Fort Myers No Spin Zone

We are Number One!

Gary Szolosi — Fri, 15 Aug 2008 11:47:00 GMT

Normally that is the chant of someone that is exuding pride in an accomplishment, however in this case it is not one to take a lot of pride in. Fort Myers/Cape Coral/Naples was just recognized as the leader in foreclosures for the entire US. We took the dubious honor from a California community.

However with all bad news comes good news. It is never reported and often over looked by the pundits. The good news is that this dubious distinction has generated an abnormal supply of ready and willing buyers. They might be called everything from bottom feeders to opportunist but in reality they are the thing that changes markets. They are the people that when there is blood in the streets come in and take advantage of the opportunities that exist.

Many of us here in the leading foreclosure market wish we had more money to invest because the old ad adage that buy low sell high has never been more dominant. However our dubious distinction will be short lived. In January we had a 24 month inventory on hand and as of last month that inventory had dropped to under 10 months. You see, we are at our bottom in this writer’s opinion. Most of the foreclosures are properties of investors that overbought during good times and walked from their investments. Our average home price is now within the means of most working families and our market is actually strong at this time.

So I guess in spite of having a distinction we would prefer not to have, the outcome is positive. So CNN, ABC, CBS, NBC, and the rest of the news media, perhaps it is time to tell the rest of the story!

May Rules change the Landscape of Lending

Gary Szolosi — Sun, 11 May 2008 01:33:00 GMT

The new lending rules have really put a damper on foreign nationals purchasing property. With the falling dollar, the foreign markets were a tantalizing market with the opportunities that existed with low prices and the difference in currency. However, as usual we have taken a positive and put a damper on it.

The new rules, if you are in what Fannie Mae or Freddie Mac considers to be a depressed area, now require that a foreign national has to put 45% down in order to secure US Funding for a loan. I had a lot of Canadian and German clients that were ready to take advantage and buy that second home and now have been shut out by the new lending rules.

It appears to me we have two ways making lending rules, they are either lax or over the edge. Perhaps in time will get this right. In the mean time we are seeing a wave of buyers being turned away because of these nonsensical rules. Less that 1/100th of 1% of foreclosures belong to this category of buyer. I would love to hear the logic in the decision that put this rule in place. We are pretty good at cutting off our nose to spite our face. IMHO

The Housing Crisis Is Over

Gary Szolosi — Wed, 07 May 2008 20:04:00 GMT

It is articles like the following from the Wall Street Journal that should get more attention if you are interested in the Truth!

The Housing Crisis Is Over

By CYRIL MOULLE-BERTEAUX

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.

Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.

Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.

The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.

The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.

In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.

The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.

Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.

Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.

Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.

Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.

This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.

When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.

More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.

A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.

We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.

Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.

See all of today's editorials and op-eds, plus video commentary, on Opinion

The Best Opportunity in 35 Years

Gary Szolosi — Tue, 06 May 2008 16:00:00 GMT

With all the press and pundits talking about the doom and gloom scenario, they for some reason have failed to view the glass as half full. It is often said that the best teacher is history, so here is a brief history lesson. It was back in 1973 when interest rates were about the same as they are today. That was considered a buyers market then, however inventory levels were far below the level of today. Since then there has only been 2 years that offered similar interest rates as today. It was 2001-2002, rates were similar but this was the height of the seller’s market, which offered low rates but higher prices and fewer homes to choose from. We have had other buyers markets but they were in the 80’s and 90’s with interest rates ranging between 8%-21%.

With supply at record highs and low interest rates available, the selection and cost has not been similar for 35 years. In fact there has not been a better time to purchase in almost four decades. For those wise buyers, I think they are looking at the glass as being half full and ignoring the pundits that have a track record of getting it wrong most of the time. So if you really want to rely on something, historical data is unchangeable and the facts substantiate that there has not been a better opportunity than now, to buy a home.

Listingbook – The New Age

Gary Szolosi — Sat, 03 May 2008 11:27:00 GMT

Our MLS recently introduced a thing called Listingbook. I think I looked at it but didn’t really pay much attention to it as I do with many things. Then on a slow day I decided to see just what this new tool the Board was promoting was. I found out that I had really dropped the ball on this puppy. This is one of the best tools I have come across in my entire time in Real Estate. It is well designed and does a lot of the work that took me hours to do prior to discovering the benefits of the system. Whoever designed this knew what they were doing.

