Market Trends

Did I miss the opportunity to buy with really cheap interest rates? Are rates going to come back down?

The scaling back of QE is expected to increase mortgage interest rates by 50 basis points over the course of the year. Some believe that the recent increase in rates pre-absorbed that anticipated impact.

However, to put it all in perspective, 2001 marked only the second time in Freddie Mac’s history (1971) that rates averaged below 7%. 2010 marked the first year that rates averaged below 5%. So by comparison, at 4.5%, today’s rates are still very cheap and it is a great time to buy!

As always, please visit us at or for questions, email us at


Are the foreclosures and short sales drying up? Fewer of them seem to be available for purchase.

Yes, they are. Distressed properties only represent 20% of the sales market this year as opposed to more than 40% just two years ago. Foreclosure filings are down an average of 37% as compared with last year. Strong buyer demand for distressed properties has caused the average sale price for such properties to increase by 27% as compared with last year as well.

The low interest rates that we are seeing have played a significant role in the reduction of distressed inventory. Call us for a list of what’s available today and be ready to act quickly!

For more info, please visit us at . Please email questions to

Alive and Well Despite BP and the Media

So, BP has finally succeeded in capping the Deepwater Horizon well … While that is great news, there will still be little mention in the media of the fact that our beaches here along the Emerald Coast are oil and tar ball free.  Over the past two weeks, Terri and I have traveled by boat from Perdido Key to Port St. Joe.  The only oil we have seen is called Banana Boat or Coppertone or No Ad, etc etc … And it was most definitely smeared all over the beachgoers, locals and tourists alike.


The cable news networks have been bad enough in their irresponsible coverage of this event, but what about the print media!!! My God!! With huge declines in readership and shrinking ad dollars, some of the print media has been the most reckless and desperate of all. Photos of sludge on the beach at Grand Isle Louisiana with headlines indicating it to be Florida??? Criminal!!


Even more criminal is the fact that BP is NOT paying reasonable claims as they would like to have everyone believe. Dragging their feet and digging in their heels, these Keystone Cops are going to deny the majority of legitimate claims.  When BP says “We are going to make this right”, it really means “If you don’t like it, sue us”.


After nine consecutive months of increased sales transactions over the previous year, the month of June fell flat. That is because there is a 30 – 60 day lag between cause and effect in real estate sales. The impact of April and May will be felt in June and July.  Over time, the public will come to realize that all is well and that life is still good on the Emerald Coast.   Most Gulf Coast regulars are already aware but had already cancelled their plans for this year. So business-wise, fall and winter will most likely be fairly normal.  By spring, business should be much improved. Time will tell.  It always does.

Housing Affordability

For the first time in a long time, the real estate trend has taken a positive turn here. June single family sales in both Okaloosa and Walton Counties were actually up over the same month last year.

An anomaly? We don’t think so. Most of the rest of the state has been experiencing increases in the number of transactions as compared to last year. Perhaps the Emerald Coast simply lags a little behind?

Interest rates have ticked up a little in response to many factors, not the least of which is the threat of increased taxation. However, low demand has kept the markets competitive – at least for now.

Nevertheless, the all-important “Housing Affordability Index” now stands at a 28 year high.  Simply put, a higher percentage of Americans can afford to purchase a home today as compared with any year going back to 1981!

Check ourt website at for more!


Broker/Owners Ed and Terri Smith were recognized by RE/MAX for their ranking as the # 5 residential real estate team in the state of Florida Year-to-Date through the month of April.
Ed and Terri are both members of the RE/MAX International Hall of Fame. Ed is also a recipient of the RE/MAX Lifetime Achievement Award which has only been achieved by the top 2% of RE/MAX Associates out of the nearly 100,000 associates and brokers worldwide.

