September 22, 2008
Bush team, Congress negotiate $700B bailout
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Miami – The Bush administration asked Congress on Saturday for the power to buy $700 billion in toxic assets clogging the financial system and threatening the economy as negotiations began on the largest bailout since the Great Depression.
The rescue plan would give Washington broad authority to purchase bad mortgage-related assets from U.S. financial institutions for the next two years. It does not specify which institutions qualify or what, if anything, the government would get in return for the unprecedented infusion.
Democrats are pressing to require that the plan help more strapped borrowers stay in their homes and to condition the bailout on new limits on executive compensation.
Congressional aides and administration officials are working through the weekend to fill in the details of the proposal. The White House hoped for a deal with Congress by the time markets opened Monday; top lawmakers say they would push to enact the plan as early as the coming week.
“We’re going to work with Congress to get a bill done quickly,” President Bush said at the White House. Without discussing specifics, he said, “This is a big package because it was a big problem.”
The proposal is a mere three pages long, but it gives sweeping powers to the government to dispense gigantic sums of taxpayer dollars in a program that would be sheltered from court review.
“It’s a rather brief bill with a lot of money,” said Sen. Chris Dodd, D-Conn., the Banking Committee chairman. “We understand the importance of the anticipation in the markets, but we also know that what we’re doing is going to have consequences for decades to come. There’s not a second act to this – we’ve got to get this right.”
Lawmakers digesting the eye-popping cost and searching for specifics voiced concerns that the proposal offers no help for struggling homeowners or safeguards for taxpayers’ money.
The government must stabilize the financial system “because if we don’t, it will have a tremendous impact on American consumers, homeowners, taxpayers and the rest,” House Speaker Nancy Pelosi, D-Calif., said in San Francisco.
But, she added, “We cannot deal with this unless this bailout helps families stay in their homes.”
Senate Majority Leader Harry Reid, D-Nev. said, “We cannot allow ourselves to be in denial about the threat now facing the world economy. From all indications, that threat is real, and the consequences of inaction could be catastrophic. Every single American has a stake in preventing a global financial meltdown.”
The proposal would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue.
“The American people are furious that we’re in this situation, and so am I,” the House’s top Republican, Ohio Rep. John A. Boehner, said in a statement. “We need to do everything possible to protect the taxpayers from the consequences of a broken Washington.”
Signaling what could erupt into a brutal fight with Democrats over add-on spending, Boehner said, “Efforts to exploit this crisis for political leverage or partisan quid pro quo will only delay the economic stability that families, seniors, and small businesses deserve.”
Bush said he worried the financial troubles “could ripple throughout” the economy and affect average citizens. “The risk of doing nothing far outweighs the risk of the package. ... Over time, we’re going to get a lot of the money back.”
He added, “People are beginning to doubt our system, people were losing confidence and I understand it’s important to have confidence in our financial system.”
Neither presidential candidate took a position on the proposal. GOP nominee John McCain said he was awaiting specifics and any changes by Congress.
Democratic rival Barack Obama used the party’s weekly radio address to call for help for Main Street as well as Wall Street.
His language reflected a tricky balance that politicians in both parties are trying to strike, just six weeks before Election Day: Back a plan that doles out hundreds of billions to companies that made bad bets and still identify with the plight of middle-class voters.
Besides mortgage help and executive compensation limits, Democrats are considering attaching middle-class assistance to the legislation despite a request from Bush to avoid adding items that could delay action. An expansion of jobless benefits was one possibility.
Bush sidestepped questions about the chances of adding such items, saying that now was not the time for posturing. “I think most leaders would understand we need to get this done quickly, and you know, the cleaner the better,” he said about legislation being drafted.
Treasury officials met congressional staff for about two hours on Capitol Hill on Saturday. Discussions centered on how the plan would work, and Democrats proposed adding the executive compensation limits and new foreclosure-prevention measures. Details of those changes were not available Saturday. Bush and Treasury Secretary Henry Paulson conferred by phone for about 20 minutes in the afternoon, gauging how the negotiations were unfolding.
Among the key issues up for negotiation is which financial institutions would be eligible for the help. The proposed legislation doesn’t make it clear, leaving open the question of whether hedge funds or pension funds could qualify.
In a fact sheet released Saturday night, Treasury said it was seeking latitude for the secretary and the Federal Reserve chairman to expand the bailout to non-U.S. companies if they determined it was necessary to stabilize markets, but the original request sent to Congress is limited to firms headquartered in the United States, according to a copy obtained by The Associated Press.
The proposal does not require that the government receive anything from banks in return for unloading their bad assets. But it would allow Treasury to designate financial institutions as “agents of the government,” and mandate that they perform any “reasonable duties” that might entail.
The government could contract with private companies to manage the assets it purchased under the rescue.
Paulson says the government would in essence set up reverse auctions, putting up money for a class of distressed assets – such as loans that are delinquent but not in default – and financial institutions would compete for how little they would accept.
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Posted by South Florida Realtor at 03:27 PM
September 18, 2008
How the financial meltdown affects mortgage rates. Miami Real Estate 800-819-5466
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MIAMI BEACH – The meltdown in the financial and housing markets continues to create a series of good news/bad news scenarios for consumers who either already own their own home or would like to buy one. Here's how areas of the market are affected:
Fixed-rate mortgages: Interest rates on conventional fixed-rate mortgages continue to slip, as investors move their funds from stocks to safer vehicles like 10-year Treasury notes, the yields of which help set mortgage rates. Last Wednesday, the average rate on 30-year fixed loans was 5.73 percent, and mortgage bankers question how much lower it can really go.
That means if you can qualify for a loan under the tighter underwriting standards - and yes, they are tight - it may be time to buy.
However, real estate agents say many potential first-time buyers, the segment of consumers needed to jump-start the entire market, remain on the sidelines, guessing that housing prices will fall further. Some researchers have predicted that prices will continue to fall this year.
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Adjustable-rate mortgages: Dig out your documents and carefully read the terms of that adjustable-rate mortgage you received a few years ago. Find out if it's tied to the LIBOR, the London Interbank Offered Rate, and if it is, whether it's linked to the three-month, six-month or one-year LIBOR. Also check when the next adjustment will be made and then keep track of LIBOR fluctuations until then.
LIBOR rates, a benchmark for interbank lending rates, are used to help set adjustments on some ARMs, and the financial market's undoing is causing wild swings in LIBOR.
"Many borrowers look at the initial rate (but) an ARM like a LIBOR can really devastate you quickly," said Michelle Collins, senior vice president, mortgage lender, ShoreBank.
Don't automatically assume that if you qualified for a fixed-rate loan or an ARM a few years back, you can convert the loan or refinance yourself into better terms now.
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Mortgage bankers say because homes have depreciated in value, credit scores need to be stellar. Customers who want to buy a home need to make significant downpayments and those who want to refinance or convert their loan have to show they still have substantial equity in what is now a depreciating asset.
"The old rules don't apply," said Jeff Slater, vice president of Bank Group Mortgage in Palos Hills, Ill.
One other warning from lenders: Don't bother asking about refinancing for the purpose of taking cash out of the house because it's largely off the table.
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Posted by South Florida Realtor at 05:53 PM
Cities to get $4 billion in foreclosure aid
WASHINGTON – The Foreclosure Prevention Act, which passed in July, allocates $4 billion to cities and states that have been hardest hit by the surge in foreclosures over the last year. Recipients will be able to use the money - which is an addition to the usual funding for the Community Development Block Grant (CDBG) program - to buy foreclosed properties to stabilize property values. Now, the U.S. Department of Housing and Urban Development (HUD) is devising a formula for distributing the funds for communities in need.
The help comes just in time for cities like Cleveland, which, in 2007, demolished nearly 1,000 abandoned properties, a 400 percent increase over the number demolished in 2006, according to Mayor Frank Jackson. The city also saw a 78 percent increase over the last two years in the number of vacant and abandoned properties it had to clean up, from 27,000 in 2005 to 48,000 in 2007. “The funds expended by the City of Cleveland to abate the nuisances caused by vacant and abandoned property, the increased public safety risk, as well as the money spent to help its residents prevent foreclosure, are monies that are being diverted from other services that the city could be providing its residents,” Jackson wrote in his report.
The Washington-based National League of Cities (NLC) is pleased with the bill’s passage, says Mike Wallace, NLC’s senior legislative counsel. “The bill is very beneficial to cities,” he says. “Now, we’re working with HUD and other stakeholders ... to make sure this roll out goes as smoothly as possible because of the really tight time frame that Congress has given HUD to turn this money around.”
When the bill was signed into law on July 30, HUD was given 60 days to determine how to disburse the funds, and the first grants should go out 30 days after the formula is announced. HUD is seeking reliable data on the nation’s entire housing market to determine communities’ shares of the $4 billion. “As far as I know, there’s no single data that covers 100 percent of the housing market across the country,” Wallace says.
HUD requires that cities and states submit their plans for the money, similar to the CDBG process, Wallace says. However, by late August, the specifics of that process had not yet been determined. “The bill gives HUD wide latitude in terms of additional regulations and requirements, so we just want to make sure that the funding allows cities to do what the bill intended to do, and that there’s no additional regulations that would prove prohibitive to cities accomplishing their goals of purchasing these homes and returning them to market, or making them rentals, or doing whatever they want to do with them,” Wallace says.
Florida, Nevada, California, Ohio and Michigan also are likely to be prime recipients, Wallace says. “Those are states that have well-documented problems with these subprime mortgages and foreclosure rates,” he says. “To be a player with this funding, you really have to get the ball rolling now, because there’s such a quick turnaround time in terms of distribution of the funds,” he says.
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Posted by South Florida Realtor at 10:46 AM
September 17, 2008
Miami Real Estate group says public awareness of credit scores has improved but still poor
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Americans can save billions of dollars annually on credit card and other interest payments by raising their credit scores, but many consumers still don’t know enough about the complex numerical values that represent their credit risk.
Although awareness of credit scores has increased in the past year, it remains poor, the Consumer Federation of America and Seattle-based bank Washington Mutual Inc. found in an annual survey released Thursday.
The scores, which generally range from 200 to 800, play an increasingly important role in consumers’ finances.
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They are used by banks and insurance companies to determine rates for mortgage loans, credit cards, auto loans and other financing. Utilities, landlords and employers also are increasingly checking credit scores.
Washington Mutual estimates that consumers could reduce credit card finance charges by $105 annually if they boosted their credit scores by 30 points. If all consumers did so, total annual savings would reach $28 billion since financial institutions offer lower interest rates to consumers with better scores.
One way to raise a credit score is to avoid charging above the maximum limit on a credit card, or coming close to the limit, the study said.
But credit card issuers, including banks such as WaMu, have recently cut limits on many cards as financial institutions seek to reduce their credit risks. That can hurt credit scores because they are based partly on the amount a consumer has on a card compared to its overall limit.
If a consumer has charged $4,000 on a card with a $10,000 limit, their so-called “utilization rate” is 40 percent. But if a card issuer reduces the limit to $5,000, that bumps a consumer’s utilization rate up to 80 percent.
The Consumer Federation recommends credit card users keep their utilization rates below 50 percent, said Stephen Brobeck, executive director of the group.
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Anthony Vuoto, president of WaMu’s card services unit, downplayed the impact of banks’ reduction of credit limits, saying it likely affects only a “small minority” of consumers who already have a “credit blemish” that caused the bank to lower the limits.
To improve their credit scores, consumers should also avoid opening multiple new accounts quickly, and pay off debt rather than moving it around, the study said.
Brobeck said the good news is that “most Americans know why credit scores rise and fall.”
Two-thirds of consumers know that paying off a large credit card balance improves credit scores, up from 62 percent in 2007, and almost 80 percent know that missing a monthly credit card payment reduces their score, compared with 71 percent, the survey found.
But less than a third of Americans understand that a credit score reflects the risk that a consumer won’t pay back a loan, the report said. Many Americans believe it reflects other factors, such as overall financial resources, and most also wrongly believe that demographic factors like income, age and education affect their score, Brobeck said.
Another positive sign is that 49 percent of Americans have obtained their credit score in the past two years, up from 42 percent in 2007, according to the survey of 1,000 adults nationwide.
The scores are compiled by three credit reporting bureaus – Equifax Inc., TransUnion LLC and Experian Group – and consumers can obtain a free copy of their credit report from all three once a year. But Americans must pay about $15 to see the actual scores.
