Mortgages ARE out there. And so are bargains.
Posted: Wednesday, October 08, 2008 3:26 PM by Daily Nightly Editor
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Notes from the field
By Michelle Kosinski, NBC Correspondent
Driving around foreclosure-riddled southwest Florida, we couldn't believe our eyes. The prices! Were those typos?
Funny, that's exactly how we felt three years ago about real estate in Florida. Only, for the exact opposite reason.
Today, homes that would have sold--and did sell--in the high $200,000 range in 2005 are being sold off by banks for $50,000 or $60,000. We found four-bedroom, never-lived-in homes for $80,000. Generally, when you look at what the peak value was for a particular house in this area, you can subtract $200,000 now.
Yes, this is partially a very sad story. For many of those thousands of foreclosures, there is a family that bit off more of a mortgage than they could digest, and were forced out. One listing mentioned that the original family would like to rent the home back from the new buyer, if possible. One bidder, a 24-year old student who never dreamed she'd be able to afford a home now, felt guilty.
But, if there is any good to be found in this dismal situation, it is the return of something that hasn't lived in these former boomtowns for a long, long time: affordability.
It is causing a bit of a "gold rush" -- homeowners are battling one another, cash buyers, and investors for these bargains. Houses are going for below replacement cost. The first day it hits the listings, a home can get a dozen bids.
Potential first-time buyers are stunned to find that getting the mortgage was NOT the hard part-- but finding a home that doesn't already have several offers pending on it is.
Kelly Francis, the 24-year-old student, says, "I just thought we were going to have a whole bunch of them, we were going to take a long time to decide, but it's the other way around. These houses that are coming up, they're being snatched right away!"
Home prices have dropped across the country. Most dramatically, in the onetime boomtowns. As a result, sales are up, and so are first-time mortgages from FHA.
Lenders are being more careful-- Kelly found that her bank was calling references and asking for documentation of her finances. Luckily, she has good credit.
Zero-down mortgages are almost nonexistent. But they ARE out there for specially qualifying buyers, or those who are eligible for bond money in certain areas that need a boost.
FHA loans, as of this month, now require 3.5 percent down, up from three percent.
But the sheer exhilaration of homeowners who are securing the financing to land these rare deals is contagious. These are the people who are bringing life back to neighborhoods marred by boarded-up foreclosures with overgrown lawns. They will be the new faces of responsible lending, and recovery.
As Realtor Bill Mitchell (who runs a foreclosure bus tour) put it, "everyone was priced out of the market! The police officers, the firefighters, the EMS, the teachers--your people that you need, as your essential workers here. And that's what really nice. It's letting them come back in. And stop renting, so they can get a home."
Brett Ellis, with RE/MAX, has been swamped with all this new buying in a market that has seen extreme highs and lows. Three years ago, Lee County, Florida, was named the hottest real estate market in the country. In January, it had the highest rate of foreclosure in the country.
"It's nice to see a neighborhood improved," he says. "and people getting their dream again."
To see a hardworking couple walk into their new home they could not previously afford in Florida, twice the size but tens of thousands of dollars less than the one they just sold in Connecticut, and actually jump up and down for joy...priceless.
