Market Recap December 12 2011

MARKET RECAP
We tend to view most situations from an optimist's perspective, because optimists are more likely to see solutions that pessimists overlook; therefore, optimists tend to be better problem solvers.
Optimism, we have found, is also usually rewarded. The housing recovery has taken longer than most of us would like, but the market is recovering, and the recovery will likely gain pace as we progress through 2012.
Mortgage delinquencies are one area of continued progress. TransUnion forecasts delinquencies of 60 days or more will peak at 6 percent of all mortgages during the first quarter of 2012, and then fall to 5 percent by year's end. This is actually a continuation of a longer-term trend that has been overlooked: delinquencies this year are expected to fall 7 percent, which follows a 7 percent decline in 2010.
The trend in the National Association of Home Builders/First American Improving Markets Index is also cause for optimism. According to the index, the number of improving housing markets expanded for a fourth-consecutive month, rising 37 percent to 41 in December from 30 in November. The index states that the expansion in both number and geographic diversity of markets is proof that markets continue to grow more heterogeneous; that is, more dependent on local factors than national ones. This is a point we've been making for the past six months.
The news on pricing was less upbeat. CoreLogic reports that house prices dipped nationally month-over-month in October. Year-over-year, prices have declined 3.9 percent, but only 0.5 percent when distressed properties are removed from the equation.
A recent report by Barclays Capital should help ease pricing concerns. According to Barclays, the housing market will be buoyed by improving job growth and by the fact that prices for non-distressed properties are stabilizing without government support. On price stabilization, Barclays housing analyst Stephen Kim writes, “[W]e are amazed at how little attention it [the recovery in non-distressed homes] has been getting from the media and the street.”
We, on the other hand, are less amazed. We've been hammering the point on stabilizing prices for months, but we also know that bad news always sells better than good news.
Speaking of good news, mortgage rates continue to hold steady and near multi-decade lows. We've noticed that the yield on 10-year U.S. Treasury notes has trended lower most of this past week, which has been something of a surprise, given that the economic news, for the most part, has been positive.
Mortgage rates have been holding steady for the past month or so, but we think upward pressure is steadily building – mostly due to an improving economy and job growth (and for a reason we'll explicate below).

Economic Indicator
Release Date and Time
Consensus Estimate
Analysis
Retail Sales(November)
Tues., Dec.13,8:30 am , et
0.3% (Increase)
Important. Consumers continue to spend more than sentiment measures suggest, thus portending higher economic growth.
Business Inventories(November)
Tues., Dec.13,10:00 am, et
0.5% (Increase)
Important. Careful inventory management coupled with incremental sales growth should lead to improved job growth.
Mortgage Applications
Wed., Dec. 14,7:00 am, et
None
Important. Refinance and purchase activity point to rising lending demand.
Import Prices(November)
Wed., Dec. 14,8:30 am , et
1.5% (Increase)
Important. Rising import-price inflation could pressure interest rates.
Producer Price Index(November)
Thurs., Dec. 15,8:30 am , et
All Goods: 0.1% (Increase)Core: 0.2% (Increase)
Important. Rising core prices (less food and energy) point to rising producer-price inflation.
Industrial Production(November)
Thurs., Dec.15,9:15 am , et
0.2% (Increase)
Important. Continued production growth will eventually stimulate lagging consumer sectors.
Consumer Price Index(November)
Fri., Dec. 16,8:30 am , et
All Goods: No ChangeCore: 0.2% (Increase)
Important. Lower gasoline prices have slowed consumer-price inflation.

HARP 2.0 and Supply and Demand
A few weeks ago, we wrote about changes in the Home Affordable Refinance Program, dubbed HARP 2.0. This latest incarnation of HARP will impact the supply-and-demand dynamics in the mortgage market, namely due to the removal of the 125-percent loan-to-value cap.
More borrowers will qualify for mortgage loans; that obviously means there will be more demand for mortgage loans. What's more, demand could increase sooner rather than later, particularly if borrowers who don't need HARP, but want to exploit today's low rates to avoid the possibility of a delay, ratchet up demand.
To be sure, HARP 2.0 will be a good deal for many mortgagors who have been unable to refinance because of diminished home equity. Many of these mortgagors will benefit, even if mortgages rates were to rise a full-percentage point or more.
Now, we're not forecasting a percentage point rise in rates when HARP 2.0 kicks into gear, but more demand does tend to raise costs, including the cost of mortgage financing. This is something borrowers who don't need HARP but who could take advantage of today's rates should think about, because many of them won't benefit if mortgage rates move significantly higher.
Article courtesy of Patti Wilson, Senior Loan Officer, Mutual of Omaha Bank.

Two Real Estate Reports Suggest Florida Rebound

CHICAGO – Nov. 17, 2011 – Two national studies – one from Realtor.com and one from Trulia – suggest that some Florida markets are poised for a real estate rebound.

“This is a positive trend for Florida,” says John Tuccillo, Florida Realtors chief economist. “While Trulia and Realtor.com aren’t completely accurate in home prices and sales – mainly because they base their numbers on only homes listed on their website – it’s useful to look at visitor behavior and note the trends. If Trulia says more visitors are doing a home search in the Miami market, for example, it probably follows that Miami is experiencing an upswing in demand.”
Realtor.com’s Top Ten Turnaround Report

In Realtor.com’s “Top Ten Turnaround Report,” six Florida cities were considered good bets for an upswing in sales. Realtor.com, which is owned by The National Association of Realtors®, says it created a formula to rank a city’s turnaround potential based on recent price appreciation, changes in inventory, median age of inventory, number of Realtor.com searches by visitors and area unemployment.

Realtor.com attributes the Florida cities’ success to year-over-year home price increases, reductions in inventory, lower unemployment rates and, in some cases, an upswing in international buyers.

Realtor.com’s turnaround list includes:

1. Miami: Ranked No. 1 in the report, Miami hit the top based on “a healthy inventory that is only half the size from a year ago,” a lower foreclosure rate than the national average, and an increase in condo sales.
2. Orlando: While No. 2, Realtor.com says Orlando had more home searches than any other city when compared to the total number of listings. It also had a significant drop in the number of foreclosures.
3. Fort Myers-Cape Coral: Median prices in Fort Myers-Cape Coral have increased year-over-year, foreclosures are down, inventory is lower and foreign buyers are attracted to the area’s real estate prices.
4. Phoenix-Mesa, Ariz.
5. Fort Lauderdale: Inventory has decreased and prices have increased, says Realtor.com.
6. Sarasota-Bradenton: About one in 10 foreign buyers look in Sarasota-Bradenton for a home, Realtor.com says. Listing prices have increased and inventory has decreased.
7. Lakeland-Winter Haven: According to Realtor.com, the number of distressed sales has decreased significantly and prices have gone up.
8. Boise City, Idaho
9. Fort Wayne, Ind.
10. Ann Arbor, Mich.

Trulia’s Metro Movers Report

Trulia has debuted a new report that analyzed its home searches.

In one study, Trulia looked at the number of people who searched for housing in a city – including renters – and compared it to the number of city residents looking elsewhere for a home. An area with a high number of inbound searches and a low number of outbound searches, Trulia reasons, suggests an increased demand for housing.

According to the study, the North Port-Bradenton-Sarasota area had six times more searches by inbound people than outbound people, landing it in the list’s No. 1 position, but four other Florida cities also made the top 10 list:
1. North Port-Bradenton-Sarasota
2. Riverside-San Bernardino-Ontario, CA
3. Charleston-North Charleston-Summerville, SC
4. Fort Lauderdale-Pompano Beach-Deerfield Beach
5. Cape Coral-Fort Myers
6. West Palm Beach-Boca Raton-Boynton Beach
7. Fort Worth-Arlington, TX
8. Oxnard-Thousand Oaks-Ventura, CA
9. Las Vegas-Paradise, NV
10. Orlando-Kissimmee-Sanford

Trulia also looked at the Chicago and New York City markets to see where residents wanted to move. Three Florida cities ranked in the top 10 for Chicago residents: Tampa-St. Petersburg-Clearwater (No. 4), Cape Coral-Fort Myers (No. 6) and Orlando-Kissimmee-Sanford (No. 10).

In New York City, five Florida cities made the list: Miami-Miami-Beach-Kendall (No. 2), Orlando-Kissimmee-Sanford (No. 3), West Palm Beach-Boca Raton-Boynton Beach (No. 5), Fort Lauderdale-Pompano Beach-Deerfield Beach (No. 6) and Tampa-St. Petersburg-Clearwater (No. 7).

© 2011 Florida Realtors®

NAR: Gradual recovery for housing and economy in 2012

ANAHEIM, Calif. – Nov. 15, 2011 – Although the housing market struggled to maintain an even footing in 2011, gradual improvement is expected in 2012 and beyond, according to projections at the 2011 Realtors® Conference & Expo.

Lawrence Yun, chief economist of the National Association of Realtors (NAR), said home sales should be stronger. “Tight mortgage credit conditions have been holding back homebuyers all year, and consumer confidence has been shaky recently,” he said. “Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely. This demand could quickly stimulate the market when conditions improve.”

