It was good news - but still not great news.  Nationally, new home sales rebounded in June after falling to all-time low in May.  The increase to a seasonally adjusted annual rate of 330,000 was almost 24%.  But overall, sales are still down significantly from the highs of the market in 2005, and economists are still pointing to a weak job market as the cause.

But a slow housing sector makes the employment situation even worse.  Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders.  It presents a “chicken or the egg” question.  If home sales are down because of the employment outlook, then jobs that depend on home sales will suffer making the employment situation even worse.

Regardless of your view, it is clear that our elected officials must make job creation the nation’s #1 priority.  Without a strong employment basis, nothing else will matter, including universal health care, immigration, etc.

Scott T. Hunt

Owner/Broker

Centre Court Real Estate Group

There is more evidence to prove that 2009 was probably the bottom of the real estate market – at least in Tallahassee.  Sales figures recently released by the MLS Committee at the Tallahassee Board of Realtors (TBR) show that for the first six months of 2010, there was an increase of 21.7% when compared with the same time period in 2009.  This is certainly encouraging news when considering there was a 27.1% decrease in sales in 2009 when compared with 2008 during the January 1 – June 30 time period.

Not surprisingly, 44% of the homes sold during the first six months of 2010 had a sales price of less than $150,000, while almost 69% of sales involving single-family homes, townhomes and condominiums for this same time period were properties selling for less than $200,000.

Most experts agree that the vast majority of these buyers were purchasing a house for the first time, and were motivated to make a purchase because of the $8,000 Tax Credit incentive.  It will be interesting to see if future sales keep pace with the past few months even though the Tax Credit has expired.

Scott T. Hunt

Owner/Broker

Centre Court Real Estate Group  

The National Association of Realtors (NAR) recently published an alert to its members about real estate scams that have once again surfaced.  The difference now is that well-intentioned individuals are being conned into participating in these frauds while believing they were only helping friends, relatives and associates.  Here are the Top-5 according to NAR:

1. The Foreclosure Rescue Scheme

The Scam: “Rescuers” promise cash-strapped homeowners that they can save their home from foreclosure. The rescue, which involves paying upfront fees, can take multiple forms, such as the perpetrator obtaining a new loan on behalf of the owner, or by having the owner sign over the home’s deed and then rent the home until they can repurchase it.  Eventually, the home owner loses the home, either to foreclosure or the fictitious rescue company.

Red Flags: With foreclosure rescue programs, borrowers are often advised to sign over the title of their house to a third party, become renters of their home, not contact their lender, or send mortgage payments to a third party, according to Fannie Mae, which provides fact sheets on mortgage fraud.

2. Loan Documentation Fraud

The Scam: This fraud involves numerous schemes in which a borrower provides inaccurate financial information — such as about their income, assets, and liabilities — or employment status in order to qualify for a loan with lower rates and more favorable terms.  Occupancy fraud is one growing area: Borrowers say they plan to live in the property when they actually intend to rent it.

Red Flags: Documentation may raise suspicion if the employer’s address is shown as a post office box, accumulation of assets compared to the person’s income appears too high or low, the new house is too small to accommodate occupants, the person has no credit history, or the application is unsigned or undated.

3. Appraisal Fraud

The Scam: A faulty appraisal — saying a property is worth more than what it really is — is connected to many types of mortgage fraud.  It entails manipulating or overstating comparables, market values, or property characteristics in order to obtain a higher appraisal. The higher property appraisal, which generates false equity, is done by falsifying an appraisal document or using an appraiser accomplice to obtain the higher value.

Red Flags: Be skeptical of appraisals that are dated prior to the sales contract, list comparable sales that do not contain similarities to the property or are outside the neighborhood, the owner is not the seller listed on the contract or the title, or a third party participating in the transaction orders the appraisal.

4. Illegal Property Flipping

The Scam: This entails purchasing properties and reselling them at inflated prices. These scams usually involve faulty appraisals and inaccurate loan documents. The property is then refinanced or resold immediately after purchase for an inflated value. The home is purchased at a higher price, often by straw buyers working with the “flipper,” and eventually falls into foreclosure. 

Red Flags: Some key things to look for are rapid refinancing of a property; the seller recently having acquired the title or acquiring the title concurrent with the transaction; an appraisal that comes in too high; a property that was recently in foreclosure being purchased at a much lower price than its sales price; or the owner listed on the appraisal and title not matching the seller on the sales contract, according to Fannie Mae.

5. Short Sales Schemes

The Scam: Borrowers owe more than the current value of their home so they fake financial hardship and no longer make their mortgage payments.  An accomplice of the borrower then submits a low offer to purchase the property in a short sale agreement.  The lender agrees to the short sale, unaware that it was premeditated. The property, after being purchased at the reduced price, is then often resold at the home’s actual value for profit.

Red Flags: The borrower suddenly defaults on the mortgage with no workout discussions with the lender, an immediate offer is made to a lender at a short sale price, the short sale offer is less than current market value, or a cash back is offered at closing to the delinquent borrower (disguised as “repairs” or other payouts, for example) and is not disclosed to the lender.

You can report instances of suspected mortgage fraud to Stopfraud.gov

Scott T. Hunt

Owner/Broker

Centre Court Real Estate Group

As regular readers of our blog will attest, we have at times chided lenders for being very stingy when it comes to making loans for the purchase of a home.  But as a recent article in USAToday points out, maybe the lenders have a very good reason for turning down some mortgage applications – bad credit scores. 

