Real estate investing in Miami, Florida is a full time business where investors are constantly trying to maximize their profits and minimize their risks in other to generate wealth over time. Investing is a verified long term wealth creator. It is a numbers game and many of the transactions will not work but it is all worth it when one deal goes through and all your hard work is rewarded. It takes a lot of time and effort to effectively dominate the art of real estate investing. It is a risky business but it is the best way to create lasting financial security. Investing in Miami real estate is an excellent way to make a positive monthly income and built long term wealth and obtain financial independence.

Investors in Miami real estate have recently taken a beating and many have seen their investment properties lose value. An investor should not panic and sell in this market to avoid huge loses. Since it is a long term business an investor should realize that the time is now to rent the property and hold until the market turns around. If an investor requires a predictable and safe return on investment then investing in Miami real estate is not the answer. The business of real estate investing is very risky, and unpredictable but well worth the effort. An investor should consider buying foreclosures and bank owned properties. The Miami real estate market has hit bottom and it should be bouncing back very soon.

Miami real estate investing is different than various types of investing. An investor must overcome many roadblocks and obstacles. Usually finding financing is the single most overwhelming challenge an investor will face when trying to purchase Miami real estate. Using leverage in the business is common so arranging financing is very important. Do not purchase investment property with no money down. Little or no money down has caused many properties to go into foreclosure recently. Investing is not as perplexing, time consuming and financially draining as one might imagine.

Bank owned properties or Reo’s and Short Sales are a good way to start to look for a good deal in Miami real estate to purchase. The list of bank real estate owned (Reo) properties is huge. Not all banks want to discount properties so finding a good property to buy takes a lot of work and patience. Short Sales are the new trend in speculating in Miami real estate. Banks are not very eager to short sale their inventory and it takes usually about two months for the bank to accept or reject the offer. Government foreclosures are another to avenue to search. These properties include HUD, Housing and Urban Development, VA, Veteran Administration, FNMA and Freddie Mac. HUD homes are very popular and usually they will sell to the higher bidder in a weekly online auction. Investors are allowed to bid when the property does not sell to owner occupants. These HUD-FHA foreclosures properties are offer an excellent value. Foreclosures remain the best way for investors to start in the Miami real estate investing business since most of them have instant equity.

The best way to start investing in Miami real estate is buying foreclosures. The tremendous amount of foreclosures now in the Miami real estate market overwhelmingly gives the investor a lot of inventory to choose from in order to purchase the right property at a discounted price. This opportunity will more than likely never be available again and investors should take full advantage. An experienced Miami real estate agent who specializes in foreclosures is essential in order to guide the investor. The agent must have access to current bank owned REOs, foreclosures, short sale properties, pre-foreclosures government foreclosures and other distress listings. Investing in Miami real estate is a very exciting and rewarding business.

Mounting foreclosures are making it harder to clear inventories, keeping pressure on prices and discouraging new construction. The economy has yet to create the sustained job growth that could invigorate housing demand and is one reason Federal Reserve policy makers will keep interest rates near zero after their meeting today.

“There are still a lot of headwinds for builders,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm. “There’s enormous competition from distressed homes that’s weighing on demand for new housing. It’s going to be a very, very grudging recovery.”

The Commerce Department will report starts at 8:30 a.m. in Washington. Estimates in the survey ranged from 510,000 to 610,000, after a 591,000 pace in January.

At the same time, the Labor Department will release the import price gauge. Estimates ranged from a decline of 1 percent to a gain of 0.7 percent, following an increase of 1.4 percent in January, according to the Bloomberg survey median. Compared with a year earlier, the index probably rose.

Building Permits

The housing report may also show building permits, a sign of future construction, dropped for a second consecutive month, a sign the extension and expansion in November of a homebuyer tax credit is doing little to stoke demand. Permits fell 3.4 percent to a 601,000 annual pace, a three-month low, according to the survey.

A report yesterday showed builder confidence unexpectedly declined in March as prospective-buyer traffic fell to a one- year low. The National Association of Home Builders/Wells Fargo’s index of builder confidence dropped for the third time in four months.

The Standard & Poor’s supercomposite index of 12 builders, including D.R. Horton Inc. and Pulte Homes Inc., fell 0.9 percent yesterday. The broader S&P 500 rose less than 0.1 percent to 1,150.51.

Fed Meeting

Fed policy makers will leave the benchmark lending rate unchanged at zero to 0.25 percent, where it’s been since December 2008, according to the median forecast in a Bloomberg survey. They’re also likely to stick to their timetable of completing their plan to purchase $1.25 trillion in mortgage- backed securities at the end of this month that was part of an effort to drive down borrowing costs and revive the housing market.

President Barack Obama in November extended a tax credit of as much as $8,000 for first-time homebuyers, and expanded it to some current owners. The extension covers closings through June as long as contracts are signed by the end of April.

Bigger gains in housing sales ultimately require a pickup in job creation. Unemployment may end the year at 9.5 percent, according to a Bloomberg monthly survey.

Executives at Hovnanian Enterprises Inc., New Jersey’s largest homebuilder, are among those watching if demand will hold up after the incentive fades. The Red Bank, New Jersey- based company this month reported its first quarterly profit since 2006.