Yun projects growth in Gross Domestic Product to be 1.8 percent this year, then rising moderately at a rate of 2.2 percent in 2012. With job growth of 1.7 to 2.2 million next year, the unemployment rate is expected to decline to 8.7 percent by the second half of 2012. Mortgage interest rates should gradually rise from recent record lows and reach 4.5 percent by the middle of 2012.

“Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year,” Yun said. “Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more homebuyers to take advantage of current opportunities.”

Existing-home sales are forecast to edge up about 1 percent this year, and then rise another 4 to 5 percent in 2012. Based on NAR’s current projection model, existing-home sales would total 4.96 million in 2011.

Housing data
NAR says it is benchmarking its existing-home sales statistics, and it expects total sales to be lowered for recent years. However, it doesn’t expect many changes to previously reported percentage comparisons, median prices or the month’s supply of inventory. NAR expects to publish its improved measurement methodology soon.

“NAR began its normal process for benchmarking sales at the beginning of this year in consultation with government agencies, outside housing economists and academic experts,” NAR said in a release. “There will be no notable change to previous characterizations of the market in terms of sales trends, monthly percentage changes, etc.”

In the 2010 U.S. Census, the government stopped reporting home sales data, which NAR used as a benchmark. As a result, the association had to develop a new independent score to use as a baseline for its calculations. Preliminary data using the new benchmark will “undergo broad review shortly by professional economists and government agencies. After any issues that may surface in the review process are addressed, we will update monthly seasonal adjustment factors and publish revisions.”

Housing forecast
New-home sales are expected to be a record low 302,000 this year, rising to 372,000 in 2012. Housing starts are forecast to rise to 630,000 next year from 583,000 in 2011.

“Although a double-digit growth in new-home sales and housing starts sounds encouraging, the projections remain historically soft relative to long-term underlying demand,” Yun explained.

With falling inventory, the median home price should rise in 2012. “Home prices have yet to show a definitive stabilization pattern in most areas. Still, given an over-correction in prices, there likely will be moderate appreciation in 2012,” Yun said. “Once home prices turn positive on a sustained basis, consumer confidence will rise and help the broader economy to improve,” Yun added.

Richard Peach, senior vice president at the Federal Reserve Board of New York, said the economy is under-performing. “Nearly two-and-a-half years since the end of ‘the great recession,’ the economy continues to operate well below its potential,” he said. “Among the significant structural impediments are the legacy of the housing boom and bust, and fiscal contrition at the state and local level.”

Peach said the current business cycle remains 7 percent below its peak and is longer than other recession cycles since 1953. He added the employment to population ratio is historically low, and there’s been a shift in the distribution of income, with corporate profits up strongly while employment compensation is down.

Peach believes there is a sizeable level of shadow inventory that will result in rising foreclosures. “My idea is to allocate certificates to 2.5 million service members who served in Afghanistan and Iraq that could be used as a downpayment on a foreclosed home in the Fannie or Freddie portfolio,” he said.

© 2011 Florida Realtors®

Market Recap November 14, 2011

Keeping you updated on the market! For the week of November 14, 2011
MARKET RECAP
If we were to survey the landscape to see if people rate the decline in housing prices as either a curse or a blessing, we are sure most would say curse. After all, most homeowners have suffered a loss of equity over the past five years.
However, there is an upside to the decline in home prices, particularly for first-time homebuyers and owners looking to trade up, and that's affordability. According to financial data provider Fiserv, the monthly mortgage payment for a median-priced single-family home is 40 percent cheaper than it was five years ago, falling to $700 from $1,140.
Lower prices are really the only way to remedy a supply glut. Watching an asset's price fall is unpleasant, to be sure, but prices fall only so far and the glut clears, and then prices generally rise.
For example, Miami was one of the most overbuilt metropolitan regions and suffered serious price deflation. But the glut in Miami appears to have cleared, thanks to lower prices stimulating more demand. In the third quarter of 2011, Miami home sales jumped 51 percent from a year ago. What's more, prices are again on the rise: the average sales price in Miami for a single-family home has risen 19 percent year-over-year.
It is more informative to focus on local numbers than it is to focus on national numbers. The National Association of Realtors reports that the national median single-family home price slipped 4.7 percent year-over-year to $169,500 in the third quarter. That said, the NAR's national median price really doesn't mean much to any specific local market.
The bottom line for us is that we've seen enough evidence of markets clearing to suggest more markets will resemble Miami in 2012. Fiserv, though expecting some price weakness over the next few months, expects most major markets to post significant price gains in the second half of 2012.
What will financing rates look like in 2012? We thought mortgage rates would be higher this year than in 2010; that hasn't been the case. The Federal Reserve has plainly stated that it is buying long-term securities in order to hold long-term borrowing rates low. It can be silly to fight the Fed.
Then again, markets can be potent forces. Consider this past week: news that another Mediterranean country, Italy , is close to insolvency did little to move interest rates or mortgage rates. In other words, investors weren't rushing into U.S. Treasury securities. In fact, Treasury rates and mortgage rates held steady for the week.
When the Greek crisis occurred, Treasury rates and mortgage rates dropped perceptibly. The fact mortgage rates hardly moved with the latest crisis suggests markets might be less willing to accept ultra-low rates in exchange for a haven from risk.


Economic Indicator
Release Date and Time
Consensus Estimate
Analysis
Producer Price Index(October)
Tues., Nov. 15,8:30 am, et
All Goods: 0.2% (Decrease)Core: No Change
Important. Underlying producer price inflation is easing but remains at elevated levels.
Retail Sales(October)
Tues., Nov. 15, 8:30 am , et
No Change
Important. The long-term sales trend suggests consumers are more optimistic than confidence measures state.
Mortgage Applications
Wed., Nov. 16,7:00 am, et
None
Important. Purchase activity continues to post steady (and encouraging) gains.
Consumer Price Index(October)
Wed., Nov. 16,8:30 am, et
All Goods: 0.1% (Decrease)Core: No Change
Important. A decrease in CPI will relieve pressure for interest rates to rise.
Home Builder Index(November)
Wed., Nov. 16,10:00 am, et
18 Index
Important. Gains in homebuilder stocks point to growing builder confidence.
Housing Starts(October)
Thurs., Nov 17,8:30 am, et
605,000 (Annualized)
Important. More regions are experiencing a rising level of starts.

Learn from the Past, But Focus on the Future
This is advice we try to pass onto our clients. It's important to learn from the past, but it's just as important to focus on the future.
What we've learned from the past is to avoid an asset whose short-term growth rate has far exceeded its historical average annual growth rate. That's not what we have today with housing. We have an asset class – residential real estate – that has reverted to historical norms and is priced to appreciate going forward.
This is a difficult concept for many people to accept. We naturally anchor to the recent past, but doing so can mislead. In 2006, many people thought home prices could only go up; in 2011, many people think home prices can only go down. What we can learn from the past is that trends don't last forever. Buying assets people are selling, and selling assets people are buying, can be very profitable.
We've been saying for the past year that residential real estate is priced to be profitable. Our belief hasn't changed, which is why we continue to say real estate financed with a mortgage loan will be one of the better performing assets over the next decade.
Courtesy of Patti Wilson, Mutual of Omaha Bank. (239) 357-0739

Market Recap Week of October 17, 2011

MARKET RECAP
We've reported frequently on the encouraging data on home prices. The most recent encouraging data comes courtesy of Zillow, which shows that home prices inched 0.1 percent higher in August, with the average home price moving to $172,600. Zillow's data also show that the national foreclosure rate dropped to 9.2 homes out of every 10,000 homes, down from 10.9 homes out of every 10,000 in 2010.
Unfortunately, the good vibes on pricing and foreclosures were tempered by a warning that foreclosures will accelerate once the controversial robo-signing imbroglio passes. In fact, Zillow believes foreclosure inventory will pressure home prices and that prices won't bottom until 2012 “at the earliest.”
It's possible we could see national average and median home prices fall. Locally, prices could just as easily fall, stagnate, or rise. In fact, a rise might be more in the offing for many local markets. After all, national data is skewed by a few regions – Nevada , Arizona , Central Florida and Central California . Overall, we still see prices firming and rising in many markets, though that trend might not be reflected in national numbers.
As for mortgage rates, we can say categorically that they have been rising nationally and locally since last Friday, thanks in part to an employment report that showed the economy created more jobs in September than most economists had expected. In many markets, rates were up 20 basis points on the 30-year fixed-rate loan. This shouldn't come as a surprise; the yield on the 10-year US Treasury note – the foundation for long-term mortgages – has risen 35 basis-points over the past 10 days.
To be sure, mortgage rates could reverse course and return to the long-term down trend, but there is a real danger to a strategy predicated on returning to the long-term trend in a market that has been trending higher; that is the obvious: the short-term trend might not reverse.
Another danger is supply and demand. Falling mortgage rates do stimulate demand, but if supply isn't rising at an accommodating pace, there is no guarantee that an ultra-low mortgage rate will be filled. Loans, like all good and services, are rationed by price. If you can get a higher price for your product, you get it.
In short, if someone is satisfied with his rate, the best strategy is to ignore the daily vicissitudes and lock. Regret is a tough emotion to overcome, particularly in a market that is showing signs of wanting to move higher.

