David O Midkiff

Has everyone started to feel the love again? In the greater Ft. Lauderdale real estate market, not only has the inventory sharply declined, prices are climbing as well.

As I've been reporting for several months, the market in the greater Ft. Lauderdale area has bounced back and this month, I am forecasting the momentum to continue in spite of the tax credit expiration date coming at the end of April. The only immediate cause for concern is if the interest rates which spiked .3% in one week, continue to rise. Most analysts state they feel the recent spike was well expected and already built into the home market since it's been known that the Federal Reserve would no longer be buying residential mortgages after March 31, 2010.

Since April of 2009, prices in the greater Ft. Lauderdale real estate market have increased by 5%. While people might feel this is pale in comparison to the declines we've seen in years past, not only have we stabilized, we're now finally going in the right direction. When a market is balanced, many problems disappear like trying to appraise a property. While prices were declining almost 1-2% per month at one point, trying to determine a value was impossible. It is customarily normal and usual to see 3%-5% gains in appreciation within a balanced market.

Equilibrium is also seen in the amount of inventory currently on the market. According the Ft. Lauderdale MLS, there is approximately 7 months of single-family inventory currently on the market. This inventory is selling for 92% of asking price within 84 days of being listed. These figures are all indicative of a balanced market. Inventory levels within a balanced market tend to run from 6-12 months of supply of homes. Homes usually sell within 90 days of the listing date. When I segmented the inventory based on prices up to $400k, the inventory level within the greater Ft. Lauderdale market was only 5.6 months commanding 95% of the asking price within 75 days of the listing date.

The same tale can be told about the multi-family real estate market. Within the multi-family arena, there is currently 7.7 months of inventory which is a far cry from nearly 40 months of supply back in April of 2008. The Sellers are receiving 90% of their asking price within 92 days of the listing date. When drilled down to prices below $400k, Sellers are receiving 93% of their asking price within 88 days of the listing date.

The average dollar per square foot within the greater Ft.Lauderdale area is presently $148 for single-family homes and $112 for multi-family homes. Be advised, this is a running average. Better quality neighborhoods and better looking and well maintained homes will command higher.

Typically a quality home (single-family or multi-family), under $400k is receiving multiple offers. It started within the price points under 100k approximately 7-9 months ago. Now that has grown to price points up to $400k. As soon as regular, standardized financing channels are reestablished for price points exceeding the FMNA conforming loan limits ($417k in Broward County), we will then see a spark in the upper end markets.

Many naysayers are thinking that doom and gloom is on the horizon when the Federal tax credit expires on April 30^th, 2010. It looks pretty apparent that the credit will not be extended again since other sectors of the economy are also bouncing back. In Florida, at least, people were not able to fund their down payments with the tax credit. Some states did allow this through special loan programs. While it's great to get free money, this was not the prime focus of first time buyers. They had to come up with the deposits and closing costs aside from the eventual windfall. If anything, some might grimace that they didn't get their windfall, but I don't think this will stop people from purchasing a home. In my professional opinion, I think interest rates will have a direct correlation to the buyer's attitudes towards purchasing a new home. Let's all hope the experts have it right and that lower interest rates will continue to prevail which will allow the sun to continue to shine over South Florida.

If you'd like to discuss this, feel free to drop me a line. Click on this link.

Normally, my blogs are more informative. Normally, they are filled with charts and usually have a positive tone. My mom always said, "If you can't say something constructive, then don't say anything at all." I've even received responses that say I need to interject more of my own opinions into the articles and be less like a journalist . This time, I am breaking all the rules.

What is wrong with the realtors and agents in the South Florida area? My specialty is helping buyers in a price point that seems to be on fire at the moment. Most of my buyers are looking for properties in various townships around the South Florida area in the price range of $100-$250k. At the present time, the condition of a property in that price range means very little. No matter what township, no matter the condition, every property is receiving at least a half-dozen offers and the lenders are salivating.

Here's the issue. Why, if you have received several offers, would you put them all through to the bank? In most cases, agents are playing a passive role for their Sellers and as a consequence, the banks who already take way too long to review the offers, throw them all back to the agent and ask for a "highest and best" offer round of bidding. Thank goodness that appraisals are going to keep a lid on the craziness of overbidding for a property. However, it's more than just the price that will win the bid. Some are removing their rights to inspections, some are changing from a safe loan to a more costly loan for the sake of being able to close a bit faster. It's absolute insanity.

