Allison Stewart BROKER/ASSOC/REALTOR ®St. Cloud Florida

DO AMERICANS UNDERSTAND HOW THE GLOBAL ECONOMY REALLY AFFECTS WHAT THEIR HOUSE IS WORTH? Sadly, for the vast majority, the answer would have to be no. Do we understand the difference between inflation and deflation? Deflation is what is causing your homes to be worth less. If asked the majority of Americans fear inflation, but without it, their homes will never recover lost value.

INFLATION VS DEFLATION

I recently stumbled across an arguement for inflation entitled "Overcoming America's Debt Overhang" it is a long read, but worth the time and effort. It explains in great detail why inflation is necessary and how in the long term it will actually help the US recover.

WHEN WILL THE MARKET RECOVER?

It depends on whom you ask. Conditions, supply and restrictions now in place all suggest it will never return to the previous levels.

CONDITIONS- What created the bubble were liberal lending policies. Stated Income, Interest only loans, and other risky lending practices which fed the need for consumer greed.

They no longer exist.

SUPPLY- In order for prices to go up, supply must come down.

Unbridaled consumer demand, was the leading cause of the housing price spike, As word spread of the fortunes to be made in the housing market this escalated demand as consumers rushed to buy anything and everything housing related they could. Regardless of what the actual value may have been.

Those buyers... no longer exist.

RESTRICTIONS- THE LACK OF RESTRICTIONS ON CONSUMERS BORROWING MONEY IN 2005-2007

Unlike the 1980's when inflation pushed mortgage interest rates to over 20%, incredibly people still bought homes. Today the interest rate is 4-6% on home loans yet consumers are not flocking to the banks. WHY?

HERE IS THE GOOD NEWS

While wages may not be going up, the majority of Americans are still working 90%

Purchasing a home when the market is down is the best long term hedge against rising inflation.

Purchasing a home now and taking advantage of the additional tax incentive good through 4/30/10 is an excellent hedge against deflation. You can create upto an $8000 buffer. This will offset any drop in value inthe immediate furture.

THE BASIC THING TO KNOW ABOUT INFLATION IS THIS....

The dollars spent today WILL be worth less in the coming years, therefore it will take more of them to purchase goods in the future.

Need Proof?

Ask your Grandparents or parents what they paid for their first home.

DOES THE GLOBAL ECONOMY IMPACT WHAT GOODS YOU CAN BUY?

Anything you purchase that says made in China would be an indicator that the Chinese Manufacturers rely heavily on exports to sustain their economy.

ARE YOU A CONFIDENT CONSUMER?

It is no secret that many people in St. Cloud, Florida are struggling in this tough economy. Most are cutting back on spending, dining out, and are still struggling as the cost of living continues to rise while incomes remain flat or decline in the wake of job losses, and increasing lay offs. The housing market in St. Cloud,Florida reflects these hard times. But.... homes ARE selling.

Mortgages rates, Property tax increases, and the spike in cost of electricity, food, and fluctuating fuel costs have pushed many to their financial limit and beyond. As consumers turning to credit cards to augment payments of basic expenses, credit card companies adjusted their interest rates in some cases as high as 32.79% forcing struggling consumers to seek Bankruptcy as a final protection from a mountain of debt.

IT IS ALL ABOUT MONEY... OR LACK THEREOF

Bankruptcy will offer a shelter from Short Sales, and to is used to stall the foreclosure process. To eliminate deficiency judgements, and other judgements that may be sitting collecting dust in court room files as well as eliminate mountains of high interest rate credit card debt. For some people, it is their only option to ever get out from under it all and make a fresh start. Their numbers are rising...significantly.

