Loan Limits Extended - Tax Credit Next?

In an effort to spur the real estate market, Washington is attacking the issue on various fronts. While the homebuyer tax credit remains on the floor - discussing both extension and expansion - another key issue has been resolved.

Last week, the House and Senate passed legislation to extend the current loan limits for FHA and Freddie Mac and Fannie Mae through December 31, 2010. These loan limits, set at 125% of local area median home price and capped at $729,750, would have expired on December 31, 2009 in which case loan limits would have been reduced in many markets. The President is expected to signed this bill as of this writing.

Cash buyers continue to enjoy the greatest savings in this market, as they have the agility and ability to pick up the deals quickly.

Real Estate Cynicism

A friend of mine recently closed on a home. He had waited 3 years to purchase. He watched the markets carefully. He finally decided on a great home in a highly desirable subdivision. He got the home for 50% of what it sold for 3 years ago, and a full 10% under the current market value.

His comment to me? "I just wish I could prevent the powers that be from using this sale as part of the 'market is recovering' hype"!

Now, I understand a healthy dose of caution when purchasing in this, or any market. But to be so cynical just after making such a great buy? His take on it is that although he purchased, he didnt want someone else to use him as an example of a recovering market.

Folks, the market starts recovering when people start buying. Even at depressed prices, decreasing inventory means less available to purchase. Homes selling more quickly means that we begin to see "list to sale" ratios declining and approaching equilibrium.

Lately, there is a lot of resistance from sellers to go any lower. Just ask a few of my buyers who have been frustrated on several properties. On others, there are multiple offers. These are all signs of a market that is ready to recover, if it is not well on its way.

It's not "hype" if all the numbers are favorable. If people are buying. If inventory is decreasing, sellers are holding, and buyers are competing. Its reality.

Could something happen tomorrow to change those facts? Of course. But for now, things are heading in the right direction.

Sarasota Short Sale Pricing is Changing

This week we received word that the short sale process is being revamped and standardized at the highest levels. The most welcome news is that if the new provision passes, the banks will actually be setting the short sale price, not the listing agent.

I have heard a collective cheer go up amongst my customers. The short sale process is daunting, and most frustrating for many people is seeing a price on a listing that may not be acceptable to the bank, even if they make a full price offer.

I have noticed lately that when the daily "status change report" makes it to my inbox, that many properties have raised their price by a considerable amount. Further investigation shows that they were a short sale that has gone pending at the higher price. For instance, this morning, a home which had been listed at $109K went pending at $136K. What happened? This may be price the bank would actually take as opposed to a fantasy price set by a well meaning listing agent.

So when the short sale pricing is set by the bank, the issue of "list price reality" will be solved. What folks are not going to like, however, is that the false veil of "rock bottom prices" will be lifted. Many people express shock when a home goes into foreclosure, and the bank actually raises the price of the home from its short sale levels. It's not a surprise to me - the bank is simply finally revealing what they will accept. The reality of that number has been the same all along - we are simply finally privy to it.

Take heart, folks. Many of those prices werent real anyway. I for one would rather deal with accurate reality than fantasy.

Postscript

There is a whole other discussion to buying a short sale - if the short sale price is unbelievably low, the chances of the winning bidder paying that price is slim. They probably made an offer OVER list price. If the home is set 50% below market, making an offer 5-10% over list still makes perfect sense in order to score a great deal over the competiton who are likely offering at or less than list. In case this all sounds familiar, it should. It's called a "bidding war", and it happens in any market for well priced properties.

Sarasota Real Estate Numbers

Trends continue to signal recovery in the Sarasota market according to the Sarasota Association of Realtors September report:

* Home and condo sales skyrocketed - a 35% increase in sales over September of 2008

* Sales up 10% over August in our traditionally slowest month

* Pending sales have exceeded 800 for 7 of the 9 months in 2009, after lingering between 400-500 much of the last two years

* Time on market numbers are down to 9.8 months from over a year for a single family home - 6 months is considered a market in equilibrium

* Inventory numbers - 3,915 single family homes and 2,337 condos - are the lowest they have been since August 2005.

Median sales prices are lower , fueled by short sales and foreclosures. As these inventories dry up, prices will again begin to climb and we will begin to see more multiple offer situtatons - bidding wars - on the best properties.

Right Under Your Nose

The market has been abyssmal for so long in Florida, that there is a sense that it will never change. Buyers are content in the knowledge that they are firmly in the catbird seat, and that they should still wait out the "bottom" of the market.

The problem is, that as exclusive buyer agents in Sarasota, we are seeing the exact opposite. Three times this week, my buyers found themselves in multiple offer situations. Often, these situations are resulting in the successful bidder offering list price or higher to get the property.What is happening? The best deals are being scooped up quickly, and there is no more luxury of "wait and see". The fact is this - the list price is the most irrelevant number in the whole process - the VALUE is what is important.

Its a strange time in the Sarasota real estate market. The prices have fallen remarkably low. However, no matter how low they fall, buyers still seem convinced prices are too high. With all evidence to the contrary, they want to lowball the offer thinking that the seller will be thrilled to get an offer. However,the sellers have come to the opposite conclusion. With inventory shrinking, and sales AND values rising - they think they have gone low enough. With season approaching and news media reporting that everyone should consider a Sarasota real estate purchase - they are feeling more empowered than they have in years.

So what happens when buyers don't want to admit that times are changing, and sellers insist they are? Buyers are often missing out on incredible deals as savvy investors are buying the best deals right out from under them. The market is undeniably changing. Buyers will need to adjust their thinking or face the fact that they missed the opportunity.

The GREAT NEWS for buyers? The prices are likely still near the bottom, the properties are still available, and the deals are still there. For now.