Build your multi-generation compound

Are you tired of the rules and restrictions of a homeowners association?

Do you have a boat, motor home, work trucks, etc. that you’d like to store at your home?

Would you like to have a big workshop next to your house?

Do your elderly parents need your help and watchful eye now?

Are the just-graduated kids moving back home?

We may have a great solution for you…we just signed an agreement to market a 1.4 acre piece of property a short distance from Winston Trails, Journeys End, Smith Farm, Lake Charleston and Lakeview Estates.

It is a heavily wooded, private parcel ready to be cleared and transformed. It is surrounded by other large parcels providing extra privacy.

We even can recommend a great, local, custom builder/engineer to help you with your plans and construction.

You can buy this property from us today for only $130,000! (Cash Only)

Call me today before we release this opportunity to the general public.

Steve Jackson: 561.602.1258

The propaganda confliction continues…

 

First…the ACTUAL facts related to the current state of housing…

• JPMorgan to lay off a total of 17,000 mortgage bankers by the end of 2014

• Prices were up 11.7% in the first nine months of 2013, but fell 0.3% in the fourth quarter. And, the latest housing news has been bad.January existing-home sales fell to an 18-month low. And home construction in January recorded the biggest month-over-month drop in seven years.
• “Our early data shows national quarterly price gains are falling at a rapid pace and suggest overall prices could dip into negative territory soon if current conditions continue,”

NEXT: Here is a sample of recent ‘upbeat’ housing related headlines:

• March comes in like a lion and goes out like a lamb. As March comes in this year, the housing sector continues to roar ahead with good news, while other sectors are struggling.
• NAR says the housing market will continue to experience a growth in home sales, provided the job market continues to improve.

As a seller or buyer, it’s difficult to know what to believe. Are prices rising? Is inventory low? Should you sell now or wait? Should you buy now or wait?

Here, in Palm Beach County, it looks like the market peaked in August, 2013 after a bottom in early 2011. An additional signal is the inventory levels have risen about 25% from the beginning of September 2013. Where is our local market headed this year? I think I know what the indicators are and where they are pointing.

My business has been built upon giving highly personalized advice based upon my client specific needs and goals. No one answer is right for all sellers or all buyers. And you can’t rely on the media to give you all of the ‘unbiased’ data and analysis required for you to make an educated decision.

If you are thinking about making a move, selling or buying, we should see what is the best thing for you to do, now. My direct line is 561.602.1258

Thanks for reading….Steve Jackson

What’s in store for 2014?

Sorry to start out 2014 with a bad-news post…but writing about all sides of the real estate market is how I roll!

On December 31, 2013, the Federal Housing Administration (FHA) reduced the loan limits for its single-family insurance program in 652 counties, while increasing them in 89 counties. The changes result from the expiration of provisions of the Economic Stimulus Act of 2008.

In Palm Beach County, the FHA loan limit for 2013 was $423,750…which meant that a buyer could obtain an FHA insured loan for $423,750. Typically, buyers choose the FHA loan route for 2 reasons: 1) they have little to no down payment, or, 2) their credit score would not enable them to obtain convention financing.

With an FHA loan, a buyer could purchase a home with as little as 3.5% down. On the aforementioned 2013 limit, that would have been a home sales price of about $439,000.

But starting now, the maximum loan amount for an FHA buyer is only $345,000! A $94,000 reduction…almost 20%! This new loan limit will translate into a new maximum purchase price of about $358,000.

Lets look at what effect these new limits would have had if we overlay the 2014 limits on to 2103 loans.

In 2013, there were 2301 FHA home sales (about 5% of the total sales) reported in MLS statistics. Of those 2301, 127 of them fell above the 2014 limits. This doesn’t necessarily mean that those 127 sales would not have happened in 2014 limits were in place, but in my 15+ years of experience I have found that the great majority of FHA buyers do not have much money for the down payment and that is why they pay the higher fees and higher interest rates associated with FHA as FHA is about the only game in town for this type of buyer.

So lets assume that 20% of those FHA buyers could have financed the loan another way…that leaves 100 sales between $357,000 and $439,000 that would not have been possible (or will not be possible this year). No matter how you interpret it, losing 5% of your prospective buyer pool is not good for home sellers in 2014.

