70% Believe America Is Not Prepared For A Natural Disaster

WASHINGTON – May 16, 2007 – America is not prepared for a catastrophic natural disaster, and Congress must take action now. That was the message delivered during the Insurance Availability in Disaster-Prone Areas session at the National Association of Realtors® (NAR) Midyear Legislative Meetings & Trade Expo today.

U.S. Reps. Ron Klein (D-Fla.) and Tim Mahoney (D-Fla.) participated in the session. They were appointed by House Financial Services Chairman Barney Frank (D-Mass.) to develop legislation to address the availability of homeowners insurance in disaster-prone areas.

“There is a role for the federal government to play when our communities are faced with a catastrophic event. Federal legislation to address this issue should assist the private insurance industry in managing risk, protect the rights of homeowners, and provide incentives for homeowners and builders to mitigate risk,” said Mahoney.

“One of the problems consumers face is the increasing cost and decreasing availability of homeowners insurance, which is not a problem limited to one area of the country. For this reason, Congress must act,” said Klein.

New polling data shows voters agree, according to Bill McInturff, co-founder of Public Opinion Strategies. A recently completed catastrophic insurance national survey found that seven out of 10 voters do not believe America is sufficiently prepared to deal with the financial and economic consequences of a major catastrophe and that Congress should take action.

The research also found a strong sense of shared responsibility when it comes to recovering from natural catastrophes. Ninety-five percent of voters believe insurance companies are responsible for the recovery, but approximately eight out of every 10 voters also believe that the federal government, their own state government and individual homeowners should assume some responsibility for recovery efforts.

According to poll results, Realtors and voters were aligned regarding pre-emptive solutions such as strengthening local land use, providing tax deductions and credits, strengthening building codes, providing reduced insurance rates, strengthening infrastructure and requiring homeowners to take safety measures.

NAR believes federal policy that addresses catastrophic natural disasters should protect property owners by ensuring that transparent and comprehensive insurance coverage is available and affordable with premiums that reflect the risk involved, while also acknowledging that people living in high-risk areas must assume personal responsibility for those choices and undertake mitigation measures, including purchasing adequate insurance.

“Natural disasters like hurricanes and earthquakes uproot families and devastate communities, not only with their forces of nature but also with the altered insurance landscape that results in their wake,” said Lawrence Yun, NAR senior economist, who also participated in the session. “When people in high-risk areas cannot obtain or retain homeowners insurance, which is necessary for a mortgage, it can slow redevelopment, depress the local housing market, and prevent residents from buying and owning homes. As America’s leading advocate for homeownership, NAR urges Congress to make natural disaster insurance affordable and available for homeowners and reduce the circumstances under which insurance companies cancel natural disaster policies.”

Realtors are visiting Capitol Hill offices throughout this week to discuss comprehensive natural disaster insurance. More than a dozen legislative bills addressing natural disaster insurance have been introduced in the 110th Congress; but none of the bills takes a comprehensive approach, and NAR has not endorsed any of them. However, Klein and Mahoney expect to introduce legislation by the July 4th congressional recess.

“Many bills are currently floating around Congress, but they are all piecemeal approaches,” said Yun. “If America is going to be truly prepared for a catastrophic natural disaster, a comprehensive approach must be firmly in place.”

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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HUD Hosts Housing Summit

WASHINGTON – May 15, 2007 – How can the U.S. minimize the impact from risky loans, predatory lending and other current real estate problems? The U.S. Department of Housing and Urban Development (HUD) yesterday hosted a Homeownership Summit with leading stakeholders in the housing community to discuss the impact of risky, high-priced loans, departmental actions against predatory lending and how modernizing the Federal Housing Administration (FHA) will provide a safer alternative to exotic mortgages.

HUD Secretary Alphonso Jackson delivered the keynote address, where he laid out seven areas of agreement for preserving and protecting homeownership, helping new homeowners keep their homes and improving lending practices.“We must make the American Dream a realistic possibility for as many Americans as possible,” said Jackson. “This is not an option; it is a duty. And that goes beyond policy-makers and regulators. It is a shared duty with investors, associations, consumers and communities themselves.”

