Should you buy a home now or wait?

Here is our answer:

Whether you should be buying a home now, or whether you should be waiting is a very important question that most potential home owners ask themselves.

Unfortunately, there is no easy answer as to whether you should buy now, or wait in case home prices start falling. However, a recent Realty Times article discussed some of the reasons that makes home buying a great investment, regardless of the future market.

The bottom line:

If you are worried that a sellers market will turn into a buyers market, then you need to look at what is happening in that market. There are two key indicators to consider. First, look at job growth - if jobs are growing, and migration into the state is growing, then demand for houses will grow. This increased demand will lead to increased house prices. Second, look at the supply of homes. If there are more homes on the market than buyers, then there is a supply surplus, which will have the effect of bringing house prices down. One easy way to determine what the market might do is to look at the offers, rebates, upgrades, etc. that builders are offering. If the extras are more generous than normal, then there is a good chance a sellers market is turning into a buyers market.

Although it is important to consider what is going to happen in the marketplace - it would not be prudent to make such a large investment without at least considering it - there are a number of good reasons why home buying can make good economical sense regardless of the housing market:

• Homeowners build equity in their homes that can be used as collateral for a home equity loan, or as part of a retirement plan when you finally downgrade into a smaller home.

• Built up home equity can also be used for putting money down toward your next home.

• Prolonged home ownership's brings with it equity growth in the form of debt reduction and general inflation.

• Even if the market starts declining, history tells us that this will only be short-lived, and the market will start increasing again.

• By using your income to pay of your mortgage, your income is in effect working for you. The opposite is true with renting.

• One of the biggest benefits to having a mortgage is that, in most cases, the interest portion of your mortgage payment is tax deductible, which can save you a lot of money every year.

Making the decision to invest in such a way is never going to be easy, but by looking sensibly at the market, and by really considering whether the advantages espoused above apply to your specific situation, you are able to make a more informed and reasoned decision!

When will REO sales finally reach the peak?

NEW YORK – Oct. 19, 2011 – Properties repossessed through foreclosure may not peak until 2013, HousingWire reports, quoting several analysts and recent reports.

Foreclosure sales are expected to reach 1.48 million properties in 2013, according to analysts from Bank of America Merrill Lynch.

However, with the surge, “we do not expect to see anywhere near the downward pressure on home prices that we had back in 2008, since the expected percent changes in liquidation volumes are so much smaller,” the analysts said.

The increase in foreclosures is expected to mostly change from private banks’ portfolios – which nearly half are from now – to the government’s backlog of properties, with an increase in foreclosures forecasted from Fannie Mae, Freddie Mac, and the Department of Housing and Urban Development’s portfolios. Overall, they are expected to liquidate about 595,000 properties in 2013.

To handle the expected surge, the government continues to consider ideas, including proposals of turning some of the foreclosures into rentals, and a plan from the Federal Housing Finance Agency to refinance more underwater borrowers so they’ll be less likely to walk away from their property.

But some analysts are skeptical that a surge in foreclosures will come without an intervention from the government.

“Do they really think that the government under any administration would let 500,000 homes hit the mark and crash prices all over again, six years after the first crash?” Scott Sambucci, chief analyst at Altos Research, told HousingWire.

Source: “REO Sales May Not Peak Until 2013,” HousingWire (Oct. 17, 2011)

© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688

What’s Lurking in the Shadows?

ORLANDO, Fla. – Oct. 18, 2011 – When you drive down the street, you can see a “for sale” sign on nearly every road. The supply of homes may seem overwhelming at times, and we are definitely in a buyers’ market. But in August, the National Association of Realtors (NAR) reported an 8.5-month inventory level, close to the six-month level that historically signals a balanced market. Even so, there’s a general feeling of uneasiness about the market.