The real beauty is not only the time savings it has but the close ties it can help you develop with potential clients and it is almost effortless. Albeit setting up showing appointment, printing out a showing schedule or just the basics of searching for a home for a client, this system does it all.

I am sure that many agents have discovered the power of this system but if you have not and it is available, check it out. It is a big dog! If your Board has not signed on yet, encourage them to, since it is a great tool!

Don't Let a Crash Ruin your day!

Gary Szolosi — Mon, 21 Apr 2008 19:47:00 GMT

Ever had your computer crash or a hard drive go bad and you have to reload all your programs. You can find the disk but the activation code or license number is somewhere but you can’t find them! I have went through all of the above and the other day heard about a program that gives you a list of all installed programs on your system and gives you the activation codes or license numbers to reactivate, if you ever have to reload the program. It searches your computer and you print out the list of programs installed with all the information you need to reinstall. It is available at Belarc.net. The great thing is it is free. If you combine this with The Carbonite Back up system you will never have to worry about another crash. If you are not familiar with Carbonite it is an on line back up system that copies all you files to an on line directory. Should your system crash you just put in the new hard drive and reinstall all your files from the on line back up. Great system and it is under $50 a year. These two products take all the worry out of hardware crashes or a virus ruining your day.

Just a thought!

Gary Szolosi — Wed, 26 Mar 2008 03:12:00 GMT

When you wish for something it sometimes happens. However when you plan for something it often happens. There is a difference since one is just an idea and the other is an objective or a plan! When things are not as you planned than you rework the plan. If you only had an idea than develop a plan to turn the idea into reality.

Here is the difference:

Idea: I will have a good and profitable year in 2008!

Objective/Plan: In 2008 I will earn $???,000 by doing the following things, A:, B:, C:…..

One is a wish, the other is a plan, and which do you think reaches a greater chance of success? You have the choice and the ability to accomplish whatever you want and now is the best time to plan the success that you had in the back of your mind and talked about. Planning allows for measurement because it spells out the results of action. When the results don’t equal the planned results it allows for change. It isn’t rocket science it is the basics. When all else fails, go back to the basics.

Perhaps if more agents and managers did this, there would be more success. Spring is a new beginning and the start of the season for my Northern friends and maybe this is the time to set your plan to writing. For if it isn’t written, it is still only a thought. When you write it down, it is a pledge to accomplish.

Is success this simple? No, nothing worthwhile is simple but it is the path that leads you to success is one that doesn’t happen by chance. So if you have the ability to take chance out of the equation, than why wouldn’t you if success is your real goal?

Just a thought that I had!

Short Sale - Bankruptcy – Or what?

Gary Szolosi — Sun, 16 Mar 2008 20:46:00 GMT

I have been involved with all the short comings of investors and buyers since the turn around in the markets. One of the questions I refuse to answer is what the tax ramifications of my sale are. If I short a property and it was an investment property do I owe the taxes on the difference since I will get a 1099 from the mortgage holder.

The truth is I am not an accountant, I am not an attorney, but in either case I am operating under a Real Estate license that does not permit me to offer that advice. So I always ask them to seek the proper council.

He is an opinion that may play a big part in the decision for bankruptcy or short sale. Rule 108 of the IRS code Say's that if you are insolvent at the time of the sale you will not pay tax on the 1099 issued. However, most bankruptcy attorneys fail to mention this because it is an easy buck to run the bankruptcy through the mill.

Here is a rule of thumb for insolvency; I have fewer assets that I have liabilities. It actually gets easier than this because there are assets that don’t count.

Another thing is that most Bankruptcy attorneys don’t advise their clients that bankruptcy will not “make a foreclosure go away” even though it usually discharges the deficiency if any. If they qualify for Bankruptcy, I hope that whatever attorneys that your client meets with explains that having a bankruptcy and foreclosure on their credit report is not good. Hopefully the attorney they meet with is knowledgeable with the current laws and will advise them accordingly and not opt for the least amount of work and the most amount of fees.

