The good ole days……. so they thought

Like any frontier town, Cape Coral’s first businesses included a grocery, a bank, a newspaper and, well, like any Florida frontier town, a realty—aptly named Wonderland Realty, as most early buyers were wondering what they had gotten themselves into. They seemed to be abandoned in the middle of a strip-mining operation. In one direction, nothing but miles of white sand and raw canal banks; in the other, glittering water. They were marooned in “Wonderland.”  more

Lee County Real Estate Enters the Moderation Era

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Both foreclosures and new-home permits were little changed in February in Lee County as the real estate economy settled into something approaching normal after the wild swings of the past decade.

Contractors in the county pulled 213 single-family home permits in the month, up only slightly from 209 in January, the county’s municipalities reported Monday.

Meanwhile, lenders in the county filed 223 mortgage foreclosure lawsuits, about the same as the 216 in January,, according to statistics released Monday by the Southwest Florida Real Estate Investors Association.

There’s little chance foreclosures will rebound to the levels they reached six years ago when investors and home buyers were abandoning their mortgages, said Jeff Tumbarello, director of the association and owner/broker of North Fort Myers-based Steelbridge Realty.

At present, he said, “Over 60 percent of the home sales are cash. At some point there’s just not enough leverage to do it.”

Bob Knight, vice president and co-owner of Cape Coral-based Paul Homes, said the month’s steady numbers showed there was relatively strong demand three months ago when those home buyers were signing the deals that led to February’s permits.

Now, he said, further growth will depend in part on getting enough qualified tradesmen back in the market to support the “nice normal pace of 400” homes per month that the county sees in a healthy housing market.

That hasn’t happened yet, Knight said, because the plumbers and electricians who were working during the boom by and large have either gone on to new occupations or left the area entirely.

Now the construction jobs here are back but some of those workers are reluctant to get back into the business – still wary of another crash.

Even so, Knight said, the industry is starting to ramp up as demand grows: Some developers are building “on spec” (without a specific buyer committed. “Quite a few are rolling out right now and they’re being absorbed.”

Tumbarello said that normal market forces are starting to reassert themselves after years when foreclosures and a huge inventory of unsold homes created atypical conditions.

“Right now you’re looking at a rational market that’s driven by supply and demand, buyers and sellers,” he said.

Another wild wave of construction likely won’t happen now, Tumbarello said, because in most areas the price of existing homes still isn’t as high as the cost of replacing a typical home with new construction.

5 Housing Trends Winter 2014

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If you plan to buy a house this winter, we have good news for you. Buyers will face less competition and will likely find a greater number of homes available for sale.

Now the bad news: Mortgage rates will keep climbing in 2014. They won’t necessarily spike overnight, but you may run out of time to grab the best mortgage rate if you wait too long. The size of your loan also may have to be adjusted after new rules and new loan limits go into effect this year.

Not sure this is the right time for you to buy a home? Maybe renting is a better option for you, but depending on where you live, expect rents to climb, as well.

Here are five housing trends you can expect to see this winter.

 

Mortgages Get More Expensive

It’s time to kiss extra-low mortgage rates goodbye.

Several factors will put upward pressure on rates in the next few months, including the Federal Reserve’s recent decision to scale back on its bond-purchasing stimulus program.

Higher mortgage fees on Fannie Mae and Freddie Mac loans also will make mortgages more expensive in 2014, as they will result in higher rates for borrowers, says Brian Koss, executive vice president for Mortgage Network in Danvers, Mass.

The fee hike could affect many borrowers because Fannie and Freddie own or guarantee about two-thirds of new mortgage loans.

With the higher fees, even borrowers with credit scores above 740 would pay more for mortgages, regardless of the size of their down payments. In addition, Fannie and Freddie have plans to raise the fees they charge lenders, which will translate into higher mortgage rates for consumers.

Mel Watt, the incoming director for the Federal Housing Finance Agency, which oversees Fannie and Freddie, says he will delay the implementation of higher fees, but has not offered details on when they could go into effect.