While the tax credit has helped to bolster the confidence of the average buyer, I am waiting eagerly for its end. The tax credit has created a frenzy that can only be equated to the stampede in Pamplona, where they run the bulls against the people. There will be tons of disappoint on the part of those marginal buyers that tried to stretch for their part of the American dream. Some however, just need to realize that at the present time, it's better to rent than buy. No one should stretch so much as to falsify or lie about their current economic status for the sake of buying a place. We've already seen the results of such behavior.

There are so many parts that are broken in this frenzied scenario. Here are just a few:

Banking issues

•1. Short sales should typically called, "long sales". The banks generally don't even start the process to review the paperwork on a Seller's home until they receive an offer. This process seem to take forever to get through anyway, so why not start immediately? When an offer does come in, the buyer would wait much less and there would be a stronger likelihood that they would actually close.

•2. The lenders shouldn't press people for a "best offer". As previously stated, if there is a bidding war, the price can only go so high before the appraisal will stop the foolishness at hand. Encouraging people to remove safeguards is reckless since they will ultimately be holding yet another foreclosure should the new owner have bitten off more than they could handle.

•3. Most loans in the price points of $100k-$250k are still going FHA or FNMA Homepath for their financing. This is because banks are generally still not loaning money. After being bailed out by the taxpayer's dollars, it seems rather hypocritical that they are now players watching on the sidelines while enjoying their recreated bubble of pollyannic serenity and huge bonuses. If a borrower has a credit score at or over 700, isn't he a good enough risk? Some people are still being denied a loan or being offered higher interest rates. Lender's prefer scores now that exceed 725 in most cases. In the multi-family arena where a lot of properties never received an initial FHA approval, help is needed from the private banking sector. Time and time again, rejections are seen and great homes then are ultimately sold for much less to a cash investor rather than a future home owner.

The Agent issues

•1. Pricing a home way below the market price to stimulate a bidding war is insane if you know that the price range is already hot. Many times, however this practice seems to backfire or I wouldn't see several listings each day returning to the market marked as active in the multiple listings. This only serves to frustrate the buyer's agents, the buyers that initially were interested as well as the Seller you supposedly represent.

•2. Submitting every offer, no matter how ridiculous, only serves to make the bank believe that they have a lot more interest than they actually have. There is no unethical behavior when exercising your using professional judgment.

•3. Get money on each offer. This nonsense of making the deposit on the initial offer subject to the lender's acceptance is not really an offer. You're booking an airline reservation. Maybe you should change professions. When there is no money placed in escrow on the part of the buyer, they will likely go to several properties and place similar offers, maybe with different agents! These buyers making multiple offers on different properties is no different than the behavior buyers exhibited when they purchased several homes they knew they couldn't afford it. This behavior is no different. Well, actually it is. The buyers with no money down have absolutely no commitment or risk involved in the process, while other deserving and earnest buyers are being left in the dust.

•4. When a buyer's agent calls for information on an actively listed property, at least have the courtesy to communicate in some fashion with him. We're all in the same profession and it seems the code of ethics is being severally abused or broken in many cases. I personally have attempted to get information several times from different Seller's agents, only to be met with a wall of indifference. No return calls, not informing a buyer's agent if special offer instructions are known, etc.

We know what's good and right. It's unrealistic to think everyone will conduct themselves with the utmost of integrity, hence the throngs of people that receive disciplinary action each month from the FREC (Florida Real Estate Commission). However, I will be better at reporting the abuses going forward. I could literally spend my entire day just reporting violation after violation from the verbiage used in the MLS listing. The local board, who has a task force to check for abuses, must be overwhelmed since I can pull up a majority of listings that will violate at least one rule.

Okay, now that I have taken the sheet off the 800 pound gorilla sitting in the corner, what do you think?

Look me up

It is very clear and apparent, the Ft. Lauderdale real estate market is stable and is about to make a turn for higher prices.

