New Home Sales: Up For Month, Down For The Year

WASHINGTON – Nov. 29, 2007 – October new home sales stats released by the Census Bureau and HUD today were up – 1.7 percent higher than September sales; however, new home sales were down 23.5 percent compared to those one year earlier in October 2006.

Sales of new one-family houses in October 2007 were at a seasonally adjusted annual rate of 728,000, according to estimates.

The median sales price of new houses sold in October 2007 was $217,800, a drop of 13 percent compared to October 2006; the average sales price was $305,800. The seasonally adjusted estimate of new houses for sale at the end of October was 516,000, which is an 8.5-month supply at the current sales rate.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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Florida’s Home Sales Slower In October

ORLANDO, Fla. — Nov. 28, 2007 – Disruptions in the mortgage market and tightening credit continued to impact Florida’s housing sector in October. Statewide, sales of existing single-family homes totaled 9,165 last month while 12,846 homes sold in October 2006 for a decrease of 29 percent in the year-to-year comparison, according to the Florida Association of Realtors® (FAR).

While the latest market outlook from the National Association of Realtors’® (NAR) expects conditions for the mortgage industry to improve in the coming months, it predicts that the impact of the credit crunch will continue to be felt through the end of this year, leaving home sales fairly flat. Keeping the current housing market in perspective, 2007 will be the fifth highest year on record for existing-home sales, according to NAR Senior Economist Lawrence Yun. “It appears raw inventories are stabilizing, but the housing supply is a bit inflated now because the sales pace does not reflect underlying market conditions – sales were dampened by the mortgage cancellations,” he says.

Florida’s median sales price for existing single-family homes last month was $222,100; a year ago, it was $242,700 for an 8 percent decrease. The median is the midpoint; half the homes sold for more, half for less. In October 2002, the statewide median sales price for single-family homes was $140,900, for an increase of 57.6 percent over the five-year-period, according to FAR records.

The national median sales price for existing single-family homes in September 2007 was $210,200, down 4.9 percent from a year ago, according to NAR. In California, the statewide median resales price was $530,830 in September; in Massachusetts, it was $340,000; in Maryland, it was $295,121; and in New York, it was $213,600.

Sales of existing condominiums in Florida also decreased last month, with a total of 2,819 condos sold statewide compared to 3,508 in October 2006 for a 20 percent decline, according to FAR. The statewide median sales price for condos last month was $192,400, down 8 percent from October’s 2006’s condo median price of $209,500. NAR reported the national median existing condo price was $221,700 in September 2007.

Last month, interest rates for a 30-year fixed-rate mortgage averaged 6.38 percent, according to Freddie Mac, just slightly higher than the average rate of 6.36 percent in October 2006. 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 497 existing homes sold last month compared to 665 homes sold a year ago for a 25 percent decrease. The market's median sales price for homes was $184,600; it was $215,800 in October 2006 for a 14 percent decrease. A total of 61 existing condos changed hands in the MSA last month, down 25 percent from the 81 condos sold the previous year. The existing condo median sales price in October was $218,800; a year ago, it was $236,500 for a 7 percent decrease.

“This is a beautiful place to live, with great beaches and a convenient location,” says Jalene Stockhausen, president of the West Volusia Association of Realtors and a salesperson with Bill Mancinik Realtor. “And this is a great time to buy a home. It’s one of the best investments you can make for your future and the future of your family. From a buyer’s perspective, now there’s an opportunity to choose from a variety of housing options, plus mortgage rates remain low.”

Among the state’s smaller markets, the Gainesville MSA reported a total of 175 homes sold in October compared to 208 homes a year ago for a 16 percent decrease. The existing home median sales price was $198,200; a year ago, it was $225,600 for a 12 percent decrease. A total of 38 existing condos sold in the MSA last month compared to 40 condos the previous October for a 5 percent decrease. The market’s existing condo median price was $156,000; a year ago, it was $162,500 for a decrease of 4 percent.

