Consumer Confidence Increases In Florida

GAINESVILLE, Fla. – Oct. 31, 2007 – A weak housing market doesn’t deter Floridians. Consumer confidence in the state rose three points in October, with much of the increase attributed to low-income households.

Consumer confidence among Floridians rose to 80 in October, while the September index was revised downward to 77. The index includes five components, and three showed improvement this month. Perceptions of personal finances now compared to a year ago fell a point to 70, but expectations of personal finances a year from now rose four points to 90. Expectations of U.S. economic conditions over the next five years fell two points to 78, but perceptions of U.S. economic conditions over the next year rose six points to 75. Perceptions of whether it is a good time to buy big-ticket items rose four points to 85.

“Consumer confidence in Florida is now very close to the national number of 80.9 as measured by the University of Michigan,” says Chris McCarty, the survey director. “The source of the rise in Florida appears to be low-income households (those living on less than $30,000 annually). Confidence among that group had been quite low at 66, but rose in October to 75. Middle and upper income households remained the same at 81.

“The rise in confidence among low-income households appears to be driven by improved personal finances now compared to a year ago and expectations about improvement over the next year. There was a very large increase in perceptions among low-income households that it is a good time to buy big-ticket items. That component rose 18 points to 86 among low income households.”

McCarty is not sure why Florida’s lower-income households believe things are getting better, but he speculates that they think the housing slowdown may be over soon.

“Respondents may have already factored in the ill effects of housing and are anticipating improvement,” McCarty says. “They may also be looking toward property tax reform from the Florida Legislature as a source of relief. Although gas prices declined briefly in October, they are up again and all signs are that they will increase. Next month’s consumer confidence will be telling.”

© 2007 FLORIDA ASSOCIATION OF REALTORS®

BACK TO THE MAIN PAGE

Consumers Less Confident In October

WASHINGTON – Oct. 30, 2007 – The Conference Board Consumer Confidence Index, which has been declining since August, fell further in October. The Index now stands at 95.6 (1985=100), down from 99.5 in September. The Present Situation Index decreased to 118.8 from 121.2 in September. The Expectations Index, which gauges attitudes about future conditions, declined to 80.1 from 85.0.

Says Lynn Franco, director of The Conference Board Consumer Research Center: “Consumer confidence posted its third monthly decline and continues to hover at two-year lows (Oct. 2005, 85.2). Further weakening in business conditions has, yet again, tempered consumers’ assessment of current-day conditions and may very well be a prelude to lackluster job growth in the months ahead. In addition, consumers are growing more pessimistic about the short-term future and their rather bleak outlook suggests a less than stellar ending to this year.”

Consumers’ assessment of present conditions weakened further in October. Those claiming conditions are “good” decreased to 23.4 percent from 25.7 percent. However, those saying conditions are “bad” decreased to 16.3 percent from 17.8 percent. Overall, consumers were less upbeat in their appraisal of the job market. Those saying jobs are “hard to get” increased to 22.6 percent from 22.4 percent. Those claiming jobs are “plentiful” decreased to 24.1 percent from 25.6 percent in September.

Consumers’ short-term expectations eroded further in October. Consumers expecting business conditions to worsen in the next six months rose to 13.8 percent from 11.9 percent. Those anticipating business conditions to improve declined to 13.7 percent from 15.7 percent.

The outlook for the labor market was also less optimistic. The percent of consumers expecting more jobs in the months ahead was virtually unchanged at 13.5 percent, while those anticipating fewer jobs increased to 20.1 percent from 18.7 percent. The proportion of consumers expecting their incomes to increase in the months ahead declined moderately to 19.6 percent from 20.0 percent.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. The cutoff date for October’s preliminary results was October 23rd.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

BACK TO THE MAIN PAGE

Florida Legislature Passes Property Tax Reform In Time For January Ballot

TALLAHASSEE, Fla. – Oct. 30, 2007 – It’s voters’ turn: The Florida Legislature passed property tax reform and a proposed amendment will appear on the January ballot. The amendment offers moderate relief for homeowners and slight relief for commercial property, but it does not go as far as an earlier House proposal. To become law, the proposal must still receive 60 percent of the votes in the Jan. 29, 2008, election.

