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Daytona Beach Homes – How Are People Paying?

by Lynn on July 27, 2010

How Are People Paying for Daytona Beach Homes?

Sales of Daytona Beach homes have been strong this year. People are buying homes and condos, but how are they paying for their properties. There’s an interesting new feature in our local MLS (multiple listing service) that shows how people paid for the property purchase.

In June, 52.4% of buyers paid cash. This doesn’t surprise me at all. I’m seeing about 80% of my buyers paying cash. Here’s the breakdown of how properties were paid for:

  • Cash – 255 (52.4%)
  • Conventional Mortgage – 136 (27.9%)
  • VA/FHA 72 (14.8%)
  • Other 24 (4.9%)

I went back to take a look at how financing has changes since the boom days. In June 2005 the numbers were completely different. 74.4% of homes and condos were purchased through conventional mortgages and 22.9% were cash buyers. In rough terms, 3 out of 4 people were using conventional financing in 2005 and 1 out of 4 are doing so today. Also interesting is that 1.3% of buyers in June 2005 used FHA or VA loans versus 14.8% last month.

Conclusions

More than half of buyers of Daytona Beach condos and homes are paying cash, about 1 out of 4 are using conventional financing and 15% are using VA or FHA loans. This tells me that if you want to finance at the good rates and you’re eligible that VA/FHA money is available (see Get Your FHA Loan Now) and people are getting loans. Make sure to check this avenue for the best options. If you have good credit and are willing to go through the new more stringent processes, mortgage money is available.

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Commercial Real Estate in Daytona Beach – Outlook

by Lynn on July 19, 2010

Daytona Beach Commercial Real Estate – Pigs and Bacon?

The building cycle for commercial real estate in Daytona Beach is much like the pig and bacon cycle. When bacon prices rise, farmers raise more pigs. When prices fall, they raise fewer pigs. In the Daytona Beach area, prices rose and developers built more buildings. Prices have fallen and developers have pretty much stopped building until… Yep, until prices rise again, but not for a while.

Commercial property in Daytona Beach has been suffering with high vacancies. There’s no doubt that the local and national economy is affecting occupancy rates as well as prices. Many people have asked me where the commercial market is going over the next few years. This article will address my thoughts.

It’s going to take a while for the commercial sector to recover in the Daytona Beach area, maybe over 5 years. I don’t have a definitive answer on when. Our local economy is still largely dependent on tourism and events, second and vacation homes and retirees. Few local businesses are outside of services to support people in these demographics. We don’t have a strong manufacturing or technology base. Any job growth in our area is likely to be in tourism, medical, education or government.

The impact of a services economy on the Daytona Beach homes market is less significant than on the commercial property market. We believe that the big boom in commercial strip malls in the early and mid-90s was based on a faulty understanding of the local market. That understanding was that the area was going to grow enough to support all that additional space. We believe the availability of money to finance these projects clouded the judgment of many developers. Further, the growth would be in housing for second homes, retirees and service workers. There was no corresponding growth in major attractions, technology or manufacturing businesses.

I watched strip malls and office buildings rise all over the Daytona Beach area. I wondered then where the tenants for these building would come from. Well, one place they came from was people who were in older buildings moving into the newer buildings when their leases expired. Another was very unfortunate. Many people refinanced their homes because of rising home values and started business at or near the top of the boom. Many lost the businesses they started and commercial property owners lost tenants and income.

We believe that commercial spaces that are unique, like Port Orange Pavilion, will fare better than “common” office and retail space. Of the common spaces, those that are newer and in prime locations will recover faster than older buildings in less prime locations.

Prices of commercial properties have dropped significantly. Rents and lease rates have dropped as well. We expect that they will stay there for 3-5 years. There have been a few recent articles in the national press about the commercial market stabilizing. I’m not convinced, but there is no doubt that other markets will recover well before Daytona Beach. New York, LA, Seattle, San Francisco and other area with large diversified economies will stabilize before our area. Why? Because for a smart business operator to occupy a new space, they will need the confidence that their business will be profitable. That confidence will come from the perception of a sufficiently strong local market and economy.