Another interesting and potentially impactful statistic: in 2013 there were 767 all cash sales in the $357k-$439k range. This equates to 43% being cash sales. The all cash sale market is expected to contract again this year as investors/hedge funds continue to scale back on purchases as prices have risen 25% or more since the bottom in mid 2011.

All-in-all, I foresee a tightening of the real estate market going forward this year. I am of the opinion that sales prices will be flat-to-negative. But on the flip side…for the (non FHA) buyer, buying sooner rather than waiting will be advice I will be comfortable giving seeing as how interest rates are expected to continue climbing (with the next ‘taper’ on the horizon) and as underwriting rules are going to be getting tougher.

If you’d like to discuss your options as a seller or buyer in this market give me a call at 561.602.1258

Thanks for reading, Steve Jackson

And come to visit us in our new office (We are now a REMAX franchise). we’re located on the SW corner of Hypoluxo and Jog in the Charleston Square Plaza. 6582 Hypoluxo Rd., Lake Worth 33467

Janet Yellen, The Nation’s New Chief Slumlord

Below is a blog post from Charles Hugh Smith’s blog: OfTwoMinds.com

I couldn’t comment or paraphrase anything in his post that would be an improvement or would add any clarity…so the verbatim post is below. You should add his blog to your daily reading list.

Janet Yellen's role as the nation's slumlord is masked by her apparent distance from the Fed's money spigot and the resulting institutional ownership of the nation's rental housing stock.

Please welcome the nation's new chief slumlord, Janet Yellen. The previous top slumlord, Ben Bernanke, has retired from the position of Chief Slumlord (i.e. chair of the Federal Reserve) to the accolades of those who benefited from his extraordinary transfer of wealth from the many to the few.
Why is the chairperson of the Fed the nation's top slumlord? Allow me to explain.We only need to understand two facts to understand the Fed's role as Slumlord.
1. Rental housing has long been a decentralized, locally owned industry. Over 90% of rental properties under 50 units have historically been owned by individuals or couples: the nation's landlords have historically been Mom and Pop, middle-class folks who saved capital and used those savings to buy a single-family home or small apartment building (duplex, triplex, four-plex) as an investment that they own and manage.
Very few amass a huge portfolio of properties, as few have the income or assets (i.e. the collateral) to leverage the purchase of dozens of rental properties.
Buildings up to four units qualify for conventional mortgages; small rental properties are not considered commercial properties like strip malls or large apartment complexes.
This diverse, local ownership provided a wide spectrum of residential rentals. The wider the variety of rentals and owners, the greater the diversity of prices, locales and requirements. This is the essence of free enterprise: sellers (landlords) and buyers (renters) agree to price and conditions in a dynamic, open and adaptive marketplace.
2. No Mom and Pop real estate investor can compete with financial institutions who can borrow unlimited sums of money from the Federal Reserve at near-zero rates of interest.

Let's start by asking what happens to the price of real estate when mortgages fall from 8% interest to 4%: prices basically double, because buyers can "afford" to pay more at low rates of interest.
When conventional mortgage rates are 8%, a rental that costs $200,000 requires a 30% down payment in cash (because the buyers are not owner-occupants) or $60,000. The simple interest on a $140,000 mortgage is about $11,200 annually. (Let's use simple annual interest for simplicity's sake.)
At 4%, the price can double to $400,000, with a 30% down of $120,000 and a mortgage of $280,000, and the mortgage accrues the same $11,200 in annual interest.
Declining interest rates push real estate prices higher.

At first glance, this doubling in price doesn't seem to affect the cost of ownership. But that is deceptive; consider how many households can scrape up $120,000 in cash compared to the number who can scrape up $60,000. The higher the price, the bigger the down payment required. The higher the down payment, the fewer the number of households who can accumulate that much cash.
To households that live paycheck-to-paycheck, both sums are out of reach. But a significant number of middle class households could accumulate $60,000: such a sum could come from a family house that was sold and divided amongst the offspring, for example, or a Solo 401K that allows the retirement fund to own real estate, or from saving $5,000 a year for 12 years.
The Federal Reserve's Zero Interest Rate Policy (ZIRP) was designed to push real estate prices higher. The Fed's public justification was "the wealth effect": the idea was that as the family home increased in value, homeowners would begin to borrow and spend more money due to their increased home equity.
The second Fed goal was to increase home sales by lowering mortgage rates, theoretically enabling more marginal buyers to buy a home. But since prices rise as mortgage rates drop, this goal is mooted unless marginal buyers are also given a free ride on down payments and qualifying income, i.e. offered near-zero down payments and no-document mortgage qualification processes.
But zero interest rates and unlimited liquidity don't just push real estate prices higher--they give institutions with access to the Fed's nearly-free money an unbeatable advantage over Mom and Pop real estate investors.

