July, 2, 2010 Update:

Well, the July 4 holiday weekend is now upon us and we’re (somewhat) scratching our heads!

After a blistering first quarter with snowbirds keeping us busier than we imagined, it has slowed down quite a bit. We believe it's due to the South Florida folks simply renting or not making moves yet (the economy was hit harder down there than most places, and with uncertainty, people put off what they may LIKE to buy but don't NEED to buy).

That could actually bode well for the future for waterfront reductions, as, hopefully, some of these sellers will "come to their senses."

We are actually getting more “advanced notice" and "action" about people coming down from up north in late fall & winter right now than any activity from our "summer city people." That is VERY unusual and far different than any time during the past 5 summers. A few snowbirds are even making trips earlier to "shop" - also fairly unusual. Unfortunately, a good amount of these people want the remaining investor-built new/newer homes which are pretty much gone so they'll have to turn to existing homes a few years older. There will be more as some of the short sales finally are foreclosed, but not even 20% of what we had last year (that’s a good guesstimate based upon the newer short sales still active in MLS).

The best news for snowbird buyers is: With the summer slowdown, waterfront may become more affordable for them.

We hope everyone has/(& had by the time many read this) a GREAT holiday - we're going to do the "local thing" this year … we actually have a great fireworks display over Lake June every year – very high quality for a small town!

June, 2010: A Game Changer?

The Treasury has new rules beginning April 5 for short sales. By far, the most important thing is a supposed 10-day turnaround on offers. This is huge as we’ve had so many offers on short sales come and go because the banks would take from 6-18 months (yes, 18!) to respond to offers. We'd usually hear nothing and the homes would slip into foreclosure.

Apparently, the new rules only pertain to Fannie Mae or Freddie Mac owned or guaranteed loans. I have to get more details, but this is great news for both buyers and sellers as there are quite a few buyers out there looking for bargains and it’s been a real shame that these banks have dragged their feet on these for so long ...

Spring, 2010 UPDATE: A Tale Of Two Markets

There are essentially two markets right now: Most of the homes are perceived as overpriced and sit and sit with no one wanting to see them – we’ll call that Market #1. Market #2 then, are the best of the best homes (not by any type, but the best priced for all types). These move very quickly. But, there are far less homes in Market #2 than market #1, so yes, prices on many homes do have to come down. What we’ve also seen is, buyers sometimes have to wait for Market #1 homes to reduce their price. Or, they have to wait for new foreclosure listings. There are probably about 150 homes in Highlands County which will go from short sales to foreclosures this year – nowhere near the amount we had to work with in 2009 (many of which are now gone – especially the newer homes).

The question on everyone’s mind seems to be: When will the low point of the market come? Or, has it come? It’s tough to answer. But, I am as certain as I can be that there will be no one opportune time to buy – the best deals will and have been spread out. We’ve been saying this for months and we can see that pattern occurring again and again and we have been 100% correct – the MLS data simply does not lie. There’s a great deal one week on a particular type of home in an area, then nothing beats it for quite some time (I’m still waiting to see some of the waterfront deals from several months ago be “topped”).

One big change is we’re “running out” of the investor-built, new construction foreclosures. Buyers have to understand – this area is different than a lot of others. There aren’t a lot of people losing their jobs which has caused the bulk of the foreclosures. Most all our foreclosures are homes built by or bought and remodeled by investors who got into the boom time flipping game late and got caught. This is a community of seniors, weekenders, etc – most people bring their money in. So, the few hundred nice homes built in 2005 and later are gone. I have been tracking the short sales and there will be more foreclosures, but nowhere near as many. From a purely “money” point of view, I wish there were a couple hundred more – these were the easiest sales for us for 2009! But, I also know that we need these to cycle through before this market becomes more balanced, so, for the private sellers out there, this is very good news.

So, whether to buy or wait to me is a personal decision – you may miss a great deal, but you may also find another one in a few months. But one thing is sure: it pays to work with someone who is a full-time experienced person who will email or show you the best of the best homes that match your search criteria – THEN, you’ll see what a great deal is and can pounce on one whenever you’re ready …

Nov/Dec., 2009 UPDATE: Foreclosures Are REALLY Selling

MLS statistics simply don't lie - there are less foreclosures available than there were at the beginning of 2009, there are less "new" foreclosures being listed (looking at the past 8-month trend), and - the most important part - many more foreclosures sold during the past 3 months than at any other 3-month timeframe in the last couple years in the Sebring & Lake Placid area.