“With the tax credit for first time and repeat buyers expiring at the end of the second quarter, we too are interested to see if the positive momentum that we established can be sustained,” Chief Executive Officer Ara Hovnanian said on a conference call with investors on March 3. “We’re keeping a close eye on this as we head into the summer months.”

The U.S. housing market has been in a slump for the past four years. When will it ever end?

In recent years, real estate has proven as jittery and unreliable as any other market. The average U.S. home price nearly doubled between January 2000 and April 2006, according to the First American LoanPerformance index. Since then, the average has fallen about 30%. The drop has been 53% in the Las Vegas metropolitan area and 39% in Miami, where about a quarter of all households with mortgages are behind on their payments or in foreclosure. The value of your home might be determined more by whether the neighbors keep their jobs than whether the house has ample light and closet space.

Here is a guide to navigating a fractured and volatile market:

1. Is the housing market getting better?
It has shown some signs of healing this year, but the much-touted recovery is tentative and fragile.

Home sales have increased from the severely depressed levels of 2008. The inventory of unsold homes listed for sale also is down. Bidding wars are breaking out for foreclosed homes in the sorts of neighborhoods (near jobs and decent schools) that attract both first-time buyers and investors seeking rental properties.

But more than 6.7 million U.S. households with mortgages, or about 13%, are behind on their payments or are in the foreclosure process, according to the Mortgage Bankers Association. Eventually, many of them will lose those homes, sending more supply onto the market. Unemployment has continued to rise, and the housing market is unlikely to show a sustained recovery until job growth resumes.

While the supply of middle-class homes on the market has declined somewhat, it remains ample in most places. And there is a huge glut of high-end houses for sale in many areas. That means prices of high-end homes might still have a long way to fall.

2. When will housing bottom out?
There probably won’t be any clear turning point. Monthly indicators, such as home sales and prices, tend to bounce erratically from month to month, making it hard to discern the underlying trend. And the housing bust will end at different times in different places. House prices already might have bottomed out in the coveted Virginia suburbs with short commutes into Washington, D.C., for instance. But it probably will be years before all of the unsold condos find buyers in parts of Florida.

Generalizations about states or metropolitan areas don’t say much about what is happening in your neighborhood. In Summit, N.J., known for good schools and an easy, 45-minute train commute to Manhattan, the median home price in September was up 1.2% from a year earlier, according to Otteau Valuation Group, an appraisal company. In Atlantic City, N.J., which suffers from too much speculative building of condominiums and weak demand for vacation homes, the median price is down about 12% from a year ago.

3. What signals should I watch to determine whether my local market is improving?
One way to get a sense of supply is to ask a good local real estate agent for stats on how many homes are listed for sale in your town and how many months it would take at the current sales rate to absorb that supply. Anything over about six months generally is considered high, meaning that sellers might have to cut prices. Another way to get a sense of a neighborhood’s health is to count the number of for-sale signs and vacant houses. If there are more than a couple vacant homes in a block, that might be a bad sign, particularly if no one is taking care of them.

The supply of homes listed for sale has fallen very sharply in some areas. But the supply is likely to balloon again in many areas with a renewed surge in foreclosures. Many local newspapers provide information on foreclosure filings.

Demand depends heavily on the job market. The U.S. Bureau of Labor Statistics provides unemployment rates by metropolitan area. In September, they ranged from 2.9% in Bismarck, N.D., to 30% in El Centro, Calif. State and local agencies provide job-market data, too. Celia Chen, a housing economist at Moody’s Economy.com, says help-wanted signs can be a useful local indicator; if you start seeing more of them around your neighborhood, that is a sign that business in your area could be starting to recover.

4. How can I figure out the value of my home?
You never know for sure what a home will fetch until you put it on the market, and then it is partly a matter of luck. Will the eager buyer who shares your taste in home style and neighborhood show up on day one or day 200?

Some Web sites — including Zillow.com, HomeGain.com and Cyberhomes.com — provide estimates of individual home values. These estimates are largely based on recent sales of nearby homes, and in some cases they are wildly off the mark. But they often provide a ballpark idea of a home’s value.

You might come closer to the real value by talking to a local agent and looking at recent prices for homes that you know are very similar to yours. If you want to be more scientific and don’t mind paying a few hundred dollars, hire a professional appraiser.

5. Does it matter whether I’m “under water”?
At least you have plenty of company. About 20% of owners of single-family homes with mortgages owe more than the current estimated value of their homes, according to Zillow.com.

If you can afford your monthly payment and don’t need to move soon, that might not be a big problem. But it is hard, and sometimes impossible, to refinance a mortgage if you are under water, and you will take a bath if you have to sell the home now. Some people who can afford to make their monthly mortgage payments are deciding it doesn’t make sense to do so because they don’t expect their home values ever to recover to past peaks, and they could rent similar houses for much lower monthly costs.

6. If I lose my home to foreclosure, how long will it take to repair my credit record?
It probably will be three to five years before you can qualify for a home mortgage insured by the government, depending on your circumstances, and that assumes you have re-established a record for paying your bills on time. The foreclosure will remain a blot on your credit record for seven years, likely raising your interest costs even if you do get another loan. If you pay bills on time, keep your credit-card balances low and don’t apply for too many cards, you can make a “slow, gradual improvement” in your credit score, says Tom Quinn, a vice president at Fair Isaac Corp., which provides tools for analyzing credit records.