The vote went down to the wire. Had the House and Senate not agreed by today, it would have been too late to get it on the January ballot, postponing any kind of tax relief.

“We are pleased the Legislature understood that missing the deadline for a January vote of the people was not an option,” says the Florida Association of Realtors (FAR) President Nancy Riley. “Tax reform is necessary to stimulate our economy. To put tax relief off to November 2008 would have been devastating to our state.”

The discussion included a number of considerations and not all made it into the final version. A complete breakdown of the individual considerations and how they fared in the final tax proposal is available in chart format at www.floridarelators.org under “What’s New.” Highlights of the passed legislation include:

• Double the homestead exemption, but only for homes valued at more than $75,000 and not for school taxes

• Allow owners of homestead property to transfer up to $500,000 in Save Our Homes benefits, including school taxes, to a new home

• Impose a 10 percent assessment cap on non-homestead property for the next 10 years. The cap does not apply to school taxes. After 10 years, voters will have the option to restore the 10 percent cap

• Allow businesses to exempt $25,000 in taxes paid on computers, office equipment and other personal property

With the deadline at hand, lawmakers had to quickly agree, and the final package represents a product that everyone could accept. The House, however, emphasized repeatedly that it would continue to work on property tax reform during the Legislature’s regular session next year, an opinion echoed by FAR.

While in favor of portability, FAR worries about including a portability provision without also adding some kind of relief for first-time homebuyers, a move promoted heavily but one that did not make it into the final version. Without any kind of first-time homebuyer protection, the U.S. constitution’s “right to travel” provision could be the basis of a court challenge.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

BACK TO THE MAIN PAGE

HUD Settles With Six Builders Over RESPA Violations

WASHINGTON – Oct. 30, 2007 –The U.S. Department of Housing and Urban Development (HUD) announced settlements with six major U.S. homebuilders over RESPA violations. According to HUD, complex business arrangements through the company’s captive title reinsurance company shielded payments for business referrals.

Combined, the $1.4 million settlement payments in these six agreements with other settlements involving captive title reinsurance bring the total amount of negotiated settlements in the past year and a half to $4.95 million. The recent companies include:

• $466,000 settlement with Pulte Homes Inc., and its captive title reinsurance company Marquette Title Insurance Co.

• $456,000 settlement with KB Home and its captive title reinsurance company Westview Co.

• $261,000 settlement with Beazer Homes USA Inc. and its captive title reinsurance company Security Title Insurance Co.

• $66,000 settlement with Meritage Homes Corp., Meritage Homes of California Inc., Meritage Homes of Nevada Inc., Meritage Homes of Arizona Inc., and their captive title reinsurance company Meritage Paseo Crossing LLC

• $84,000 settlement with The Ryland Group Inc. and its captive title reinsurance company Cornerstone Title Insurance Co.

• $52,000 settlement with Technical Olympic USA Inc. (TOUSA Homes) and its captive title reinsurance company Universal Land Title Inc

“There’s no legitimate purpose for captive title reinsurance when it comes to single-family homes,” says Brian D. Montgomery, HUD Assistant Secretary for Housing and Federal Housing Commissioner. “It’s increasingly clear to us that these complicated business arrangements serve no other purpose than to hide referral fees and kickbacks which are expressly forbidden by law.”

Captive title reinsurance is a practice where a title insurance company transfers a portion of the risk and title premium to a company owned by the builder, lender or real estate broker referring business to the title insurance company. In HUD’s view, any captive title reinsurance arrangements in which payments are not bona fide and exceed the value of the reinsurance are a violation of RESPA.

