New Pending Sales
As of August 31, 2008, there were 870 pending sales of single family homes, and 766 pending condo salesin the Greater Fort Lauderdale area. This does not include all of Broward County, just the city of Fort Lauderdale and all of the smaller cities that touch our borders such as Pompano Beach, Oakland Park, Plantation, etc.About 40% of the new pending sales at this time are either foreclosures or "short sales". A short sale is when the seller owes MORE than the property is worth, and because of a TRUE financial hardship (normally behind on payments, principal residence, etc.), the bank decides to let the owner sell for less than the mortgage amount while writing off the difference. When a property is sold as a short sale, the seller receives NOTHING, but they do avoid going through a foreclosure and can usually repair their credit and buy again within a year or two. The percentage of foreclosures and short sales is likely to increase in 2009 as ARM's reset. Please contact me directly if you would like more information on short sales. A Note on Foreclosures- The foreclosures in THIS market are NOT evenly spread all over town. If you want a house in the Las Olas neighborhoods, or a beach condo, or a house east of the Intracoastal, then you are mostly OUT OF LUCK when it comes to shopping for foreclosures. At this time, you have PLENTY of foreclosures to look at in neighborhoods that have lots of section eight tenants and higher crime rates. Just A FEW IF ANY to look at in the nicer neighborhoods with best schools. Most of the foreclosures right now seem to be going to first time home buyers, or savvy investors looking to turn a little sweat equity into a long term rental.Keep in mind, the type of buyer that was likely to get a subprime loan and then default later when the rate adjusted was more likely to be a lower-income buyer with zero cash down, who lived in an average or BELOW average neighborhood. Neighborhoods that appealed to buyers that already had cash to purchase a 1.5 million dollar home in an eastern location with canal waterfront, no fixed bridges, and within walking distance of the beach or Las Olas - not so likely to go into foreclosure! It should also be noted that South Florida is NOT a kind environment for a vacant house. A home that has been unoccupied for a lengthy amount of time could have black mold or other issues that make it MUCH LESS DESIRABLE for the average buyer, REGARDLESS of the lower price. For Sale and SOLD! At the end of August there were 12,010 single family homes for sale in the Greater Fort Lauderdale metro area and 643 homes that SOLD during the month of August. There were 15,253 condos for sale and 595 condos that SOLD during August. I am happy to report that I personally had FIVE closed sales in July and FOUR closed sales in August, so HOMES ARE SELLING! Our office also turned a tidy profit in July with several agents receiving profit share checks.The Tale of Two MarketsAT this time, probably 90% of the homes currently listed are OVERPRICED and have ZERO chance of selling. It is only the BEST 10% of homes in any price range that are actually PRICED IN the market and have a decent chance of selling. The other 90% are listed for sale, but they are actually PRICED OUT of the market. So the TRUE SELECTION of available properties may not be as large as many buyers or sellers believe it to be.This is what a BUYER'S MARKET looks like. Most homes are priced OUT of the market.This is what a SELLER'S MARKET looks like. Most homes are priced IN the market.Remember, a BALANCED MARKET occurs when there are between FIVE to SEVEN MONTHS of homes listed for sale. Less than that and you have a SELLER'S MARKET, more than that and you have a BUYERS MARKET. Subtract all of the upside down sellers who truly CANNOT or REFUSE TO SELL at today's new market value (about half of the homes currently listed). The number of properties left for sale is still defined as a Buyer's Market, but it isn't nearly as lopsided as most people believe, and at some point it will shift from a Buyer's Market to a Balanced Market very quickly. Are there Really TWO YEARS Worth of Homes Already Listed For Sale?If you look at the surface numbers without going deeper to see what they are composed of, then yes, you will falsely believe that we have two years worth of condos and 18 months worth of single family homes for sale. In reality, ABSOLUTELY NOT! Before values fell to the levels they are at today, these "surface