Florida Real Estate News - 03/12/07
FLORIDA PROPERTY TAXES
An alternative House Republican plan to swap property taxes for sales taxes began to gather steam Friday. The idea is to eliminate the portion of property tax bills that go to school districts and pay for education through a higher sales tax.
When the lottery was introduced into Florida, the legislature proposed that the monies would go towards the public education for both school districts and the state’s higher education institutions. Well….after some time, funds slated for education were diverted to the general fund, because the lottery profits were going to education.
This is beginning to sound familiar - maybe the same outcome?
A group of out of country part-time residents are banning together to call for property tax reform in Florida. Part-time resident Phyllis Turek says she doesn’t expect the same concessions as full-time residents, but believes part-time residents should get some credit for paying taxes year-round and using services for only a few months.
Sounds fair, but does Ms. Turek realize services are not strictly volume related, but there are fixed costs along with the variable costs associated with the part-time residents?
It’s not just Florida: At least a dozen states have legislation in the hopper this year to provide property tax relief, on top of at least eight that acted last year, according to the online news service Stateline.org.
HOUSING OUTLOOK
Many forecasters now predict that the worst may be over when it comes to the housing market, pointing to sales data that shows the national existing home sales market is on the verge of regaining ground.
Hope you read my posts about what the University of Florida survey on Emerging Real Estate Market Conditions had to say as well as what is happening in the greater Naples real estate market.
MORTGAGES
Federal Reserve Chairman Ben Bernanke and many other economists do not expect troubles in the subprime mortgage niche to impact the overall national economy, thanks to a low unemployment rate and income gains. Still, rising subprime foreclosures could affect the housing sector, particularly in Florida and California.
Naples Real Estate Homes Sold
The graph below represents the median sold price by month for Naples homes during the period March 1, 2006 to February 28, 2007.
The average median price paid during the year was $464,308. During this period the median price of a single family decreased $39,101 or about 7.99%. The lowest median price for the year was $395,000 during October 2006. During the months of July to December the median sold price was below the average median price for the year. In January the median sold price peaked at $584,500. In February 2007 the median sold price dipped back to $450,000, which was higher than the July to December timeframe.
The median sold price for single family homes trend line reflects a slight downward trend. Looking at the last several months the trend line would reflect an upward trend, which does support Dr. Archer’s comment that now is the time to buy a single family house in Florida.
Naples Real Estate Condos Sold
The graph below represents the median sold price by month for Naples condos during the period March 1, 2006 to February 28, 2007.
The average median price paid during the year was $338,958. During this period the median price of a condo decreased $20,500 or about 5.6%. The lowest median price for the year was $284,000 during October 2006. During the months of November and December the median price was stable, but the month of January 2007, the median price dipped, but rose again in February.
The sold price trend line reflects a downward trend, but there is sold price stability during the past 4 months.
Naples Real Estate Time To Buy?
The University of Florida Bergstro Center for Real Estate Studies, quarterly surveys leading experts in real estate investment and development to determine current trends in Florida real estate. The survey covers residential development, apartments, industrial, office and retail.
"If you’re thinking of buying a house, there’s probably not much to be gained by holding out at this point," said Dr. Wayne Archer, Director of UF’s Bergstrom Center for Real Estate Studies. "It doesn’t look like prices are going to fall anymore."
Dr. Archer’s statement addresses only the single family home market. However, the survey does suggest that the condominium segment is still lagging behind. As well as land for residential development.
Dr. Archer continues by saying "When prices maintain the same level as inflation, then we’re probably in some kind of equilibrium. It indicates the market is stabilizing."
One possible explanation for the housing market turning the corner is a restricted supply of land for residential development, Archer said. The shortage meant there was less overbuilding than there might otherwise have been, he said. Condos did not have this land restraint, which is one reason they are overbuilt, Archer said. At the same time, condos are prone to strong speculative swings because they are considered a relatively easy commodity to exchange; it’s not difficult to acquire them in multiple units or to buy contracts on them, he said. The stabilization of the single-family housing market came earlier than anticipated and is not expected to affect all parts of the state equally, Archer said. The quieter markets likely will take longer to rebound than those in Central and South Florida, where growth has been explosive.
