Florida is one of the states most affected by the mortgage crisis. The most accessible loans available in this market are FHA loans. After qualifying for an FHA loan I initially thought the hard part of being a first time home buyer was behind me. But, it would seem that the journey has just begun.
Most communities do not meet the requirements for FHA approval. The most common reason is the high foreclosure rate. The community of interest must also be current on HOA fees, there must be a certain percentage of home owners to investors and other such conditions must be met for an FHA approval. With all these regulations and restrictions associated with an FHA loan it is not hard to imagine that even this type of loan may become obsolete. The dilemma now is not whether you will exceed your budget but whether the available homes within your budget will qualify for the loan type.
With all fairness I am obligated to mention that conventional loans or cash sales do contribute to recent sales. The requirements for a conventional loan in Florida are not realistic. Where some borrowers may be able to contribute 10% down payment the newly required 25% down payment to say the least is a stretch on nearly anyone’s budget not to mention the budget of a typical first time home buyer.
Investor are buying at extremely low prices with cash and conventional loans. FHA loans cannot compete with these investors due to all of the restrictions and rules that they must adhere to. The increasing of number buys by investors in a neighborhood/community further limits opportunities available to FHA first time home buyers. As a result investors and not "home owners" are benefiting from the low market rates.
I have concluded from my observations that the so called homes sales increase doesn’t fully tell the underlying problem. The right rate of available homes and foreclosures properties are not represented in the market. Banks are slowly trickling inventory into the market while the excess or "ghost inventory" remains hidden in their vaults in an effort to manipulate market values.
I have also noticed another disturbing trend. Yes, single family homes, townhouses and condos are at an all time low. But, where FHA approval is not available home prices are much lower than market values. One would initially reckon this is in their best interest but these homes are primarily only available to investors due to requirements and restrictions placed on FHA loans. Where homes are FHA approved this results in homes being listed and maintaining the inflated prices. The limited homes available especially ones built in 2005 and 2006 are in high demand. As a result a new type of bidding war is ensues. Potential home owners of low to moderate income cannot compete with investors of whom recent sales can be attribute to.
I expect home prices will continue to fall. Do you predict a change in the way the real estate market and lenders addresses these new issues and it’s direct connection to lower home prices? Do you reckon the government will relax some of the FHA regulation to combat these issues? (which in itself has pros and cons associated with the outcome for home buyers). Finally do your foresee a new program/stimulus that will help first time home buyers in the near future once this ,000 tax credit expires?
I live in Pompano beach area. I thinking of buying in palm beach county. That market is over saturated with town homes and condos…. Over saturation can be a excellent or terrible thing.
[...] Evangelistic Ministries in America be it (Benny) Hinn of Orlando, (Karl) Strader of Lakeland, How is Florida real estate getting better? – fha-loanrates.com 08/07/2009 Tags: banks, borrowers, conventional loan, conventional loans, [...]