Smoothing out the bumps for a stronger industry

Changes are afoot that will make our market stronger than ever.

There’s old saying, “It takes money to make money,” that has particular relevance for Florida’s real estate professionals. When buyers have a difficult time obtaining financing, it becomes harder to complete transactions. That’s why the subprime loan problems, national credit crunch and other financial issues have had such an impact on Florida’s real estate market.

Fortunately, there are some strong signs that Florida is finally coming out of the financial storm. While conditions may persist into 2009, many Miami real estate and mortgage experts expect a major improvement by mid year and definitely by year end.

Most important, they say that changes in state and federal regulation, higher lending standards and the natural evolution of the financial markets will lay a solid foundation for long-term growth.

“Lenders are more acutely aware of the necessity to put people into loans they can afford and to remove fraud from the originating process,” says Nigel Fullick, head of Southview Mortgage, a joint venture of John R. Wood realtors and Element Funding in Bonit Springs. “This will have a positive effct on both the real estate industry and the long-term health of our economy.”

Tim Allen, president of the Mortgage Bankers Assoc., of Florida, points out that the entire state will benefit as lenders go back to the basics when underwriting mortgages. “For several years, loose credit standards allowed investors to buy properties at prices that could not be justified by market rents,” he says. Now, more buyers will be actual residents, who support Florida supermarkets, restaurants and other local businesses.

“Real estate professionals will benefit because they can help educate these real buyers about local markets, the benefits of ownership and how to pursue sources of funding,” Allen says.

Because 2008 is an election year, analysts say, it’s more likely that state and federal lawmakers and regulators will approve reform proposals. Early in the year, for example, the Federal Housing Administration (FHA) raised it’s loan limits, making this increasingly attractive source of financing more available to buyers in Florida markets.

“Since housing is roughly 20 percent of our nation’s economy, our elected officials are working diligently to put programs in place that will support the housing market,” says Clark W. Toole III, president and chief operating officer of Coldwell Banker Residential Real Estate in Sarasota.

Slower market conditions and declining prices are also helping to ease the state’s affordability issue. “People who are buying now are getting some really good bargains,” Toole says. “If you ever thought about owning South Beach real estate, now’s the time to do it!”

In tomorrow’s real estate market, the successful real estate buyer will understand the basics of home mortgage lending as part of a sound real estate investment practice. Real estate is ever changing market and you have to keep learning in order to achieve your goals.