Underwater on Your Mortgage and Looking for Justification for Walking Away?

Brent T White, a professor at the University of Arizona School of Law, has written a 54 page paper on why you should consider walking away from a mortgage if you are underwater. Click on the title to see the paper.

Given that 49% of Florida homeowners are underwater in their mortgages, this article is certainly food for thought and perhaps a better use of time than watching the Tampa Bay Bucs lose again.

Sarasota County Sales and Inventory Levels

At the beginning of 2009, it was hard to find any category of homes that didn't have at least 30 months of inventory in Sarasota County ( City of Sarasota, Longboat Key, Siesta Key, Venice, North Port, Nokomis, Osprey, northern part of Englewood, Casey Key, northern part of Manasota Key ). As 2009 closes out, there are dramatically different levels of inventory by category.

Overall there are 7,020 active listings today and there were 1,344 sales in the last 60 days for an inventory of 10.4 months.

Realtors generally consider that 6 months of inventory is a balanced market. Any number of months below 6 months is a sellers market, any number above 6 months is a buyers market. Overall Sarasota County is still a buyers market.

For Bank Owned Foreclosures there are 199 listings that are only 2 months of recent sales. This is definetly a sellers market. Multiple offers are normal and many listings sell over list price.

For single family homes priced under $300,000 there are 2,018 listings that are 5.7 months of sales. This market is essentially in balance and builders are starting new construction for this market.

For single family homes priced between $300,000 and $500,000 there are 774 listings that represent 13.9 months of sales. This market is still a buyers market.

For single family homes priced over $500,000 there are 1,126 listings that represent 31.7 months of sales. Condos over $500,000 have a similar level of months of inventory. These markets have not had any substantial recovery and are a very strong buyer's market.

Florida Existing Home Sales Up 45 Percent in October

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Sales of existing homes in Florida were up 45% compared to October, 2008. This was the 14th month in a row that sales are up. All of Florida's metro areas showed an increase.

North Port Building Lots-What's Happening?

Many of you invested in North Port building lots during the boom years. I thought you'd like an update on sales volumes and selling prices.

In the 90 day period ending today, 49 lots were sold in North Port. There are 1,218 lots for sale on the MLS. The average selling price was $8,556. In the same period of 2005, 689 lots were sold for an average price of $58,371.

There are 58 lots listed today for $5,000 or less. In the last 90 days, 21 of these lots sold for an average price of $3,734.

There are 465 lots listed for prices between $5,000 and $10,000. In the last 90 days, 22 sold for an average price of $5,763.

There are 370 lots listed for prices between $10,000 and $20,000. In the last 90 days, 6 of these sold for an average price of $10,542. Four of the six sold lots were on freshwater canals.

There are 345 lots listed for prices over $20,000. In the last 90 days, 4 of these lots sold for an average price of $41,000. All of these sold lots were oversized or acreage lots.


If you purchased lots in 2005, you ought to see if you can get some tax advantage by selling the lots and taking the loss. Also, if you believe the world isn't coming to an end, you might buy 10 or 12 lots now for what you paid for one in 2005 and wait for the market to recover.

Florida has Most New Home Foreclosures

Click on title to see original story.

The Mortgage Bankers Association says one in four Florida mortgage are either delinquent or in foreclosure, the highest rate in the country.

Potential buyers are in a paradise; low prices, desperate sellers, historically low interest rates, tax credits for buyers, and easy FHA financing.

Florida Unemployment Rate Reaches 11.2 Percent, Up From 6.9% Last Year

Click on the title to see the BLS press release.

Florida's unemployment rate rose 0.1% in October from September. There are about 1,026,500 people unemployed out of a workforce of 9,175,000.

Be Careful of Online Auctions-Lunch Isn't Free

I've had customers call me about property tax and condo fee auctions. The Sarasota Herald Tribune had a good article about this today. Click on the title to see the article.

Caveat emptor, let the buyer beware, are the key words in this business. As a minimum, have a title company check out what other liens are on a property before participating in an auction.

Florida, 22 Percent of Mortgages in Trouble

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According to Lender Processing Services, 22 percent of Florida mortgages are either delinquent or in foreclosure. Over 10 percent are in some stage of foreclosure.

