Real Estate Information

Foreclosures and short sales continue to be on the rise in the Jacksonville Florida Real Estate market.  The 2008 year saw dramatic changes to the market.  Sellers began to lose their "staying power" short sales and REOs took off.

The year opened with the Jacksonville Real Estate Market at a low 6.21% ratio of homes sold being distressed properties-either foreclosures or short sales.  By the December 31st of 2008, that average had gone up to almost 22%.  The December 31st average of short sales and REOs sold over the past 30 days was almost 32% indicating that this average is continuing to go up as Jacksonville short sales and foreclosures continue to be the place to find deals.

For single family homes and townhomes (non-condo properties), the pending to active ratio for distressed properties is at 30%, dramatically higher than the 14% that the Jacksonville real estate market is seeing overall.  This indicates that these distressed properties are going under contract at a higher rate for every home that comes on the market.  Almost 53% of all homes under contract in the Jacksonville real estate market are now short sales or foreclosures!  They are simply better deals right now.  Sellers that have purchased their homes in the last 5-7 years in many cases can not afford to get out without selling short.  The reluctance to do this is often great, so many sellers continue to try to get money back out of their house.

Buyers are very savvy.  They know when a house is overpriced and they are not interested.  Upgrades that were worth so much a few years back are now largely irrelevant to buyers.  Houses are commodities, buyers simply want the best price.

The condo market is faring slightly better for sellers.  For condos 22% of all condos under contract are short sales or foreclosures.  Just over 10% of the condos sold in 2008 were short sales or foreclosures.  This is up from less than 1% at the beginning of the year.  The fact that over the past 30 days the percentage closed was at 15% shows that the uptrend is continuing.

If you have bought in the last 5-7 years and need an honest, upfront evaluation of your situation, let us know.  We can also help you purchase one of these great deals.  Just let us know when you are ready.

No matter how you feel about your HOA, they unfortunately have a lot of power over you.  This is even more true if you are trying to short sale your property and have gone late on your HOA dues because of your inability to pay.

HOAs are insensitive creatures.  Unlike banks, the management companies in charge don't seem to care about the reason for your hardship.  They are usually more than willing to let your home foreclose before they will take a lesser amount.

They do not see that they are better off having a new homeowner in the home who can, and will, pay their dues on time.  How is forcing a homeowner into foreclosure, so the home remains vacant for longer, better for the surrounding homeowners?  Well common sense says it's not. 

We have a short sale that has been approved by both the first and second lenders.  The family has experienced incredible hardship involving job loss and loss of health.  The HOA management company, in a popular area of Northwest St. Johns County, told us 2 months ago that the amount due was around $1,700.  They drug their feet in getting an actual payoff letter to the title company.  We had allotted $2,000 in the deal to go to paying off the HOA based on what they stated.  The day before yesterday, the number all of the sudden miraculously hit $4,000.  Well, that tooka little bit of wiggling on the HUD to figure out what could be reallocated or renegotiated.  Imagine our surprise when we got another call last night stating that the HOA had added more fees and they were now saying the payoff was $5,000.

The numbers have been established for weeks and we have just been waiting for the buyer's loan to come through.  Can the HOA just randomly add fees and continue to increase the balance?  We can't even get a straight answer and itemization of what is included in the $5,000.  From our understanding the homeowners quit paying roughly a year ago when their extreme, very legitimate, hardship hit.  Even if they haven't paid for a year the deficiency should only be around $1600-$1700.  Where did the rest come from?  We may never know.  We have to try to figure out a way to make the numbers come together even though the fees may or may not be legitimate.  The homeowners can't even pay their mortgage anymore.  They definitely can not afford to hire an attorney to fight the questionable fees. 

The HOA will not take a settlement amount...even one of a few hundred less.   The first lienholder is getting roughly half of what is owed.  The second lienholder is only getting $2,000.  Both are settling for much less, the HOA won't.  The only other option is for the poor family to foreclose in which case the first mortgage holder won't even recover but half of what they are owed.  The HOA said they would rather have the home foreclose and just try to collect after that than take less than the high amount they are quoting.