Imagine being able to borrow $400,000 at 1% with zero collateral. You can now buy the rental property for cash, and pay only $4,000 in simple annual interest. And you didn't have to put up a dollar of actual collateral to buy the property.
Consider the huge advantages you now have over the competing Mom and Pop bidders. Sellers typically prefer cash offers, so your cash offer (of Fed money) is more attractive than Mom and Pop's loan-based bid.
If the price jumps to $500,000, Mom and Pop are blown out of the water: they don't have the additional $30,000 cash required as collateral.
Thanks to the Fed, you don't need any collateral. You can borrow $500,000 as easily as $400,000, and the increase in annual interest is trivial: a mere $1,000.
Now consider the operating costs: you have a $7,000 annual advantage because you have access to the Fed's nearly-free money. Mom and Pop have to pay $11,200 in simple annual interest, while you pay only $4,000. A property that is break-even to Mom and Pop reaps you a $7,000 annual profit, just because you can borrow money from the Fed for next to nothing.
Now multiply the $400,000 and the $7,000 by 1,000. Now you can buy $400,000,000 of rental properties and skim $7,000,000 in annual profits, just from the advantage of having access to the Fed's quantitative easing (QE) nearly-free money.
Any advantages you can accrue from economies of scale from owning tens of thousands of rental properties are also yours to keep, courtesy of the Fed.
Now you understand why Janet Yellen is the nation's new top slumlord. Her policies of unlimited liquidity, QE and zero interest rates directly enable financial Elites to beat out Mom and Pop rental housing investors and buy tens of thousands of rental properties at will.
Access to free money and near-zero interest rates gives institutional buyers a built-in advantage over Mom and Pop rental property owners: no collateral and free profits from super-low rates available to those closest to the Fed's QE money spigot.
Institutional ownership turns the rental housing stock into a Fed-enabled financial monoculture. Individual Mom and Pop owners may not require a credit check, or they might not raise the rents very often; the odds that you will be treated as a human being are higher because the scale of the operation is small and local.
To Fed-enabled Institutional landlords, you are an income stream to be skimmed.You will be processed and managed remotely, and variations are not allowed, as they mess up the profit machine.
Fed-enabled Institutional landlords may or may not hire competent, responsive managerial firms to manage their thousands of properties: from the point of view of Fed-enabled Institutional landlords, the lower the costs, the larger the profits. One way to lower costs is to not respond to tenant complaints or requests for service. Another is to hire the lowest-cost (and likely understaffed) management firm.
Janet Yellen's role as the nation's slumlord is masked by her apparent distance from the Fed's money spigot and the resulting institutional ownership of the nation's rental housing stock. But guess what, Chairperson Yellen: we're not fooled. Your phony facade of "progressivism" doesn't mask your real role as the nation's top slumlord.

Happy Holidays to all of my loyal blog readers!

It’s a Wonderful Life

This isn’t real estate related…but I thought it may come in handy to my loyal blog readers.

I ran across a blog that has a listing for ALL of the holiday TV shows…date/time/channel!

The list starts with shows as of tomorrow (11/20) and runs through Christmas day. It’s an awesome list…click on the image below and go print your list so you don’t miss seeing (or DVR’ing) any of your holiday favorites.

 

Thanks for reading…and be on the lookout for a big announcement coming in the next few weeks!

Steve Jackson

561.602.1258

The canary in the coal mine?

Back in the early days of the mid 2000’s real estate bust…Las Vegas was the first to show signs of cracking. Now, is Vegas trying to tip us off again?