There were only 28 foreclosure homes listed in Sebring & Lake Placid on November 25, 2009 (we do not track vacant lots). As some of the short sales are finally foreclosed upon, there will be more good foreclosures coming, but that is a VERY telling number (down from couple hundred a few months ago!).

October 1 Update - Just like when real estate (seemingly) kept going up and we were actually past the peak, we're finding that same sort of mentality now that we're at (past?) the bottom. People refused to think the rise in prices would ever end - and many people made critical errors because of that way of thinking. Now, we're talking to people who think prices will keep falling "for a long time" - which we simply don't agree with. Now, in their defense, I think a big part of this thinking is due to the fact that many listed homes really are overpriced. But the best-priced homes (mostly foreclosures & homes being sold by people who bought a while ago at a good price) are well below the rest of the homes and these are selling well.

I think many of the overpriced homes will eventually come off the market, or the sellers will finally realize they can't get that price and they will come down, some sellers will "walk away" (and the home will go through foreclosure), etc. Where we're seeing big mistakes from buyers is on the newer, investor-built homes that became foreclosures & short sales. There are far less of these than there were a couple months ago - the numbers simply don't lie (and it's not like they're going to build a whole bunch more and let them foreclose. There will be a definite "end" for this type of home at that price - they still can't build them for what many have sold for the past few months.

The market has steadily improved for four months now. Please click on the "By The Numbers" link above to view the actual figures.

Now, again, please don't get me wrong: There are still many homes that are overpriced for the current market, and these won't sell until the prices come down (most don't even get a showing - they sit and sit). It's the best-priced homes that are moving.

July 1 Update - Well, it had to happen, but I didn’t think it’d be this quick! The “standard” (3-bedroom, 2-bath, 1200-1600sqft) new construction short sales & foreclosures (that were well priced) are nearly gone! I was amazed – they have been moving rather quickly for the past few months, but they REALLY moved in June. I think there will be others that will have to reduce, and more foreclosures, but nowhere near as many and the best ones in the best locations priced at 90-110k are going … going … and they’ll soon be gone (and the builders can’t build them that cheap).

The cheapest homes - from 30k-60k will move ULTRA quickly if they are in decent shape and in a good location. This has been the case pretty much for the past year. Buyers need to pay close attention to the condition of the home, as well as location.

Now, the rest of the pack – waterfront, older homes, larger homes, golf course homes, condos & townhouses are about the same as they have been the past few months. They are moving a bit better, but in general, many are still overpriced. The buyers looking for these certainly haven’t missed the boat. I’d say we have about another 6-12 months of good deals “left” for these homes and the good deals will be here and there throughout that period and possibly longer.

Mid-June Update - The May ratio for homes going under contract to new listings was the best it's been for a few years (and that increase came after two months of improvement). A lot of the activity was foreclosures and short-sales, but it clearly shows the market has changed. Most of the new (or nearly new), investor-built foreclosure homes are sold or under contract - many people are simply waiting too long for that particular market segment. There will be more, but it will be slimmer pickings from here on out. On the flip side, private sellers have to understand it's all about price and reduce to make their homes attractive to buyers. When homes reach a certain threshold, they sell, but there are still too many overpriced homes out there (possibly 70% of the listings).

We're not guessing, or "having a feeling" to call the bottom; we're using actual data. We're now as certain as we can be that we're at or past the bottom. That isn’t to say good deals won’t be around for quite some time – it’s simply that many people don’t understand how the bottom of a real estate market "works" and how to "find" it. There will not be a time when homes will all be priced their lowest. The best deals follow more of a pattern where there will be one or two much better-priced homes than the rest of the comparables. These homes then sell, and buyers have to wait for reductions. We’ve watched this pattern occurring again and again for several months. There certainly hasn’t been a steady decrease in all or even most of the home prices. As long as the reductions keep coming, this works well for buyers – and we do anticipate great opportunities for months to come. However, many of the best homes in the best locations will be gone (and many already are) - but much of it depends upon what you're looking for!