Economic Indicator
Release Date and Time
Consensus Estimate
Analysis
Industrial Production(September)
Mon., Oct. 17,9:15 am, et
0.2% (Increase)
Important. The rising production trend is encouraging for the economic outlook.
Producer Price Index(September)
Tues., Oct. 18,8:30 am, et
All Goods: 0.4% (Increase)Core: 0.1% (Increase)
Important. Producer prices remain subdued and non-inflationary.
Home Builders Index(October)
Tues., Oct. 18,10:00 am, et
14 Index
Important. Activity remains at multi-decade lows, though some markets are showing increased activity.
Mortgage Applications
Wed., Oct.19,7:00 am, et
None
Important. The uptick in purchase applications could signal improved October home sales.
Consumer Price Index(September)
Wed., Oct.19,8:30 am, et
All Goods: 0.3% (Increase)Core: 0.1% (Increase)
Important. Consumer prices are pushing the Federal Reserve's upper-range target and could turn inflationary.
Housing Starts(September)
Wed., Oct.19,8:30 am, et
590,000 (Annualized)
Important. Starts remain at a three-year depressed level.
Existing Home Sales(September)
Thurs., Oct. 20,10:00 am, et
4.9 Million (Annualized)
Important. After surging in August, sales are expected to pull back to the longer-term trend.

Mortgage Market Debate
It's no secret that a lot of mortgage lending is in government-backed loans. Nationally, Fannie Mae, Freddie Mac, and the FHA back nine in 10 new mortgages. The federal government is looking to pull back and see if more private investors and lenders can be lured into the market.
There are legitimate concerns with a prospective federal pull back. There is the possibility of reduced available credit, thus leading to fewer sales and lower home prices. We've already seen some reduction in volume in higher priced homes when limits on loans backed by Fannie and Freddie declined at the beginning of October.
There is also the concern that sellers will find that fewer potential buyers qualify to purchase their properties. Less liberal down payments and lower loan limits could also hamstring trade-up buyers who want to tap their home equity as a down payment for their new residence.
Here's the conundrum: If we went to return to a more market-driven lending environment, we have to attract private investment, which means rates would have to rise. Private lenders and investors require a greater return than public sources of funds. It's worth noting, though, that many private lenders are flush with money they could put to work. What's more, private lenders and investors will add diversity to the market, which it is currently lacking.
The point is, we can see the mortgage market changing. We can't say whether it will be a net positive in the short term, but we think it raises the uncertainly level enough for borrowers to seriously consider taking advantage of the mortgage market as it is today.

This Mortgage Matters Compliments of Patti Wilson,
Senior Loan Officer Mutual of Omaha Bank.
Email to: patti.wilson@mutualofomahabank.com

Home Listing Prices Rising in Florida

ORLANDO, Fla. – Sept. 26, 2011 – Prices are rising in Florida.

Florida cities have had the largest year-over-year increases in average list prices, according to the latest real estate data from Realtor.com. Based on August data of 2.2 million listings in 146 markets, Florida cities make up nine of the top 10 places for highest year-over-year list price spikes.

Nationwide, the average list price is $320,325, up 2.36 percent year-over-year.

Here are the top 15 cities boasting the highest percentage of year-over-year increases in average list prices.
1. Miami
Average list price: $640,332
Year-over-year increase: 27.4%
2. Fort Myers-Cape Coral, Fla.
Average list price: $443,570
Year-over-year increase: 26.27%
3. Central-Fla. rural service area
Average list price: $405,809
Year-over-year increase: 19.41%
4. Punta Gorda, Fla.
Average list price: $267,066
Year-over-year increase: 16.37%
5. Macon, Ga.
Average list price: $193,520
Year-over-year increase: 15.98%
6. Sarasota-Bradenton, Fla.
Average list price: $466,785
Year-over-year increase: 15.86%
7. Naples, Fla.
Average list price: $713,087
Year-over-year increase: 15.13%
8. West Palm Beach-Boca Raton, Fla.
Average list price: $591,895
Year-over-year increase: 14.68%
9. Ocala, Fla.
Average list price: $193,360
Year-over-year increase: 12.07%
10. Lakeland-Winter Haven, Fla.
Average list price: $181,409
Year-over-year increase: 11.48%
11. Orlando, Fla.
Average list price: $319,419
Year-over-year increase: 10.56%
12. Portland-Vancouver, Ore.-Wash.
Average list price: $314,537
Year-over-year increase: 10.52%
13. Boise City, Idaho
Average list price: $212,588
Year-over-year increase: 10.43%
14. Springfield, Illinois
Average list price: $174,537
Year-over-year increase: 9.12%
15. Shreveport-Bossier City, La.
Average list price: $211,414
Year-over-year increase: 8.34%

Source: Melissa Dittmann Tracey, Realtor® Magazine Daily News
© 2011 Florida Realtors®

Keeping you updated on the market!

For the week of September 19, 2011


MARKET RECAP
The major mortgage servicers are getting their house in order, as foreclosures have accelerated in the past month. RealtyTrac reports that mortgage servicers started foreclosure on more than 78,800 properties in August, a 33-percent increase from July levels.
Most of us were aware that the foreclosure lull was only a temporary reprieve. That said, the growing rate of foreclosures has revived concerns over excessive inventory. The Cato Institute, an economic think thank, estimates an oversupply of three million houses, about a million more than actually demanded.
With so much inventory on the market and more to come, pricing becomes an issue: More supply means lower prices, which, in turn, means more negative equity. Concerning the latter, CoreLogic estimates that nearly 11 million properties, roughly 22.5 percent of all U.S. homes, were worth less than the underlying mortgage in the second quarter of 2011.
The prospect of more price depreciation and more negative equity has increased calls for more government action. Problem is, efforts to date have had only marginal benefits or have had negative unintended consequences: Cato reports that government efforts to revive housing have helped the most expensive markets while actually depressing prices in the cheapest markets.
At this point, it might be best to let the market run its course. We’ve noted in past editions that when prices fall, demand increases, then prices increase. We've seen this economic truism at work to encouraging effect in a few hard-hit markets. The Orlando Regional Realtor Association reports that the median price for homes in its area has increased 15.1 percent year-over-year.
We've also often noted that real estate is local. The national numbers on foreclosures and negative equity can be big and scary, but they also carry no relevance to any one particular market.
Mortgage rates are another matter; they tend to adhere closely to a national average. Rates at the national level dropped a few basis points this past week on most mortgage products.
There are many reasons for the drop in mortgage rates. One of the more interesting is a rumor that the Federal Reserve is contemplating purchasing longer-term Treasury securities (such as the 10-year note) to drive down long-term interest rates, which would help keep mortgage rates low. Because markets are forward looking, it is possible that the market is getting a jump on the Federal Reserve.
We've been in the minority in questioning the economic benefits of ultra-low mortgage rates. Our rationale is that low rates, and the anticipation of even lower rates, are delaying buying and refinancing decisions today. Our rationale isn't unfounded. Richard Fisher, president of the Federal Reserve Bank of Dallas , believes low rates are limiting economic growth because businesses have an incentive to delay borrowing for expansion. They see no reason to act today if interest rates are expected to stay low tomorrow. We see the same effect in housing.

Economic Indicator
Release Date and Time
Consensus Estimate
Analysis

Home Builders Index(September)
Mon., Sept. 19,10:00 am, et
16 Index
Important. A slowdown in existing-home sales is causing more cancellations of new-home contracts.
Housing Starts(August)
Tues., Sept. 20,8:30 am, et
590,000 (Annualized)
Important. Starts remain anemic with mild strength in the multifamily component.
Mortgage Applications
Wed., Sept. 21,7:00 am, et
None
Important. A pick up in purchase applications suggests improving sales for September.
Existing Home Sales(August)
Wed., Sept. 21,10:00 am, et
4.75 Million (Annualized)
Important. Economic uncertainty is slowing sales volume.
Federal Reserve FOMC Meeting Announcement
Wed., Sept. 21,2:15 pm, et
Federal Funds Rate: 0.0% to 0.25%
Important. Markets will be parsing the Fed's transcripts for directions on long-term rates.
FHFA Home Price Index(July)
Thurs., Sept. 22,10:00 am, et
0.5% (Increase)
Important. Despite sluggish summer home sales, prices should continue to improve.

A Novel Solution, But Can It Work?
We like it when people think outside the box. Radar Logic, a data and analytic firm, has sent a proposal to Washington on a loan-restructuring plan we find intriguing.
Mortgage News Daily offers an example of Radar logic's plan in practice: A loan with an original balance of $190,000 has been paid down to $186,000, then goes into default. A foreclosure occurs and a subsequent sale of the REO property nets $99,000. The loss suffered by the lender would be $87,000. Under Radar Logic's plan, a restructuring occurs based on borrower information and the appraised value of the home to produce a new loan of $125,000. The restructuring would result in a loss of $61,000 for the lender, but a 26-percent larger recovery.
So what's the incentive for the lender? The restructured loan would also include an equity participation certificate (EPC). While the homeowner would be granted a portion of the appreciation rights, the lender would hold an equity position through the EPC in anticipation of appreciation of the underlying collateral.
There are a couple obvious risks: 1) Radar Logic's contention that its plan will reduce the perception of over-supply and prices rise fails to materialize; and 2) the borrower defaults on the restructured loan. That said, at least Risk Logic is thinking, and we like that.