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Posted by South Florida Realtor at 08:58 AM
July 14, 2008
Rates on 30-year mortgages rise, other rates mixed
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WASHINGTON – Rates on 30-year mortgages edged up this week, while rates on other home loans were a mixed bag.
Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.37 percent this week. That was up from 6.35 percent last week.
Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, dipped to 5.91 percent this week, compared with 5.92 percent last week.
Meanwhile, five-year adjustable-rate mortgages rose to 5.82 percent this week, up from 5.78 percent last week. Rates on one-year adjustable-rate mortgages held steady at 5.17 percent, unchanged from the previous week.
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Earlier this week, there were fresh signs that the painful housing slump was likely to drag on. The National Association of Realtors’ pending home sales index slipped 4.7 percent in May to the third-lowest reading on record.
“Pending home sales fell more than expected,” said Freddie Mac’s chief economist Frank Nothaft.
Home foreclosures have hit record highs as sagging home values have left some borrowers owning more on their mortgages than their homes are worth. With more empty homes being dumped on an already glutted market, prices are being pulled lower. Buyers, however, have become harder to find as credit has gotten harder to secure.
Congress is moving ahead on a package to help distressed homeowners. It would allow the Federal Housing Administration to provide them with more affordable, fixed-rate mortgages.
The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year and five-year mortgages all averaged 0.6 point this week. The fee on one-year mortgages averaged 0.5 point.
A year ago, rates on 30-year mortgages stood at 6.73 percent, 15-year mortgage rates averaged 6.39 percent, five-year adjustable-rate mortgages were at 6.35 percent and one-year adjustable-rate mortgages averaged 5.71 percent.
On the Net: Freddie Mac: http://Freddiemac.com
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Posted by South Florida Realtor at 09:48 AM
July 01, 2008
10 best places for house bargains. (800) 819-5466 Aventura, Florida
AVENTURA - HOMES .COM Fla. – The best place to get a bargain on a home is an area where there is healthy job growth and more houses available than people to buy them.
These are markets “where you have high inventories but pliable borrowers, with lenders willing to deal,” says Anthony Sanders, a professor of finance at Arizona State University.
Forbes magazine went looking for markets where the damage from risky lending hasn’t been as dramatic as in some parts of the country and where employment growth will burn off an over-abundance of inventory quickly.
Here are the magazine’s 10 best cities for bargain house hunters.
1. Salt Lake City, Utah. Developers have gotten ahead of the demand, but the city is adding jobs more quickly than practically any place else in the country.
2. Raleigh, N.C. Another place where building got ahead of the curve, but the economy is expanding quickly.
3. Orlando, Fla. This part of the state had fewer speculators than Miami and Tampa, and it’s adding jobs faster than those cities as well.
4. Charlotte, N.C. The financial industry is moving here, adding jobs, but the inventory of unsold homes is still significant.
5. Phoenix. This city had a high foreclosure rate, but the economy is growing and people are still moving here in large numbers.
6. Seattle. The city’s port has profited from the weak dollar, but the housing price growth has slowed.
7. Las Vegas. This market was hit hard by foreclosures, but the growing economy makes the huge inventory less toxic than it is many places.
8. Jacksonville, Fla. The foreclosure rate is slower than the rest of the Florida cities, making the large inventory likely to improve.
9. Richmond, Va. There is only one foreclosure per 1,103 households here (compared to 1 in 33 in Detroit). Still, there are plenty of homes on the market.
10. Houston. Homes in Houston have long been a bargain. While there have been plenty of foreclosures, the population and the economy are expanding.
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Posted by South Florida Realtor at 11:01 AM
September 04, 2007
Home Insurance: What Does "Insured" Mean To Me & My Miami Property?
The kids are back in school and now it's time for you to do your home work.
If you have not updated your home inventory and estimated value of your possessions for more than 12 months, you may be in trouble if faced with a "final exam" -- an insurance claim.
Simply paying property insurance premiums on time is not enough. To ensure your possessions, shelter, financial well-being and your home-based business, if you have one, are safe and secure, you should actually read your insurance policy or go over the details with your insurer's representative.
The contract between you and the insurer -- your policy -- must accurately estimate full value and must include relevant details of what you own, which usages are involved and what replacement would cost. If you carry too little insurance or if changes in use would disqualify some or all of a claim, that's your problem because the insurance industry considers it your responsibility to arrange correct coverage for your property and lifestyle.
From a consumer perspective, "The Best" insurance brokers and agents may be those who contact clients annually to ensure coverage reflects property value increases, renovations, new acquisitions and extended usage like a start-up home-based business, a new equipment-intense hobby or the inclusion of foster children.
If you are on your own with this annual up-date, tie the inventory review to a seasonal shift associated with "buying sprees" like back to school or Christmas. Include taxes in your listing. Minimum contents coverage is usually calculated as a percentage of building value. If the value of your possessions exceeds the insurer's calculated percent, then additional coverage may be required to protect the new home theatre, latest diamond ring or "had-to-have" golf clubs.
To up date the building's replacement value, contact your insurance representative. "Insured value" does not include land value, often a considerable portion of market value.
The Insurance Bureau of Canada (IBC), the national trade association of the private property and casualty insurance industry representing more than 90 percent of non-government home, car and business insurance, provides consumers with details on their responsibilities and rights. Armed with accurate information on what to expect, you are well prepared to ask the right questions whether you are searching for a new insurer or renewing a policy. Not convinced there's value in learning more? Did you know ... ?
Decide on Agent vs Broker: "Agents" work for one insurer and can only offer that insurer's policy types and features to consumers. You must fit this insurer's criteria for "insurable" or find your own alternative supplier. "Brokers" each represent a small range of insurance companies, ideally chosen to provide the most useful range of products and options for the client base served by that broker. When shopping around, ask each broker which criteria they use in selecting companies and how their business is distributed between the insurers. If one insurance company drops you, the broker will attempt to switch you to another insurer.
Compare beyond price: IBC Consumer Information Officer Don Stewart provides an example: "Coverage matters. All policies are not the same as companies can enhance their policies or not enhance them. For example, all companies will insure to estimated replacement cost. Most will add 'sleep at night' enhancement—guaranteed replacement cost." Steward goes on to explain that some insurers will pay all the replacement cost even if it exceeds the insured level while others will cap over-payment to a percentage, perhaps 20 percent.
Read the fine print: "People should always read their policy so they know what they are covered for because it's better to know before than after," said Stewart. For instance, policies do cover wind damage—something blowing off or onto your house—but a tree falling on a home can add complications beyond the damage. The policy may include payment to have your tree taken off the building, but not off the property. If the tree belonged to a neighbour, your insurance covers the damage to your home. If the tree was known to be in dangerous condition and the neighbour did nothing about this, your insurance company may go after the neighbour's. Let the insurers fight this out rather than taking on the tree owner yourself since any resulting settlement from your neighbour will be based on depreciated value whereas your insurer will pay you replacement value.
Hidden Secrets May Cost You: Owners of older homes may have knob-and-tube or aluminum wiring within the walls without knowing it. If the house burned down and one of these deficiencies was discovered later, the policy would still stand. However, if your insurer inspects your property at any point and finds a "red flag" like an oil tank or knob-and-tube wiring, you could be given notice to modernize or face having your policy cancelled. Switching insurers could trigger a similar situation. Once you sign up, an insurance inspector may discover a condition the insurer will not cover and you'll have to fix the situation, or find an insurer who will overlook it.
It's For The Unaffordable, Not Home Maintenance: IBC explains that home insurance is there to protect you from having to pay out a huge amount at once, often at the very worst time emotionally. "Auto insurance is claims rated and it is affected by claims," said Stewart, comparing insurers' reactions to a claim. "In home insurance, you would lose the discount for being without a claim. Where you run into a problem with home insurance is two or three claims in two or three years. When you have a claim and it goes on record, the amount does not matter. Frequency does....Home insurance is not a maintenance contract...legally you can claim all kinds of things, but insurers don't like this so they will drop you, and others will not want you."
Insurance is an integral part of the price of real estate ownership. If property insurance lapses, existing mortgages are in default and may become due and payable. New financing may not be possible. The accompanying loss of millions in personal liability coverage places you at risk from law suits. Consider insurance premiums, insurer-driven renovations and continuing property modernization as basic ownership costs.
"Welfare is society's problem, not insurance," said Stewart. "They are there to try and make a profit. If you can't afford to keep a house, you'd better sell it ... . A lot of insurance companies do charity on the side, but not in business. GM does not reduce the price because you cannot afford it."
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Posted by South Florida Realtor at 10:56 PM
FHA to step in, finance at-risk loans
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Some homeowners with risky “subprime” adjustable-rate mortgages will be able to refinance before they lose their home to foreclosure, with the help of steps President Bush will announce today, senior administration officials said Thursday night.
An estimated 80,000 homeowners with bruised credit and subprime ARMs they can no longer afford will be able to refinance loans, which the Federal Housing Administration (FHA) would insure.
The move marks a historic expansion of the role of the FHA, a Depression-era agency that has traditionally served low- and moderate-income families and first-time buyers, but not delinquent borrowers. Nearly 16 percent of subprime borrowers are behind on their ARMs, and an estimated 2 million subprime ARMs totaling about $600 billion will reset to higher rates through the end of next year.
To qualify for the new benefit, homeowners would have to prove they paid their loan on time before it reset to a higher rate and must have at least 3 percent equity in the home.
The program, which doesn’t need congressional approval, should take effect early next year.
Under current rules, the maximum loan the FHA can guarantee is $202,000 in most states and up to $362,000 in high-cost states such as California and New York.
The officials said Bush will also call on Congress to pass his proposal to overhaul the FHA, in part by raising those loan limits to $262,000 in most states and $417,000 in pricier areas. The officials spoke on condition of anonymity because they weren’t authorized to speak on the record.
Bush also wants the FHA to be able to help other risky borrowers, beyond the 80,000, by broadening its lending criteria. To compensate for the added risk that the borrowers might default, the FHA would charge them higher premiums on the loans. Also, he wants to eliminate the 3 percent downpayment requirement, though borrowers would have to pay at least some of the closing costs to secure the loan.
The senior officials avoided using the word “bailout,” but the plan is sure to incite critics.
“If you’re going to help someone to refinance, you’re going to bail out the person who financed him in the first place,” Peter Wallison of the American Enterprise Institute said Thursday night. “This will only cause the problem to arise again.”
Wallison said the lenders who provided the financing in many of these cases likely knew that the borrowers couldn’t meet the financial obligations of the loan.
“If we’re going to allow (lenders) to be refinanced out, what we’re doing is saving them from their own greed. ... It might be good politics, but it’s very bad policy.”
In another bold step, Bush will propose a temporary change in tax law. It would let homeowners avoid taxes on forgiven debt if a lender agrees to alter the terms of a loan.
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Posted by South Florida Realtor at 02:17 PM
May 09, 2007
Todays News Updates
The last time our “Prime Rate” was as high as it is now was February of 2001. At that time it was 8.5%. Today’s prime rate is 8.25% and over the past 6 years, it has grown to this level via increases set forth by the current and previous Fed Chairmen.
Tomorrow, we will see if the Fed will leave the rates as they stand now or, begin cutting them. According to many prognosticators, it is too early for the Fed to cut rates now. However, they did change their stance and communication last month by insinuating cuts would be forthcoming if the economy continued to show slowness. As we had seen last week, we did have a sluggish employment report. This statistic clearly would show a cut is necessary and, our economy is in fact, slowing. But has it slowed enough to cut rates?
Certainly, from the last 3 weeks of a hot stock market, our real estate industry has slowed significantly and cuts are needed. We also need more tax relief and more insurance relief. However, there are many great deals in the market and interest rates are still extremely good. The “par” rate for a typical 30 year mortgage is still in the very low 6% range. I am also closing many interest only loans in the 6.5% range too.
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Posted by South Florida Realtor at 03:46 PM
April 23, 2007
Miami Real Estate News Of The Week. 800-819-5466
Fueled by surging energy prices, the closely watched Consumer Price Index (CPI) shot up 0.6% in March, the biggest increase since a similar rise in April 2006. However, core inflation -- which excludes volatile energy and food prices -- rose 0.1% in March, the smallest increase in three months, and better than the 0.2% rise Wall Street had expected. Inflation for the first quarter of 2007 was 4.7%, far above the 2.5% increase for all of 2006.
