Joe Knows Mortgages

 Brevard County Mortgage and Real Estate Market Data For January 2010 

       Welcome to the first market data report for Brevard County Real Estate of 2010.  While 2009 turned out to be a good year for both the reduction in inventory, and sales of existing inventory, it also proved to be the year of lending changes, and bottoming out prices.  With 2009 in the distant past, we now get our first glimpse into the new decade for 2010. 

        Not too surprising, the vast majority of sales were under $200,000 with 76% of all residential transaction selling between $0 and $199,999.  This trend has been consistent over the past year as the first time homebuyers are greatly incentivized to come in and purchase.  However, we did see an increase in the average price sold of homes to $160,079 in January 2010 versus $148,474 in January 2009.  This data could be telling us that we have hit bottom, and are going up. 

        The biggest surprise for January is the sheer number of cash transactions that are taking place.  This January 2010 we had 252 cash Transaction which accounted for 52% of the market.  Again, Real Estate has historically been a decent investment, and with so few places to put your money right now, buyers are choosing to use their cash instead of financing.  When the cash on the sidelines starts coming into the game at this pace, that is a sign that we have hit bottom. 

        Whether or not the Brevard County market has hit its bottom or not, one thing is certain: it is an outstanding time to buy real estate.  If you are a first time homebuyer, the government is still offering the $8000 tax credit, however, there is an end date, so you better act soon to find your home and claim your government incentive.  Also, we know that the federal government will stop their Mortgage Backed Security purchase program which will almost instantly add to the increase of interest rates.  So, if you are on the fence, or if you know someone who is thinking about buying, now is the time to act.  If you have any questions, please contact me.

Let me make a statement, and I hope you truly digest what I am about to say: the interest rates on mortgages here in Brevard County, Florida are about 1/8% off of their lowest levels in history.  That means that if you qualify for a mortgage, you could potentially get a better rate on your loan than just about anyone in history.  With interest rates and home prices as low as they are, and with the first time home buyer tax credit extended into 2010, people should be lining up to buy homes.  However, these rates have only one way to go, and we are headed there soon.

One of the biggest factors in our low rates right now is not the Fed’s decision to keep the overnight rate as low as it is, rather it is from their decision to continue to purchase mortgage backed securities in the many Billions of dollars per week.  When this purchase program ends, the demand for Mortgage Backed Securities will be less, therefore the price will decrease, and the yield (or interest rate) will increase. 

Another factor that is keeping rates low, has been the low threat of inflation.  While inflation is not happening right now, there are many concerns of inflation coming once the economy starts to improve.  We are already seeing signs of inflation as the Core CPI (Consumer Price Index) came in higher than expected, and a little higher than this time last year. It is inevitable that when you dump as much into the economy as we have, and when the cost of money is as low as it is that we will see inflation.  In inflationary times, bonds are not as attractive because they become devalued. 

So, with Inflation around the corner, and the Fed finishing their Mortgage Backed security purchasing program coming to an end in 2010, interest rates are going to increase.  The increase in interest rates will affect buyer’s purchasing power, as well as their cost of money.  I have said it before, and I will say it again: Now is the time to buy!  Rates are low, but rising; home prices are down, but will go up; sellers are generous, but they will be greedy.  Please take advantage of this opportunity, before it goes away. If you are currently renting, talk to a professional to see if you can buy; if you know someone who is renting, encourage them to see if they can buy.

Is the Market Changing?

Brevard County real estate sales continue to thrive.  New listings are down, sales are up, and interest rates are still at historically low levels.  With sales up almost 20% year over year, and inventory down about the same, it seems as though the market is moving at a fairly decent pace.  So ask the question: is the market changing?

Sales continue to show strong numbers, and inventory is decreasing.  With 79% of the sales being under $200,000, buyers are still looking for the bargains.  These “bargains” are going fast, as 37% of September sales sold in less than 30 days.  That means that if the price is right, the house will sell, fast!  I do not think we are in a sellers market, however, in the lower price points, it is starting to feel that way.

With 60% of homes being financed in the Brevard County area, buyers are still taking advantage of the historically low interest rates.  With the majority of the financing being done through FHA and VA loans, many are enjoying the benefits of these government insured and guaranteed loans.  With the $8000 First time Home Buyers credit still being offered, first time homebuyers are rushing to the market to find their dream home, however, the deadline is fast approaching.

All in all September’s Brevard County mortgage and market data proved to be in line with the theme that the market is improving and changing.  Sales are up, inventory is down, rates are still low, and with incentives to purchase for first time homebuyers, it is an amazing time to purchase real estate!  So, make sure that you speak with a mortgage professional to get an idea of you purchasing power and financing options, and then go out there and get yourself a deal before the market has “changed”!