The reason for this anxiety, notes Erica Cross, research analyst with the Florida Realtors, is likely due to “shadow inventory” – homes placed in foreclosure or owned by lenders, and loans overdue by at least one payment. We feel their looming presence, even though a “for sale” sign hasn’t appeared in the front yard.

But how much shadow inventory is out there? The amount depends on its definition. How delinquent must a property be to include it in shadow inventory – 1 day, 90 days? Is it assumed that any of the delinquencies will improve? Are foreclosure properties included?

With all of these different questions, estimates of shadow inventory in March 2010 ranged from 1.7 million to 7 million, according to NAR. The number of homes in shadow inventory is uncertain; more importantly, so is the timing of their exact release to the market.

Shadow inventory going to market
Let’s imagine two scenarios. First, think of a situation where banks slowly release shadow inventory to the market. Foreclosures are currently weighing down home prices, so this trend would continue. But if a balance between those foreclosures coming on the market and those being sold is maintained, market stability will continue. The supply of homes would be restricted.

Now picture a more drastic case. What if banks dumped all of the homes they own on the market all at once? The increase of supply would cause a decline in price, a drop most likely affecting home prices negatively across the board. Since demand cannot respond quickly, the price drop would have a tremendous impact on the market.

In turn, a drop in home prices would have a harmful impact on home equity and consumer confidence, leading to less consumer spending and more of the economic issues we are currently trying to resolve.

Can it be managed?
Banks aren’t the only players in the “disposing of homes” game. Homeowners also control the number of homes in shadow inventory. A homeowner in trouble can decide whether to pay the mortgage, seek mitigation or walk away. Think of it like a bathtub. Currently, the amount of bank-owned homes fills part of the tub. The disposing of homes into the market is like letting the drain open. Homeowners going into foreclosure can add more homes to the shadow inventory – like opening a faucet into the tub. If there is more water (homes) being added by the faucet than there is water (homes) being drained (or sold), the bathtub will fill and overflow. The flooding of the bathtub means that banks can only hold so many homes or they will need to dump homes on the market.

The government affects the supply of shadow inventory through the Home Affordable Modification Program (HAMP). HAMP allows homeowners to modify their mortgage payments to 31 percent of their pre-tax income to make them more affordable. If homeowners meet the HAMP criteria and can reduce the amount of their mortgage payments, they are less likely to default. Stricter eligibility or removal of HAMP would cause more delinquencies and foreclosures. Easier eligibility could prevent delinquencies and foreclosures and lower the shadow inventory count.

What to do

Banks, homeowners and the government can modify their actions to speed up or slow down the amount of inventory added to the current supply. With each player making different moves, the moral of the story is that the timing and number of distressed properties in the market can’t be predicted. We do know it will affect your business, so monitor your local market closely. Communicate with lenders so you know the business decisions they are making, and work with distressed homeowners to help mitigate their debt burdens.

Source: Erica Cross, research analyst, Florida Realtors
© 2011 Florida Realtors®

RealtyTrac anticipates rise in foreclosures - housingwire.com Wednesday, October 12th, 2011, 11:00 pm Data firm RealtyTrac says foreclosure filings year-over-year plummeted 34% in the third quarter. However, the CEO said the market may be a bottom, with signs that activity will likely... 19 shares  •  Read full story  •  Share

Real Estate In Lake City

North Florida Real Estate:

Not a good day in North Florida for driving around and searching for your dream home.  It hasn't stopped raining since early this morning!  Please be careful out there on the wet and flooded roads!  Many counties in North Florida as well as Georgia are under a Tornado Warning until 1:00 pm.  Keep an eye on the sky! Have a great day and stay dry! =)

Lake City, FL 4BR/2BA Single Family $178,000 4 bedrooms 2 bathrooms 1,804 sqft 10.5 acres lot Built in 1997 view detailed listing

Madison, FL 4BR/3BA Single Family $500,000 4 bedrooms 3 bathrooms 2,764 sqft 56.28 acres lot Built in 1996 view detailed listing

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