Realtors see buyers returning to market

WASHINGTON, D.C. – May 20, 2009 – Historically high housing affordability and low mortgage interest rates, combined with buyer opportunities in the distressed sales market, have increased home sales in many areas of the country.

“There has never been a better time to buy,” said National Association of Realtors® (NAR) Chief Economist Lawrence Yun, who presented NAR’s economic outlook at the Realtors Midyear Legislative Meetings & Trade Expo. Yun noted a “perfect storm” of favorable conditions.

“Housing affordability is at an all-time high, mortgage rates are historically low, and interest rates are the lowest they’ve been since the days of Eisenhower,” said Yun.

While he doesn’t anticipate an immediate pickup in the coming months, Yun believes early summer will be a critical indicator of how homebuyers respond to the $8,000 tax credit. “The home buying process takes time,” said Yun. “This summer will gauge the success of the first-time home buyer tax credit.”

California has already shown signs of recovery, with home sales rising much faster than anticipated; some areas in the state are seeing a 70 to 80 percent increase in sales. Yun attributes the extraordinary surge to buyers who sat on the fence but are now taking advantage of the great opportunities out of fear that they’ll miss out on current deals.

According to Yun, many first-time buyers want deeply discounted and distressed home prices. Nationally, distressed sales have made up about half of all recent transactions. Fifteen to 20 percent have been short sales, and 30 to 35 percent have been foreclosures. Yun says that these statistics are unfortunate, but the situation, along with current home buying incentives, has created an impressive window of opportunity for potential home buyers.

“The stimulus and falling inventory levels will help stabilize prices,” said Yun. “My projection is home sales will be 10 to 20 percent higher the second half of this year (compared to) last year, and we will come out of this recession in 2010.”

© 2009 FLORIDA ASSOCIATION OF REALTORS®

Florida’s existing home, condo sales rise in December 2008

ORLANDO, Fla. – Jan. 26, 2009 – Florida’s existing home sales rose in December, making it the fourth consecutive month that sales activity demonstrated gains in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors® (FAR). December’s statewide sales also increased over November’s figures in both the existing home and existing condo markets.

Existing home sales rose 27 percent last month with a total of 11,053 homes sold statewide compared to 8,712 homes sold in December 2007, according to FAR. December’s statewide existing home sales were 28.9 percent higher than November’s statewide sales.

Florida Realtors also reported a 12 percent gain in statewide sales of existing condominiums in December, marking the third recent month (following September and October) for higher statewide existing home and existing condo sales compared to year-ago levels. Statewide existing condo sales last month increased 37.7 percent over the total units sold in November.

Sixteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing-home sales in December; 11 MSAs also showed gains in condo sales, marking the sixth month in a row that a number of markets have reported increased sales activity.

Florida’s median sales price for existing homes last month was $155,500; a year ago, it was $213,600 for a 27 percent decrease. According to industry analysts with the National Association of Realtors® (NAR), there remains a significant downward distortion in the current median price due to many discounted sales, including a large number of foreclosures. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in November 2008 was $180,800, down 12.8 percent from a year earlier, according to NAR. In California, the statewide median resales price was $285,680 in November; in Massachusetts, it was $283,000; in Maryland, it was $262,109; and in New York, it was $210,000.

While overall sales have softened nationally in recent months, NAR’s latest housing outlook noted a trend of increasing activity in Florida, California, Arizona and Nevada markets. “Sales are rising in areas with large numbers of distressed properties as bargain hunters take advantage of discounted home prices,” said NAR Chief Economist Lawrence Yun. “It is imperative to provide incentives for homebuyers to get back into the market. It also depends on how effectively Congress and the new administration can help facilitate the short sales process and unclog the mortgage pipeline – impediments remain for some buyers with good credit.”

In Florida’s year-to-year comparison for condos, 3,138 units sold statewide compared to 2,814 sold in December 2007 for a 12 percent increase. The statewide existing condo median sales price last month was $130,600; in December 2007 it was $192,600 for a 32 percent decrease. In the latest data available at press time, NAR reported the national median existing condo price was $185,400 in November 2008.