7. If I’m renting, is now a good time to buy a house?
It may well be. Prices in most areas are well below their peaks, even if they haven’t hit bottom. Don’t kid yourself that you can time the bottom of the market perfectly. But don’t feel any pressure to buy in a hurry, because the supply of housing is likely to remain ample for years in many areas.

Generally, it doesn’t make sense to buy unless you expect to remain in the house for at least four or five years, because the transaction costs — including commissions for real estate agents and mortgage fees — are heavy.

But now is clearly a good time to rent. Many landlords need tenants badly. The national apartment-vacancy rate in the third quarter was 7.8%, the highest in 23 years, according to Reis Inc., a New York research firm. So landlords are cutting rents and offering such sweeteners as free flat-screen televisions or several months of free rent to retain or attract tenants. Some owners of condos will “cut their throats to get some kind of rental income to cover part of their expenses,” says Jack McCabe, a real estate consultant in Deerfield Beach, Fla.

8. Can I get a tax credit if I buy a home now?
Under an expanded and extended program approved by Congress earlier this month, tax credits are available to many people who buy or sign a contract to buy a principal residence by April 30 and complete the purchase by June 30. The tax credit is up to $8,000 for first-time home buyers and $6,500 for people who already have owned a home for at least five consecutive years during the previous eight years. The credit is available for individual taxpayers with annual incomes of up to $145,000 or joint filers with incomes up to $245,000.

9. Can I get a mortgage on attractive terms?
Only if you have a good credit record, a moderate amount of debt in relation to your income and the ability to fully document your income. That last requirement is fairly easy for people who work for a salary and have had the same employer for more than two years, but it can be tough for self-employed people with incomes that vary substantially from year to year.

A borrower with a strong credit score of 740 or higher (on the scale of 300 to 850) and the ability to make a down payment of at least 20% could get an interest rate of about 5% with no origination fees on a 30-year fixed-rate mortgage, says Lou Barnes, a mortgage banker in Boulder, Colo. But if your credit score is 680, the rate jumps to about 5.5%.

People who can’t make a down payment of at least 20% generally are being funneled into loans insured by the Federal Housing Administration. That means paying extra fees for the FHA insurance.

Borrowing costs are steeper at the high end of the housing market. For so-called jumbo loans — those above $729,750 in areas with the highest housing costs or $417,000 in places with the lowest costs — interest rates on 30-year fixed-rate mortgages last week averaged 5.95%, according to HSH Associates, a financial publisher.

10. Should I invest in foreclosed homes?
Probably not. A lot of investors chase these properties, and only the most experienced know how to deal with all of the pitfalls. Homes auctioned at trustee or sheriff sales are sold on an as-is basis, and there is no provision for an inspection before you take ownership. If after buying you find out that termites have been treating the floor joists as an all-you-can-eat buffet, that is your problem. You must pay for the full price within a day or two, so you need a lot of cash or access to special short-term loans for investors that come with interest rates of around 18%. This is a pursuit best left to people with a lot of time, nerve, cash and knowledge of the local market.

Those words mean researching all the risks involved in a property purchase, which in the past meant extensive legwork and expense. But that’s no longer the case, thanks to exponential advances in information technology and the establishment of Web-based property data aggregators like RealtyTrac.

Don’t be fooled – buying a foreclosure property doesn’t equate to easy money by any means. A savvy player in this market is willing to do a bit of homework. But the tools and resources needed to do that homework are much more accessible now than ever before.

“While buying a foreclosure property is certainly not without risk, the right examination and due diligence on the part of buyers can significantly improve their ability to make a strong investment,” explains James J. Saccacio, chief executive officer at RealtyTrac, the leading online foreclosure marketplace.

Web-based services like RealtyTrac can help investors and homebuyers tap into the previously hidden foreclosure market by providing access to property data formerly available only to professional real estate brokers and investors. Today, homebuyers can use these services to identify and research potential home purchases, as well as to find the tools and professional resources they need to help them close the deal.

It makes sense to give any foreclosure property under consideration a thorough examination – possibly even more thorough than for a traditional real estate property. There are three stages of foreclosure that require different research strategies: pre-foreclosure, auction and bank owned.

Before buying a pre-foreclosure property directly from the owner, run a preliminary title check for all debts secured by the property. You can research the title online using RealtyTrac’s Legal and Vesting Report or Transaction History Report. Subtract the total amount owed from the estimated market value to determine the potential bargain. After making contact with the owner, arrange a walk-through of the property to evaluate its condition. Factor estimated repair costs into your purchase offer. Before you close the deal, hire a professional home inspector to inspect the property and enlist a title company to run a final title check.

In most states, you don’t have a chance to inspect a property before buying at a public auction, which makes this type of purchase more risky. But if you’ve researched the title and determined the amount owed is far less than the market value, you’ll have some margin to cover unexpected repair costs. Before you go to the auction, set a maximum bid based on your research and stick to that bid at the auction.

