In This Issue:
- Your National Forecast for the Real Estate Market: Partly Sunny!
- Believe Us – South Florida Lis Pendens Decline in April 2010
- Learning from Our Mistakes
While commercial properties are turning into a nightmare for owners in states like Arizona, California, and Florida, the opportunities to buy are turning into dreams for Default Research savvy clients. I have heard a lot of positive news from many of our clients who are shifting their focus from residential foreclosures to commercial deals.
I spoke with one particular client in Arizona who is using the struggling commercial sector there to turn deals on relatively cheap property. He is then taking the properties and renting them at a cheaper price to start-up companies and entrepreneurs who are looking to move their offices out of their homes. If it sounds like the American Dream and a win-win for the new property owner and his tenants, you are exactly right.
In this month’s newsletter, we have other good news from a “partly sunny” forecast based on the new national real estate numbers released by the National Association of Realtors. Other accurate and solid numbers come directly from Default Research as we detail why our numbers are more conservative than other foreclosure research companies. Our numbers also mean more deals are waiting for our customers who focus primarily on lis pendens.
Just rereading my introduction to this month’s newsletter with the solid commercial numbers and other statistics makes me want to change the forecast to completely sunny. However, I will stick to our more conservative, yet promising, method of reporting to our clients! (read on… it will make total sense)
Your National Forecast for the Real Estate Market: Partly Sunny!
The National Association of Realtors (NAR) recently released their April 2010 statistics and although I cannot predict the weather, I can interpret the statistics from the NAR. I am pleased to say that the news was positive, especially when it comes to the sale of existing homes which rose by 7.6 percent in April 2010. This is one of the most important statistics followed in the pre foreclosure industry, and a gain like this is bound to have a positive effect on the real estate market.
The report also indicated that single family home sales increased by 7.4 percent while condominiums and co-ops increased by 9.1 percent. There are mixed reports from economists as to the housing market, but the Default Research statistics indicate that the nation is on its way to recovery. Although the federal homebuyer tax credit expired at the end of April, we have had positive news in the mortgage markets.
One number that did fall (in a good way) is that the average 30 year home loan dropped to 4.8 percent. There is a clear explanation; the European debt crisis has, at least temporarily, boosted foreign investment into the US Treasury market. It is not completely clear how long the European debt will continue to affect this country in a positive way, but the news is good in the short term for our clients. Additionally, those interested in purchasing property including commercial properties are able to afford more expensive properties.
With a positive report like that, it is time to grab your sunglasses because the future for our clients, and that of the nation as a whole, is bright!
Believe Us – South Florida Lis Pendens Decline in April 2010
Although the Default Research method of reporting has been the most consistent and accurate method of collecting foreclosure data in the business, we still field calls about why the total number of our Florida statistics are lower than other foreclosure providers. I am always happy to answer the question because my response has stayed the same since day one; Default Research focuses only on mortgage related lis pendens, while many national providers look at all types of lis pendens, including homeowner association foreclosures which can greatly skew results. Therefore, the competitors’ numbers are much greater, inflating the appearance of an already bad foreclosure problem in our country.
Take for example our statistics from just last month. In April 2010 Default Research saw a huge drop in mortgage related lis pendens records in Broward, Miami-Dade, and Palm Beach counties. In comparing April 2010 to March 2010, Broward lis pendens dropped by approximately 44 percent, Miami-Dade dropped by 43 percent, and Palm Beach lead the areas with a 77 percent decline. Real estate market indicators also showed that home prices have leveled out in the first quarter of 2010 after seeing steady declined since 2006. Home inventories also continued to decline, a trend that started in January 2009.
All of these accurate numbers do not seem to mesh well with the bigger numbers reported by other foreclosure companies. While there is nothing we can do about their method of reporting, we do know that with less new lis pendens (pre foreclosures), it is even more important for our clients to be savvier and be the first to reach the homeowner. We will continue to do our honest job and therefore you can continue to make deals the honest way too!
Learning from Our Mistakes
After reading about a survey conducted in April by Zillow Mortgage Marketplace of 2,729 adults, I could not believe my eyes! The report showed that borrowers are not spending any more time now than they did in 2008 in researching a home loan. Borrowers are actually asking for fewer quotes!
It amazes me that after all the country has been through with the real estate crisis, people in the market for a home spent typically five hours when researching their lender. That number is unchanged from two years ago and is similar to the same amount of time spent researching a computer or vacation.
Apparently I am not alone when it comes to being utterly surprised and shocked that people are not taking more time comparing quotes. According to Zillow Chief Economist Dr. Stan Humphries, “The last few years should have driven home the lesson that understanding one’s home loan is critically important, but mortgages continue to be something that most people don’t want to spend time thinking about. Not understanding a home loan can have catastrophic consequences. Starting from our first survey two years ago, I’ve been surprised that people spend more time shopping for cars and televisions than they do researching mortgages. I’m further surprised that they spend no more time shopping for mortgages now than they did two years ago, even in the midst of an unprecedented foreclosure crisis. People spend countless hours shopping for the perfect home, yet few realize that small differences in the interest rate or discount points can add tens of thousands of dollars to the overall cost of the home. In an area like mortgages, where the lender has so much more information than the typical borrower, getting multiple offers from lenders and being able to compare them relative to one another is critical to leveling the playing field.”
That was quite a lengthy and telling quote from Dr. Humphries. In fact, I could not have said it better myself too. It is surprising that people around the country have not learned from their mistakes. I know that is not the case for our clients at Default Research. The savvy real estate professionals I have spoken to about this report are apparently the exception. They research and review before buying anything – especially a house.