In local real estate for 22 years, the Smiths founded RE/MAX along the Emerald Coast in 1990. Both are Certified Residential Specialists (CRS) and Accredited Buyer Representatives (ABR) and Certified Distressed Property Experts (CDPE).  Ed is also a Certified Real Estate Brokerage Manager (CRB) and is e-PRO certified.
The Smiths  are assisted by four team members, two of which specialize as Buyer Specialists,  Kay Hutcheson who joined the team in 1999, and  Heather Swett, who has been a team  member since 2003. Barbara Elizondo, also licensed, has been a team member since 1997 and coordinates the entire team effort. Also affiliated is  Richard Stewart who directs short sale services and special marketing projects.
RE/MAX Coastal Properties is located at 125 Main Street, at Highway 98, in the heart of Destin in the Old Destin Bank Building.


RE/MAX Coasatal Properties Broker/Owners Ed and Terri Smith were recognized by RE/MAX International for their ranking as # 71 among all residential real estate teams in the United States. The year-to-date statistics are through April, the most recent month for which 2009 statistics are available.

“With the enormous number of top producers within the RE/MAX system, a ranking anywhere within in the top 100 in the U.S. is a very formidable achievement” said Ed Smith. “In fact, RE/MAX was just ranked as the top U.S. firm in terms of transactions per agent for 2008, in both The REAL Trends Survey and the RIS Media Power Broker Survey.”   

The Real Trends Survey also reported that RE/MAX agents averaged far greater sales volume than the other national firms, and 31% more than the second place company in the U.S. RE/MAX operates 7,000 offices in more than 70 countries worldwide which is an international presence far greater than any of its competitors. With more than 90,000 sales associates worldwide, RE/MAX has been honored as the leading real estate franchise for nine of the last ten years by Entrepeneur Magazine.

Business Looking Up in Florida

Remembering that real estate was the first “industry” to feel the impact of a weakening economy, it stands to reason that it may lead way to recovery.

Real estate sales transactions have been increasing around most of the rest of the state for the past year or so. The Emerald Coast, or Northwest Florida in general is typically believed to trail the rest of the state by from 12 to 18 months, depending upon whom you ask.

So, sales transactions are finally increasing here as well. Not as compared with last year, but as compared with recent months. This 2009 positive trend is the result of a number of things:

1. Interest rates are incredibly low.
2. Sales and asking prices are incredibly low.
3. Inventory levels are high – Choices are plentiful.
4. $8,000 tax credit for first time buyers.
5. An overall sense that prices will not decline much further.

Moreover, we have never seen low mortgage interest rates and low housing prices at the same time. This is an unprecedented opportunity for buyers. This helps to explain why we are seeing so many institutional buyers and investors coming back into the market. We are being approached by REITs and others, searching for investment properties, both residential and commercial.

You cannot turn a battleship on a  dime, and neither will this economy rebound in an instant.  What we are seeing now are the early signs of a real estate recovery. Some prices may very well go lower before they go higher, but as sales transaction numbers continue to improve, the brighter becomes the light at the end of the tunnel.

Are there fewer foreclosures on the market right now?

Yes, there are fewer foreclosures on the market now … There are several reasons for the decline in the number foreclosure sales, but such is not the case in terms of actual filings. Filings may be about to increase significantly though.

The reasons for the cancelled sales, abated foreclosures and dismissals have to do with:

1. Moratorium commitments for entities receiving government funds
2. Some servicers have run out of money to advance foreclosure costs
3. Servicers are now being instructed to mitigate costs when a foreclosure will only result in the burden of maintenance, repair, taxes and insurance and the ire of the affected neighborhood
4. The overwhelmed servicers have minimal trained staff and huge caseloads
5. The servicers have to deal with conflicts between investor tranches
6. Servicers have to wade through the complex IRS REMIC tax shelter issues set up in the PSA

The decline in foreclosure sales is a result of loss mitigation which has now morphed into “loan management”, but is not likely to be successful in the near term as property value continue to decline, making it difficult to accomodate modifications.