The Conference Board said its Index of Leading Economic Indicators climbed a tepid 0.1% to 137.4 in March, as analysts had expected. The latest reading reverses two straight months of declines. The index is designed to forecast economic activity over the next three to six months.
Retail sales rose 0.7% in March, up from a 0.5% gain in February. It was the best showing since a 1.1% rise in December, the Commerce Department reported April 16. Analysts had predicted a 0.8% increase.
Construction of new homes edged up 0.8% in March, the second straight monthly rise, the Commerce Department reported April 17. Applications for new building permits also rose by 0.8% in March, the first advance in three months, providing a glimmer of hope that the worst of the housing downturn might be over.
For the week ending April 19, interest rates on 30-year and 15-year fixed-rate mortgages declined, remaining well below year-ago levels, Freddie Mac said April 19.
This week look for updates on existing and new home sales on April 25.
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Posted by South Florida Realtor at 02:46 PM
November 14, 2006
Housing slump may be nearing end, industry economist says
Saying that “the worst may be over,” the housing industry’s chief economist said Friday that home prices must continue to come down in some regions before the real estate slump plays out.
“We need a price decline, we were overbloated,” particularly on the West Coast, David Lereah, chief economist for the National Association of Realtors, told attendees at his organization’s annual meeting here on Friday.
“In 2007, it will be a flat year, maybe 1 percent (sales) drop, and that’s it,” he said. “After 2007, we’ll be back to expansion again,” Lereah said.
But Steve Murray, a Littleton, Colo., industry consultant who followed Lereah on the podium at the convention, which drew an estimated 30,000 people, said he was less optimistic about the speed of the market’s recovery.
“Lereah said we’re at the bottom (of the slump), but in most markets we are going to slide some more,” Murray said. Citing interviews with executives at more than 100 large real estate firms, he said the pending sales data could be falsely reassuring.
“The fall-through rate (of contracted home sales) has gone from single to double digits,” Murray said the executives reported. “Buyers can’t sell their existing homes.”
“People who think this thing is going to turn around in six months are out of their minds,” Murray said in an interview before his speech.
Lereah forecast that 2006 sales will end up about 9 percent lower than in 2005, a record year. He anticipates sales of 6.47 million units, declining to 6.43 million next year. Prices nationwide will be down by about 2 percent, year over year, and will inch up by 1.5 percent in 2007, he said.
New-home sales will decline this year by 16.8 percent, to 1.07 million units, and will sink 8.7 percent further next year, to 975,000, he said.
Lereah said inventory is stabilizing, citing his trade group’s data on pending sales - homes that have gone under contract.
“It appears that inventory has peaked,” said Lereah, who now estimates a 7.3-month supply of available homes nationwide.
“We were hovering near 4 to 5 months’ (supply of homes fore sale) during the boom, and in some areas, such as Orange County, Calif., we were measuring it in weeks, not months.”
But Lereah said the national picture is positive. “I’m optimistic for 74 percent of the country,” where local markets are, at worst, flat. “The other 26 percent are in for some rough times.”
Struggling the most would be California, Southern Florida, Arizona, Nevada, and metro Washington, D.C., he said, where sellers particularly need to lower their prices.
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Posted by South Florida Realtor at 11:11 AM
Governor-appointed task force to present 50 property insurance fixes
Strengthening homes, continuing state support for Floridians’ insurance needs and eliminating an arbitrary method of deciding who qualifies for wind coverage were among 50 recommendations in the first report from a governor-appointed task force to solve the state’s property insurance woes.
The 115-page report – the product of seven meetings around the state since August with the public, legislators and industry experts – will be presented to the governor Wednesday in Tallahassee.
Much of the report focused on how state-created Citizens Property Insurance Corp., Florida’s insurer of last resort, operates.
One of the committee’s recommendations is to do away with the windpool boundary designations in the state that determine if homeowners can get wind insurance through Citizens.
“While certainly intended to create valid pockets of wind risk areas in the state, the 2004-2005 hurricane losses illustrate the boundaries are arbitrary and antiquated,” the report states.
Locally, state Rep. Bill Galvano, R-Bradenton, has crusaded against the disparity between the windpool boundaries in Manatee and Sarasota counties.
“That’s a good thing. That’s exactly what I stood up on the House floor and said several months ago – that they (wind boundaries) are arbitrary,” Galvano said. “That’s something that had to be addressed if any further bill was going to be meaningful.”
In Manatee County, the windpool only includes a section of the barrier islands 1,000 feet from the Gulf of Mexico, while Sarasota County’s windpool encompasses the city of Sarasota and extends eastward in the vicinity of Interstate 75 at some points.
The committee also recommended that commercial policies in Citizens be transferred to the recently created commercial joint underwriting association or a new state entity for commercial risk assumption.
John Laurie, a Bradenton insurance agent who served on a technical board advising the committee, feels the proposed revisions to Citizens are important.
“That’s big, because, as you know, people are paying assessments today for people who had property insured through Citizens, but (the former) were ineligible to get access to that very same safety net,” Laurie said. “That was unfair and needed to be corrected.”
A recommendation to increase funding for the state’s Hurricane Catastrophe Fund, which currently has about $15 billion to pay damages, is also significant, Laurie said.
“The CAT fund is the most efficient vehicle to allow us to have more availability and affordability in insurance coverage,” Laurie said. “So that’s a home run that the committee hit and I’m glad they made that recommendation.”
Other recommendations by the committee include:
• Expand the state’s My Safe Florida Home program that offers free home inspections and matching grants up to $5,000 for property owners who invest in storm shutters, roof tie-downs and other reinforcement features. Also, make clear what discounts on premiums policyholders can receive for investing in such features.
• Require insurers to offer dwelling limits for wind coverage that would only cover the outstanding balance of the mortgage.
• Seek federal funding for windstorm analysis and studies that is equivalent to the federal funding in place for earthquake data.
• Do away with a recently passed provision that residents of Florida must be homestead property owners in order to obtain policies through Citizens.
Though the move by the Legislature was to ensure that year-round residents didn’t shoulder the burden for insurance costs of snowbirds with winter homes, many believed the move would send the wrong message to people looking to invest in the state of Florida.
The committee, chaired by Lt. Gov. Toni Jennings, will continue to meet and discuss solutions through May 15.
What happens now largely depends on the governor.
Many are waiting for Bush to call a special session of the Legislature to put ideas into action to solve the problem of soaring insurance premiums and rampant policy cancellations in the wake of the past two storm years.
“It’s been reported widely that the governor is seriously considering calling the Legislature into special session in December,” said Florida Office of Insurance Regulation spokesman Bob Lotane. “I think the proposals that are generated by the committee will have a lot of weight in what the governor decides to do.”
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Posted by South Florida Realtor at 11:06 AM
November 10, 2006
Allstate reduces rate increase request
Allstate Floridian Insurance, the state’s third largest home insurer, is lowering its proposed rate increase in the face of resistance from state regulators.
The company said Tuesday that it was still seeking a rate increase, but one that would average just under 20 percent statewide instead of nearly 25 percent.
Another Allstate company, Allstate Floridians Indemnity, made a similar move, notifying state regulators that it will seek a 26.4 percent increase on average rather than the 31.6 percent average increase it initially proposed.
Company officials said Allstate had originally included the cost of reinsurance for some policies that it now plans to shift to another company as it seeks to reduce some of its exposure.
If approved by the state Office of Insurance Regulation, the new rates would take effect around the end of the year.
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Posted by South Florida Realtor at 10:09 AM
September 03, 2006
Mortgage rates dip to lowest level since early April
WASHINGTON (AP) -- Sept, 2006 -- Rates on 30-year mortgages fell for a sixth consecutive week, providing homebuyers with more relief from an earlier rise in rates.
Mortgage giant Freddie Mac said Thursday that 30-year, fixed-rate mortgages dipped to 6.44 percent this week, down from 6.48 percent last week.
That was the lowest level for 30-year mortgages since they averaged 6.43 percent the first week in April.
Mortgage rates hit a four-year high of 6.80 percent the week of July 20, before beginning a sustained decline as financial markets became more convinced that a slowing economy would keep inflation under control.
"Mortgage rates continued to drift lower this week in large part because of the cooling in the housing market and in consumer confidence, thus giving financial markets reason to believe that economic growth will moderate and inflation will remain in check," said Frank Nothaft, chief economist at Freddie Mac.
Sales of both new and existing homes set records for five consecutive years through 2005 as buyers reacted to the lowest mortgage rates in more than four decades.
But sales activity has slowed this year with many analysts forecasting a decline in both new and existing home sales of around 10 percent.
The Federal Reserve at its last meeting on Aug. 8 left interest rates unchanged, breaking a two-year period of rate increases. Many private economists believe the central bank may be finished raising rates as long as inflation pressures remain reasonable.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, averaged 6.14 percent this week, down from 6.18 percent last week.
For one-year adjustable-rate mortgages, rates dipped to 5.59 percent, down from 5.60 percent last week.
Rates on five-year adjustable-rate mortgages fell to 6.11 percent this week, down from 6.14 percent last week.
The mortgage rates do not include add-on fees known as points. Thirty-year mortgages and 15-year mortgages both carried a nationwide average fee of 0.4 point. One-year ARMS carried a nationwide average fee of 0.7 point while five-year ARMs carried a fee of 0.5 point.
A year ago, 30-year mortgages averaged 5.71 percent, 15-year mortgages stood at 5.32 percent, one-year ARMs were at 4.48 percent and five-year ARMs averaged 5.30 percent.
Posted by South Florida Realtor at 11:38 PM
May 19, 2006
Housing cool-down is 'orderly,' Fed chief says
WASHINGTON -- May 19, 2006 -- Confirming what home buyers suspected and real estate sales figures have indicated for months, Federal Reserve Chairman Ben S. Bernanke said yesterday that the U.S. housing market was showing clear signs of cooling off.
Bernanke said the slowdown is "moderate" and "orderly" and pointed to the overall strength of the economy.
"We're seeing slowing in sales, slowing in starts. There also seem to be signs that prices are not rising as quickly as they have been for the past few years," Bernanke said in response to questions after a speech in Chicago, Bloomberg News reported.
His comments came as Freddie Mac announced that the average rate on a 30-year, fixed mortgage hit 6.6 percent this week, the highest in almost four years. Rising long-term rates have contributed to the housing industry's slowdown. The Commerce Department this week said construction of new homes fell 7.4 percent in April, to an annualized pace of 1.85 million homes. It was the third straight monthly decline.
Analysts were divided about Bernanke's assessment. Peter Morici, an economist at the University of Maryland's Robert H. Smith School of Business, said Bernanke's comments were "right on."
Morici said he saw the rise in long-term interest rates as healthy, with the economy moving away from its dependence on the housing market and "hyper-consumption" fueled by people taking out loans against their houses. "The housing market is going to come back to earth," he said.
Economist Dean Baker of the Center for Economic Policy and Research expressed concern that rising interest rates were squeezing homeowners who took out interest-only and adjustable-rate mortgages. Even when interest rates were at historically low levels, Baker said, stretched buyers were taking out exotic loans to get into pricey homes.
Baker said a rising inventory of homes in the Washington region could fuel a double-digit price decline if interest rates climb higher. Condo prices could fall by as much as 30 percent, and prices of single-family homes could drop by as much as 15 percent, he said.
Former Fed chairman Alan Greenspan echoed Bernanke's analysis in a speech last night to the Bond Market Association in New York. "The boom is over. We can say that with some confidence," Greenspan said. But, he added, "there is no evidence that prices are going to collapse."
Greenspan predicted that the U.S. market was more likely to follow the path set by housing markets in Australia and Britain, where "prices just flattened out."
The consequences for the broader economy are not yet clear, Greenspan said. But if rising home prices and cheap home equity loans have been fueling consumer spending, as many economists think, "there is going to be some slowing of consumption," he said.
Bernanke did not address whether the Fed would pause in its campaign of raising short-term interest rates. Last week, the central bank raised its benchmark rate for the 16th consecutive time since June 2004 in response to continuing signs of inflationary pressures.
On Wednesday, the Commerce Department reported that April consumer prices rose at the highest rate in three months, leading many analysts to believe that the Fed would continue raising short-term rates. Richmond Fed President Jeffrey M. Lacker said in a speech yesterday in Norfolk that the Fed is less likely to suspend its interest-rate increases in light of higher consumer prices.
