A recent deluge of short sales is creating difficulties for home sellers and buyers alike according to most real estate analysts. Lenders are overwhelmed by the number of short sales requests and are taking far longer to process offers from willing buyers. This delay often causes buyers to withdraw their offers and contracts [...]
Some analysts are worried about the increase in short sales.
A recent deluge of short sales is creating difficulties for home sellers and buyers alike according to most real estate analysts. Lenders are overwhelmed by the number of short sales requests and are taking far longer to process offers from willing buyers. This delay often causes buyers to withdraw their offers and contracts to fall through, necessitating the relisting of the home and further delays for anxious sellers. Banks and mortgage providers simply don’t have the staff in place to handle the increased volume of short sales, and further delays result when lenders must request necessary paperwork from investors and secondary lienholders.
Short sales occur when lenders agree to discount the remainder of a mortgage balance rather than foreclose on the property; the lending institution then puts the home on the market, and the bank collects the proceeds of the sale as payment in full for the outstanding debt. Because of recent market conditions, many homeowners have found themselves in serious financial difficulty; their home’s value has dipped, sometimes to less than the remaining mortgage debt. Typically the bank is willing to take the current appraised value of the home as full payment, even when this does not cover the entire amount of the mortgage. In some cases, however, lenders have been known to cancel contracts and raise the price of the property, sometimes to an unrealistic level. This is due in part to changes in the appraisal process, which have also led to serious underappraisals of properties in cities like Austin. The use of foreclosures as comparables is only one of the many deficiencies in the current system; in short sales especially, it can be difficult for lenders to obtain an accurate appraisal of the property’s true worth.
While Austin has seen fewer short sales than many other metropolitan areas, the continuing rise in short sales volume has some real estate experts worried. Short sales are expected to increase still more in response to the November 30, 2009 announcement of a federal program that provides financial incentives to sellers and lenders who avoid foreclosure through short sales. These transactions place an additional burden on all parties. Sellers must provide proof of economic hardship before their request for a short sale will be approved. Lenders must assume responsibility for paperwork relating to the sale of the home; buyers and real estate agents must be prepared for lengthy delays in processing and accepting offers and closing on the short sale property. The entire process takes much longer than traditional home sales, and can be further delayed if banks and buyers cannot agree on a mutually acceptable price. While Austin’s real estate market remains comparatively stable, analysts are watching the situation closely to ensure that short sales do not drive down home prices in our area.
The first real sign of our impending recession began in the national real estate market. Thousands of sub-prime loan holders began to fall behind or default completely as the job market became stressed. Since 2007, home prices have been on a steady decline nationwide. According to a recent report, the decline is beginning to slow [...]
The first real sign of our impending recession began in the national real estate market. Thousands of sub-prime loan holders began to fall behind or default completely as the job market became stressed. Since 2007, home prices have been on a steady decline nationwide. According to a recent report, the decline is beginning to slow down, but it is still there. It has now been 31 straight months on record indicating the falling prices. February 2008 showed a dip of 18.6% when compared to the same month in 2007, down from 19% recorded for January. There have been no rises in median home prices since 2006. Overall, the market has fallen by 30.7% since July 2006.
While this slowdown shows promise, experts refuse to get excited quite yet. With unemployment reaching higher levels, and not expected to jump up throughout this year, the real estate market will not really have a significant chance to rebound yet. Real estate analyst Mike Larson of Weiss Research states “it’s just a moderation in the monthly declines and it fits in with the pattern we’re seeing of things getting less bad.” There has been some slowing previously, but it had not led to any real stabilization. Most experts feel we are closing in on the bottom of the weak market, so this trend may be coming at a better time than the last.
Consumer confidence has also seemed to grow in the last couple of months. More people are looking into buying to take advantage of the great rates this recession and weak market has created. The ongoing credit crunch continues to inhibit many potential buyers from securing a loan, but that is not necessarily a bad thing. One of the largest factors in the real estate bubble burst was the non-traditional financing that allowed those with less than perfect credit to buy a home. When the payments increased, many were simply unable to keep up. Now, with more traditional lending practices back in full swing, those who purchase a home are more than likely able to afford it.
It used to be that developers of large tract community homes preferred it if they could build a new house in relative secret – keeping the prospective home owner at bay until the new home was complete. In today’s information rich atmosphere, however, this has become increasingly difficult as consumers are more informed and more [...]
It used to be that developers of large tract community homes preferred it if they could build a new house in relative secret – keeping the prospective home owner at bay until the new home was complete. In today’s information rich atmosphere, however, this has become increasingly difficult as consumers are more informed and more anxious to have a say in the construction process.
At Town & Country Homes, Brian Murphy, vice president of operations, says they “are encouraging open communication between” buyers and the construction team, which fosters a great feeling of control for the buyer and results in greater customer satisfaction. Home buyers pretty much know what they want and Town & Country Homes provides an interactive experience, from choosing options on their Web site to supervised visits to the construction site so they can see first hand how the building is progressing.
Town & Country is located in the Chicago area and has seen great success building larger homes in the $250,000 to $400,000 range. They also have built townhouses that are selling in the low $160,000 to the upper $170,000 range. The development company is involved in just about every aspect of a building project from market research and land planning to marketing, sales and construction.
It’s not just the home buyers who become involved in the development planning, but the community as a whole can have a say in what sorts of amenities and homes are constructed and how much development is allowed. Town & Country plans to concentrate on smaller, more intimate communities of 200 or so homes rather than the 1,000 unit large tract communities of the past, and are particularly looking to redevelop in the older suburbs and explore urban reclamation.