HUD invited over 150 investors, consumer advocates, decision-makers and key advisors to assess the current housing situation and offer recommendations. Panel participants met in closed-door sessions moderated by Michelle Singletary of the Washington Post and syndicated columnist Ken Harney. Jackson's laid seven areas of agreement for protecting and preserving homeownership are:

1. Homeownership is still the best investment for the long-term.
2. Every responsible step must be taken to enable Americans to become homeowners.
3.Lending should be legal, fiscally responsible and ethical.
4. Housing counseling is critical and borrowers must read the fine print before buying a home.
5. There is no place for predatory lending in the housing industry.
6. Modernization of the Federal Housing Administration is long overdue.
7. A taxpayer-funded bailout will not resolve housing concerns.

Jackson says the summit was a part of HUD’s effort to encourage Congress to pass legislation that modernizes the FHA. The program has helped more than 34 million families become homeowners over the past 73 years, but as lending practices have evolved and modernized, the FHA has been unable to do so without legislation.“We have internally modernized FHA as much as we can,” says Jackson. “But the time has come to bring FHA into the 21st century. A new FHA could be an antidote for predatory lending and for sub-prime difficulties.”Last year, HUD proposed a set of changes to the FHA program that would expand its reach by eliminating outdated downpayment requirements, customizing mortgage premiums for each homebuyer according to risk, and raising loan limits across the country. The bill, the Expanding American Homeownership Act of 2006, passed the House with bipartisan support in July 2006.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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Foreclosures: Florida Up Slightly

IRVINE, Calif. – May 15, 2007 – Florida reported one foreclosure filing for every 510 households, and was seventh highest among the states, according to RealtyTrac. The state’s foreclosure activity increased less than 1 percent since March but was up nearly 72 percent from April 2006.

Nationally, the April 2007 U.S. Foreclosure Market Report shows a total of 147,708 foreclosure filings nationwide – default notices, auction sale notices and bank repossessions – reported during the month, down about 1 percent from the previous month but up 62 percent from April 2006. The report shows a national foreclosure rate of one foreclosure filing for every 783 U.S. households during the month. “After hitting a two-year high in March, U.S. foreclosure activity slipped slightly lower in April,” says James J. Saccacio, chief executive officer of RealtyTrac. “Last year, foreclosure activity subsided somewhat during the spring and summer months, thanks in part to increased interest from buyers. Whether the decrease in April is the beginning of a similar trend this year remains to be seen, but we expect foreclosure activity to at least stay above last year’s levels for the remainder of 2007, fueled by a combustible mix of risky loans taken out in the last few years – many in the subprime market – and slowing home price appreciation.”

States with foreclosure rates (percentage) ranking among the nation's 10 highest in April were Nevada, Colorado, Connecticut, California, Ohio, Georgia, Florida, Arizona, Illinois and Michigan. In total number of foreclosures, Florida ranked second to California. States with foreclosure totals among the nation’s 10 highest in April were Ohio, Texas, Illinois, Georgia, Michigan, Colorado, Connecticut and Arizona.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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FL's Housing Market 1st Q

ORLANDO, Fla. – May 15, 2007 – In first quarter 2007, Florida’s housing sector continued to mirror the national pattern, with higher inventory levels of homes for sale, median prices edging down and soft sales reflecting a buyer’s market in many areas.Statewide, sales of single-family existing homes totaled 33,748 during the three-month period, a decrease of 26 percent compared to 45,844 homes sold during the same time a year earlier, according to the Florida Association of Realtors® (FAR).

The statewide existing-home median sales price was $237,000 in the first quarter; a year ago, it was $243,500 for a decrease of 3 percent. In 2002, the first-quarter statewide median sales price was $129,600, which reflects an increase of about 82.9 percent over the five-year period. The median is a typical market price where half the homes sold for more, half for less.To gain insight into current trends in Florida’s real estate industry, the University of Florida’s Bergstrom Center for Real Estate Studies conducts a quarterly survey of industry executives, market research economists, real estate scholars and other experts.

