Closing Day...

Now Is The Time!

Starting the first quarter of 2010 we have had an incredible push forward to continue the strength of the housing market from the fourth quarter 2009. Prices, in Orlando area, have continued to slowly rebound and stabilize, and the average days on the market has continued to fall. Buyers are becoming wisely competitive and sellers, in many cases, have resolved to a stark understanding of pricing. In Seminole County we are seeing a supply of home around 7.7 months of inventory. For comparison purposes, in “Boom” times the Orlando Regional Realtors Board (ORRA) reports a low of 1.15 months in April of 2005, and a high of 31.64 months in January of 2008. Undoubtedly, we are heading in the right direction. 

Now the sobering subject of availability of funds. The funds have been readily available for the last year for credit worthy borrowers. This packaged with the homebuyers tax credit and low rates have been a now brainer for many borrowers. With this availability accompanied with consumer confidence continuing to rise, as well as prices still falling slightly, borrowed funds are forced to rise. It goes back to the basic laws of supply and demand. There is simply not enough funds for every American to buy property with 4.5% interest rates. Interest rates are the hedge against this type of predicament. 

Freddie Mac is projecting rates to move from just over five percent today for 30-year loans to over 6 percent or higher later in 2010. The Federal Reserve has also scheduled a phase-down of its multi-billion dollar purchases of mortgage backed securities. The point of all this is to note that if you are considering purchasing, or selling, you need to get serious now. Buyers will see a tremendous increase in cost, and sellers will see a decrease in buyers due to availability of funding. Now is the time to purchase or sell while rates are low and prices are stabling. Competition is low between sellers and everyone benefits from the new extended and expanded tax credit. Lock down your financing now and don’t wait. 

New Condominium Regulations by FHA

In the most recent FHA guidelines and regulations that are set to be implemented October 1st, 2009 is the following:

FHA Concentration
a. Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance.
b. Projects consisting of four or more units will have no more than 30 percent of the total units encumbered with FHA insurance.

What this states is that FHA will not back more than 30% of any given building. This applies to all condominium projects of 4 or more units. The condominium market is still in shambles and this is going to further reduce the accessability to financing.

At this point in time there are very few condos that are financable by FHA. In downtown Orlando there are only 2 highrise condos that are FHA approved. If you were considering investing or purchasing condos in the near future it appears there will be a rough road ahead for the foreseeable future. There could be many unintended consquences to this enactment like higher vacancies, more investor owned units, decreasing value, and higher HOA fees. Although on the other hand can you blame FHA for not wanting to fund the instability of this market at this time?

This article breaks down the situation of the condo market and it's volatilty expanding on some of the points above.


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