The shifting housing market has left sellers and buyers alike uncertain about their next steps.
"On the one hand, you feel like you can sit back and wait. On the other hand, you feel like you don't want to because of the interest rates," said John Booth Babcock, a transportation planner from Arlington who had considered buying but has now decided to wait. "No matter what you think the situation is, there's no comfort level."
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Copyright © 2006 washingtonpost.com, Tomoeh Murakami Tse. Staff writer Brooke A. Masters contributed to this report.
Posted by South Florida Realtor at 02:34 PM
January 06, 2006
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Posted by South Florida Realtor at 06:42 PM | TrackBack
Investors are unknown factor in 2006 real estate market
While housing and finance industry economists say they don't expect the real estate boom to turn to doom and gloom this year, they do say that the record run-up in housing prices and sales has run out of steam, and 2006 should be an above-normal year but probably won't make the record books.
There is an asterisk for these predictions: How real estate investors react to this downturn could foil the forecast and potentially be devastating for the housing market and overall economy, economists said during an economic outlook presented Thursday by the Homeownership Alliance, a national coalition of housing and finance organizations.
While housing has been an economic boost over the past several years, this year the housing market could be a slight drag on the national economy, the Homeownership Alliance economists generally agreed.
"It's difficult to follow the strongest year ever," said David Lereah, chief economist for the National Association of Realtors trade group, which has about 1.2 million members. "The boom is obviously winding down. That's what we're all saying and observing." Existing-home sales should drop about 4 percent to 5 percent this year, compared to the 2005 levels, Lereah said, and new-home sales should drop about 5 percent to 6 percent year-over-year.
Price drops are possible in some "very, very hot metro markets," he added, though "it's very difficult to know which markets they will be right now." Nationwide, though, Lereah expects home-price appreciation to be up about 6.1 percent this year, compared to a rise of 13 percent in 2005.
As for investors, Lereah said, "Investor activity is by far ... the biggest risk that the housing sector is going to face this year, because investor activity had gotten to levels that we had never seen before. And we are in uncharted territory." Speculators who bought properties to flip quickly may be left at a loss, as interest rates are rising and the market is in transition from a seller's market to a buyer's market.
David Seiders, chief economist for the National Association of Home Builders trade group, said, "I think the biggest risk would be for investors not only to stop investing, but to move those units back onto the market in large volume, and that could create a bigger problem. This is kind of new to us," he said, adding that it's a "major uncertainty" where investors would put their money if they pulled it out of the real estate market.
"All of us will be observing keenly," Lereah said. In March 2005, the Realtor trade group released a study that showed a high level of investor activity in the housing market: 23 percent of all homes purchased in 2004 were for investment, and another 13 percent were vacation homes.
Frank E. Nothaft, chief economist for Freddie Mac, said rising energy prices also have the potential to disrupt the overall economy and could potentially lead to higher-than-expected increases in the mortgage rate.
The panel of economists said they expect the Fed will soon stop its trend in raising the federal funds rate, which they expect will level off at about 4.5 percent to 5 percent this year.
There will likely be no quick solution to affordability problems in markets where home-price appreciation has outpaced income growth, though 2006 may see income growth more in-line with price gains, economists said.
Nothaft said that areas that have experienced 20 percent or more appreciation for the past several years and have also had high levels of investor activity may be at particular risk as the housing market cools. Investment activity in Las Vegas, for example, has accounted for close to 40 percent of purchase activity, he said. "What will happen in Las Vegas in the coming year? It's very hard to say."
Refinancing activity should be down about 14 percent to 15 percent this year compared to 2005, and that should lead to lower consumer spending relative to refinancing cash-outs, he said.
Nothaft also said he expects the share of adjustable-rate mortgages to tail off in 2006, from about 30 percent of the overall share in 2005 to 25 percent of the overall share, and he also expects declining activity in interest-only and other unconventional mortgage products as there is "more regulatory scrutiny and pressure on lenders."
Seiders estimated that new-home sales, which increased about 6.7 percent in 2005, should drop about 6.6 percent this year, while existing-home sales should drop about 4.8 percent this year.
David Berson, chief economist for Fannie Mae, said he predicts an 8 percent drop in new- and existing-home sales this year, with home-price appreciation of about 3 percent. Berson said his forecast is down largely because of a high level of investment activity in the real estate sector.
"Our data ... suggests that the investor share of the market has been at record levels and rising ... and the investor share has effectively doubled over the past three or four years. Investor demand is always more volatile than other housing demand," he said. Investors appeared to pull out of some markets toward the end of 2005, he said, and that trend could continue this year.
Overall, though, the housing market still looks good, he said. "It's still not a bad year for housing -- just not the record year we've had for the past couple years," he said.
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Posted by South Florida Realtor at 06:34 PM | TrackBack
December 11, 2005
Florida's home resales' median price rises in October
ORLANDO, Fla. - Home sales statistics from the Florida Association of Realtors® (FAR) show that home prices continued to rise but the number of sales fell in October, notably in southern areas directly impacted by Hurricane Wilma's march across the state. Most insurers stopped issuing new policies when the hurricane neared Florida, and, following the storm, some lenders required a re-inspection of properties before they would release mortgage money.
Despite storm problems, however, the state's median home price rose 28 percent in October to $241,000 from $188,800 in October 2004. In September 2005, the median price was $247,800. In October 2000, FAR records show the statewide median sales price was $116,100, resulting in an increase of 107 percent over the five-year-period.
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Many Realtors across the state report gains in housing supply, giving buyers a larger selection of homes to consider. Statewide, a total of 16,029 existing single-family homes sold last month compared to 16,844 homes a year ago for a decrease of 5 percent, according to FAR.
The national median existing-home price in September was $212,000, up 13.4 percent from the previous September's median price of $187,000, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $543,980 in September; in New York, the median price was $275,000; and in North Carolina, the average resales price was $208,097.
Interest rates for a 30-year fixed-rate mortgage averaged 6.07 percent in October, a slight increase from the average 5.72 percent in October 2004. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s larger markets, the Daytona Beach metropolitan statistical area (MSA) reported that 1,037 homes sold in October for an 18 percent gain over October 2004 home sales of 881. The median home price in Daytona Beach rose 35 percent over the same time period, from $165,000 in October 2004 to $223,300 in October 2005.
Shawn M. Goepfert, president of the Daytona Beach Area Association of Realtors and owner of Ideal Realty of Volusia, says that demand for Daytona-area homes is now catching up with supply. "We started 2005 off with only about 1,000 residential listings, really robust sales and it taking only about two or three weeks to get a contract," Goepfert says. "That demand really pushed up our sales price, but in the last 30 days, our inventory has increased to about 3,000 residential listings."
Other larger MSAs with strong sales and price increases include Jacksonville, with 1,504 home sales in October for a 38 percent gain over October 2004 sales numbers; and Tampa-St. Petersburg-Clearwater, with 3,735 homes sold for an increase of 4 percent over the same time period. Prices also rose in both markets over the year. In Jacksonville, the median price rose 20 percent to $191,600; in Tampa-St. Petersburg-Clearwater the median price rose 35 percent to $225,700.
Among the state’s smaller MSAs, Lakeland-Winter Haven posted a 24 percent gain in home sales in October, with 513 homes changing hands compared to 414 homes a year ago. The market’s median sales price rose 50 percent in October to $173,500; last year, it was $115,500.
"I think people have discovered our little secret," says Peggy Daley, treasurer of the Lakeland Association of Realtors and a Realtor with ImperiaLakes Realty Services in Lakeland. "We've got the best of everything. People are moving here in droves from South Florida, plus people from the North keep coming down and quickly realize that we're centrally located with easy access to Tampa or Orlando -- but without the traffic."
Other smaller MSAs that posted gains in the number of homes sold in October include Ocala, where 482 homes sold for a 15 percent jump; and Tallahassee, where 393 homes sold for an 18 percent increase. The median sales price in those markets also rose. In Ocala, it rose 38 percent to $159,200; and in Tallahassee, 19 percent to $172,700.
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Posted by South Florida Realtor at 09:31 PM | TrackBack
Rates on 30-year mortgages rise for the first time in three weeks
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WASHINGTON -- Rates on 30-year mortgages, which had fallen for two weeks, resumed their increases this week.
Mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.32 percent this week, up from 6.26 percent last week.
Rates three weeks ago had hit 6.37 percent, which had been the highest level in more than two years.
Anaysts said the booming housing sector, which has been cooling a bit under the weight of rising rates, should slow further in coming months. The slowdown, however, won't be enough to stop sales of both existing and new homes from setting a fifth straight record in 2005, economists said.
Frank Nothaft, chief economist at Freddie Mac, said even with the recent increases, 30-year mortgages, by far the most popular mortgage type, so far this year have remained close to the averages set in the past two years.
"These low rates helped the housing market set records for home sales and new construction over the past three years," he said. "Looking ahead, as mortgages rates rise, housing activity will ease somewhat."
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.87 percent this week, up from 5.81 percent last week.
One-year adjustable rate mortgages were unchanged at 5.16 percent while rates on five-year hybrid adjustable rate mortgages averaged 5.78 percent this week, up slightly from 5.76 percent last week.
The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a nationwide average fee of 0.6 point while one-year ARMs had a 0.8 point fee and five-year hybrid ARMs carried a fee of 0.7 point.
A year ago, 30-year mortgages averaged 5.71 percent, 15-year mortgages were at 5.14 percent and one-year ARMs averaged 4.15 percent. Freddie Mac does not have historical data on the five-year ARM which it began tracking this year.
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Posted by South Florida Realtor at 08:40 PM | TrackBack
October 29, 2005
Hurricanes, housing boom blow construction materials prices through the roof. South Florida Realtor
JACKSONVILLE, Fla. -- South-Florida-Realtor.Com -- Hurricane-force winds may not have hit the First Coast this season, but hurricanes Katrina, Rita -- and now, Wilma -- have blasted the costs of construction materials skyhigh.
Local contractors and material suppliers say Wilma might deal the latest blow to construction materials prices, causing a spike in costs of the basic building blocks of homes, including cement, lumber and shingles.
Expected rebuilding efforts for Katrina and Rita have already driven prices up, spurring home prices up with them. According to the National Association of Home Builders, new home prices have grown 15 percent through August since August 2003.
Cement prices were already rising at a rate of about 20 percent every six months, said Frank Taylor, a sales and marketing agent with Heidelberg Cement Group.
"Demand has been very high in the Southeast region," he said.
"Katrina, Wilma, the housing boom -- all of that is driving prices up and putting us in a shortage."
Taylor said that Florida consumes about 10 million tons of cement per year, half of which must come from outside the state due to insufficient in-state production capacity. Thus, rocketing fuel prices have also driven cement prices skyward.
Bryan Lendry, president of the Northeast Florida Builders Association, said that higher cement prices might be coming from another unlikely source -- China. Construction projects there have sucked building materials away from the United States, leaving local contractors scraping for cement. The hurricanes worsened that costly trend.
Lendry said that his own company, custom home builder Brylen Homes, has seen a 50 percent increase in the cost of plywood since the end of September. The waiting period for asphalt shingles has also grown to between two and three weeks.
"Whenever a hurricane hits, we see lumber flying off the shelves," Lendry said. "We're getting hit with repair demands in an already tight market. Now, we might wait four or five days just for concrete. That used to be unheard of."
Since Sept. 1, the price of plywood has rocketed 30 percent and the price of OSB roof sheeting, which is used in the roofs of most local homes, has soared 40 percent, said Robert Mangum, who heads purchasing for the Carolina Lumber Company in Jacksonville.
"Since Katrina, these prices went way up, and with Wilma coming, manufacturers are probably going to keep prices up," he said.
Because South Florida mainly uses plywood in roofs instead of OSB roof sheeting, Mangum expects that plywood prices will see the largest increase once rebuilding begins.
Roofing materials, which are largely petroleum-based products, have also come in high-demand.
Asphalt shingles, which are used in the construction of most roofs, cost about 5 percent more every month than they did the month before, and shingles manufacturers are having to ration some suppliers as they struggle to keep up with demand, said Kevin Snyder, sales and projects manager for BBG Contracting Group Inc. in Jacksonville.
Glen McRae, assistant manager of the Jacksonville branch of the Bradco Supply Corporation, said that he has seen the price of asphalt shingles go up about 25 percent in the last six months and that his branch is on an allocation from his manufacturers.