Read the excerpts from todays WSJ story below and see what you think. Personally, for the past 60 days I have been telling my clients that I feel (and see) a softening in demand and growth in listing inventory. Although we still seem to be short on properly priced inventory in certain price ranges, I can feel the tide shifting.

Also, I am of the opinion that rents will be softening up soon as there are hundreds of new rental units coming close to completion. And new construction ‘for sale’ homes are coming our of the ground everywhere…just like in 2005. Close to me, Osprey Oaks had the timing about right, but I think that DR Horton is going to be late to the party with their 2 developments on Hypoluxo and the one on Haverhill north of Lantana. Then there is Capistara just around the corner on Military (Lennar I think?) and also on Lawrence just south of Hypoluxo. I think we’ll be seeing LOTS of builder incentives in 2014 in an effort to maintain the listed pricing…just like the builders tried to do in 05/06/07.

Las Vegas: The share of homes that sold in cash last month stood at 47.2%, down from 54.8% in August and one year ago, and down from a high of 59.5% in February, according to the Greater Las Vegas Association of Realtors. Many cash buyers tend to be investors.

Home sales were down 1.2% from a year earlier, even though there were more homes for buyers to choose from. The number of single-family homes listed for sale, at 14,659, stood 12.6% below last year’s levels, but the inventory of “non-contingent” listings—homes that don’t have any offers and aren’t under contract—was 60.5% above year-earlier levels. The median sales price in September fell for the first time in 19 months.

In Las Vegas, buyers earlier this year found themselves regularly losing out to investors amid tight supplies of homes for sale. Now, “the market is softening tremendously,” said Bryan Lebo, a local real-estate agent. “Buyers are becoming a lot pickier. They’re more patient.”

In some neighborhoods, he says, homes are now selling for 10% less than they were just a few months earlier, and builders are beginning to offer generous incentives, such as home upgrades to buyers and commissions to real-estate agents, in order to stay competitive.

Thanks for reading…Steve Jackson

561.602.1258

Show Me The Money!!

IMPORTANT NEWS FOR ANY HOMEOWNER WHO OWES MORE ON THEIR MORTGAGE THAN THEIR HOME IS WORTH!!

PLEASE FORWARD THIS POST TO YOUR FRIENDS AND FAMILY…

TALLAHASSEE—During a press conference on Friday, September 20, Florida Housing Finance Corporation (Florida Housing) announced that next week, Florida homeowners who have remained current on their mortgages may apply for federal assistance from the Florida Hardest-Hit Fund Principal Reduction (HHF-PR) Program. The online application, www.PrincipalReductionFLHHF.org, will open at 9:00 a.m. (Eastern) on Wednesday, September 25, and will be available in all 67 counties. ON A FIRST COME-FIRST SERVED BASIS

“This morning, Florida Housing’s Board of Directors approved $350 million in federal Hardest-Hit funds allocated to our state to be used specifically for a principal reduction program,” said Steve Auger, executive director of Florida Housing. “While our state’s housing market continues to recover, many Florida homeowners have remained current on their mortgage payments in spite of their homes being substantially underwater. For those who qualify, this new program can help to reduce their principal balance, which can result in a lower monthly payment and put more money in their pockets.”

Initially, only 25,000 completed and submitted applications will be accepted for eligibility determination, via the website only. When that number has been reached, the ability to start a new application will be disabled so that staff can begin processing the completed applications. However, if additional funding is available for the program after this initial launch, Florida Housing will notify the public prior to re-opening the application process.

The Florida HHF-PR program is designed to provide up to $50,000 to eligible homeowners who owe at least 125% more on their home than its current market value—commonly known as having a home that is “underwater.” Funds will be applied to reduce the principal balance of the first mortgage to reduce the loan-to-value (LTV) of the first mortgage to no less than 100%. The mortgage can then be recast (re-amortized) or refinanced to produce a lower monthly mortgage payment.

The minimum qualifications a homeowner must meet to be considered for participation in the Florida HHF-PR program are as follows:

· Must be a Florida resident and a legal US resident/legal alien, and occupy the property as the primary residence;

· Must be current on the monthly mortgage payment—first mortgage payment cannot have been 60 or more days late within the past 24 months;

· The first mortgage must have originated prior to January 1, 2010;

· The unpaid principal balance for the first mortgage cannot exceed $350,000;

· The loan-to-value for the first mortgage must be greater than 125%—in other words, home must be more than 125% “underwater”; and

· The total household income, including all persons age 18 years and older who live in the home, must be less than 140% of the area median income.

