House Prices: The Impact of Supply and Demand Posted: 29 Nov 2010 04:00 AM PST For some time now, we have attempted to shed light on the fact that pricing in today’s real estate market will be determined by the concept of ‘supply and demand’. If supply continues to increase and demand softens (or even remains constant) prices will continue to fall. Even the National Association of Realtors (NAR) has acknowledged this to be true. The supply of inventory in the real estate industry is defined by the current months’ supply of homes that is available for sale. There are no steadfast rules that will apply to every category of housing. However, here is a great guideline by which to go: 1-4 months’ supply creates a sellers’ market where there are not enough homes to satisfy buyer demand. Appreciation is guaranteed. 5-6 months’ supply creates a balanced market where historically home values appreciate at a rate a little greater than inflation. 7-8 months’ supply creates a buyers’ market where the number of homes for sale exceeds the demand. Depreciation follows. Where do we stand today? According to NAR’s most recent Existing Sales Report, there is currently a 10.5 months’ supply of homes for sale. We can see, based on the guideline above, we are in a buyers’ market and that prices will continue to soften. The other statistic we must watch is the number of months’ of shadow inventory which will be coming to market. CoreLogic just released their November report (which covers August). They estimate shadow inventory: … by calculating the number of properties that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders and that are not currently listed on multiple listing services (MLSs). Shadow inventory is typically not included in the official metrics of unsold inventory. The report showed that shadow inventory jumped more than 10% in the last year, pushing total unsold inventory to 2.1 million houses. That represents another 8 months of supply. The Wall Street Journal reported that some analysts have said CoreLogic estimates look rather low. Laurie Goodman, senior managing director at Amherst Securities Group, has warned that as many as seven million homes could end up in banks hands unless more aggressive modification regimes are put in place. Barclays estimates that another 3.76 million homes are either in the foreclosure process or are at least 90 days delinquent but not yet in foreclosure. Bottom Line Most industry experts are projecting just that – an additional fall in prices of between 5-20%. Mark Fleming, chief economist for CoreLogic commented: “The weak demand for housing is significantly increasing the risk of further price declines in the housing market. This is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time due to the highly extended time-to-liquidation that servicers are currently experiencing.” If you are thinking of selling, meet with a local real estate professional immediately. In most parts of the country, selling sooner may be better than later. This article is by The KCM Crew If you are interested in selling or buying your property, give me a call or e-mail me at matta.m@ewm.com Key Biscayne, a wonderful place to live.     Marilina Matta     Coconut Grove Office     305.519.8191

St Agnes Academy in Key Biscayne Christmas Bazaar

5th Annual Christmas Bazaar. 

A fun filled day of one of shopping
for one of a kind and unique items,
silent auction,food vendors, and a visit   from Santa.

Sunday, December 5, 2010

9:00 AM - 4:00 PM

122 Harbor Drive

Key Biscayne, a wonderful place to live.

    Marilina Matta
    Coconut Grove Office
    305.519.8191

Christmas trees in Key Biscayne

Have you ever wondered where can you buy a Christmas tree in Key Biscayne? The trees are already out. You can buy one either at Winn Dixie, or in the parking lot at the Key Biscayne Community Church on Fernwood Road. If you are looking for a bigger tree, the KBCC has a bigger selection. Either way, buying your tree in Key Biscayne is a great way to help and support Key Biscayne businesses.

Key Biscayne, a wonderful place to live.

    Marilina Matta
    Coconut Grove Office
    305.519.8191

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20,000 Houses Will Sell This Weekend. Will Yours?

Posted: 19 Nov 2010 04:00 AM PST

There is no doubt that demand for housing has slowed. The National Association of Realtor’s 3rd Quarter Existing Homes Sales Report showed that sales were down in all fifty states and the District of Columbia (3rd quarter vs. the 2nd quarter). The decline was in double digits in all but two states (Nevada and California). Those are the facts.

But let us not allow the facts to get in the way of the truth. The truth is that over 4 million homes will have sold in this country by the end of the year.

That averages out to be over 10,000 houses a day! Every day – 365 days a year!

Houses are selling. The question is will your house be one of the 10,000 that sell today. That is entirely up to you. You and your family can move on with your plans and dreams immediately. You just have to be willing to price the house at what today’s purchaser is willing to pay. Will you be able to sell it for what it would have sold for in the past? Probably not. Will you be able to sell it for the price you had desired? Probably not.

You must weigh the cost of selling today (a reduced profit on your home) against the cost of not getting on with your life. There is no doubt that money is important to everyone, especially today. Being able to follow your plans and dreams is also important however. Don’t allow money to ultimately control that decision.