J. Parrish, vice president of the Gainesville Alachua County Association of Realtors and president of Coldwell Banker MM Parrish Realtors, points out that the area’s friendly, laid-back lifestyle and college-town amenities attract new residents. “The Gainesville area has a strong and stable underlying economic foundation,” he says. “The University of Florida and other governmental entities really drive the local economy and offer great job opportunities.”

© 2007 FLORIDA ASSOCIATION OF REALTORS

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Florida’s Consumer Confidence Dips 2 Points

GAINESVILLE, Fla. – Nov. 28, 2007 – Florida’s consumer confidence dropped two points to 77 in November, a new University of Florida study finds.

“The growing pessimism about U.S. economic conditions seems to be among all income levels,” says Chris McCarty, director of UF’s Survey Research Center at the Bureau of Economic and Business Research. He says the decline in Florida’s housing market has increased consumers’ financial insecurity.

Survey respondents were particularly pessimistic about U.S. economic conditions over the next year. That component of the index fell 11 points to 62, in contrast to the index measuring perceptions of U.S. economic conditions over the next five years, which rose two points to 80.

“Florida consumers seem to understand the gravity of the fallout from the housing crisis and resulting credit crunch, but they still believe in the long-term viability of the U.S. economy to turn this around,” McCarty says.

The housing slowdown creates indirect effects, McCarty says, beyond hurting Floridians who cannot sell their homes and those who have lost their homes to foreclosure. Lenders who resold loans or packaged mortgage debt in elaborate securities now face a backlash from investors, many of whom are international, creating a shortage of credit, which previously fueled not only home loans but many other kinds of spending from corporations buying other corporations to individuals buying cars, McCarty says.

“We expect the housing market to bottom out by the second quarter of 2008 at which time existing home prices will be low enough that some prospective buyers will make purchases,” McCarty says. “However, 2005 prices are years away.”

This month’s drop in the overall confidence rate follows a two-point rise in October.

“We were a bit perplexed by the rise in confidence last month,” McCarty says. “It now appears that rise was a reaction to a short-term decline in gas prices early in October. Now that gas prices have gone up, as expected, confidence is at the same level as in September.”

Of the three remaining components making up the index this month, one fell, one rose and one remained the same. Perceptions of personal finances a year from now fell four points to 86, while perceptions of personal finances now compared with a year ago rose two points to 71. Perceptions of whether it is a good time to buy big-ticket items remained unchanged at 84. Perceptions of personal finances showed a small improvement among low-income households, but a slight decline among middle and upper-income households.

The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for November was conducted from 475 responses.

Consumer confidence is designed to help predict buying patterns by measuring the mood of consumers toward purchasing. Although other economic indicators also predict buying patterns, consumer confidence tends to be available sooner. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for the year. The value of the index is in comparing changes over time rather than looking at an isolated month.

© 2007 FLORIDA ASSOCIATION OF REALTORS

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Expert Shares Tips For Mastering 1031 Exchanges

WASHINGTON – Nov. 26, 2007 – Why bother becoming an expert on 1031 exchanges? For starters, using a like-kind exchange instead of selling the property outright will almost certainly save your seller big bucks in taxes, says Jim Miller, vice president and southwest regional manager of IPX 1031 in Phoenix.

In addition, 1031 exchanges are a great estate-planning tool because heirs can receive a stepped-up basis and have any deferred taxes on the property forgiven by the Internal Revenue Service.

But be careful that you don’t try to count the sofa as part of the relinquished property’s value, Miller told a group attending the Realtors® Land Institute class on 1031 exchanges during the recent 2007 Realtors Conference & Expo in Las Vegas.

As the name implies, like-kind exchanges must be of similar property, so a sofa or other furnishings in a condo held for investment and rented out couldn’t be counted as part of the property value when it’s exchanged since furnishings are personal property.