Here are some key points from the survey:
- The rate of residential sales should stabilize for both single family and condominiums.
- Prices for residential properties are expected to lag behind inflation, with less price declines than previously anticipated.
- Weakest areas of residential real estate are in condominiums, condo conversions, and individual residential land lots.
Key issues that bear watching are:
Insurance
Lending
Sources of capital
Growth management
Land for development
Property taxes
Increased use of mixed developments
Oversupply of condominiums
Green Development (or Green Building)
Increases in foreclosures
Unavailability of affordable housing
Increased increase in some northern areas (Carolinas) due the uncertainties in Florida.
As a potential buyer or seller of real estate it is very important to look at results over time to better comprehend market trends and shifts. This is the exact reason why information in graphical format can assist you in determining when to make your purchase or sale.
Subprime Lenders
I read yesterday on Diane Cipa’s Radical Title Talk blog her alert regarding some of the sub-prime lenders and advising people to call their title underwriters.
The sub-prime lenders that bear watching are New Century Financial, Fremont General, and HSBC for future events.
CNNMoney.com today, has announced that on Monday, Countrywide Home Loans will stop offering no money down loans. No money down loans are secured by the value of the property. This type of loan is where the lenders are finding the highest delinquency rates.
In reading the article there appears to about 24 companies are being affected by the delinquencies and may be expected to take "hits" to their bottom lines.
Florida Real Estate News - 03/08/07
FLORIDA PROPERTY TAXES
In a rush to show that lawmakers are serious about cutting property taxes, a House council passed a controversial bill Wednesday to sharply roll back local taxes even as Florida’s counties warned of "Draconian choices" they would have to make.
A more realistic method, rather than a quick fix as is being proposed is to legislate requirements that county governments need to have budgets that increase the lesser of the consumer price index or 3% per year. This would bring the Save Our Homes Amendment and county spending into line.
The cutting of property taxes is only the first phase of the proposal. The second phase would be to increase the state’s sales tax another 2.5% - equating to 8.5%.
The greatest savings in property taxes would be for businesses - might be good to increase the number of businesses coming into the state, thereby, creating a better tax basis. The second group to benefit would be the second or vacation homeowners that are exempt from the Save Our Homes Amendment. The least affected group would be the existing homeowners that have a homestead exemption on their homes.
It seems to me the most logical method would be for county governments to look more closely at their expeditures for running the county - ZERO BASE BUDGETING!!!
PROPERTY INSURANCE
After submitting a rate decline proposal to Florida’s government, Nationwide has resumed issuing notices to many homeowners that their policies won’t be renewed. The insurer stated that homeowners were given the required 100 days notice and that the carrier is merely following through on its strategic plan to no longer issue new property policies in Florida.
MORTGAGE FRAUD
The number of mortgage fraud cases investigated by the FBI almost doubled the past three years, reflecting a problem that is "pervasive and growing," the bureau said Wednesday in its annual report on financial crimes. The FBI also noted that those numbers likely only represent a small part of the problem.
Geez, the FBI is finally realizing that mortgage fraud is "pervasive and growing"! As a residential real estate broker, I readily see and hear about some situations that could possibly fall under mortgage fraud. One of the issues that faces the FBI, is that much of the potential fraud situations, in at least my residential real estate business is insignificant compared to what they want to deal with or investigate.
CONSTRUCTION
Most commercial businesses now back environmentally-friendly construction, or green building. But the nation’s major homebuilders, which account for 80 percent of all residential activity, say they have trouble finding buyers willing to pay for it.
I love the major homebuilders saying that - especially when home and condo prices have risen so much over the past few years (of course, the prices are coming down or big incentives offered). My personal thought is that it is a matter of affordability for most people looking to buy a home.
Naples Condo Values Vary
Often people want to know from a real estate agent’s point of view where they should consider buying a condo. Recently, a few people asked about some three different bundled golf course communities.Â
Looking at closed sales for the past six months and the previous six months the results for the average price paid was rather interesting to see how the values were affected by the recent downturn in the real estate market.