Courtesy of Patti Wilson, Senior Loan officer, Mutual of Omaha Bank.
Email to: patti.wilson@mutualofomahabank.com

Check all the current listings for the Sanibel/Captiva Islands here www.SanibelHomeSeeker.com

Market Recap end of August 2011

The woes of homebuilders and anyone dependent on home building continue. The July report on new home sales shows that the annual sales rate has fallen to 298,000 units, hitting a five-month low. The good news is that supply isn't expanding. In fact, only 165,000 homes are in inventory. This is a record low and a 6.6-month supply at the going sales pace.
Homebuilders face a cluster of problems: bargain-priced foreclosures; higher lending standards; and skittish buyers, many of whom have been further put off by the recent stock market sell-off. Mounting concerns of a double-dip recession and rising cancellation rates have only exacerbated homebuilder worries. The chief concern now is that builders could be forced to cut prices, something they've been fighting tooth-and-nail.
Despite the recent spat of bad news, home prices continue to hold their own, and in many instances are moving higher – at least month-over-month. The FHFA home price index for June increased 0.9 percent after posting 0.4 percent and 0.3 percent increases in May and April respectively.
However, does the slump in new and existing home sales portend falling home prices? We remain optimistic that prices will hold. People are understandably wary about big-ticket purchases, like a home, because of slow job growth and stagnating economic activity. But all have a reservation price (a price they will not sell below). Houses (that is, habitable houses) won't be given away, they'll be taken off market if the sales price doesn't exceed the reservation price.
Reservation prices could fall and the monthly price trend could reverse, of course. That said, we think most of the bad news is baked into the system, so we don't think there will be any heavy discounting. In short, we still think a home is a worthwhile investment in today's market.
Mortgages have also been holding a price trend. Bankrate reported that its weekly survey on rates posted another all-time low. It's worth noting, though, that after the survey was released, yields on the 10-year Treasury note spiked 10 basis points, which points to higher mortgage rates in the next survey.
A surfeit of negative news has kept mortgage rates low. This has lead many analysts to opine that ultra-low mortgage rates are the new norm. We think this is a dangerous way of thinking (which we'll explain below) and that it is still best to take advantage of rates unseen in over 50 years.


Economic Indicator
Release Date and Time
Consensus Estimate
Analysis
Personal Income & Outlays(July)
Mon., Aug. 29,8:30 am, et
Income: 0.3% (Increase)Outlays: 0.5% (Increase)
Moderately Important. Income and outlay growth are sluggish, but both categories continue to post gains.
Pending Home Sales Index(July)
Mon., Aug. 29,10:00 am, et
90 Index
Important. July should hold gains posted in June, but recent data suggest some regression in August.
S&P Case-Shiller Home Price Index(June)
Tues., Aug. 30,9:00 am, et
1.0% (Increase)
Moderately Important. Early summer sales prices have shown modest improvement.
Mortgage Applications
Wed., Aug. 31,7:00 am, et
None
Important. Purchase activity hit a 15-year low, which points to lower near-term home sales.
Factory Orders(July)
Wed., Aug. 31,8:30 am, et
0.8%(Increase)
Moderately Important. The yearlong trend in orders still suggests overall economic growth.
Productivity & Costs(2nd Quarter)
Thurs., Sept. 1,8:30 am, et
Productivity: 0.7% (Decrease)Costs: 2.6% (Increase)
Important. Falling productivity and rising costs are indicative of a sluggish labor market.
Construction Spending(July)
Thurs., Sept. 1,8:30 am, et
0.2% (Increase)
Important. Government and commercial spending are pacing any growth.
Employment Situation(August)
Fri., Sept. 2,8:30 am, et
Unemployment Rate: 9.1%Payrolls: 110,000 (Increase)
Very Important. Unexpected job strength (like in July) could move interest rates higher.

Is This the New Norm?
We've gone down the higher-inflation, higher-interest rate road many times in the past, only to find ourselves doubling back. There is an interesting trend occurring with banks, though, that could persuade us to go down it once again.
One of the more vocal criticisms of banks is that they haven't been lending as much as they should. There is some validity to the criticism; banks have been squirreling away a higher amount of reserves with the Federal Reserve, which has attenuated loan supply and, therefore, money supply, thus keeping inflation in check.
Data released by the Federal Reserve show this period of containment appears to be ending. In other words, excess bank reserves are leaking into the economy and money supply is growing. Because we operate in a fraction-reserve banking system, which means one dollar can be sufficiently leveraged to produce nine more, more reserves put to work can quickly raise inflation pressure.
This all might seem abstruse to the layperson unfamiliar with the intricacies of the Federal Reserve and fractional-reserving banking. All we are saying is that it is folly to write off price inflation and the possibility of higher mortgage rates, because there is no “normal” when it comes to financial markets.
Courtesy of Patti Wilson, Senior Loan Officer, Mutual of Omaha Bank
patti.wilson@mutualofomahabank.com

Pending home sales slip in July but up strongly from 2010

WASHINGTON – Aug. 29, 2011 – Pending home sales declined in July but remain well above year-ago levels, according to the National Association of Realtors® (NAR). All regions show monthly declines except for the West, which continues to show the highest level of sales contract activity.
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, slipped 1.3 percent to 89.7 in July from 90.9 in June; but it’s 14.4 percent above the 78.4 index in July 2010. The data reflects contracts but not closings.
“The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy,” says Lawrence Yun, NAR chief economist. “We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations and streamlining the short sales process.”
The PHSI in the Northeast declined 2.0 percent to 67.5 in July but is 9.7 percent above July 2010. In the Midwest the index slipped 0.8 percent to 79.1 in July but is 18.8 percent above a year ago. Pending home sales in the South fell 4.8 percent to an index of 94.4 but are 9.5 percent higher than July 2010. In the West, the index rose 3.6 percent to 110.8 in July and is 20.6 percent above a year ago.
“Looking at pending home sales over a longer span, contract activity over the past three months is fairly comparable to the first three months of the year – and well above the low seen in April,” Yun says. “The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge. It is now a question of lending standards and consumers having the necessary confidence to enter the market.”
© 2011 Florida Realtors®

The Basic Steps of Foreclosure -easy to follow

WASHINGTON – Aug. 24, 2011 – In recent news, Fannie Mae has publicly assured homeowners going through foreclosure that they will be protected from losing their homes while applying for a federally funded loan modification. Homeowners can apply for a modification at any point before or during the foreclosure process.
If a modification is approved, homeowners can keep their homes if they make their adjusted payments. Absent that, here are the stages of a typical foreclosure:
1) In default: A loan is in default when a mortgage payment is 30 days late.
2) Warning: When a loan is 60 days past due, the bank, credit union or mortgage company warns that foreclosure is the next step.
3) Proceedings begin: After 90 days, the lender refers the loan to its foreclosure department, and hires a local lawyer to begin foreclosure proceedings.
4) Sale advertised: The lender's lawyer advertises the property for sale for four consecutive weeks in a local newspaper. The sheriff's sale date is listed in the advertisement.
5) Sale held: The sale is held on the published date. A sheriff's employee conducts a courthouse auction and the highest bidder wins, usually the bank that owned or serviced the mortgage.
6) Sheriff's deed: The winning bidder gets a sheriff's deed that lists the last date the homeowner can redeem, or take back, the property, usually six months from the date of the sheriff's sale. During this redemption period, the homeowner can live in the property or try to sell it.
7) Redemption period: To redeem a property, the homeowner must pay off the mortgage and all interest and late fees, court and attorney fees, title and appraisal fees, taxes and insurance. Otherwise, they will be evicted from the home.
Copyright © 2011, Detroit Free Press. Distributed by McClatchy-Tribune Information Services.

LESS THAN ONE IN FIVE HOMES HAVE FLOOD INSURANCE!