numbers" had more direct relevance. A closer look at the makeup of the number of properties "for sale" today tells a different story.About half of today's sellers bought in 2004, '05,'06, or '07. Unfortunately, the majority of these sellers now owe MORE than their home is worth. They can make their monthly payments, but they CANNOT or WILL NOT pay off the difference between what they now owe and what the home is worth in today's market in order to sell. Most of these sellers will stay where they are wait for inflation to push their homes value back up to where it was when they bought. Remember, over longer periods of time, real estate values have always GONE UP. These sellers know that real estate is meant to be a LONG TERM INVESTMENT, and they will stay put knowing that eventually their homes will be worth MORE than what they PAID. MOST of these sellers will probably just GIVE UP trying to sell in today's market and just take their homes off the market. No one has a crystal ball that perfectly tells the future, but the change to a buyer's market seemed to happen "overnight" to local residents. When the market shifts again to a Balanced Market, the perception will be the same. So when you look beyond the surface numbers, and you delete JUST the upside down sellers that will eventually just take their homes off the market without selling anyway, then it is obvious that what we really have are LOTS OF FOR SALE SIGNS everywhere, NOT two years worth of properties that are ACTUALLY SELLABLE. In fact, for single family homes, just deleting the upside down dreamers mentioned above, the supply would drop from "18 months of inventory" to less than nine months worth, and out of that THE MAJORITY still aren't priced correctly. In many neighborhoods, it is not unusual to find just one or two homes worth viewing based on price. Remember, a balanced market occurs when there is between 5 to 7 months worth of inventory. We aren't really as far away from that as it appears. This is especially obvious once you get out there and start looking for properties that are priced so that they really are SELLABLE!When Will The Market Change?Local market swings can happen VERY QUICKLY, seemingly "overnight". When the sellers that bought after 2003 mentioned above finally decide to throw in the towel and take their homes off the market, expect to see a lot of signs come down in a VERY SHORT period of time. When the market here shifted from a sellers market to a buyers market, the perception of the overwhelming majority of local people was that it happened "OVERNIGHT". Expect to see the same thing when we switch from a buyers market to a more balanced market. See "Timing the Market" below...Timing The Market With Perfect IntelligenceDon't take this personally, but try to think of how many times you have ever TIMED ANYTHING with perfect intelligence. Your babies? Your marriage? Selling those dot.com stocks? The truth is, we only recognize perfect timing AFTER THE FACT, NEVER by planning it that way in advance. Individuals who have been lucky enough to time anything perfectly will tell you it was mostly just that - LUCK!SELLER Misconceptions In a Buyers' MarketSeller: "If I sell now I will have to GIVE my home away." Truth: NO ONE IS GIVING THEIR HOME AWAY. They are SELLING their homes at the NEW MARKET VALUE. Your home is in a PRICE WAR and a BEAUTY PAGEANT. You must price competitively, and your Realtor should be pointing out improvements that would help your home show better, regardless of whether it hurts your feelings or not. Sorry Blanche, but "You Are in a Beauty Pageant, You Are!!!" You aren't supposed to be "Happy" with the offers that are coming in. If you were, it wouldn't be called a BUYER'S MARKET! :) Oh Crap! I Should Have Sold in 2005!The market is what it is. If you want to move up to a bigger house, guess what? You will have to sell for less than you would have two years ago, but you will MORE than make up for the difference when you buy that larger "dream home" for FAR LESS than it would have been two years ago too! Waiting to Sell? Consider the following...Sellers that wait... I don't blame ANY seller that chooses to wait instead of selling. Either you are SERIOUS ABOUT SELLING, or you ARE NOT SERIOUS. If you ARE serious, then you will have to do WHATEVER IT TAKES to get the home sold now! If you aren't serious PLEASE take the home off the market and leave it to your HEIRS. They will sell it for whatever the market will pay at that time.
