Daytona Beach Florida Real Estate Sales - 2 Things Need to Grow

There is a lot of news, analysis, analysis of analysis, finger-pointing, blame gaming, doom and gloom predictions, and plain bickering going on about the economy and real estate. It going to go out on a limb here and attempt to simplify what needs to happen for home sales in Daytona Beach to break out of the current level.

There are two major factors, and I believe only two, that focus our market problems:

1. Lack of money for mortgage loans
2. Lack of confidence of home buyers

Lack of Money for Mortgage Loans

As easy as it was to get a mortgage a few short years ago, it is that difficult now. Near perfect credit and 20% down is being required by many lenders. In addition, income to cover the payments needs to be verified. Why? Lender’s are looking to be as close to zero risk as possible.

For the Daytona real estate market to grow from current levels, credit must be available to people with good credit who fall into what used to be considered reasonable risk. This will happen, the question is when?

Congress and the Administration are attempting to pass a widely unpopular measure to remove bad mortgage debt for giant mortgage lenders. The reason is that with this debt on the books, they are hurting for cash to fund operations, and they are unable to borrow against the lousy debt. The banks and mortgage companies don’t trust each other because they are nowhere close to zero risk themselves. Who would want to do business with Washington Mutual, IndyMac or Wachovia knowing there disasterous financial conditions.

If this bill is passed in some modified form, credit may be available much sooner than if the markets take care of themselves. In the meantime, the market will continue as it is. I’m not calling it bad now, bad was January, when only 164 homes were sold in the Daytona Beach MLS. I’m not calling it good by a long shot. Too many sellers are really hurting because of the drop in prices and the lack of buyers.

Lack of confidence of home buyers

Home buyers lack confidence in two ways:

• Buyers are unsure that prices are finished dropping
• They are unsure about the economy in general

Falling Prices

Are prices finished dropping? Probably not and the reason is that short sales and foreclosures are flooding the market. Short sales are selling well under market value and sellers without problems are competing against those lower prices. The economically distressed sales are depressing prices.

I could argue that buyers can get such good deals now, that they are protecting themselves pretty well against prices falling, but that is a longer term view. I believe the deals that people are getting now will be the best for a long time, but, they will not be able to sell until the market recovers. So they are getting great deals, but they’re stuck with them for a few years.

General Economic Conditions

Everybody knows that consumer confidence is low and if it wasn’t low before, it is now. When the President of the United States says that unless Congress takes action immediately, Americans will lose their pensions and jobs and that home values will fall further, most people panic - at least a little. Now honestly, President Bush doesn’t know for sure what will happen, no one does. But, action is required. The bailout of Wall Street excesses leaves a bad taste in my mouth, and if polls are to be believed, 8 or 9 out of 10 people agree with me. But something needs to be done and this is a good start.

If money is available for mortgages, people still need to be confident that they will have their jobs and companies and a way to pay the mortgage.

We Need Both Mortgage Money and Confidence

We need both available mortgage money and buyer confidence for the Daytona Beach real estate market to grow. One will not work without the other. These are tough times in the real estate business, maybe the toughest ever, but this is part of a cycle and sales will eventually grow. When you, your family and your friends feel better about the economy and your situations, then we will have turned the corner. If at that point money is available for mortgages, the pent up demand that’s building now will result in market growth.

Until then, it takes cash or great credit to buy. People who are in that position can take advantage of a great prices right now. People call me now with requests that were impossible a few years ago. They want more house or condo and amenities at low prices and we are finding them what they want. I am making sales and I’m amazed at the value people are getting for their money. If you want to take advantage of great deals, call me now at 386-566-7503. Homes in Ormond Beach and Port Orange, with their popular schools and lifestyle, are now at affordable prices we couldn’t have imaged just a short time ago. There really are tremdous opportunities.

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