In spite of these efforts, many borrowers will not qualify because of bad debt to income ratios, loan to value ratios. Also due to poor credit scores and in general, an inability to qualify for a mortgage loan and/or obtain property insurance.

In 2008, more than half of the borrowers who were able to obtain loan modifications from their lenders were delinquent again six months later. In other words, nationwide modification efforts have not been especially successful thus far.

Then we have the next generation of defaults – That is, those occurring within the ranks of the chronically unemployed – previously referred to as the middle class. Nationwide surveys indicate that the average family has the liquid resources to survive for 60 days without income. Unemployment rates are rising, and consequently, a rise in related mortgage defaults.

All this data is being closely scrutinized by lenders and government alike. The lenders are coming around to the realization that putting families out of their homes is not a good business model.

If you are looking for a deal on a distressed property, short sales may be better options than bank owned.

Good Economic News?

Fresh look finds hope

By Jeff Harrington, Times Staff Writer

Published Friday, March 6, 2009

Ticking off reasons to be in a dour economic mood is picking low-hanging fruit: The stock market is near 12-year lows; about one-third of bay area homeowners hold a bigger mortgage than their house is worth; more small businesses are losing their credit lines while more Floridians are losing their jobs.

No wonder consumer confidence is kicking around at all-time lows.

Enough with the gloom already.

In the spirit of hope and our perpetually optimistic governor, we prefer to seize on a handful of positive economic snippets that set the stage for a turnaround. After all, Federal Reserve Chairman Ben Bernanke, who more often than not moves the market downward with a bluntness alien to his predecessors, is among those predicting the recession will end in the second half of this year.

So raise your half-full glass for a semitoast to the upside of our economic condition.

BUSINESS INVENTORIES have been dramatically pared down, leaving many small companies lean enough to weather a prolonged slump and flexible enough to adjust their products to a shifting marketplace.

THERE ARE GREAT DEALS to be had in buying a house (substitute: stock, car or marked-down consumer good of your choosing). Yes, there may be a further slump in real estate and stock prices, but history dictates they’ll eventually rise above current levels, and discounts and incentives abound.

THE FEDERAL STIMULUS PACKAGE may be assailed for lingering long-term effects on the deficit. But in the short term, Gov. Crist is counting on it to help Florida balance its budget and avoid government layoffs.

CONSUMER SPENDING rose in January after falling for a record six straight months. The better-than-expected numbers were pushed higher by purchases of food and other nondurable items.

INCOMES ALSO ROSE unexpectedly in January. The jump was helped by higher Social Security checks kicking in; nevertheless, take heart that the 0.4 percent increase was the biggest jump since May.

NEW JOBLESS CLAIMS and the total number of people receiving unemployment benefits both dropped more than expected a week ago.

A HUGE DROP IN HOUSING STARTS has helped shrink the inventory of homes on the market. When homes sales eventually stabilize, home prices should appreciate at a quicker pace because there are fewer houses out there.

How will this new Fannie Mae home refinance program work?

Unfortunately, the program referred to as “Making Home Affordable” (MHA) will not benefit many homeowners in this market. Call me a cynic, but I believe that the scope of this program is so narrowly focused that very few homeowners will be able to qualify. 


The reason is that area depreciation (like so many others) has been severe. This program will not allow you to refi more than 5% above the current value of your home. As an example – Say you had put 10% down on a home in 2005. If that home has now depreciated by 25%, you would be 15% “upside down”, or 10% above the qualification threshold. 


Look at it another way:


$300,000   –  Purchase price in 2005


$  30,000   –  Down Payment


$270,000   –  Mortgage Balance


$225,000   –  Current Value (25% less than original purchase price)


$236,250   –  Maximum MHA refi loan amount (5% above current value)


As you can see, there is a difference (deficit) of $33,750 between the existing mortgage balance and the amount that could qualify for a MHA refi.


This program equates to typical government fuzzy math.  It’s like putting lipstick on a pig – It sounds cute but it does not accomplish much 🙂