So my advice is to get a good attorney to work with that understands shorts, foreclosures, and the ramifications. This is a great market for bargains and not to be up to speed is a loss of ability to service your clients.

Today's Market

Gary Szolosi — Sat, 08 Mar 2008 08:10:00 GMT

There are a lot of reasons to be down in this economy however, what may be a down market to many is an up market to some. Easy to ask, but how can this be? The reason is because no matter what the conditions of the day are, there are people that must or will make a move.

Take the current buyers market, we know that someone that is relocating has little choice but to purchase a home or rent. Your target audience is the one that are the buyers/sellers. Typically the Company will purchase the home if it is a transfer or relocation. Without getting into all the intricacies of corporate moves there are many advantages to working with the relocation departments of major Corporations. Another source is the retiree. They may keep their present home or sell and down size. So it pays to know the retirees in you community. Albeit listings or referrals for the place in the warm lands.

You see, there is always a market, it is sometimes not as obvious but it is always there. As a Broker I hear all the time that the market is really slow. My response is, what are you doing to speed it up? The standard answer is I can’t do anything to change the market. I actually agree with that so what you are doing to work within it?

I hear every day that it takes someone that has been in the industry a long time to make the big bucks. The truth is it only takes someone that thinks big to make the big bucks and someone that is willing to pay the price. You see the price in time and effort. It is thinking out of the box. It is the willingness to go a little extra.

I hope some of this makes sense. You see I am neither the smartest nor the best Realtor on this Planet but I have made it through good and bad markets and all I have done is look at who is selling and who is buying and gear my marketing to attract those people. Not rocket science, or any significant plan that will be the next business plan which will be the focal point at Wharton Business College.

So if you are doing what you did last year or the year before, you may be missing the market, you see it is out there and requires change. Watch what you do every day and make sure your efforts are directed at today’s market!

The market is there and so should you be! You see there is a saying that if you did something yesterday and it produced nothing, why would doing it today produce more? There is no secret to success other than be adaptable.

Opportunity for Change, Or is it?

Gary Szolosi — Mon, 03 Mar 2008 19:10:00 GMT

The popular word today when it comes to politics, real estate or the economy is “Change”. It is a hard thing to argue with since regardless of the position you are now in change for the good is always an improvement; however, change is not always for the good. I could have just won the lottery and hope or wish for change in the tax laws, I could be living under a bridge and hope for a change in the weather. So the broad and all encompassing word is one that resonates with anyone regardless of their position. A clever term when it comes to politics or anything else since we assume the change is for the better. However, change does not always present itself in the vision that we assumed. In real estate the change could be a market correction, which is also good if the market was weak but in a strong market, it would be bad. In the economy change would take on the same sneaky move up or down position if the change is not defined.

So when we listen to the rhetoric of today, we have to ask for definitions of the change and how it will affect us. Good change is always welcomed, however two plus years ago the Real Estate market made a change that had some good, but for a lot of agents it was not good because of the sudden move and the depth of the correction.

We face some difficult days ahead but none that compare to those that previous generations have not seen and overcome. We need change but it has to be positive change and the economy is the root. For this Republic to sustain its dominance of all free society’s we need to address the rising debt and part of that debt is the result of the sub-prime market and its effect on Banks. Although I don’t totally agree with some of the things we have done to remedy this problem, I defer my opinion because there are those more informed and wiser that have decided that a sort of Government bailout is in order. We will have a new Treasury auction and the majority of it will be used to shore up banks. Perhaps the next one will be to shore up Realtors!

So I guess the point that I am trying to make is that we are taking a mortgage on our future but it is probably one that needs to be taken. However, if the new Congress and President do not address such issues as Oil Dependency, Line Item Veto's, Wasteful spending, Health Care Cost and the falling Dollar, we will see a decline in life as we know it.

I am confident that America will look hard at these issues over the next 7 months and in November make a decision that will propel us into a new era. That is an era of less government and more entrepreneurial enterprise. The Real Estate Market is starting to move in the right direction and will lead the charge of those that care and care deeply enough to change things but change them for the better because of what the people you vote for reflect your desire. That is an outcome I can live with and hope for because I believe in a system that is run by the people and not the government.

