The Cost of Waiting for Prices to Fall

(to view the entire article on The KCM Blog, click here)

by The KCM Crew on February 11, 2011 ·

Many purchasers have been sitting on the sidelines waiting for home prices to hit bottom. They want to guarantee that they are purchasing at the best possible price. Like them, we also believe that prices still have some room to fall in most markets. However, we disagree that waiting is a good financial decision. The buyer should not be concerned about housing prices. They should be concerned about cost.

The cost of a house is made up of the price AND THE INTEREST RATE they will be paying. Two different pieces of news released yesterday highlight this point.

PRICES

The National Association of Realtors (NAR) released their 4^th quarter housing research report. In the release, they reported that home sales rose 15.4% in the 4th quarter over the 3rd quarter. They also showed that prices remained stable during the year:

The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009.

A buyer who delayed a purchase might find solace in the fact that prices have not increased. However, the other news released yesterday paints a different picture.

INTEREST RATES

The Primary Mortgage Market Survey was released by Freddie Mac which showed that the 30 year fixed rate mortgage was at 5.05%. Frank Nothaft, vice president and chief economist of Freddie Mac said:

“Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week…As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.”

So prices have remained stable but interest rates have risen dramatically in the last 90 days. What does that mean to a buyer looking to purchase a home this year?

The price is the same. It just costs more.

Let’s show you what the news means:

By sitting on the sidelines for the last 90 days a purchaser lost:

• $89.44 a month
• $1,073.28 a year
• $32,198.40 over the thirty year life of the mortgage

If you buy a $340,000 home, double all these numbers.

Bottom Line

Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be later in the year.

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Opinions From Real Estate Investors:

I agree 100% with this article.  As investors, we have to keep our sights focused on the end goal which is a return on our investment.  Price is only one factor of the overall returns (and many times its the least important.)  Many times investors let the emotion and thrill of “getting the best deal” corrupt their decision making process and, ultimately, their investments suffer.

What most investors don’t realize is that if you’re always looking for the absolute bottom of the market, it’s impossible for you to ever take action.  That’s because you will never know for sure if you are in the bottom of the market.  It’s always an insight gained on past historical data.  And what’s your rate of return going to be if you never take action because you were always looking for the bottom?  A big, fat 0%!

So, in order to give yourself the best chance of reaching your investment goals, you must make your investment decisions based on your expected ROI based on current market conditions.  Don’t fall into the trap of always trying to get the best deal or else you’ll be sitting on the sidelines watching all the other investors who took action reach their financial goals!

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Below is an article from www.floridarealtors.org website regarding the rise in Florida’s condo sales in 2010:

ORLANDO, Fla. – Jan. 20, 2011 – Sales of existing homes and condominiums in Florida rose in December, a positive trend also reported at the close of 2010 as statewide sales activity posted gains over the previous year, according to the latest housing data released by Florida Realtors®.

A total of 15,550 existing single-family homes sold statewide in December, up 4 percent from the 14,923 homes sold in December 2009. The statewide existing home median sales price last month was $133,100; in December ’09 it was $139,800 for a 5 percent decrease, according to Florida Realtors’ data. However, December’s statewide existing home median price was higher than the $132,700 reported in November 2010. The national median existing single-family home price was $171,300 in November, according to the latest data available from the National Association of Realtors® (NAR). The median is the midpoint; half the homes sold for more, half for less.

In December, 12 of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales and 14 MSAs reported higher existing condos sales. In the year-to-year comparison for statewide existing condo sales, a total of 6,673 units changed hands last month, up 12 percent from the 5,955 condos sold in December 2009. The statewide existing condo median sales price in December was $88,100; in December ’09 it was $106,700 for a 17 percent decrease. The national median existing condo price was $165,300 in November, according to NAR.

Looking back on 2010, Florida’s existing home sales rose 5 percent for the year, with a total of 170,848 homes sold compared to 162,873 homes sold in 2009. Statewide existing home sales activity in 2010 also was 37.5 percent higher than 2008 statewide sales, records show. The statewide existing home median price for 2010 was $136,500; it was $142,500 in 2009 for a 4 percent decrease.

“It’s encouraging to close out the year for Florida’s housing market with increased sales activity,” said 2011 Florida Realtors President Patricia “Pat” S. Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound. “The homebuyer tax credits helped to fuel home and condo sales during the first half of 2010, while favorable affordability conditions and historically low mortgage rates continued to bring buyers into the market in the waning months of the year.

“Looking to the future, 2011 is going to be a year of opportunity for buyers and sellers,” Fitzgerald added. “Industry analysts report seeing steady economic improvements, including more jobs and stronger consumer confidence, which will have a positive, stabilizing impact on the housing market.”

