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BUYING OR RENTING? HERE IS YOUR 2018 REAL ESTATE STUDY

Florida has an attractive real estate market, whether it’s the prices, tropical temperatures, lower taxes and more. However, with so many incentives, there is the doubt: what neighborhood to buy? How is the market for renters? Bendixen & Amandi International, in collaboration with the Miami Herald, have surveyed about 100 brokers, agents, and analysts to help answer these questions.

For those who rent, Downtown Miami continues to be the number one choice. Those with tight budgets may consider the neighborhoods of Homestead, Miami Shores, and Kendal. Investors: pay attention to the Design District. Although it remains popular, Miami Beach buyers, have to watch out for inflated prices.

Below is a summary of the study:

 

Prices

When asked if prices are feasible for buyers, on a scale of 1 to 10, the answer was 7. A big difference compared to last year’s results of 4.6. According to the June report of the Miami Association of Realtors, the average price of a single-family home increased from $335,000 to $355,000 year-over-year. In condominiums, the average price rose 2.1%, from $235,000 to $ 240,000.

The positive result found in the research can be explained as an oversupply of unsold condos and a growing number of new rental buildings – two factors that should make sellers and landlords adjust their asking prices to remain competitive.

“You’re starting to see the repercussions of overbuilding,” said Peter Zalewski, founder of Cranespotters, a website that tracks condo development in South Florida. “The supply of rental apartments is going through the roof, and the cranes come down, rents are going to come down, too. And there’s a 32-month supply of condos in downtown Miami alone, so the only way you’re going to move to a condo in this market is to lower your price. ”

While in the luxury market, half of the interviewees said that the inventory is high and the market is stagnant. However, this is not everybody’s opinion. Daniel de la Vega, president of One Sotheby’s International Realty, for example, said that the properties are being sold for 15-20% less than the asking price but that they are being sold.

“You have seven months ‘supply in the million-dollar single-family home market and 70 months’ supply at the over- $ 10 million range, so there’s a lot of inventory,” he said. “But these properties are still selling, and the [luxury] market is going to continue to appreciate. It will just be at a normal pace, nothing drastic. ”

Location

The large number of apartments being built, approximately 4,800 new apartments for rent according to a study by Integra Realty Resources, and another 5,062 under construction explains why Brickell, Downtown, and Midtown are the top of the list of the most attractive areas to rent. For buyers, the winners are Coral Gables, Miami Beach, and Coconut Grove.

For the fourth consecutive time, Miami Beach was named an overvalued neighborhood with a median price per square foot of $520, according to Zillow. Brickell clocked in second at $ 497 per square foot, while the luxury enclaves of Sunny Isles Beach ($ 554) and Key Biscayne ($ 753) tied for third.

“Brickell has a majority of the properties that are condos,” a broker from Miami commented for the study. “They are always overvalued, because they are catering to offshore buyers.”

 

Is The Zero-Down Mortgage Loan Making A Comeback?

Buyers may soon be able to bring less to closing. They were blamed for precipitating the housing crisis years ago, but major lenders are giving no- and low-downpayment loans another shot.

Several major lenders are reportedly offering loans with just 1 percent down. Navy Federal, the nation's largest credit union, offers its members zero-down mortgages in amounts up to $1 million. NASA Federal Credit Union markets zero-down mortgages as well.

Quicken Loans, the third highest volume lender, offers 1 percent downpayment options, as does United Wholesale Mortgage. And the Department of Veterans Affairs has offered zero-down loans to eligible borrowers for many years.

Also, Movement Mortgage, a large national lender, has introduced a financing option that provides eligible first-time buyers with a non-repayable grant of up to 3 percent. As such, applicants can qualify for a 97 percent loan-to-value ratio conventional mortgage, which is basically zero from the buyers and 3 percent from Movement. For example, on a $300,000 home purchase, a borrower could invest zero personal funds with Movement providing $9,000 down. The loan also allows sellers to contribute toward the buyer's closing costs.

So far, the delinquency rates on these low- to zero-down payment loans have been minimal, according to lenders. Quicken Loans says its 1 percent down loans have a delinquency rate of less than one-quarter of 1 percent. United Wholesale Mortgages told The Washington Post that it has had zero delinquencies from the borrowers on its 1-percent down loan since debuting it last summer.

For Movement's new loan product, the lender will originate the loans and then sell them to Fannie Mae, which remains under federal conservatorship. Fannie officials released the following a statement:

"(We're) committed to working with our customers to increase affordable, sustainable lending to creditworthy borrowers. We continue to work with a number of lenders to launch (test programs) that require 97 percent loan-to-value ratios for all loans we acquire." They add that there "is no commitment beyond the pilots," which are "focused on reaching more low- to-moderate income borrowers through responsible yet creative solutions."

During the housing crisis, zero-down loans were among the biggest losses for lenders, investors and borrowers. However, housing experts say the latest versions are different from years ago. Applicants must now demonstrate an ability to repay what's owed. They also must have stellar credit histories and scores, and lenders require a lot more documentation to prove borrowers are in good standing.

Also, many of the programs are charging higher interest rates. For example, Movement's rate for its zero-down payment option in mid-June was 4.5 percent to 4.625 percent, compared with 4 percent for its standard fixed-rate mortgages.

Some critics say that the borrowers who really could benefit from such options aren't able to qualify for them. Paul Skeens, president of Colonial Mortgage Corp. in Waldorf, Md., told The Washington Post that "it seems like people without excellent credit scores and three months of [bank] reserves don't qualify."

Source: "No Down Payment? No Problem, Say Lenders Eager to Finance Home Purchases," The Washington Post (June 14, 2017)

If you have any additional questions or queries contact us at (954).944.2799 or emailinfo@DSALegalGroup.com

 

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact an attorney.