There is particular concern when these arrangements involve an entity that is in a position to refer business to the primary title insurer. According to HUD, there is also strong evidence these arrangements are designed to generate referral fees when there is a history of few or no claims paid by the reinsurance company. The companies cooperated with HUD in reaching these settlements. In addition to the settlement payments, the companies agreed not to enter into any new captive title arrangements and to cease writing new captive title reinsurance business.

This is the third round of settlements at the federal level involving the recipients of payments made by title insurance companies to captive companies for reinsurance. The settlements come in the wake of two rounds of settlements that HUD reached with five major homebuilders and one lender for a total of $3.55 million.

The Real Estate Settlement Procedures Act was enacted in 1974 to provide consumers advance disclosures of settlement charges and to prohibit illegal kickbacks and excessive fees in the home buying process. Section 8 of RESPA prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

BACK TO THE MAIN PAGE

My Safe Florida Home Program Increases Inspection Standards

TALLAHASSEE, Fla. – Oct. 30, 2007 – Nearly six months after expanding statewide, the My Safe Florida Home (MSFH) program announced it is increasing standards for participating wind inspection firms to improve the quality of inspections provided for Florida homeowners.

“Floridians interested in hardening their homes deserve the best customer service from the highest-quality wind inspectors available,” said Chief Financial Officer Alex Sink.

After undergoing a quality assurance review of more than 3,000 randomly-selected inspections and performing an independently conducted compliance audit, the MSFH program has renewed contacts with six of the 11 wind inspection firms to provide free wind inspections. Contracts for Alltech, ARA, Don Meyler Inspections, JVI, Skye Tec and WB Sanders Inspections will be renewed for three additional months, effective Oct. 31, 2007.

Inspectors performing free wind inspections through the MSFH program under the new contracts will be required to meet a number of new requirements, including:

• Complete the uniform mitigation form required by insurance companies for homeowners to be eligible for discounts on their insurance premiums

• Have a minimum of two years experience in residential construction and/or residential inspection experience or shall be licensed in good standing as a professional engineer,
architect or building contractor

• Provide actual measurement (not an estimate) of window and door openings

Additionally, the MSFH program is required to perform a number of re-inspections for homeowners who have received matching grants for improvements to their homes. Inspectors will be required to have a minimum of 10 years experience and participate in additional training classes before performing these re-inspections.

Since April 2007, the MSFH program has performed over 111,200 free wind inspections. More than 13,500 homeowners have been approved for matching grants and are working with the MSFH program to harden their homes. Statewide, the program has issued a grand total of more than 1,876 grants to homeowners for more than $6 million.

Many homeowners who have received free wind inspections from the MSFH program are eligible for discounts on their wind insurance premiums without making a single improvement to their homes. To date, 78,739 or 71 percent of participating homeowners are eligible for an average discount of $192.55 on their wind insurance premiums, based on the current structure of the home during the free MSFH wind inspection.

Any Floridian who lives in a single-family, site-built home is eligible for a free wind inspection through the program. Floridians can apply on-line at www.MySafeFloridaHome.com or by calling the program toll-free at 1-866-513-6734. Homeowners who receive free wind inspections through the MSFH program will get detailed inspection reports, complete with additional eligibility information on matching grants and estimated insurance premium discounts, if the homeowner is eligible.

In order to be eligible for the program’s matching grant reimbursements of up to $5,000, the Legislature requires that homeowners meet the following requirements: have received a completed wind inspection after May 1, 2007; live in a single-family, site-built home built before March 1, 2002; have a valid homestead exemption; have an insured value of $300,000 or less; and be located in the wind-borne debris region.

While the free wind inspections will still cover seven potential wind-resistance improvements, matching grants may only be applied to opening protections, including windows, exterior doors and garage doors, as well as the bracing of gable ends.