NEW YORK – Aug. 19, 2011 – Less than a fifth of U.S. homeowners have a flood insurance policy that protects their property and personal belongings, even though more than four out of every five natural disasters nationwide involve flooding, according to the Insurance Information Institute (I.I.I.).
Coverage for flood damage resulting from surface water, including storm surge caused by hurricanes, is excluded under standard homeowners and renters insurance policies. Flood coverage is available from the National Flood Insurance Program (NFIP) and from a few private insurance companies.
During the first six months of 2011, the federal government declared 28 major flood disasters. This put the U.S. well ahead of the pace set in 2010 when 50 federally declared major flood disasters occurred during the entire year.
“People tend to underestimate the risk of flooding,” says Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. “But, in fact, 90 percent of all natural disasters in this country involve flooding. It is important to note that there is a 30-day waiting period for flood insurance to go into effect, so don’t delay purchasing this important financial protection.
”The percentage of homeowners with flood insurance was highest in the South, at 19 percent. Thirteen percent of Midwestern homeowners had a flood insurance policy in 2011, along with 12 percent of homeowners in the West and 5 percent in the Northeast.
Consumers can find out their risk of flood and the cost of a policy by going to the NFIP’s website: FloodSmart.gov.
NFIP provides coverage for up to $250,000 for the structure of a home and $100,000 for personal possessions. It provides replacement cost coverage for the structure of a home but only actual cash value coverage for possessions. Replacement cost coverage pays to rebuild a home as it was before the damage. Actual cash value is replacement cost coverage minus depreciation. Flood insurance is also readily available for renters.
There is a 30-day waiting period after applying for flood coverage and paying the premium before the policy goes into effect.
The only exceptions are:
• If a homeowner purchases flood insurance in connection with making, increasing, extending or renewing a loan.
• If a lender determines that a loan on a property that does not have flood insurance should be protected by flood insurance, there is no waiting period as long as the premium is presented at the completion of a loan application.
• There is a one-day waiting period if a homeowner purchases flood insurance during the 13-month waiting period following the effective date of a revised community flood map issued by FEMA, the agency with oversight over NFIP.
“Flood insurance is also easy to buy. It can be purchased from the same agent or company representative who sold you your home or renters insurance policy,” said Salvatore. “So to file a flood insurance claim, you can simply get in touch with your insurance company.”
© 2011 Florida Realtors®

MARKET RECAP

Keeping you updated on the market! For the week of August 8, 2011
MARKET RECAP
Over the past couple weeks we've featured good news on home prices. This week, the good news continues... sort of. Clear Capital reports that home prices improved by 4.1 percent nationally in the second quarter of 2011 compared to the same year-ago quarter. On the flip-side, Clear Capital also says it expects home prices to decline 2.4 percent in the second half of 2011.
We're not quite ready to put any money on Clear Capital's price prediction, because its own data show that all four U.S. regions posted quarterly gains, led by a 6.3 percent gain in the Midwest – the first widespread, non-tax-credit-induced gain in five years.
Reduced inventory levels have helped support prices in recent months. We've noted in past editions that inventory levels have been falling, thanks in large part to a dearth of new-home construction and fewer homes listed for sale.
Normally, shrinking inventory is a positive, because it means demand is rising, which leads to higher home prices. Of course, times aren't normal. In today's environment, an inventory decline also reflects the slow pace at which banks are processing foreclosures, thus pushing the number of newly initiated foreclosures to a three-year low. Concurrently, the backlog of homes in foreclosure has been pushed up to 2.1 million.
The principal concern is that if these homes hit the market in a flood, the price trend could reverse course. Then again, if they hit in a trickle, the up trend could continue unabated. At this point, we think a trickle is more likely than a flood.
Mortgage rates are a more difficult call. After slightly rising the past few weeks, rates tumbled over the past few days, and are the lowest they've been in eight months. There are a number of contributing factors to the mortgage-rate drop: U.S. Treasury securities are again viewed as the ultimate haven. The yield on the 10-year Treasury note has fallen 100 basis points over the past six months and now yields a mere 2.5 percent. (The 30-year fixed rate mortgage tends to be two percentage points higher than the 10-year note.)
The fact is that risk of default was never a concern for U.S. debt investors, or yields would have been rising instead of falling. Investors are more concerned with a slowing economy, and with good reason: gross domestic product grew only 1.3 percent in the second quarter. This puts the annual growth rate far below the Federal Reserve's expectation for 2.7-to-2.9 percent GDP growth this year.
The prospect of a slowing economy, in turn, has pulled a lot of money out of stocks and directed it toward bonds. Stocks have been on their longest losing streak since the financial crisis of 2008; the S&P 500 has lost over 1,000 points over the past 10 trading days.
Fortunately, the economy hasn't ground to a halt. ADP's latest employment report shows that private-sector payrolls grew by 114,000 jobs in July. It's not great, and more job growth is needed to sustain a recovery, but it does show that parts of the economy continue to thrive and grow. That said, the 30-year fixed-rate mortgage is unlikely to clear 5 percent in the near future.

Economic Indicator
Release Date and Time
Consensus Estimate
Analysis
Productivity & Costs(2nd Quarter 2011)
Tues., Aug. 9,8:30 am, et
Productivity: 0.8% (Decrease)Costs: 1.6% (Increase)
Important. Productivity appears to have reached a temporary high, which could lead to a hiring spurt if the economy improves.
Federal Reserve FOMC Meeting Announcement
Tues., Aug. 9,2:15 pm, et
Federal Funds Rate: 0.0% to 0.25%
Important. Short-term rates remain near zero, but talk of more monetary easing could roil credit markets.
Mortgage Applications
Wed., Aug. 10,7:00 am, et
None
Important. Refinance and purchase activity spike on a drop in mortgage rates.
International Trade(June)
Thurs., Aug. 11,8:30 am, et
$47.9 Billion(Deficit)
Moderately Important. The deficit has widened on a weakening dollar.
Retail Sales(July)
Fri., Aug. 12,8:30 am, et
0.5% (Increase)
Moderately Important. Sales have slowed along with economic growth.
Another Contrarian Indicator
We like to keep our eyes open for novel indicators that a market might have reached a saturation point and is ready to turn. We think the Wall Street Journal has provided us with one: Reality television shows are jumping into the foreclosure-deal market, the WSJ reports.
If you think back five years, shows featuring buying and flipping homes were all the rage. Their peak popularity coincided with a peak in the housing market. (As an aside, anyone interested in collectibles should note the surfeit of shows – pawn shops, pickers, storage-unit hunters, and antique auctions – that are the rage today.)
We view the rising popularity of foreclosure shows positively: For one, it raises interest (and prices) on foreclosed homes, which will help clear the market sooner. More important, these shows suggest a market saturation point, and a possible turning point toward fewer foreclosures and higher-priced foreclosures.
Of course, this “reality-show” indicator is far from scientific, but than again, the past frequently is prologue, and these shows have frequently pointed to market tops and bottoms.


Email to: patti.wilson@mutualofomahabank.com
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National Association of Realtors - Pending Home Sales Rise in June

NAR: Pending home sales rise in June
WASHINGTON – July 28, 2011 – Pending home sales increased in June following a wide swing down in April and then up in May, according to the National Association of Realtors® (NAR). Month-to-month activity increased in the West and South but declined in the Midwest and Northeast. However, all regions show strong double-digit gains from a year earlier.The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 2.4 percent to 90.9 in June from 88.8 in May, and is 19.8 percent above the 75.9 reading in June 2010, which was the low point immediately following expiration of the homebuyer tax credit. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, said there may be some increase in closed existing-home sales.“For the majority of transactions, the lag time between pending contacts to actual closings is one to two months. Therefore, the two consecutive months of rising activity should lead to overall improvement in closed sales in upcoming months,” he said. “Though a higher than normal cancellation rate can hold back final closing figures, it could well be that some past cancellations are nothing more than delayed buying decisions rather than outright cancellations.”Yun said tight credit and economic uncertainty have been constricting the market. “The best way to ensure a more solid recovery in housing is to simply return to normal, sound credit standards so more creditworthy homebuyers can get a mortgage,” he said.
“Washington also should not rock the boat with policy changes that would negatively impact affordable credit or otherwise increase the cost of buying or owning a home,” Yun added.
The PHSI in the Northeast slipped 0.4 percent to 68.9 in June but is 19.4 percent higher than June 2010. In the Midwest the index fell 3.7 percent to 79.7 in June but is 26.4 percent above a year ago. Pending home sales in the South increased 4.4 percent to an index of 99.2 and are 19.1 percent higher than June 2010. In the West the index rose 6.4 percent to 107.0 in June and is 16.4 percent above a year ago.
Existing-home sales this year are expected to total 5.0 million, slightly higher than 2010. Similarly, little change is forecast for aggregate home prices with several indicators, including NAR’s median prices, showing recent signs of stabilization.
© 2011 Florida Realtors®

Housing Starts Surge 9 Percent; Signal A Strong Fall Season

by Chris Brown on Wednesday, July 20, 2011 at 8:46am
Builders are busy once again.
According to the Census Bureau, Single-Family Housing Starts rose to 453,000 on a seasonally-adjusted, annualized basis in June – a 9 percent spike from the month prior and the highest reading in 3 seasons.
A “Housing Start” is defined as a home breaking ground on new construction.
June’s reading is largest one-month jump since June 2009. The reading surprised Wall Street despite that the Homebuilder Confidence survey may have foreshadowed the results.
Monday, the National Association of Homebuilders reported that builders are more confident about the future of the new home sales market, and forecast a large increase in sales over the next 6 months.
For buyers of new construction, the news is mixed. Rising confidence may mean that builders in Orlando are less willing to negotiate on upgrades and/or price, but rising construction levels add inventory to an already fragile market.
Adding to the nation’s home supply without a corresponding increase in buyer demand shifts negotiation leverage away from builders.
The Census Bureau also reported on Building Permits.
In June, permits for single-family homes rose by 1,000 units nationwide on a seasonally-adjusted, annualized basis. This, too, bodes well for housing because 89 percent of homes with permits start construction within 60 days.
Momentum should carry forward into fall.
If you’re buying new construction in Florida , ask your real estate agent about local home supply, and how the market is trending. With mortgage rates low and the fall buying season approaching, you may find some of your best deals in the next few weeks.