“If the personal property is valuable enough, you can do a separate exchange for other personal property, but if it’s just a small amount, take the value of the furnishings as a boot and pay the taxes on it,” Miller said. “It probably isn’t worth paying an attorney to do a second exchange.”

What’s the boot?

The term “boot” refers to any non-like-kind property that is exchanged, Miller said. Boot, which is most often in the form of cash, can result when the value of the piece of real property being relinquished is greater than the value being acquired.

“Receiving a boot in a like-kind exchanges doesn’t disqualify the exchange, it only introduces a taxable gain to the transaction,” Miller said. Only the gain that results from cash and unlike property is taxable.

These amounts cannot exceed the amount of the gain recognized if the property was sold in a taxable transaction.

How to calculate the gain

To calculate taxable gain, a property seller should begin with the price of the relinquished property and then subtract the adjusted basis of the property. This amount is the realized gain.

The adjusted basis is the purchase price of the relinquished property plus any capital improvements to the property, less any depreciation. The basis amount carries over to become the basis of the replacement property.

While 1031 exchanges cannot be used for residential property that is used as a primary residence or a vacation home that is used by the owners for more than 14 days per year, it provides a great strategy for deferring taxes on highly depreciated properties.

Source: REALTOR® Magazine Online

© FLORIDA ASSOCIATION OF REALTORS

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HUD Takes On Housing Assistance Oversight For 30,000 On Dec. 1

WASHINGTON – Nov. 26, 2007 – Nearly 30,000 residents affected by the 2005 Gulf Coast hurricanes will receive housing assistance from the U.S. Department of Housing and Urban Development (HUD) rather than the Federal Emergency Management Agency’s (FEMA) rental program on Dec. 1.

“Thousands of hurricane victims still need help,” says HUD Secretary Alphonso Jackson. “That’s why earlier this year we decided to extend the rental housing program, but for FEMA to hand it over to HUD since we are in the long-term housing business.”

Families who have been contacted by a local public housing agency will see no break in rent payments.

HUD works with approximately 375 public housing agencies (PHA) and 12,000 landlords who will be implementing and managing the temporary rental assistance under the new Disaster Housing Assistance Program (DHAP) now run by HUD. HUD will deploy nearly 20 staff members to cities where the largest numbers of displaced families are currently living.

Individuals who believe they may be eligible for the DHAP program but have not been contacted should calls HUD’s toll-free referral center immediately at (866) 373-9509 Monday through Friday from 9:00am to 7:00pm EDT, 9:00am to 1:00pm EDT on Saturday and Sunday.

HUD also requires landlords and PHAs participating in DHAP to meet basic housing quality standards, as it does for all its programs. PHA’s must conduct limited inspections of units to make sure there are no serious health and safety problems.

Starting March 1, 2008, the level of rental assistance will be gradually reduced. Residents will pay a small portion of the housing cost, which will begin at $50 per month in March and incrementally increase each month thereafter until the program concludes on March 1, 2009. Seniors and the disabled whose primary source of income is Supplemental Security Income or other fixed income that make them eligible to receive assistance under existing HUD programs will be protected.

In January 2008, HUD will begin working with FEMA to transition remaining eligible families out of travel trailers and into rental housing in the private market.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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Americans Believe Buying A Home Still A Good Financial Decision

LAS VEGAS – Nov. 16, 2007 – Americans remain convinced that buying a home is a good long-term investment – just one of the findings from the 2007 National Housing Pulse Survey, released during the National Association of Realtors® (NAR) annual Conference & Expo.

The survey measures how affordable housing issues affect consumers. This year’s results show that nearly nine out of 10 consumers believe that buying a home is a good financial decision. Fifty-nine percent of respondents also agree that now is a good time to buy a home; that number is higher (64 percent) in areas of recent home price declines.

“Owning a home continues to be a good, long-term investment, and most consumers understand that,” says NAR President Pat V. Combs. “This new survey clearly shows that people believe in the value of homeownership and know that owning a home is one of the best ways for most families to build a nest egg.”

