Update On Flood Insurance Renewal

On May 10th I wrote a story about how Congress needs to extend the National Flood Insurance Program by the end of May or thousands of property closing will be held up.

Well, some progress is being made in Washington, DC. 

Yesterday (Thursday), the Senate voted to extend the program for another 60 days.  Last week, the House ok'd a 30 day extension.  So, now the two chambers have to find some kind of compromise (ahh, there's that word politicians bandy about so much but seldom do) on how long the extension will be.  They need the extension to work on a long-term extension of the flood insurance legislation that will restore fiscal solvency to the program. 

Let's hope they can actually find some kind of middle ground on this needed program.  The National Flood Insurance Program's charter runs out at the end of May and the hurricane season starts the next day.  Nothing like cutting it close.

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Pinellas Inventory Down, Prices Steady

In Pinellas County, single family home and condominium inventory figures are down as compared to last month.  Homes seem to have gone up in value in the last year, but condos appear to have gone down a little bit in value.

Let's start by looking at the Absorption Rate, which is the inventory turn.  It tells us how long it should take to sell what is on the market today.

For single family homes, the AR in April was 25.4%.  In March, the AR was 23.7%.  The difference is very small, but it does show that houses sold just a bit faster in April than in March, so if you are a seller this is some good news.  Perhaps the market was just a bit more active in April.

During April, there were 3,288 single family homes listed for sale in the Pinellas MLS as compared to 3,450 in March.  So, if you are a seller you have a little less competition than you did in the previous month.  If you are a buyer, you have fewer houses from which to select.

All  together, in April there were 835 single family homes sold in Pinellas as compared to March's sold figure of 819.  Really, that's not much of a difference.

For condominiums, the AR for April stood at 20.4% as compared to March's 20.2%.  Statistically, that's virtually the same figure and shows that condo sales and demand are holding steady in Pinellas County.

There were 3,425 condos listed in the MLS in April.  In March, there were 3,535 units listed.  April condo sales totaled an even 700 units while in March we saw 714 condo sales.  That's just about the same figures and to me it shows that condo demand stayed about the same during this two month period.

Unlike single family homes which rose in median value during the previous twelve months, condos continued their downward pricing slide.  The median condo price in April of this year was $87,800 versus $90,000 for the same period in 2011.  That's not a big drop, but it is a drop nonetheless.

So, it seems to me that sales are holding steady as inventory shrinks.  As we all remember from basic Economics class, if inventory shrinks and demand remains the same, prices will go up.  So, I'm looking for higher prices in the coming months for both single family homes and condos.  It's just a matter of time.

Happy Selling!

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Flood Insurance Problems ... Again!

Here's another little news  flash that just came across my desk.

The U.S. Congress will need to extend the National Flood Insurance Program for the 18th time at the end of this month.  If they don't, some 1,600 home closings per day will be held up beginning, well, June first I guess.  The flood insurance program is some $18-billion in debt to the U.S. Treasury.

As you might expect, Democrats and Republicans are arguing about it and the bill is sitting in the House with no progress.  Apparently both sides have added amendments to it that neither side will vote for, so the main bill is just sitting there.  Same old bull @#*% with these people.

Somebody needs to explain to these Congressmen that this is not a bill they should play politics with.  If they want to help bring America out of this recession and get the economy moving, they need to support real estate sales, not hinder them.

I guess it's time to write your representative ... again.

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More Details On BofA Mortgage Reductions

Well, there's a bit more info on those mortgage reductions from Bank of America (BofA) in today's newspaper, so consider this to be a follow-up to the news flash I sent out yesterday.

Here's the latest ...

It appears that BofA is not reducing mortgage principal amounts out of the goodness of their hearts.  The reductions are part of a settlement over alleged foreclosure abuses.

BofA and several other lenders agreed to a $25-billion settlement last February with 49 state attorneys general and some federal officials.  Most of the settlement involves a reduction in loan amounts for the more than 1-million homes in the USA that are currently underwater.  You probably remember all that business last winter about robo-signing, foreclosure irregularities and failure to verify documents.  Well, this mortgage principal reduction is the result of that settlement with the various states.    

Underwater homeowners will receive letters soon from BofA that invite them to fill out various financial forms to see if they qualify for a loan modification that will lead to a reduction in the principal  balance on their mortgage.  To qualify, homeowners must owe more than the value of the house, and be at least 60 days behind on their mortgage payment as of January 31st.  Only mortgages that are owned by BofA will qualify.  Mortgages owned by Freddie, Fannie or FHA will not qualify.

Hey, I'm sorry to have to bring this up, but what about all those BofA mortgage holders who are underwater on their mortgage but are not behind on their payments?  You know, the people who are working two jobs so they can keep current on their mortgage payments and still buy such luxury items as food and gasoline. 

Why should the people who don't pay their mortgage get up to a $100,000 direct mortgage reduction, while the hardworking guy who is doing his best to stay current doesn't qualify for this help?   What about the young couple who had to buy using an FHA loan, or the senior citizen whose loan got sold to Fannie or Freddie and then bundled into some kind of triple-A rated "mortgage backed security" that is now owned by some rich capitalist in China or some investor in Russia?  Why no break for these folks?  They are having just as hard a time as the other guys. 

This just doesn't seem to be completely fair to me, that's all I'm saying.

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Bank of America To Lower Mortgage Balances For Underwater Homeowners

Word has just come across my desk that Bank of America (B of A) is about to announce a new program that will allow underwater homeowners to reduce their mortgage balances.  Details are a bit sketchy now, but B of A will shortly send letters to some 200,000 underwater mortgage holders offering to reduce their mortgages by as much as $150,000.  To qualify the homeowner must be underwater in his mortgage, be delinquent in payments by several months, and the loan must be held or serviced by Bank of America.

B of A mortgage holders need to look for a letter in their mailbox which will explain the program.  It is not junk mail!  Don't throw it out!  It might help you.

I'd look for more details in coming days in your local newspaper, or call your local B of A office.

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Investment Advice From Warren Buffet

Here's some investment advice from Warren Buffet ... the Oracle From Omaha ... the investor genius behind Berkshire Hathaway ... one of the world's richest persons ... the guy who doesn't think it is fair that his secretary pays higher taxes than he does. You know who I mean.

Anyway, Buffet is noted mostly as an investment guru who usually buys enough stock in a company to own it, or at least sit on their Board of Directors.

Buffet admits he likes buying stocks, but right now he likes buying houses even better than stocks.

In an interview today on CNBC, Buffet points out that houses are depressed in many markets by as much as 35 to 50 percent from where they were a few years ago, and that they can be purchased with just 20 percent down (if you qualify for a mortgage, and certainly Buffet qualifies).  Also, houses are not subject to margin calls ... all you have to do is keep the payments timely.

Hmmm ... some of you may remember a monthly real estate newsletter that I used to publish called "Word From Ward".  I stopped writing it when blogging became a better way to communicate with people than snail mail.  Well, if you remember that newsletter you might also remember several stories I wrote that essentially said the same thing as Mr. Buffet -- that is, you are probably better off to invest in real estate than in common stock -- including the possible margin call problem.

Hey!  I wonder if Buffet got this investment idea from me!  I'll have to check my old mailing list to see if he was on it.

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