The Gate Arty Blog - July 2008 Archive

Down-Payment Assistance Eliminated?

Wednesday, July 23, 2008 - By Gate Arty

Mortgage programs that offer down-payment assistance (DPA) assisted nearly $80,000 people buy homes in the depressed market of 2007. The Senate and House of Representatives are fast-tracking legislation that would likely abolish DPA programs. The repercussions could be devastating to the already ultra-sensitive real estate market.

DPA programs are operated by nonprofit organizations. These organizations provide buyers with money for their down-payment. In turn, home sellers reimburse the organizations and pay an administrative fee. These loans are insured by the Federal Housing Administration (FHA).

Mortgages with DPA account for almost 40% of FHA’s volume! It has been estimated that if DPA programs are eliminated, the direct impact on real estate could result in an estimated $50 billion in lost real estate sales & mortgages, not to mention the loss of jobs in the building & lending sectors of the real estate industry.

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Market Update - June Real Estate Sales

Tuesday, July 22, 2008 - By Gate Arty

The MidFlorida MLS reports that the Lakeland Association of Realtors (LAR) closed 172 homes in the month of June, up from 159 sales in May. To put this in perspective, there were only 114 homes sold in January. The East Polk Board of realtors posted 110 home sales, giving Polk County 282 homes sold for the month.

In Lakeland, the average list price increased to $183.672 from $178,894. The percentage difference between sales price/list price increased slightly to 93.52% from 93.09%. The average days on the market dropped to 124 days on market (DOM) from 135 DOM last month. Again signifying increased momentum in the local market.

In East Polk, the average list price increased to $165,987 from $159,173 last month. The average sales price jumped to $153,489 from $147,806 last month. The percentage difference between sales price/list price decreased to 92.47% from 92.86% and the average days on market decreased to 155 DOM from 163 DOM a month earlier.

The hottest price point in Lakeland continued to be south of the $200,000 mark. The majority of home sales in Lakeland occurred in the $160,000-$179,999 price range. The 21 home sales represented 12.21% of all Lakeland sales. Other hot price points were $140,000 - $159,999 representing 11.05% (19 home sales) & the $200,000 - $249,999 accounted for 10.47% (18) of sales. The upper end market remained sluggish, with no homes selling over the $600,000 mark, and only 11 homes selling for over 350,000 (last month there were 8 homes that sold for over $350,000).

In East Polk there were 16 sales in the $120,000 - $139,999 price range, which represented 14.55% of total sales. The second most popular category was $100,000-$119,999, which represented 13.64% of the market (15 sales).  The upper end also was sluggish, with only 6 homes selling for over $350,000.

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First Friday - August

Saturday, July 19, 2008 - By Gate Arty

Friday August 1st will mark Downtown Lakeland's First Friday event. This month's theme is "Dog Days of Summer." Like in years past, this year's event will also feature many 'dog-centric' activities like obedience training demonstrations, pet portraits, pet & owner look-alike contests, and agility drills by the Lakeland Police Department K-9 unit.  Kids can also expect to see celebrity McGruff the Crime Dog make an appearance.

As usual, Downtown restaurants & retail stores stay open late on First Friday. Many of the restaurants have outdoor seating and, in most cases, dogs are welcome. The SPCA will also be having YAPPY HOUR at Black & Brew. There will be a car show on Tennessee Avenue, along with many local artists, entertainers, & music. Expect to see many other activities during the event as well.

See you there!

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Record Sale for Trump & Apprentice

Friday, July 18, 2008 - By Gate Arty

Donald Trump 'fired' off another record sale this past Tuesday. The Maison de l'Amitié, a 60,000 square foot  estate in Palm Beach with 475 feet of beachfront property, sold for a record $95 M. Located at 515 North County Road, the cozy residence typifies Trump's tradmark over-the-top luxuries: a mammoth fountain at the front, a circular gallery boasts a series of trompe l'oeil reproductions of famous paintings, white marble columns, and formal gardens. Of course, the bathroom fixtures simply feature understated 24-carat gold.