According to Trendsgraphix, inventory levels in both single-family products and multi-family products dipped after making a small spike in January. The inventory level of single-family homes within the greater Ft Lauderdale market dipped to 9.9 months, down from 10.1 months in January.

The actual number of single-family homes currently on the MLS stands at 8,100. Of the current single-family inventory, only 6.1% was from foreclosures while a whopping 59.5% were from traditional sellers that still had positive equity within their homes. Inventory levels dropped from 11 months to 10.9 months according to the chart below.

The actual number of multi-family homes currently on the MLS stands at 12,917. From this raw number, 6.2% of the total represents foreclosures while 61.1% are listed as traditional transactions whose owners are in a positive equity territory.

Short sales, like the other transactions above are closely mirrored between the single-family and multi-family markets. On average the short sale today represents nearly 1/3 of the properties currently offered in the Ft Lauderdale real estate market. Short Sales, according to the Florida Association of Realtors are about to get a procedural make over. Since the Federal government's loan modification process turned out to be a huge joke, they have turned their attention to making the short sale process more successful. The changes being made have people on both sides of the aisle once again [so what's new with that concept, right?] Here is a short list of changes being made effective as of April 5, 2010:

The new Home Affordable Foreclosure Alternative program will run until Dec. 31, 2012. Among its provisions:

The lender must offer a short sale in writing to the borrower within 30 days after the borrower either is ruled ineligible for mortgage modification under the HAMP program or has been ruled unable to sustain payments under a trial plan.

A borrower may receive up to $1,500 to assist with relocation expenses.

Incentives of $1,000 will be offered to lenders for each completed short sale. For each deed in lieu of foreclosure, in which the borrower voluntarily transfers the property to the lender, $1,000 will be paid to the lender.

A lender with a second lien on the property will get up to $3,000 of the short-sale proceeds, or can pursue a short sale outside the program if it doesn't agree to share.

The lender will not be permitted to reduce the real estate agent's commission after an offer on a property has been received.

The final piece of good news is that interest rates continue to be stable at just under 5% according to the Florida Association of Realtors. As of March 12, 2010, the rate for a 30-year fixed loan was 4.95%.

With all of the good that is finally being said about real estate, there is one scenario that I've noticed and makes me take cause with our profession. Within the price point from 100k-200k, agents within the greater Ft Lauderdale area are allowing a vast number of multiple offers to be taken on their listings. In some cases, I've personally witnessed over 20 offers on a single property! Additionally, the agents will then submit every offer to the bank without looking at the strength or integrity of the deal. Many offers now submitted do not have actual cash tendered to the deal until the bank approves the transaction. This not only dilutes the importance and meaning of a contract, it reduces it to no better than making an airline reservation, only in this case, people's lives are being messed with.

Someone or some organization needs to put a halt to this practice. I've personally seen many times over in the past months, "approved" short sale. This is now become a joke. By the time the lender makes their judgment as to the best offer, the person who's made the offer is long gone and probably living in their next new home. Meanwhile, there are throngs of hard working people who seem to be getting locked out of the ability to purchase a home.

With the deadline of the tax credit looming in the near future, I am hoping that our profession will rise to the occasion, consider the best offer for their seller and submit one offer to the lender. If all the agent is going to do is be a paper pusher rather than the expert, then why are they present? Let's stop this abuse. Let's eliminate the foolishness and let's help the people.

If you'd like to comment on this article, feel free to contact me by using this link.

The dawn of the new year has seemingly given way to an increase in inventory levels throughout the price points of the Ft. Lauderdale real estate market. If one solely looked at the increase in the months of inventory, the condition of the local Ft. Lauderdale market would be taken totally out of context. Actually, the market is stronger than ever these days.

From this time last year, single-family inventory levels have decreased an amazing 42.2% while the inventory of attached homes have decreased an astounding 52.9%. As of this article, another significant shift has occurred. Traditional sellers are now again a clear majority of what is being offered on the MLS. In the single-family arena, traditional sellers represent 60% of the homes offered with an additional 34.2% offered as short sales and a minute 5.8% as foreclosures. The news is quite similar in the multi-family sector with 61.3% of the properties offered by traditional sellers, 32.7% offered as short sales and only 6% of the multi-family properties currently offered are bank owned foreclosures.