Below, we’ll talk about the different types of homes in particular:

New Construction: This is our biggest area of concern for buyers waiting too long. These are typically short-sale and foreclosure homes built by investors late in the boom or even after the bust (people were really wishful thinkers). Many of the best priced/located homes have sold and these have generally been the best deals the past few months. These homes will still sit until they reach a certain price threshold, but then they sell very well. There will be a few more, but certainly not the choice that was available several months ago and there will be more competition from the buyers who waited and now are "pouncing" on the best deals (the way to do it now). The numbers don’t lie. There are less and less new-construction homes listed now than there were 6 months ago.

Condos/Townhomes/Villas: These are probably the best deals (in general) right now. We see quite a few very well-priced homes in golfing communities as well as waterfront complexes. Several are new construction and much cheaper than they've been in years. There are also a few very cheap - but still nice - buys out there for the very budget conscious.

Waterfront is the most "spotty" of the home types in terms of good deals (and it's been this way for quite some time). There are much fewer waterfront foreclosures in our area because they are often vacation homes and sellers can afford to "wait out" the market. But there are a few short sales and foreclosures and they are more attractive than the rest. Prices are well off their highs, but most people still don't consider the majority of them "cheap." In our opinion, the canal homes are better deals than the lakefront homes right now. Lakefront sellers have certainly been more stubborn. One of our clients put a contract on a nice lakefront home a few weeks ago and we now can't find anything similar nearly as well priced - we have to wait and hope for reductions. The name of the game is to learn what a good deal is, then pounce on it when it comes up (this one had multiple offers while many others can't even get a showing).

Golf Course Homes have come down quite a bit, and there are a few good deals out there, but we'd like to see more sellers reduce soon, however. This is probably an area where good deals will be around for quite some time (unless these sellers can actually "wait the market out").

Older Foreclosure Homes have been selling well for about 6 months and VERY well for the past few months. Investors who can buy, rent and actually make a few bucks are snapping these up almost as quickly as "end users" (people buying to live in them). It's been several years where an investor could buy a home and actually make a profit renting (which shows how prices were way too high in and of itself).

All The Rest of the homes are probably where we’ll see some much better deals in the future. These are typically owned by snowbirds or locals and they have been trying to hold to an unrealistic price. These homes simply can’t compete with the foreclosures (not when you can get a new, larger home in a better location, cheaper). I think these are the most overpriced homes in the market on average right now, and to sell, we’ll need to see some pretty good reductions. But these sellers have been stubborn so far and may think they can "ride the market out." If the foreclosures cycle out of the market fairly quickly, they may be right, but I doubt it - I'd guess on average they need to come down 20% off their asking price to sell fairly well.

So, that is it - good deals are out there here and there (as they have been the past few months) so it is time to grab them when you find what you are looking for. But, if you can't buy for several more months, don't worry too much - it will be a tougher, but there should still be good deals.

Mid-May Update - The March & April ratios of homes going under contract to new listings is significantly higher than prior months - the improvement trend continues (even though many homes are STILL way overpriced, people are taking advantage of the good deals on the foreclosures & short sales and this is helping to cycle many of these homes out of the market). I think that we've reached the bottom - but it will take a couple more months of this trend to continue for me to be absolutely sure. (And, again, I can't say this enough: There won't be some "magic date" where homes will be "the cheapest" - the best deals will be spread out here and there for months to come just as they have been the past few months.

Please click on the "By The Numbers" link above to view the actual figures.

April 24 - Statewide Real Estate Sales Data Released
Florida's existing home sales rose 30 percent in March, making it the seventh month in a row that sales activity was higher than year-ago levels, according to FAR's latest housing data. Statewide existing condo sales increased 25 percent over the same period; and last month's home and condo sales were higher than February's levels.

April 10 Update: The Trend Continues
The best foreclosures and short-sale homes continue to move quickly. It is getting more difficult finding a really good one at this point (there is actually competition for the best ones - while everything else sits and sits). I don't think people who are waiting for it to get much better - cheaper - are going to be as pleased. It will be great for buyers for the rest of 2009 and possibly half of 2010, but it will be a great deal here and a great deal there - the deals are not "stacking up." This can easily be proven with MLS sales data. The best-priced homes are cycling out of the system - in other words more foreclosures and short sales are being sold than others being listed now. We will have more, but there will be less and less as time goes on now (and, again, this is already occurring when you look at MLS).