First Time Homebuyers…The Clock is ticking…

Uncle Sam wants you to buy a house!  If you are a first time homebuyer, he is even willing to give you an $8000 tax credit to do so.  Time is ticking away…this deal only lasts through November of 2009.  With rates still low, many properties to choose from that are aggressively priced, it really is the time to take advantage of the deals and get $8000 from Uncle Sam.

As I have outlined before, the program is simple, however, if you have any questions, you may want to check with your accountant or CPA.  You can also check on the IRS’s website.  However, here is an outline of the program:

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  • Must be first time homebuyer – That means you haven’t owned a home in the past three years, and your spouse hasn’t either if you’re married.

  • Purchase home before December 1^st 2009

     

  •  File an amended return on your 2008 tax return, or wait to file on your 2009 tax return

     

  •  The credit is for 10% of the purchase price, up to $8000

     

  •  The credit amount starts phasing out if you make more than $75,000 or $150,000 if you’re filing a joint return.

     

  •  Enjoy the benefit of an $8000 tax credit

     

Again, with interest rates at historic lows, homes being aggressively priced, and an $8000 tax credit, now is an outstanding time to be a first time homebuyer!  But don’t forget, this offer does have an expiration date.  To be eligible for this money, you must purchase before December of this year.  So call a Mortgage Professional, get pre-approved, and go out there and find your dream home!

Another Great month For Brevard County Real Estate!

Here is a powerful and positive little fact: sales for single family residences for Brevard County are up over 22% for July of 2009 verses July of 2008.  That is an astounding year over year number.  Additionally, new listings are down slightly over 20% this July verses last July.  So, it looks like sales are up and inventory is down; this is a strong sign that the market is improving, and we are bottomed out.  If we continue on this track, this current real estate “sale” could end.

There are no real surprises in the market data from July against that of June.  Sales continue to show strong numbers, and inventory is decreasing.  With 78% of the sales being under $200,000, buyers are really looking for the bargains.  One thing that we have found is that these “bargins” are going fast, as 36% of July sales sold in less than 30 days.  That means that if the price was right, the house sold fast!

With 66% of homes being financed in the Brevard County area, buyers are still taking advantage of the historically low interest rates.  With the majority of the financing being done through FHA and VA loans, many are enjoying the benefits of these government insured and guaranteed loans.  With the $8000 First time Home Buyers credit still being offered, first time homebuyers are rushing to the market to find their dream home.

All in all July’s Brevard County mortgage and market data proved to be in line with the theme that the market is improving.  Sales are up, inventory is down, rates are still low, and with incentives to purchase for first time homebuyers, it is an amazing time to be purchasing real estate!  So, make sure that you speak with a mortgage professional to get an idea of you purchasing power and financing options, and then go out there and get yourself a deal before the “sale” is over!

The FHA insured loan is a great loan option for many borrowers as it gives home owners a very low down payment option, allows features that conventional loans do not (a conventional loan is any loan that is not a government loan), and has historically very low interest rates.  Currently the FHA will allow a loan amount up to $291,250 for a single family residence in Brevard County, Fl.  Right now this limit is good through the calendar year 2009, however, there is talks of extending the limits into 2010.

Just to recap, here is a list of some features of the FHA loan:

Source of Down Payment Flexibility  - Your required down payment can come as a gift from many different sources, as well as approved community assistance programs.

Great Rates and Low Monthly Mortgage Insurance  - While the rates change on a regular basis, they are currently very low, and do not much differ from conventional financing.  Depending on credit score, FHA rates could actually be lower than conventional financing.

Low Down payment option – Minimum of 3.5% down payment

Seller Paid Closing costs - seller can pay up to 6% of the purchase price towards closing costs and prepaids to help you purchase the home with very little out of pocket expenses.

No penalty for lower credit scores - you are not penalized in the rate for having a lower qualifying score, however, your credit score must be over 620 as most lenders have set that as the minimum allowable score.

Rehabilitation loan option - there is even an FHA loan that will allow you to finance repair or updating into the loan.

The FHA insured loan remains a great option for so many different situations, however,it may not be right for every borrower.  This is why it is imperative to contact a mortgage professional to help you find the product that best fits your situation.  Please feel free to contact me anytime with questions.

Single Family Residence Sales for May 2009 Show Continued Increase

                The Brevard county real estate market continues to improve at a rapid pace.  Looking at the data for May 2009, sales are up 7% over April 2009.  Sales are also up over 18% year to date through May verses last year.  Sales are up, rates are low, and prices are still favorable.  This is a great time to buy a house.

                Even if you think that prices may still drop, the impending increase in interest rates will more than likely outweigh a small decrease in price (check out this article on this subject).  And with sales on the rise, it is only a matter of time before pricing rebounds.

                While most of the single family residences sales in May seem to be below $100,000, 62% of the sales are above $100,000.  The properties below $100,000, in addition to the first time homebuyer credit, still present an excellent opportunity for those first time home buyers.  If you want to buy a house, but are waiting, you may lose $8000.