The first quarter 2007 survey, released in March, found that a growing number of respondents believe that home prices are staying even with inflation, said Wayne Archer, the center’s director.“We see that as a benchmark,” he said. “When prices maintain the same level as inflation, then we’re probably in some kind of equilibrium. It indicates the market is stabilizing.” It appears that residential development may have bottomed out, according to the study. Given the scale of the residential development market, Archer noted this would be good news for all real estate markets and for Florida in general.

Continuing low mortgage rates remain another positive influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 6.22 percent in first quarter 2007; one year earlier, it averaged 6.24 percent.

The latest industry outlook from the National Association of Realtors® (NAR) predicts that stricter lending standards and a decline in subprime mortgage originations will have an impact on existing home sales this year. “Home buyers today are purchasing for the long term, generally with a realistic expectation of modest gains over time,” says NAR Senior Economist Lawrence Yun. “We see this as a soft landing with home sales rising gradually in the second half of the year and prices recovering a bit later.”Looking to Florida’s existing condominium market, sales of existing condos also decreased during the quarter, with a total of 10,537 condos sold statewide compared to 15,031 in first quarter 2006 for a 30 percent decline, according to FAR.

The statewide median sales price for condos remained flat at $210,800 for the three-month period; a year ago, it was $209,900.Among the state’s larger markets, the Jacksonville metropolitan statistical area (MSA) reported 3,373 existing homes sold for the quarter, a decrease of 14 percent compared to the 3,903 homes sold a year earlier. The market’s existing-home median sales price increased 1 percent to $199,500; a year earlier, it was $197,100.

A total of 385 existing condos sold in the market over the three-month period, down 23 percent from first quarter 2006, while the existing-condo median price decreased 7 percent to $152,300.The Gainesville MSA, one of the smaller markets in the state, reported that 562 homes changed hands in the first quarter, down 23 percent compared to 729 homes sold a year earlier. Over the same period, the market’s existing-home median home price rose 3 percent to $217,100; a year earlier, it was $211,100. A total of 143 existing condos sold in the Gainesville area during the first quarter, a decrease of 40 percent from the previous year, while the existing-condo median price rose 8 percent to $166,800.

© 2007 FLORIDA ASSOCIATION OF REALTORS

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Remodeling up in 2007

WASHINGTON – May 14, 2007 – Americans will spend nearly $233 on home remodeling this year, according to the National Association of Home Builders’ (NAHB) 2007 industry forecast. That represents a 1.9 percent increase from the record $228 billion spent in 2006, according to estimates from the U.S. Census Bureau.

“Remodeling continues to show strength despite the housing slowdown,” said NAHB Remodelers Chairman Mike Nagel, CGR, CAPS, a home remodeler from Chicago. “With more than 120 million homes in the United States plus $11 trillion in owner equity, the demand for remodeling will be there now and in the future.” Remodeling currently accounts for more than 40 percent of the home construction industry by dollar volume.“Quite simply, we’re adding more homes each year than we’re tearing down, and these will eventually require remodeling,” says NAHB Chief Economist David Seiders. “Compared to other components of the housing industry, remodeling remains one of the few areas to show growth, at least in nominal terms.”

Driving the remodeling market are the size and characteristics of the housing stock. With an average age of 33 years and rising, older homes require more remodeling – both in terms of upgrading features to compete with new construction as well as maintaining their physical quality. Though remodeling is somewhat cyclical with new construction, homeowners cannot put off a major repair like a leaky roof as they can discretionary upgrades, and that stabilizes the industry during slower housing markets.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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FL House To Consider Property Tax Plan

TALLAHASSEE, Fla. – May 11, 2007 – In an opinion piece published today in The Orlando Sentinel newspaper, Florida House Speaker Marco Rubio signaled a shift in the House’s approach to property tax reform, introducing the concept of a homestead exemption based on a home’s value.