© 2007 FLORIDA ASSOCIATION OF REALTORS

BACK TO THE MAIN PAGE

Florida’s Existing Home Sales Slower In September 2007

ORLANDO, Fla., Oct. 24, 2007 – Mirroring the national trend, turmoil in the mortgage market impacted Florida’s housing sector in September, despite continued low unemployment rates and other positive economic activity. Statewide, sales of existing single-family homes totaled 8,688 last month while 14,044 homes sold in September 2006 for a decrease of 38 percent in the year-to-year comparison, according to the Florida Association of Realtors® (FAR).

Housing industry analysts previously predicted that mortgage disruptions would affect home sales in September. The National Association of Realtors’® (NAR) latest market outlook expects conditions for the mortgage industry to improve in the coming months and that widening credit availability will help homebuyers. Keeping the current housing market in perspective, 2007 will be the fifth highest year on record for existing-home sales, says NAR Senior Economist Lawrence Yun. “Although sales are off from an unsustainable peak in 2005, there is a historically high level of home sales taking place this year,” he says. “One out of 16 American households is buying a home this year.”

Florida’s median sales price for existing single-family homes last month was $221,200; a year ago, it was $243,300 for a 9 percent decrease. The median is the midpoint; half the homes sold for more, half for less. In September 2002, the statewide median sales price for single-family homes was $139,600, for an increase of 58.5 percent over the five-year-period, according to FAR records.

The national median sales price for existing single-family homes in August 2007 was $223,900, essentially even with the year-ago figure, according to NAR. In California, the statewide median resales price was $588,970 in August; in Massachusetts, it was $357,000; in Maryland, it was $315,850; and in New York, it was $255,000.

Sales of existing condominiums in Florida also decreased last month, with a total of 2,557 condos sold statewide compared to 4,032 in September 2006 for a 37 percent decline, according to FAR. The statewide median sales price for condos last month was $194,200, down 4 percent from September 2006’s condo median price of $202,800. NAR reported the national median existing condo price was $228,500 in August 2007.

Last month, interest rates for a 30-year fixed-rate mortgage averaged 6.38 percent, according to Freddie Mac, which was lower than the average rate of 6.40 percent in September 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 Jacksonville Metropolitan Statistical Area (MSA) reported 878 existing homes sold last month compared to 1,191 homes sold a year ago for a 26 percent decrease. The market's median sales price for homes was $194,800; it was $190,800 in September 2006 for a 2 percent increase. A total of 113 existing condos changed hands in the MSA last month, down 14 percent from the 132 condos sold the previous year. The existing condo median sales price in September was $162,700; a year ago, it was $185,500 for a 12 percent decrease.

“Northeast Florida is a wonderful place to live,” says Hank Oltmanns, president of the Northeast Florida Association of Realtors and broker-owner of A Broker’s Choice Realty. “The unemployment rate in Jacksonville is between 3 to 4 percent, and new business is always coming into the area and generating jobs. The St. Johns River offers access to anywhere in the world. Jacksonville offers all the amenities of a big city, yet the lifestyle here is relaxed and laid-back.”

Among the state’s smaller markets, the Panama City MSA reported a total of 102 homes sold in September compared to 113 homes a year ago for a 10 percent decrease. The existing home median sales price was $184,000; a year ago, it was $203,000 for a 9 percent decrease. A total of 38 existing condos sold in the MSA last month compared to 32 condos the previous September for a 19 percent increase. The market’s existing condo median price was $250,000; a year ago, it was $262,500 for a decrease of 5 percent.

Scott Bowman, president of the Bay County Association of Realtors and a broker-sales manager with Prudential Shimmering Sands Realty, says that the area’s investment in new infrastructure is attracting buyers’ interest. “A lot of things have been happening in our market over the past few years: We’ve widened our roads, built a new bridge and had a new airport site approved,” he says. “The injection of new infrastructure is having a good impact on the market, along with expanding industries. For example, there’s a company wanting to use the Panama City port facility for a wood pellet [a renewable energy source] plant they’re planning in the northern part of our county.”