“It doesn’t make sense to add additional barriers now that the market is healing,” says Lawrence Yun, chief economist at the National Association of Realtors. Still, he says buyers should act quickly if they are ready to make a commitment now.

 

Buyers Face Less Competition

The housing market will march at a slower pace this winter. That’s good news for potential buyers who struggled to ink a deal during the fall.

Home sales have taken a dip after more than two years of year-over-year increases. A housing report by Re/Max found that home sales dropped 15.9 percent in November, compared with the previous month, and 7.8 percent compared with a year ago. The report is based on Multiple Listing Service data in 52 metro areas.

Home prices won’t follow the same trend as home sales, Yun says.

“But there will be less of a bidding frenzy than before,” he says. And don’t dare call this a buyer’s market yet. “It’s slightly tilted towards favoring the seller over the buyer.”

Still, buying a home should be a bit easier this year as the inventory of homes for sale increases.

“We are going to see more inventory coming online,” says Errol Samuelson, president of Realtor.com. “Homebuilders are calling for 1.1 (million) to 1.2 million housing starts next year, which is much better than a couple of years ago. And as home prices appreciate, people who were underwater will feel more comfortable putting their homes on the market.”

Loans Shrink

The Federal Housing Administration has reduced the maximum loan amount on FHA loans in 650 counties across the country. The new limits went into effect Jan. 1.

In high-cost areas the loan limit was reduced from $729,750 to $625,500. You may think that’s not such a big deal, but it affects the purchasing power of many buyers with low down payments in cities like New York and San Francisco.

The FHA also drastically reduced the loan limits in some counties. Limits in Salt Lake County, Utah, for example, dropped from $729,750 to $300,150.

Fannie Mae and Freddie Mac also are considering reducing their loan limits from $417,000 to $400,000 in most markets, but have not made a final decision.

These reductions could hurt the housing market as buyers who want to buy outside the loan limits would face stricter underwriting requirements, says Matt Hackett, operations manager for Equity Now, a mortgage bank in New York City.

“In general, the reduction in explicit and implicit government-backed loan amounts pushes buyers on the margin into ‘non-agency’ loans, which tend to have more stringent qualification standards, reducing the overall pool of buyers which can qualify for a loan,” he says.

New Mortgage Rules

A series of new mortgage rules goes into effect in January. Most of the rules were created to protect consumers from lender abuses and to shield the mortgage market from the irresponsible lending standards seen during the last housing boom.

You may have heard that the new rules will make it harder for consumers to qualify for mortgages, will hinder mortgage lending and hurt the housing market. But in reality, most borrowers won’t be affected by the new rules when applying for a mortgage.

One controversial part of the new Qualified Mortgage rule, or QM, says a loan to a borrower with debt-to-income ratio of more than 43 percent will lack certain legal protections for lenders. Debt-to-income ratio is the percentage of monthly income that goes toward debt obligations.

Loans will be exempt from the 43 percent DTI cap for seven years, as long as the loans meet FHA, Fannie or Freddie Mac guidelines.

“Generally speaking, (the underwriting requirements) will stay about the same for most people,” says Michael Becker, a mortgage banker for WCS Funding in Baltimore.

Another part of the rule, which puts a cap on maximum points and fees that borrowers can be charged, could hurt borrowers seeking smaller loans, he adds.

Rents Get Less Affordable
As homeownership gets more expensive in 2014, many Americans may choose to rent instead of buy. That could put more pressure on already unaffordable rents.

Although rent growth has somewhat stabilized after a steady rise in 2011, rents are still increasing at a faster pace than overall inflation, according to a recent study by the Joint Center for Housing Studies of Harvard University. One in four renting households spend more than half of their income on rent and about half spend more than 30 percent of their income, according to the study.

Demand for rentals continues to grow, especially for single-family homes, says Wally Charnoff, founder and chief executive officer of RentRange LLC, a rental market data company.

“We are seeing a shift where people seem more comfortable renting single-family homes in suburban neighborhoods instead of apartments,” he says.

Rents aren’t increasing everywhere in the nation, he says. But they are more likely to rise in areas with strong job growth, shows the Harvard study.