Miami Realtors focus on foreign buyers

MIAMI – Nov. 4, 2014 – International real estate deals accounted for 29 percent of all transactions in Miami-Dade and Broward counties in the past year, comprising one of the more vibrant corners of the local economy.

But the truth is Miami real estate isn't so much bought by foreigners as it is sold to them – by a polished army of real estate agents, who strategize and network to make those sales happen.

This week, some 300 agents who focus on the foreign market have gathered at the Miami International Real Estate Congress at the Biltmore Hotel in Coral Gables.

The event – put on for the 20th year by the Miami Association of Realtors – has drawn some 70 agents from Brazil, Argentina, France, Italy, Ecuador, Colombia and the U.S. Virgin Islands, and it is abuzz with the excitement of a city that, after the painful bust of 2008, once again has a skyline full of construction cranes.

"Miami is the most international city in the entire United States," Teresa King Kinney, CEO of the Miami Association of Realtors, told the gathering. Her proof: More than half the residents in Miami-Dade were born abroad.

If Miami-Dade doesn't set another record year for residential sales in 2014, it will come close to doing so, buoyed by the strength of foreign demand, King Kinney told the meeting, which continues through Tuesday.

Despite tough economic conditions in much of Latin America and Europe, foreign buyers are continuing to invest in Miami, according to a report from the National Association of Realtors. Still, foreign sales accounted for a smaller share of sales than in 2013, when 35 percent of sales by Miami-Dade and Broward agents involved international clients.

South Florida's foreign buyers tend to be big spenders: The mean price of a residence purchased by an international buyer was $444,052. That compared with a mean of $245,000 for all Florida home sales. Brazilians had the highest mean purchase price, $494,531, while Canadians had the lowest, $310,484, the report said.

"International buyers in Miami are more upscale, the NAR study found," King Kinney said.

And that means big money for the Realtors who cater to them.

"We're probably paying some of the highest commissions in the world," Alicia Cervera La Madrid, managing partner of Miami-based Cervera Real Estate, told the crowd.

Cervera's firm specializes in sales and marketing of pre-construction condominiums and works through networks of agents locally and internationally.

Many South Florida real estate agents are multilingual or hail from a foreign country and thus understand the language and culture of their clients.

Mauricio Mohrer, a Realtor associate with Beachfront Realty Inc. in Aventura, is a Brazilian-American who travels several times a year to Brazil to nurture ties with clients and other agents there.

Mohrer said through training sessions put on by the Miami Association of Realtors, he has also polished his skills in understanding other cultures, including Asians.

While Asians currently make up a small share of buyers in Miami, many locals expect that to increase with the increased trade expected at Port Miami once the expansion of the Panama Canal is complete.

Philip Spiegelman, principal at Aventura-based International Sales Group, another big sales and marketing firm focused on pre-construction condos, said real estate brokers play a vital role in connecting foreign buyers to Miami projects.

"For the guy sitting in Caracas or Buenos Aires or Sao Paulo who doesn't need shelter but who wants to make an investment or wants a vacation home, it's our job to create that impetus," Spiegelman said.

According to the NAR study, 81 percent of South Florida's foreign buyers paid cash, and 72 percent purchased a condo or townhouse.

King Kinney said, "Cash continues to be king," even though a growing number of lenders do offer the option of mortgage financing at some level. "The assumption is Miami is a very good place to put your money," she said.

Copyright © 2014 Miami Herald, Martha Brannigan. Distributed by MCT Information Services.

Student debt, car payments block Fla. home sales

IRVINE, Calif. – Nov. 4, 2014 – How much do student loan debt and car payments impact first-time homebuyers?

RealtyTrac released an analysis of major U.S. counties – including 34 of the 67 in Florida – based on median home prices and median incomes. The analysis assumed a downpayment of 3 percent, 10 percent and 20 percent.

RealtyTrac's stated goal: To determine how much lower downpayments would help first-time buyers if they must also pay higher monthly mortgage costs after the sale. It assumed a conventional loan that could be sold later to Fannie Mae or Freddie Mac.

"While lower downpayments may help pave a quicker path to homeownership for some prospective homebuyers, a bigger obstacle to homeownership is the additional non-mortgage debt many borrowers bring to the table," says Daren Blomquist, vice president at RealtyTrac.

In the 34 Florida counties studied, RealtyTrac deemed homes affordable for first-time buyers in every county, whether they put down 20 percent or 3 percent, but with a big caveat: Only if the buyer had no additional student loan debt or car payments.

With debt included in the analysis, affordability dropped.

