with confidence that profits are there for the making.
"I've lost a lot of money in a lot of things, but I've never lost in real estate," Johnson says. He remembers selling his first house in the 1930s for about $1,500. "It's probably worth $300,000 now."
4 real-estate tips from Johnson
You can't thrive in the real-estate industry for this long without learning some useful lessons along the way. Here are some of Johnson's pearls of wisdom:
Beware one-company towns: Cities dependent on a single company or industry are more vulnerable to jarring downturns if the economy goes south. The Rust Belt's old factory towns have made that abundantly clear.
The Seattle market turned particularly grim in the late 1960s and early '70s when Boeing, the aerospace giant, laid off more than 60,000 people in the Seattle area. "Boeing was about the only major company we had other than (the University of Washington)," he recalls. "Now we've got a much broader base to help out … it is altogether a different proposition."
Johnson counsels homebuyers to look beyond real-estate values and investigate an area's fundamental economy before making a purchase.
Don't get greedy. Johnson blames "plain old greed" for the latest real-estate downturn — people got caught up in the enthusiasm of the moment and banks egged them on with cheap loans.
"Everybody was out to buy a house, raise the price, double it and make a quick buck," he says, shaking his head. "People signed up for stuff that they knew they shouldn't have and they couldn't pay (for) and of course the banks helped them."
Johnson is old-school in that way. At the heart of his real-estate philosophy is his fundamental belief in personal responsibility. "You've got to be able to hang onto a house until conditions are such that you can make a little money," he says, emphasizing that each and every potential homebuyer should make an honest assessment of his or her financial potential and should be wary of offers that seem too good to be true.
"People aren't as dumb as the media is making them out to be. They knew what they were getting into," he says.
But he is compassionate for those who have run into honest trouble. "It's tough on people who lost their jobs and are now losing their homes and that type of thing. It always is," he says.
Their pain, however, is the buyers' gain.
Timing is everything. "In this market, any young person that hasn't bought a house ought to buy one," Johnson says. "A buyers market doesn't come along that often … you just can hardly help but make money on whatever you buy today at the prices they are."
Johnson says rates are only going to go up over the long term, so borrowing will cost more.
If you don't have to sell, hang on. Unfortunately, Johnson expects sellers to continue to suffer, at least for now. Buyers, on the other hand, "know it's a buyers market – they are going to come in with offers below what we've appraised it at just because they know a lot of people have to sell," he says.
Despite the continued housing-market struggles, Johnson is confident that the latest downtrend is largely over. "We are headed up," he says, "but like I said, I think it is going to be slow. It will take a year or two at least."
And as the market heads up, Johnson hopes to be there helping his customers buy and sell homes just as he has for most of his life – out of a small, family office dedicated to service with a smile.
"We've done a good job," he says of his business. "We've been careful and honest and thorough and it's been good service, and I think that will always produce, no matter what business you're in."
http://realestate.msn.com/article.aspx?cp-documentid=25369084>1=35006
Wednesday, September 15, 2010
Gov't: Banks should share Fannie, Freddie costs - September 15, 2010
By ALAN ZIBEL
AP Real Estate Writer
WASHINGTON -- The nation's largest banks have an obligation to pay some of the cost for bailing out mortgage buyers Fannie Mae and Freddie Mac because they sold them bad mortgages, a government regulator said Wednesday.
Edward DeMarco, the acting director for the Federal Housing Finance Agency, said the banks this summer have refused to take back $11 billion in bad loans sold to the two government-controlled companies, in written testimony submitted for a House subcommittee hearing Wednesday. A third of those requests have been outstanding for at least three months.
DeMarco said the banks have a legal obligation to buy back the loans and called the delays "a significant concern." He said the government may take new steps to force those buybacks if "discussions do not yield reasonable outcomes soon."
In an interview with reporters after the hearing, DeMarco declined to give further details on what the government might do next. He said only that "we're looking for contractual obligations to be fulfilled."
Fannie and Freddie buy mortgages and package them into securities with a guarantee against default.
The two mortgage giants nearly collapsed two years ago when the housing market went bust. The government stepped in to rescue them and it has cost taxpayers about $148 billion so far. The rescue is on track to be the most expensive piece of stabilizing the financial system.
Fannie and Freddie have a legal right to return bad loans, especially if they later discover fraudulent statements on applications. Any money they recover offsets their losses.
The amount in question is a small fraction of the total government rescue, said Ed Mills, financial policy analyst at FBR Capital Markets.
Still, lenders say Fannie and Freddie are trying to return too many loans. And in some cases, they are pushing back loans where it's not clear fraud was committed, the lenders say.
Mortgage industry consultant Brian Chappelle said the requests often apply to loans that met the mortgage buyers' guidelines at the time.
"The industry believes that the pendulum has swung far beyond what is reasonable," he said. As a result, he said, lenders are being extremely cautious about making new loans.
Wall Street has worried that the costs of bailing out Fannie and Freddie could get pushed back on big banks. Fitch Ratings said in a report last month that the four largest U.S. banks could book losses of up to $42 billion if Fannie Mae and Freddie Mac force them to take back troubled mortgages they made. It also estimated that JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. could record $17 billion in losses if they repurchase a quarter of the mortgage giants' seriously delinquent loans.
The leading Democrat on the panel, a House Financial Services subcommittee, indicated the banks bear some responsibility.
