Good morning all,

Well, it is definitely still December. Our business has slowed down a touch as it usual does during the holiday season. I’ve been taking some of the free time I’ve had over the past week or two to finish preparations for the new year. We’re expecting a busy year like last year so I wanted to streamline some processes and familiarize myself with some new technologies (like podcasting, which is coming soon!). Anyway, I ran across this article in the online version of the “Real Estate Magazine”. It lists some common mistakes that individuals made in 2005 (both buyers and sellers).

Buyers

– Bought properties to flip at top-of-market prices. Thinking the bubble headlines were wrong or didn’t apply to them, newbie real estate investors wanted to become week-end millionaires. What they didn’t know is they were buying the experienced investors portfolios as they exited markets at the top.

– Utilized Interest-Only Mortgages. Many home-hungry buyers discovered the only way you can pay top-of-market prices is to get an interest-only mortgage. With declining prices and no monthly principal payments, these homebuyers could fuel a foreclosure market in 2006. Fixed-rate mortgages will become the majority in 2006 as mortgage underwriters and educated consumers are reunited.

– Overlooked Resale Characteristics. New construction was the rage in 2005, everyone wanted to select finishes, floor coverings and kitchen cabinets. Buyers should beware when this year’s home buyers become sellers, buyers could bypass their resale that was new in 2005 for the chance to design their own new home. Look to future before signing on the line.

– Skipped Performing a Home Inspection. Before some markets shifted away from sellers markets, many homebuyers waived their right to a property inspection. Never, skip or waive the right to a inspection, the benefits far out weigh the costs and could save you numerous headaches and expenses later. Hire a professional, not Uncle Bert.

– Misinterpreted developers’ giveaways. Two years free condominium assessments, stainless appliances and plasma TVs were thrown in to induce buyers to write contracts to purchase. What many buyers thought were a freebie were actually a signal that markets were softening and that projects were slow to sell from increased competition and a lack of buyers. Incentives are a Band-Aid for a languishing development.

– Didn’t Read Homeowners Association Documents. Getting rid of Fido because you didn’t know you were moving into a no-dog building is an example why every buyer should request and read home owner association declarations, rules and regulations, association meeting minutes and budgets. Ask if there are any special assessments (typically for capital improvements; new roofs, windows, elevators) or planned ones. Special assessments can run into the thousands.

Sellers

– Overpriced homes. Thinking back to bragging sellers at the water cooler or at the neighborhood cocktail party as little as a year ago, home sellers in 2005 overpriced properties in record numbers. After chewing up market time, the realization set in that it wasn’t the same market as 2002, 2003 or 2004. Realistic pricing based on sold comparable’s in the last six months illustrates to buyers that you understand today’s market.

– No Internet property marketing. According to The National Association of Realtors® more than 70% of all home buyers start their search on the Internet before contacting a real estate agent. Require any agent you list your home with to post a virtual (360 digital) tour and a minimum of eight indoor and outdoor photos on the Internet. CDs of your home are a great take-away for open houses.

– Stop showings too early after contract. With a shift toward buyers for the first time in years, buyers remorse was on the upside in 2005. Many sellers lost valuable market time when taking their home off market too early after signing a purchase contract. Continue to show your home until you feel very comfortable that your buyers intend to go to the closing table with you.

– Refused to pay buyers closing costs. For the first time in many years, buyers based on their strength in the market, asked for and received give-backs from sellers. Closing costs and points on mortgages were the most popular. Decide before offers come in, what your strategy is for dealing with give-back requests. In 2006 expect owner-financing to be the next buyer perk.

– Exclusion confusion. As prices dropped, sellers began to strip fixtures and amenities in contract negotiations. Forget “if the price is right” and take down and replace grandma’s chandelier and remove the mid-century refrigerator for sodas before you place your home on the market . Some simple ratios of home list price versus chandelier cost will convince you to not get distracted by personal property or must-keep fixtures.

– Knowing your market and competition. Buyers in 2005 were very savvy with market times and available inventory. Home sellers who were out-of-touch failed to spend the time to visit competing properties at public open houses, study the competitions marketing and “listening” to the market. No or few showings, no second showings or purchase offers and unfavorable feedback indicate market issues with your home. Don’t be the obstacle to selling your home.

