Monday, September 26, 2011

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 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®

Tuesday, September 20, 2011

Keeping you updated on the market!

For the week of September 19, 2011

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

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
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.
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