Wealthy Americans upgrade to pricier Primary Homes

NEW YORK – July 13, 2011 – Amid still-depressed housing numbers that dominate headlines, a new survey by the independent New York City-based Luxury Institute and the Institute for Luxury Home Marketing finds that high net-worth U.S. homeowners are taking advantage of the downturn and trading up into higher-priced primary residences.
Lured by lower prices, one in four U.S. consumers with an annual income of $150,000 or more have bought a residential property since 2008 at a median purchase price of $509,000 – an increase of 3.2 percent from the 2005 to 2007 period.
Most new residences (83 percent) are single-family homes and two-thirds of those are in suburban settings. Seventeen percent plan to purchase additional property this year, while 23 percent of those younger than 50 plan to buy in 2011.
More than one-third (37 percent) of the wealthy value their homes at $1 million or higher, while 32 percent assess their primary residence to be worth $500,000 or less.
Seventy percent of wealthy homebuyers used a real estate agent to help with their property purchase, and two-thirds of that group says they would work with the same agent again.
“Luxury is the good news story in real estate,” says Laurie Moore-Moore, CEO of The Institute for Luxury Home Marketing. “The number of wealthy households has jumped back to pre-recession levels and affluent home buyers are actively purchasing.
The National Association of Realtors’ statistics show that national home sales at $1 million and above were up more than 18 percent year-over-year in 2010. Strong activity continues this year as well.”
For complete details from this WealthSurvey on wealthy homebuyer attitudes, plans and marketing preferences, visit LuxuryInstitute.com.
© 2011 Florida Realtors®

Florida Mortgage rates moved slightly higher.

Keeping you updated on the market! For the week of July 11, 2011
MARKET RECAP
The past week was slow on housing news, which is understandable given the Independence Day weekend. Mortgage rates moved slightly higher, and it's possible they could start trending higher through the month.
One reason is hiring, which is on the rebound. ADP's National Employment Report showed that private sector employment rose to 157,000 new jobs in June, nearly triple May's rate and well-ahead of the consensus estimate of 68,000 from Reuters. June’s employment figures suggest the economic recovery, which slipped in the spring, has found new traction. New traction, in turn, could pressure interest rates to move higher.
Real estate research firm DataQuick reported that sales of existing homes in Phoenix reached a six-year high of 9,837 in May. This regional piece of housing news is important for the economics lesson it imparts. We've noted many times in the recent past that lower prices stimulate sales and are the most efficient, most expedient means of clearing high inventory. The Phoenix market is proving that to be true.
DataQuick also reported that 40 percent of the Phoenix sales were for homes less than $100,000, which is a 40 percent increase from year-ago sales. The median price of a home in Phoenix stayed consistent at $120,000, which is actually a good sign: increased demand is causing more distressed inventory to hit the market that needs to be cleared. With both supply and demand increasing, prices are likely to hold steady going forward. Once the excess supply is absorbed, prices can then start moving higher.
Many of the homes sold in Phoenix were investment rental property. This makes sense; many people are still shut out from the mortgage market due to either bad credit or insufficient down payment. This is producing a renaissance in rental properties. The Wall Street Journal reports that the average nationwide rate for apartments and home rentals is up 6.7 percent year-over-year. Rent increases for studio apartments and five-bedroom homes were particularly vigorous, rising 14.3 percent and 12.1 percent, respectively. Rent.com expects even more rent hikes this year.
This upward price trend in rents suggests to us that buying an owner-occupied home will become a more viable option over the next couple of years. Here, again, is another economics lesson: as investors buy rental properties because of rising rents, they also stimulate interest in more potential homebuyers who are renting. This is one reason we are bullish on the long-term outlook for housing.


Economic Indicator
Release Date and Time
Consensus Estimate
Analysis
International Trade(May)
Tues. July 12,8:30 am, et
$44.3 Billion (Deficit)
Moderately Important. Falling petroleum prices are shrinking the deficit.
Mortgage Applications
Wed., July 13,7:00 am, et
None
Important. Higher purchase activity reflects a rise in home sales.
Producer Price Index(June)
Thurs., July 14,8:30 am, et
All Goods: 0.4% (Decrease)Core: 0.2% (Increase)
Important. Falling energy prices have slowed producer-price increases, but inflation remains a concern.
Retail Sales(June)
Thurs., July 14,8:30 am, et
0.4% (Decrease)
Moderately Important. Sales are easing on fewer big-ticket purchases and falling gasoline prices.
Consumer Price Index(June)
Fri., July 15,8:30 am, et
All Goods: 0.1% (Decrease)Core: 0.2% (Increase)
Important. Consumer-price inflation remains elevated, so an unexpected rise could send interest rates higher.
Industrial Production(June)
Fri., July 15,9:15 am, et
0.7% (Increase)
Moderately Important. Capacity utilization continues to increase, suggesting strong business-sector growth.

Time to Remove the Monkey Wrench from the Gears
Trouble financing a home purchase is the one variable that could derail our prediction of a housing recovery. Bloomberg News recently ran a compelling article that encapsulates our most frequent lament: we need more liberal and subjective underwriting standards to get more buyers into homes. Bloomberg writes, “While a record share of Americans want to buy homes, U.S. policies [on banking and lending], often working at cross-purposes, are making it more difficult.”
We've been saying for months now that the market has gone too far in the direction of excessively high standards. Security-filings data provided by Fannie Mae show that nine of 10 mortgages it bought in the first quarter of 2011 were for borrowers with credit scores higher than 700, a 32 percent increase in the percentage of these higher-score loans. Meanwhile, the average credit score for FHA loans was 701 in April, up from 669 three years earlier.
There is a disconnect at work. People, a lot of people in fact, still want a home. In May, a record 5.5 percent of Americans said they wanted to purchase a home, according to the Conference Board, a New York research firm. This is frustrating, especially when considering we have the expertise and experience to price risk, but many people don't want to apply for a loan because they believe it is a waste of time.
It's no a waste of time; we want to speak with anyone interested in a purchase or refinance loan. However, if there was a cause that we could all get behind, it is loosening up the lending purse strings and getting more people mortgages who are worth the risk and can afford it.

Courtesy Patti Wilson, Mutual Bank of Omaha.

Historic Sanibel Lighthouse Decked Out For Independence Day

Historic Sanibel Lighthouse located at Lighthouse Beach, 1 Periwinkle Way, has been decorated with traditional patriotic red, white and blue bunting in celebration of Independence Day. The decorations will remain through Tuesday, July 5. Sanibel Lighthouse is the most photographed icon in Lee County and is a historic as well as a navigational and marine landmark.


The Sanibel Lighthouse was the first lighthouse on Florida's Gulf Coast north of Key West and the Dry Tortugas and was completed in 1884. It is a popular sightseeing destination for tourists, locals, and island residents. The lighthouse was placed on the National Register of Historic Places in 1974 and also identified as a Historic Site and Structure within the 1976 Sanibel Plan.

For more information on Sanibel history click here.

