Gregg Cook Newsletter: Time will tell how this market adjusts

By October 31, 2022Uncategorized

I am offering this new Quarterly Newsletter to keep my clients, friends, and real estate associates informed about developments in the real estate market. My goal is to keep this short (hard for me!), informative and to the point.

Updates

I have rebranded my website and the marketing to Gregg Cook Real Estate. My new website is www.greggcookrealestate.com. You will see some exciting options which include an online home appraisal calculator, a preferred vendor list and a link to my You tube Channel. Our hope is that consolidating everything to one area will be easier for you. I welcome your feedback and we are still making improvements.

Recently, I have expanded my territory in our beautiful state. I am actively serving clients from Fort Pierce to Key Largo. While this is a large area, this year 50% of my business involves people from Southeast Florida purchasing properties on the west coast of Florida or the Treasure Coast.

Overview

Dramatic changes are taking place in our economy. Inflation is hitting record highs, which has caused the Federal Reserve to make significant increases in the interest rate in an attempt to down the economy.

I asked Tonya Quarequio, owner of Celebrity Mortgage Corporation in Fort Lauderdale, NMLS 206978, to weigh in on the anticipated increases. Her response:

“While interest rates have climbed at an unprecedented pace over the last three quarters of this year, the positive side is this has opened doors to homebuyers who were literally shut out before. Sellers seem more amicable to negotiate purchase prices than we have seen over the last year, as there are fewer buyers able to qualify at the current higher interest rates. Additionally, even those that qualify are weighing their options to purchase now or take a wait and see approach.”

To this point, lenders are rolling out new programs like the 2/1 buy down to assist homebuyers in obtaining lower interest rates initially. A 2/1 buydown is a type of financing that lowers the interest rate on a mortgage for the first two years before it rises to the regular, permanent rate. The rate is typically two percentage points lower during the first year and one percentage point lower in the second year. How much does these costs? It's estimated that the rough average cost of the 2/1 buydown is 2.5 percent of the total loan amount. In many cases, though, buyers are able to get the seller to pay for the buydown as part of the selling arrangement with a seller concession. This is just one of the programs my team and I can assist homebuyers with.

To this point, lenders are rolling out new programs like the 2/1 buy down to assist homebuyers in obtaining lower interest rates initially. A 2/1 buydown is a type of financing that lowers the interest rate on a mortgage for the first two years before it rises to the regular, permanent rate. The rate is typically two percentage points lower during the first year and one percentage point lower in the second year. How much does these costs? It's estimated that the rough average cost of the 2/1 buydown is 2.5 percent of the total loan amount. In many cases, though, buyers are able to get the seller to pay for the buydown as part of the selling arrangement with a seller concession. This is just one of the programs my team and I can assist homebuyers with.

Summary of our Current State

Time will tell how this market adjusts. Further, in Florida the normal rules don’t always apply because of the demand and desire to live here. The substantial number of cash buyers who have come into Florida from all over the world creating comparable sales which have contributed to higher prices. Another issue which could impact our housing market – Wall Street and many corporate offices are bringing their staff back to work in the office (either full time or limited days per week). Over the past two years, the need for a home office was paramount and the remote scenario gave workers the option to live miles away from their job location. It will be interesting to see how this return-to-the-office trend may further affect our South Florida market.

Inventory & Days on Market have both increased in South Florida. The number of cash buyers has leveled off and the multiple offer scenario has diminished. Homes are taking longer to sell. Buyers, concerned about inflation and financial issues, are taking their time to offer. The National Association of Realtors reported that Prospective Buyers have canceled or withdrawn 3.1% of all accepted offers. Sellers are realizing the sellers’ market is over, the property must be in good or better condition and appraise to market conditions. Prices are currently stable with the beginnings of corrections.

Why use an experienced Realtor? – A short example…

My recent client is a first-time homebuyer and wanted a townhouse in Boynton. We found her a property which on the MLS was priced $30k lower than recent sales, plus it was on the water and updated. Two recent comparable sales were significantly higher but were original condition. Thinking there was some problem with the property, we scheduled a Showing and discovered it was beautiful, clean and updated. We inspected and negotiated some concessions with the buyer on minor items. We made an offer, which was accepted within 24 hours.

The Seller said that she listed the house with a friend who was a realtor and needed the commission money; that the comparable sales did not matter. Her reliance on a realtor who was not focused on her best interest resulted in a great purchase for my client – the net result is my client had substantial immediate equity on closing.

Final Thoughts …

If you are thinking of purchasing or selling real estate, you need a focused plan, which includes taxes and insurance estimates. Let me help you develop a plan to identify the right deal that makes sense for you. Should you have an interest in investing in real estate, there are properties on the market which can produce a consistent 6 % to 9 % ROI. Let me know if you are interested in discussing this option.

I want to thank you for working together; I am always here for you as a resource. The greatest compliment is getting a referral. Please keep me in mind for friends or colleagues you may have who could use advice or representation in real estate. I will work hard to provide value.

I wish the best to you and your families in the coming months. Have a happy and healthy holiday season.

greggcook

Author greggcook

I have in depth local knowledge and can provide you with the information you need on home buying, home selling, financing and owning real estate in Fort Lauderdale, FL. RE/MAX CONSULTANTS REALTY I provides a wide range of real estate services and utilizes the most current technology, processes and systems to assist you with all of your home buying and home selling needs.

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