My New Blog

Current Sale Projections vs. Actuals and Market info.

 I have been reviewing the latest stats between Hillsborough and Pinellas on my Projections Webpage and the actual trend is getting pretty close to what I expect to occur. We are at sales rates of 2001, prior to any rate decreases by the Federal Reserve at that time. The buyers in the market that can actual be approved are set. What I am observing is that unless banks ease lending restrictions the excess inventory is going to affect our local market through 2010 and no price swings until 2011-2012. I know quite a few people with above average credit history who have had a difficult time obtaining financing.  The 700 Billion bailout should help the foreclosure and short sale side and allow some of these people get the loans to buy up this excess inventory. This is very crucial, as I have routinely observed homes in foreclosure or short sales that are in good condition being sold below what a builder’s costs would be. The banks are currently perpetuating the problem by dumping properties below cost. I spoke with a Realtor on 10/07, he told me that on a listing of his, the bank took a significantly lower cash offer and had a higher FHA and another higher VA offer in at the same time. I understand the concept of cash, but the difference was near 20%. Now, the average Joe homeowner will be competing with deals like these and the holding cost of the bank was not $20,000 for a month. Countrywide took a great step along with BofA, it’s parent company on 10/7, by announcing they will start resetting certain borrowers payments to 34% of their actual and current gross income. This is a plan that has teethe behind its’ bark. I still do not understand why some of theses possible foreclosures are not turned into rentals, with the current owners converted to the tenants. Although the owners in foreclosure cannot afford their mtg. payment, they can afford to rent, they can afford something. And that will increase the banks balance sheets and give the banks cash. Instead of the banks booking a $150,000 loss, take in some rental cash. The owners’ get to keep a roof over their head, the banks get some cash, don’t book a loss and add a long term asset, and the market doesn’t feel such a great effect from this low priced competition. I am about done with my opinion of what the banks can do although I could talk about it another couple of hours. This goes back to my accounting degree and former controller job back in the 90’s. I think that banks should follow what Countrywide announced on 10/07. At least there seems to be some small shimmer of light out there and that is our local market is sustaining a reasonable sales rate and all eyes are on the Real Estate market.