Decide what is best for you and your family – AND DO IT!!

This article is by The KCM Crew

If you are interested in selling or buying your property, give me a call or e-mail me
at matta.m@ewm.com

Key Biscayne, a wonderful place to live.

    Marilina Matta
    Coconut Grove Office
    305.519.8191

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There Is Still a Tax Credit Available!

Posted: 18 Nov 2010 04:00 AM PST

As Veteran’s Day passed last week, I forgot to remind everyone to thank those who have served our country AND to remind everyone out there in the blogosphere that eligible Veterans are still able to take advantage of the Federal Tax Credits that expired for the rest of the population a few months back.

Yes, eligible First Time Home Buying Veterans only need to be in contract by April 30, 2011 and close by June 30, 2011 to receive the  up to $8000 tax credit on their income tax return.

And yes, eligible Repeat Home Buying Veterans can receive the up to $6500 credit.

And no, they do not have to take VA mortgages to get the credit (even though we have often discussed the benefits of VA financing in this space).

Scenarios to think about:

1. Home buying Veteran gets their tax credit to fund some home improvement

2. Or to buy furniture

3. Or to consolidate other debt

4. Or to pay discount points (two benefits here.  One, the points are tax deductible. And two, they result in a lower rate to help qualify for bigger mortgage/better home or just lower the monthly carrying costs.)

5. What this tax credit may be able to do is ease the pain of a seller who is a veteran that has to lower their asking price because they will receive the benefit on their home purchase.

I have heard the arguments about whether or not the previous tax credits helped sell more homes, but I don’t think that matters because that is an “industry/political argument”.  What I am talking about here is the opportunity for individual families that shouldn’t be wasted because of a lack of knowledge.

The mission of this blog is to get the information into the hands of the people.  Well, people….are you going to make sure every Veteran you know is aware of this opportunity?
This article is by The KCM Crew

If you are interested in selling or buying your property, give me a call or e-mail me
at matta.m@ewm.com

Key Biscayne, a wonderful place to live.

    Marilina Matta
    Coconut Grove Office
    305.519.8191

350 W PALMWOOD LN, Key Biscayne, Florida 33149

As you all know, Wednesday is the day for Brokers Open Houses.

I just previewed this beautiful house in Key Biscayne. Perfect for

entertaining with covered terrace and a fully equipped covered outdoor

kitchen.

350 W PALMWOOD LN, Key Biscayne, Florida 33149 - MLS# M1442371 - EWM Real Estate

If you would like to preview this property, or any other property in Key Biscayne or

South Florida, give me a call at 305.519.8191, or e-mail me at matta.m@ewm.com

Key Biscayne, a wonderful place to live.

    Marilina Matta
    Coconut Grove Office
    305.519.8191

Shedding Some Light on the Issue of Shadow Inventory

Posted: 17 Nov 2010 04:00 AM PST

There appears to be some confusion regarding the amount of shadow inventory that currently exists and the impact it will continue to have on the real estate market. Today, we want to bring some clarity to both of these issues. First, let’s define shadow inventory because part of the confusion is in differing definitions.  Originally, the term ‘shadow inventory’ was used by some to define a supposed ‘secret’ inventory; mysteriously hidden by banks from their investors and the general public. This definition caused banks to come forward and announce that they were not holding a ‘secret’ stash of foreclosures.

Those announcements were misinterpreted by some to mean there was no backlog of distressed properties. That is not what the banks said. There definitely are millions of distressed properties that have been and will continue to be placed on the market. The banks were just explaining that the number and process is totally transparent.

What actually is ‘shadow inventory’?

The most common definition of shadow inventory is given by Standard and Poor’s:

Outstanding properties that are (or were recently) 90 days or more delinquent on mortgage payments, in foreclosure, or real estate owned (REO)—that haven’t yet hit the market.

Let’s look at a graph from Calculated Risk showing that the inventory of foreclosures Fannie, Freddie and FHA currently hold is up 24% in the last quarter:

This does not include the inventories held in the private sector.

Also, there are millions of homeowners that have fallen behind on their mortgage payments. Currently, less than two percent of those who fall behind 90 days will ever make up the difference. Over 98% will become a distressed property in the future.

How long will it take to ‘clear’ this inventory?

The banks are being very cautious in the way they are releasing this inventory. If they release too many too quickly, it will have a major detrimental impact on existing home prices. If they release too few, it will retard the housing recovery which will not fully occur until this inventory is cleared.

The best analogy I have heard was from Buzz MacIntosh from MacIntosh Realtors in Maryland. He explained that the shadow inventory is like a lingering storm. If it rains too hard, there will be flooding. However, we must be willing to accept some rain or the clouds will never clear.

