What's Happening in and around Palm-Aire

Closed sales of existing single-family homes rose 10.2 percent statewide in the first quarter of 2013 over the comparable period last year, Florida Realtors reported this week. The trade group said the state’s housing market showed strength with more pending sales, higher median prices and a reduced supply of homes for sale.

Realtors sold 48,976 existing single-family homes in the first quarter. Pending sales — contracts that are signed but not yet closed — rose 26.8 percent. The statewide median sales price was $153,000, up 13.4 percent from a year ago. Condo-townhouse sales totaled 24,655 units, up 3.2 percent. Pending sales rose 13.7 percent. The median sales price was $116,000, 18.4 percent higher than last year. The inventory for single-family homes stood at a 5.3-months supply, down from 5.8 months a year ago.

Average U.S. mortgage rates rose this week but remained near historic lows. Cheaper mortgages have encouraged more homebuying and refinancing. Mortgage buyer Freddie Mac said Thursday that the average rate for the 30-year fixed mortgage edged up to 3.42 percent from 3.35 percent last week. That’s still near the average of 3.31 percent reached in November, the lowest on records dating to 1971.

The average on the 15-year fixed-rate loan rose to 2.61 percent from 2.56 percent last week, which was the lowest on records going back to 1991. Low mortgage rates have buttressed the housing recovery that began last year. Home sales and construction are up from a year ago, and prices are rising in most U.S. markets.

A survey released Tuesday showed that U.S. home prices rose 10.5 percent in March compared with a year earlier, the biggest year-over-year gain since March 2006. The survey from Core Logic, a real estate data provider, showed that year-over-year prices have risen for 13 straight months. Prices are rising in part because more buyers are bidding on a limited supply of homes for sale.

Prices rose in 46 states over the past year. Eleven states posted double-digit gains. And excluding distressed sales, which comprise foreclosures and short sales, prices rose in every state. A short sale is when a home sells for less than what’s owed on the mortgage. Sales are rising in some markets hit hardest by the housing bust in part because investors are scooping up homes in hopes of turning a profit.

Home prices in March were 10.5% higher than a year ago -- and a bit more if distressed sales weren't counted, says market researcher CoreLogic. The overall change was the biggest year-over-year jump in seven years and the 13th straight month for home price gains.

Excluding distressed sales, which are short sales and foreclosures, home prices were up 10.7% year over year. Price gains will slow slightly in April, CoreLogic says. It predicts prices will rise 1.3% month to month and be 9.6% higher than a year ago. But, excluding distressed sales, it says April prices will jump 12% year over year.

Different home price indexes frequently come up with different results, but the trend is clear. Last week, the Standard & Poor's Case-Shiller index of 20 cities showed February prices up 9.3% year-over-year. Contributing to higher prices is rising demand among investors and home buyers for a limited supply of homes for sale, CoreLogic says. Fewer foreclosures and other distressed homes in the market can also inflate price changes.

Including distressed sales, the five states with the highest home price appreciation in March vs. March 2012 were Nevada, 22%; California, 17%; Arizona, 17%; Idaho, 15%; and Oregon, 14%, CoreLogic says. Prices were lower year over year in only four states: Delaware, down 3.7%; Alabama, down 3.1%; Illinois, which dropped 1.8%; and West Virginia, down 0.3%.

There is no “typical” Florida homebuyer or seller, but the most recently released “Profile of Home Buyers and Sellers Florida Report” provides an overview of the types of buyers and sellers currently operating in the state.

The report provides a baseline for Realtors’ business decisions. Where do most Floridians start a home search? How do they finance the purchase? How many home sellers choose to go it alone and sell FSBO?

Report highlights: Homebuyers

• 25 percent of recent homebuyers were first-time buyers in Florida, compared to a national level of 39 percent – a slight rise from 2011.

• The typical Florida buyer was 55 years old; nationally, the typical buyer was 42 years old, a modest decrease from 45 in 2011.

• The 2011 median household income of Florida buyers was $74,200 ($78,600 nationally). The median income was $55,600 among first-time buyers ($61,800 nationally) and $82,200 among repeat buyers ($93,100 nationally).

• In Florida, 66 percent of buyers were married (65 percent nationally).

• In Florida and nationally, 16 percent of buyers were single females.

• In Florida, 22 percent of buyers cited “desire to own a home” as their primary reason for buying a home, compared to 30 percent nationally.

Characteristics of homes purchased

• New homes made up 20 percent of Florida home sales (16 percent nationally).