Cash Deals Dominate Some Luxury Markets

Cash Deals Dominate Some Luxury Markets

Cash is king in high-end real estate this year, serving to stabilize the market as tight credit conditions and depreciated home values continue to plague the embattled real estate sector.
At least 30 percent of all purchases were financed with cash between mid-April and mid-May, according to the May 2011 Realtors Confidence Index by the National Realtors Association, and the numbers are even more robust for the luxury property market.
In the Fort Lauderdale, Florida area, 57 percent of all single-family homes purchased and priced over $1 million were cash buys between Jan.1 and May 31 of this year, says Vickie Arcuri, an agent with EWM Realtors. In the million-dollar plus condo market, 42 out of the 47 units sold during the same time period were cash purchases.
The south Florida market is particularly hot for out-of-state and foreign investors, who often find it more difficult to secure financing.
“Tight credit and lending criteria are some of the reasons why cash is so popular and it significantly affects the upper-end of the market,” says Arcuri. Jumbo loans — those too big for underwriting by Fannie Mae and Freddie Mac — typically have higher interest rates than government-backed mortgages. The loan amount that falls into jumbo loan territory varies from one local real estate market to another. In the Fort Lauderdale area, a jumbo loan is anything above $620,000.
When you wave cash around, you can lower the purchase price and dictate the terms of the deal so much more effectively” said Ross Levine, a partner in the law firm of Schwartz, Levine and Kaplan. He recently represented a seller looking to offload a $4.5 million Manhattan property — a smooth deal made easy because of cash.
“The sellers said they would have never gotten the deal done if they had … (used) … a bank because the jumbo loan market makes it difficult to get a loan. Beginning on October 1, the government will dial back on the size of mortgages it guarantees in high-cost areas like San Francisco, New York and Washington.
Arizona is also benefiting from a cash spending spree — it’s a hot market for snowbirds, retirees, and those looking to purchase second homes. In 2005, only 11 percent of sales were cash, compared to 30 percent in 2009 and 43 percent in 2011, says Lynn Murtagh, branch manager of Coldwell Banker Residential in Scottsdale, Arizona.
In the north Scottsdale area, 45 percent of all sales were cash purchases for the month of May. In the high-end market — homes priced at $850,000 or more — 66 percent were purchased with cash, says Murtagh.
Even some of the top metropolitan markets around the country are seeing cash purchases on the rise. In Las Vegas, 49 percent of purchases were cash in the second quarter of this year, according to data from the popular real estate site Zillow. In Los Angeles, 33 percent of second-quarter buys were financed with cash compared to 17 percent in the same quarter of 2009. In San Fransisco, 24 percent were cash buys for the same time period versus 16 percent in the second quarter of 2009.
Cash buyers are propping up the market, increasing the number of properties sold, decreasing the level of inventory and flushing distressed properties through the system, says Jim Gillespie, CEO of Coldwell Banker Real Estate.
“If cash buyers evaporated tomorrow, real estate would be in a lot more difficult position. They are stabilizing the market even though they’re purchasing 10 to 15 percent below value,” he says.
For the seller, cash buys mean no appraisal or mortgage contingencies and faster closing dates, while the buyer enjoys the piece of mind knowing they don’t have a mortgage payment, can tap their home equity if needed, and can negotiate some extra perks in their favor.
Levine is currently representing a 23-year-old cash buyer looking to purchase a $2.5 million ground-level Manhattan property. Concerned about privacy in the all-glass building, she was able to negotiate renovations with the developer.
“She wanted to tint the windows but arguably that would permanently alter the structure and we needed the board’s consent. So I carved that language in the contract, which requires the board to approve the tinting before closing. There is no way if she had a bank with 80 percent financing that they would have ever entered into this kind of deal,” Levine says.
While a cash buy may be the sexier option at the moment, here are a few things to keep in mind for buyers and sellers.
Get educated on valueAn appraisal contingency — a condition that the purchase price of the property must be appraised at an agreed upon amount or the purchase can be canceled without penalty — is not required for a cash sale. But it may be a good idea to put an appraisal clause in your agreement to ensure you’re not overpaying. If you don’t want to go the appraisal route, be sure to solicit a market analysis from a real estate agent.
“Realtors have the tools to do an in-depth market analysis, giving the buyer a ball-park figure. They can show a buyer exactly what’s been sold in that area because we have access to a lot of data and information,” says Ingrid Carlos, branch manager of Coldwell Banker Residential in Hollywood, Florida.
Don’t make a low-ball offer. A common misconception among cash buyers is that you can deeply discount the purchase price. But with so many cash offers flooding the market, competition is steeper than you may think. Often times, the property will go to someone more well-informed on the local market.
“Typically in the luxury market, we don’t have a lot of distressed properties and distressed sellers. Owners of these properties are very secure financially and can hold onto the property for an extended period of time without accepting a low-ball offer because they’re desperate,” Arcuri says.
Don’t get swayed by the overall weakness of the real estate market. “Buyers will see the market has come down a certain percentage, and they will go in with an offer price that is discounted the same percentage on the listing price instead of realizing the news is trying to tell them that the market has come down that percentage over a number of years,” Carlos warns.

Make sure the buyer has the cash. If selling a luxury property, you want to be sure the potentially buyer can pony up seven figures when the bill comes due. A letter from the buyer’s financial institution stating the funds to finance the purchase price are available is a must. An account statement will also work, providing the funds will come from that account.
“Anyone can put an offer in writing, but if you don’t have the proof to back it up than it’s just writing on a paper and not a legitimate offer unless there are proof of funds,” Carlos says. “Sometimes buyers are reluctant to give that information and then they lose out on the potential transaction because a seller won’t even look at their offer.”
Sandy Schwartz, another partner in Levine’s firm, says if a cash buyer presents a seller with an offer it’s important to have a clause in the agreement prohibiting the buyer from seeking a mortgage at a later point in negotiations. “I represented a buyer once who lead me to believe it was an all-cash deal on a multi-million-dollar property. After he spoke to his financial adviser, and after we were already in the contract, he said he wanted to get a mortgage. There was no prohibition in the contract from obtaining the mortgage and the closing was 30-45 days later than what the seller had anticipated,” Schwartz says.
That may have inconvenienced the seller, but it worked out well for the buyer — he was left with all that cash, ready to wave at the next big deal down the road.
Courtesy Reuters Wealth June 29, 2011.

Top Picks for International Buyers

Top picks for international buyers
NEW YORK – June 17, 2011 – International buyers are taking advantage of real estate bargains in the United States. Last year, international buyers reportedly spent $41 billion on purchasing homes in the U.S.So which cities do they most have their eye on?Ten out of the 24 most popular American cities for international buyers are in Florida, according to Trulia. Last year, Europeans, Canadians and Brazilians reportedly spent about $13 billion on homes in Florida alone.Here are the most popular Florida cities for international buyers, according to Trulia, in order of demand:
1. Cape Coral, Fla.
2. Miami
3. Fort Lauderdale, Fla.
4. Naples, Fla.
5. Fort Myers, Fla.
6. Miami Beach, Fla.
7. Kissimmee, Fla.
8. Orlando, Fla.
9. Jacksonville, Fla.
10. Tampa, Fla.
© 2011 Florida Realtors®

Hurricane Season is only six days away!

GAINESVILLE, Fla. – May 26, 2011 – Hurricane season is only days away, and a University of Florida researcher says that planning is important for everyone, but especially for older adults or their caretakers.
Hurricane season begins June 1 and preparations can take a little longer and require a bit more attention to detail for older adults and their caregivers, says UF’s Linda Bobroff, a family, youth and community sciences professor who helped update a disaster preparation guide.The guide, called Disaster Planning Tips for Older Adults, is for anyone planning for disaster, but it includes special recommendations that apply to older adults.For example, the guide notes that everyone in hurricane-prone areas needs, ideally, a two-week supply of drinking water – one gallon per person, per day, and more if you have pets. But because older adults become dehydrated more easily, it’s a good idea to store more water than recommended. It also suggests that planners make sure the jugs aren’t too heavy, and a sanitized two-liter plastic soda bottle might be a better option than gallon jugs. Caps should be easily removed by someone with arthritis.Everyone needs a three- to five-day nonperishable food supply, the guide says, but for older adults, dietary needs such as low sodium or high fiber foods should be considered. Smaller cans of food that can be eaten at one meal or as a snack are helpful, because older adults are more vulnerable to food-borne illness. And make sure you have a manual can opener.
It’s vital for families to talk about disaster scenarios before they happen, Bobroff says. If a family has already decided what to do in an emergency, it can save precious time that would otherwise be spent debating whether or not to go and haggling over what to bring.“You have to talk about it,” she says. “Just knowing that if the roof blows off, or if we start to get flooded, we’re leaving – having the plan already mapped out helps.”
Carolyn Wilken, a UF associate professor emeritus, and Emily Minton, program coordinator for UF’s Elder Nutrition and Food Safety Program, also contributed to the update.For more information on preparing for disasters, visit the Extension Disaster Education Network (EDEN).© 2011 Florida Realtors®

Straight talk on determining the market value of your home

THE MARKET VALUE OF YOUR HOME IS DETERMINED IN SEVERAL WAYS

The market Value of your Home IS NOT:
What you have in it.
What you need out of it.
What it is appraised for.
What you have heard your neighbors house sold for.
What the tax office says it’s worth.
What it’s insured for.
Based on memories and treasures.
Based on price of homes where you are moving.

The True Market Value of Your Home IS:
What a Buyer is Willing to Pay for the Property – TODAY
Based on today’s market.
Based on today’s competition.
Based on today’s financing.
Based on today’s economic conditions.
Based on the buyer’s perception of property condition.
Based on location.
Based on normal marketing time.

As a Seller You Control:
The price you ask.
The condition of the property.
Access to the property.

As a Seller You Do Not Control:
Market conditions.
The motivation of your competition.
Value.

Warning Signs:
AGENT elimination – if agents are previewing, or if they preview, but do not show it, they are eliminating your property
BUYER elimination – if your home is being shown with no results, buyers are finding better properties in your price range.
In either case, this is an indication that your home is not priced at current market value.
REMEMBER: Price Overcomes All Objections

Florida Realtors pushed for short sale bill

Florida Realtors pushed for short sale bill
WASHINGTON – April 21, 2011 – U.S. Rep. Tom Rooney (R-Fla.) and U.S. Rep. Robert Andrews (D-N.J.) introduced bipartisan legislation last week to speed short sales by requiring lenders to decide whether to accept an offer within 45 days.“This bill addresses the biggest obstacle for homebuyers and owners in short sale situations,” says Patricia Fitzgerald, president of Florida Realtors and a key contact to Rooney, who lives in Tequesta, Fla.“We’ve worked with The National Association of Realtors® (NAR) and through Patti as the FPC (Federal Political Coordinator) since last August or so,” says John Sebree, Florida Realtors vice president of public policy. “This federal legislation is one of the goals of our short sale work group.”H.R. 1498 – the “Prompt Decision for Qualification for Short Sale Act of 2011” – will bring the processing time for short sale price approvals in line with the time required for other types of real estate deals by mandating a quicker response from the lender – at most 45 days after submitting the request for short sale approval.“Due to the economic crisis, the number of short sales in Florida is rising, but lenders haven’t always been able to keep pace,” says Rooney. “By requiring lenders to make decisions on short sales within 45 days, this legislation would speed transactions and help prevent homes from going into foreclosure.”© 2011 Florida Realtors®