The credit scores of millions of Americans are sinking to new lows.  Figures provided by FICO (a credit reporting company) show that 25.5% of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders.  It’s unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use.

FICO’s latest analysis is based on consumer credit reports as of April.  Its findings represent an increase of about 2.4 million people in the lowest credit score categories in the past two years.  Historically, just 15% of the 170 million consumers with active credit accounts, or 25.5 million people, fell below 599, according to data posted on Myfico.com.  More are likely to join their ranks.

It can take several months before missed payments actually drive down a credit score.  The Labor Department says about 26 million people are out of work or underemployed, and millions more face foreclosure, which alone can chop 150 points off an individual’s score. Once the damage is done, it could be years before this group can restore their scores, even if they had strong credit histories in the past.

Scott T. Hunt

Owner/Broker

Centre Court Real Estate Group

Although the downturn in the housing market has negatively affected a number of different people and professions, there is at least one segment of the industry that has apparently done very well - rentals.  Continuing a trend over the past three years, vacancy rates in apartments, duplexes and single-family homes went down once again in June, 2010.

According to Reis, Inc., more and more people are seeking out rentals as a housing solution because of the difficulty in purchasing a home.  With the collapse of the subprime market, lenders are extremely reluctant to make loans unless the borrower has credit scores within the top 90 percentile, and sufficient cash for mandatory down payments.

But this only accounts for those who want to purchase a home.  Because of the current state of the economy and jitters over job security, many people who would otherwise qualify are avoiding a home purchase despite historically low interest rates.  The Federal Reserve and economists associated with the housing industry had been predicting that low rates would inspire more sales, but we are finding that is not the case.  As one housing expert pointed out “Buying a home just because interest rates are low is like getting married because there is a sale on at the local bridal shop.”

Scott T. Hunt
Owner/Broker
Centre Court Real Estate Group

As we predicted, pending home sales dropped in May – mainly for the reason we noted two months ago – buyer’s uncertainty about their prospects for continued employment.  To be sure, the expiration of the $8,000 Tax Credit was also a factor, but the Chief Economist at the National Association of Realtors confirmed that jobs play a larger part in stabilization of the market going forward.

Lawrence Yun noted “Consumers are rational and they rushed to meet the tax credit eligibility deadline in April (increasing sales tremendously).  The key test on whether the housing market can stand on its own without stimulus medicine will depend critically on private sector job creation in the second half of the year.”

The consumer accounts for over 70% of the U.S. economy, and confidence in their own financial security - we believe - will be the driving force behind whether they feel comfortable making longer term commitments such as purchasing a home.

Scott T. Hunt

Owner/Broker

Centre Court Real Estate Group

After a close brush with a deadline of midnight last night, Congress passed an extension of the Homebuyer Tax Credit closing deadline until September 30, 2010.  The extension applies only to transactions that have ratified contracts in place as of April 30, 2010, that have not yet closed.

Additionally, the United States Senate has passed the National Flood Insurance Program Extension Act of 2010 (H.R. 5569) an extension of the National Flood Insurance Program until September 30, 2010.  The bill is retroactive and covers the lapse period from June 1, 2010 to the date of enactment of the extension.

Scott T. Hunt
Broker/Owner
Centre Court Real Estate Group

Effective immediately we will start posting again on this blog - in addition to posting on Facebook!  What we have learned is that while Facebook may be awesome for social interaction, it provides very little in the way of leads for business.  Moreover, we have heard from many people that they have stopped using their Facebook account.  In other words, Facebook was fun while it lasted - but it got old real quick.

Therefore, in order to meet the wants and needs of those seeking credible information about the Tallahassee real estate market, we will make periodic blog entries here, as well as posting on Facebook.

Let us know if there is anything in particular you would like information about.

Scott T. Hunt
Broker/Owner
Centre Court Real Estate Group

Effective immediately, we will post our real estate blog on the Facebook page for Centre Court Real Estate Group.  Rather than posting in two different areas, it saves time and effort by limiting our blog entries to just one location.  And because of Facebook’s enormous reach in the social networking community, we can reach many more people in a shorter period of time.

Please consider becoming our “Friend” on Facebook by clicking on:
http://www.facebook.com/pages/Tallahassee-FL/Centre-Court-Real-Estate-Group/321970603550

We have lots of exciting local real estate news that we’ll be posting very soon, so please be sure to join us.  And we look forward to becoming “Friends” and “Fans” of yours on your respective Facebook page(s), as well.

Scott T. Hunt
Owner/Broker
Centre Court Real Estate Group

Just like the plants and flowers in my backyard, real estate sales are blooming.  Kim just wrote another contract for a Buyer in Wakulla County which closes the middle of April.  And just this past weekend, I wrote another contract for a Buyer in Killearn Estates which closes in May.

With the expiration of the $8,000 Tax Credit quickly approaching, if you are in the market to buy or sell real estate, you need to contact us now!

If you’re not working with Centre Court Real Estate Group, you’re losing thousands of dollars in saved real estate commissions.  Check out the short videos on the front page of our website for Buyers and Sellers.  You won’t be disappointed.

Scott T. Hunt
Owner/Broker
Centre Court Real Estate Group