"People are trying to come up with alternatives but almost everything used in roofing is petroleum based," McRae said. "As you see gas prices go up, you can be sure that shingles are going up too."
McRae said that his supply line and prices had already been heavily affected by Katrina and Rita and that Wilma could cause another spike in demand and prices.
All of that might bring another headache for Katrina Hosea, owner of BeeTree Homes, a Jacksonville-based custom home builder. In the past four months, she has seen the prices that it pays for sheetrock rise 20 percent. Hosea said that she also has trouble getting dry wall and concrete for her houses.
"In my opinion, I find materials costs are extremely inflated, but a lot of the manufacturers know they can get these prices," she said.
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Posted by South Florida Realtor at 03:36 PM | TrackBack
NAR’s Home Sales Forecast Looking Stronger
The forecast for home sales has trended up as the year progressed, fueled lately by added demand resulting from the impact of recent hurricanes, according to the National Association of Realtors®.
David Lereah, NAR’s chief economist, said that at the beginning of the year it was thought that 2005 would be the second best total for both existing- and new-home sales, but by June it was apparent that another record was in the works. “Post-Katrina, our sales projections for this year have moved even higher,” Lereah said. “Short-term momentum is very strong, and our Pending Home Sales Index just set a record. In addition to the housing needs of hurricane victims, we may be seeing some ‘fence jumping’ from home buyers who are getting into the market before interests rates move higher.”
Existing-home sales are forecast to rise 4.2 percent to 7.07 million in 2005, while new-home sales are expected to increase 7.1 percent to 1.29 million. Total housing starts – single-family and multifamily – should be up 4.5 percent to 2.04 million units this year, the best showing since 1973, and single-family starts are seen at a record of 1.70 million.
“Inflationary pressures – driven by higher energy costs – have become a concern, so we anticipate two more hikes in the fed funds rate by the end of the year. In addition, long-term interest rates also are rising at a faster clip,” Lereah said. The 30-year fixed-rate mortgage is projected to reach 6.2 percent in the fourth quarter, and trend up to 6.7 percent by the end of next year.
The national median existing-home price for all housing types is forecast to increase 12.5 percent in 2005 to $208,400, while the median new-home price should rise 3.9 percent to $229,700.
NAR President Al Mansell of Salt Lake City said some easing in home sales is expected in 2006. “The rise in mortgage interest rates is likely to have a slight braking action on the housing market, and the upside of that is it would help to bring the market closer to balance between home buyers and sellers,” he said. “As a result, there should be a cooling in the rate of price growth – on balance, the overall market should continue to favor sellers with price appreciation remaining above the high end of historic norms. The investment fundamentals for housing remain solid.”
In 2006, NAR expects the median existing-home price to grow by 5.2 percent and the median new-home price to rise 7.1 percent. Historic home-price gains are 1.5 percentage points above the rate of inflation, which is seen at 2.6 percent next year.
“Although energy prices are the chief culprit in current inflation concerns, we project oil prices to settle early next year – that would cause inflation to quickly dissipate,” Lereah said. The Consumer Price Index is forecast to rise 3.5 percent for all of 2005 before easing early next year.
Inflation-adjusted disposable personal income is expected to grow by 1.4 percent for 2005. The U.S. gross domestic product (GDP) is seen at 3.5 percent for all of 2005, with GDP picking up early next year as hurricane rebuilding accelerates. The unemployment rate is projected to average 5.2 percent for the next three quarters, then decline to 5.0 percent in the second half of next year.
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September 13, 2005
Study examines real estate flipping
Assign-Your-Contract.Com
ANAHEIM, Calif. -- Sept. 13, 2005 -- First American Real Estate Solutions® (RES) has released a new study examining the practice of real estate "flipping," or the reselling of residential properties for profit within 24 months of purchase. FlipYourPreConstruction.Com
The study, "Real Estate Flipping: Gold Mine, Mistake or Fraud," by Christopher Cagan, Ph.D., director of research and analytics at First American RES, examines the prevalence of -- and profits made from -- flipping residential real estate properties from 1999 through June 2005 in three of the hottest real estate markets in the country: Las Vegas, Miami and Orange County, Calif.
The study draws a distinction between legitimate flipping, which is defined as the purchase and quick resale of distressed or undervalued property for profit, vs. fraud, whereby the perpetrator uses false information in a real estate transaction to obtain unlawful profits.
Real estate prices have risen dramatically in recent years, with annual appreciations of 20 to 30 percent in some areas. The study shows that flippers obtained returns far in excess of those strong gains -- above 100 percent per year in many cases. The particularly profitable "sweet spot" of the elapsed time between purchase and flip sale is revealed through statistical analysis as being from three to six months of duration. Other key findings include disclosure of gross and adjusted rates of return for different types of flip resales and identification of specific zip codes where flipping was the most frequent and where the highest returns were obtained.
"While the market has done well overall, flippers have done even better," said Cagan. "During the past six years, flippers have exercised a level of strategic intelligence and savvy in their investments that proved to be even more profitable than the strong gains experienced by the general market.
"Among the strategies employed by purchasers who flipped properties within two years were investing in the hottest local markets; purchasing distressed, undervalued or foreclosed properties; and taking advantage of the psychology associated with a market experiencing higher than historical rates of appreciation to earn spectacular returns on their investments."
The study is derived from the pairing of the company’s analytics and its real estate transaction database. First American RES, a member of The First American Family of Companies, provides advanced property and ownership information, analytics and services.
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Posted by South Florida Realtor at 06:09 PM | TrackBack
The seller's dilemma: Is now the time?
Aventura-Homes.Com
WASHINGTON -- Sept. 13, 2005 -- Homeowners who currently are grappling with the decision of whether or not to sell must consider a number of contradictory economic indicators. While median residential prices are rising, surveys indicate that existing-home sales overall are declining.
David Lereah of the National Association of Realtors® (NAR) believes prices will continue to grow, citing the double-digit annual increases posted in 24 states and the District of Columbia during the second quarter.
An unexpected result of Hurricane Katrina, meanwhile, has been the continued lowering of mortgage rates. The more pessimistic view holds that the overall decline in the prices of new homes and sales attests to the gradual ebbing of the real estate boom. Fears of hurricanes are also spurring some owners of coastal properties to sell, driven by fears that the bottom could soon drop out. Katrina has driven up oil prices, making the transportation of construction materials more expensive.
Also, the rebuilding process will likely siphon construction workers and supplies away from other regions in the country, indicating a sustained slump in the market that has prompted some property professionals to advise their clients to wait at least a year before putting their homes up for sale, in the hope that the economy will have restabilized by then.
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Posted by South Florida Realtor at 06:07 PM | TrackBack
Senate OKs flood insurance borrowing bill
South-Florida-Realtor.Com
WASHINGTON -- Sept. 13, 2005 -- Congress agreed Monday to increase the borrowing authority of the federal program overseeing flood insurance to cope with the huge expected costs of claims from Hurricane Katrina.
The Senate, by voice vote, approved a House-passed bill that would allow the National Flood Insurance Program, a wing of the Federal Emergency Management Agency, to borrow up to $3.5 billion a year from the Treasury, up from the current ceiling of $1.5 billion. The legislation now goes to the president for his signature.
The program, established by Congress in 1968, currently covers around 4.5 million policyholders in more than 20,000 communities located in flood plains and other low-lying areas.
Participation is based on agreements between local communities and the NFIP under which the program offers protection at lower than full-risk rates in exchange for commitments from the communities that they will carry out steps to reduce flood damage risks in new structures.
The program is generally financed by premiums, but officials say it is certain that it will need substantial assistance to handle the hundreds of thousands of expected claims from Katrina. The program has paid $12.7 billion in flood insurance claims and related costs since 1969.
The bill is H.R. 3669.
On the Net:
National Flood Insurance Program: fema.gov
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Hurricane worries: Is this the new normal ?
REAL ESTATE ISSUES
Home buyers, though, don't have the luxury of picking their seasons in Florida.
South Florida's housing market is in the midst of a historic building boom, with high-rise condominium buildings breaking ground at an unprecedented pace. The construction spree has many market watchers warning of a coming glut, but developers have justified their plans by citing Florida's appeal to Northeasterners, Latin Americans and Europeans eager to buy retirement homes and vacation getaways here.
Last year's hurricane barrage had market watchers worried that storm fears could halt the momentum. But the numbers didn't bear that out.
Home prices in Punta Gorda, where Hurricane Charley hit as a Category 4 storm, rose 34 percent in July, the second month of the hurricane season. Statewide they rose 33 percent.
''People thought last year's hurricane season was going to deter people from buying, and it didn't at all,'' said Bradley Hunter, South Florida director for Metrostudy, which analyzes the real estate market. ``I heard a lot of buzzing about that. There was no evidence people were deterred.''
But Hunter and other analysts said more active hurricane seasons would have them worried over a storm's more immediate impact: higher costs.
Rebuilding the Gulf Coast is expected to increase already strong demand for lumber, concrete and other building supplies nationwide -- with higher prices sure to follow. That would increase housing costs in a market where affordability and runaway prices are already major concerns.
''That's just what we need,'' Hunter said with a laugh.
Fernando Martinez, a vice president and partner at Caribe Homes, said his company tries to build houses that minimize hurricane anxiety, mainly by adding the convenience of accordion shutters. But after last year's storm season, those are hard to find.
Still, Martinez said he doubts busier hurricane seasons would turn off people to South Florida real estate, particularly given the region's strong building codes.
But consumers' location preferences might change.
''The comment I have heard is that maybe living right on the water isn't as nice as we all liked it to be,'' he said.
As a barometer of both a real estate market and tourism destination vulnerable to hurricane jitters, South Florida's post-2004 hurricane season performance also offers cause for optimism.
Miami-Dade home prices surged 28 percent in July over 2004 levels, and are up 21 percent since 2005 began. In Broward, prices went up 22 percent last year and 28 percent in July.
HOTELS' POPULARITY
The rates for Broward hotel rooms also jumped in July by 11 percent, while Miami-Dade room rates were up 12 percent. In fact, among the top 25 hotel markets, Miami boasted the second highest room rate in the country for the January-to-June stretch. And less than four years after the 9/11 attacks, first place went to New York City.
''I think that proves the point,'' Talbert said.
Dawn Soper, a real estate analyst in Miami, also sees hurricane concerns as short-lived, no matter how disturbing the destruction.
''You have the stigma, of course, after a hurricane, but we learned after Andrew it doesn't last long,'' she said.
Even so, some see Katrina as launching a new era of hurricane fears.
''You're talking about 10,000 people dead,'' said Julio Stieffel, a marketing consultant for the travel industry. ``That is a different hurricane than any other hurricane impression you've ever had. When you talk about hurricanes now, it's different than when you were talking about hurricanes last year.''
Psychological concerns aside, Lewis Goodkin worries about what accelerated hurricane seasons could mean for the nuts and bolts of real estate transactions. Even if buyers are willing, will insurers be?
''If you have a situation where insurance companies are getting increasingly conservative . . . that could have a substantial impact,'' said Goodkin, a real estate analyst in Miami. When he bought a condo on Brickell Avenue after Hurricane Andrew, ``I couldn't get a policy for the damn thing.''
South Florida's hurricane woes have never been a secret. From the University of Miami Hurricanes to the cyclonic swirl that decorated the stage for MTV's recent Miami broadcast, fierce storms are probably the region's most famous liability.
But what if the downside gets worse? If predictions of newly active hurricane seasons come true, where will that leave the Sunshine State's reputation as a tropical getaway and balmy place to own real estate?
It's a question getting more and more attention as images of spinning hurricane patterns and devastation dominate the national media.
''I'm hearing -- and I'm sure a lot of baby boomers are -- that we could be in a period of heightened hurricane activity for 20 years,'' said Jack McCabe, a real estate analyst in Deerfield Beach. ``I think a lot of folks are going to consider: Do we really want to invest a lot of money in real estate in areas prone to that?''
Last year, for the first time, four hurricanes hit Florida in a single storm season. And 2005 set its own record: seven named storms by Aug. 1, an unprecedented start, with three of them (Tropical Storm Arlene and Hurricanes Dennis and Katrina) slamming Florida.
With almost three months of hurricane season to go and Hurricane Ophelia menacing the Florida coast at press time, this year could surpass 2004's pace. Already, Katrina's assault on the Gulf Coast has set a new benchmark for the destruction and suffering a hurricane can cause.