When the demand for commercial real estate in Daytona Beach rises, rents and prices for buildings will rise. It will happen again, just not anytime soon.

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Daytona Beach Real Estate News – Flood Insurance Available Again

by Lynn on July 11, 2010

Congress Extends Flood Insurance Program To September 30th

Update July 19, 2010

The House of Representatives has approved a five years extension of the flood insurance program. It has not yet been signed into law. It must still pass the senate before it can be sent to the President for signature.

Federal flood insurance is again available to buyers of Daytona Beach and Ormond Beach homes and condos. This is very important for people buying on the beachside and near waterways on the mainland. The legislation allows policies written before the extension to be retroactive, however, and this is very important, there is still a 30 waiting period between the date a policy is written and when it takes effect.

There are two important points to remember about flood insurance when buying a home:

  1. The policy takes 30 days to be effective after it is written
  2. Close before September 30th if you need flood insurance

We talked about the 30 days waiting period above, but if your are required to have flood insurance by a mortgage lender, you will need to set your closing date before September 30. I advise targeting 3-4 weeks earlier to make sure that any delays don’t push you into October. Also, policies will not go into effect if there is a storm that could affect the area. Give yourself plenty cushion.

If you’re paying cash, your closing won’t be delayed, but you could be without flood insurance until congress decides to extend coverage again. The current extension is the fourth extension without  a permanent law. There was a delay in the last extension that caused delays in about 1,200 closings a day across the country. The likelihood of another delay is high.

Please contact your insurance agent and instruct them to make sure that the flood insurance policy will be effective, not just written, on the day that you close.

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Daytona Beach Home and Condo Up 46.2% in June 2010

by Lynn on July 6, 2010

Sales of Daytona Beach Homes and Condos Up Again

And so it continues. Sales of Daytona Beach homes and condos were up 46.2% over last June and 12.9% over May.  Total sales for the first half of 2010 are up 33.4% over the first half of 2009. The uptrend continues, but…

There is a lot of speculation that sales have been driven by the Homebuyers Tax Credit. The date to close has been extended (see: Congress Approves Homebuyer Tax Credit Closing Extension for more). We won’t argue with that, however…

Daytona Beach area real estate is different than most other places in the country. To put it simply, most of our sales are driven from out of town money and buyers of second, rental and vacation homes. Those buyers are not eligible for the tax credit, so the affect of the credit is not as significant in Daytona Beach. See our article The Current Daytona Beach Homes Market in 142 Words for more details.

We will know the effects of the expiration of the homebuyers tax credit in July numbers. July and August are traditionally strong sales months in area, so if sales drop in the next couple of months, we might be able to say that the tax credit expiration was one of the causes.

The major trend continues…

The chart shows that 74% of all sales of homes and condos were under $200,000 and 88.1% were under $300,000. However, this is the first time in a long time that sales of properties over $300,000 were over 10%. At 11.9% of sales, this may be a signal that homes in higher price ranges may be becoming more attractive to buyers. One month does not make a trend, but this will bear watching.

If sales over $300,000 start to improve, that will add more strength to our market.

We are still receiving a lot of inquiries from this website, so activity does not seem to be declining at all. Most of our sales are from short sales and foreclosures. If you need more information, or just want to discuss the market and your options, please call me at 386-566-7503.

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Congress Approves Homebuyer Tax Credit Closing Extension

by Lynn on July 2, 2010

Senate Extends Homebuyer Tax Credit Closing Date to September 30

Home buyers who can take the homebuyer tax credit, with binding contracts as of April 30th, will have until September 30th to close under the extension passed by the Senate last night and the House of Representatives last week. All that remains is for President Obama to sign the bill next week.

As we discussed last week in our article, The Current Daytona Beach Homes Market in 142 Words, fewer Daytona Beach and Ormond Beach home buyers are eligible to take advantage of the tax credit because they are buying second homes, vacation homes and rental properties.

Up to 200,000 home buyers nationwide were expected to lose up to $8,000 in tax credits if the closing date was not extended. The problem was that many buyer’s closings were delayed by lenders for the purchase, lenders who owned the distressed properties being purchased, or the closing process itself. Let’s just say that the closing process is usually not very elegant, and foreclosures and short sales complicate the process even further.