So yes, the HOA can really wreck your short sale deal.  Don't let it happen to you.  Because of our training and experience we will be able to keep this together.  If you are comtemplating a short sale, do not trust it to someone without extensive training and experience in short sales.  A short sale has many obstacles that an educated agent can manuever. 

Now you can grab some donuts and go get your groceries in the Palencia area.  Food Lion opened last week and is supposed to be a deluxe version of the store. 

We enjoyed breakfast at Dunkin' Donuts on Sunday and the store had quite a bit of traffic just in the few minutes we were in there.

Dunkin' Donuts and Food Lion are both located just south of the Palenicia entrance.  You can access the two stores from US 1 directly, or enter the Palencia subdivision then make the first right.  This is less than 5 minutes from World Golf Village and right down the road from all Palencia neighborhoods, Kensington and the new neighborhood of Las Calinas that is going up just north of Palencia. 

Food Lion and Dunkin' Donuts joins Starbucks and a few other stores and shops at the entrance to Palencia.  Burger King is opening here soon, it looks to be almost complete. 

If you want to live in this great developing Palencia area, we can help!

We have the lowest inventory level since spring of 2007 when we were just one year into our Jacksonville real estate market downturn.  While we are down around 1500 units from the height of our  inventory levels since the downturn began, our inventory level is still almost double that of spring 2006 when the slide quietly began.

In the past month 635 single family and townhome units (non-condo) have sold.  Last year, for the same dates, this number was 855.  In the same time period in 2006 when most buyers, sellers, the media and agents had not caught on to the fact that we were in a downturn, the number was 1,258.  Not too far off of the almost 1,500 we saw at one point during the summer of 2006.

Jacksonville Florida real estate market inventory levels are at 13.64 based on sales over the past year, and 17.3 months based on sales over the past 30 days.

Our pending to active ratio is just over 14%.  A healthy, balanced market hovers around the "middle" with 50% being perfectly balanced.  A high number indicates a strong seller's market.  At our lowest, that number was around 10%, this occurred for about a four week stretch last December and early January.  We have not seen this ratio that low since then, for the past quarter we have seen this number hover around the 14%-16% range.

The biggest news is that this week, for the first time, the number of homes under contract that are short sales or foreclosures surpassed the 50% mark!  In the Jacksonville Florida Real Estate market 51.5% of all homes (non-condo) currently under contract are short sales or foreclosures.

Last year at this time buyers and agents were still largely avoiding short sales.  This continued on through a good portion of the year.  This is no longer possible.  A quarter of all listings on the market are short sales or foreclosures and those are priced very competitively, as a rule.  The fact that only a quarter of all active listings are short sales or foreclosures, yet over 50% of homes under contract are short sales or foreclosures shows that this is where the bargains are.  If the prices for straight resales were in line with short sales you would expect to see a similar ratio for actives and pendings, however, short sales and foreclosures are getting a larger share of contracts from a lower inventory.  The pending to active ratio for Jacksonville short sales and foreclosures is around 30%, slightly more than double the same ratio for the market overall.

In the past 30 days 31% of all homes closed  were short sales or foreclosures.  This number should start trending up more given the rapidly increasing number of pending homes that fall into this category.  Short sales do have a higher fallout rate because of the complexity of the transaction but this can be minimized with proper handling of short sales transactions by real estate professionals.  We have no way of knowing how many of the pendings have unrealistically low contracts on them that have no shot of bank acceptance.  Those will eventually go back on the market, which is why it's important to put in the lowest possible offer that a bank will accept going into the process.  It saves time and aggravation for buyers and sellers.  If you are trying to sell your home, you have to price your home to be the next to home to sell.  With the market prices trending down, this means lower than your competition if you truly want to sell. 

I love Benito's near the Avenues on US 1 in the Southside area of Jacksonville so I was very excited when I saw that one was coming to CR 210 in northwestern St Johns County.

I had a lunch meeting there today and it was incredible!  I greatly enjoyed the veal picatta and sweet tea.  Our waitress, Eva, was beyond wonderful!  If you go, request her, she takes service seriously and is very friendly.  She made sure I had my extra capers, going above and beyond.

This location of Benito's has an all-you-can-eat buffet at lunch time for $6.95 that includes salad or soup.