• 76 percent of Florida buyers chose a detached single-family home (79 percent nationally.

• Top three factors influencing neighborhood choice: Quality of neighborhood, convenience to job and overall affordability of homes. However, neighborhood choice varies considerably among households.

• A home’s heating and cooling costs were at least somewhat important to 84 percent of Florida buyers (87 percent nationally); commuting costs were at least somewhat important to 63 percent (76 percent nationally).

Home search process

• For 40 percent of Florida buyers, the first home buying step was to look at properties online (41 percent nationally); and 10 percent looked for info about the home buying process online (11 percent nationally).

• In Florida, 86 percent of all buyers (90 percent nationally) and 95 percent of buyers younger than 44 (96 percent nationally) used the Internet in their home search.

• 99 percent of Florida buyers who used a real estate agent viewed it as a useful information source (97 percent nationally).

• The typical homebuyer in Florida searched for 10 weeks and viewed 10 homes, compared to 12 weeks and 10 homes on a national level.

• Nine in 10 recent buyers were satisfied with the home buying process in Florida and nationally.

• In Florida, 84 percent bought a home through a real estate agent or broker (89 percent nationally).

• In Florida, 35 percent of buyers in Florida used a referral from a friend or family member to find an agent and 8 percent used an agent they had used previously to buy or sell a home. Nationally, 40 percent of buyers found their agent through a referral and 10 percent used an agent they had used before.

• Slightly more than 57 percent of recent buyers in Florida only interviewed one agent before they found the agent they worked with, compared to about two-thirds of recent buyers nationally.

• In Florida, 87 percent of buyers would use their agent again or recommend him or her to others.

Financing the home purchase

• In Florida, 70 percent of buyers financed their recent purchase (87 percent nationally); and if they did, 89 percent of the purchase price was financed (91 percent nationally).

• In Florida, 87 percent of first-time buyers financed their home purchase (95 percent nationally); and 64 percent of repeat buyers financed (81 percent nationally).

• More than a third of homebuyers in Florida and nationally said they made some sacrifices to buy, such as reducing spending on luxury items.

• 25 percent of Florida buyers reported the mortgage application and approval process was somewhat more difficult than expected (23 percent nationally); and 19 percent reported it was much more difficult than expected (17 percent nationally).

Home sellers and their selling experience

• In Florida, the typical seller lived in their home 11 years (9 years nationally, up from only 6 years in 2007).

• In Florida, a real estate agent assisted 92 percent of sellers (88 percent nationally).

• In Florida, recent sellers sold their homes for 93 percent of the listing price (95 percent nationally) and 67 percent reduced the asking price at least once (60 percent nationally).

• In Florida, 32 percent of sellers offered incentives to attract buyers (40 percent nationally).

Home selling and real estate professionals

• In Florida, 40 percent of sellers found their real estate agent through a referral (38 percent nationally); 16 percent used an agent they worked with before (23 percent nationally).

• Two-thirds of home sellers only contacted one agent before making a selection, both in Florida and nationally.

• 88 percent of Florida sellers say their home was listed or advertised online (93 percent nationally).

• In Florida, 81 percent of sellers (84 percent nationally) reported they would definitely or probably use the same real estate agent again or recommend him or her to others.

One thing that I have learned in my 14 years of real estate is that you need to plan ahead to get the best credit score. Reporting from your tradelines and corrections to them can take 1-2 months, so you want to keep that in mind if you plan on buying a house or car on credit in the near future. 

Here’s how:

1.  Do one scan for flat-out errors.  Go to AnnualCreditReport.com and order your credit reports from all three reporting bureaus: Experian, Equifax and TransUnion. Look for accounts that aren’t yours, that have long been closed or otherwise are erroneously reported (e.g., payments listed as late that were actually on-time, a short sale listed as a foreclosure, etc.). Follow the instructions on the reports to dispute such report errors immediately - both online/on the phone and in writing.  

Be prepared that it might even take several rounds of disputes and submissions of documents proving your case to ultimately clear everything up - if you experience this, make sure to loop your mortgage pro in after the first dispute round, rather than waiting months and months to even make the first call.  It might be the case that the hard-to-dispute items are simply not making much of a difference to your ability to get a home loan.  

2.  Do another scan for small reporting inaccuracies you think don’t make a difference - but do.  In particular, you’re looking for things like:

delinquencies that should have aged off

balances listed as higher than they truly are

limits listed as lower than they really are, and

short sales/foreclosures that are improperly dated, among other things. 

