photo June 19 2007

< xml="true" ns="urn:schemas-microsoft-com:office:office" prefix="o" namespace="">REAL ESTATE MARKET WATCH is very proud to announce: Jason Kaplan will be joining us and giving some additional diversity to our staff and reporting from the mortgage perspective for our publication. Mr. Kaplan is the Principal broker of Mortgage Lending Associates, Lakeland FL & Asheville, NC.. Watch for the Kaplan Report, in future issues and on the website. We ask our loyal readers to also visit our website as we build our world class e-Reports for central Florida. Watch for our expansion to include our Western North Carolina Real Estate Market Watch. (Soon to be available).  
........READ ON!........



What's happening with the Florida Real Estate market?  




 JR Hafer

Whenever I speak to a group or am stopped on the street, often I am asked the same question the real estate industry is asking all over the nation. The question is; “What’s happening to cause this real estate slump… What kinda deal is this?” Well, to be honest the root cause seems to be without a comprehensive answer. Even the so called experts can’t seem to find out what is the cause for the current real estate market slump. Those “in the know” and study the economic indicators and driving factors that generally control trends and dictate the market, are covered with statistics which are confusing and contradicting. It’s no wonder the public is getting so many diverse answers.  The truth is nobody knows why the market is so “soggy”.

I do know the consumer confidence is lacking and perhaps that is a symptom of the real estate market condition. But what is the root cause? It is so difficult to try to explain to “Sellers” why their house hasn’t sold when there is nothing we can explain it by, except the pricing might not be attractive enough? When asked we can only stretch out our arms, look toward the ground and run our toe in the sand, shrug our shoulders and mumble “I duuno”… Now how, I ask you, professional is that? What alternative do we have other than giving sellers a bunch of excuses and bore them with less than the “bottom line?”

The “bottom line” is the mortgage interest rates are historically low, there is an abundance of inventory and potential buyers are more likely than ever to find exactly what they are expecting in a home. If one has decent credit and finds the house they want, they can get it at a great deal. The abundance of foreclosures also provides another source of great deals. Additionally, “Short Sales” can give a potential savings of thousands, as well. Therefore, it is a great time to buy a house. But buyers are still standing by in the wings, waiting to see what’s happening. Their actions are sort of like a deer caught in the headlights. The deer is overwhelmed and confused and doesn’t move.

The economic indicators are reporting a strong and stable economy. Foreclosures are on the rise, mortgage money is still plentiful and available. The rental market is stable and the investor ratios are in line with stability of the market. Job growth is holding steady with the exception of the government upheaval and confusion over the Florida homestead exemption laws. But changes should not be a deterrent to purchasing a house at this point. In fact, it should be an incentive to buy this year.

The tax and insurance issues, if scrutinized closely, should not be a big change adversely. Just like Jason says in the “Kaplan report” (November 15, 2007), “It’s important to remember that any one of those variables can change for the worse over time”  

So I ask you… What kinda deal is this?     



by JR Hafer

    Recently Bank of America announced they were going to stop the wholesaling of home mortgage loans. They would no longer, after the first of the year, let mortgage brokers or outside concerns market their mortgage products or provide Bank of America programs (Mortgage Loans). At first, I must admit, I read into this that there would be fewer mortgage brokers out there. Although I have several close acquaintances who are mortgage brokers, here in Lakeland and around other places. These are good conscientious brokers whom I respect highly. They are the exception rather than the rule. My "Knee Jerk reaction" was; it would be a plus for the industry to have fewer mortgage brokers. Some Realtors® think mortgage brokers are only middle-men who only introduce additional costs into the equation. < xml="true" ns="urn:schemas-microsoft-com:office:office" prefix="o" namespace="">

    Dealing with mortgage brokers, for the most part, it would seem, at first glance, they only cause more confusion to the demands of the processor and underwriters. This might be true for some mortgage brokers, but it isn’t always the case. I have found out, through the years, mortgage brokers do indeed have a rightful place in the industry. They often provide an array of products that may give more options. As long as the customer is the focal point, and misleading arbitrary assignment of programs isn’t greed driven, they can be an advantage in some cases. Just like sub-prime loans provide democratization in the mortgage industry. It is just a matter of seeing the big picture from a different perspective and having options from which to draw.       

    Bank of America’s decision not to continue to wholesale their mortgage programs and products may be a good moral decision to increase the quality of their product and portfolio and maybe even good business sense for the short haul. However, it will tell over time whether it will limit their volume of business.  Perhaps their wholesale business isn’t as extensive as some other large banks. I don’t think this change has anything to do with mortgage brokers because Bank of America has had a good handle on their quality. I suspect that B of A has the least problems than other banks in today’s problematic “Sub-prime” foreclosure debacle.  