"For borrowers without additional debt, monthly house payments are affordable in more than 90 percent of U.S. housing markets – whether they make a 20 percent or 3 percent downpayment," says Blomquist. "But for borrowers with the additional debt burden of student loans and car payments, monthly house payments are affordable in less than half of U.S. housing markets with a 3 percent downpayment."

Monthly payments are considered affordable in 30 of the 34 counties (88 percent) for buyers with debt who make a 20 percent downpayment, but in four – Miami-Dade, Collier, Martin and Sumter – first-time buyers can't afford the monthly payments even with a hefty downpayment.

However, a 3 percent downpayment doesn't go a long way to make homes more affordable in most counties.

In 25 of the 34 counties RealtyTrac analyzed (73 percent), buyers with debt still won't be able to pay the monthly mortgage. Even with a 3 percent downpayment, they can only afford the long-term costs of a home in nine Florida counties – Duval, Polk, Brevard, Pasco, Seminole, Escambia, Clay, Santa Rosa and Citrus.

Time spent saving for a downpayment

Another factor RealtyTrac considered is the length of time it would take the median buyer to save for a downpayment. The most expensive Florida market, Miami-Dade, isn't affordable with even a 20 percent downpayment, and it would take the average buyer 16.9 years to save that amount. For a 3 percent downpayment, it would take a Miami-Dade resident 2.5 years.

A downpayment takes less work in Pasco County, where it would take only seven years to save for 20 percent down and one year for 3 percent down. Pasco County is also affordable for first-time buyers under all downpayment and monthly payment assumptions.

RealtyTrac analysis

RealtyTrac offered takeaways from its analysis:

1. Lower downpayments will help with one major hurdle to homeownership. Across all U.S. markets analyzed, it takes an average 12 ½ years to save a 20 percent downpayment at the current annual savings rate of 5.6 percent. It would take less than two years to save up for a 3 percent downpayment.

2. However, the good news applies mainly to borrowers without additional, debt such as student loans and car payments. Borrowers without additional debt can afford a home in 92 percent of all U.S. county housing markets; but borrowers with debt can afford a home in less than half (48 percent) of all county housing markets.

3. A larger downpayment helps. With a downpayment of 20 percent, more than three-fourths of county housing markets (78 percent) are affordable long-term, even if borrowers have an average student loan and car payment debt.

RealtyTrac says first-time buyers have one resource that's under-utilized: Downpayment assistance programs. There are more than 2,300 downpayment and closing cost programs available across the country, and an estimated 60 to 80 percent of homes in most areas qualify for one of the programs, according to data collected by Down Payment Resource.

"The narrative is that it's too hard to get a loan today, and when first-time buyers believe that, they won't even begin their search. That hurts the overall housing market," said Rob Chrane of Down Payment Resource. "Consumers for the most part have no idea that these programs exist, so they don't think to ask for them."

Black Cats and 8 Other Real Estate Omens to Know

Believe in it or not, there are plenty of bad—and good—omens woven into our culture.

Whether you’re facing seven years’ bad luck from that broken mirror or carrying around a rabbit’s foot in the hopes of turning your luck around, omens are all around us—even in real estate.

If you’re selling your home or looking to buy a new one, be on the lookout for these nine real estate omens.

Black Cat

Possibly one of those most well-known omens: If a black cat crosses your path during an open house, it could be a warning that bad luck is coming your way. Maybe you should think twice before submitting that lowball offer.

Swarm of Bees

While most people aren’t thrilled to see bees swarming around their home, where they land could be a bad real estate omen: It is said a swam of bees on your roof is a warning of a house fire.

Single Crow

Watch out for crows when you’re heading to your closing. A lone crow appearing is bad luck and may make the deal fall through.

Umbrella

Love the house you just saw? Don’t open your umbrella before you leave—wait until you step out on the porch. Opening an umbrella indoors might bring you bad luck when you make your offer.

Picture on the Wall

Taking your personal photos off the wall isn’t only a good idea for home staging, it can also help preserve your luck. If a picture falls off the wall while you’re trying to sell your home, you could bring bad luck to the deal.

Resident Blackbird

Think you may have a bird living in your house? Look for the breed before you shoo the guest away. A blackbird nesting in your roof could bring good luck, and some buyers might find the chirping charming.

White Butterfly

If the first butterfly you see in the spring is white, you’re in luck. A white butterfly at the beginning of the season brings good fortune in all of your business dealings, even real estate.