Last month, interest rates for a 30-year fixed-rate mortgage averaged 5.29 percent, significantly lower than the average rate of 6.10 percent in December 2007, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s large to medium-size markets, the West Palm Beach-Boca Raton MSA reported a total of 638 homes sold in December compared to 467 homes a year ago for a 37 percent increase. The existing home median sales price was $246,000; a year ago, it was $337,900 for a 27 percent decrease. In the year-to-year comparison for the existing condo market, a total of 527 units sold in the MSA last month, up 26 percent compared to 419 condos sold the previous December. The market’s existing condo median price was $112,900; a year ago, it was $161,400 for a 30 percent decrease.

© 2009 FLORIDA ASSOCIATION OF REALTORS

The sweet life on stretches of ‘sugar sand’

WALTON COUNTY, Fla. – Jan. 16, 2009 – Unlike densely populated South Florida or theme-park epicenter Orlando, the western panhandle of Florida has no big cities, and trendy nightclubs are few and far between. The region is not exactly sleepy, with plenty of golf courses and resort developments, but for many years it hasn’t drawn much attention from second-home buyers beyond nearby Louisiana, Texas and Alabama.

Not so any longer. Attracted by some of the best values in Florida (not to mention some of the state’s most acclaimed beaches), buyers from all over the USA and Canada are heading to south Walton County. A new international airport scheduled for 2010 may bring them from even farther.

The main selling point is sand, so soft and white locals call it “sugar sand.” The 26-mile stretch of coastline that constitutes the beaches of south Walton County has 14 towns or communities – including Seaside, the locale for the fictional picture-perfect town in the film The Truman Show. All 26 miles have been certified “Blue Wave Beaches,” an environmental seal of approval from the Clean Beaches Council.

The entire strip is on a narrow peninsula between the Gulf of Mexico and Choctawhatchee Bay. More than 40 percent of the region is owned by the state and protected from development. There are numerous state parks and preserves, as well as an extensive network of protected sand dunes. All of it is linked by more than 200 miles of bicycle paths and hiking trails. But the landscape is not all nature: The strip has about a dozen golf courses.

The 14 communities are each distinct – some gated, some not; some planned, some evolved. The best-known are Sandestin, Seaside, WaterSound and WaterColor. Among them, they contain an array of restaurants, art galleries, shops and recreational facilities. Most have a mix of houses, townhouses and condos. Prices also are diverse, from just over $100,000 to several million dollars.

“Compared to south or central Florida, we have a huge variety of product with a large number of affordable homes,” says Joe Bracciale, director of real estate sales at Sandestin.

Copyright © 2009 USA TODAY, a division of Gannett Co. Inc., Larry Olmsted

Crist signs insurance bill into law

TALLAHASSEE, Fla – May 29, 2008 – Gov. Crist yesterday signed property insurance reform into law, the so-called Homeowners’ Bill of Rights (SB 2860 by Sen. Jeff Atwater, R-N. Palm Beach). The final version of the bill included other bills that were added as amendments, and is the biggest insurance change to come out of the 2008 Legislative session. It offers a number of protections and upgrades for Florida homeowners.

In a letter issued by the governor, he says the bill “contains many important consumer protections that will help keep insurance costs more affordable for Florida’s homeowners.”

At the same time, however, Crist took the unusual step of vetoing one provision within the bill – a proposal to take $250 million from the Insurance Capital Buildup Incentive Program that covers Citizens Property Insurance deficits, and use it to entice private insurers to buy Citizens policies. While Crist says the “program is well intended,” the “funding source is inappropriate.”

The law becomes effective July 1, 2008, and makes the following changes:
 
• Extends the rate freeze for Citizens Property Insurance Corp., the state’s insurer of last resort, to January 2010. The freeze was set to expire in January 2009.
• Allows single-family residential properties and condos with a replacement value of up to $2 million into the Citizens insurance pool (up from $1 million, which was set to begin Jan. 1, 2009).
• Requires Citizens’ policyholders of property located in wind-borne regions and with an insured value of $500,000 or more to disclose the property’s windstorm mitigation rating to prospective buyers. (Language in an earlier version of the bill would have required all sellers to provide their property’s windstorm rating.)
• Increases fines for violations of the insurance code and for unfair trade practices by private insurers.
• Extends by one year to January 2010 a provision from last year’s insurance bill that requires insurers to get state approval before raising property insurance rates.
• Requires insurers to notify state regulators 90 days before dropping more than 10,000 homeowners’ policies in one year.
• Requires insurers to use state-approved methods to predict the risk of hurricanes, a key factor in setting rates.