No New Homebuyer Tax Credit Likely

I review a lot of information about what’s happening in local and national real estate. I don’t see any indication that there will be a new tax credit. This will have minimal direct affect on the Daytona Beach area market, but has an indirect affect in perception. Buyer’s from out of town are more affected by national news even if that news doesn’t affect our local market. So, if there are reports of slowing home sales nationally, people may take that to mean that they should back off their purchase in our area. We haven’t seen that to date. We are very busy working with buyers and are receiving new inquiries every day.

As always, if you have any questions, please leave a comment here. You can also call me at 386-566-7503 to discuss this article or anything else about the Daytona Beach area market and your options.

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The Current Daytona Beach Homes Market in 142 Words

by Lynn on June 21, 2010

The Daytona Beach Homes Market – The Elevator Version

Let’s say you know I am a Realtor. We are in an elevator and you ask me what’s happening in the Daytona Beach condos and homes market, here’s my quick elevator version:

“Our prices have dropped to where people are buying homes and condos in the lower price ranges, particularly under $200,000. Distressed properties from short sales and foreclosures will continue for another 2-3 years keeping prices from showing a significant rise. When distressed properties in big numbers are gone, our prices will rise. First, a short spike while people try to buy at the lowest prices and then more gradually. Much of the money to buy local homes and condos comes from outside the area from buyers of second and vacation homes. That makes the national economy more important to home and condo sales than the local economy. Any time in the next few years is a good time to get a great value. Interest rates are super low, making now probably the best time if you will be financing. Thanks for asking.”

That’s the elevator version, here’s why:
[click to continue…]

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Customer Question – Should I Buy in an Older or Newer Neighborhood?

by Lynn on June 7, 2010

Where Should I Buy?

A buyer has a dilemma. They like two homes in two vastly different neighborhoods. Should they buy the upgraded home in an older neighborhood, or, the new home in a newer development?

First, let’s assume you like both homes equally. You would be happy living in either. With both homes being equal in location, schools and other things that are important to you, it comes down to two big questions: 1) how long are you planning to stay in the home, and, 2) how important is appreciation for you?

If you are planning to stay in the home for a long time, appreciation is not as important. If you know you will likely move in a few years, appreciation is very important to you.

The old adage that location is important still holds, especially with waterfront homes and condos, but another important point is often overlooked – what are the most popular or “hot” neighborhoods and developments in the area. Ormond Lakes Homes are located in a newer development with great amenities and lots of small lakes. Tomoka Estates Homes are in a community of newer and older homes without amenities, but many of these homes are on the Tomoka River or canals leading to the river.

These two communities are popular for different reasons. Which one would appreciate more? In general the newer homes in a popular community, with a lot of demand, will appreciate faster than older homes in older neighborhoods. However, waterfront homes, whether river or ocean, will always be in short supply. The short supply creates demand and competition, so riverfront and oceanfront homes should appreciate faster than similar homes in a neighborhood that are not on the river or ocean. Ormond Lakes homes will probably appreciate faster than Tomoka Estates homes that are not on the river or canal. Homes on the river will be more expensive because of the land value.

Another important thing for you to consider is the value of the home compared to the rest of the neighborhood. For appreciation purposes, avoid the most most expensive home in the neighborhood. Why? Because if every other home sold in the neighborhood sells below the value of that home, it’s difficult for people to understand the price and value of the most expensive home. There will be no equal or higher comparisons to help justify the value and price. That being said, you may still want that home. The point to understand is that appreciation may be reduced by the neighborhood, especially at the top end of values.

When we lived in Pennsylvania in the early 1990s, we lived in a 100 year old home with beautiful rich wood throughout located right on Main Street. It was gorgeous and comfortable. Our last two homes in Florida were newly built homes in Halifax Plantation and Mallards Reach. We loved the 100 year old home, but we also loved our new homes.

In the end, it comes down to what you like, but understanding the difference in neighborhoods and developments should be considered.

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Daytona Beach Area Home and Condo Sales Up in May 2010

by Lynn on June 3, 2010

Daytona Real Estate Sales Up in May 2010

A 1.6% increase may not seem like much. That’s what we saw in May over April sales. That’s not the news. The news is that we are up 23.5% year over year when we compare May of this year against last year. Local Daytona Beach home sales gains over 2009 are holding.