During the regular session, the House, under Rubio, pushed a property tax reform plan that would get rid of property taxes for homeowners in exchange for a sales tax increase as high as 2.5 percent. Rubio says that proposal stemmed from three House goals: reduce local government taxing and spending, provide significant and immediate relief to taxpayers, and give Floridians statewide the opportunity to vote for meaningful and comprehensive property-tax reform.

However, Rubio also says the House “would support any plan that met those three goals and was more focused on the taxpayer than the tax collector.“During the past few weeks, Rep. David Simmons (R-Maitland) suggested an idea that met the House’s policy goals, and offered an opportunity for opponents of the House plan to reconsider their objections,” Rubio said in today’s editorial. “The House is now considering a variation of (Simmons) idea of dramatically increased homestead exemptions based on a percentage of the value of the home.”The system works similar to the IRS’s tiered income tax system.

All homes would have the same tax savings on the first $300,000 of value, for example, giving workforce housing the maximum deduction. But a home’s proportional property tax savings would go down for homes worth more. Rubio offers an example, which seems to be his preferred amount of tax shielding, though he also seems willing to negotiate with other House members as well as the Senate. In the opinion piece, his plan offers substantial savings to most Florida homeowners along with significant cuts to local governments’ coffers.

Rubio’s example calls for 80 percent of a home’s value to be shielded for the initial $300,000. On the next $700,000 of value, 70 percent would be exempt. Any home worth less than $1 million but more than $300,000, then, would be taxed at two different rates. Homes worth more than $1 million would pay proportionally more – a tax exemption of only 30 percent for the home’s value that exceeds $1 million, and a total property tax bill calculated using three different tax rates.

Examples using Rubio’s numbers:1. $300,000 (market value) home: 80 percent shielded from property taxes, making the taxable value $60,000. The county or city’s millage rate would then be applied to the $60,000 only.2. $1 million (market value) home: 80 percent shielded up to $300,000 as it was in example No. 1, for $60,000. That must be added to a taxable value of $210,000, calculated by taking the remaining $700,000 ($1 million minus $300,000), which has a 70 percent shield. Add $210,000 and $60,000 to get a total taxable value of $270,000.3. $3 million (market value) home: The two taxable values in No. 2 apply for the value of the home up to $1 million, for $270,000. Add that to $1.4 million, calculated by taking the remaining $2 million and shielding it by only 30 percent. $1.4 million plus $270,000 equals a taxable value of $1.67 million.

For homesteaded properties, the Save Our Homes amendment’s tax savings could go away, but Rubio claims that 90 percent of these homeowners would actually end up paying less in property taxes under the new plan anyway, and “the average beneficiary of this approach would see his or her tax bill cut in half.” Commercial and non-homesteaded property owners would be taxed under a similar approach under this idea. Rubio did not recommend a specific tax rate, but it would probably be higher.

According to Rep. Dean Cannon (R-Winter Park), head of the House’s committee charged with working out a property tax compromise bill with Senate leaders, the general concept of tying property-tax cuts to a percentage of property values “seems to be something that we both (House and Senate) have economic and philosophical support for.”Two key issues will impact any compromise, however – the drop in tax revenue local governments would be expected to absorb, and whether a tax increase elsewhere, such as sales taxes, would be needed to make up for any deficit. “If it’s such a huge revenue impact that we just have to go back to the drawing board and make up for it with sales tax, we’re going to have a difficult time coming together,” says Sen.

Mike Haridopolos (R-Melbourne) the Senate’s lead negotiator. Still, Haridopolos did not reject the plan altogether. Cannon says there is beauty in the methodology of a percentage-base property tax because “you can tailor it. … It doesn’t necessitate a replacement revenue source altogether. It also doesn’t rule it out, either.”

