Distressed home
sales accounted for less and less of the total market month after month here in
Florida the last 6 months. We have seen a normalization to the local housing market,
but at the same time putting more of a squeeze on already-burdened buyers.
"The bargain
days are gone," said John Tuccillo, chief economist for the Florida
Realtors trade group. "That's the bottom line in all of this."
Distressed sales
have been slowly shrinking for the past three years. Statewide, nearly half of
all property sales involved a short sale or foreclosure in 2009, near the
height of the housing bust. The properties typically sold for below market
value to ready and willing buyers. Many of those properties would have multiple
buyers waiting for their offers to be chosen only to be out bid.
But rising home
prices over the past year turned Florida and many other parts of the nation
into a seller's market. Short sales and foreclosures now are selling for list
price and above, and many still have the attention of multiple buyers.
Thousands of owners
who were "underwater" on their mortgages now have equity, even though
in some cases it is just enough to get out with taking from their own pockets
to make a deal work. They don't have to let the homes fall into foreclosure or
need permission from their lenders to sell for less than they owe on the
mortgage. Now they can go rent or buy something in the area they now like with
out having to wait the two years to qualify, (as long as their credit is still intact
when the sale is completed).
"There's less
distress in the market, and those who are in distress have the escape hatch of
equity," said Daren Blomquist, a vice president of RealtyTrac Inc., foreclosure listing firm.
One
of the biggest issues here that I feel has been over shadowed is that the Federal
lawmakers allowed the Mortgage Forgiveness Debt Relief Act to expire on Dec. 31st
of last year. That means the amount of debt forgiven in the short sale of a
primary residence is considered income and taxable. An owner with $100,000 in
debt wiped away could face taxes of $25,000 or more depending on their
individual tax rate. That is huge when dealing with this problem. At one
time it was fight just to get the deficiency waived on an approved short sale now;
it’s looking at bankruptcy to get rid of the tax burden after the short sale.
There
is always talk now and again about renewing the Mortgage Forgiveness Debt
Relief Act but it is always put on the back burner and seems like everything is
always behind the Obama care news. Will they ever renew the Act? Will it be
retroactive to Jan. 1st? Will it be the same old Mortgage
Forgiveness Debt Relief Act we know of ? or will it become something new? ObamaDRA
? Your guess is as good as mine.