Fed Cuts Rates - Mortgage Rate Rises

Gary Szolosi — Sun, 03 Feb 2008 06:36:00 GMT

When the fed cut rates recently 1.25% in less than 10 days, the public linked this to mortgage rates. The thinking was that because we had a rate change on the Fed Bank Rate that Mortgages would follow suit. Unfortunately that is not how the system works. It did change Heloc's and credit card rates but had the opposite effect on mortgage rates.

In January we started the year off at an average rate on a 30 year fixed mortgage at 6.07%. By mid January we were down to 5.48% and then came the rate cut. The average rate jumped up 20 basis points to 5. 68%. Overall, all of these rates are good. However don’t expect rates to decline based on the recent Fed change. In fact we may see more upward movement and possibly over 6.25% when the markets settle out.

The reason for this is Inflation. Inflation drives the interest rates more than anything else and we are in an inflationary period right now. The Government may take food and energy and things like that out of their calculation when they put out their numbers but I can not. Gas is up and so is food, and that is inflation at its finest. I don’t need a report to tell me that.

When mortgage rates are set they are based on the 10 year Treasury bill. If you want a good indicator of where the mortgage rates are going just watch this price and it will tell you what is going to happen in the mortgage interest rate market.

Since perception is stronger than fact, I believe the recent Fed Rate decrease will have a positive bump for the Real Estate market because it will draw attention to an already good rate in mortgages in spite of the slight up tick we will see. The shrewd buyer will act fast and lock in below 6% but even the late comer can expect a good rate that will provide more home for the dollar when you consider the reduction in prices and still a good mortgage rate.

Even though this is an election year don’t expect a big change in the economy. Inflation will be the biggest nemesis in the near future and the current stimulus package is a farce and not going to do very much other than make people feel a little better. I do believe we will see a pretty good move to the plus side in the housing market starting now and gaining momentum in the second quarter of this year. Prices have moved down enough, good mortgage rates and still lenders ready to lend. That all spells good for Real Estate. IMHO

Florida’s Property Tax Reform

Gary Szolosi — Mon, 28 Jan 2008 16:37:00 GMT

January 29 Floridians will be voting on a proposed change in the way property taxes are calculated. The big selling point on voting “Yes” addresses resident Floridians that qualify for Homestead Exemption. This provision now states that the resident’s property tax is capped at a maximum of 3% (SOH) increase a year and they are given a $25,000 exemption in value. For those that own property in Florida this exemption is not available.

The new proposed tax increase the exemption amount by about $15,000 and allows the portability of the SOH amount to be taken to the next home. The SOH amount is the difference in the appraised value that exceeded the 3% cap. The new proposed tax also does put a cap on non-resident property at 10%.

I have often said that our property tax is unfair to non-residents and this new proposal fall short of addressing this issue. Although the 10% cap is a start it is far to low and should be the same for both residents and non-residents.

The biggest problem tomorrow will be how to vote on this issue. To vote no means, no change and may be viewed by legislatures that it is not a big problem, as well as delay a reduction in property taxes. To vote yes means the chance of further changes for the non-resident are diminished because residents will have received their decrease and it takes 60% voting yes to further change the issue. Once again the legislatures have failed to address the problem and offered a solution that gets them out of hot water but doesn’t fix anything.

I will be voting NO tomorrow even though I feel the change will pass. To vote yes on an incomplete bill that doesn’t address non-residents in a fair manner is doom for any further correction to an unfair system. The 3% cap should apply to all owners of property in Florida and until it is addressed Florida Real Estate is at a disadvantage to neighboring States. Equitable solutions are the only fair way to address the problem and although I hate to not have my taxes go down as a resident, I think NO on this vote and force the legislatures to do it right and put an equitable plan on the next ballot. The argument against a NO vote is, take what you have and work for more. However, because of the 60% needed to get further change and non-residents don’t have a vote that is a lame argument and one doomed to failure.

Credibility is a thing of the past!