Although you’ll be able to inspect the property if it’s bank owned, the bank typically knows little about the property and will sell it in as is condition. This means the bank will disclose all the needed repairs it knows about, but is not held responsible after the sale for any repairs it did not know about. Factor the known repairs into your purchase offer and have a professional inspection conducted before closing the deal. You should also have a title company run a final title check before closing, although most banks will make sure the title is clear before selling.

Here are eight steps for doing a professional-level property examination for all stages of foreclosure:

Identify desirable neighborhoods – Find specific neighborhoods where you would like to live or own a home. This will limit the search to a manageable size for you and your agent, and give you a sense of relative property values.

Cast a wide net – There are a number of Web-based services like RealtyTrac that can put hundreds of thousands of foreclosure properties at your fingertips. But remember, the best savings are often found in pre-foreclosure properties; therefore, it’s important to check the percentage of pre-foreclosure (vs. REO) properties in any database before subscribing.

Determine the property value – Look at the original purchase price and recent comparable property sales to determine the current value of the property. You can obtain information on recent sales in the area via Multiple Listing Service (MLS) comps from your realtor or by ordering a report such as RealtyTrac’s Comparable Sales Report. Ideally, you should look at comparables sales in the area over the past six months. Then you can drive by each property on the list of comparables and note its condition, size, appeal and location. You should also look for properties that are currently listed for sale in the area and research the same information for them. From this information, you can get a good idea of what the property you are interested in is worth.

Find out the amount in default and the remaining loan balance – In order to determine a reasonable offer price, you’ll need to know at a minimum how much money it will take just to satisfy the debt to the lender. This information is available on the foreclosure documents filed by the foreclosing lender and from online foreclosure-tracking websites like RealtyTrac.

Check for other liens – Before purchasing any foreclosure property, make sure it is free and clear of any bankruptcies, tax liens or other financial liabilities. A title search will examine records used to determine the legal ownership of the property and all liens and encumbrances on it. A title company or attorney can run a title search for you. You can also research the title online using RealtyTrac’s Legal and Vesting Report or Transaction History Report.

Assess the condition of the property – In addition to visiting the property yourself, hire a professional inspector to inspect the property to make sure that the property is in acceptable condition, or to determine how much of a rehab budget you’ll need to build into your deal. If you buy during pre-foreclosure or directly from the bank (REO), it’s usually possible to conduct a thorough inspection. But if you buy at the public auction, it may not be possible to view or inspect the property beforehand.

Build a positive relationship with the seller – Before purchasing a property, try to make sure that you’re entering into a win-win situation with the seller, so that they’ll be more willing to do what they can to make the process easy and leave the property in good condition for you.

Leverage your timing – Knowing when a property is going to be auctioned gives you an extra bargaining chip when negotiating with a seller or a lender. You can sometimes contact the seller just before the auction to see if a last-minute sale is possible. At the very least, knowing the intended date can help you organize time to research the property as much as possible, review comparable sales, calculate values and potential profits and ultimately determine a bid price so that you’re well prepared to compete with other investors on auction day.

It’s sometimes said that in real estate, selling is about business while buying is controlled by emotion. While this may generally be true, it’s important to keep your head about you and think through the process so that you can make the most informed decision possible. Remember, a little preparation before the sale can help you reap huge benefits. So, it’s worth your time and energy to do a little homework!

Add in the fact that shares of the publicly traded REITs that own roughly 15% to 20% of all commercial properties in the U.S. have appreciated nearly 100% since March and it’s hard to find a compelling reason to buy any of these stocks right now. The MSCI U.S. REIT Index jumped 96.6% from Mar. 9 to Nov. 17.

Investors need to know, however, that the prospects for the public REITs are dramatically better than those of their privately held counterparts. That’s because the public companies financed acquisitions at lower grades of leverage during the commercial real estate boom a few years ago, while private developers took out mortgages on properties at up to 90% loan-to-value ratios. The more highly leveraged players have been left with underwater investments following property value declines of 30% to 40%.

The question of survival for most of the 99 publicly traded REITs that BMO Capital Markets covers is largely off the table because these companies have proved that they can access the capital markets, says Paul Adornato, BMO’s senior REIT analyst.
DDR’s mortgage-backed securities win
This year, publicly traded REITs have raised over $20 billion through equity offerings and an additional $7 billion through unsecured debt offerings, according to John Wenker, co-manager of the First American Real Estate Securities Fund (FARCX).

In addition to better capital market conditions, the long-dormant commercial mortgage-backed securities (CMBS) market has begun to show new signs of life. On Nov. 16, Developers Diversified Realty (DDR) successfully sold $400 million in bonds guaranteed by 28 shopping malls in 19 states. Aided by the federal government’s asset-backed securities loan facility (TALF), which lets investors borrow from the Federal Reserve to buy new CMBS, the offering was oversubscribed and priced at a lower premium than expected over comparable Treasury bonds.

The prospect of additional CMBS offerings under the TALF could help put a floor under commercial property values, reducing the flow of foreclosures to come.