    The question is: Will this decision of Bank of America’s start a trend and if so, where will it stop? Competition is the driving force of fair pricing. If all banks stop the wholesaling of home loans, will it put the mortgage broker on the endangered species list, what will it do to the checks and balances of fair pricing? Is this change of operation in Bank of America’s policy, the first step toward cutting out competition? If this decision of B of A starts a trend and other banks get out of the wholesale loan market, it will eventually take away a lot of competition from the overall scope of things?

    The upper echelon of Bank of America would not make a decision on a whim; they are too well organized and smart to do anything to destabilize either our real estate market or the national economic interests. I am convinced that this move is more than just an efficient way of doing away with the competition. At first glance we might think this step to be a progressive move on behalf of Bank of America but for all the other Banks it may be a dangerous path to follow.

    Under more carefully scrutiny I cringe to think what might happen to the Real Estate market when the day comes when we have only the banks providing and marketing home mortgages. Hard money lenders may then provide an alternative and then the old usury laws might become attractive again.  

    Well, perhaps I am going down the wrong road in assuming this will start a trend in the banking industry. Maybe the free market and capitalism will prevail and this will really be a non-issue. In any case, this change of policy might, in fact, be a good thing for Bank of America and a very good business move on their part. After all we all have seen this bank improve their customer service. The strides made by Bank of America over the last couple of years to improve the customer service have been phenomenal, and I applaud them.

    Speaking from a vantage point and perspective from which no one can dispute, I am quite satisfied, as a customer, at their progress to improve their customer service. Of course there are some branches, departments and employees that have yet to get the message. But overall the Customer Service at Bank of America has come a long way. These improvements are reflected in their home loans and mortgage programs. I am a firm believer that “Stuff” runs down hill and I am also convinced that things have changed a lot from the top of the Bank of America Building in Charlotte North Carolina and the board room there. It does reflect in the rank and file of their employees.

    I truly expect the banking industry and especially a leader like Bank of America, to continue to improve their customer service and in turn it will help us in the Real Estate industry to improve the quality of our work as well. After all we are all in the service business and we should strive to serve our customers with Quality and pride. Remembering it is all about the customer.   



Negative Reports are Baloney!

Or is that Bologna? By JR Hafer

Many folks are standing on the corner of commerce, overwhelmed by all the things they read and hear regarding the real estate market. Some have asked about the continuing "negative" reports they are getting from various sources. In response to all the questions, Ya Gotta understand that the real estate market spiraled out of control in 2004 through 2006, resulting in real estate appreciation rates, in some cases climbing as high as 38 percent in one year. There were folks bidding on houses as the signs went up. The market trend grew dangerously out of control. There are checks and balances in place for such occurrences. When these checks and balances kick in, the market starts to correct itself. In such a correction, there are many factors that come into play to assure the action is a correction - not a market change. The correction is as drastic and equal to the "out of control" spiral.
There was some very creative financing during that time. It became a greed-driven market. Many thought they would get into the flipping business (buying low and selling high) and "making a killing".
Employment was high and there was rapid growth in the county. Everyone was either building or buying. Many of us were predicting a heck of a train crash or a severe market correction.
Though this may be somewhat of an oversimplification, there are certainly many factors that give reason to the application of checks and balances for correcting the real estate market.
Another fuel to stoke the fire of this out-of-control train was sub-prime loans. Granted, sub-prime mortgages play an important role in increasing home ownership in the United States, and must continue to be included as a democratization factor of credit in the housing industry.
Only 5 percent of all mortgages are sub-prime and only a fifth of those go into foreclosure, according to U.S. Housing and Urban Department Assistant Secretary Darlene Williams in a speech she made in Singapore in August. Therefore, we can't realistically blame the current status of the real estate market on sub-prime loans and foreclosures. The runaway train was pushing us into what I call a "California syndrome" where the middle-income professional would be rapidly pushed out of the home-buying market. It was inevitable that a correction had to take place to quench the market frenzy.
No matter what news reports elsewhere indicate, the real estate market correction has done its job here in Polk County and the market has leveled out. We have a very unique market here in Polk County. The New York, California, Texas or North Carolina real estate markets are so different that the generic reports can give us false information about our market.
Similar to other markets though, buyers are waiting for the prices to drop. Those buyers who do make offers are lowballing in hopes of getting a great deal. The sellers who currently have their houses on the market are factoring in the potential for lowball offers in their asking price. However, when potential buyers see a high asking price, they generally don't even make an offer.
So it seems to be a grand old game now, seeing who blinks first, the buyer or the seller. Buyers will eventually understand that the market will not take away all of the property appreciation, but will normalize within an acceptable range. That range has arrived, and once the reports confidently announce that the market has "hit bottom," it will stabilize and start the upturn. Those homeowners who are not upside-down in their home, or owe more than the house is worth, will find themselves in a healthier market soon. The real estate market is a perception-driven market. Realtors are always aware of the pitfalls of negativism toward the market. Additionally, the confidence in the real estate market will directly determine the speed of recovery.

 This article may be reproduced provided JR Hafer is credited as "Writen By" and a copy forwarded to the author.