I can say with certainty that my crystal ball is still a little cloudy, but:
I’m pretty sure that nationally there will be an uptick in the rate of home repossessions in 2012. The good news here is that Florida is pretty well drained of this stock, and as the vacant inventory begins to dry up, we should be in a better than average position for new sales and the return of very modest inflation in the prices of used homes.
There are many reasons for the massive backlog in the foreclosure pipeline, banks are taking months, maybe even years, to actually foreclose on mortgages in default. The administration is focusing on the backlog of homes out there and are making some wild and crazy proposals that may or may not work. But the fact that real estate remains a hot topic is helpful to those who homes are in limbo and to buyers and investors who would purchase a home—but had been stymied with the red tape and delays. It’s pretty clear that in 2012 and beyond, the banks will work through those backlogs, which will increase the actual foreclosure rate, but should get new families in the vacant homes over the next few months.
According to the folks at Coldwell Banker here in Englewood, short sales represent more than 40% of their business. In the coming year, distressed home sales will continue to represent an increasing share of homes on the market. Buyers will shift from considering whether to buy a short sale to understanding that they must be educated and prepared to do a deal with a seller, a bank or both to access the full selection of homes on the market.
To make smart decisions about what to offer and what to expect on any listing they like, buyers will need this information and be willing to negotiate in good faith with patience as well as to set smart priorities and make realistic comparisons between listings based on their own personal priorities around timing, certainty and seller flexibility.
We’ve all been “dope-slapped” by the dips in home values. In Sarasota, I have shown condos which in earlier times would have sold for over a million dollars—but today the asking price is in the $400’s. In Englewood, waterfront homes once in the $500,000 range are selling for under $250,000. Still, the “affordability index” often discussed by the economists at the National Association of Realtors and the Florida Association of Realtors, is showing that buying a home has never been cheaper.
The cost of borrowing money is at an almost all-time low, the cost of purchasing fine housing is also very low today. Meaning that as the job numbers finally correct themselves, the cost of housing will likely increase disproportionately over the next 12 to 18 months. I can’t speak for the other areas of the country which had the same “bubble” we had, and the same “burst” of their bubble—like Las Vegas--but I can speak for Florida, which I see as ready to return to a real estate driven economy.
For years, buyers and sellers have been waiting for that singular event to occur that would cause a quick market recovery. Well, it ain’t gonna happen. Americans love instant gratification. We love to have our cake and eat it too. But the days of getting rich quick (legally) are over. Hard work, sacrifice and good realistic ideas equal getting rich slowly, and that’s the best we can hope for now.
You don’t make money in the real estate business when you sell your property. You make money when you buy. You can’t sell a property for more than it’s worth, so smart investors buy right, maybe 30% off the going rate, and then either wait for the market to grow, or make repairs and cosmetics to drive up the likely resale price.
Today the investors will look to acquire rentals that will return 150% of their monthly costs, and hold these homes as investments. Flipping is so yesterday. Ordinary citizens should relook at a refi or remodel and be content where they are for the long haul, or decide their homes no longer fit their lifestyles and their finances, divest of them and move on.
But the good news is, people will make these decisions based on what is or is not sustainable for their lives and their finances, and not based on inflated hopes about what the market will or will not do.
Dane Hahn is a real estate professional in Englewood, you can contact him at 941-681-0312 or by email at firstname.lastname@example.org. Or see him on the web at www.danesellsflorida.com.