“If the securitization market for commercial real estate starts to open up in return, it will be a dramatically positive catalyst for not only public real estate companies, but the [entire] commercial real estate sector,” including privately held properties, says Wenker. Just how distressed the market gets remains to be seen over the next year or two and will depend largely on the state of the economy and the capital markets, he adds.

Adornato at BMO doubts the DDR deal will unleash a flood of CMBS deals, although two other trusts are exploring offerings of their own.
a big drop in maturing unsecured debt
Three weeks before DDR’s breakthrough, Credit Sights predicted that the majority of REITs it covers will have enough cash and credit capacity to meet all unsecured debt obligations, at least through 2012.

Credit Sights noted that many REITs have used proceeds from equity offerings over the past three quarters to pay down maturing unsecured debt. “We are giving our companies credit that they can refinance their secured debt without having to kick in a significant amount of additional equity,” or that they can mortgage unencumbered assets to raise cash to pay down secured debt that’s maturing in the short term, certified financial advisor Craig Guttenplan wrote in an Oct. 25 report.

BMO has a neutral rating on REITs overall. That’s based on how the high valuations compare not only with the March lows, but with historic levels. Adornato expects REITs to perform only as well as the stock market as a whole.

One group he sees as fairly cheap, however, are industrial REITs that own and operate warehouses used by distributors. The need for U.S. companies to replenish drawn-down inventories of goods and an expected pickup in international trade as the economy recovers will drive demand for these warehouses, he says.

A BMO favorite: Duke Reality
Although Adornato isn’t optimistic about factory-sector fundamentals, he believes that the industrial real estate market could turn around quickly. “Industrial space tends to be less overbuilt than other property types that are more generic in nature and relatively quick to construct, like malls or office buildings,” he says,

Among Adornato’s favorites is Duke Realty (DRE), which owns warehouses and suburban office parks. Demand for office space will probably remain soft, but Adornato likes Duke’s management, mix of tenants from diversified industries, and market strategy. The shares trade at 14 times estimated adjusted funds from operations (AFFO) in 2010, a nearly 23% discount to the overall REIT average of 18.1 times 2010 AFFO.(AFFO, a measure of operating profitability for REITs, is equivalent to free cash flow.)

First Potomac Realty Trust (FPO) is a small-cap company specializing in industrial space and real estate that can be adapted for either industrial or office use. With 60% of its properties located in the greater Washington metropolitan area, First Potomac benefits from economic stability around the capital, which is bolstered by the growth of government programs, Adornato says. The stock trades at 11.6 times estimated 2010 AFFO, a 36% discount to the average REIT.

DCT Industrial Trust (DCT), which has traded publicly for less than five years, has been overlooked by a lot of investors, according to Adornato. The stock is trading at 15.4 times estimated 2010 AFFO, a 15% discount.

One of the top five holdings in Wenker’s fund is Public Storage (PSA), which benefits from diversity in its large national portfolio of self-storage properties. In addition to considering the company well-run, Wenker likes that Public Storage has financed acquisitions by issuing preferred shares in lieu of debt. Although the preferred stock carries a higher coupon than secured debt, it need never be paid back because it’s perpetual, he says.
will U.S. consumer spending recover?
Wenker concedes, however, that unlike in previous recessions, self-storage has proved to be less resistant to this downturn.

Adornato says he’s reluctant to recommend REITs that focus on retail properties because he’s not certain that discretionary spending by U.S. consumers will return to pre-financial-crisis levels.

While many retailers have been adept at managing inventories and cutting costs, he expects to see a further wave of bankruptcies among weaker merchants after the holidays. Another concern is whether the smaller mom-and-pop retail tenants in shopping malls think nail salons and pizzerias have nearly depleted their personal savings to keep their businesses going during the recession. With few reserves left, Adornato asks, might they have to shut down?

Instead of the wave of commercial property liquidations that some economists anticipate as followed the savings & loan debacle in the early 1990s Adornato thinks liquidations will “probably be much more limited both in terms of volume and discounts.”

Of the $300 billion worth of commercial mortgages slated to mature in the next two years, he believes roughly $75 billion of them, or 25%, will end up being liquidated.

For now, investors who expect bargains to gleam among the rubble once that happens might want to consider buying well-capitalized REITs long before the recovery takes shape.

A foreclosure is a serious deal. Sure the value of the home is half of what it was when you took out the mortgage, but if you lost it, your credit record would be affected and of course you would have to look for a new place to stay. While the value of the home may have dropped, that does not mean it will not rise once again and likewise no one wants to deal with the credit record issues which would prevent you from purchasing a new home.

If you do not want to loose your home to foreclosure, you do not have to. A number of specially designed lending programs have been available to prevent any further foreclosures. You just need to realize that these programs are meant to help you to keep your home. Once you have decided to put forth the effort to find out more about these specially designed foreclosure programs, you will realize their importance.

They will help you to reduce your monthly payments and lower your overall interest rates. Not to mention the most important part which is to help make sure that you are able to keep your home and handle all of the payments. This will and does help many people every single day. Stop your foreclosure and stay in your home simply by choosing to take advantage of these specialized lending programs which have only been made available to help stimulate the economy and prevent further collapse of lending institutions around the nation and prevent further foreclosures from happening.