This year’s survey shows that Americans are more concerned about obtaining a mortgage and having enough money for downpayment and closing costs than they have been in five years of polling. Nearly six in 10 respondents believe it’s difficult for people in their area to obtain a fair and affordable mortgage. More than eight in 10 say having enough money for downpayment and closing costs are obstacles for homebuyers in their area, up 17 percent from 2005. Sixty-three percent also think the mortgage approval process is an obstacle, up 13 percent since 2005.

“Buyers in the conventional market can still obtain mortgages at very favorable rates,” said Combs. “In addition, NAR is advocating for FHA modernization; changes to this program will help many more first-time buyers become homeowners.”

Of those surveyed, more than one in five homeowners have some type of variable-rate mortgage, including interest-only (15 percent), adjustable-rate (6 percent) and a balloon or other large payment due in the next five years (2 percent).

These homeowners feel more strain from their monthly mortgage payment than those with fixed rates. In fact, more than half of those with variable-rate mortgages say they feel a significant or slight strain, whereas fifty-three percent of those with fixed-rate mortgages feel little or no strain at all. Despite these findings, only five percent of respondents say they are very or fairly worried about being able to make their mortgage payments over the next year.

When it comes to challenges facing the mortgage market, Americans are split on the need for more federal government oversight. Forty-seven percent believe the federal government should take a more active role, while 45 percent believe oversight is the private sector’s responsibility.

While 32 percent of those surveyed perceived the rate of home foreclosures in their area to have increased over the past year, 39 percent report the rate has remained about the same; 6 percent believe the foreclosure rate has decreased in their area. When asked how big of a problem foreclosures were in their area, 38 percent of respondents said foreclosures were a very big or moderate problem, but the majority, 51 percent, said foreclosures were only a slight problem or not one at all.

“Realtors are in the business of helping people into homes, and we want to make sure they can afford to stay there,” Combs says. “NAR believes that one foreclosure is one too many, and we are working with government agencies, lenders and consumer groups to protect home buyers and sellers in the real estate transaction and beyond.”

The lack of affordable housing continues to be a greater concern than jobs, crime, terrorism or the environment. Nearly seven in 10 survey respondents are concerned about the cost of housing in their area. In the short term, more than half of survey respondents believe home sales and values in their neighborhood will remain about the same in the next three months. Only one-fourth of those surveyed believe sales and values will continue to decrease, while about 10 percent believe they will rise.

NAR’s Housing Opportunity Program conducted the 2007 National Housing Pulse Survey. The telephone survey was among 1,000 adults living in the United States in October 2007. The study has a margin of error of plus or minus 3.1 percentage points.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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Roll Tape On Property Tax Reform

Do you have questions about the new property tax reform amendment approved by Florida lawmakers? Get your answers directly from FAR Vice President of Public Policy John Sebree, who explains in video format how the proposed property tax reform amendment helps Realtors and homeowners. Please click here to see the 10-minute video posted on FAR’s Web site, floridarealtors.com

Still have a few questions? Call FAR’s Office of Public Policy in Tallahassee at 850-224-1400.

NAR Survey: Commercial Practitioners Make Big Money

AS VEGAS – Nov. 14, 2007 – A survey of National Association of Realtors® (NAR) commercial members showed that more than 51 percent earned $100,000 or more in 2006 – 18 percent earned $250,000 or more; 33 percent earned between $100,000 and $250,000; and 24 percent earned between $50,000 and $100,000.

Results were announced during this week’s National Association of Realtors Conference & Expo being held in Las Vegas. Members of the Realtors Commercial Alliance were surveyed in the summer of 2007.