It's clear that low interest rates are a key component to the recovery process of the local Ft. Lauderdale real estate market. Currently, according to the Florida Association of Realtors, the 30 year fixed rate product was offered at 4.97% dipping back below the 5% benchmark. Interest rates have been hovering on either side of the benchmark for the past several months. Another kick in the pants to the local real estate market has been a jump in the consumer confidence level. Having recently peaked at a 2 year high, it's clear that the average person in the Ft. Lauderdale area is seeing a definite sign of recovery. Finally, the Federal income tax credit has created a substantial advantage for not only the first time buyer, but the people moving up the property ladder as well. When the vast numbers of first time buyers decided to take a leap of faith in property ownership, this allowed the sellers of those properties to take the advantage of the expanded tax credit and move up the ladder as well.

The question at hand is whether the growth in the local real estate market will continue if the Federal government doesn't extend the tax credit beyond its current deadline of April 30,2010. If the Ft. Lauderdale market must now sink or float without artificial help, I think it's going to float rather nicely. Granted, $8,000 is a nice stimulus to buy a home, but the first time buyers are now well past their buying zenith and the market continues to get stronger. I think the market is quickly becoming self-sustaining and while some might decide to put off their purchases, the $8,000 incentive is a relatively small incentive in the grand scheme of things. Low interest rates, which directly affect the affordability of the monthly payment, are the key to a long lasting recovery. Many experts are on board by saying they feel that rates will remain low for the foreseeable future.

What does this all mean? When there is sustainable growth, there is prosperity. When you find a prosperous environment, there is usually price appreciation. Not only has the greater Ft. Lauderdale market stabilized, we are on the brink of price appreciation once again. You heard it here first. If you'd like to discuss this further, click here and voice your opinion.

There are so many naysayers out there and that will probably never change. Some people make a living at throwing negativity out in the world just to throw out a contrasting point of view. To them I say, "Find a new job!"

Just in the last twelve months in the Ft. Lauderdale real estate market, I've witnessed price points under $400k experiencing bidding wars over distressed or newly renovated properties. In many ways, it was reminiscent of the old glory days of 5 years ago.

Ft. Lauderdale has experienced a renaissance in the real estate market. Prices of homes and investment properties are now so affordable that the non-college type can purchase and own a piece of terra-firma. If a person has carpentry or mechanical talents, there are properties going for as much as 75% off their peak prices from 5 years ago. After recently doing some extensive research in the Ft. Lauderdale area investment arena, it's clear that the affordable properties to renovate and hold as rentals are quickly disappearing. This was not the case this time last year.

Mortgage rates have now calmed back under the 5% threshold to close at 4.98% on Friday, January 29th. Most economists do predict unfortunately that the rates will increase to approximately 6% by year's end. This could have a substantial impact to the local Ft. Lauderdale real estate market. The driving forces of recovery in this local real estate market have been ridiculously low interest rates and free government money. Someone in Washington maybe had a fuzzy but practical point to give tax credits to the first time buyers. When the tax credit was extended to existing home owners on December 1st, that was brilliant. Someone figured out that the pool of first time buyers would eventually dwindle, but a bigger source of movement could come from the pool of existing home owners. The key to the continued recovery in the local Ft. Lauderdale market will come from the extension of the tax credit due to expire on the 30th of April.

A huge turn for the Ft. Lauderdale real estate market came from a change in the perception of the consumer. There is a lot more confidence in the local real estate market now compared to two years ago. In 2007 to early 2008, you couldn't put a price attractive enough to sway many to take the leap of ownership. Many went into rentals knowing that the prices were falling and they were going to wait it out. Today, that ship has sailed and people are once again exchanging their existing homes, often securing the buyer within 79-90 days from listing the property and settling on an offer that is approximately 96% of their asking price. These are great number that have only improved within the past 12 months.

To the naysayers, find another job! Ft. Lauderdale real estate is alive and recovering nicely. To those who are still on the fence, jump off and dive right in. The water is warm and it's calm. You may tread a little water in terms of appreciation for the next few years, but the freedom of ownership, the free tax money and the income tax right off for interest and taxes are very intoxicating for building wealth in the near future.

If you'd like to chat more leave me a message.