Against that backdrop, the two main industries relying on Florida's appeal as a tropical getaway -- real estate and tourism -- are hoping public perceptions don't turn against them.
Last year's hurricane barrage had Florida's tourism gurus warning of an image crisis on par with the 9/11 terrorist attacks' impact on air travel. Visit Florida, the tax-funded state tourism bureau, wanted $30 million for an advertising campaign to reassure tourists and convention planners.
But as last hurricane season gave way to a string of heady room rates and healthy occupancy levels at hotels, that sense of panic dissipated. And with record hotel performance in South Florida throughout the current hurricane season, local tourism officials see storms causing only short-term travel drop-offs.
''The public is pretty sophisticated,'' said William Talbert, president of the Greater Miami Convention & Visitors Bureau. For Hurricane Katrina, which hit South Florida on a Thursday night, ``we saw some drop-off in occupancy that Thursday and Friday nights. But then a dramatic pickup on Saturday night.''
Long-term, Talbert said he doubts an increase in hurricanes will change the current storm-season dynamics. Vacationers and meeting planners, he said, would have a hard time insulating themselves from hurricane risks.
TROUBLING TREND LINE
''Hurricanes can go to Louisiana, Mississippi, Alabama, Georgia, Florida, North Carolina, South Carolina, all up the coast,'' he said. ``It's unlikely the marketplace is going to stay out of all those states for five months out of the year.''
The science is far from conclusive at this point, but it does appear the coastal states are at the beginning of a troubling trend line.
Climatologists say the Atlantic Ocean is in the midst of a routine upswing in hurricane activity. But other scientists warn global warming will create -- or has already created -- storms with far more destructive power.
The Association of British Insurers said in a June report that global warming could increase the wind speed of Atlantic hurricanes by 6 percent -- enough to push a Category 4 storm into Category 5.
And Ceres, a coalition of pension funds and environmental groups, last week issued a similar report saying climate change could force the insurance industry to scale back coverage and leave the government to pay more for reimbursements after catastrophes.
More frequent hurricanes, though, would lead to more frequent hurricane scares.
Steve Litvin, a professor of hospitality and tourism management at the College of Charleston in South Carolina, noted Charleston's tourism industry has pressed the National Weather Service to drop its five-day forecast for hurricane tracks because its broad swath needlessly implicates such a large area.
TRAVELERS' CONCERNS
While Litvin said he didn't agree with the bureau's strategy, he sees the hurricane tracks fueling traveler worries. Busy hurricane seasons will naturally compound that factor.
''I think it's going to dramatically increase the nervousness about it ahead of time, and the seriousness with which people will take warnings,'' Litvin said. ``From a vacation point of view, it just means if you're anywhere near that cone, you're just going to cancel.''
In contemplating its hurricane marketing response, Visit Florida has looked at how Toronto's tourism business weathered outbreaks of SARS disease and how Israel manages to woo visitors amid chronic terrorism concerns, said Dale Brill, senior vice president of marketing for Visit Florida.
Meanwhile, last year's storm barrage prompted Visit Florida to create an insurance program for conventions washed out by hurricanes. Seeing large groups as the most weather-leery, Broward County this year also began waiving rent at the Fort Lauderdale convention center during August and September.
''The reality that we're looking at is the fact that the public is so much more keenly aware of hurricanes and their seasons than they ever were before,'' said Nicki Grossman, president of the Greater Fort Lauderdale Convention & Visitors Bureau. ``Whether we're in some kind of new weather pattern, or [whether] people just hear that we are, we might as well just act like we are.''
Black Enterprise, publisher of the well-known business magazine, brought its annual golf tournament to Doral in the 1990s, but hurricanes plagued the last two outings: the 2004 tournament was all but washed out by Frances, while this year's event came on the heels of Hurricane Katrina's tear through South Florida.
But Earl Graves Sr., chairman and publisher of Black Enterprise, said the problems in 2004 didn't hurt attendance for the sold-out tournament this year. And he noted hurricane season -- not to mention South Florida's scorching summers -- offer a significant attraction for groups seeking to turn a profit from large events: cheaper rooms and lower costs.
''If we try to do it in the winter season, it will be even more costly,'' Graves said. ``They don't need us in the winter.''
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Posted by South Florida Realtor at 05:56 PM | TrackBack
July 26, 2005
Existing Home-Sales Smash Record Again
Aventura-Homes.Com, July 25 – Existing-home sales surpassed market expectations and reached another record in June as low mortgage interest rates and favorable market conditions continued to attract buyers, according to the National Association of Realtors.
Total existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.7 percent in June to a seasonally adjusted annual rate of 7.33 million from an upwardly revised pace of 7.14 million in May. Sales were 4.4 percent above the 7.02 million-unit level in June 2004; the previous record was 7.18 million in April of this year.
David Lereah, NAR’s chief economist, said home sales were expected to ease slightly from peaks reached over the last couple of months. “Just when you think sales activity is ready to settle into a more sustainable pace, the housing market continues to surprise,” he said. “We’ve been expecting sales to remain at historically high levels, but this performance underscores the value of housing as an investment and the importance of homeownership in fulfilling the American dream.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.58 percent in June, down from 5.72 percent in May; the rate was 6.29 percent in June 2004. “Job growth and economic improvement also are boosting home sales,” Lereah said.
The national median existing-home price for all housing types was $219,000 in June, up 14.7 percent from June 2004 when the median price was $191,000; this is the strongest increase since November 1980 when annual appreciation was 15.6 percent. The median is a typical market price where half of the homes sold for more and half sold for less.
NAR President Al Mansell, of Salt Lake City, said home sales are expected to ease as the year progresses. “When the housing market eventually slows from red-hot levels, we should see some cooling in price gains,” he said. “Home prices continue to be bid-up in tight markets across the country. Eventually, appreciation rates will slow and come down to normal levels when the shortage of homes on the market improves and comes closer into balance, hopefully, by the second half of next year.”
Historically, home prices rise at the general rate of inflation, plus one-to-two percentage points.
Total housing inventory levels rose 3.8 percent at the end of June to 2.65 million existing homes available for sale, which represents a 4.3-month supply at the current sales pace. “The irony is that housing inventory is tight enough to boost prices but not enough to curb overall sales,” Mansell said.
Existing condominium and cooperative housing sales hit a fourth consecutive monthly record in June, rising 4.5 percent to a seasonally adjusted annual rate of 960,000 units from a pace of 919,000 in May. Last month’s sales activity was 12.4 percent above the 854,000-unit level in June 2004. The median condo price was $223,500, up 14.8 percent from a year earlier. Condo/co-op sales accounted for a 13.1 percent market share.
Single-family home sales increased 2.4 percent to a record seasonally adjusted annual rate of 6.37 million in June from 6.22 million in May, and were 3.2 percent above the 6.17 million-unit pace in June 2004. The median single-family home price was $218,600 in June, up 14.5 percent from a year ago.
Regionally, total existing-home sales in the West increased 5.5 percent to a record annual pace of 1.73 million units in June, and were 3.6 percent above June 2004. The median existing-home price in the West was $317,000, up 17.4 percent from a year ago.
Existing-home sales in the Northeast rose 3.4 percent to a record annual level of 1.23 million in June, and were 7.9 percent above the same month a year ago. The median existing-home price in the Northeast was $250,000, up 13.6 percent from June 2004.
Total existing-home sales in the Midwest showed a 1.9 percent gain to an annual sales rate of 1.63 million in June, the second highest on record, and were unchanged from June 2004; the record was 1.64 million in April of this year. The median price in the Midwest was $177,000, up 12.7 percent from a year earlier.
The home resale pace in the South was up by 1.1 percent to a record level of 2.74 million units in June, and was 5.8 percent higher than a year ago. The median price of an existing home in the South was $193,000, which was 9.0 percent higher than June 2004.
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Posted by South Florida Realtor at 01:43 AM | TrackBack
Slow sales fail to keep lid on Florida real estate prices
Despite cooling home sales across Florida in May, the statewide median price of an existing single-family home soared from a year ago, the Florida Association of Realtors reported today.
The statewide median price of an existing single-family home was $248,700 last month, up 31 percent from a year ago when it was $189,200.
In June 2000, Florida's median sales price was $119,600, according to FAR records, resulting in an increase of nearly 108 percent over the five-year period.
Statewide, resales activity slowed slightly from the blistering pace of recent months, with a total of 25,455 homes sold compared to 26,112 homes a year ago, for a 3 percent drop.
"Some briskness left the pace of sales of existing single-family homes across Florida during June," said David Scott, executive director of the Dr. Phillips Institute for the Study of American Business Activity and professor of finance at the University of Central Florida. "Actually, this is a step forward towards economic reality as double-digit gains are impossible to sustain in the real estate market just as they are impossible to sustain in the domestic economy. This single (monthly) outcome is not an alarm bell for a major contraction, as the June unit sales are still a healthy number. The June results represented the first month-over-month decline in 2005."
The trend of rising real estate values in Florida's existing-homes market suggests no imminent slowing, according to Scott. "Eventually, rising interest rates will curtail this situation, but long-term rates are still advancing at a slow pace," he said. "Substantiating the case for slowing rising long-term rates, including mortgage rates, is the fact that recent inflation rate data contained no negative surprises. As an example, the consumer price index for June stands 2.5 percent higher than a year ago. No thud has yet been heard related to the torrid pace of rising home prices."
Among Florida's larger markets, the Miami Metropolitan Statistical Area (MSA) reported a total of 1,317 homes sold last month compared with 1,293 homes sold a year ago for a 2 percent increase. The area's median sales price rose 27 percent to $363,100; a year ago, it was $285,900.
Other larger markets reporting higher home sales in June compared to a year ago include: Tampa-St. Petersburg-Clearwater, where 5,230 homes sold for a 2 percent increase; and Jacksonville, where 1,798 homes changed hands, also for a 2 percent gain. The median sales price in both markets rose by 23 percent last month: reaching $211,100 in Jacksonville and $208,700 in Tampa-St. Petersburg-Clearwater.
In the state's smaller MSAs, Tallahassee had a 14 percent gain in the number of home sales last month, with a total of 552 homes changing hands compared with 486 homes sold a year ago. The market's median sales price rose 11 percent to $169,800; a year ago, it was $152,400.
Other smaller MSAs reporting gains in home sales last month include: Punta Gorda, where 490 homes sold for a 22 percent increase; and Gainesville, where 450 homes changed hands for a 15 percent gain. The median sales price in those markets also rose: in Punta Gorda, up 16 percent to $216,500; and in Gainesville, up 10 percent to $192,000.
The Florida Association of Realtors has more than 130,000 members in 70 boards/associations.
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Posted by South Florida Realtor at 01:36 AM | TrackBack
July 24, 2005
The Housing Bubble Revisited
“Buy Real Estate, They ain’t making any more of it.” Will Rogers
In the prediction business you will often question your work. It is only natural. When predicting something is a bubble that doubt is doubly so. Bubbles are once in a generation events, which are not to be taken lightly. When bubbles burst the results are very and a lot more serious than a line on a computer screen going down in value.
Housing is even more difficult to predict a bubble because there are so many dynamics. For example, while there is a bubble in places such as Florida, California and most of the major U.S. cities. Their certainly is not one in Omaha or Topeka. However, as the populous areas of the United States are where most people live and these areas have seen large increases in land we have to conclude that on the whole, the United States and Canada are seeing real estate bubbles.
Another method we use to judge bubbles are stock charts. Bubbles usually coincide with Parabolic (straight up) moves in the stocks which represent that industry. When looking at the charts of the Dow Jones Homebuilding Index or any of the major homebuilders in the states we can most definitely see that homebuilding is experiencing a bubble.
It has gotten even worse, when I was discussing the real estate bubble earlier this year the Dow Jones Homebuilding Index was trading at nearly 800, it has increased over 30% in just a few months and trades at 1,070 as I write!! It has doubled in the last year. This, of course, is not sustainable.
However, what really defines a bubble is Manic Mass Psychology. When the bubble becomes so crazy that the mass of the population is involved. We remember the story of Joe Kennedy selling all of his stocks in 1929 after a shoe shine boy gave him stock advice. Recently, I traveled to Miami Beach and then the Bahamas. You could tell the difference in psychology in each place. In Florida EVERYONE was talking about Real Estate.