In Florida’s condo market, a total of 72,050 units sold statewide in 2010, a gain of 29 percent compared to 55,900 units sold in 2009. Statewide existing condo sales activity in 2010 was up 90.6 percent over the 2008 sales level, records show. The statewide existing condo median price in 2010 was $91,300; it was $108,000 in 2009 for a 15 percent decrease.

The latest industry outlook from NAR offers positive predictions for 2011. “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable,” said NAR Chief Economist Lawrence Yun. “All the indicator trends are pointing to a gradual housing recovery.”

In December, the interest rate for a 30-year fixed-rate mortgage averaged 4.71 percent, down from the 4.93 percent average during the same month a year earlier, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

To view the entire article, please visit http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=253201

This is an article from www.Realtor.com that explains what qualifies a real estate agent as a Realtor.  All Real Estate agents working at University Realty are licensed Gainesville Realtors.   Here is the article:

When Is a Real Estate Agent a REALTOR®?

A real estate agent is a REALTOR® when he or she becomes a member of the NATIONAL ASSOCIATION OF REALTORS®, The Voice for Real Estate®, the world’s largest professional association. The term “REALTOR®” is a registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS® and abides by its strict Code of Ethics.

Founded in 1908, NAR has grown from its original nucleus of 120 members to more than 1 million today. NAR is composed of REALTORS® who are involved in residential and commercial real estate as brokers, salespeople, property managers, appraisers, counselors, and others who are engaged in all aspects of the real estate industry.

Members belong to one or more of 1,700 local associations/boards and 54 state and territory associations of REALTORS® and can join one of our many institutes, societies, and councils. Additionally, NAR offers members the opportunity to be active in our appraisal and international real estate specialty sections. REALTORS® are pledged to a strict Code of Ethics and Standards of Practice.

Working for America’s property owners, the NATIONAL ASSOCIATION OF REALTORS® provides a facility for professional development, research, and exchange of information among its members.

Check out the Public Awareness Campaign television and radio spots that encourage consumers to rely on the expertise and integrity of REALTORS®.

The NAR advertising campaign runs February through November on network and cable television and network and satellite radio, helping consumers understand the real value of working with REALTORS®. From their voluntary adherence to a Code of Ethics to their incomparable knowledge of real estate processes, REALTORS® are the experts of residential and commercial property transactions. (end of article)

If you are looking for a Realtor who is qualified to assist you in buying or selling a Gainesville condo, please click on the “Contact” button at the top of this page and fill out the form.

Are You Looking to Buy A Condo Near the University of Florida? If so, the months of January-July are the busiest and best times to find the perfect Gainesville condo that fits your needs. During these months, the largest amount of sellers are looking to sell their UF condos once their children have graduated. For information on gainesville condos for sale near UF and Shands, just click on one of the categories of this website!

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To view more information on this Gainesville condo for sale, just go to our homepage and click on the “Featured Property” named Taylor Square.

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For more information on this Gainsville condo for sale, call Eric Leightman of University Realty at 352-219-2879 or email him at eric.leightman@gmail.com.

Midtown on the road to success?

UF’s Innovation Square and other projects in the area have officials excited about future

By Chad Smith
Staff writer

Published: Sunday, December 12, 2010 at 10:08 p.m.
Last Modified: Sunday, December 12, 2010 at 10:08 p.m.

But Kubisek doesn’t mind the lost light because, after all, he sees a different sort of light at the end of a dim economic tunnel.

Across from Spin Cycle, the mid-rise Continuum has gone up at the former site of First Baptist Church. By August, the University of Florida and its contractors hope it will be home to hundreds of graduate and professional students and a number of commercial tenants.

A few blocks to the southwest, past recently built condominiums and apartment buildings, UF’s Innovation Square, which will be home to a “super incubator” for start-up companies along Southwest Second Avenue, is in the works.

Kubisek, other business owners, and city and university officials think they have the building blocks to create a true midtown between campus and downtown, where development had been slow-going until recently.

While property sales have lagged in midtown and east downtown — from 131 in 2006 down to 35 this year — the average property value has risen substantially, from about $189,000 in 2005 to nearly $285,000 this year, according to Alachua County Property Appraiser data.

But midtown — home to mostly small strip malls — has been a rather nebulous part of Gainesville, without much identity of its own.

Innovation Square, going up at the former Shands at Alachua General Hospital site, promises to change that.

Please click on the link below to read the entire news article about the exciting new Innovation Square being built between UF’s Campus and the Downtown Area:

http://www.gainesville.com/article/20101212/ARTICLES/101219867?p=2&tc=pg

The Palms Condominiums are just a few blocks away from where this Innovation Hub will be.  For more information on The Palms, please click here