As result, bankruptcy petitions have hit an all time high of 9% for consumers and 7% businesses in October, setting a new record of 135,914 nationwide. Chapter 13 (reorganization)) accounted for two thirds of the October filings. Whereby filers were put on a repayment plan over a five year period. If the petitions continue at their present rate, they are likely to be the highest in four years. according to the American Bankruptcy Research Institute. Director, Samuel Gerdano said "The filings demonstrate the sustained stress on the US economy"

Bankruptcy filings are up 30% over last year's numbers. Contributing to the high numbers of consumers seeking protection from creditors are credit cards, home equity loans, and rising unemployment. As you may recall back in October of 2005, consumers in large numbers rushed to file for bankruptcy protection in the weeks prior to Congress passing legislature making it more difficult for petitioners to file for bankruptcy under Chapter 7 which dissolved their debts. Forcing many to seek protection and restructure their debt obligations under Chapter 13 which requires structured repayment.

Maureen Thompson, legislative director for the National Association of Consumer Bankruptcy Attorneys in Washington, DC said " an economy that puts people back to work will begin to lower the number of Americans filing for bankruptcy, but added that she is not expecting the numbers to turn around in the foreseeable future."

Declining Home values appear to have slowed down, and sales of foreclosed and short sale properties have risen for the past eight consecutive months inching up the median price throughout the state. Homeowners who are not upside down (owe more than the property is currently worth)seem to be waiting longer to try and sell their homes hoping the market will recover.

Expectation of previous high priced sales reported in 2006 are unlikely to be achieved again due to the change in the number of housing units now available in Osceola County. Bank owned properties selling at below market prices are continuing to oppress the escalation of prices for homes and the speedy recovery in the housing market many consumers were hoping to see.

First time home buyers have been granted an extension of the 2009-2010 (Up to $8000) tax credit (stimulus plan) which has now been extended to April 30, 2010. The expanded extension now makes consumers who have owned a home within the last five years and are purchasing a home within those time frames eligible for a tax credit of up to $6500.

Selling a home can be a very emotional experience. Suddenly the "enhanced value" becomes intertwined with emotion as the walk through becomes a trip down memory lane. What is valuable to one person may not be relevant to another. Over time, people do things to their homes which have great personal meaning. The key word is personal. It may not necessarily add value to your home, no matter how much you love it.

I recently met with a lovely couple who have a home they wish to sell in St. Cloud Florida. They contacted me having heard good things, seeing my articles in the local St, Cloud Florida News (paper), and here on Activerain as well.

The home has been lovingly maintained. Every corner had been dusted and the home was beyond immaculate we decided to sit in the Florida Room which was very uniquely designed. It had movable walls with vinyl windows which completely open in nice weather and shield you from the harsh elements during bad weather, today it was wide open and the ventilation was fabulous. The pool sparkled brilliantly under the warm midday sun, as we sipped chilled ice tea with a twist of home grown fresh lemon, cut pulled from their citrus tree, and we talked about Real Estate.

They felt confident their old appraisal was still valid. I had pulled fresh comparables and prepared a Comparable Market analysis which I showed them as we discussed what they hoped to achieve in selling their home. They were not very happy with what the numbers revealed. "That is considerably lower than our appraisal". Their appraisal was dated 2006.

So to settle their discouragement, I suggested they have the same appraiser do a new appraisal. Confident I was wrong and they were right, they proceeded with that plan.

A week later I called them back. They were happy to hear from me. It turns out the appraisal which had just been done was back, and even lower than we thought. This was very valuable insight for them, and in the end money well spent in paying for an independant appraisal- that is what a would be buyer will do.

Armed with this new information, they realize a lot has changed in the past three years. The bubble had burst.

They felt I knew my market, and what I talking about and they were very gracious in telling me that.

Not to burst ones bubble, is important.

Homes are selling here in St. Cloud Florida but the price has to be appropriate for the market conditions.

MAKING "QUICK CASH" IN THE CURRENT HOUSING MARKET IS STILL POSSIBLE. If you have been sitting on the sidelines wondering if you should stay in stocks or diversify your portfolio, you may want to take a closer look at the housing market once again.

DOES A 20-50% PROFIT MARGIN EXCITE YOU?

There are not too many stocks or bond options that are paying 20% out there today. However, with some careful research finding a distressed home and repairing and remarketing it could easily yield 20-50% if done properly.