Estimates of how long it will take for this storm to clear range from 40 to 44 months. Housing Wire recently reported:

The shadow inventory of delinquent loans, foreclosures, and REOs stands at 7 million homes, which would take the market more than 40 months to clear, more than three years, according to Fitch Ratings.

What impact will it have in 2011?

Moody’s Anaytics, in an article by Andres Carbacho-Burgos, reported:

While U.S. housing fundamentals have certainly improved since 2008, the shadow of rising foreclosures still looms over the market and is the strongest reason why house prices will fall again in 2011. More than 2 million homes remain in some stage of foreclosure, according to RealtyTrac, and although this number has declined in the last three months, it is likely to rise again in 2011. The annual total of foreclosures, short sales, and deeds in lieu is forecast to peak at 2 million in the next year as well.

Standard & Poor’s analysts think home prices will drop between 7% and 10% in 2011. According to Housing Wire, S&P credit analyst Erkan Erturk said;

Prices will continue to be pressed down as long as the market works through a backlog of distressed properties that remains elevated.

Bottom Line

A ‘shadow inventory’ does in fact exist and it will have an impact on the housing market for some time to come. The banks must clear this inventory but are trying to do it systematically so as to have the least negative effect on home prices. Check with a local real estate expert to learn how this may impact your values.

This article is by The KCM Crew

If you are interested in selling or buying your property, give me a call or e-mail me
at matta.m@ewm.com

Key Biscayne, a wonderful place to live.

    Marilina Matta
    Coconut Grove Office
    305.519.8191

Video Jessy Matador - Alllez Olla Olé (France)

This video has been watched by more than 13 million people in You Tube. Filmed
in Miami and Key Biscayne (Jimbo's).

If you are interested in selling or buying your property, give me a call or e-mail me
at matta.m@ewm.com

Key Biscayne, a wonderful place to live.

    Marilina Matta
    Coconut Grove Office
    305.519.8191

Is Your Loan Officer A Leader or Paper Pusher? Posted: 11 Nov 2010 04:00 AM PST Being a PROFESSIONAL Loan Originator in today’s market requires more than just a fancy title on a business card or the affiliation with a recognizable name in lending. As regulators try to continue to minimize the importance of the counsel of talented lenders through tightening guidelines and the guise of transparency, the public needs to have a better handle on how to identify a good loan officer and what value they can bring to the transaction. Being a good loan officer is being a good Leader, and Leaders have three core components: They are EXPERTS. Solid loan officers know the requirements of their loan products; they know how to qualify borrowers for those products; and they have an understanding of the process workflow. Moreover, they can effectively communicate these items to consumers who “don’t do this every day”, and in so doing, they garner the trust and confidence of those consumers. But, EXCEPTIONAL Loan Officers offer more. They can offer insight to likely interest rate movements before it occurs because they are students of the financial markets (of course, with no guarantees, but with some reasonable probabilities). They can discuss income tax strategies (which, of course, should be reviewed with an accountant) that can help optimize the benefits of homeownership. In addition, the best loan officers are surrounded by a team of experts in other areas- real estate, financial planning, life insurance, wills & estates, construction/renovation, credit score optimization, and more. They are EMPATHETIC. The loan officer of today needs to know more that facts and figures. They need to read into the nuances of a file and be able to bring out the character of the borrower. That only comes from a loan application consultation that includes hopes, dreams, and compassion about the past. Most files today have some issues (be it in the credit score or documentation of income and assets). The great loan officer knows how to highlight the strengths of a file and document the challenges in a way to lessen their impact for the underwriter. If expertise is a science, empathy is the art form. And it requires exceptional listening skills which is crucial for today’s originator. They THINK OUTSIDE THE BOX. Most lending today is done inside the “boxes” of the FICO Credit Scoring System and the Automated Underwriting Systems. Superior loan officers understand how the “boxes” think. They know the old adage “garbage in/garbage out”. The loan officer who can properly structure a loan can get loans closed that others cannot. Loan officers who can counsel clients on asset positioning, credit score optimization, and such can be invaluable. It is my experience in life that people want to follow in areas where they are not the expert. Getting a mortgage today, it demands that you find someone worth following. You need a loan officer who is a leader. We define that Leader as an EXPERT who is both EMPATHETIC and CREATIVE. My advice is you search for the BEST PERSON, even more than you search for the lowest rate and fees. This article is by The KCM Crew If you are interested in selling or buying your property, give me a call or e-mail me at matta.m@ewm.com Key Biscayne, a wonderful place to live.     Marilina Matta     Coconut Grove Office     305.519.8191