We encourage serious buyers to start looking carefully, and "pull the trigger" on one they REALLY like. Of course, we're only talking about looking at the best of the best here, but that is what pretty much every buyer is doing (that's why there's competition for the best deals). According to the area MLS, there are 103 foreclosures & short sales under contract this week with 67 foreclosures and short sale homes being listed the past month. This trend had been going on for a couple months now. Following the math is key - just like the crash could be seen using math, so can the bottom.

On February 12, I had a client tell me that he heard that real estate could go down another 10-30%. He asked if I believed this. I answered yes. But that is when you look at the entire market. I'd say about 80-90% of the listings are overpriced. But, there are people who really need to sell and are priced right, and banks (foreclosures & short sales) are letting homes go well under the vast majority of listed comparable homes. Many of these homes are now priced 20-40% below listed comparables. So waiting for the absolute bottom won't necessarily get you a better deal - but make sure you buy right. A strange (and very typical) thing is: By the time the majority of people (and the "experts" in the media) say it's time to buy again, the majority of the best deals will be gone (quite a few have already gone in this latest round of foreclosures to go under contract). What we call "the gems" are out there and have been out there and are priced very well. I certainly don't think these will come down another 10-30% and with all the best ones going under contract now, the numbers are proving this day by day (see below).

Feb, 2009 Update: Short-Sales & Bank Foreclosures Are Moving!

Let's look at the good and bad news: The worst news for sellers is that it is very difficult to "compete" with bank sales - most private-seller homes are still listed at least 20% higher than they need to be to even get a few showings. The good news for buyers is there are still a couple hundred foreclosures and these will provide great deals for months to come. One bit of good news for sellers is that these will cycle out of the system (as they are sold), then private sellers will be back "in" the market - though they will almost undoubtedly need to reduce about 20% on average from where they are now.

As of the end of January, 2009 there were 204 foreclosure & short-sale listings in Sebring & Lake Placid - many have been gobbled up the past couple months. There were 51 under contract then. This makes for a ratio of .25 active listings to listings under contract - a much better number than we've seen in a LONG time. This number also shows that foreclosures & short sales are moving very well - math doesn't lie. Of course, there are 1559 total (non land-only) listings (most from private sellers) with 121 are under contract for a ratio of: .08 - DISMAL! Come on private sellers - you need to reduce.

(NOTE: This ratio is different than the overall trend ratio we also use - please don't get them confused.)

Take a look at the entire market numbers in our By The Numbers Section.

You REALLY should start looking in earnest now. Don't rush, don't buy whatever, but get help finding the best of the best listings out there - and there are some really great deals as people who really need to sell have to reduce way under the others to get their property sold.

And we're putting our money where our mouths are! Melissa & I have bought several properties (including land and partnering on a 10-unit hotel) the past couple months.

Failures and fire sales of the bastions of the American (and world) financial powerhouses seemed common with no end in sight. It was a complete crisis in confidence – and it all starts (and ends) with housing. Now, no one can absolutely time financial markets, but I am confident that this is the bottom or VERY close to it (weeks to a few months). When things get “the craziest” and look most bleak – that is usually it. Of course, there will be volatility and experts with vastly differing opinions, but I think we’ve seen the worst.

Thankfully, when things were at their worst, it wasn’t (severely) politicized and things were done swiftly to stop any “runs” on the system. The Fed & Treasury were (are?) basically running this country! But, they seem to e doing the job. The sky isn’t falling – this is a crisis in confidence and it is “caused” by the media and naked short selling (which has been temporarily curbed and I’d like to see go away forever)

What does it mean for homebuyers (and sellers)? Many of our area listings still need to come down. If we take a careful look, many of the best-priced homes have been selling again (I’m surprised at the “action” during the last few weeks with all the bad news). The rest of the homes sit. And sellers need to understand that even when activity comes back better than now, it isn’t a signal for higher prices whatsoever. They need to be in line with reality. The proof is plain and visible by looking at the MLS statistics – homes need to be well priced to sell. Please read below for detail ...

So Why Wait Now?