JULY 2015 - REAL ESTATE TRENDING POSITIVE!!!

     Things in real estate were scary, from 2006, through 2012.  If you bought a home in 2005 and were needing to sell in 2010, you got the surprise of your life!  Let's see, "You're telling me that I can get $350,000 for my house?  The one I bought 5 years ago, for $500,000?"  
     If you were a Realtor, those were belt tightening times.  My wife and I are thankful we were prepared to weather that storm.  Distressed properties were saturating the market, as owners found themselves owing the bank far more than their home was worth.  Banks played the role of "bad cop" very well and were reluctant to work with people to re-finance.  Here in Palm Coast and Flagler Beach, FL, "short sales" represented 60% of our market for several years running.  These short sales, an attempt to preclude foreclosure proceedings, destroyed values for Mom and Pop "normal" sales.  To say the least, it was a mess!
     As we moved into 2013, we knew the bad stuff was over, as we started a long, slow climb out of a very deep hole.

     To say that we are in a "hot market" would be a stretch, but compared to those bubble busted years, we'll take it!  This July, 2015, shows these very positive trends:

• Foreclosure filings (the beginning of the bank's process to take the house back) are way down from previous years.
• Actual repossessions (the final step for the bank)  are up.  The good news here is that distressed inventory is clearing out of the market, allowing true value to be re-established.
• Values are rising at a sustainable rate.  It's slow and steady, but the trend is heading positive.
• Homes that are well priced and fixed up (staged well) are selling quickly.
• Mortgage money is beginning to be more available.  For a few years it was quite odd, in that it seemed like the banks wanted to make buyers suffer... for the mess the banks created!!!

So, if you are ready, it really seems safe to say:

*** IT'S A GOOD TIME TO BUY ***

   

Where Will 2015 Take Us?

I remember with clarity 1986...
It was the final year of my 20 year career, as a U.S. Army Officer and the beginning of my career as a Real Estate Broker - and that was 29 years ago!  I worked for a terrific firm (Mount Vernon Realty) in the Northern Virginia, Southern Maryland, and Washington, DC marketplace.  Leaving my Staff Officer job at the Defense Intelligence Agency and jumping into the civilian business world was quite a rush!  Let's see... hang up the uniform and go to Nordstrom's for pin stripe suits, button down oxford shirts, power ties, and wing tips... Check!
The real estate market was on fire and I thought I'd died and gone to heaven.  1986, 1987, and the start of 1989 were a Realtor's dream.  Then February of 1989 happened.  Listings stayed on the market longer.  Some strange things called "short sales" and "foreclosures" entered our repertoire. Prices started dropping.  Oh, oh, what was this all about?  A few years later, by 1993, we were back in a climbing market once again.
I moved to Palm Coast & Flagler Beach, FL in 2001.  It was a shock to leave my market of Great Falls and McLean, VA, where $Million dollar+ sales were routine and I was managing an office for Century 21 New Millennium (the highest producing C21 company in the world).  However, from 2001 to 2005, things were hot as a pistol here as well.  I recall our monthly office sales meeting at my Flagler Beach Re/Max office in December, 2005.  I said, "Can anyone else feel "something" happening, or is it just me?"  Well, that "something" was the beginning of the worst real estate crash in US history.  From late 2005, all the way through 2012, we were in freefall.  It was crazy.  The "depressed sales" dominated over 60% of all we did!  Ouch!
However, since the beginning of 2013, we have righted ourselves... leveled out... and started a slow, steady climb out of the hole.  It's a safe bet that, barring a cataclysmic disaster, 2015 and the foreseeable years beyond should hold more of the same.  That is a slow, steady upward real estate trend.  Inventory is available.  Mortgage rates are low.  Foreclosures and short sales are way down.  Oh, and here's the statistic I always love:  Many of the real estate agents who bailed when things got tough, are scrambling to re-activate their licenses.  As a consumer, I'd ask you to consider asking your Realtor if they remained active and productive during those really difficult years.  You're better off with a battle scarred veteran of the real estate wars.  Been there... Done that... Got the T-shirt!!!

Foreclosure/REO Property - "Real Estate Reality"

Note to Self:
"After 25 years, you should KNOW better!"

25 Years!  
That's how long I've been a Real Estate Broker... 
Helping Buyers and Sellers and Investors navigate the mine fields of several crazy market swings.  In 1986, as a newbie, they gave me a manual "mortgage calculator wheel" to help figure monthly payments... and the mortgage interest rates on the wheel STARTED at 10%.  Why?  Because there were no available rates under that.  When I came back from Berlin, Germany with the Army in 1980, to work at the Pentagon, I bought a house with a rate of 16.75%.  So don't complain if you feel abused today with a 4.5% rate.

So, with all this experience and wisdom, I should have discipline and smart business sense, right?  I should look them in the eye and tell them they have little chance to be successful in certain types of transactions, right?  Well, I do... most of the time.  Here's the deal - I have a strong desire to help people get what they want, as far as their Real Estate Goals are concerned.  And I feel pretty good, knowing that's the heart and soul of how I approach things.  If a guy tells me he wants to buy a house, I'm going to work it for him, like a dog on a bone.

But lately, I've been experiencing a lot of push-back from specific areas of the market... and I don't like my lack of self discipline, in how I've responded.  Two quotes come to mind:

• "Knowing that the task was absolutely impossible, I doubled my efforts anyway." (Unknown)
• "A man's got to know his limitations."  (Dirty Harry/Clint Eastwood)

Wow!
"I can get a great deal, right?"

Here's the cheese to go with my whine.  Buyers call me and say something like, "Frank, I found this house at 3113 Chatham Road online, and it's 2,400 square feet, with 4 Bedrooms, for only $119,500!"  "Can you show it to me?"  And I immediately start to think, "Oh, Oh..."  because I KNOW it's an REO (Real Estate Owned - Bank Foreclosure)  Of course my buyer wants to see it, however, it's been on the market for only 3 days and it's listed at a "teaser price" - crafted to create competitive bids.  They race to get a "lender qualification letter" to show they can get a mortgage.  They want to offer less than the asking price, have an inspection contingency, make it subject to their bank's appraisal, and offer a $1,000 max escrow deposit.

So, what's the problem?  As soon as our offer goes in and 5 days have passed, we are told by the listing company that we need a "Multiple Offer Disclosure Form" and that "Highest and Best" offers are now due "by Noon tomorrow."  There are 12 total offers and ours is the only one that's not "cash with no contingencies."  These investors can usually close in 15-30 days and also are not timid about going over the asking price.  They realize the value presented and they know we are at the bottom now.  BOOM!  SPLASH!  (That's the sound of being blown out of the water)...

In Flagler County, Florida today, there are 685 homes For Sale, from $35,000 to $4,200,000.  Only 17% are distressed (short sales/foreclosures) and only 5% are REO/Bank Owned.  Sounds pretty OK?  Sure, BUT in the "Under $150,000," market it's different... Way different!  There's only 175 of those homes and 63% are distressed... with a whopping 35% being REO/Bank Owned!  And that is exactly the market segment that draws all the "investors with cash" looking for rental properties.  And they are driving "Mom and Pop with a mortgage" out of the segment.

I'm not saying that's bad, because it's not.  Actually, it is helping to clear out the market bottom, which is essential to real recovery.  But my "lesson learned" is this:  Keep my "non-investor" buyers with mortgages in the "normal" market and away from REO enticements.  Short sales are OK now (and I'm shocked to hear myself say that).  BUT, stay away from REO's!!!  Fool me once, shame on you.  Fool me twice, shame on me!