"We must begin to think about approaches for recouping taxpayers' money in the long run," said Rep. Paul Kanjorski. "We found a way to pay for the savings and loan crisis, and we can survey find a way to recover the costs associated with this crisis."
A bigger headache for lawmakers is figuring out what to do with Fannie and Freddie in the future.
The Obama administration is working on a plan to restructure the mortgage market and make sure home loans are affordable. Officials don't plan to release details until next year. But Michael Barr, an assistant Treasury secretary, told the panel Wednesday that Fannie and Freddie "will not exist in the same form as they did in the past."
Sorting out the future of housing finance has been a divisive issue on Capitol Hill. And it could grow even more contentious if Republicans take control of one or both houses of Congress.
Republicans have seized on the administration's management of Fannie and Freddie to illustrate Democrats' push for broadening the reach of the federal government. They say loans acquired by Fannie and Freddie since the September 2008 takeover have put taxpayers at risk.
"It's time for the government to get out of that business," said Rep. Spencer Bachus, the top Republican on the House Financial Services Committee.
But Democrats and regulators say the loans acquired by Fannie and Freddie before their takeover represent the overwhelming majority of the companies' losses. New loans acquired since then have been performing well, they note.
"There is no urgency," to reform the two companies, said Rep. Barney Frank, the committee's chairman. "The pattern of abuse they had engaged in has been changed...Fannie and Freddie are behaving differently and are causing far less problems."
Read more: http://www.miamiherald.com/2010/09/15/1825791/regulator-says-banks-slow-to-buy.html#ixzz0zdspZU9I
AP Real Estate Writer
WASHINGTON -- The nation's largest banks have an obligation to pay some of the cost for bailing out mortgage buyers Fannie Mae and Freddie Mac because they sold them bad mortgages, a government regulator said Wednesday.
Edward DeMarco, the acting director for the Federal Housing Finance Agency, said the banks this summer have refused to take back $11 billion in bad loans sold to the two government-controlled companies, in written testimony submitted for a House subcommittee hearing Wednesday. A third of those requests have been outstanding for at least three months.
DeMarco said the banks have a legal obligation to buy back the loans and called the delays "a significant concern." He said the government may take new steps to force those buybacks if "discussions do not yield reasonable outcomes soon."
In an interview with reporters after the hearing, DeMarco declined to give further details on what the government might do next. He said only that "we're looking for contractual obligations to be fulfilled."
Fannie and Freddie buy mortgages and package them into securities with a guarantee against default.
The two mortgage giants nearly collapsed two years ago when the housing market went bust. The government stepped in to rescue them and it has cost taxpayers about $148 billion so far. The rescue is on track to be the most expensive piece of stabilizing the financial system.
Fannie and Freddie have a legal right to return bad loans, especially if they later discover fraudulent statements on applications. Any money they recover offsets their losses.
The amount in question is a small fraction of the total government rescue, said Ed Mills, financial policy analyst at FBR Capital Markets.
Still, lenders say Fannie and Freddie are trying to return too many loans. And in some cases, they are pushing back loans where it's not clear fraud was committed, the lenders say.
Mortgage industry consultant Brian Chappelle said the requests often apply to loans that met the mortgage buyers' guidelines at the time.
"The industry believes that the pendulum has swung far beyond what is reasonable," he said. As a result, he said, lenders are being extremely cautious about making new loans.
Wall Street has worried that the costs of bailing out Fannie and Freddie could get pushed back on big banks. Fitch Ratings said in a report last month that the four largest U.S. banks could book losses of up to $42 billion if Fannie Mae and Freddie Mac force them to take back troubled mortgages they made. It also estimated that JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. could record $17 billion in losses if they repurchase a quarter of the mortgage giants' seriously delinquent loans.
The leading Democrat on the panel, a House Financial Services subcommittee, indicated the banks bear some responsibility.
"We must begin to think about approaches for recouping taxpayers' money in the long run," said Rep. Paul Kanjorski. "We found a way to pay for the savings and loan crisis, and we can survey find a way to recover the costs associated with this crisis."
A bigger headache for lawmakers is figuring out what to do with Fannie and Freddie in the future.
The Obama administration is working on a plan to restructure the mortgage market and make sure home loans are affordable. Officials don't plan to release details until next year. But Michael Barr, an assistant Treasury secretary, told the panel Wednesday that Fannie and Freddie "will not exist in the same form as they did in the past."
Sorting out the future of housing finance has been a divisive issue on Capitol Hill. And it could grow even more contentious if Republicans take control of one or both houses of Congress.
Republicans have seized on the administration's management of Fannie and Freddie to illustrate Democrats' push for broadening the reach of the federal government. They say loans acquired by Fannie and Freddie since the September 2008 takeover have put taxpayers at risk.
"It's time for the government to get out of that business," said Rep. Spencer Bachus, the top Republican on the House Financial Services Committee.
But Democrats and regulators say the loans acquired by Fannie and Freddie before their takeover represent the overwhelming majority of the companies' losses. New loans acquired since then have been performing well, they note.
"There is no urgency," to reform the two companies, said Rep. Barney Frank, the committee's chairman. "The pattern of abuse they had engaged in has been changed...Fannie and Freddie are behaving differently and are causing far less problems."
Read more: http://www.miamiherald.com/2010/09/15/1825791/regulator-says-banks-slow-to-buy.html#ixzz0zdspZU9I
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