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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Property Tax Relief

TALLAHASSEE –- May 4, 2007 – 4:13 p.m. –- Let’s start with the issue most on your mind: property tax relief. By now you’ve no doubt learned that the Legislature suspended negotiations on Save Our Homes portability, rollbacks and other property tax reform proposals until next month when lawmakers return to Tallahassee for a 10-day special session.

Several words come to mind.

Disappointing? Yes.

Derailed? No.

“We’re going home to continue to work on it,” said House Speaker Marco Rubio (R-Miami). “We would not call dates (for a special session)...unless we were confident that we would come up with something that would not just pass but work. But drafting something to go on the ballot (can't be rushed).''

House and Senate leaders called the special session Wednesday afternoon when it became clear that a deal couldn’t be worked out in the remaining 48 hours of the regular session. "The issue is too important to our state and to our taxpayers for us to give them a product they would not be proud of," said Senate President Ken Pruitt (R-Port St. Lucie) . "We have laid a great foundation." Pruitt noted that both sides have already agreed on two FAR-supported tax relief measures—$25,000 exemption on personal intangible property for small businesses and some form of Save Our Homes portability.

Details of the portability discussions were not released.30 days to talk the talkA one-month waiting period leading to a special session of the Florida Legislature gives Realtors an opportunity to meet their lawmakers locally and push for substantial property tax relief. It also gives lawmakers time to consider the focus exclusively on the issue.“It is my hope that a special legislative session devoted entirely to this issue will be able to deliver even more comprehensive tax reform than what could be negotiated in the waning hours of the regular session,” says FAR President Nancy Riley. “The Legislature will be able to roll back rates immediately and, if we remain strong, we will get our special election this year for portability and other constitutional issues that must be ratified by the voters.”

Special session at a glance:When: June 12-22Original House plan: Rollback taxes to 2001 levels; replace property taxes with a 2.5 percent state sales tax increase (constitutional amendment. Projected savings: $50 billion over five years.Original Senate plan: Rollback taxes to 2006 levels; allow for Save Our Homes portability; $25,000 exemption on intangible property; double the homestead exemption for first-time buyers. Projected saving: $14 billion.

What sources say has been agreed to so far: Cut property taxes by about $20-25 billion over five years; no sales tax increase; some form of Save Our Homes portability.How to send an email to your legislator: http://floridarealtors.org. Visit the Legislative Center.Progress report: Realtor issues advanced this sessionProperty insurance: Legislators made is easier for certain property owners to obtain insurance from Citizens Property Insurance Corp. and raised the ante for others. Citizens, the state’s insurer of last resort, is now Florida’s largest insurer with 1.3 million policyholders.

SB 2498 by South Florida Sen. Rudy Garcia (R) would allow property owners into the Citizens pool if the only insurance they could obtain on the private market was 15 percent more expensive than what they would pay Citizens. The current threshold is 25 percent.

The measure would also prevent private insurance companies from setting off their Florida operations in a separate, Florida-only company (known as PUP companies), and freeze Citizens rates through 2008; effective Jan. 1, 2009, Citizens would again be allowed to raise rates. Legislation passed during the special session on insurance last January freezes rates through the end of 2008.

Another bill, HB 7057 by Rep. Trey Traviesa (R-Tampa) , requires homes valued at over $750,000 and located in high-risk zones to install opening protections effective July 1, 2008, if they seek a building permit for work estimated at $50,000 or more. By Jan. 1, 2009, all homes valued at over $750,000 in high-risk zones must be fitted with opening protections to remain eligible for property insurance coverage through Citizens.

The goal is to “harden” homes insured by Citizens (which all policyholders in Florida support financially), thereby helping reduce some of the risk in the event of a devastating storm. The plan also calls for free inspections of 400,000 single-family homes and provides grants and loan to certain homeowners so they can make improvements that strengthen their home against storms. Housing trust funds.

