I’m waiting until the market recovers to sell…

In arm, First-Time Buyer, forclosure, foreclosure, home sellers, loan reset, miami, miami beach, mortgage, option-arm, real estate, Tax Matters on October 19, 2009 at 10:43 am

These words are often uttered by sellers who are frustrated about their situation in this market.

Many go as far as to believe that, if they wait long enough (in their minds, this time frame ranges from a few more months to a year or two), they will be able to sell their home and brake even.

Of course, if you believe this, a recent article published by the Miami Herald will just blow you away.

In part, the article points out an ugly, yet to be written side of the foreclosure story, many are choosing to ignore (just like those who chose to ignore the early signs of an unsustainable real estate bubble).

In the article, Cammy Clark stated in part: quote”For some, the first reset may not come until 2010 or 2011, Gumbinger said. “That’s why there could be some lingering effects down the road.”

Of 1.1 million loans with adjustable rates in South Florida, 53 percent have already reset. But at the beginning of August, another 22 percent were scheduled to reset in the next two years, according to First American CoreLogic.

Industry experts say the foreclosure crisis won’t end until housing prices recover, not just flatten — and until the employment situation improves.

“I’ve read guesstimates that some properties might not be back to the price borrowers paid for them for 10 to 12 years,” Gumbinger said. “It could be ugly for a while yet.” unquote

This has been the same sentiment I’ve discussed with several industry experts who have a finger on the financial and lending pulse. The opportunities many buyers face in the years ahead are absolutely out of this world…if they can keep a job or their income earning ability through all of this and qualify for a loan, or better yet, buy cash.

With prices as low as they are, the vision of a positively cash-flowing rental with a good prospect for capital appreciation that will lead to a better than average building of net worth over the next 10-20 years, is starting to become a reality not recently seen (at least, not during the boom years).

There only a few (if even a handful) of ways to avert this disaster, one major one is mentioned above…employment.

Until our government finally gets it and begins to focus (and I mean, REALLY FOCUS) on creating jobs (not just saving jobs), so that consumer confidence returns, spending returns and buyers come off the fence because they no longer fear a potential job loss, we are not likely to see a recovery of prices, a further deleveraging of inventory and a recovery of our economy and housing market.

In Miami-Dade, while “…foreclosures nearly doubled from a year ago…” according to the recent article in the Miami Herald, we have also seen buyers come out in droves, helping a doubling of Pending Sales between September, 2008 and September, 2009.

This has in fact helped our Months of Inventory Based on Pending Sales to drop from 28.3 months a year ago to 8.9 months in September, 2009. Additionally, our Absorption Rate Based On Pending Sales has gone up to 11.2 from 3.5 in September, 2008.

The only way we can sustain this recovery and ensure the dire predictions fail, is to rebuild our economy through jobs, deficit reduction and tax benefits that go beyond taking a tax deduction for your pet, and to help incentivise housing purchases like an extension and even, an expansion of the home buyer tax credit has and would continue to produce.

Can our country afford to continue making housing incentives available? I’m not sure we can afford not to!

Your pithy comments welcomed!


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