Let me give you an example. I was taking my cab from the airport to the hotel. When driving down Collins Ave., (a road that runs right along the coast) we asked our cab driver about the prices of the houses on the ocean. He knew them all. “On this side they are 2-3 million, on this side 5-6 million dollars.” He also knew that his house had gone up from “66,000 to nearly 140,000” in the past 5 years. The funny thing about it; he could barely speak English! Yet he knew all about the prices of real estate in the area.
When getting a massage at the hotel my masseuse started to talk about how Real Estate was booming and how they were tearing down all the old motels and building condos in place of them.
I was also shocked to see that in Miami Beach, a very built up area, how many cranes their were. The only other city I can remember seeing more cranes was Beijing. Of the major difference is that China is transforming from a third world nation to an industrial power. Where as just stated South Florida is already built up. Due to land prices it makes more economic sense, at the moment, to build condos as you can make more off the condo prices than hotel rates. These are sure fire signs of a Real Estate mania.
In Nassau, there was a lot of building going on. However, it was more communities and individual homes rather than mega condos. In addition, no one was really talking about it. Housing in Nassau has gone up about 5-10% a year over the past few years 5-10 years. Whereas, much of Florida (such as West Palm Beach and Boca Raton) are up 30-40% year to date!!
What you could see is the difference in mass psychology of a bubble compared to that of a place that is probably not experiencing a bubble.
Anyhow, our warning remains the same. “Hot areas” of the United States are still looking like a real estate bubble. It is estimated that 11% of current sales are those who are speculating, this is nearly 60% above historical average of 7%. When the market turns speculators, who are usually the most heavily leveraged with debt, will be decimated.
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Posted by South Florida Realtor at 12:22 AM | TrackBack
May 24, 2005
Florida home sales up 3 percent, median price rises 26 percent in April
ORLANDO, Fla. -- May 24, 2005 -- Different month, same story for sales of existing single-family homes in Florida in April: high demand, still-low mortgage rates and a short supply of homes available for sale, bringing the statewide median sales price to $218,600 -- a 26 percent increase over the April 2004 figure, according to the Florida Association of Realtors® (FAR).
In 2000, the statewide median sales price was $115,900, which represents a dramatic 88.6 percent increase over the five-year-period, according to FAR records. The median is a typical market price where half the homes sold for more, half sold for less.
Last month, a total of 23,537 existing single-family homes changed hands statewide for a 3 percent increase over the 22,746 homes sold the previous April, according to FAR.
Nationally, the median sales price for existing single-family homes was $193,600 in March, up 11.3 percent from a year earlier, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $495,400 in March; in New York, it was $278,050; in Maryland, it was $258,736; in North Carolina, the average resales price was $199,750; and in Illinois, the median price was $184,500.
The interest rate for a 30-year fixed-rate mortgage in April averaged 5.86 percent, only slightly higher than the 5.83 percent averaged during the same month a year ago. FAR's sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state's larger markets, the Fort Myers-Cape Coral metropolitan statistical area (MSA) showed higher sales last month, with a total of 1,266 homes changing hands for a 19 percent gain over the 1,064 homes sold in April 2004. The market's median home price rose 43 percent to $262,900; a year ago, it was $184,100.
Gary Atkinson, GRI, president of the Realtor Association of Greater Fort Myers & the Beach and a sales associate with RE/MAX Realty Group in Fort Myers, cites still-low mortgage rates as a factor in the market's strong resales activity.
"We're not strictly a retirement community anymore. Our sales are year-round," he says. "We've got baby boomers still looking for retirement property. People are realizing that prices are heading up and they want to get into the market while they can. Inventory is becoming much more scarce. And if a home is priced where it should be, it's gone in a week."
Other larger Florida MSAs reporting strong resales activity last month compared to a year ago include: Tampa-Clearwater-St. Petersburg, where 5,105 homes sold for a 19 percent increase; and Jacksonville, where 1,553 homes changed hands for a 7 percent gain. The median sales price in those markets also rose over the same period: in Tampa-Clearwater-St. Petersburg, 23 percent to $183,000; and in Jacksonville, 13 percent to $174,100.
Of the state's smaller markets, the Lakeland-Winter Haven MSA reported a 13 percent boost in home sales in April, with a total of 592 homes changing hands compared to 524 homes sold last year. The area's median sales price rose 25 percent to $126,600; a year ago, it was $101,000.
Vera Tungate, president of the Lakeland Association of Realtors and a sales associate with Exit Realty of Lakeland, says the Lakeland area offers a range of housing options at attractive prices, which helps to drive demand. "We have multiple offers on the table," she says. "We don't have enough properties for the buyers we have, and it's helping to create a sellers' market. Our area is very attractive to a lot of buyers, they want to move into the Lakeland area, but we just don't have the inventory."
Other smaller MSAs reporting strong gains in home sales last month include: Gainesville, where 386 homes sold for a 27 percent increase; and Ocala, where 594 homes sold, also for a 27 percent increase. The median sales price in those markets increased as well: in Ocala, 10 percent to $131,800; and in Gainesville, 5 percent to $168,100.
© 2005 FLORIDA ASSOCIATION OF REALTORS®
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Posted by South Florida Realtor at 05:45 PM | TrackBack
Young buyers set trends in new-home marketplace, says study
WASHINGTON -- May 24, 2005 -- Households headed by Generation Xers and members of the so-called echo-boom purchased 55 percent of all newly built homes sold in 2003 and are fast becoming the trendsetters in U.S. housing markets, according to reports from the U.S. Census and newly analyzed buyer preferences data from the National Association of Home Builders (NAHB).
"A new generation is viewing the housing market from an entirely different perspective than the baby boomers who've traditionally dominated industry trends," says NAHB Executive Vice President and Chief Executive Jerry Howard. "They're techno-savvy and are more likely to be house-shopping on the Internet. They have a strong awareness of all their options."
Gen-Xers in particular are wielding their buying power to shape today's new-home characteristics and market trends. "They and younger buyers were responsible for more than half of all new-home purchases in 2003 and are twice as likely to purchase new homes in the immediate future as baby boomers and seniors," Howard says.
American Housing Survey data from the U.S. Commerce Department shows that, while households headed by those aged 27 to 40 (the Gen-Xers) accounted for 28 percent of all U.S. households in 2003, they were responsible for fully 49 percent of new-home purchases that year. Another 6 percent of newly built homes were purchased by echo-boomers (born after 1979), 33 percent were purchased by baby boomers and 12 percent were purchased by seniors aged 60 and up.
Meanwhile, NAHB research on consumer preferences indicates that 37 percent of Gen-Xers and 27 percent of echo boomers intend to buy homes in the next two years, compared to just 13 percent of baby boomers and 6 percent of seniors.
What does this mean for the next generation of home building? "Previously there was speculation that younger buyers would be more thrifty than their parents with respect to their housing choices, but our research shows just the opposite is true," says NAHB Director of Research Gopal Ahluwalia.
In fact, many preferred options support the idea of a "move-up mentality" for younger buyers. For example, both echo boomers and Gen-Xers say they would like to have a home that is about 50 percent larger than their current residence. This compares to seniors and baby boomers, who want only 17 percent and 22 percent more space, respectively.
Similarly, 91 percent of echo-boomers say they would like their next home purchase to be a single-family detached home, versus the 46 percent who currently live in that kind of house. Seniors, on the other hand, are more likely than any other group to want to buy a townhouse rather than a single-family home -- though most still prefer the detached option.
Other housing preferences of younger buyers also show the inclination for a more luxurious lifestyle. For example, 61 percent of echo-boomers and 67 percent of Gen-Xers say they would prefer to have four or more bedrooms in their next house, compared to 40 percent of baby boomers and 26 percent of seniors. Similarly, younger buyers show a much greater preference for high ceilings that lend a greater sense of volume and spaciousness to a home.
Fully 73 percent and 77 percent of echo-boomers and Gen-Xers, respectively, say they want nine-foot or higher ceilings on the first floor, compared to 65 percent of baby boomers and just 54 percent of seniors. In terms of high-tech amenities, echo-boomers are more likely than any others to want a home theater, automated lighting controls and a built-in security system.
© 2005 FLORIDA ASSOCIATION OF REALTORS®
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Posted by South Florida Realtor at 04:28 PM | TrackBack
May 20, 2005
Mortgage rates at lowest level since February
WASHINGTON -- May 20, 2005 -- Rates on 30-year and 15-year mortgages this week dropped to their lowest levels since late February, offering a bit of good news for people wanting to buy a home.
Mortgage giant Freddie Mac reported Thursday in its weekly survey that rates on 30-year, fixed-rate mortgages averaged 5.71 percent, down from 5.77 percent last week.
Analysts attributed the decline in mortgage rates to reduced fears on the part of investors that the economy might face an outbreak of inflation.
"As long as inflation is held in check, there is little or no pressure to push mortgage rates higher," said Frank Nothaft, Freddie Mac's chief economist. Despite high fuel prices, "core" inflation - which excludes food and energy costs - seems to be fairly tame, he said. The gauge of core inflation is watched closely by the Federal Reserve, economists and investors.
For 15-year, fixed-rate mortgages, a popular option for refinancing, rates dipped to 5.27 percent this week, down from 5.33 percent last week.
This week's rates for both 30-year and 15-year mortgages were the lowest since the week ending February 24, when they averaged 5.69 percent and 5.22 percent, respectively.
Rates on five-year hybrid adjustable rate mortgages also declined this week, falling to 5.07 percent, compared with 5.21 percent the week before. These hybrid mortgages have a fixed-rate for five years and then adjust each year after that.
"Continuing low rates will keep the housing industry abuzz," Nothaft said.
Rates on one-year adjustable-rate mortgages, however, rose to 4.26 percent this week, up from 4.23 percent last week.
The nationwide averages for mortgage rates do not include add-on fees known as points. Each mortgage type carried a nationwide average fee of 0.7 point.
A year ago, 30-year mortgages averaged 6.30 percent, 15-year mortgages were at 5.67 percent and one-year ARMs averaged 3.99 percent. Freddie Mac does not have historical data on the five-year ARM, which it began tracking this year.
On the Net:
Freddie Mac: http://www.freddiemac.com
Posted by South Florida Realtor at 05:14 PM | TrackBack
Donald Trump chooses Kendra Todd as 'The Apprentice'
NEW YORK –- May 20, 2005 -- Donald Trump selected Kendra Todd as his first female "Apprentice," handing her a job with his organization and a $250,000 (euro197,754) salary at the close of the NBC reality show's live finale.
"I couldn't be happier," Todd told The Associated Press after her win Thursday night. "I was the girl who used to watch this on television and here I am. Dreams do come true. Just work hard and you'll get there."
Todd, the 26-year-old "book smarts" real estate broker from Boynton Beach, Florida, bested "street smarts" entrepreneur and mother of two Tana Goertz during the final boardroom battle.
Goertz, 37, of Des Moines, didn't go down without a fight. She assertively pointed out in front of the live audience that a winning idea for a round Pontiac brochure during one of the tasks was her idea although Todd was the task's project manager.
"I thought it was a little much," Trump said of Goertz's self-acknowledgment. "I don't mind aggression in men or women, but I found it to be a little obnoxious. I didn't love it."
Todd said she had been expecting Goertz to bring up the brochure.
"I was pretty sure that was going to happen," Todd said. "Believe me, I had my strategies in line. I knew everything that they might come at me with. I am a team player. I give credit where credit is due. ... (But) certainly there's more to a brochure than just the shape."
In episodes leading up to the live finale, Todd organized the Best Buy Video Game Championship during her final task, pleasing both corporate sponsors and her misfit team of firees. Todd, who was a member of "book smarts" Magna team, has an undergraduate degree in linguistics from the University of Florida.
Todd won't have to go too far from home for her new job. She chose developing a mansion in Palm Beach, Fla., over working on the Miss Universe pageant. Trump said he'd like Todd to train under his adviser Carolyn Kepcher at the Trump National Golf Club in Briarcliff Manor, New York, for a few months before tackling the Palm Beach mansion.
"I think she's going to be terrific," said Trump. "I like that she's a team player. That's how she ultimately won."
In the previous two "Apprentice" finales, Trump chose cigar business owner Bill Rancic to oversee the Trump International Hotel and Tower in Chicago and software executive Kelly Perdew to work on the Trump Place real estate development and Trump Ice bottled water projects in New York.
Trump is already in search of another "Apprentice." The fourth season and a spin-off starring Martha Stewart are in production.