More of the money generated by a portion of documentary stamp taxes for the William E. Sadowski Affordable Housing Trust Funds will be allocated to state and local programs. The state budget provides $393.4 million for housing programs — down from $433 million set aside last year but still $150 million more the cap imposed by the 2005 Legislature. Unfortunately, legislators failed to remove the $243 million cap on the funds, a move sought by affordable housing advocates, including FAR, citing a lean budget year.

On a related note, lawmakers approved HB 1375 by Rep. Mike Davis (R-Naples) , a long-time advocate of full funding of housing trust funds and other statewide affordable housing programs. Among other things, HB 1375 would require local governments to adopt by July 1, 2008 a workforce/affordable housing plan into the local comprehensive plan. Failure to do so would prevent the local government from receiving state housing grants.

More staff positions at the Division of Real Estate. The state budget also appropriates money for seven new employees at the Division — four full-time and three part-time. This should go a long way toward improving services to Realtors and protecting the public. Also approved this session:• SB 2234 by Sen. Steve Wise (R-Jacksonville), which requires home inspectors, mold remediators and mold assessors to be licensed by the Department of Business and Professional Regulation. Effective July 1, 2010, if signed by the governor.• HB 1277 by Rep. Pat Patterson (R-DeLand), which limits the financial penalty a landlord can collect when a tenant breaks a lease to two months of rent. The bill only affects leases of less than a year.

Effective immediately if the governor signs it.• HB 7163 by Rep. Carlos Lopez-Cantera (R-Miami) which allows real estate licensees to earn 3 hours of CE credit for attending a Florida Real Estate Commission meeting. Effective immediately if the governor signs it.• SB 1824 by Sen. Mike Fasano (R-New Port Richey) , which places numerous disclosure and education requirements on mortgage brokers and lenders to help protect consumers during the mortgage loan application process. More importantly, the bill includes additional enforcement and investigative tools for prosecuting mortgage fraud. Effective Oct. 1, 2007, if signed by the governor.• HB 111 by Rep. Bill Galvano (R-Bradenton) , amends the definition of “primary title services” and “related title services,” and codifies a civil court case that permits a portion of a title insurance premium to be rebated. Effective Oct. 1, 2007, if signed by the governor.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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2007 Florida Legislature Real Estate Issues

TALLAHASSEE, Fla. – May 4, 2007 – And so it ends. This year’s regular session wraps up today, and while lawmakers could stay late, it’s just as likely that they’ll disband earlier. While the state’s high-profile real estate issue – property tax reform – has been postponed until June, a handful of real estate-related proposals moved forward yesterday.

State Budget

Gov. Charlie Crist now has the state budget in his hands. While funding impacts all Floridians in different ways, two budget items specifically benefit the real estate industry. First, it appropriates money for seven new employees at the Division of Real Estate – four full-time and three part-time – which should go a long way toward improving services to Realtors. Second, more of the money generated by a portion of documentary stamp taxes for the William E. Sadowski Affordable Housing Trust Funds will be allocated to state and local programs. The state budget provides $393.4 million for housing programs – down from $433 million set aside last year but still $150 million more the cap imposed by the 2005 Legislature.

Home Inspectors

A built that creates a system for regulating home inspectors is also now on the governor’s desk awaiting a signature or veto. SB 2234 requires home inspectors, mold remediators and mold assessors to be licensed by the Department of Business and Professional Regulation (DBPR).Property insuranceA comprehensive law to reign in the skyrocketing cost of property insurance passed during January’s special session, and this session’s insurance law fine tunes some details and makes other changes. It now awaits Crist’s approval. Many of the revisions clarify provisions in HB 1A to avoid unintended consequences.

Property Taxes

A comprehensive solution to high property taxes has been deferred, but a move to expand Las Vegas-style slot machines in Broward County is on its way to Crist. Officially, they’re called video lottery terminals, an electronic version that plays similarly to bingo. The move could raise as much as $1 billion for the state, which would be used for schools, lowering the property tax amount allocated to that cause. It’s unclear whether Crist will sign the bill. He’s a fan of lower property taxes but generally opposes gambling.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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