Frog

A frog showing up in your mud room around the time you decide to sell your house may seem like an odd coincidence, but a frog indoors could mean you’re about to come into money: Get ready to make a deal!

Peas in a Pod

You might want to have peas for dinner if you’re planning on going house hunting the next day. Finding nine peas in one pod is an omen that good luck is headed your way.

Celebrity Real Estate: Hall of Fame Golfer Nick Faldo Buys and Sells in Florida

Lifetime golf professional Nick Faldo is a busy guy.

Since he stopped playing full-time on the PGA Tour in the mid-2000s for a second career in television broadcasting, Faldo has kept himself occupied designing over 50 golf courses around the world.

He’s also been active in Florida real estate: This month, he sold one home in Winter Park, FL, and bought another just down the street. Both houses are in the Chain of Lakes neighborhood, not far from Orlando and its delights.

The home he sold was a four-bedroom, four-bathroom brick affair, which closed for $2.55 million.

Sited on a canal front, the home has a private boat house, lush tropical landscaping, a koi pond and a fountain—as well as a three-car garage and a motor court.

There are cathedral-height ceilings, rich wood floors, raised galleries, coffered ceilings, and lavish wood built-ins.

The kitchen, sitting in stylistic juxtaposition to the rest of the house, is sleek and European in its feel, boasting every imaginable culinary accoutrement.

Faldo loaded up the moving trucks and headed down the street to this Floridian delight, which he bought from NASCAR Foundation VP Jennifer France Bates. The sale price? A cool $3.5 million.

The new Faldo residence is slightly bigger and slightly newer than the old digs: It’s got five bedrooms and nine bathrooms. Mediterranean in style with a Spanish tile roof and gorgeous tropical flora, this house is situated on 125 feet of lake frontage on Lake Maitland.

There are magnificent lake views, which can be enjoyed from the Cypress tree-lined lanai. And don’t forget the private boathouse and four garages.

Things seem to be working out quite well for Sir Nick Faldo, who has 47 professional tournaments wins to his credit—including three Masters championships and three British Open titles. He was inducted into the Golf Hall of Fame in 1997. Faldo has been a broadcaster for ABC, CBS and the Golf Channel over the last 20 years.

Others for whom things are working out well include Mick Night, who represented the sellers in both these transactions.

Is refinancing a mortgage worth it?

NEW YORK – Nov. 3, 2014 – The interest rate pendulum has swung in favor of homeowners again.

A steady decline in recent weeks brought down the average rate for a 30-year fixed home loan below 4 percent to 3.92 percent this week, the lowest level in more than a year. As recently as January, the average was 4.53 percent, according to mortgage giant Freddie Mac.

That's good news for homeowners who are locked in at a higher interest rate and weren't able to refinance before rates began ticking up last year. The decline in mortgage rates has spurred a surge in mortgage refinancing. Applications reached their highest level since November 2013 last week, according to the Mortgage Bankers Association.

A reduction in your mortgage interest rate can translate into significant savings. The key is ensuring they aren't outweighed by the charges and fees involved.

"You want to be careful to do the math and be sure you're coming out ahead," said Gary Kalman, executive vice president at the Center for Responsible Lending.

Here are some tips to help you determine whether refinancing your mortgage will pay off:

1. Understand the fees

Lenders typically charge fees for the mortgage broker's services, credit reports, a home appraisal and title insurance, among other costs.

To get a sense of the total costs, start with the "good faith estimate." It's a form that lenders are required to provide that details the projected costs associated with the loan.

Although certain costs of the loan can't change, including the origination or broker's fee, costs such as title fees may change until the loan is locked, meaning the interest rate is set, notes Kurtis Baker, a wealth management advisor at Certified Wealth Management & Investment LLC in Princeton, New Jersey.

The loan officer should also be able to help determine what your total monthly payment would be after the refinancing.

2. Get a low-enough rate

The general rule of thumb is that borrowers need to shave at least 1.5 to 2 percentage points from their rate in order for the refinancing costs to be worthwhile.

To qualify for the best rate on a mortgage refinancing, borrowers must have proof of income and have equity in their home. About 20 percent equity is ideal, though some lenders will require as much as 30 percent for jumbo loans, said Greg McBride, chief financial analyst at Bankrate.com.

3. Do the math

Don't be fooled into thinking that you're getting a better deal when it's simply a new loan with a longer term, warns Timothy Watters, a certified financial planner at Watters Financial Services in Paramus, New Jersey.

To avoid this, tally up how much you're paying now in principal and interest and multiply it by the number of months left on your loan. Then do the same calculation using the figures under the new loan.