Given the relatively low number of foreclosures on the market, there is either going to be a massive restructuring of loans or a very large number of foreclosed houses on the market.

I suspect that because the banks can finance past-due mortgages at close to zero inerest rates and the rules have been changed so they don't have to write down mortgages are the factors behind this mystery.

Two More Southwest Florida Banks Bite The Dust, One in Sarasota & One in Naples

Click on title to see the full article.

Both Orion Bank of Naples and Century Bank of Sarasota both were closed down by the FDIC and sold to IberiaBank of Louisiana last night. The two banks had combined assets of $3.1 billion. The two failures will cost the FDIC almost $1.0 billion.

The failure of Century Bank is the third for Sarasota County in the last three months. Orion Bank was an active lender in Sarasota and Charlotte Counties.

Bank failures tend to mark the final phase of financial crisis periods.

Thirty Year Bond Auction Weak

Today there was a thirty year bond auction. The bonds were sold, they always are, but the number of buyers declined. Why should you care?

There are various factors conspiring to raise long term interest rates:

-The continuing weakness in the dollar.
-Increased economic activity in the USA.
-The inflation that will come from deficit spending.

When long term rates rise, this wonderful period of five percent long term mortgages will end. For most buyers, the amount they pay in interest exceeds the value of the house. A rise in interest rates to just six percent will raise mortgage payments by 12 percent. A rise to eight percent raises mortgage payments by 37 percent.

During the last 30 years, it is more common for rates to be above 7.5 percent than below it.

If you are considering buying, don't forget interest rates when you are considering timing.

FHA Rule Change To Help Florida Condo Market

MIAMI – Nov. 11, 2009 – The Federal Housing Administration is giving the condo market something it hasn’t had for a while – a little breathing room.

Last week, the FHA, the federal agency that insures low-downpayment home loans for private lenders, said it was relaxing its building underwriting guidelines as a way of helping the struggling sector ride out the downturn. The move could help boost sales in condos by making more FHA mortgages available to borrowers.

“The best way to bring back some level of security is to get new buyers into those vacant units. You can’t do that until new homeowners have access to financing,” said Meg Burns, director of the FHA’s single-family program development.

The new rules – which are temporary – come after more than a year of more stringent standards from lenders, who, after suffering major losses on condos, began vetting and disqualifying condominium projects for purchase loans, regardless of whether home buyers qualified.

“This might be an entree for traditional and conventional lenders to return to the marketplace. Symbolically, it’s a pretty significant move,” said Peter Zalewski, a condo market analyst and broker with Condo Vultures in Bal Harbour, Fla.

The temporary rules are effective for most of the coming year and will help the marketplace transition into a new set of tougher guidelines that bring FHA into closer alignment with the project underwriting practices of Fannie Mae.

Earlier this year, Fannie implemented a slew of new regulations governing condo projects that some claim have strangled the market by stigmatizing condo loans in tough markets such as Florida.

Similar to Fannie regulations, the FHA is also now singling out those markets for special attention by approving projects itself, rather than lenders. Burns said lenders and investors were reluctant and even “scared” to lend money, prompting the agency to step in as a way of calming nerves.

“We’re coming in and saying we’ll approve the projects and back them so you will feel confident and comfortable lending in this environment,” Burns said.

Securing the blessing of the FHA is important because it allows borrowers to get loans that require downpayments of only 3.5 percent and qualify under less burdensome terms.

Most conventional loans now require 20 percent down, keeping creditworthy borrowers on the sidelines. In some new projects, lenders have asked for downpayments of as much as 40 to 50 percent.

Among the new, temporary rules is a measure extending a deadline allowing lenders to submit mortgage loans for spot approval in buildings that have not been approved for FHA lending. The administration had said the so-called spot loans would be eliminated by the end of the year but the new deadline is February 2010.

The new guidelines also:

• Increase from 30 percent to 50 percent the number of units in a project that can be financed with FHA loans. FHA, however, will make exceptions, even allowing up to 100 percent, when buildings meet an additional set of more stringent criteria.

• Require at least 50 percent of units in a complex to be owner-occupied or sold to owners who plan to live in the units. Bank-owned units may be disqualified from the percentage calculation.