Florida's existing home, condo sales up

ORLANDO, Fla. – April 20, 2011 – Florida’s existing home and existing condo sales rose in March, according to the latest housing data released by Florida Realtors®. Existing home sales increased 12 percent last month with a total of 18,522 homes sold statewide compared to 16,540 homes sold in March 2010, according to Florida Realtors.
Statewide sales of existing condos last month rose 24 percent compared to the year-ago sales figure.Seventeen of Florida’s metropolitan statistical areas (MSAs) reported higher existing home and existing condo sales in March; 17 MSAs also had higher condo sales.
It’s the fourth consecutive month that Florida Realtors has reported higher year-over-year existing home and existing condo sales statewide.“A variety of housing opportunities is available at attractive prices across the state, while mortgage interest rates remain historically low,” said 2011 Florida Realtors® President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart. “Favorable conditions like these spark the interest of buyers – who should consult a local Realtor to find out more about their local markets.”
Florida’s median sales price for existing homes last month was $126,300; a year ago, it was $136,000 for a 7 percent decrease. Analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.The national median sales price for existing single-family homes in February 2011 was $157,000, down 4.2 percent from a year ago, according to NAR.
In California, the statewide median resales price was $271,320 in February; in Massachusetts, it was $270,000; in New York, it was $245,000; and in Maryland, it was $208,258.
According to NAR’s latest industry outlook, a strengthening economy will continue to bolster the housing market’s slow recovery. “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by unnecessarily tight credit,” said NAR Chief Economist Lawrence Yun.
In Florida’s year-to-year comparison for condos, 9,703 units sold statewide last month compared to 7,830 units in March 2010 for an increase of 24 percent. The statewide existing condo median sales price last month was $84,300; in March 2010 it was $94,800 for an 11 percent decrease. The national median existing condo sales price was $150,400 in February 2011, according to NAR.The interest rate for a 30-year fixed-rate mortgage averaged 4.84 percent in March, down slightly from the 4.97 percent average during the same month a year earlier, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
© 2011 Florida Realtors®

Sanibel's Beaches Rank with Trip Advisor

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UF survey: Florida’s real estate outlook perks up in several areas

UF survey: Florida’s real estate outlook perks up in several areas
GAINESVILLE, Fla. – Feb. 2, 2011 – Optimism has increased slowly but steadily in Florida real estate markets through the fourth quarter of 2010, a new University of Florida survey finds.The fourth quarter Survey of Emerging Market Conditions found improvement in several key categories, including the outlook for sales in new single-family homes and condominiums, office occupancy, retail occupancy, land investment and capital availability.Much of the optimism derives from politics with the defeat last fall of Amendment 4, a proposed constitutional amendment that would have required a referendum for all changes to local government comprehensive land-use plans, said Timothy Becker, director of UF’s Bergstrom Center for Real Estate Studies. The conclusion of mid-term elections also eased respondents’ uncertainty as it provided a clearer picture of the future.“The state welcomed a new governor who has promised to make Florida a more business-friendly state,” Becker said. “If he can succeed on his goals, respondents believe it will have a positive impact on the real estate market. Any help in attracting new business to move or form in the state will no doubt have a positive impact on job growth.”Survey respondents’ expectations for occupancy and rent increased across every property type. The investment outlook rose in a majority of the property types, and the statewide outlook was the highest since the survey’s inception in 2006. Additionally, private capital is abundant as investors seek the few good products on the market. Overall, the market appears to be improving and will continue to improve at a slow pace over the next year.Despite the positive outlooks in many asset classes, respondents’ optimism is tempered by troublesome economic factors, most notably Florida’s high unemployment rate of 12 percent. Respondents also relayed fears over federal, state and local budget issues.“Local revenues continue to decline as property values decline, placing a tremendous burden on local budgets,” Becker said. “This will require tough decisions by local officials.”The outlook for single-family and condominium sales increased slightly in the fourth quarter, but Becker said home builders continue to have a negative outlook because financing is difficult to obtain and lower prices in the foreclosure and short-sale market take potential customers away from the new housing market. Unexpectedly, however, respondents’ outlook for investment in residential development increased for both single-family homes and condominiums. Becker said the low cost of fully developed lots provides incentive for investors and developers.Expectations for office and retail occupancy continued to improve. Occupancy expectations in the office sector increased, and the outlook for rental rates increased slightly but is expected to continue lagging inflation. In the retail sector, occupancy expectations improved for all property types.Becker said respondents believe occupancy will increase in neighborhood centers and large retail centers. Accordingly, the investment outlook in retail increased for neighborhood centers while declining for the remaining property types.Land investment and capital availability also rose this quarter. More respondents believe land is beginning to be priced at levels that support longer-term investment, despite the fact that lack of financing for land purchases continues to be a concern. The optimistic outlook for capital is due in large part to respondents’ belief that future availability will increase.“Respondents believe there is a need to add additional apartment units based on the fundamentals and expect development financing to be available for that sector,” Becker said. “Private equity continues to be plentiful for quality core assets and valued-add assets.”Expectations for apartment occupancy and the industrial sector were mostly stable.© 2011 Florida Realtors®

Florida Realtors Report: 2010 Profile of Home Buyers and Sellers

Florida Realtors Report: 2010 Profile of Home Buyers and Sellers
ORLANDO, Fla. – Jan. 5, 2011 – The 2010 Profile of Home Buyers and Sellers in Florida looks at the traits of the state’s current real estate clients, and it identifies the characteristics of today’s homebuyers. It describes the motivations of recent homebuyers and sellers in Florida so real estate professionals can track the changing demands of consumers.
Characteristics of homebuyers
• Forty-four percent of recent homebuyers were first-time owners compared to 50 percent nationwide.
• The typical first-time buyer was 31 years old, while the typical repeat buyer was 54 years old; nationwide, first-time buyers were typically 30 and repeat buyers were 50 years old.
• The 2009 median household income of Florida buyers was $63,300 – slightly lower than the median income of buyers nationwide, $72,200.
• The median income was $53,500 among first-time buyers and $84,300 among repeat buyers.
• Nineteen percent of recent homebuyers were single females, and 11 percent were single males. Nationwide, twenty percent of recent buyers were single females, and 12 percent were single males.
• For 30 percent of recent homebuyers, the primary reason for the home purchase was a desire to own a home.
Characteristics of homes purchased
• New home purchases were at the lowest level in nine years nationwide – 15 percent of all recent home purchases. But in Florida, 18 percent of homes were new.
• The typical home purchased was 1,800 square feet, built in 1998, and it had three bedrooms and two full bathrooms.
• Seventy-eight percent of homebuyers purchased a detached single-family home.
• The median price of a home was $161,000 compared to $179,000 nationwide.
• When considering the purchase of a home, 73 percent of buyers considered commuting costs very or somewhat important.
The home search process
• For four in ten homebuyers, the first step in the home-buying process was looking online for properties.
• Eighty-nine percent of buyers used the Internet to search for homes.
• Real estate agents were viewed as a useful information source by 98 percent of the buyers who used an agent while searching for a home.
• The typical buyer searched for 12 weeks and viewed 15 homes. This compares to 12 weeks and 12 homes viewed by the typical buyer nationwide.Home buying and real estate professionals
• Seventy-nine percent of buyers purchased their home through a real estate agent or broker.
• Seven percent of buyers purchased a home in foreclosure – slightly higher than the share of buyers nationally.
• Forty-four percent of buyers found their agent through a referral from a friend or family member.
• Seventy-two percent of buyers would definitely use their real estate again or recommend the same agent to others.
Financing the home purchase
• Eighty percent of homebuyers financed their home purchase compared to a much higher percentage, 91 percent, of buyers nationwide.
• The typical buyer financed 93 percent of their home purchase.
• Forty-six percent of buyers said they made some sacrifices, such as reducing spending on luxury items, entertainment or clothing.
• Twenty-eight percent of buyers reported their mortgage application and approval process was somewhat more difficult than expected, and 16 percent reported it was much more difficult than expected.Home sellers and their selling experience
• A real estate agent assisted 86 percent of home sellers. Nationwide, 88 percent of sellers used a real estate agent when selling their home.
• Recent sellers typically sold their homes for 94 percent of the listing price, and 63 percent reported they reduced the asking price at least once. Among all sellers nationally, sellers typically sold their homes for 96 percent of the listing price, and 57 percent reduced the asking price at least once.
• Thirty-nine percent of sellers offered incentives to attract buyers, most often assistance with home warranty policies and closing costs.
Home selling and real estate professionals
• Thirty-nine percent of sellers who used a real estate agent found their agents through a referral by friends or family, and 23 percent used the agent they worked with previously to buy or sell a home.
• Eighty-eight percent of sellers reported that their home was listed or advertised on the Internet.
• Among recent sellers who used an agent, 81 percent reported they would definitely (61 percent) or probably (20 percent) use that real estate agent again or recommend the agent to others.
For-sale-by-owner (FSBO) sellers
• The share of home sellers who sold their home without the assistance of a real estate agent was 10 percent, or slightly higher than the national share of 9 percent.
• The primary reason that sellers chose to sell their home using a real estate agent was to avoid paying a commission or fee.
Download the complete 2010 Report of Home Buyers and Sellers in Florida here. The report is also available on the Florida Realtors’ website Research page at floridarealtors.org.
© 2011 Florida Realtors®