For the first five month of 2010 sales are up 30.4% over 2009. We’ve sold 428 more homes and condos than during the same period last year. That’s the important trend. Even if sales were to stay steady, or even decline slightly, on a month to month basis, the market has regained a lot of its strength lost during 2007 and 2008.

The composition of sales however has changed radically. Most home sales are still occurring in the under $200,000 price range. Take a look at the chart below and you will see how sales under $200,000 dominate the market.

80.5% of sales in May were under $200,000. Add the 11% of sales between $200,000 and $300,000 and the total rises to 91.5%. Only 36 of the 426 homes and condos sold were sold for over $300,000. This is a trend that we have seen for over two years and is still increasing slightly. In April, 90.4% of sales were under $300,000.

What Do May Numbers Mean?

First, with sales under $200,000 dominating the market at 90.5% of all sales, homes and condos in this price range are going to sell faster for sellers. For buyers, homes in the this price range that are priced right, will have more competition with other buyers. It’s not unusual for an aggressively priced bank-owned foreclosure property under $200,000 to have multiple offers and a bit of a bidding war.

Second, more expensive homes and condos have significantly lower sales and less competition. Homes and condos over $300,000 must jump out as a significant value. The listing price must be backed up by value. An attractive, properly priced listing in any price range must have its value showcased and made clear to prospective buyers.

Three Factors to Watch

We see three factors to watch closely this year to time your home purchase:

  • Home Prices
  • Mortgage Rates
  • Inflation

It’s rising prices you need to be watching. No, we are not seeing rising prices yet, but it will happen. Some markets are recovering in price, but not sales. We have recovered in sales, but not price. When prices of Ormond Beach homes for sale and other area homes start to rise, we expect a mini-boom if people panic about getting what they see as a once in a lifetime bargain.

Mortgage rates and inflation are tied together. Watch both because if you are financing, it can cost you a lot. A big jump in inflation rates will boost mortgage rates. Here’s what happens:

Monthly Payment for a $200,000 mortgage at 5.14% = $1,090.82

Monthly Payment for a $200,000 mortgage at 5.44% = $1,128.06

Monthly Payment for a $200,000 mortgage at 6.00% = $1,199.10

Monthly Payment for a $200,000 mortgage at 6.5% = $1,264.14

Rates going from 5.14% to 6.5% is not unrealistic. Remember 1980s Interest Rates.

Is Now the Right Time to Buy?

We think it’s a good time to buy, but don’t take our word. Look at the 426 people who bought homes and condos in May. 1835 votes were cast by buyers so far this year, 30.4% more than last year and 57.1% more than in 2008. The people who vote with their money are the people we watch.

We are concerned about inflation. We believe there will be higher inflation to pay for record government spending and borrowing. It’s a matter of when, not if. If you are financing and qualify now, consider the value of having a 5% mortgage rate if rates go to 7, 8 or 9%.

Please give me a call at 386-566-7503 to discuss the market and your options.

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Is International Instability Keeping Mortgage Rates Down

by Lynn on May 28, 2010

International Instability Keeping Mortgage Rates Down? – Nah

Most people who buy Daytona Beach and Ormond Beach homes and condos care only that mortgage rates are low. With prices being low, it’s a pretty good situation right now for buyers. However, there are those who like to speculate rather than report useful facts and information.

It appears that whatever is happening in the world is often used as an explanation for favored opinions. I been seeing a few references in the past few days that domestic mortgage rates are being held down by instability in international financial markets. I don’t believe this at all.

I’m not an economist, but that doesn’t stop me from understanding some basic things about money and interest rates. Mortgage rates are low because the demand for loan money is down. If there were better places, safe places, for banks to loan money, they would – at higher rates. Long-term bond rates that are correlated with mortgage rates are low, so mortgage rates stay low.

If the economy were in any state close to normal, we suspect rates would be much higher. The US government has been borrowing and printing money during this recession and we will eventually pay for that with inflation. We can’t know for sure when, but if history repeats, we can fully expect it to happen. When inflation kicks in, interest rates and mortgage rates will rise.