• Reduce a presale requirement in new construction to 30 percent, compared to 70 percent for loans from conventional lenders.

“This temporary guidance represents incredible leniency in terms of financing standards and loan standards,” Burns said.

It’s hard to say how many buildings may benefit from the new rules, but mortgage brokers and real estate observers applauded the reprieve.

“This should really help some of the stalled projects if they can get their buildings approved,” said Grant Stern, a mortgage consultant in Bay Harbor Islands, Fla., who specializes in Fannie Mae and FHA guidelines. “A lot of these buildings looking to sell out the rest of their inventory should be able to get FHA approval to close out the projects.”

But there will be more hurdles to overcome beginning Dec. 7. That’s when a bevy of additional regulations take effect, including a provision that withholds approval from buildings where more than 15 percent of unit owners are past due on association fees.

Copyright © 2009 The Miami Herald, Monica Hatcher.

Sarasota County Bank Owned Foreclosures-Number for Sale Growing Slightly

Today there are 167 bank owned foreclosed houses & condos listed for sale on the MLS. This is down from 600+ at the end of last year but up from the less than 120 in the summer.

Of the 167 foreclosures for sale today, 111 are single family houses. All but 34 of the 167 are listed at prices below $200,000. 101 of the 167 have been on the market 60 days or less but 46 have been on the market over 120 days.

Also, there are 1,181 short sales for sale today in Sarasota County. For bargain hunters with patience, short sales offer a much better selection than foreclosures.

Venice, Florida Short Term Rental Laws Confusing

Click on the title to see the original article.

Owners of short term rental properties are getting hurt by the a new city ordinance. If you are buying property to do short term rentals, have an attorney do a study of the laws affecting the property before purchasing. There are areas, such as Siesta Key, that appear to be more friendly to rental property owners than the City of Venice.

Longboat Key Club Expansion Decision Coming Soon

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Emotions are running high as the $400 million expansion plan goes throuh it's approval process. You can take advantage of this possible expansion by buying condo's in the existing hotel. The "hotel" program for these condo's generates significant income for the owners. Let me know if you want to see current listings.

Obama signs bill: Homebuyer tax credit extended

Homebuyer tax credit program extended


WASHINGTON – Nov. 6, 2009 – President Obama signed H.R. 3548 this morning, enacting into law an extension, and adjustment, of the $8,000 tax credit for first-time buyers. Among other things, the extension adds money for certain move-up buyers; creates one deadline for signing a contract and a later deadline for closing; changes income requirements; and limits a purchased home’s cost to $800,000.

For more details, click on the title.

Banks Hoarding Land Positions

According to Kevin Depew of Minyanville the banks are hoarding their land positions. This is a situation worth monitoring.


"Banks Go for Broke...

...and They're Almost There

A game of chicken. That's really what it's come down to for banks. Listening in on the Pulte Homes (PHM) conference call this morning, Richard J. Dugas, Jr., president and chief executive officer, summed up the game chicken banks are presently engaged in:



What is becoming clear is that banks are retaining many of their land parcels, especially the A-rated positions, until market conditions improve and they can realize better pricing.



See, right now banks aren't being pushed to sell their land portfolios thanks to Federal Reserve efforts to ease their balance sheet restraints and force feed liquidity into the stock market to help them recapitalize. But we're nearing the tipping point where if those efforts fail, well, then all bets are off.

"Good conditions change if the economy gets weaker instead of stronger in 2010, and banks find themselves under more pressure," Dugan said. "Of course, given that banks have held on this long, we believe that our few incremental deals might get forced out, but not the flood of lots that many have expected and feared."

Naturally, the risks involved in this game of chicken are extraordinary, but would our banking system have it any other way? If the magical mystery recovery falters, banks will be forced to unload this property all at once, naturally, and at much, much lower prices."

October, 2009 Gulf of Mexico access Waterfront Lot Sales in Sarasota and Charlotte Counties

Click on the Title above to see all 12 waterfront lot sales. Prices continue to be low but stable. The number of transactions is low as is typical for this time of year. The most expensive sale was a bayfront lot in Sarasota that sold for $900,000. A lot on Clearview in Port Charlotte that sold for $23,175 was the least expensive.