According to the National Association of Realtors, about 28 percent of 2010 home sales involved all-cash transactions.  This trend appears to be an increasing,  especially when one considers that in 2008, 14 percent of all real estate transactions were cash only.

In the Miami-Fort Lauderdale area, the prevalence of all-cash transactions is even more apparent.  In 2010, more than half of all transactions in the area involved cash buyers.

South Florida Home Buyers Find Getting a Mortgage Difficult

Some experts have suggested that the sluggish housing market has caused the increase in cash-only real estate transactions. Here’s why.

After the housing market bubble burst, many lenders tightened their belts and made it more difficult to get a mortgage.  According to a national survey by MortgageMatch.com:

• 70.6 percent of Americans feel like the difficulty of getting a mortgage is a serious problem.
• 32.3 percent of Americans found that understanding the mortgage process and meeting lender requirements is more difficult than getting the mortgage itself.
• 79 percent of recent home buyers said that getting a mortgage was as difficult or more difficult than they expected.
• 20.9 percent of home buyers said that it stressed them out more to wait for approval on a mortgage than to wait to hear back on a job opportunity.
• 10.8 percent of borrowers said their lender charged them a higher interest rate than they were originally quoted or expected.
• 20.7 percent of borrowers said that finding a lender that was easy to work with was a challenge.

All Cash South Florida Real Estate Deals Seen as a More Attractive Option

The recent data released on home buyers’ perceptions of getting a mortgage suggests that  the process is stressful, frustrating and upsetting.

Meanwhile, those home buyers who are opting to use cash on their real estate purchase are finding that the process is easy and even advantageous.

Home buyers who use cash only usually get 5 to 10 percent  off the asking price of a home as compared to those buyers who use a mortgage.

Many South Florida real estate experts agree that sellers prefer cash real estate transactions because they tend to be quicker.  In addition, the seller doesn’t have to worry about a bank rescinding  a mortgage deal.

Homes for Sale Available Now

Are you interested in checking out some of the properties available now in Aventura, Florida and other nearby communities such as Golden Beach and Hallandale? Then contact me, Scott Patterson, your South Florida real estate expert.

As your South Florida REALTOR, I’ll keep you up to date on more trends like this one in the Aventura real estate market as well as let you know of any Aventura homes that enter the Aventura real estate market.

James Venney

Private Mortgage Banker, Homeservices Lending

I believe that most clear minded individuals would agree that given the fact that the Federal Government controls Fannie Mae that a coordinated effort could be made to relax those underwriting guidelines that will enable more well qualified buyers to obtain financing to buy a new condominium.
Overview of Fannie Mae Condo Guideline Changes:

• For new construction and newly converted South Florida condo developments, 70% of the units must be pre-sold (closed or under bonafide contract). This is an increase from 51%.

• No more than 15% of a condo project units can be more than 30 days past due on HOA fees.

• Fidelity insurance will require for condos with 20 or more units, ensuring that homeowner association’s funds are protected. Prior to these changes this threshold was only for new condos but is now being applied to existing/established condos as well.

• Borrowers/unit owners must now obtain a condo-owners insurance policy unless the master condo policy provides for interior unit coverage.

• No more than 10% of a project can be owned by a single entity.

• No more than 20% of a project can consist of non-residential space.

• The homeowners association must have 10% of its budgeted income designated for replacement and reserves and adequate funds budgeted for the insurance deductible.

The Icon and The Jade Residences in the Brickell area, Canyon Ranch on Miami Beach and The Artech in Aventura are just a few examples of the many new world class condominium buildings in South Florida. Many savvy buyers from around the world recognize that the units in these buildings represent incredible values at their current price points.

I think that it would benefit the housing market and the economy as a whole if the Federal Government were to put into place meaningful changes to the Fannie Mae condominium guidelines to make it easier for well qualified buyers to finance these units.

While most of the units in these luxury South Florida buildings would require jumbo mortgages wouldn’t it make sense for the Federal Government to require any lender that was the recipient of TARP funds to adhere to a relaxed set of condominium guidelines making purchase money mortgages more readily available to potential buyers?
The Federal Government needs to coordinate it’s efforts regarding new condominiums and available financing before their actions lead to the destruction of an otherwise viable market place.

For your consummate mortgage news visit James Venney’s Blog.

Ron Peltier, President and CEO of the Holding Company, Homeservices of America Inc. speaks about the Nations housing and Lending situation. Homeservices of America, Inc. is a Berkshire Hathaway Affiliate which owns South Florida’s EWM, and the second-largest full service independent residential real estate brokerage firm in the country.

I think it is very important to listen to every indicator you can today and especially with successful people like Ron Peltier & Warren Buffet. Warren Buffet stated just a few weeks ago that until the US Housing Market stabilizes the world economy with continue to suffer. Berkshire Hathaway is one of the largest shareholders of Wells Fargo which is one of the few financial institutions that has been doing well and one of the few lending today.

Scott Patterson
South Florida Properties
Phone: 954.661.8871

One of the primary goals for the Buy South Florida Real Estate Blog is to be a valuable resource for the South Florida real estate market. From time to time, I will invite market experts to write a post providing you important updates on these experts’ area specialties. For this post I have invited expert South Florida Mortgage Banker, James Venney to offer this timely mortgage market update.

Knowledge is Power!

James is very knowledgeable in the mortgage industry and is up to date on the continually changing industry especially here in South Florida.  I have invited James to offer his insight on the current trends in the mortgage market. Empowering you with timely mortgage information, after reading this post, we welcome your comments.

Effects of the Backlash in the Mortgage Crisis

The “mortgage crisis” is now more than 12 months old and we are still experiencing significant daily volatility in interest rates as well as significant underwriting guideline changes.  Most notable of the recent changes in the availability of mortgage products is the elimination of mortgage insurance for condominiums in the state of Florida.  As many of you know mortgage insurance is required when making less than a 20% down payment.  The one exception to this is FHA which can be utilized for FHA approved condos with as little as 3% down.  If the condo building in question is not FHA approved, FHA “spot approvals” can be pursued but are not typically granted on buildings with a high concentration of investor owned units.

“The Big Four” Down Payment Expectations

Additionally 20% down payments are being required by “the big four” (Wells Fargo, Citibank, Chase and Bank of America) for jumbo purchase and refinances with loan amounts up to $1 million and 25% down for loan amounts greater than $1 million.  Rest assured that what ever “the big four” are doing the smaller lenders are doing as well.

Current Interest Rate Environment:

Interest rates remain near historic lows with conforming 30 year fixed rates in the low 6% range (conforming loans are those of $417,000 or less) and Jumbo 5 year adjustable rates in the high 6% range (Jumbo loans are those of greater than $417,000).

Rate Lock Forecast:

Short-term Rate Volatility

Expect continued volatility with the possibility of frequent “intra-day” re-prices.  As indicated in the float vs. lock meter above, I have a locking bias for those transactions closing in the next 15 days and only recommend floating for those transactions closing in the next 30 days with caution and daily updates on the direction of interest rates.

Rates Follow the Lead of Yields

The mortgage backed securities market will take its cues from the stock market with extreme sensitivity to any economic news that indicates that inflation maybe creeping into the economy.  Remember “as go yields go interest rates” so any news that shows the economy is slowing or any significant down days in the stock market will be a prelude to lower mortgage interest rates in the short term.

James R. Venney CMP, CMPS
Mortgage Banker / Certified Mortgage Planner
HomeServices Lending An Affiliate of Wells Fargo Bank
305-960-2671 phone
866-577-6971 E-fax
Email James Venney
www.PreApprovalPro.com