The Huffington Post reported that “Despite signs of continued housing market distress, most homeowners and perspective buyers are optimistic about the housing market, according to a survey by real estate website Trulia.” (Scroll down for a graphic.)

In the biannual American Dream Survey, 78 percent of homeowners said their property was the best investment they had ever made. But 20 percent said they felt trapped in a home that was worth less than their mortgage, and 14 percent told surveyors they would walk away from their homes if they could.

The people least likely to be affected by the housing crisis, 18 to 34-year-olds referred to as ‘millennials,’ were most optimistic about a recovery.

According to Trulia, 26 percent had become more positive about owning a home over the past six months compared to 18 percent of 35 to 54 year-olds, and 22 percent of baby boomers.

The key, of course, will be employment. The younger Millennials have much better job prospects than those over the age of 40. In fact, some people over that age will likely not fully recover from this Great Recession unless they heed the advice of the President  (and the South Florida Law Blog) that:

1.  The rules have changed
2. You must reinvent yourself

I sometimes ask myself if we have not created a new permanent  lower- middle class by extending unemployment benefits, and not forcing people to retool.

Trulia American Dream Infographic:

This week on the Today Show, real estate mogul Barbara Corcoran shared tips for homeowners who are having trouble selling their home. At Oppenheim Law and Weston Title, we hear about these situations everyday and agree…buyers and sellers need to work together to create a better market.

We took Corcoran’s tips and added some of our own to help subscribers prepare for future Florida real estate transactions.

1. Time it right: Did you know that very few homes sell before Super Bowl Sunday? Consider taking your home off of the market and relist it after the Super Bowl if you’ve been trying to sell for more than four months.

2. Price it wisely, at what it’s worth: Cost is always the deciding factor when it comes to buying a house. This is not a time to build “wiggle room” into your asking price; and even think about listing your home for ten percent less than it’s worth to ensure it is the first home shown.

3. Get an inspection prior to listing the house: Don’t wait for the would-be buyer to discover the problems you could have fixed before selling they will either move to the next house or rack up reasons to expect price cuts.

4. Offer financial incentive up front: By offering to pay closing costs, the first year of property taxes, HOA fees, or lawn care up front, you’ve already got a leg up on the less savvy seller who waits until negotiations to try to sweeten the deal. Don’t forget to include your incentives front and center in the listing, to catch a buyer
attention.

5. Spend money on three key spaces: Corcoran recommends fixing up three key areas of the home: the kitchen, living room and front facade. For the kitchen, small touch ups such as new knobs, handles or cabinet fronts make a difference. If you can afford it, invest in one fancy-looking appliance or install a new backsplash. For the living room, get rid of all clutter, paint the walls a neutral white and add touches of color. Notably, buyers decide in eight seconds if they are interested in buying your home. Curb appeal will make or break their decision. Paint your door, edge your lawn or do whatever you have to enhance the exterior of the house.

6. Put the best photos online! Considering 89 percent of today’s buyers begin their home search online, invest in a local photographer to take pictures for online listings.

A major takeaway from Corcoran’s segment is sellers must try to see things from a buyer’s perspective. Both sides need to be prepared to communicate with each other for a smooth and quick closing!

More and more buyers today are seeking services such as Oppenheim Law’s sister company Weston Title & Escrow for their closing needs, so sellers must be fully informed as well to ensure both parties are satisfied.

Borrowers stay in default … Regardless of Obama Modification Programs New Study Shows

As we have previously discussed about Florida real estate, the whole premise of the Obama Administration’s housing bail out response was to provide, Florida real estate borrowers, the opportunity to modify their loans and get back on track.  Based on prior studies, folks that fell behind typically self corrected or played catch up with their lenders about 25 percent of the time. And that was without any modifications. Thus, the Obama policy was simple: hope and pray that 25 percent of homeowners that fell behind would self correct and provide modifications to those who qualify thus eliminating the number of foreclosures clogging the courts.

Well the verdict is now in once again. According to the Wall Street Journal a study conducted by the well-known Fitch Rating Services concludes that the cure rate on loans is only about six percent! That is almost 75 percent less than expected. Oops… I guess the policy works minus a slight miscalculation. But it is simple to understand, prior research was conducted during a time when real estate prices fell at most 10-20 percent… not 30-60 percent.

What does this mean to Florida real estate? The prior studies never factored in what we call “strategic defaults” where homeowners decide to just stop paying because it no longer makes sense to keep paying. Plain and simple.

The Fitch study is compelling enough since it covers $1.7 trillion of mortgages. That is a sum that exceeds the amount of numerals on all my calculators in the house (except the I-Phone). But it says something else. It provides an insight into the fact that in all likelihood we will see many more banks fail and that the FDIC will soon need its own infusion of funds.

So, it will be back to the drawing boards for the government and Florida real estate buyers and sellers. Probably, we will see the many first-time home buyer credit programs extended since it has helped stabilize pricing in some areas.  Stable pricing is at the end of the day is one of the key ingredients to resolving the crisis along with folks having the jobs and income to pay their mortgages. This is just what Florida’s real estate market needs.

As for Florida loan modifications, I still believe it is better to do a “short refinance” or “short modification” and keep folks in their homes rather than allowing another house to go on the block.  It is illogical to understand why the Bank is willing to take the loss on a short sale or foreclosure, yet not willing to take the loss by keeping someone in their home at a lower principal amount. The systemic impact on the community is obviously more severe when a family is kicked out of their own home.

Clearly, only once modifications include meaningful principal reduction, will the cure rates improve. And guess what, you don’t need a new fancy study or high powered calculator to figure that one out.

Roy Oppenheim

From The Trenches

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