Land sales was the top commercial specialty among respondents. The top six specialties cited by respondents as their primary specialty were:

1. Land sales (19 percent)
2. Office leasing (11 percent)
3. Multifamily building sales (11 percent)
4. Retail building sales (10 percent).
5. Office building sales (8 percent)
6. Industrial building sales (8 percent)

Commercial practitioners belong to many groups

Forty-three percent of Realtors Commercial Alliance members said they belonged to a commercial affiliate of NAR. Many survey respondents also hold membership in other real estate specialty organizations. Among respondents:

• 31 percent were members of the International Council of Shopping Centers
• 10 percent were members of the National Association of Industrial and Office Parks
• 9 percent were members of the Appraisal Institute
• 9 percent were members of the Building Owners and Managers Association

The commercial segment continues to be dominated by men and by practitioners working in independent companies. Seventy-four percent of respondents were male and 79 percent said their company was not affiliated with a large national or regional brand.

The Realtors Commercial Alliance is an NAR division dedicated to serving the needs of Realtors practicing in the commercial arena. There are currently 75,000 RCA members. The membership survey was presented at a commercial research meeting held as part of the Realtors Conference & Expo.

Commercial Real Estate Index to launch

Also at this week’s convention, NAR announced it would be teaming up with the Society of Industrial and Office Realtors, on the analysis of SIOR’s Commercial Real Estate Index. The index is a measure of SIOR members’ assessment of market conditions.

NAR will continue to release its own quarterly Commercial Leading Indicator, a measure that forecasts commercial market activity on the basis of job growth, manufacturing, purchasing power and other quantitative factors.

Source: REALTOR® Magazine Online

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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Modest Recovery For Existing-Home Sales In 2008

LAS VEGAS – Nov. 14, 2007 – A modest recovery for existing-home sales is expected in 2008 as the impact of the credit crunch subsides, while pending home sales indicate near-term stability, according to the latest forecast released at the National Association of Realtors (NAR) Conference & Expo this week.

Lawrence Yun, NAR chief economist, said the housing market will improve from a steady unleashing of pent-up demand, and from a wide abundance of safer mortgage products. “The level of pent-up demand reaching the market next year is a bit uncertain, and it is possible for even higher home sales activity than we’re forecasting if buyers regain their confidence about the long-term benefits of homeownership,” he said. “Over the near term, home sales are likely to be fairly flat as the lingering impact of the credit crunch filters through the system through the end of the year.”

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September, rose 0.2 percent to a reading of 85.7 from an index of 85.5 in August. It was 20.4 percent lower than the September 2006 level of 107.6. “Even with relatively low fourth quarter sales, 2007 will be the fifth highest year on record for existing-home sales. The median existing-home price in 2007 will have fallen by less than 2 percent from an all-time high set in 2006,” Yun said.

The PHSI in the Midwest rose 5.4 percent in September to 82.3 but is 14.4 percent below a year ago. In the South, the index increased 1.5 percent to 99.3 but is 19.7 percent lower than September 2006. The index in the West slipped 0.1 percent in September to 80.5 and is 25.6 percent below a year ago. In the Northeast, the index dropped 10.1 percent in September to 69.5 and is 23.1 percent below September 2006.

Existing-home sales are projected at 5.67 million this year, edging up to 5.69 million in 2008, in comparison with 6.48 million in 2006 – the third highest year on record. Existing-home prices are expected to decline 1.7 percent to a median of $218,200 for all of this year and hold essentially even in 2008 at $218,300.

“Some markets are still going strong, such as Austin and Raleigh, while others are showing early signs of recovery, like Denver and Boston. However, a vast portion of the nation’s mid-section is underpriced in relation to income, and prices in some markets could rise notably with good local job gains,” Yun said. “At the same time, a significant rise in foreclosures in some areas could delay the recovery.”

New-home sales will probably total 796,000 in 2007 and 693,000 next year, below the 1.05 million last year; no real improvement is seen for new homes until 2009. Because builders have rightly made drastic cuts in production, housing starts, including multifamily units, are forecast at 1.35 million this year and 1.14 million in 2008, down from 1.80 million in 2006. The median new-home price is estimated to drop 1.6 percent to $242,500 in 2007 before rising 0.4 percent to $243,600 in 2008.