WHERE THERE IS A SHORTAGE OF FORECLOSURE AND SHORT SALE HOMES

THERE IS ROOM FOR PROFIT TO GROW.

The key is careful selection. REALTORS® making use of the new innovations to the MLS system can pinpoint short sale and foreclosure homes accurately. They can also select specific sub divisions.

The ones which have greatest possibility of future profits are the ones which have the least amount of homes whch are bank owned or short sale properties.

Ultimately, large numbers of homes in either of those categories will apply downward price pressure to the market they are in. So do your homework and find an area expert to work with.

OVERLOOKING RAW LAND

The prices of raw undeveloped lots have also dropped as the housing market and building came to stand still in 2007. As a result there are some very well priced lots now available- but most buyers are so focused on the HOMES they are overlooking the ground upon which they must rest.

Typically when the demand for housing is high, people turn to to buiying lots which can be built upon as an alternative hedge against rising costs of buying a home under construction or already exisiting.

The increase in demand for raw land will cause those prices to rise just as it does for existing homes. It is a supply and demand effect.

Conversely, these parcels will drop when demand slacks off. While raw land carries far oless cost in carrying the undeveloped property, over time owners looking to cash out and turn that land into cash equity may price some lots attractively to entice a sale. Now is the time to be looking at them.

This lot for example is located in an area of estate homes in St. Cloud Florida. In Bay Lake Ranch. This community is one of the remaining few still zoned for esquestrian use as well as residential. Lots here range from 1-5 acres. Homes on either side of it range from $375,000- $414,000

PROFIT MARGINS

Estimating profit margins needs to be done prudently. The market is still in the early stages of recovery. Unlike the boom of 2005-2006 the rate of return is not going to be 100-300%. It is more likely to yield 20-50% but the cost of acquiring the property has also dropped drastically. Today it is possible to buy a home for as much as the cost of a luxury car. The main difference being, the car will lose 50% of its value faster.

PENDING SALES UP Nationally 6.1% IN September trumpet the 8th consecutive month pending sales have risen. Compared to pending sales 1 year ago that is an overall increase of 21%. In St. Cloud Florida the numbers are stronger

MORE REASONS TO ACT NOW

The Extension of the Tax Credit will be carried through April 30, 2010 allowing more first time home buyers who can earn as much as $8000, as well as home owners during the past five years, whi can derive a $6500 benefit, to take advantage of tax credit incentives.

You must have a valid sales contract in force by April 30th, 2010 and close on the porperty by June 30m 2010 to qualify.

So if you have been sitting on the fence wondering how to make a financial gain in these turbulent times the answers may well be right under your feet. The ground you are standing on is still solid from an investment standpoint. At least in my market of St. Cloud Florida the possibilities are there.

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LOOKING FOR A HOME AND DON'T FEEL YOU HAVE MUCH MONEY? TRY ST. CLOUD FLORIDA. Your dollar seems to have greater value in St. Cloud, Florida. The entension of the Tax credit for first time home buyers will now extend to April 30, 2010. This means your dollar will go further if you are a first time home buyer. Why rent when it is possible to purchase for less than you are paying now and still reap the tax advantages renters forego? Former rental homes make great starter homes.

St. Cloud, Florida is celebrating it centennial, way back in 1909 it was established as a City celebrating Small Town Living.

The homes in the downtown district are perfect starter homes, or vacation or rental properties. Close to shops, stores, banks, and restaurants.

The tree lined streets which lead to east Lake Toho are quintessential small town quaint.

Located south east of Orlando, St. Cloud Florida was considered a bedroom community. It is nestled between Disney to the west and the beaches to the East. Only 30 minuites to Orlando International Airport.

WHY RENT WHEN YOU CAN OWN?

With prices this reasonable why rent when you can own your own home?

Prices are way down, and sales are rising. Now is the perfect time to consider making the move to St. Cloud Florida

Homes in St. Cloud, Florida Under $100,000 CLICK HERE (No Sign up required)