Principal reduction program funds will be in the form of a 0% percent, deferred-payment loan that will be subordinate to current mortgages on the home. The loan can be forgiven over a five-year period, at a rate of 20% each year. For conventional mortgages, once HHF-PR funds are applied to the principal, the mortgage will be recast (the terms of the loans will remain the same, but the loan will be re-amortized).

If the borrower has a FHA, VA or USDA-RD mortgage, the mortgage will need to be refinanced within 120 days after closing on HHF principal reduction funds in order to receive the pro rata forgiveness.

If a refinance is not completed within the specified time, the principal reduction loan will be 100% forgiven after a full five years of the borrower remaining in the home.

Homeowners in every Florida county may apply for the Florida HHF-PR program by using the official website: www.PrincipalReductionFLHHF.org. The site contains all the information users will need to begin the application process, including a program fact sheet and answers to frequently asked questions. Additionally, the Florida HHF Toll-free Information Line [1-(877)-863-5244] will be open on Saturday, September 21, and Sunday, September 22, from 9:00 a.m. – 5:00 p.m. to answer any questions callers may have about the program.

Application for the Florida HHF-PR program is FREE-OF-CHARGE, and applicants will not be asked to pay for any eligibility determination services in conjunction with applying for the program.

To My Blog Readers: If you apply for this program please follow up with me and let me know what happens/how it goes. Thanks

Steve Jackson…561.602.1258

 

Lets keep this housing party going!

There was a time when those who defaulted on their debt, especially mortgages, had to wait 3-5 years before they became eligible for any form of new credit, let alone a brand new mortgage. That, however, was in the Old Normal. In the New one things are different: so different, that for anyone who filed a bankruptcy on or before July 2012, we have good news for you - the FHA (subject to an explanation and several almost painless conditions) will be happy to provide you with a brand new mortgage.

From the recent FHA Mortgagee Letter 2013-26:

FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.

As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.

To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that:

• certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control;
• the borrower has demonstrated full recovery from the event; and,
• the borrower has completed housing counseling.

Housing counseling is an important resource for both first-time home buyers and repeat home owners. Housing counseling enables borrowers to better understand their loan options and obligations, and assists borrowers in the creation and assessment of their household budget, accessing reliable information and resources, avoiding scams, and being better prepared for future financial shocks, among other benefits to the borrower.

Well, we did say almost painless: it is only logical that after filing bankruptcy one should go to housing counseling. Surely that will 'learn' one to buy that 18 bedroom McMansion that the evil banker, gun against head, forced down one's throat.

Either way, once done with the grueling "counseling" sessions, and providing evidence one didn't blow it all in Vegas, the FHA makes one eligible for a new mortgage even with a prior recent bankruptcy, and not just any but Chapter 7 as well as 13, as follows:

D. Economic Event-Related Chapter 7 Bankruptcy

The lender must verify and document that:

• a minimum of twelve (12) months have elapsed since the date of discharge of the bankruptcy; and
• the bankruptcy was the result of the Economic Event.

E. Economic Event-Related Chapter 13 Bankruptcy

The lender must verify and document that:

• the Chapter 13 Bankruptcy was discharged prior to loan application and all required bankruptcy payments were made on-time, or a minimum of twelve (12) months of the pay-out period under the bankruptcy has elapsed and all required bankruptcy payments were made on time; and
• the bankruptcy was the result of the Economic Event.

But what if, gasp, the existing bankruptcy has not yet been discharged? Don't worry: the FHA's got you covered even then:

If the Chapter 13 Bankruptcy was not discharged prior to loan application, the lender must also verify and document that the borrower has received written permission from the Bankruptcy Court to enter into the subject mortgage transaction.

And so on. There are other conditions (the full FHA Mortgagee Letter can be found here) but if the only gate for a bankruptcy as a restraining factor is for 12 months to have gone by, one can imagine just how "strict" the other conditions have to be.

So…party on!

Thanks for reading…as always.

Steve Jackson

561.602.1258