Real Estate in Northeast Florida and Around the World

Today's economic climate is often compared to the Depression Era 1930's.  Interestingly enough, one governmental program that was created out of that era is a strong player in today's economic recovery - just as it was 75 years ago.  FHA loans celebrate their 75th year this year, and I am glad to see that it is still serving it's purpose today as it did in 1934 when the program was created.

The Federal Housing Administration was created to provide the means for everyday people the ability to purchase and own their own homes, who could not otherwise afford to purchase using "conventional" means.  Prior to its creation, "conventional" loans to purchase homes typically required a 50% down payment, making home ownership unavailable to most people, especially in the dark days of high unemployment and cash shortages that were abundant in the 1930's.  In addition, the loan terms typically were to include a balloon payment at the end of 5 years - and the bank would then reconsider whether they wanted to extend those terms. 

The FHA loan program costs are self-funding, and do not cost the American taxpayer funds.  Each loan is required to have mortgage insurance, which is paid into a fund that in turn, covers the expense of running the program, including covering the default expenses to the lender.  The actual loan proceeds are provided by other sources, whether it be a bank or secondary market investor, and is guaranteed as a security through the quasi-governmental agency known as Ginnie Mae - a nickname for the Government National Mortgage Association.  FHA insures the lender in the event of default by the buyer - they do not actually lend the money.  However, the loan must meet the standards and guidelines set forth by the Federal Housing Administration.  FHA was put under the U. S. Department of Housing and Urban Development (HUD) when it was created in 1965.

Through the turbulent 1980's, FHA played a critical role in helping buyers, especially first time home buyers using state-agency bond program funding, buy their home and keep the housing market going through the rough times.  In the 1990's when new and unique (now considered foolish and toxic) loans came around, the FHA loan program was considered out of touch, out of date and too expensive.  However, through those times, FHA did not relax their guidelines to bend to the critics, and subsequently, FHA insured loans are not experiencing the default levels, criticism or included in the label of "toxic assets" as their conventional counterparts are getting.

So, let's celebrate FHA's 75th birthday by remembering it's purpose - to assist home buyers in securing financing where conventional loans are not available - and get the word out to our governmental legislators that we need to continue to boost this program, and keep it around for another 75 years!  Many of our neighborhoods are in existence because of FHA - and I can't wait to see you around one of them!

Here are some interesting facts I pulled from the www.HUD.gov website regarding FHA loans.

When the FHA was created, the housing industry was flat on its back:

• Two million construction workers had lost their jobs.
• Terms were difficult to meet for homebuyers seeking mortgages.
• Mortgage loan terms were limited to 50 percent of the property's market value, with a repayment schedule spread over three to five years and ending with a balloon payment.
• America was primarily a nation of renters. Only four in 10 households owned homes.

• During the 1940s, FHA programs helped finance military housing and homes for returning veterans and their families after the war.

  In the 1950s, 1960s and 1970s, the FHA helped to spark the production of millions of units of privately-owned apartments for elderly, handicapped and lower income Americans. When soaring inflation and energy costs threatened the survival of thousands of private apartment buildings in the 1970s, FHA's emergency financing kept cash-strapped properties afloat.

  The FHA moved in to steady falling home prices and made it possible for potential homebuyers to get the financing they needed when recession prompted private mortgage insurers to pull out of oil producing states in the 1980s.

We are over a week into the Autumn season, and with the new season comes the opportunity for us to experience changes all around us.  From the leaves turning (yes, we have some leaves that actually change colors in Northeast Florida) and lower temperatures, changing schedules due to school activities or changing our clothes from summer to fall wardrobe, we are all going through changes during this time of year.

One of the most astounding changes that I watch each autum are the number of buyers and sellers who hurry to buy or sell a house before the holidays arrive at year's end.  The normal thought is that home buying and selling activities wanes during the last 4 months of the year.  In fact, it traditionally spurs just after school starts. 

If you are thinking about a change of venue for your family, you are not alone.  The inventory levels of homes continues to be above average, so there are many opportunities out there for buyers.  The good news for sellers is that the levels continue to decline, and we are seeing stabilization in prices in our area.  Those homes that are in the best showing condition, priced competively and well-marketed are not staying in inventory long.  Buyers who wait are often left continuing to look - because homes in great condition and well-priced just are not so common anymore. 

Here's an example - last evening while in the grocery store trying to decide which cheese to select, I overhead two couples chatting behind me.  One couple tells the other that they are house hunting, and describe the area in which they are looking.  The other couple asks how it's going, and if they have found anything.

The house-hunting couple responds that no - they are surprised - they expected more "deals" than what they have been shown by their agent.  One more thing.....they had been shown over 20 homes and still didn't find anything.

Unfortunately for these buyers, they have caught the media bug, which makes them believe that they can find a house for 50% of its market value.  This media bug is viral in nature, because it is everywhere - on TV, at the water cooler, in the newspaper.  However, when asked for factual information, you usually only get facts about one of two actual good bargains, and typically not at a 50% discount. 

Are there deals out there compared to 3 and 4 years ago?  Absolutely!  But buyers and sellers, please consult with your professional real estate agent about the reality of what is going on in your local market before taking the advice of a media source that (1) gets paid based on the number of papers/commercials/magazines that are sold and (2) likes to use national statistics but cannot provide statistics within a zip code in which you may be looking.

If you are thinking of buying or selling your home, give me a call and let's discuss your situation.  You never know if the opportunity is the right one unless you make a change in your actions - so call me today!

See you around the neighborhood!

I'm hearing report after report from various national and notable sources that the recession is technically over.  I also hear a lot of cynicism about this statement, primarily because the person making the comment doesn't feel like the recession is over - or is going to be over any time soon.  How do I respond?

Well, history has taught us that it is always darkest before the dawn with economic downturns.  Employers reduce their workstaff as a last resort - not as the first one, and that is the biggest impact that is being felt at this point in time.  Unemployment, and the lack of new jobs, and the fallout from that.  More bankruptcies, more foreclosures, more store closings, etc.  But guess what?  The rate in which employers are reducing jobs is slowing.  Yes, jobs are still being lost, but for the last several months, the rate is slowing.  And temporary jobs are on the move.  Employers will first bring in temporary workers, until they see a positive trend in business.  Those temporary workers will most often be converted to permanent employees.  It is also a way for a company to "test drive" an employee, to make sure that employee will be a good investment in training time, benefits and other costs that are associated with permanent hires.

How long will it take us to "feel" better about economy?  Well, it depends on how deeply you are impacted.  We didn't get into this mess overnight, and it will not recover overnight.  For most people under the age of 40, this is the only recession they have ever "felt".  Those that lived through the never ending recessions of the 80's understand it just takes a little time.  In West Virginia, where I am from, the state was in recession almost for the whole 1980's it seemed.  The 80's recession(s) were deep and long, but once the engines got humming, the country got back on its feet in an great way.  We are not a nation of patience - we are a nation that wants what we want - and now.  This time - we just have to wait a little bit. 

So - don't give up, hang in there.  If you are looking for a job - keep at it!  If you haven't turned yet to temporary agencies to look for work, do that.  If you've done all of that and still nothing, go out and volunteer in your community.  Find a group that can benefit from your skills, whether it be in an office or out in the field somewhere.  You will make new contacts, and feel good at the end of the day. 

In the meantime, we will as a nation, pull together and one shovel at a time, dig ourselves out of this mess.

I'll be out and about in the neighborhood, keeping a close eye on things - so if there's something I can do for you, just let me know!

See ya around the neighborhood!