(Remember that your credit report is not updated constantly, so allow for some slack time on these)

Paying bills late or not at all is only one thing that dings your credit report and score. Having a maxed out credit account (loan, line or card) limits is another.  So, if your credit report shows your balances as higher than they actually are or your limits as lower than they actually are, this by itself can actually impair your credit score.  

These sorts of little, technical errors can, cumulatively, create a serious, negative impact on your credit score. They are very common - and commonly overlooked by consumers who are looking primarily for big, bad errors and wrong reporting that might indicate identity theft or other nefarious goings-on.  So take a second tour through your credit reports looking for inaccurate balances and limits. 

In the same vein, triple-check the dates of any delinquent payments, collections, short sale(s), foreclosure(s), or bankruptcies that are legitimately reported. Another common error is for these sorts of derogatory credit marks to have been dated inaccurately.  Delinquencies should age entirely off your report after 7 years, and bankruptcies after 10.  The precise date of a short sale or foreclosure can actually make or break your ability to qualify for a home loan - so make sure it is reported accurately. 

3.  Pay the right things off - and take care not to pay off accounts you need to show your responsible use of credit. A few things that most lenders will demand you settle, bring current or pay off entirely before you can buy a home: 

accounts in collections

state and federal tax liens

past home loans or lines of credit in default that were not extinguished through foreclosure or short sale (e.g., second loans, home equity lines of credit, etc.)

defaulted federal student loans (for FHA loan applicants).

If you do have to negotiate with any such creditors for settlements or repayment plans, consider including the way they report the account as one of the negotiables in your settlement deal.  Consult with your mortgage professional about how you should ask the creditor to report the resolution as part of the settlement - you might not get it, but it certainly doesn’t hurt to ask. 

Your mortgage pro can also help you understand how you should sequence and prioritize the various items on this little laundry list. For example, some lenders might allow you to simply extinguish a tax lien at closing, while most FHA loans won’t allow for a credit pre-approval while you have a defaulted federal student loan on your report.

But do exercise some caution when you start paying off debt in preparation for home buying. Some house hunters take the opportunity to pay all their debt off and close out old, unused accounts, thinking it will document their readiness for the financial responsibilities of homeownership.  Not so: credit scores are optimized when they show that you (a) have credit available to you, and (b) are responsible in how you use it.  The ideal for the FICO score calculations is to be using roughly 30 percent of the credit available to you on your accounts.  So don’t pay them entirely off, and whatever you do, don’t close accounts that are open and/or current.  

That said, don’t go out charging up a storm trying to bring zero balance accounts up to 30 percent credit limit usage.  A flurry of new charges can upset your debt-to-income ratio and be seen by the FICO calculating robots as a sign of potential financial distress.

4.  Get your mortgage pro to help.  Up to now, you’ve been working on the reports that you can pull yourself, for free, as mandated under the federal Fair and Accurate Credit Transactions Act (FACT Act) through AnnualCreditReport.com. These reports are free and are the smart starting point for your credit Spring Cleaning, but they have two important shortcomings:

(1) They are almost never identical to the report your lender will actually use as the basis of your mortgage application, and 

(2) They do not include the FICO credit score on which lending decisions are based.

So, once you’ve dealt with any major or minor reporting errors you detect on the free reports, get your mortgage pro in the loop (if you haven’t already) and ask them to pull your report and FICO score, and help you to troubleshoot it.  From the report, they can tell you whether you’ll have any challenges qualifying at the price range you desire and, if so, they can help you put a plan of action into place for finishing up your credit fitness program. 

Many mortgage pros have software or expertise that can power a set of recommendations about what you need to do to complete your credit report Spring Clean, like paying 3 particular accounts down by a specific dollar amount, each.  Also, they generally have access to Rapid Rescore or similar programs that will have your report updated and your credit score revised within a day or two after you pay a bill down or execute your mortgage broker’s other score-boosting advice. (By contrast, it can take 30 days or more it can take for your score to be updated if you dispute your report on your own.)

5.  Ask about augmenting your report with non-traditional “tradelines,” if needed.  If you simply don’t have much credit because you like to pay cash, kudos to you for managing your finances responsibly.  Increasingly, lenders will allow borrowers to use non-traditional accounts to document their credit history.  If you can document your history of paying your rent, health insurance, or even child care bills on time, every time, for at least 12 months, talk to your mortgage professional about whether you can use any of these accounts to prove yourself creditworthy to mortgage lenders.

Floridians’ consumer confidence rose three points to 79 in April – the second consecutive monthly increase, according to a new University of Florida (UF) survey.

