January, 2010 Market Indicators

Nationally, according to the National Association of Realtors. existing-home sales- including single-family, townhomes, condominiums and co-ops- dropped 7.2% to a seasonally adjusted annual rate of 5.05 million units in January from a revised 5.44 million in December, but remain 11.5% above the 4.53 million-unit level in January 2009.

In Sarasota, overall sales vs. a year ago are down by 21% vs. December, 2009, but are up 58% vs, January 2009.  This indicates a continuing recovery of the local market despite the end of 2009 dip in sales.  End of year 2009 pending sales remain high.   The median sales price also dropped in January to $156,250 vs, $170,000 in December for single family homes.  The January median Sales price was above January 2009 number of $149,950.

Free University of Florida Home Book

Here’s a good free resource for prospective home buyers. 

The University of Florida’s Department of Family, Youth and Consumer Sciences (FYCS), Florida Cooperative Extension, Institute of Food and Agricultural Sciences at the University of Florida (UF/IFAS) developed My Florida Home Book to assist home buyers in making decisions on a home purchase.

My Florida Home Book consists of two major parts:

Part I. Becoming a Homeowner

Part II. Taking Good Care of Your Home

In Part I, you will learn various aspects of homeownership that you need to take into consideration before making a final decision to own a home. In Part II, you will learn how to take care of your home and how to keep your home healthy for you and your household members, and importantly, how to be a good neighbor.

The information is free –  just click here to download

Sarasota Housing Market Makes Progress in 2009

Data from Sarasota Board of Realtors

Sarasota’s real estate market has shown some nice gains as of November ‘09.  Sarasota Board of Realtors data shows overall sales are up 86% vs. a year ago, and median prices have risen 6% since October to $162,500, as inventories continue to decline, now down to about 9 months. 

What this all means is that Sarasota continues to be a good market for buyers and investors.  Nationally, home median prices are at about $177,900, that’s 9.4% higher than Sarasota.  About half of the single family home sales in Sarasota are bank owned sales, or short sales, which contibutes to a lower overall sales price here compared to national numbers. 

The government tax credit for home buyers will continue to be a positive factor in this market.  when you overlay this onto sarasota’s laid back Gulf Coast lifestyle, it  could be a very good 2010 Sarasota real estate market.

Create a Simple System for Maintaining Your Property

The initial cost of a home is only the beginning.  Just like your car, over time, home thingys wear out, fall out, give out, break out, and just need some old fashioned TLC.

You can prepare for this by putting together a system that proactively maintains your home in the best possible shape. For those who are very organized, a system like this will fit right in with how you live your life.  For those who are not the most organized (I count myself in this group)…..well, just give it a try, you’ll be amazed at how it can help.

For starters, you will create a plan for the home.  Using a spreadsheet or a written document that lists all the major systems in the house down the left side of the page.  So you would have a list for example, that would include:

• Heat Pump
• Plumbing
• Roof
• Electrical
• Landscaping
• Appliances
• Special Equipment (like fireplace, or pool)

Alongside of this column create a column called “Major Maintenance” and list beside each system any work and the recommended dates.  Do a little research on this.  For example, every spring, and fall, homeowners one should tune up the Air conditioning system using a licensed technician.

The next column should be titled “Minor Maintenance”  and include routine tasks like changing filters, or painting, or carpet cleaning.

Finally, set aside a budget for maintenance.  Here’s a good article written by Dan Steward  that throws out some guidelines, like the 1% rule.

When it comes to home maintenance, you can pay now, or later, but you will pay.  You might as well take control of it and plan for it – being a bit more organized will help things to last longer, keep the value of the house as high as possible, and not be such a big expensive surprise when something fails.

Will The Home Affordable Modification Program Help?

Our government has put $75B in a program called Home Affordable Modification Program.  The idea is to help people with hardships to qualify for a permanent loan reduction program.  The Treasury department says that homeowners who have been approved have reduced their mortgage payments by an average of $576 per month.

As usual, there is controversy with this program.  Among the complaints, are that the banks have dragged their feet implementing the program, and the banks in turn have blamed the government for delays because the guidelines for qualification took months to define.  I also think that it has not been advertised well.

Despite its drawbacks, the kind of mortgage reduction that is possible will certainly help many people to avoid foreclosure and stay in their homes.  People who are experiencing difficulties with their mortgage because of loss of job, illness, or other misfortunes, should contact their mortgage holder right away.

Should I Just Walk Away? – Help in Making A Foreclosure Decision

 It is a great sadness today that more people have to choose if they should let the bank foreclose on their home.  Today, this decision is happening at all income levels,  and homeowners and investment property owners decide sometimes to simply walk away and let the bank foreclose, thinking that it is the easier choice. 

The truth is that unless you are wealthy, and plan on paying for everything in the future with cash, you should avoid foreclosure if at all possible.   And if you’re that wealthy, you ought to pay your debt anyway.

This article describes general factors that I have uncovered in working through attorneys and brokers in my real estate business, which may give you some idea of important differences between a foreclosure and a short sale.  Standard warnings apply here – seek the advice of an attorney who understands your specific situation before making your decisions.

First, let’s understand that foreclosure is the bank’s way of satisfying their financial claim against the property when the homeowner fails to pay per the note terms.  They have that claim because when buying the house, the homeowner gave them a mortgage to secure the loan the homeowner took out.  Every state has in place its own laws for this process, so it’s best to check with the state that you are in for details that affect you.

A short sale is actually a pre-foreclosure process that allows the homeowner to sell the property with the bank’s approval, for less than what is owed to the bank.  After a short sale, depending on the financial situation of the owner, and their policies, the bank will either seek a judgment against the owner for the balance, or not.  If they do not pursue a judgment, the homeowner will still have to face the IRS, who views the forgiven mortgage balance as phantom income.

So, if someone, either the bank, or the IRS is going to come after the balance, or the taxes, why would anyone want to do a short sale?  Why not just walk away and let the bank foreclose?  Because in most states, the bank has the same rights – they can still seek a judgment against the homeowner after foreclosure.

 Here are some other considerations that figure into this decision:

• With a foreclosure, your credit score may be lowered by 250 to 300 points.  Typically they affect your score for over 3 years.  In a short sale, the credit score is lowered by 50 points and the mortgage will be reported as paid or negotiated, while affecting your score for 12 to 18 months.
• A foreclosure remains on the credit history for 10 years or more.  A short sale is not reported on a credit history.  It is usually reported as “settled for less than the full amount”.
• A foreclosure in many cases is grounds for immediate reassignment or termination.  A short sale is not a challenge to employment.
• A foreclosure is a serious challenge to a security clearance, in almost all cases resulting in a denial or revocation of a security clearance.  A short sale is not a challenge to a security clearance.
• A foreclosure takes much longer to process than does a short sale, resulting in a higher amount of the deficiency judgment for additional taxes, maintenance, and interest costs.  A short sale will usually have a much smaller judgment associated with it.
• A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae mortgage for five years.  A short sale homeowner is eligible for a Fannie Mae backed mortgage after only two years.

No one I am sure, wanted to be in a situation to have to make this choice.  It is best of course to seek as much help as possible to avoid either one, but if forced to choose, the short sale route is truly the lesser of two evils.

1000 Realtors Surveyed on Top Home Improvement Projects