                Don’t forget, contrary to popular belief, financing is still available.  66% of those homes purchased in May of 2009 were financed.  Rates are still historically very low, and people are closing on homes with financing.  It is always in your best interest to consult a mortgage professional to go over your purchasing power and financing options.

                     Homes are still priced very aggressively, and interest rates are also at historical lows.  If you have the means to do so, or are even thinking about it, you need to speak with a professional to see if you can make it happen.  Not only will we not see these low prices again, we may not see these low interest rates; and if you are a first time homebuyer, or have not owned a property in three years you may be entitled to an $8000 tax credit.  Now go out there and buy a house!

 

Everyone Wants a Lower Price, But What About the Impact of Interest Rates?

When shopping for a home, the natural tendency of any buyer is to want to pay the lowest price possible. It’s important to keep in mind, however, that the sales price is not the only factor that determines what the monthly payment will be. In fact, the impact of higher interest rates can easily nullify any benefit of waiting for a lower price.

Why Should I Rush to Buy?
While you may have heard discussions in the media about the decline of property values here for Brevard County Real Estate, the rate of decline appears to be stabilizing.

That being said, it would not be unreasonable for buyers to want to hold out for an additional decline of 10%, hoping to capture the best possible price. However, as property values have declined in many areas to 2003 levels or lower, waiting longer to pull the trigger could be a mistake. Many markets are reporting that lower property values have been bringing out investors and the result has been multiple offers on many properties. Properties priced correctly are not declining and, in fact, are creating a lot of interest.

Interest Rate Complacency
The problem is that many home buyers have been lulled into a sense of complacency because of extremely low interest rates. Since the Federal Reserve initiated its program of buying mortgage-backed securities, which control the rates people pay for their home loans, rates had been range bound, bouncing between 4.50% to 5.00% for a 30-year fixed-rate loan.  So the interest rates for a Brevard County Mortgage is still low.

But buyers shouldn’t be confused by this. These rates are artificially low! Historically, interest rates have been above 6.00%. And any rate obtained below this number is a great deal, especially on homes with price tags from 2003!

Markets are Unforgiving
The last two weeks of May showed just how unforgiving the markets can be for people who choose to procrastinate. In just five days, interest rates from many lenders increased anywhere from .50% to 1.00% as fixed-income investors demanded more for their money.

For anyone who was waiting for prices to drop even more, a 1.00% increase in interest rate would bring a higher monthly principal and interest payment on a home, even if the price of that same home had fallen an additional 10% in value.

If you or your clients are waiting for prices to fall even lower, be aware that while holding out for a lower price may help them win the battle, they could lose the war in terms of monthly payments and overall affordability. With the Federal Reserve scheduled to end its buying of mortgage-backed securities this year, rates only stand to go higher for those that wait. In fact, interest rates are already on the rise and could go higher from here.

Clock is Ticking on Free Money
If you are planning on purchasing your first home this year, you need to take possession before 12/01/2009 to be eligible for a tax credit of up to $8,000. In a survey conducted in March by Move.com, nearly 50% of home buyers are currently unaware that this free money exists in the marketplace. And since over 50% of all buyers are first-timers in today’s market, this impacts many buyers.

If you have questions about this update, give us a call. I can show you how waiting for the lowest price could really cost you or your clients more in the long run.

All signs point to rising interest rates.  The inflationary fears have started to materialize and have affected the Bond markets.  Over the next few years, Trillions of dollars will be pumped into the economy, and many fear that this will cause hyperinflation.

Because interest rates are determined by the price and yield of Mortgage Backed Securities, when consumer confidence comes back, there will be a flight away from fixed income instruments, and towards equities or stocks.  In other words, money will stop flowing towards bonds, and will start moving towards other items that will more likely beat inflation.

While bonds offer a fixed rate of return and are stable, in times of inflation, your rate of return may not be beating inflation.  When there is less demand, the price of the bond will go down, and the yield will go up; the yield is the interest rate.  Again, this means that interest rates are headed up.

What does this mean?

Rates are still low; however, we know that they are heading up.  If you know ANYONE who is looking to purchase a home or Refinance their existing home, it is time to let them know that they need to act soon.  A rise in interest rates will mean decreased purchasing power and increased costs.  Rates are still relatively low, and prices are still low; it is still a great time to buy a home!

With over 25 agents attending from 10 different offices from all over Brevard County, this event was a wild success.  While giving exposure to the property is the goal, it is also nice to have a time to speak with your professional peers from a myriad of different offices.

For those who attended, thank you for previewing this spectacular property.  Please keep this wonderful home in mind when you have buyers that are looking for the very best. 

For those who did not attend, I hope to see you at next month’s event.  If you did not receive an invite, and would like to attend future events, please contact Joe Harris at joeharris321@gmail.com