The loss in value revealed greatly different results - in community number 1 - the values fell less than 2%, community number 2 - values dipped about 15%, while community number 3 - values fell about 22%.
What proved interesting is that community number 3 was an older community built during the late 80’s. This was expected since, newer constructed properties tend to appreciate faster and fall in value more slowly. This does affect either community numbers 1 or 2, they were built and completed most recently. What may have been the cause of the variation in reduced value, may have been simply the locations within the Naples area.
This is a good example of how segmented a local real estate market can be and is worth a buyer’s time to identify communities meeting their needs and gaining an understanding of historical values. The in-depth analysis does take some time to assemble.
Real Estate News - 03/07/07
MORTGAGES
Federal Reserve Chairman Ben Bernanke urged Congress on Tuesday to bolster regulation of mortgage giants Fannie Mae and Freddie Mac, and suggested limiting their massive holdings to guard against any danger their debt poses to the overall economy.
CONDOMINIUMS
If homebuilders are right, the condo market will look significantly brighter six months from now, though current conditions remain substantially weaker than they did one year ago.
Naples Real Estate Market - 02/07
How is the Naples real estate doing? What does the trends show for homes and condos? Is it a buyers’ market, is it neutral or has it returned to sellers’ market? By looking at the first graph below for single family homes and the second graph below for condos one can gauge the market. For a fully explanation, please the narrative below the condo graph.
Naples Single Family Homes
Naples Condos
A quick explanation of the above graphs - the heavy horizontal line represents a neutral market which favors neither the buyer nor seller.  Above the horizontal line represents the strength of the market for buyers, while below the line represents the strength for sellers.
The index on the left side represents the degree of strength so that a viewer can easily determine how strong the market has been or is currently.
Both the single family home and condominium markets are still greatly favoring the buyers. The current year ‘07, is reflecting a weaker market for a buyer than last year for both homes and condos.
Single family homes had few listings entered than February ‘06 and a greater number of expired listings causing the index to fall from ‘06. The volume of pending sales and closed sales for February were less than ‘06.
Condos had far fewer listings come on the market in than February ‘06 and a slightly higher number of expired listings. Pending sales were about the same as the previous year while the closed sales were below the ‘06 level.
The graph can also be used by both sellers and buyers to determine when it is most advantageous for them to list or buy.
Data used to compile is from the SunshineMLS, used by the Naples Area Board of REALTORS and the Bonita Springs - Estero Board of REALTORS. The information was obtained as of midnight on March 1st for listings, pending sales, closed sales and expired listings posted by members during the month of February. Not all transactions with a date of February may not have been entered into the system as of the end of the day on February 28th and therefore, may not reflect all transactions. The actual numbers are entered prior to the analysis of the next month.
Florida Real Estate News - 03/05/07
FLORIDA PROPERTY INSURANCE
About 90,000 customers of Citizens Property Insurance Corp. are receiving what every Florida property owner wants: an invitation to lower insurance rates. However, not every recipient is jumping at the chance.
MORTGAGE FRAUD IN FLORIDA
Florida has become a hotbed for home loan fraud in the past few years, landing at the top of many government and private reports that are analyzing the problem nationally. The Florida Legislature will consider making mortgage fraud a criminal offense, under HB 349, which would give law enforcement agencies a stronger weapon in prosecuting mortgage fraud cases.
MORTGAGES IN FORECLOSURE
The Federal Reserve and four federal agencies, worried about a surge in defaults on high-risk home mortgages, on Friday called on lenders to exercise caution in making subprime loans and strictly evaluate borrowers’ ability to repay them.
WORKFORCE HOUSING
Lawmakers say this year’s Florida Legislature will spend too much time on issues related to property insurance and taxes to tackle major affordable housing issues. Instead, they likely will focus on little fixes to legislation passed in 2006, which earmarked $50 million to help municipalities with workforce housing for teachers, police and other public servants.