Gary Szolosi — Sat, 29 Dec 2007 00:00:00 GMT

I received an email from a client today that has been contemplating a purchase of a home in my area for the last two years but things have interrupted the process. This was the year and January was the month. The gist of his email can be summed up in this line, “Your area looks very bad. The 6th worse in the nation.” Of course he had read this news flash from some pundit that knows about as much about Real Estate as they about black holes and the theory of time travel.

My response was as follows:

I am sorry you have to read this trash. These are the same people that told us that the fed would not reduce interest rate until some time in 2008. That was in March or April of this year. I put on my Blog at that time that I felt that Interest rates would be reduced at the latest in the third qtr. and maybe further in the forth. I was correct. They take a segment of the market and make a broad statement. Yes, Real Estate is down. Will it stay down, No!! The current cause is short sales and foreclosures on investors that speculated.

I used to be a financial planner and told people that you invest in down markets and sell in up markets. It isn't a hard concept to grasp. Buy low, sell high. I think anyone that is looking to hold a property over three years has a gold mine that is waiting to be mined. Will they retire on the profits, no! They will see appreciation over the next few years, in my humble opinion. So, you can wait until it is a level market and that will give you peace of mind, minimal profits, or you can look at the market as I do and say there are few opportunities to buy low and sell high. We are in one now! What are you waiting for?

That is the "Gary View"!

Now I am not sure how the response will be to this, but it is honest and to the point. If you want to wait until prices start to rise, then hold on, it won’t be long. If you want to listen to people that have no ideas of the real facts, keep reading the trash that is provided daily by a Media that could care less about you.

This is not rocket science! When things are on sale and you plan to hold, does it really matter if you get the rock bottom or just close. We may be at the bottom but regardless we are close. If people continue to listen to the uninformed and their conclusions, than we will see a lot of people missing opportunity. Opportunity doesn’t knock often but when it does, it doesn’t knock loud, you have to be listening. I hope this message gets out!

Get off your duff and look!

“Tis the Season!”

Gary Szolosi — Wed, 12 Dec 2007 04:48:00 GMT

This is the season for happiness, Santa, for Christians the Celebration of the Birth of Christ and the things that go with the holiday season. We are about to start a New Year and sometimes the best way to start a new is to reflect on the history and ask yourself, did I do everything I could have last year to make it a happy year. If you really want to reflect and evaluate yourself, then maybe you go back further than just the last year and ask yourself the hard questions. Have I set my goals and schedule to bring everything into the proper perspective or will I some day regret what I have done? Am I looking for success in all the wrong places? Am I paying a bigger price than it is all worth? What is success?

At some point in your life you will ask yourself these questions, albeit this year or some year in the future. All too many of us, self included, judge ourselves in a monetary sense. The more we make the more we are successful. There is a saying that money doesn’t make you happy and believe me it is true. I look back at my past and know that I would trade all the stocks I own for seeing my two daughters first steps or their first words, or hear "Daddy I love" a few more times, when they couldn't pronounce the words. However, I was on a quest for success. I traveled all over the US and was home on weekends to give them my love but it was what I missed that means so much to me today. I will never be able to get that back, no matter how successful I was or regardless what my checking account looks like today. My intentions were noble but the price that I paid for this is something that I pay for each day. It is lost revenue. There is no second chance, do it right the first time.

This is a tough business and you are on call 24/7 and it is up to you to put into that schedule, your family. You also have to schedule off time for yourself. If you have a few less dollars at the end but have years of memories that don’t relate just to business they will be the memories you cherish and they can not be purchased, regardless of how much money you possess.

So, when you start 2008, remember the order of importance, Family is first and the rest of the world is after them. I might add that I have a great relationship with both my daughters but I missed their childhood. I hope you don’t make the same mistake as I.

I wish you and your family the happiest during this Holiday season and for the rest of time. 2008 will be a great year and we will all see productive numbers without giving up more than we should.

Carey will receive a 25% raise and promised to forward 3% for putting that in here. JK

A back up that works.

Gary Szolosi — Mon, 10 Dec 2007 21:01:00 GMT

With all the talk of backing up web sites, I ran across a great site that backs up your computer. It cost between $3-$4 a month and is stored online. I used to use tape backups but this is so much easier and updates file continually. Here is the site: http://www.carbonite.com/

If this doesn't belong here, move it. Not that I had to tell you that!