"It's not book smarts vs. street smarts," said executive producer Mark Burnett of the next season. "It's a very impressive cast. Donald's in a really, really good mood about it. It's been really tough each week about who to fire."
Posted by South Florida Realtor at 05:09 PM | TrackBack
May 19, 2005
Allstate drops insurance policies for Florida businesses
TAMPA -- May 19, 2005 -- Allstate will stop writing property insurance for Florida businesses and will not renew 95,000 homeowner policies to protect against future losses.
Allstate, the state's third-largest insurer, will not renew policies for the 16,000 commercial properties it insures. It is not a major writer of business insurance in the state.
The publicly traded insurer will drop about 12.5 percent of its homeowner policies across the state, keeping about 663,000 customers.
Allstate has not written policies in the Tampa Bay area for years.
Universal Insurance Co. of North America has agreed to write policies for Allstate customers who are dropped as part of the reshuffling.
"Now, with the 2005 hurricane season starting in two weeks, we must be ready to handle future hurricane losses," said Phil Lawson, president of Allstate Floridian, a separate division of Allstate Corp.
Allstate paid about $2 billion in claims after last year's four hurricanes.
The company also said it would seek a rate increase from state regulators but didn't specify how much.
Allstate waged an unsuccessful bid in this year's legislative session to make it easier for insurers to tap the Florida Hurricane Catastrophe Fund, which the state created to offset massive losses for insurance companies.
"There is still significant room for improvement to give Florida homeowners protection at a better price," Lawson said.
© 2005, Tampa Tribune, Fla., Baird Helgeson. Distributed by Knight Ridder/Tribune Business News.
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May 18, 2005
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May 13, 2005
Bush Thanks Realtors for Helping Americans Achieve Homeownership
President George W. Bush received thunderous applause during parts of his speech Friday to thousands of Realtors assembled in Washington, D.C., for a week of meetings and lobbying.
Though the president spent most of his speech to the National Association of Realtors explaining his proposed Social Security reforms, he got the strongest applause when he argued for more health insurance options for small business, as well as select policies that would likely help continue the strong residential real estate market.
“Our Realtors play a crucial role in creating opportunity in America,” Bush told the Realtors. “After all, you help people attain an important part of the American experience and the American Dream, and that is owning a home. I believe the proper role of government is to encourage ownership, is to promote an ownership society ... When you own a home, it brings stability to a neighborhood or security to a family. I love it when somebody – a first-time homeowner – opens up the door to their house and says, welcome to my piece of property, welcome to my home.”
“And we're making progress,” the President continued. “In this country, homeownership set a new record last year: 69 percent of American families own a home. … There are 74 million homeowners in America today. And that's the most ever in our nation's history. I want to thank you for working hard to help people realize that dream.”
The president also noted how he wants the number of minority homeowners to reach 5.5 million by the year 2010.
“We just set a new quarterly record this year of 51.6 percent of minorities owning their own home – 2.3 million minorities own a home. We're halfway toward our goal of over five million by 2010,” Bush said.
“Housing starts – we're at the highest level in over 25 years, reaching nearly two million homes. That's the best annual performance since 1978,” the president added.
The American Dream Down Payment Act has been signed into law.
“My 2006 budget requests $200 million for that initiative,” Bush said. “And it's an important initiative. You see, that money will help thousands of families with their downpayment and closing costs, which will help more people realize the great joy of owning their own home.”
“To boost housing sales even more, Congress needs to pass my single-family homeownership tax credit,” he added. “We estimate this credit would increase the supply of affordable single-family homes by as many as 50,000 each year. The idea is to increase the supply of affordable homes by seven million over the next 10 years. In other words, there is a proper role for government to provide incentives for entrepreneurs and small businesses to expand. One thing we've got to make certain is to understand that the mortgage interest deduction enables more Americans to be able to own their own home. It is an important part of our tax code.”
The loudest applause came when the president backed health insurance reforms that would allow more small businesses to cover their employees – with a current bill strongly backed by the NAR and Realtors.
“We need to make it less costly for small businesses to provide health care for their employees,” Bush said. “We continue to expand health savings accounts. We must allow small businesses to pool risk across jurisdictional boundaries so they can buy insurance at the same discounts big companies are able to do. And to make sure health care is available and affordable to people from all walks of life, Congress needs to pass medical liability reform.”
Bush also relayed how he hold his wife, Laura, that he was going to speak to the Realtors group.
“She said, don't go over there and start looking for a house yet, you've got three-and-a-half more years,” the president joked.
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Posted by South Florida Realtor at 11:46 PM
May 09, 2005
Backlog for hurricane shutters leaves homes vulnerable
MIAMI -- May 9, 2005 -- It may already be too late to add hurricane shutters in time for this year's storm season. In some cases, it takes six months to complete a job after a customer calls: A call for hurricane shutters today means they wouldn't be installed until roughly the same time the 2005 hurricane season ends.
"It's really hectic now. We can't even get out to do an estimate for three weeks," says Barry Horvath, assistant operations manager for Shutter Services and Screen Repair in Delray Beach. "Then there's a 40-week backlog before we can start the job." Horvath calls it a slow day if he only gets 75 calls.
Installation and manufacturing remain stumbling blocks because shutters must be made to fit and installed by skilled workers. In addition, the raw materials -- mainly aluminum and some steel -- remain in short supply for everyone in the construction industry.
"The cost of aluminum has shot up 30 percent so far this year, and suppliers are increasing their prices as frequently as twice a month," says Greg Allowe, executive vice president of sales at Bulldog Products USA in Fort Myers. "No one's ever seen a crunch of business like this. New, tougher building codes, population growth and last year's very active storm season have all contributed to the demand."
Shutter installers say the real onslaught hasn't even begun. Many homeowners don't call for service until the hurricane season is under way.
Even do-it-yourselfers may have trouble preparing their home for the next hurricane season. Aluminum panels and installation tracks can be purchased at Home Depot and other supply stores at a cost of $250 to $300 for a typical window. But even the stores don't expect another shipment, at least in South Florida, for another six weeks; and many Home Depot stores only offer them by special order. Lowes also carries the raw materials, but many times sells out before the next shipment arrives.
Brian Brizel of Tamarac says he doesn't plan to follow the do-it-yourself route and will rely on a higher source for protection. "We'll just hope and pray we don't get hit this year," Brizel says. "I'm going to wait until this hurricane season is over and then see if I can find a better price when the contractors aren't as busy."
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Posted by South Florida Realtor at 05:50 PM
May 07, 2005
"Hot" Miami Pre Construction Condo Information
GotMiami.Com Arguably the hottest areas of Florida real estate are the pre construction and new construction markets. Developers across Florida are building at a fantastic rate. In order to qualify for the various stages of their construction financing, many developers offer discounts to early buyers. These discounted prices often result in better-than-average appreciation for buyers and investors. Savvy buyers know the value of buying preconstruction. Getting in on the ground floor is a fantastic opportunity to save thousands of dollars. One of the greatest benefits of buying in the preconstruction phase is that prices generally are lower than those of existing like-kind re-sales of existing real estate. Developers discount the prices of preconstruction units to give buyers the incentive to buy, something that will help both seller and buyer. Discounts are sometimes the primary difference and provide a win-win situation for all parties involved. Developers sell pre-construction at lower prices because they usually need pre-sales in order to secure a construction loan. Lenders typically require that 50% to 80% of a project be pre-sold prior to the construction commencing. As construction progresses, Developers typically increase the price of preconstruction units. This oftentimes is an additional incentive to buy at the earliest possible phase. Planning and patience pay off when buying preconstruction property. First, you need to plan on having the necessary funds when it comes time to convert. Second, you just need patience waiting for the documents to be delivered and for the condo to be built. If the preconstruction prices compare favorably with existing re-sales, then there is a good probability that you will enjoy substantial appreciation for your investment. Weather you're planning to purchase a preconstruction condo or loft for personal use or for investment Turnberry International Realty is sure to be your key to South Florida real estate. For more information, E-Mail Dean Isenberg or call Bonnie Isenberg at 800-819-5466 Visit us On-Line for the latest pre construction projects. GotMiami.ComPosted by South Florida Realtor at 04:16 PM
Economist Frets Over Housing Bubble
People across the nation continue to buy houses at highly inflated prices, even though economists have warned for months that the bubble's going to burst.
But it hasn't.
University of Houston economics professor Barton Smith believes the bubble is bound to pop, but the severity and timing depend on how long and how high the Federal Reserve keeps raising interest rates.
There's another big unknown looming, said Smith, who presented his annual real estate symposium on Thursday to more than 1,000 real estate developers, bankers and other business leaders.
"It's psychological, it's psychological," he said.
At some point, people are going to realize that the gains of 10 to 20 percent a year aren't sustainable, he said. In 2004, for example, average home prices increased 47 percent in Las Vegas, 27 percent in Washington, D.C., and 25 percent in Miami.
When the realization strikes, prices will start to fall. A dip of only 20 to 25 percent in cities just on the East and West coasts could end up creating a nationwide recession. And that would hurt even affordable-housing cities like Houston that are closely tied into the national economy.
"The Fed has to try to take the gusto out of the market without creaming it," Smith said.
On Tuesday, in its eighth consecutive quarter-point hike, the Fed raised interest rates to 3 percent. It takes three quarters before the economy begins to feel the effect of a rate change.
Despite rising interest rates, there's been no shortage of buyers. Smith attributes that to a last-minute rush to buy. Consumers are hearing about interest rates rising so they figure they'd better lock in, he said.
Fortunately, Houston's market isn't overpriced compared to the rest of the nation. For a four-bedroom, two-and-a-half-bath house, it costs on average $79 a square foot in Houston, compared with the national average of $117.
Area employers are adding jobs faster than they did a year ago, though manufacturing and construction will continue to be weak spots. Assuming employers will keep their January-to-April hiring pace going for the entire year, Houston should end 2005 with an extra 33,000 jobs, a 1.6 percent increase.
But ominous signs are looming, Smith said. Foreclosures, for example, are as high today as they were in 1991. And builders in Houston are putting up single-family homes faster than they can be sold.
In the past year, 42,000 single-family home permits were issued, but the area gained only 15,000 households.
"It's an environment in which builders should be cautious," Smith said. Developers have been focusing lately on starter homes, which sell for $80,000 to $160,000.
But that will be the weakest part of the market because those lower-priced homes are most sensitive to interest rate hikes, he said.
Not only are developers overbuilding, but they are building the wrong houses, Smith said.
When the economy improves and people start moving to Houston with money from selling their costly houses on the West or East coasts, they'll be looking for upscale properties, not starter homes.
For more information, please call or E-mail Dean Isenberg @ 305-936-2489 or visit Dean On-Line at www.DeanIsenberg.Com
Posted by South Florida Realtor at 10:52 AM
May 03, 2005
Pending Home Sales Index Holds at High Level
A-Realtor.Com 05-03-05 – The Pending Home Sales Index, a leading indicator for the housing market, is essentially flat after a healthy rise during the previous month, according to the National Association of Realtors.
The Pending Home Sales Index, based on data collected for March, stands at 122.8, which is 0.3 percent below February but 1.7 percent above March 2004. The index is based on pending sales of existing homes, including single-family and condo. A home sale is pending when the contract has been signed but the transaction has not closed. Pending sales typically close within one or two months of signing.
David Lereah, NAR’s chief economist, said the February and March indices bode well for home sales in April and May. “Considering we’ve set records for home sales in each of the last four years, the level of contract activity is exceptionally strong,” he said. “In fact, the March index is the sixth highest monthly reading we’ve ever had for pending home sales.” The report on April existing-home sales will be released May 24.
An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales. 2001 sales are fairly close to the higher level of home sales expected in the coming decade relative to the norms experienced in the mid-1990s. As such, an index of 100 coincides with a historically high level of home sales activity.
Regionally, the PHSI in the Northeast rose 5.8 percent to 114.7 in March, but was 4.1 percent below March 2004. In the South, the index increased 1.0 percent to 128.9 and was 5.3 percent higher than a year ago. The index in the West edged up 0.6 percent in March to 129.1 and was 10.5 percent above March 2004. In the Midwest, the index fell 6.1 percent from a surge in February to 113.7 in March, and was 7.5 percent below a year ago. For more information, Call or E-Mail Dean Isenberg at 305-936-2489. www.DeanIsenberg.Com
Posted by South Florida Realtor at 10:39 AM | Comments (0)