The buyer, Dmitry Rybolovlev, is number 59 on the Forbes list of the world's wealthiest people. His net worth is estimated at $12.8 B. the Russian tycoon supposedly covets the property for its expansive beachfront. Trump, the man behind the successful reality television series The Apprentice, bought the property for a meager $41.35 M in 2004. Kendra Todd, winner of the Apprentice (Season 3) spearheaded the renovation  of  the property, which alledgedly cost a whopping $25 M. Trump originally forecasted an anticipated sales price of $125 M.

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Fannie Mae & Freddie Mac Concerns

Monday, July 14, 2008 - By Gate Arty

Concerns about the solvency of both Fannie Mae and Freddie Mac, which guarantee over $5 trillion of the nation's $12 trillion in mortgage debt, sent the stocks of both companies into a tailspin this past week. Fannie Mae, open the day trading at $23.00 previously had a 52 week high of $41.65. Freddie Mac opened at $23.50 today with a 52-week high of $45.50. The Federal Reserve voted Sunday to allow Fannie and Freddie to borrow directly from the central bank.

Add to this the announcement that IndyMac Bancorp shut its doors, which marks the first time in 15 years that a bank with over $10 billion has collapsed. The Federal Deposit Insurance Corporation seized control of the bank late Friday. IndyMac focused on deposits and originating home mortgages.

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Real Estate Foreclosure Opportunities

Monday, July 14, 2008 - By Gate Arty

A turbulent real estate market has presented opportunity for local investors. Polk County has never had as many real estate foreclosures as our present day market. In June alone there were 815 foreclosures. In June of 2007, there were only 381 filings . . . a whopping 114% increase! In all of 2007, there were 5132 foreclosures. Thru June there have already been 4,481.

So what of this opportunity? Buyers, specifically investors, have a treasure trove of real estate inventory to select from. Banks are not in the business of owning real estate. Once a property is foreclosed & in their ownership they will either sell the property at auction, or typically secure the services of a REALTOR to sell the property. It is wise to consult with a REALTOR adept at handling foreclosures, known in the real estate profession as REO (real estate owned) properties. Typically these REALTORS work with several banks & are often the first to know about a property before it even hits the multiple listing service (MLS) database. Working with a REO professional could give you insight on market conditions, incoming inventory, potential resale values, & financing options on rehab properties.

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Real Estate Values & Sales on the Rise

Saturday, July 12, 2008 - By Gate Arty

According to the latest report from the National Associaton of Realtors (NAR), real estate values & sales volume appear to be trending upward, in spite of the recent credit crisis and barrage of negative real estate news reports. After reaching a relative low of $195,600 in February of 2008, the NAR reports the median sales price have increased 4 consecutive months. In the month of May (June’s value will be revised on July 24th) the median sales price was $208,600. This represents an increase of 6.6% from the February low! On an annualized basis, home sales volume has also risen.

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Mortgage Insurance

Friday, July 11, 2008 - By Gate Arty

Three mortgage insurance (MI) companies filed for bankruptcy this week. Mortgage insurance is insurance to offset losses in the case where a mortgagor (borrower) is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property. Mortgage insurance is typically required on loans where the borrower has less than a 20% down payment.

Remaining mortgage insurers have been tightening their standards and offering borrowers fewer ways to avoid purchasing mortgage insurance. The MI companies have begun categorizing more and more of the country as a "declining market," raising the requirements and making such insurance more difficult to obtain. Stated simply, without MI, buyers will have to put more money down to qualify for loans - perhaps 10%.

During the previous housing boom, borrowers were often able to avoid mortgage insurance by taking out two loans: one that covered four-fifths of the home's purchase price and a second "piggyback" loan that covered the traditional 20-percent down payment. With this type of lending practice now being non-existent, potential home buyers need MI to buy, and the overall buying pool has consequently significantly decreased.

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100% Financing options?

Friday, July 11, 2008 - By Gate Arty

With the mortgage & lending industries further tightening their lending requirements & guidelines, it is becoming increasingly difficult for home buyers to qualify for homes. Are there still low down payment options available? The USDA / Rural Development program is certainly a very viable option for certain buyers in certain areas. The advantages of a USDA loan are:

• No down payment & 100% financing
• Loan not limited by contract amount
• No PMI
• No need for "seasoned funds"
• No maximum purchase price
• Not limited to first-time buyers

The property does have to be in an area that qualifies as rural. To check if a property qualifies, click: USDA.

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