2006 is going to be a great year and I think we could all learn a little something from the mistakes that others have made in 2005. It all comes down to doing your homework, and finding a good agent. Don’t settle for an agent just because you see their face on a billboard or in an ad. Choose someone that you like and that you can build a rapport with. There are a lot of agents out there and most of them would be better served in other industries so be careful. The most important character trait an agent can have is integrity, and that’s a trait that isn’t easily determined. I wish you all the best in your 2006 real estate ventures!

- Justin Beck
REALTOR
Beck Properties, LLC

This is an interesting article geared towards the South Florida real estate market. I wonder if we will continue to see this northern migration of South Floridians. I’m expecting a strong first quarter despite the slowly rising interest rates. The Florida real estate market is still growing as strong as ever. Here’s how some of my peers in South Florida weighed in:

Every year at this time, the South Florida Sun-Sentinel polls real estate industry professionals who are experts in different segments of the South Florida real estate market. We ask them to predict what the market will do in the coming year. Here are their responses:

Andrew Ansin, vice president of Sunbeam Properties in Miami: “The question for 2006 is whether or not industrial tenants will pay $9 per square foot or more. If they don’t, we will see an exodus from South Florida and very limited new supply. Lease rates in North Dade will surpass $6 per square foot, an increase of 40 percent over the last two years. Industrial land prices will continue to increase as industrial condominium developers pay double-digit prices. Land prices will continue to limit the amount of new rental product, with the vast majority of rental projects being delivered by established industrial parks.”

Richard Bass, broker/owner of Keller Williams Realty in Boca Raton and Boynton Beach: “I believe that residential real estate will be somewhat softer in the first quarter of 2006 than it was last year. Interest rates will continue to rise slowly, but continue to be low enough for the market to expand. As people come out of the holidays and the market funk resulting from the hurricanes this year, they will jump back into the market. Overall, I expect prices to level off for a while and then pick right back up where they left off. It will be a great time for people to get back into the market.”

Ron Berger, first vice president, Industrial Properties Division, of CB Richard Ellis Inc. in Miami: “In the first half of 2006, the Miami-Dade industrial market will become white-hot with activity. Rental rates will spike, and sales prices for warehouse buildings will continue to rise. Small warehouse condos (2,500 to 10,000 square feet) will continue to be a hot item no one can build them fast enough — with sales prices reaching $200 per square foot. The Homestead and Perrine submarkets will come on the 2006 radar screen big-time, with substantial industrial development in each one.”

Gary Broidis, president of Atlantic Commercial Group Inc. in Boca Raton and a retail broker: “Demand for income-producing retail properties and land suitable for development will continue to experience pent-up demand from developers and investors both domestically and abroad. But investors will not see the returns they’ve been reaping the past few years because of the higher interest rates. Many buyers of retail properties will realize that they can’t raise rents fast enough to cover the costs of their lofty purchases. This will result in many owners choosing to stabilize the rental streams of their properties rather than focusing on increasing revenue by raising rents.”

Katrina Campins, owner of The Campins Co., a brokerage in Miami Beach: “Miami Beach real estate values across every market will rise in 2006, but there are some areas of concern, such as the West Brickell market and areas north of downtown Miami, where there is an abundance of nondescript projects under construction. Single-family homes will increase in value by 10 to 15 percent in 2006, and demand for glamorous homes/condos by athletes and entertainers will remain at a very high level. Smaller, boutique office condo projects should continue to attract end-user demand, and more residential developers will venture into the office condo market in 2006.”

Marcie DePlaza, division president of G.L. Homes of Florida Corp.: “In residential new-home construction, the Florida marketplace remains very strong. Interest rates are still well below 7 percent, and the beautiful climate will continue to bring enthusiastic buyers for new housing. What bubble? New housing starts are up over 13 percent vs. last year in Florida and will continue because of continued migration from the Northeast, Midwest and Latin America, combined with strong economic indicators going into the new year.”

>David Dweck, a real estate agent with Re/Max Advantage Plus in Boca Raton and president of the Boca Real Estate Investment Club: “Due to the impact of Hurricane Wilma, which compounded the correction in the residential market, some homeowners and investors will get clobbered by the increase in taxes, insurance and potentially higher interest rates and homeowners association assessments. They will be forced to sell or refinance. This will continue the shift to more of a buyers’ market, and there will be more buying opportunities for investors. The single-family and condo market below $400,000 will remain stable in terms of sales, and we will return to 10 to 15 percent price appreciation rates. Foreclosures will increase.”