In the end though, the choice will be up to you. Of course you will have to qualify for these special programs that will help prevent your foreclosure and allow you to stay in your home. If you are still making the same income as you were before the recession and have not been affected as much as many others, then the chances of you qualifying for loan restructuring will be slim to none; but if you are like the countless families all over the nation who have felt the effects of the economic recession, been laid off, lost your job completely or worse, then you may actually qualify for it and be able to keep your home.

Goddard, manager of RE/MAX Marquee Partners in Manhattan Beach, began selling real estate 35 years ago, specializing in residential properties, residential income properties and commercial buildings. Goddard also is a developer and a licensed general contractor. During the past 28 years, he has consistently ranked among the top 10 agents in his company’s group of more than 400 agents.

Over the past 17 years, he has chaired or served on myriad committees and forums at the local, state, and national association level. As president of CAR, one of Goddard’s goals is to shed light on housing-related issues, including the rights of private-property owners, and housing affordability.

Us: What are the biggest challenges facing you in your year as C.A.R. president?
The issues that the real estate industry currently is facing – Home Valuation Code of Conduct (HVCC), the economy, the amount of foreclosures, bank-owned properties, and short sales on the market-will continue to be a challenge throughout next year.

It’s going to be important that the Federal Reserve keeps loan rates where they are and that Fannie Mae and Freddie Mac remain intact and viable. The purpose of Fannie and Freddie is to provide capital to lenders so they can issue home loans to qualified buyers in any market. We also need to work with the jumbo lenders to make it easier for high-end buyers to obtain financing.

Although the creators of HVCC were well intentioned, the code is negatively affecting real estate sales transactions. The cost of appraisals has risen; valuations have differenced dramatically from perceived market values; a rising number of alleged factual errors have been reported in appraisals; the completion of appraisals are being delayed by several days or even weeks; and appraisers from as far away as 40 miles are being assigned to conduct valuations in unfamiliar neighborhoods.

Us: What’s the outlook for the housing market in Southern California and Orange County as you see it?
I think that the markets in Orange County and Southern California in general will be pretty much what we’ve seen over the past few months-sales should maintain their current levels through most of next year and first-time buyers and investors will continue to drive the market.

Specially in Orange County, I think home prices hit bottom in early 2009, like so many other parts of the state, but that we may see an off-season dip before seeing modest appreciation in 2010. Any price increases will be determined by low inventories, low mortgage rates, and tax credits. Distressed sales will likely make up a smaller part of total supply and more discretionary sellers will enter the market.

Us: Has the market hit bottom?
When you look at the data from C.A.R., you’ll see that the median price has risen eight straight months and that prices bottomed out in February of this year. First-time buyers and investors are driving the market, and sales continue to be up year over year. Once perceptions shift and the public realizes that the market has indeed hit and passed bottom, the market can move in tandem and activity will respond accordingly.

Us: Realtor membership has been falling steadily. Do you expect that to continue in 2010, and if so, how far will membership drop?
Historically, Realtor membership has followed the same trend lines as the housing market. When the market is up, so is membership and when the market is down, membership is too.

As with any business during an economic downturn, there typically is a contraction, and real estate is no exception. Membership has been and continues to be a lagging indicator. In 2006, when the market declined sharply, California Realtor membership dipped slightly.

Us: Looking back, what role do you think Realtors may have played leading up to the economic meltdown? Is there anything CAR or Realtors could have done differently? Is greater enforcement the answer or does the Realtor Code of Ethics need revising?
Many of the safeguards that should have been in place to protect consumers weren’t there until it was too late.

It’s important that consumers educate themselves about their creditworthiness, loan rates and terms, and their ability to repay a mortgage. Every situation is different and consumers should decide on which housing scenario best matches their financial state.

Us: How has this four-year-old housing slump changed the real estate profession and the industry? How will the industry be different after the slump is over?
I think the major change we’ll see is that successful Realtors now active in the industry are serious, more focused, and more committed. For the most part, those who were less serious about real estate as a profession have left the business.

Business models and brokerage types may vary, but the value that a REALTOR?? brings to the transaction will continue to be the deciding factor when a consumer decides to purchase home.

Consumers should weigh the value each business model provides, whether it’s a discount brokerage, an online/virtual broker, or a traditional full-service brokerage, and determine which model and level of service best fits their individual situation.

New sales of single-family homes came in at a seasonally adjusted annual rate of 352,000 in April, down 0.3% from a downward-revised 351,000 in March, but 34% below the April 2008 estimate of 533,000, according to the U.S. Census Bureau and the Housing and Urban Development Dept.. But new home sales are down from 362,000 in February. The median sales price of new houses sold was $209,700, down almost 15% from a year ago.

One reason for the month-to-month improvement in the housing numbers for a couple of months earlier this year was the moratorium placed on foreclosures by many banks from November through February, says Robert Stevenson, an analyst at Fox-Pitt, Kelton Cochran Caronia Waller in New York. But since then, foreclosures have continued to rise, causing home sales to plateau.

Some of the positive data points have proved not to be sustainable, he says. “You haven’t seen as many sales as you would like coming out of the spring homebuying season and the very low mortgage rates and some of the tax stimulus,” he says. Still, homebuilders are feeling more optimistic. The National Association of Home Builders’ housing-market index, which measures both current and future sales conditions, climbed two points, to 16, in May after a five-point increase in April.

