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South Florida Real Estate
Mortgage Rates – How An Increase In Rates Affects Your Purchasing Power
I came across a great article that explains the effect of interest rates on your purchasing power so well, that I have to blog about it. Now that inventories are decreasing and we are running into an April 30, 2010 deadline for tax credits, you have to read it if you have been on the fence about whether or not now is the right time to buy real estate.
The article, If You Don’t Buy a House Now, You’re Stupid or Broke may have an offensive title, but the graphs that it contains illustrate historic interest rates and increasing trends and the explanation on how an increase in rates affect what you will pay in principal in interest are easy to understand. In a nutshell:
- For 30+ years interest rates ranged from a low of 7% to a high of 18% (my husband and I were paying over 16% interest when we purchased our first home in the 1980’s)
- Current interest rates are the lowest they have been in 40 years
- For every quarter-point change in interest rates you will pay an additional $6,000 for every $100,000 borrowed over the life of a 30-year fixed rate mortgage.
7 Reasons to Buy Real Estate Now
Okay, you have been hearing that now is the time to buy a home, but maybe you are still unsure of why, when there is so much inventory on the market and so much insecurity in the economy. Here are 7 specific reasons:
- Home Buyer Tax Credits – The Government is paying first-time home buyers and move-up buyers money to purchase a home. It can be a single family home or a condo, it just has to be your primary residence.
- Interest rates are still at historic lows, currently around 5.25% for a 30-year fixed rate mortgage.
- Lenders are moving their inventories of foreclosures and are becoming more likely to agree to short sales.
- Interest rates will increase due to the huge amount of government debt.
- The median price of a single family home is currently $185,000, down from a median price of $400,000 at the peak of the real estate boom.
- There is currently a 10 month supply of single family homes in Miami-Dade County, down from a 24 month supply at the end of 2008. A stable market has an inventory of 6-9 months.
- There has been a 29% increase in sales since last year.
- Whether single family or condo, under $300,000 or over $1,000,000, the market trend has been a steady decrease in inventory since at least October of 2008.
Now, you may be a naysayer and agree with someone who stated that the price of real estate is going to go down another 33%, but those of us that are active in the market are not seeing it. We are seeing inventories decreasing, foreigners and investors coming back into the market that they had shied away from during the boom years and buyers getting some very good buys. Miami is on sale and many properties are selling for less than what it would cost to build the exact same structure on the same lot. Are you going to be someone who says, “Shoulda, woulda, coulda” or someone who feels lucky that they got into the market when they could?
Miami Foreclosures Now On-line
In an attempt to work through the more than 110,000 open foreclosures and the 7,000 new ones that are filed each month, Miami-Dade County has put them on-line. Registration is free and allows you access to the county’s foreclosures. If you want to bid, you will be required to put down a refundable 5% deposit.
Arts Festival At Pinecrest Gardens
The 7th Annual Pinecrest Gardens Fine Arts Festival will take place this Saturday and Sunday from 10:00 a.m. to 5:00 p.m. Take a stroll through the beautiful gardens while viewing a variety of artwork from nationally recognized artists. There will also be food and music.
Attending this event counts as one the New Year Resolutions for South Floridians!
Rental Vacancies Rise, Rents Drop
According to CNNMoney.com the national vacancy rate for rental apartments rose to 8% at the end of 2009 up from 6.7% a year ago. High vacancy rates translate into lower rents, so if you are getting ready to go into a lease or renew your existing one, negotiate the price. Keep in mind that many corporate landlords will not want to decrease the monthly rent because it hurts their books, but they will throw in a free month’s rent or some other benefits/improvements, that will bring your effective rent down.
Miami Real Estate – Single Family Homes 4th Quarter Market Update
Below is a quick snap shot of what the real estate market for single family homes looked like for the fourth quarter of 2009. These numbers are derived from the Multiple Listing Service and though they do not include For Sale By Owners and anything not listed on the MLS, they are indicative of what is going on in our local markets. The closed sales may be slightly underestimated due to the lag time in posting the sale in the MLS.
Coconut Grove
- Closed Sales: 23. 5 short sales, 3 REO. None of the closings in December were Short Sales or REO. Highest Sales Price: $2.2 million. Highest Price/Square Foot: $437.98. Lowest Sales Price: $154,900. Lowest Price/Square Foot: $82.97
- Pending Sales: 22, 14 of which went pending in the fourth quarter.
- Active Listings: 165, down from 217 at end of Sept. Highest List Price: $18 million. Lowest List Price: $65,900.
Coral Gables
- Closed Sales: 101. 6 short sales, 10 REOs. Highest Sales Price: $5.15 million. Lowest Sales Price: $250,000.
- Pending Sales: 74
- Active Listings: 421, down from 450 at the end of the third quarter. Highest List Price: $49.5 million. Lowest List Price: $89,500
Key Biscayne
- Closed Sales: 13. 0 short sales, 1 REO. Highest Sales Price: $6.15 million. Lowest Sales Price: $820,000.
- Pending Sales: 3.
- Active Listings: 122. Highest List Price: $24.950 million. Lowest List Price: $985,000.
Miami Beach
- Closed Sales: 41. 5 short sales, 7 REOs. Highest Sales Price: $9.75 million. Lowest Sales Price: $240,000
- Pending Sales: 53
- Active Listings: 380. Highest List Price: $29.9 million. Lowest List Price: $181,000.
Palmetto Bay
- Closed Sales: 42. 8 short sale, 4 REO. Highest Sales Price: $1.45 million. Lowest Sales Price: $140,000.
- Pending Sales: 63
- Active Listings: 139. Highest List Price: $2.85 million. Lowest List Price: $165,000.
Pinecrest
- Closed Sales: 45. 4 short sale and 5 REOs. Highest Sales Price: $3.5 million. Lowest Sales Price: $236,000.
- Pending Sales: 29
- Active Listings: 199. Highest List Price: $5.9 million. Lowest List Price: $265,000.
South Miami
- Closed Sales: 24. 3 short sales, 9 REO. Highest Sales Price: $870,000. Lowest Sales Price: $87,500.
- Pending Sales: 21
- Active Listings: 71. Highest List Price: $1.899 million. Lowest List Price: $57,270.
Mortgage Rates Fall Slightly This Week
After rising for the past four weeks, long-term mortgage rates fell last week. Freddie Mac reported 30- year fixed rate mortgages averaged around 5.09%, down from 5.14% last week.
Foreign Investors Looking At U.S Real Estate
Now that the residential real estate market appears to have stabilized, investors are starting to look at U.S properties as potential investments. According to Kevin Brass of the Wall Street Journal, groups of investors from Mainland China are still touring properties in the U.S.
With the decrease in real estate prices and the drop in the dollar in relation to other currencies, foreign investors are taking advantage. Shouldn’t you be?
Beaux Arts Festival Is This Weekend
The 59 Annual Beaux Arts Festival of Art is this Saturday on Sunday at the Lowe Art Museum on the University of Miami campus.
This event counts towards on of the New Year’s Resolutions For South Floridians.
FHA Changing Approval Process of Existing Condo Projects
The following are some of the changes the FHA is making in how they process and accept loans in new and existing condo projects:
- The burden of approving a condominium project will shift from the FHA to the lenders
- Approved condo projects will need to be re-certified every 2 years
- Homeowner’s Associations will need to fill out an FHA Homeowner’s Association Certification verifying that delinquencies are less than 15%
- 50% owner occupancy ratio will be required on existing approved condos
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