Central Florida Real Estate Expert on State of the Market: Expect Normalization to Return

As the co-founder and CEO of The Pinnacle Cos., an Orlando-based financial-services company involved in residential Florida home mortgage and commercial mortgage lending nationwide, Douglas F. Long knows a lot about housing. The following is a summary of an interview he recently gave The Orlando Sentinel.

Q: What’s your outlook for Central Florida real estate market. Rates and inventories are rising, sales are slowing. Big crash or just a cooldown?

A: I think we’re going back to a more normal, balanced market. Inventories are where they were three, four, five years ago. I’m still hearing about people who sold their house quickly; I’m also hearing about houses sitting for 90, 100, 120 days. You know the standard listing contract has always been 180 days, because you knew that in a normal market it might take that long. All that speculation [of the past two years] wasn’t healthy. A house shouldn’t be looked at as a day-trading commodity.

Q: Some people think that unprecedented explosion of the real estate business may never be duplicated again. Do you agree?

A: I think what happened was there was so much speculation in the market. I don’t believe we’re going to have that on that scale again. But I think first-time buyers and move-up buyers are going to be in the market [taking out Florida mortgage loans]. Over the next six to nine months, there’s going to be opportunities for people to take advantage of softening prices - but I wouldn’t wait too much past nine months. Orlando is going to continue to grow.

Q: The average rate on a 30-year fixed mortgage is now above 6.5 percent. What interest rate level do you think is a psychological barrier today for buyers - 8 percent, 10 percent?

A: I think it’s 8 percent. Another big change is that everything is credit-score driven. Someone with a poor credit score might be looking at 8 percent or more right now; that 8 percent as a barrier would be for those with the best credit.

Q: You’ve been in the Florida home mortgage business a long time (around 20 years). What are some of the changes you’ve seen?

A: When we started in the mortgage business, everyone was on typewriters with carbon paper. A copy machine was a luxury. Today, everything is done at the speed of thought. It’s all on the computer. We’ve really seen technology make major changes in mortgage banking. Getting a Florida home mortgage loan is so much faster today.

Q: Not that long ago, you could count the types of mortgages available on one hand. How many loan types does Pinnacle have today?

A: We have 1,182 loan variations. That’s so many that loan officers can’t know them all. Technology lets us handle so many products and helps us make the best selection.

Q: Are home buyers confused by so many mortgages?

A: With the advent of the Internet, people understand things better than ever. But with so many options out there, it can be confusing. The need for a professional loan officer is greater than ever [in order to determine the best Florida mortgage for you and your family].

Q: There has been some criticism of some of the new mortgages, such as interest-only loans, as being dangerous. Do you share those concerns?

A: I think interest-only Florida home loans are fine for the right borrower. If you look at an amortization rate on a 30-year loan, you’re basically paying interest only for the first 10 years anyway. And if you look at cash flow as a key need for a homeowner, interest-only loans can make sense. The key is matching the right loan for the consumer’s need.

Q: There has been talk about phony appraisals, with false values promoted so a loan can be made at a higher than warranted level. Has this been a problem?

A: It’s out there. But lenders have processes in place to check appraisals. We can validate appraisals. We believe that’s the biggest danger of fraud. Mortgage fraud is expenive to the consumer. Those losses are going to get passed on to the consumer.

In the end, individuals can look forward to a healthy Central Florida market, despite concerns about closing costs on Orlando Florida home mortgage loans. You just need to ask the right questions and understand every aspect of the process.