The “Better Areas” Are Going to Get Hit

Economists would like to believe the recent data indicate that the housing market has touched bottom, but prices have further to drop to reach some analysts’ peak-to-trough estimates of 43%. John Burns, a real estate consultant who advises major homebuilders, believes the median home price will fall an additional 5% or 6% and that will be the end of it. “The worst areas have been hit very hard” since that’s where most of the distressed selling has been, he says. “It’s the better areas that are going to get hit over the next 12 months” as foreclosures mount in those areas.

In Phoenix, which has experienced one of the worst drops in home prices from their peak of any U.S. city, sales-office traffic jumped 55% in the three months through the end of April after 11 consecutive quarters of decline, according to Jim Belfiore, president of Belfiore Real Estate Consulting, a market research firm in Phoenix. Traffic is a leading indicator of where home sales are headed, he says.

Builders’ sales in that area have at least tripled in the past 30 days, due to a big drop in prices from January through early March that narrowed the premium over prices of foreclosure properties to just 15% in most local sub-markets, says Belfiore. Meanwhile, the latest S&P/Case-Schiller data show prices of foreclosures on Phoenix’s multiple listing service up an average of $5 per square foot over the past 30 to 40 days, with demand currently outstripping supply.

Phoenix is being looked at as an indicator of what the nationwide housing market could look like 12 to 18 months from now, he says. The land and lots that most of the publicly traded homebuilders own in and around Phoenix comprise a significant portion of their total holdings, he adds.

Bottom-Fishing in Phoenix

Stevenson at Fox-Pitt characterizes most of those buying homes in Phoenix as “bottom-fishers” who are taking advantage of the supply glut that’s pushed prices to bargain levels. Other reasons the market has attracted buyers: Phoenix is likely to produce one of the higher levels of job growth over the next 10 years, and its climate makes it a preferred retirement destination, he says.

Belfiore concedes that a large percentage of the recent sales has been by investors rather than people planning to move in immediately, and most are resales of foreclosure properties. The majority of new-home sales have been by first-time home buyers, motivated by the federal tax credit of up to $8,000, which is set to expire in November.

The expected increase in foreclosures over the next few months will force homebuilders to lower prices on new homes to be able to compete. Builders who own the land end up building a house and selling it at a price that results in a negative margin just to get the money out of the land, says Stevenson. Normally, however, rather than build at a negative margin, companies will take an impairment charge, marking down the value of the land to where they can afford to sell the houses for less without killing their margins.

Generally, the bigger homebuilders are still reporting impairment charges between $100 million and $400 million per quarter this year, including the cost of walking away from options on land they don’t own and goodwill remaining from past acquisitions, he says.

More foreclosures than new homes

Metrostudy, a national housing market research firm in Houston, is still projecting 490,000 U.S. housing starts for 2009, below the 520,000 to 550,000 forecast by many general economists. Brad Hunter, chief economist and national director of consulting at Metrostudy, recently cited three reasons for the low level of starts: the inventory overhang builders are trying to work off, denial of credit by some builders’ banks even if they’re current on their loans, and the depressed price levels that make it hard for some builders to sell homes profitably.

Housing inventory fell to 10.1 months of supply from 10.7 in March and was well below the peak 13 months of supply, After a couple of strong months, there was a lull in purchases of homes priced between $150,000 and $200,000, which had had the strongest growth, Goldman Sachs said in a May 28 research note. The key to further paring excessive housing supply is a slowdown in foreclosure filings, which Goldman doesn’t see as likely. In March, foreclosure filings were 15% higher than the total inventory of new homes for sale, Goldman said, citing RealtyTrac data.

Do stock-market pros like any names in the battered industry? D.R. Horton (DHI) is one of the stocks favored by James Wilson, an analyst at JMP Securities in San Francisco, who rates it as outperform. He said he expects the company to be among the first to return to profitability starting in fiscal year 2010. “Over 50% of its customers are first-time home buyers, who will be the first, in our view, to enter the market as prices begin the bottoming process and sales start to pick up in certain markets,” he wrote in a May 6 research note.

D.R. Horton had $1.5 billion in cash at the beginning of May and said it was terminating a $275 million revolving credit line due to lack of anticipated need, and as a result saving $3 million in annual non-use fees. The company generated $161 million in operating cash flow in the second fiscal quarter and $978.6 million for the first six months of fiscal 2009. “This puts Horton in a very favorable position to capitalize on attractive land deals as banks and private builders begin to unload assets on the cheap,” Wilson said in his note.

While the company said it’s trying to work down current inventory and is not considering any joint-venture deals, at some point land will become too cheap to ignore, Wilson said. After two straight quarters of impairments below $60 million, the company is nearing the end of its impairments, he said. He expects an additional $65 million in impairments for the current fiscal year, which should bring Horton’s assets close to being in-line with current market values. However Credit Suisse analyst Daniel Oppenheim is less optimistic about the stock, which he rates as underperform, citing risk from mounting foreclosures.

