Prices are down, way down on homes and not only foreclosures. Interest rates are somewhat volatile, however, still historically low. Taxes seem like they will be dropped in the near future, and insurance, well no hope there. The point is there are some real sweet deals out there but based on the number of closed sales one would wonder why the market is not improving. Why aren’t there more sales? The main reason is “risky lending” and its repercussions. Major banks have gone bankrupt or have had to be bailed out by bigger entities. For this reason banks have tightend their lending practices and become more stringent. It is not easy to qualify for a regular loan these days. Fannie Mae has declared most cities to be in a declining market, which means when buying a home in these cities most lenders will require you to have a 10% down payment. Lenders will also want you to have good credit and reserves. So realistically speaking there are a lot of people that will not be able to buy untill banks feel they are back on top, or the fed steps in with drastic measures to ease lending practices. This is not necessarily a bad thing since renting is a nice alternative. (ie Total monthly payment on a 1 million dollar home in Miami can easily reach $8000/m. This same home can be rented for $3600/m).
There are a small percentage of buyers that do have the capability of aquiring financing and closing on a home, but are either waiting for interest rates to drop or the bottom to be hit or inflation to pass or are just scared. Interest rates are low! They may go down another half point, lets say, but on a monthly payment of an average priced home this may be a difference of $40. Prices on homes are in some cases still dropping, but in others are stagnent. As I have said before, the days of flipping are gone for a long while, so any purchase to be made should be a long term purchase preferably an upgraded primary residance, which means for the next 30 years you will know exatly what your home payment will be (fixed rate loan, no exceptions). Lets say the market takes 2-3 years till we see appreciation, well that means you have another 27 years to see if your property appreciates, and folks, its South Florida it will! Your investment will proably double by the mid point of the loan. So you can wait, there is no harm, but you may actually be missing out on some real good deals that exsist today and please do not think foreclosures and short sales are the only way to go.
Find a good Realtor and have him pull the lowest 5 prices in the neighborhood you like, then also have him see which homes have been on the market a while, then go see the home. Pick the showing agents brain, ask him how motivated the sellers are and get as much information about the home as possible. Keep in mind Fannie Mae has declared most cities to be in a decline meaning distress sales are now comps. Find the comps in this city you selected and factor in the distress sales as well, have your Realtor do this actually. Your offer should be based on this information.
Once you found your dream home and you are certain you qualify for a loan (read my first paragraph) then there is no way you can lose. As a Realtor I can help you with your search. The idea is to know eveything that is going on on a daily basis, what prices have dropped, which listings are new, what has closed. I have a software that can keep you abreast of these market conditions. Feel free to contact me, on the meantime browse my website.
