Home prices plummet in steepest drop in 16 years

That is the headline, just across the wire from CNN & AP.

An index of home prices in 10 markets shows the biggest price decline since 1991, an average decline of 4.5% for the month of July. More importantly the index also shows month over month declines for every month this year. This all according to the S&P/Case-Shiller home price index released Tuesday. The full index which covers single family homes in 20 markets however seemed to have declined only 3.9% according to the lastest news update.

Either way, it is clear that the media is latching on to the 'big headline' and 'troubling news of the day', namely the real estate market and home price declines specifically and they do need to be taken with a grain of salt.

Bad news and panic sells, and just as it seemed that every home owner was getting rich overnight, and home prices were tripling everywhere when looking at the news in 2004 and 2005 (and we all know that's not true), now its nothing but 'doom and gloom' wherever you look.

Interestingly, one significant positive result from the market decline, namely the availability of affordable housing that was non-existent a couple of years ago receives no media coverage at all.

I'd be interested in hearing what readers of this blog think about the subject.

Sincerely,

Thomas Heimann, President & CEO
BRAVO REAL ESTATE SOLUTIONS
Bravo Brokers/Bravo Title/Bravo Lending

Zillow raises another $30 Million

The Wall Street Journal reported this morning that Zillow (www.zillow.com) successfully raised another $30 Million in a round valuing the company at $350 Million.

This is on top of $57 Million the company raised in the past 18 months.

Clearly this is an indication that venture capital firms are prepared to continue to invest in technology and online marketing startups on one hand, and even more importantly how they value next generation real estate firms that may promise to drive change in the way real estate is bought and sold online.

Recently Redfin (www.redfin.com), a Seattle based online real estate broker raised $12 Million from top flight venture firms, bringing the total raised for that company to just over $20 Million.

To Your Success!

Thomas Heimann, President & CEO
BRAVO REAL ESTATE SOLUTIONS
Bravo Brokers/Bravo Title/Bravo Lending

Moody's report suggests turnaround in 2008

The question lingers on everyone's mind... when will we have reached the 'bottom' of this market downturn, and when will things turn around and values start to improve again.

Of course, trying to time the market - and forecasting tops and bottoms is just that - is in some way a fools game. You really don't know until after the fact. Point in case, in 2004 and 2005 virtually all the 'experts' and 'economists' forecasted that this roller coaster would continue for several more years and then appreciation would soften. Strong demand from population growth and baby boomers rushing into the SW Florida market would make sure of that. Well, we all know what happened.

So, when an analysis was published yesterday by Moody's Economy.com, that should be taken with a grain of salt. That being said however, the current market conditions are what they are and I certainly don't expect a meaningful turn-around prior to their estimation.

Looking at 100 markets, the Sarasota/Bradenton Real Estate Market is #3 and the Tampa Real Estate Market is #32 on the list in terms of total decline from Peak to Bottom. For the Sarasota/Bradenton Real Estate Market the peak was set at Q1/2006 and for the Tampa/St. Petersburg Real Estate Market the peak was set at Q4/2006 with the bottom forecasted at Q3/2008 for both.

According to Moody's analysis, overall total decline from peak to bottom is forecasted to be 24.8% for Sarasota/Bradenton, and 11.7% for Tampa/St. Petersburg.

The complete article can be accessed by clicking here.

It appears that we will be in for another challenging year, as inventories slowly get worked off.

Sincerely,

Thomas Heimann, President & CEO
BRAVO REAL ESTATE SOLUTIONS
Bravo Brokers/Bravo Title/Bravo Lending

Realtors not to blame for sub-prime mess...

A lot of people it seems are placing blame on the 'greedy, money hungry' Realtors for the sub prime mess, and I can see why. Certainly there were a number of agents who were pushing their clients to buy, BUY, B U Y NOW when the market was hot.

But was that really because all of them (and us) were greedy looking to bank another sale, or was it - just maybe - because the market at the time was in fact red-hot and if a buyer did want to make a successful purchase they had to act quickly or miss out.

Bottom line is that whilst certainly the argument could be made that some agents do share blame for suggesting (or even pushing) the idea of real estate as a no-risk, no-brainer investment, and thereby causing possibly people to buy more than they should have; this does not equate to 'it's the real estate agents fault' that the market is what it is and the blame is theirs.