Douglas Eagon, president of Stiles Corp. in Fort Lauderdale: “Downtown Fort Lauderdale vacancies should drop by another 5 percent or more in this upcoming year due to employment growth and very limited new potential office development. Downtown Miami is experiencing solid demand with very little new office development. Vacancies should also drop by 3 to 5 percent in the next 12 months.”

Jeff Kahn, broker/owner of Florida Beach Inc. in Fort Lauderdale: “I think that in 2006 home prices will begin to recede and that there will be a shift from a strong sellers’ market to a more balanced market. I believe that listing prices will become more realistic, reflecting the prices of comparables rather than above-the-comp pricing. And I think that the number of contracts with `not subject to appraisal’ clauses will be significantly reduced.”

David Levin, a real estate industry consultant based in Delray Beach: “In 2006, residential unit sales and prices will decrease 10 percent from peak 2005 levels. Higher interest rates, utilities, taxes and insurance will stress homeowners, sending ripples throughout the market and deterring all buyers. New condos will place downward pressure on the market, and people expecting to sell the contracts on their investor units will have to deal with becoming owners instead. Since they won’t be able to achieve rents sufficient to cover their costs, they’ll be motivated to sell.”

Mark Zilbert, broker/owner of Zilbert Realty Group in Miami Beach: “I believe that we will see an overall reduction in the number of new residential construction projects being announced as well as a 10 to 30 percent reduction in the listing prices of resale condos in the $500,000 to $900,000 range. We will continue to see growth, although modest, in condos costing $1 million and up. I also believe that record numbers of new buyers (buyers who have never bought property in southern Florida) will be purchasing property in 2006, with the main source of buyers being second-home buyers from the northeastern United States and Western Europe.”

This article was written by Robyn Friedman and appeared in the Sun-Sentinel - Article Link

One thing to keep in mind however is that these are merely predictions and opinions. The real estate market in Florida is consistently stronger than most others despite the fact that it is the front pin in a hurricane bowling alley.

Justin Beck
REALTOR
Beck Properties, LLC

We’ve all been hearing about the condo boom in Florida. People are buying condo’s all throughout the state and “flipping” them for decent profits. The newest real estate fad, though is condo conversions.

Yesterday was a pretty busy day for me. I was in Orlando doing a walk through with a client in their soon to be brand new condo conversion. On the way out I happened to pick up a copy of the Orlando Sentinel and BOOM, there it was. Right there on the front page, the headline read “Condo-Crazy Orlando - (Translation: Good luck finding an apartment)”. My client is in the final stages of purchasing a condo conversion at the Crest at Waterford Lakes in east Orlando, and ironically, the Crest is pictured in the Orlando Sentinel article.

According to Real Capital Analytics, Orlando has been experiencing an explosion of apartments being converted into condominiums since 2002. In 2002, there were 148 apartment complexes converted, compared to 2005 where 14,183 have already been converted. This marks a ridiculous 9,483% increase over the 4 year period. According to the studies, Orlando’s condo market is growing bigger, and faster than Miami AND, yes, even Manhattan!

So, what if you’re currently renting an apartment? What does this mean for you? It means that you need to consider purchasing some real estate. As of November 28th, 2005 interest rates for fixed 30 year mortgages were at 6% while 1 year adjustable rate mortgages were at 4.25%. According to Mike Thomas, a columnist with the Tampa Bay Sun-Sentinel, we’re seeing a sellers market turn quickly into a buyers market. I agree with this assertion to an extent. In my every day real estate practice, I’m seeing a slight leveling off. I’m still working with a number of sellers, but I’m seeing a dramatic increase in the amount of buyer interest and buyer phone calls.

The bottom line is, if you’re currently renting an apartment you should seriously consider purchasing some property. Whether it’s a condo, or a home you’re going to find that your mortgage payment is going to be around the same amount you’re paying for rent, if not less! That’s the case with my client who is set to close on her Orlando condo in mid January. She will be paying the same amount per month to own as to rent!

If you’re currently renting, talk to a lender! You’d be surprised at what you might be able to afford. Avoid any large purchases (like a new vehicle) and try to stash away some money for closing costs (Typically, $4-5,000). There are ways to get around paying for closing costs, but it all depends. Just keep an eye on your credit and before you know it you could be “Crazy About Condos”.