St. Joe sees bottom of housing market

JACKSONVILLE, Fla. – May 7, 2008 – Florida’s biggest landowner, the St. Joe Co., believes the housing market may have reached the bottom, pointing to stabilization in the residential inventory.

St. Joe Co. CEO Peter Rummell says buyers must be “retrained” to recognize the importance of making home purchases now. He notes, “We have trained people to expect that prices are going to be lower tomorrow than today if they just wait. So now people are going to have to learn that they’ve gotten to that point.”

Though the company posted a $32 million profit for the first quarter, only $9.8 million can be attributed to its residential operations. Much of the firm’s profits can be tied to the sale of “nonstrategic” land parcels in the Florida Panhandle, including 57,435 acres it recently sold to a group of buyers including sportsmen, investors and conservationists for $91 million.

Source: St. Petersburg Times (05/06/08) Thorner, James

REVERSE MORTGAGE IS IT RIGHT FOR YOU!

But it sounds like such a good deal.

Let’s look at the requirements. They sound reasonable. The

person(s) must own the property and occupy it as their primary

residence. Youngest owner must be age 62 or older. Property

must meet FHA property standards. Owners must agree to

maintain the property, pay the real estate or other lawful taxes

and keep up the insurance.

The loan (this a loan and the owner is actually borrowing

money with each payment) will be based on the lesser of the

appraised net value or the FHA insurance limit.

The initial amount of the loan will be determined

each week based on the interest rate set by the FHA.

There are hundreds of lenders so there is going to be a

slight difference in the amount paid to the borrower. That

difference will be the commission or fee charged for the

paperwork. This is negotiable so always get more than one

quote.

The homeowner may take the proceeds as a lump sum

or as monthly payments or some of each. The owners might

like a monthly payout with lump sums advanced when property

taxes become due or certain health care needs are required.

It can be made flexible.

The lender doesn’t care what you need the cash for as

he looks to the equity in the property for his guarantee of

payment. Each time the homeowner receives cash this

increases the debt accrual on the property plus interest. Mr.

Home Owner does not see this as he has been told the

maximum amount he may withdraw unless it is set up as a

monthly lifetime payment.

The sooner the person dies or moves out of the home

the better it is for the lender.

Here is the trap for the lender. If the owner lives a

long time the lender must continue to come up with cash.

The lender is hoping the value of the property will

increase so his return on investment will be greater.

The lender has not factored in two negatives. First a

possible continued decline in property values and second

the possibility the owner will not maintain the property.

Let’s take an example of a man age 80 with a home

appraised at $300,000 with a remaining loan of only $100,000.

His monthly check is estimated between $900 and $1,000 per

month. He lives for at least 10 years. There is no provision for

inflation or that real estate taxes will not increase. His

payment buys less each month. He may not be able to

maintain the property or do necessary repairs.

The borrower could maintain his purchasing power

if the reverse mortgage contract included a Cost of Living

Index annual adjustment. So far not one contract has. Selling

the home now may be a better option.

The ultimate outcome is the borrower must lower his

standard of living as inflation eats away his monthly check.

The lender will have a lien on property with a decreased value.

The potential for another “subprime” fiasco looms if

the lenders bundle these reverse mortgages and sell them

as MBSs – mortgage backed securities.

In the long run it is not a good deal for either party.

A sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes

The Internal Revenue Service recently issued Revenue Procedure 2008-16, which spells out how vacation properties can qualify for 1031 exchanges. The guidance aims to clear up the debate over vacation homes, and whether they're an investment or personal use properties. To qualify for a 1031 exchange, the IRS says that the taxpayers must hold the property for 24 months. The holding period is broken further into 12-month blocks, and during each, the property must be rented at the fair market rate for no less than 14 days. Additionally, the owner can use the property for 14 days or 10 percent of the days rented, whichever is greater, plus devote a "reasonable" number of days to maintenance. Because it is a safe harbor ruling, experts say failing to comply with all the rules does not mean the exchange will be denied or an audit will automatically occur. However, they underscore the importance of keeping good records of the property's rental history and the dates the property was occupied by the owner for maintenance.