“Contrary to perceptions, conventional mortgages are widely available at favorable interest rates for the bulk of home buyers,” Yun said. “The pricing and availability of jumbo mortgages has improved, and FHA loans for home purchases – up 58 percent in the third quarter – are replacing subprime mortgages to serve the needs of low- and moderate-income buyers.”

The 30-year fixed-rate mortgage should rise slowly to the 6.6 percent range by the end of next year, although cuts in the Fed funds rate will help short-term interest rates.

“Home buyers in it for the long haul nearly always come out ahead in building wealth. Given the leverage in purchasing a home, the average return on a 5 percent downpayment over 10 years is usually three to five times greater than stock market returns,” Yun said. “When people compare investment returns, they often overlook the power of leverage in the housing market.”

He said a $10,000 downpayment on a median-priced home, at a typical appreciation rate of 5 percent, would be worth $110,000 after 10 years. That same amount invested in the stock market for the same amount of time, assuming 10 percent annual appreciation, would be worth $23,600. “That’s why housing is the best long-term investment most families ever make – the longer you own, the better your investment,” Yun said.

Growth in the U.S. gross domestic product (GDP) is seen at 2.1 percent in 2007, down from a 2.9 percent growth rate last year; GDP growth is projected to improve to 2.8 percent in 2008.

The unemployment rate will probably average 4.6 percent for 2007, unchanged from last year, but edge up to 4.9 percent in 2008. Inflation, as measured by the Consumer Price Index, is likely to be 2.8 percent both this year and in 2008, compared with 3.2 percent in 2006. Inflation-adjusted disposable personal income is forecast to grow 3.5 percent in 2007, up from 3.1 percent last year, and then ease to 2.4 percent in 2008.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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UF: Florida Population Growth Slows But Still Remains High

GAINESVILLE, Fla. – Nov. 8, 2007 – According to the University of Florida (UF), Florida’s population growth slowed considerably last year as the housing boom went bust, but it remained relatively strong and likely will stay that way for the next few years.

“There have been a number of news articles lately focusing on the idea that population growth has fallen off the table top in Florida and practically come to a standstill, and that simply isn’t true,” says Stan Smith, director of the UF’s Bureau of Economic and Business Research, who led the research. “Florida has a strong economy and adds jobs every year. That is a major factor in last year still being a big year for population growth, even though it was less than in the previous three years.”

The estimates released this week show the Sunshine State’s population grew by 331,000 between 2006 and 2007, compared with 431,000 between 2005 and 2006; 402,000 between 2004 and 2005; and 448,000 between 2003 and 2004, Smith said. Florida’s total population was estimated at 18,680,367 as of April 1, 2007.

Based on recent trends, Smith said he expects Florida to add about 300,000 residents a year during the next two to three years unless there is a recession.

“The housing boom certainly contributed to Florida’s growth in those earlier years, and the housing bust contributed to the slowdown this last year,” he says. “When economic conditions are tough, it’s much harder for people to sell their homes in New York, Ohio, Michigan or some other state and move to Florida.”

Today’s increasing number of foreclosures, large inventories of unsold houses and the decline in housing prices in some cities contrast starkly with the flourishing construction industry, huge numbers of home sales and flurry of people buying homes simply to make a quick profit that characterized the last few years, he said.

But Florida’s healthy job market and the continued movement of retirees and foreign immigrants to the state helped bolster population growth last year.

“Job growth has been higher in Florida than the national average,” Smith says, adding that the largest increases in jobs during the past year have been in leisure and hospitality services, education and health service. “You also have to factor in Florida’s climate, with its relatively warm winters, which continues to attract people from the Northeast and Midwest from one year to the next.”