"If there's a substantial difference, it may be worthwhile to refinance," said Watters. "If there's not, it may not at all be worth refinancing."

Online calculators can help you estimate whether the savings in a refinancing add up in your favor. Try this one from Bankrate.

4. Determine when you will break even

Even if refinancing will lower your monthly payment, it will take time to recoup your expenses. So think about how long you plan to stay in your home.

For example, refinancing from a 5.5 percent interest rate to 4 percent would save $180 a month on a $200,000 mortgage. But the fees — averaging around $2,500 — mean it would take about 14 months to break even.

To estimate how long it will take for your savings to offset the refinancing costs, divide the estimated costs by the projected annual interest savings.

Remember to factor in loan points, which borrowers can buy to lower their interest rate further. One point equals 1 percent of the loan amount.

As long as that is comfortably shorter than the time you plan to stay in the home, refinancing could be a good choice, Baker said.

The Federal Reserve has a more detailed calculator for determining the break-even point on a mortgage refinancing.

5. Shop around

Get quotes from several banks and ask that they put their offers in writing, including an estimate for the closing cost and any extras, like loan points.

Some lenders will allow you to roll the refinancing fees into your loan, sparing you upfront costs. However, this will increase how much you owe – and pay interest on – for the life of your loan.

Ask that the lender provide you with a comparison of the loan costs paid upfront and rolled into the loan.

Builders don’t try to compete with resales on price

WASHINGTON – Nov. 3, 2014 – A trend is developing that favors resales over newly built homes.

The gap between the more-expensive median price of new residences and existing homes has surpassed $70,000 for most of the economic recovery – the widest spread since the National Association of Realtors and the Commerce Department began tracking the data in 1968.

"The reason we're not seeing more new-home sales is definitely a function of price. Builders are making a conscious decision to sell fewer homes at higher prices than to sell more homes at lower prices," says Zillow chief economist Stan Humphries.

Builders have placed considerable emphasis on erecting larger houses due to demand trends, as wealthier buyers have been the most active segment in recent years. At the same time, entry-level buyers largely have been kept out of the market due to factors such as student loan debt, tighter underwriting and sluggish wage growth.

Consequently, builders have constructed fewer homes and keeping profit margins high by making those houses big and pricey.

Largely because of this trend, the median price of new homes rose by 24 percent from 2009 to last year, outpacing the 14.7 percent gain in the median price of resale homes during that same time.

Sales of new homes climbed just 1.7 percent in the first nine months of this year from the same period a year ago. By comparison, sales soared 16.6 percent in 2013 from the year before.

Source: Wall Street Journal (10/24/14) Hudson, Kris

Top 10 reasons renters keep renting

NEW YORK – Nov. 3, 2014 – Most Americans who don't currently own their home say they intend to one day, and they hold strong feelings toward home ownership.

But about 20 percent of renter households are adamant about renting, and they say they intend to stay renters now and in the future, according to researchers at Harvard's Joint Center for Housing Studies (JCHS). The Center recently surveyed renters to find out why they're shying away from what some consider the "American dream."

The bottom line: It's not lifestyle choices but financial constraints that renters say keep them from purchasing a home in the future. More than half said they do not intend to buy because they think they cannot afford it, or their credit is not good enough, according to JCHS.

According to the research, the top 10 reasons renters give for not planning to buy in the future:

• Cannot afford the purchase or upkeep of a home

• Not good enough credit for a mortgage

• Not a good time economically to buy a home

• Cheaper per month to rent than to buy

• Don't want to be concerned with doing the upkeep

• Don't plan to be in a certain area for an extended period of time

• Rather use the money for other investments than a home

• Process of buying a home seems too complicated

• Purchasing a home limits flexibility in future choices

• Can live in better neighborhood by renting

"These results suggest that about a third of renters, or 10 percent of all households, rent because of lifestyle and personal preferences," writes Rachel Bogardus Drew, a post-doctoral fellow conducting the research for JCHS. "That their reasons appear to be largely idiosyncratic, rather than systematically related to their personal characteristics, further indicates that those who rent by choice do so in spite of strong social biases towards ownership that encourage the remaining 90 percent of households to view owning favorably."

However, many renters could become homeowners under the right circumstances.

"More than half of lifetime renters … see their tenure options as constrained, either by their own financial circumstances or by macroeconomic conditions," says Drew.

Source: "Who Doesn't Want To Own a Home?" Harvard Joint Center for Housing Studies' Housing Perspectives blog (Oct. 28, 2014)