- Pre-owned, single-family home sales in North Texas dropped nearly 25 percent in May from the previous year, according to the North Texas Real Estate Information Systems Inc. and the Texas A&M University Real Estate Center.

- These sources also reported that May saw the lowest home sales since 2000.

- Median home prices in the North Texas region are down about 4 percent this year, to $139,500.

- Condominium sales in North Texas were down 33 percent for the first five months of 2009.

As sales continue to decline, analysts are closely looking for signs that the market is finally leveling off. Although there are certainly different viewpoints and opinions regarding when this will occur, most analysts agree that both consumer confidence and the job market in the Dallas-Fort Worth metro area need to show signs of improvement before the real estate market can begin balancing out.

Another interesting point is that luxury homes, valued at $1 million or more, were also down a whopping 45 percent for the first, five months of 2009, showing that the recession and housing market slump has affected all classes.

Homes on the market continue to decrease, as well, indicating that many homeowners are simply looking to ride out the storm and list their home when sales begin to pick up. As of May, there were about 40,000 homes listed on the MLS, which is a 10 percent decline from a year earlier.

And Lest we Forget the Sub-Prime Mortgage Mess

There’s one thing for certain: the subprime mortgages are stilling coming back to haunt North Texas. There seems to be a large chunk of homeowners still struggling with their prime adjustable-rate loans. And, although many of the subprime adjustable-rate mortgages have just about finished wreaking havoc on the market, the next round is set to hit, and it doesn’t look good.

We all know what that means – foreclosures. The Dallas Forth Worth area – and for that matter the rest of the country – is still seeing foreclosure numbers hitting historic highs. To give you a good idea of the gravity of the foreclosure mess, consider that there are more than 6,000 homes in the Dallas-Fort Worth area scheduled for foreclosure in July alone, according to the Addison-based Foreclosure Listing Service.

Don’t Count out Dallas Just Yet

There are bright spots on the North Texas real estate horizon. While other parts of the country that experienced a real estate bubble of extraordinary portions, such as California and Florida, are expected to continue to struggle well through 2009 and beyond, many parts of the country – many located in Texas – are expected to recover sooner than later.

Just some of the areas expected to bounce back from the recession and housing market slump are Dallas, Austin, San Antonio and McAllen. The healthy economy of Dallas and other Texas cities comes from its growth in the health care and education sectors.

Luckily, these Texas cities never experienced the housing boom like other areas of the country, and it’s a good thing; for that’s exactly what is propelling them toward a swift recovery.

The Federal Government under Obama’s direction implemented a Making Homes Affordable Campaign, which is designed to help homeowners stay in their homes by lowering monthly payments either by a reduction in interest rates or an extension on the length of the loan. The overall goal of the program is to stabilize home prices which would in-turn enable the economy to recover. Unfortunately, the program has had minimal impact especially in the hardest hit states of California, Nevada, Arizona and Florida.

According to Irvine, California’s Realty Trac, Inc.’s CEO James J. Saccacio, ‘In spite of the industry wide moratorium earlier this year, along with local, state and national legislative action and increased levels of loan modification activity, foreclosure activity continues to increase to record levels.????? Riverside County with the highest foreclosures has 6% of all households in some stage of foreclosure.

There appears to be multiple issues impeding the plan. Included are :

- Consumers are confused and don’t fully understand the program. Many think that in order to qualify, they have to be behind in their payments.
- Lenders are overwhelmed with the number of requests and do not have the staff to adequately handle the volume.
- Declining home prices and equity make it impossible for homes to qualify for the loan modifications.
- Rising interest rates have hindered some of the loans.
- Unemployed homeowners with limited or no monthly income cannot qualify.

For these types of situations, foreclosure may be the only realistic choice.

Recently there has been an increase of people who can afford their house payments but due to declining equity have elected to just walk away from their homes. A study by the University of Chicago and Northwestern University found that about 26% of foreclosures were calculated economic decisions due to negative equity positions. In Salinas, California people who bought their home near the peak of the market can buy the exact same house across the street or next-door for $214,000 less than what they paid for theirs.

Another issue is the number of fraudulent counselors or scammers that are rapidly growing. They charge large sums of money from unsuspecting victims under the guise of?? ‘guaranteeing’ a loan modification. The California Department of Real Estate has filed Desist and Refrain Orders to over 750 various firms and individuals.

July 28, 2009 the Treasury is planning to meet with 25 of the largest mortgage service companies to examine year-to-date results and determine ways to improve results and efforts.

New programs and incentives are being considered by the Obama administration. July 1, 2009 the administration decreased the home loan to value from 95% to 75% with the hope that more homeowners would qualify. In addition, they are looking at a program to help the unemployed by potentially giving them more time and financial leeway to qualify for a new loan or loan modification. With 11.2% unemployment rate, this program would have an impact on California.

There have also been talks about allowing people to stay in their homes and rent from the lender – basically turning lenders into landlords. The initial plan under discussion is to allow the government to make the house payments through housing stipends as unemployment benefits.

Under the previous program, 50% of the homeowners that renegotiated their mortgage feel into foreclosure within 6 months. What remains to be seen with these new efforts is will Californians and other homeowners stay in their negative equity homes.