Home Sales Up, Prices Down in South Florida

Realtors: August home sales up, prices down in South Florida
Reprinted from The Miami Herald
BY Matthew Haggmann

South Florida home sales jumped in August amid signs that lower prices are drawing buyers back into the region's long-struggling housing market.

Sales of existing single-family homes in Miami-Dade County increased 22 percent and Broward County sales increased 12 percent compared to the same period a year ago, according to numbers released Wednesday by the Florida Association of Realtors.

Condominium sales were up 13 percent in Miami-Dade, while condo activity in Broward for the month was even compared to August 2007.

A big reason for increased sales appears to be healthy price drops. Prices were at least 20 percent lower in August than a year ago for single-family homes and condos in both Miami-Dade and Broward counties.

The median price for a Miami-Dade single-family home was $276,000 in August, amounting to a 30 percent drop from last year. For Broward single-family homes, the median price was $269,800, down 27 percent.

The median condo price in Miami-Dade was $210,400; it was $133,300 in Broward.

The outsized inventory of residences for sale also declined in August. Market watchers say the number of homes on the market must shrink significantly -- creating a better balance between buyers and sellers -- before prices start rising again.

The South Florida results were in contrast to the rest of the country.

Nationally, sales of existing U.S. homes fell by 2.2 percent in August, though the number of unsold homes on the market also dropped sharply from the previous month's record high.

The National Association of Realtors said sales fell to a seasonally adjusted annual rate of 4.91 million units, from an upwardly revised pace of 5.02 million in July. Sales had been expected to fall by 1.6 percent, according to economists surveyed by Thomson/IFR.

The median price of an existing home dropped to $203,100 from $224,400 a year ago. For single-family houses, the median price dropped 9.7 percent, the biggest decline since records began in 1968.

Resales account for about 90 percent of the market, while purchases of new homes make up the rest. Sales of existing homes are compiled from contract closings and may reflect contracts signed one or two months earlier.

There were 4.2 million unsold homes on the market, a 7 percent drop from the record set in July. It was the steepest drop in inventory since December 2006.

Reprinted from the Miami Herald: http://www.miamiherald.com/business/real-estate/story/699288.html

What the Government Takeover of Fannie Mae & Freddie Mac Means to the Housing Industry

What the Government Takeover of Fannie Mae and Freddie Mac Means to Housing Industry
Reprinted from the National Association of Realtors

In short-term, home sales should improve as mortgage rates fall

Washington, D.C. (September 8, 2008)-The federal government's takeover of secondary mortgage giants Fannie Mae and Freddie Mac should cause a drop in mortgage rates in the short term that benefits home buyers, but the long-term outlook is too early to call. NAR fully supports the action of the U.S. Treasury and the Federal Housing Finance Agency.

The federal government had no choice. The capital situation of the two companies was not enough to handle the fallout from rising mortgage defaults in the near future. In addition, investors who purchase Fannie Mae and Freddie Mac debt have lost confidence in the two.

In a statement, NAR commended the Treasury's action, announced yesterday, to bring stability and continued liquidity to the mortgage market.

"The plan will help restore confidence in the secondary mortgage market," said NAR President Richard F. Gaylord.

"We appreciate the steps taken to calm the market, make mortgages more widely available and protect taxpayers. We look forward to working with the administration and Congress to ensure the continued vibrancy of the secondary mortgage market.

Summary of what the Treasury actually did and what it means

• In the takeover, Treasury placed the GSEs into a conservatorship-similar to a Chapter 11 bankruptcy- which fully protects taxpayers from conflicts of interest between taxpayers and shareholders or current management.


• The federal government is authorized to take up to an 80 percent stake in the companies, will review their financial condition quarterly, and inject money into the operations as needed. That means the market for GSE securities will be treated more like Treasury obligations, which should push mortgage interest rates down. That in turn, is expected to speed up home sales and help stabilize home prices.


• The GSEs will be allowed to increase their mortgage funding over the next year and a half to help stabilize markets. Starting in 2010, the plan calls for them to reduce their portfolios.


• The heads of Fannie Mae and Freddie Mac have been relieved of their duties. Treasury selected Herbert Allison, former Merrill Lynch vice chairman, to lead Fannie Mae, and David Moffett, former U.S. Bancorp CFO, to guide Freddie Mac.

Talking Points

• NAR, as the leading advocate for homeownership and housing issues, has closely monitored the market turmoil affecting the stock and debts of the two government-sponsored enterprises (GSEs) - Fannie Mae and Freddie Mac. Their mission is crucial to the economy to make fair and affordable mortgages available to home owners and home buyers. That mission must not be interrupted.
  
• Fannie Mae and Freddie Mac play a vital role in the U.S. economy by making fair and affordable mortgage loans available for home buyers and owners. That must not be interrupted. Treasury Secretary Henry M. Paulson Jr. and James B.Lockhart III, director of the Federal Housing Finance Agency that regulates Fannie Mae and Freddie Mac, have issued strong statements assuring the public that credit will continue to flow over the next 12 to 18 months.


• Short term, the takeover will result in government money driving down interest rates, which is expected to spur an increase in home sales.


• Long term, the action will lead to a major reorganization of the two GSEs as privately owned models. The brunt of that work will fall to the new administration and new Congress. NAR will help shape that process and the association is already working on a plan to do that.


• The action taking by Treasury and the FHFA, which regulates GSEs, makes clear the government will not let the deteriorating conditions of the GSEs disrupt the flow of capital to the housing sector, or harm the national and international financial system.


• The GSEs guarantee more than 40 percent of the nation's mortgages and own or guarantee more than $5 trillion in mortgages. Since the credit crunch began in August 2007, the private sector mortgage securitization market has virtually disappeared and the market share of the GSEs has jumped to about 70 percent.


• NAR will continue to follow events closely and develop recommendations on the future of the GSEs' mission to ensure there will be a robust secondary mortgage market in all markets.

Florida Condo Prices Hit Bottom?

Real Estate Vultures Think Florida Condo Prices Have Hit Bottom
Reprinted from Florida Association of Realtors

MIAMI – Sept. 4, 2008 – Trying to time the real estate market and planning to buy once it hits bottom? Get your checkbook.

Condo Vultures LLC owner Peter Zalewski believes the recent purchase of 120 condominiums in Miami’s 50 Biscayne Blvd. tower, by the Philadelphia-based private equity firm Lubert-Adler Partners LP and Related Group of Florida, will usher in a wave of investors looking to snap up distressed properties in the region.

Jack McCabe of McCabe Research & Consulting LLC believes these vulture buyers are an indication that the housing market has bottomed out, and he believes ongoing foreclosure sales could extend the bottom for a few years. He says that vulture investors plan to spend $30 billion or more on distressed housing in the Sunshine State.

However, Lewis Goodkin of Goodkin Consulting Group says prices need to be reduced to about 50 cents on the dollar to attract investors.

Downtown Miami will see the opening of 11,551 condos this year, which is a five-year supply, according to MetroStudy regional director Brad Hunter.

Source: Bloomberg (09/04/08) Ivry, Bob
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