Mortgage Rates Next Year Don’t Matter Now

My point is that mortgage rates are low now. Prices are low now. If you are planning to buy, this year and next year will probably be the best opportunity for a long time. If you’re in the market, watch prices and watch mortgage rates. In the long-term, you won’t need to hit the absolute bottom of both mortgage rates and prices. Anywhere close should put you in a solid position for future appreciation.

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Daytona Beach Foreclosures Pages Updated

by Lynn on May 25, 2010

Live Display of Daytona Beach Foreclosures Listings Added

We just updated several pages related to Daytona Beach and Ormond Beach foreclosures today. Current listings of foreclosures have been added to the following pages:

Daytona Beach REO Properties – This page has all properties in Daytona Beach that have been listed as foreclosure or Bank Owned / REO.

Ormond Beach Foreclosure Listings – All Ormond Beach Florida foreclosures are listed from the Daytona Beach MLS.

Beachside Daytona Beach Real Estate Foreclosure Listings – This page shows all the beach side foreclosure listings for Daytona Beach, Daytona Beach Shores and Ormond Beach including homes and condos.

We will be publishing more pages of listings of foreclosure properties over the coming days and weeks. We are also in the process of adding more community pages. We published The Trails Homes for Sale in Ormond Beach yesterday.

Check back often for updates. If you don’t see what you’re looking for, please give me a call at  386-566-7503. I’m happy to talk about any specific property or to discuss the market in general to help you determine if now is the right time to buy or sell for you.

If you want to see all the foreclosure, bank owned / REO properties available in Daytona Beach, Daytona Beach Shores, Ormond Beach, Port Orange, Ponce Inlet, Ormond by the Sea, Holly Hill and South Daytona, just look at the list below.

Daytona Beach Area Foreclosed Homes and Condos

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Ormond Beach Homes – 2 New Communities Posted

May 23, 2010

Halifax Plantation is golf course community located north of the city of Ormond Beach, Florida. Tomoka Estates is a river front with surprisingly lower priced waterfront homes.

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Customers Question: What is a Condotel?

May 21, 2010

A condo hotel, or condotel, is a hotel or motel converted into a condominium property. Pretty simple explanation, but it gets a bit more complicated.

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Buying Daytona Beach Homes and Condos – What YOU Need to Know

May 17, 2010

More people are buying homes and condos. Sales of Daytona Beach Homes and Condos are up 32.7% in the first four months of 2010 compared to 2009. The reasons are pretty simple – low prices and low interest rates.

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Daytona Beach Commercial Building for Sale

May 11, 2010

A recent renovation inside and out highlights this 14 unit centrally locate office building on US1 in Daytona Beach.

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Daytona Beach Home and Condo Sales Up 35% in April 2010

May 6, 2010

Daytona Beach homes and condos continued their sales increase in April moving 35% higher than last April and increasing 6.9% over last month.

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Ormond Beach Executive Home Price Reduction

May 4, 2010

This executive pool home in Ormond Beach provides the best in Florida living and now the price has been reduced to $499,900.

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Daytona Beach Homes Sales Spike Up 34.9% in March 2010

April 13, 2010

Sales of homes and condos in Daytona Beach continue their steep climb over both March last year and last month. 393 homes and condos were sold last month against 282 sold last March – an increase of 34.9%. Sales were up 23.6% over last month when 318 homes were sold

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Upgraded Daytona Beach MLS Search With New Features

April 11, 2010

We have upgraded our search capabilities for our clients. New features include enhanced property information, advanced search with many more search options, and the ability to search using a map.

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New Listing – Ormond Beach Pool Home for Sale

April 10, 2010

This Ormond Beach executive home is simply beautiful. The owners have recently upgraded both inside and outside. The inside of the home has all those designer touches you would expect in an executive home. The exterior of the home is freshly painted with extensive new landscaping.

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MSNBC Showcases South Daytona Condo From LynnByrne.com

March 23, 2010

A South Daytona condo shown on my site, listed at $28,900, was showcased on MSNBC this morning in a feature on hot properties in Spring Break towns.

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