BUYER Misconceptions in a Buyers' MarketBuyer: "I'm going to wait and buy when I find A STEAL! I want to buy for 30 cents on the dollar and smell blood in the water...!" Truth: No offense, but you are about as likely to find a real "steal" as you are to get a date with supermodel Cindy Crawford. While you are on your date with Cindy, expect to pick up a newspaper with a front page story that reads "Michael Jackson moves to Utah, becomes a Polygamist, and is caught on videotape getting each of his 12 new wives pregnant. All 12 wives are now expecting triplets!" Oh, by the way, one of Michael's 12 new wives turns out to be... your date, Cindy Crawford!! Is This You? Just Sitting Around... Waiting to Buy or Sell... Someday...?Today's buyers often think they can lowball any seller, that every seller is desperate, and that they should only buy if the seller is willing to come down 20% or more from their list price. In fact, NONE OF THESE ARE TRUE. No seller is going to just give you their home. If their home is already priced significantly lower than ANY other similar property, THERE IS NO NEED for them to come down an additional 10% to 20% to get the home sold. There will always be an EDUCATED BUYER that will recognize a good deal when it comes along, and then snatch it up in short order.OPPORTUNITIES TAKEN AND MISSED!One of my July (2008) sales belonged to a seller that was asking $400,000 and sold for $395,000 within two weeks of being listed. * There were uneducated buyers that wanted to negotiate an additional $50,000 off the list price, but the seller had already "Priced the home to Sell" and it sold quickly very close to the asking price. Similarly, I had buyers in April (2008) that paid FULL PRICE for a foreclosure because they knew the minute it hit the market it was "Priced BELOW MARKET". This property previously belonged to someone intending to "flip" the property, so it was 99% renovated! It had multiple offers within a FEW DAYS of being listed.** The reason they got the home is they were well informed. They recognized the list price was actually already PRICED BELOW MARKET and they knew if they wanted the home they had to ACT QUICKLY and snatch it up before someone else did! *1120 Avocado Isle**400 NE 26 DRBy the way, it has already been six months since those buyers wrote that "full price" contract in March, and even with all of the price reductions that have occurred in the general market since then, buying that particular property at the price they paid WOULD STILL BE A DEAL TODAY! Over half a year later, and as of today, and during all of this time, I haven't seen a SINGLE 3/2 home in that area available OR SOLD for anything remotely close to the price they paid! After all, they got a new kitchen, new bathrooms, new tile floors, new roof, large backyard, fresh paint, etc. all within walking distance of the restaurants and entertainment on Wilton Dr for $199,000! If you are looking for PROOF that sometimes waiting - even in a declining market- does NOT guarantee that you will get a BETTER DEAL later, then HERE IT IS! In both of these examples, there were buyers later who realized they had missed a great OPPORTUNITY by not buying the property the minute they saw it. **************************************************************************************************************
**************************************************************************************************************Sold in Two Weeks (July 2008) for just $5,000 less than Asking Price!These Buyers pictured below waited Too Long... ACTUALLY, they look like some SELLERS I have spoken to recently as well! The one on the right REALLY looks like some of the Realtors I've met who haven't sold ANYTHING in six months. That is EXACTLY how they look when I tell them I am working Harder Than Ever, but that I have sold DOZENS of homes in the last 12 months! See The Buyer Comments Below.At some point most of the for sale signs will come down, though people will only notice what has happened AFTER THE FACT. Many buyers now on the fence will go out and buy something at that time, BLISSFULLY UNAWARE OF THE BETTER DEALS THEY MISSED WHILE WAITING, AND ALL THE EXTRA MORTGAGE PAYMENTS THEY WILL NOW HAVE TO MAKE AS A RESULT! Others will be painfully disappointed because of unrealistic expectations they developed after they found a deal and failed to snatch it up! As a BUYER, is there ANY time when you will have MORE POWER at the negotiation table than when the SELLER is AFRAID their property will be worth less tomorrow than it is today? After the market shifts gears, that fear will be GONE! Some comments that we will hear from Buyers that waited too long: "Where did all the deals go? Why won't the sellers negotiate with me when I put a low offer in now? I can't find any more deals like the one I didn't buy! &*##@!! Every time I put a low offer in now the seller won't even negotiate with me because THE SELLERS AREN'T AFRAID ANYMORE. Why didn't someone tell me the interest rates would change?" Is It REALLY a Good Time For YOU to Buy?That depends on YOUR particular situation. For someone that is likely to move to another city or state in the next two or three years, NO, THIS IS NOT A GOOD TIME FOR THAT PERSON TO BUY. Real estate is meant to be a LONG TERM INVESTMENT, not something that is bought and then sold two years later when the owner moves to another state for a better job, etc. If this describes your situation, then you are better off renting. There is a certain portion of the population that REALLY SHOULD NOT BUY IN ANY MARKET.Price is Only HALF of the Equation!For those buyers willing to lock into a LONG TERM real estate INVESTMENT at historically low interest rates, YES, THIS IS AN EXCELLENT TIME TO BUY! Buyers often forget that PRICE is only HALF of the equation when it comes to purchasing a home. THE INTEREST RATE makes up the other half of the equation. As of the time of this writing, rates are currently at levels which are considered HISTORICALLY LOW when compared to mortgage rates over the last 40 years. No one has a crystal ball that will alert them to what rates will be in a year or two. At some point, rates will certainly return to historic norms which are quite a bit higher than the rates that today's buyers have grown accustomed to. At that time locking into a mortgage at today's low rates will be impossible.Sometimes "Waiting" Pays Off! Sometimes Waiting Can Cost You Dearly!In the 1980's many buyers that were WAITING for prices to come down found out they NO LONGER QUALIFIED TO BUY ANYTHING they would be interested in living in. Interest rates rose DRAMATICALLY. Buyers that were waiting found out the hard way that PRICE is only HALF of the equation when it comes to buying a home. Remember, for most of the 1970's 1980's, and early 1990's, rates STAYED above 8%! From 1974 to 1993, interest rates NEVER came below 8%! I for one hope interest rates STAY where they are, but I would never presume to predict the future and tell someone to ASSUME they will stay where they are.The 1982 rise in interest rates made it almost impossible to buy, and the result was NOT that sellers lowered their prices enough to make buying affordable. Sales basically came to a standstill for BUYERS AND SELLERS ALIKE! Most of you are probably too young to remember, but at one point rates went UP SIX PERCENT FROM WHERE THEY WERE WITHIN A SIX MONTH PERIOD! From 10% up to 16%! 30 Year Mortgage Rates from 1970 to 2000I sincerely hope we never see rates climb like that again, but if there was a noticeable change in the interest rate, HOW WOULD THAT CHANGE WHAT YOU QUALIFY FOR? Again, we have already had a 19 year period (approx. 1974 to 1993) where rates NEVER came BELOW 8%! How would this change your monthly payment?Today's buyers have taken historically LOW interest rates for granted. At some point, rates WILL GO UP. The buyers "waiting" at that time will have to DRAMATICALLY LOWER their idea of exactly what they were looking for in their new home. INFLATION ALWAYS CAUSES A RISE IN INTEREST RATES.
I don't blame ANY buyer that chooses to wait. The way prices have fallen over the last 3 years, it is perfectly understandable how the average buyer would be GENUINELY AFRAID to buy at this particular point in time. The point I hope I have made is that this market offers OPPORTUNITIES that future buyers -the "waiters"- will NOT have. Wait a year or two and see what your interest rate is. IT'S A GAMBLE. Perhaps you will win! PERHAPS YOU WILL LOSE BIG TIME BY TAKING TODAY'S RECORD LOW INTEREST RATES FOR GRANTED. History repeats itself. We had these low rates before in the 1960's. Inflation came around; those lovely interest rates went bye-bye. "THIS TOO SHALL PASS..."Waiting to Buy? Consider the Following...What is certain? If you wait, (let's say for one more year or so) the OVERALL market values certainly may be lower, but the market values WILL BE firmly established after the market shifts gears again, and NO, you will NOT have advance warning of THE NEXT MARKET SHIFT! Not to mention, if you are expecting the overall market to fall another 20% to 30% from the peak 2005 levels, you may be SEVERELY DISAPPOINTED! As a result, it is POSSIBLE for those that wait to expect the following:
And just in case you wondered, Are All Realtors the Same
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