Four of the five components used to determine Florida consumer confidence level increased and one remained unchanged in April. Respondents’ overall opinion that their personal finances are better than a year ago increased five points to 70, while their expectations they will be better off financially a year from now increased six points to 78.

Meanwhile, their trust in the U.S. economy rose three points to 80. They also were optimistic about national economic conditions over the next five years – that assessment rose one point to 77.

Left unchanged from March was whether now is a good time to buy big-ticket items such as cars and appliances. The response stayed at 90.

Not all Floridians, however, are optimistic. Confidence among Floridians making $30,000 a year or less dropped six points to 61, but it rose four points to 85 for those earning more than $30,000.

Age could affect views, too. The overall confidence level of Floridians younger than 60 increased 10 points to 87, but it fell three points to 72 for those 60 and older.

The long-awaited plans for commuter rail along the Florida East Coast Railway appear to be gaining some traction after being stalled by the recession.

The Southeast Florida Transportation Council, which includes planning organizations for each county, has approved a memo of understanding (MOU) outlining the process to create the commuter service along the 85-mile FEC tracks from downtown Miami to Jupiter.

As the Business Journal reported April 18, the FEC's sister company, All Aboard Florida, has scheduled two environmental impact hearings in South Florida on May 6 and May 7 about its plans for high-speed rail service to Orlando.

The expansion of the Tri-Rail system would not only help people get to and from work, but feed passengers to All Aboard, which will only have four stations – Orlando, Fort Lauderdale, West Palm Beach and Orlando.

In contrast to a decade of slow progress, eight key organizations are expected to vote on the commuter rail MOU by the end of May. Among them are Tri-Rail's parent (the South Florida Regional Transportation Authority), the South Florida Regional Planning Council, the Treasure Coast Regional Planning Council and the Florida Department of Transportation's Florida Rail Enterprise.

Canadians are helping Florida real estate housing market emerge from the doldrums. The Herald-Tribune reports that Canadians are purchasing more Florida real estate than any other foreign buyers.

A study prepared for the Consulate General of Canada in Miami found that Canadians purchased $2.1 billion worth of residential real estate in Florida in 2010, accounting for 8% of all home purchases and 36% of all foreign-buyer deals. Jack Ablin, chief investment officer with BMO Private Bank, says more than 500,000 Canadians own property, including timeshares, in Florida.

Realtor.com announced a major update to its realtor.com mobile app for iOS (iPhones, iPads, etc.) and Android. The upgrade now allows homebuyers to target listings based on schools and districts. The app also includes other updates, such as intuitive navigation elements and enhanced maps.

“We understand that when searching for the perfect home for your family or soon-to-be family, schools are an incredibly important consideration in the home-hunting process,” says Errol Samuelson, chief strategy officer of Move and president of realtor.com.

Realtor.com updates

• “Nearby Schools” button on the home screen uses the phone’s GPS to find schools in surrounding areas

• Pins on an interactive map display GreatSchools ratings and assignment boundaries, and allow users to search homes for sale within a school boundary

• Schools tab, which is displayed within each property listing, that provides information about the grades taught at each school, student-teacher ratios and GreatSchools ratings

• Ability to search listings based on their assigned public school or school district

Florida Insurance Commissioner Kevin McCarty encourages Floridians to prepare for the upcoming 2013 hurricane season by purchasing flood insurance now. Most flood insurance policies – with a few exceptions – don’t take effect for 30 days.

The National Flood Insurance Program (NFIP) administers the coverage rather than local insurers, and private policies – if available – generally cost significantly more. Homeowners’ policies generally cover water damage from wind and storms, but they don’t cover rising water in a flood, even though it’s the nation’s most common natural disaster.

McCarty cites another reason to buy flood insurance sooner rather than later: NFIP policy rates are set to rise on Oct. 1, 2013. McCarty calls the increase “significant.”

“Florida’s risk for severe weather is well-known and, even though a hurricane has not impacted our state in recent years, several tropical storms have caused significant flood damage to many Floridians,” says McCarty. “Regardless of the storm type, I strongly urge Floridians to prepare now and purchase flood insurance by May 1, as a typical flood insurance policy takes 30 days to become effective. This will ensure you are covered on June 1, the first day of hurricane season.”

To learn more, visit the new Hurricane Resource website page hosted by the Florida Insurance Commission.

For more info on the National Flood Insurance Program, visit the federal website FloodSmart.gov.

© 2013 Florida Realtors®