Although less significant than employment, retiree migration stands to become increasingly important in the future.

“Over the next 20 years as the baby boomers reach retirement age, the probability is high that many of them will want to move to Florida,” Smith says.

Florida, with its large foreign-born population, also has grown because of the increase in U.S. immigration during the past decade because many newcomers move to places where they already have a network of family and friends, Smith says. Typically, Florida attracts about 8 percent or 9 percent of the nation’s immigrants in a year.

“What is considered a slow year for population growth in Florida would be considered a fast year for most states,” he says. “Between 1990 and 2000, no county in Florida lost population, which is unusual considering that typically 30 (percent) to 40 percent of the nation’s counties lose population during any particular decade.”

Flagler, the state’s most rapidly growing county, has ballooned by 88 percent since 2000, from 49,832 to 93,568; followed by Sumter, which increased 68 percent from 53,345 to 89,771, and Osceola, up 54 percent from 172,493 to 266,123.

Contributing to Flagler’s growth is its location between Jacksonville and Daytona Beach, which is attractive to retirees as well as to commuters. Boosting Sumter County’s population gains are spillover from Orlando to the southeast, as well as the booming Villages retirement community, which covers parts of three counties. Third-ranked Osceola County has drawn a sizeable population of Puerto Rican immigrants in recent years.

Counties with the biggest increases in absolute numbers were Orange County, which grew by 209,259 between 2000 and 2007, followed by Miami-Dade with an increase of 208,513 and Hillsborough with an increase of 193,913. Monroe was the only county in Florida to lose population between 2000 and 2007, declining by 602.

HUD creates Blueprint For Affordable Housing And Historic Preservation

WASHINGTON – Nov. 7, 2007 – Historic preservationists and affordable housing advocates are often at odds when it comes to developing strategies to preserve older housing while providing affordable housing opportunities for working families. In fact, there is a prevailing myth that the cost of historic preservation actually prices many working families out of many urban neighborhoods.

The U.S. Department of Housing and Urban Development and the Advisory Council on Historic Preservation have announced a blueprint that seeks to challenge this myth and employ historic preservation as a tool to preserve historic homes and keep them affordable in the process.

HUD and the ACHP held a symposium of national experts on affordable housing and historic preservation policies and unveiled a policy road map to potentially offer a promise of affordable housing in urban neighborhoods.

“Historic preservation and affordable housing are not two separate worlds,” said HUD Deputy Secretary Roy A. Bernardi. “Historic preservation can be a powerful tool to fuel the preservation of affordable housing too.”

In 2004, HUD published “Preserving America,” a how-to guide designed to help local communities utilize federal assistance to promote historic preservation by stimulating “heritage tourism,” economic development and job growth. Panelists provided their comments on new guidelines from various viewpoints and perspectives. The speakers represented economic development, HUD community development grantees, state historic preservation offices, and the banking and development sectors.

This week’s symposium kicks off a national dialogue that will include other federal agencies, state organizations, public interest groups, and the private sector as part of HUD’s America’s Affordable Communities Initiative (AACI). The initiative works with over a hundred state and local governments to cut red tape and reduce regulatory barriers.

The Latest Version Of Property Tax Reform: How It Works

TALLAHASSEE, Fla. – Nov. 1, 2007 – The Florida Legislature, caught in a game of “chicken,” approved a measure that will appear before voters on the Jan. 29, 2008, ballot. With time working against them, lawmakers agreed on a measure that scaled back earlier initiatives, and even current reforms pushed by the House.

What the current amendment includes:

Homestead exemption

The homestead exemption increases. The current $25,000 homestead exemption remains; but a second $25,000 exemption is added for home values between $50,000 and $75,000. The second $25,000 exemption does not apply to school taxes, however, which translates into a lower-than-expected savings of about $240 per homesteaded owner. The portion of a home valued between $25,000 and $50,000 will still be taxed at all levels. FAR fought to include this taxable portion in order to maintain fairness for smaller cities and counties with lower median home values.