So... I was very surprised, positively as a matter of fact, to see this article and countdown on CNN Money this morning:

A gallery of 'whose to blame' for the current sub prime and mortgage mess. And the culprits are (click on the link above to read the full article) as follows:

1. The borrowers
2. Mortgage brokers
3. Appraisers
4. Mortgage lenders
5. Wall Street
6. Rating agencies
7. The Federal Reserve

I couldn't believe it --- the media (this one at least) did not even mention Realtors as the root of all evil :-)

Well, in all seriousness, the article/gallery does give some great insights into what components came together to create that perfect storm the worlds financial markets are now experiencing.

Of course there will be the blame game, and of course there will be plenty of finger pointing at both real estate agents and mortgage broker agents when home makers turned real estate investor/speculator go into foreclosure and look for someone to blame.

Since we have in this country unfortunately a culture of never assuming responsibility for our own actions and decisions but rather find someone else to blame (and sue, are you reading this Mr. Morgan "for the people") it will be only a matter of time.

I have always predicted that there will be a slew of class action law suits - and we are already seeing the first targeting mortgage brokers - in the wake of the melt down; just as it happened after the dot com crash when investors sued Investment Banks and brokers.

It was refreshing, for once, to read something that did not focus on real estate agents as the cause.

To Your Success!

Thomas Heimann, President & CEO
BRAVO REAL ESTATE SOLUTIONS
Bravo Brokers/Bravo Title/Bravo Lending

Bush announces steps to help home owners, but will it be enough?

Hundreds of thousands of home owners are facing financial hardship and even foreclosure because their mortgages are resetting with increases in payments that these home owners cannot afford, while at the same time refinancing the loan is not an option due to declining equity or a host of other reasons.

On Friday President Bush announced a number of initiatives that are designed to assist such home owners in refinancing their current loans, amongst other things.

Some of these measures are long overdue, but will they be enough to have any meaningful impact on the fundamentals that have been affecting both the real estate market, as well as the mortgage industry?

Since none of the programs contemplated will be of any help to homeowners who cannot refinance because their equity has been wiped out due to falling home prices (even an FHA insured loan will be subject to appraisal guidelines), and since a large percentage of mortgages made in the past 5 years were to non-home owner occupants (i.e. investment properties and second homes, none of which would qualify) I cannot help but feel that this is a nice toke gesture, but may not have much of an impact in the final analysis.

In Florida 25% of all loans made were made to non-occupants, in Nevada this number was as high as 32%. Of course it is those investors and speculators who were not able to flip their properties who will be most likely to walk away from them.

I personally think that the measures announced, especially the ability of homeowners to apply to the FHA to refinance their homes, will be of tremendous assistance to homeowners who are right now faced with ARM resets and Pay Option ARM payment adjustments, provided they can qualify based on their debt to income ratios, and that is really great news.

Another incentive proposed that I think will and can make a real difference, is to waive the tax liability associated with loan forgiveness in short sales or 'deed in lieu of foreclosure' transactions. If banks can come to their senses and will agree to short sales in transactions where homeowners are not yet in default, understanding that once the home owner is in default and facing foreclosure they will be much less motivated to take any action and the risk of foreclosure increases exponentially, then home sellers who cannot sell for realistic prices because they are upside down would be able to lower their prices and inventory may actually move.

I feel that if a bank is going to take back a house in foreclosure they will end up losing a lot more than if they had agreed to a short sale in the first place. Some banks/lenders are actually beginning to realize this and home sellers who are truly not able to bring cash to the closing table and who must sell for less what is owed on the property are well advised to contact their lender's loss prevention department to discuss short sales opportunities.

The best part is that a short sales can be of benefit regardless of whether the property in question is a primary residence, or an investment property. This could prove to be a real option for those real estate investors who had hoped to profit from the Manatee/Sarasota/Tampa real estate boom and now find themselves unable to sell because they owe more than the property is worth today.

Sincerely,

Thomas Heimann, President & CEO
BRAVO REAL ESTATE SOLUTIONS
Bravo Brokers/Bravo Title/Bravo Lending