Benito's is located a couple of miles off of I-95 and CR 210 in northern St Johns County.  You go west when you get off of I-95.  It is located behind the Hess station on the left of CR 210, right before you get to Cimarrone Golf and Country Club and South Hampton.  It is located right beside the new La Nopalera.

HUD Short Sale / Preforeclosure Sale Guidelines

It is a very common battle we encounter everywhere these days...on television, at parties, in your local Starbucks.  Homeowners who were responsible and got into affordable homes and affordable mortgages are short on patience with talk of bailing out homeowners who can't make their payments. This is completely understandable.  Is their argument valid?  On the straight assumption that they were responsible and no homeowner currently in trouble was similarly responsible...of course, their argument is very valid and they should be angry about the dialogue.

Unfortunately, the problem is much deeper and complex than that in the Jacksonville real estate market and other real estate markets around the country.  This is a general discussion not specific to the Jacksonville Real Estate market.

We need to examine what happens once a homeowner gets in trouble and the resulting effects on everyone. 

Depending on the homeowner there are different things that we see happening.  Some just quit caring about the condition of their property and it becomes an eyesore in the neighborhood.  Some yards are overtaken by weeds until there is no grass left and the weeds become tree-like.  To charge a homeowner a fine when they already have no money left is not an effective deterrent.  They don't have money to pay the fine and the HOA fees usually go late before the mortgage does.

HOA or Condo Association related problems begin to occur.  Many times the homeowner quits paying HOA dues.  Once this happens all homeowners suffer because there is less money coming into the HOA to take care of the facilities.  This can cause one, or a mixture, of two things.  Your HOA dues may rise.  Services may be cut to account for the decreased inflows while you pay the same fee.  Sometimes there will be some mix of the two options.  In any case it's not a favorable outcome for you.

That homeowner then may try to modify their mortgage(s) with the lender.  This is a largely unsuccessful process although there are some exceptions.  Many lenders have not adjusted their process to the market conditions or the current reality of what banks are dealing with.  Most homeowners are not going to benefit long term by a few late payments being tacked on to the end of their mortgage.  If they couldn't pay the mortgage for the last few months, how is that going to enable them to pay next month?

So what to do?  Some just give up, live in the house "free" for as long as possible then let the bank take it at the end of the process.  An increasing amount of homeowners decide to try to sell the home.  Most homes bought within the past 5 years or so no longer have a fair market value sufficient to cover the liens and closing costs, unless there was a large initial down payment.  The homeowner will usually need to attempt a short sale.

Here's where we get into the crux of the problem. 

Whether they successfully short sale or whether their home goes into foreclosure then back on the market, this is problematic for other owners in the neighborhood, including the highly "responsible" homeowner who wants the "irresponsible" homeowner to pay.

Short sales and foreclosures, when done correctly, are priced at fair market value.  Unlike straight resale properties, they are unrestricted by what is owed on the home.  Once a price is put in a short sale, if buyers do not come, the price should be reduced if the listing agent is doing their job.  The market is rejecting the price and that's what fair market value is, the price at which a willing buyer and willing seller come together.  As a result, the price on short sales and foreclosures are subject to frequent price drops until the home is sold.  The next short sale or foreclosure that comes on the market will be priced better than the other ones that are already sitting out there and so the cycle goes.

The value of your home, whether you are responsible or not, will continue to decrease until something breaks the cycle.  The hard line of not helping those who are in trouble is a little bit like cutting off your nose to spite your face at this point in the large cycle.  When your neighbor is "punished" by losing their home, you are also punished with them.  Fair?  No, but it is reality. 

There are a few things that can happen, either alone or in combination, to help break this cycle. 