Portability – Moving up

Property tax savings portability (money saved over time on property taxes because of yearly increase limits through Florida’s Save Our Homes amendment) applies to homesteaders (homeowners with a homestead exemption) moving anywhere within Florida. Up to $500,000 of accumulated savings, applied to taxable value, may be transferred when one home is sold and another is purchased, with the transfer applying to all taxes, including the school portion. Homeowners have two years after they sell a home to buy a new one and transfer the savings.

If buying a more expensive home, a homesteader calculates savings by subtracting the assessed value (taxable value) from the just value (market value). The amount (savings over time) is then subtracted from the just value on the new home purchased. In most cases, the $50,000 homestead exemption will also be subtracted.

Example: Susie currently owns a home and has lived there for a long time. The house’s just value is $500,000, but because of Save Our Homes, the assessed value is only $200,000. Susie buys a new house for $700,000. The following year, she’ll pay taxes on only $400,000, however, because she’s “porting” $300,000 in value to her new home. After factoring in the new homestead exemption of $50,000, her total assessed value would be $350,000.

If buying a less-expensive home, the calculation changes and is based on the percentage of tax savings rather than a dollar amount. If the assessed value on the original home was 50 percent of the just value, for example, the homesteader would transfer that percentage to the new home, or have a new assessed value that is 50 percent of the new home’s just value. The percentage system was created to keep homesteaders from effectively eliminating their property taxes altogether by moving from a high-cost area of Florida to a low-cost area – a change that could severely hurt smaller rural economies.

Example: Susie currently owns a home and has lived there for a long time. The house’s just value is $500,000, but because of Save Our Homes, the assessed value is only $200,000. Susie buys a new town home for $300,000. She’ll pay taxes only on $120,000 because when buying down in value, she’ll keep the same ratio (40 percent) of assessed value to just value that she enjoyed in her old home. After factoring in the new homestead exemption of $50,000, her total assessed value would be $70,000.

Also, portability is retroactive to Jan. 1, 2007 – so everyone who bought this year and moved from an established homestead will be able to “port” their savings for next year. Since yearly tax values are based on ownership as of Jan. 1 each year, portability would not affect this year’s tax bills, which most homeowners have already received; but the savings will be applicable to next year’s tax bill.

Non-homesteaded property tax cap

A win for FAR and an important piece of the amendment is a 10 percent annual assessment cap on non-homestead property. Similar to Save Our Homes, this cap limits the assessed increases of commercial, rental and second home property taxes to a maximum amount of 10 percent per year starting in 2009, protecting against high spikes in taxes from year-to-year.

While property values will not rise 10 percent every year, FAR believes the cap offers some relief and protection to properties in high-value markets and waterfronts from unpredictable tax increases. The Constitution mandates a tax reassessment to just value upon transfer for non-homestead residential properties of nine units or less, but allows the Florida Legislature to determine how reassessment will occur for commercial and higher-unit residential properties. However, implementing legislation passed during the Special Session provides for reassessment of these properties upon a change in ownership or use.

Tangible personal property exemption

Under the amendment, the Tangible Personal Property (TPP) exemption for businesses is $25,000. The Legislature estimates that this tax – paid to local governments on items such as shelving, desks, computers, and other office equipment – will exempt about 1 million of Florida’s 1.2 million businesses that currently pay it. The amendment also drops the requirement to file for the TPP tax.

Work not done

While the proposed amendment will save property owners as much as $12 billion (depending on the portability amount used), FAR will work for greater relief measures. The association also has serious concerns about a challenge to the constitutionality of portability.

Earlier versions of property tax reform included provisions to help first-time homebuyers, a move missing in the current version. With that protection gone, FAR considers it possible that it will be challenged under the U.S. Constitution along with the entire Save Our Homes property tax system. If that happens, it could bring everyone back to the table yet again.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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