• More buyers have to enter the market now.Homebuyers need to begin to take advantage of the incredible deals that are out there for the taking.
• More banks have to lend money with fewer restrictions than currently exist, not more, for refinances and new purchases.
• The inventory of distressed homes has to decrease. This will happen as more people are able to modify their mortgages, find new jobs and correct other factors that have caused the hardship. The reality is that the majority of delinquent homeowners may have been entirely responsible when they bought the home. How do you continue to pay your mortgage when you have been laid off or your income has been drastically reduced. Or what if you are relocated and have to sell your home you bought 2 years ago that is now worth $100,000 less now than it was then? Do you have any option than to try to sell short for less than what is owed to the bank? Either way, it drives down the prices of area homes.
• Banks have to be willing to realistically and meaningfully modify mortgages instead of using the money being given to them by taxpayers (against the will of most taxpayers) to buy up other banks and to give their executives raises which is largely what the money has been going to if you have been following the news. Some of the banks who have gotten the largest bundles of money are the most impossible to work with on modifications and short sales.This just means they are going to be asking for more money because the underlying problems are not being fixed. It's like having a leak in your gas tank. You can keep putting gas in the tank, but until the leak is fixed, you are always going to need a constant fill-up.
• Banks have to quit doing things like refusing to talk to you about a modification until you are 90 days late, or refusing to modify your loan because you make too little money each month. If you made enough, you probably would not need the modification, right?
• Banks have to speed up the short sale process. Some have gotten really fast and efficient. Others are still highly challenged in their capability and understanding of dealing with short sales. They have to understand that buyers don't care if they have thousands of short sales they are sorting through, so they need to quit whining about that and figure out how to make their process work more efficiently. A buyer will eventually walk if the bank does not process the short sale fast enough. In the meantime, the homemay have become worth less than when the offer was submitted to the bank which means the bank will lose even more money.
• More buyers need to buy short sales instead of waiting until the homes are foreclosed.Do not be discouraged from buying a short sale becausean agent, or your brother, or your neighbortold you they never go through. They DO go through and they are usually great deals for buyers. In our option a short salepresents a better opportunity for a great deal than a foreclosure.

If you find yourself in a situation where you have to get out from under your home, we can put it on the market and help you attempt a short sale.  We can also help buyers purchase short sales or foreclosures and get a great deal.  There are parameters for what the bank will take for the short sale to be successful.  We know how to put together a great offer that the average bank will accept because it mitigates their loss. 

If you are a responsible homeowner who has always made their payment on time, you are greatly appreciated and should be commended.  But please realize that regardless, you are being hurt by the current state of things.  Your fair market value has fallen just like the buyer who hasn't made mortgage payments in six months.  To help that homeowner is to help yourself, even though it's not fair.  Just be aware that everything is intertwined and your home value is not independent of everyone else's value no matter how much that may unequal and unfair.

Pendings are up around 3% this week from last week. Pendings are up a big 25% from last year at this time.  In addition, the number of homes sold in the past 30 days has increased roughly 11% since last week.

There is still a 13.5 month inventory in the Jacksonville Real Estate market but this number has been trending down over the past couple of months.

Jacksonville Real Estate Short Sale and Foreclosure activity still remains strong.  These are the homes that are driving the current market and bringing down the prices.  Almost 50% of all homes pending in the area are short sales or foreclosures.  This number has been getting stronger every week.  As the prices go lower due to short sale and foreclosure activity, homeowners are finding it harder to meet the lower prices when they need to sell.  This results in overpriced listings from straight resales, while short sales and foreclosures can be priced at fair market value which is dictated by the real estate market.

Roughly 1/3 of all closings in the Jacksonville real estate market in the past 30 days were short sales or foreclosures.  In comparison, only 24% of homes on the market are short sales or foreclosures.

Short sales and foreclosures have a pending to active ratio of 30.5% while the overall market has a pending to active ratio of only 14.74%.  The lower the number, the more weighted towards buyers the market is.  The higher the number the more weighted towards sellers the market is.  A balanced market is somewhere in the middle around 50%.

Short sales and foreclosures are still where the action is.  If you are a straight reseller, you have to compete with them or your home is priced out of the market.  Many Jacksonville homeowners who have to sell for relocation reasons are finding they have to go the short sale or short payoff route even if they are not having financial problems because of the impossibility of selling their homes and getting back what they owe.

Let us know if you need help analyzing your situation.  We specialize in helping homeowners remedy their situations.

La Nopalera on CR 210 is now open for business.  It's the same great food and same great menu.  I went and enjoyed a plate of cheese enchiladas.  The space is clean and open.  The waiter was extremely attentive.  It will be awesome not to have to drive all the way to Mandarin from the World Golf Village area to have my favorite Mexican food.

La Nopalera is behind the Hess station, immediately before you get to Cimarrone and South Hampton, on the left side of the street.