© 2007 FLORIDA ASSOCIATION OF REALTORS

BACK TO THE MAIN PAGE

Florida House Passes Property Tax Reform Legislation

TALLAHASSEE, Fla. – Oct. 23, 2007 – The Florida House passed a bipartisan property tax reform package yesterday by a 108-2 vote that addresses many issues important to Florida Realtors. House leaders consider the almost-unanimous vote an indication of that legislative body’s dedication to the plan. It now goes to the Senate for consideration.

Prior to the vote, Florida Association of Realtors®’ (FAR) President Nancy Riley sent a letter to House Leadership indicating the association’s support for property tax reform, specifically applauding the inclusion of an assessment cap for non-homestead and commercial property owners. The 5 percent yearly assessment cap on non-homesteaded property (assessment retriggers upon sale) and commercial property (assessment only retriggers with “substantial” improvements) would apply to local government and school taxes.

“The House proposal regarding an assessment cap for non-homestead residential property and commercial property addresses many of the tax problems with non-homestead properties’ high yearly assessments and an uncertain tax bill from year-to-year,” Riley told House leaders, since many “non-homestead property owners are rethinking whether they want to invest in Florida.”

Another provision FAR leadership finds appealing is a guaranteed property tax break of 40 percent for homesteaded property or Save Our Homes savings. Homeowners would take advantage of the tax relief plan that saves them the most money. The 40 percent break would offer substantial and immediate relief to new homebuyers or those who purchased a home within the past few years.

“We are also pleased that both the Senate and House are advocating for “Save Our Homes” portability,” Riley says. “While not precisely in line with FAR’s stated position (local county option or a phase-out of ‘Save Our Homes’), this is mitigated by the House’s proposed assessment cap on non-homestead properties.” The House proposal includes statewide portability of property tax savings under Save Our Homes.

Other legislative highlights include:

• No doubling of the homestead exemption
• The Legislature will be allowed to change assessment methods for working waterfronts and affordable rental housing
• The Miami-Dade Property Appraiser must be elected, rather than appointed
• $25,000 tangible personal property tax exemption

The House bill, while covering many FAR goals, is still not the final word, however. “FAR will continue to promote property tax reforms in the areas of ‘highest and best use,’ presumption of correctness, value adjustment boards and assessment issues related to affordable housing and working waterfronts,” says Riley.

The Senate is slated to reconvene on Thursday. A Call-to-Action will probably be issued by FAR shortly, asking Realtors to contact senators, encouraging them to approve the House plan. The House and Senate must approve a bill by Oct. 29 to make it onto the Jan. 29 ballot.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

BACK TO THE MAIN MENU

Florida House Pushes For Stronger Property Tax Cuts

TALLAHASSEE, Fla. – Oct. 22, 2007 – On Saturday, Florida’s House of Representatives released its updated property tax reform plan, which includes a number of initiatives favored by Florida Realtors.

House leaders now hope to build a bipartisan consensus to show the Senate that they’re serious about drastically cutting state property taxes. If Democrats and Republicans pass the measure with something close to a majority, they reason, the Senate would have to consider the plan.

“If we come out with a product in the House that’s 118-2 or 115-5, it sends a message that, look, this is pretty good reform that we’re united behind,” says Rep. Jack Seiler, D-Wilton Manors. “We actually deliver the same in tax cuts [as the Senate’s plan], but we deliver it more efficiently.”

In addition to portability – which the governor, Senate and House already advocate – the updated House proposal includes a 5 percent assessment cap on commercial and non-homestead property. The cap applies to properties, so a change of ownership would not change those taxes under a new owner, giving non-homestead property owners a degree of stability and predictability.

The House also advocates a new homestead exemption. Instead of doubling the current $25,000 exemption, the plan would guarantee a minimum Save Our Homes exemption of 40 percent of a county’s median home price. House leaders believe this will provide relief to not only new buyers but also those who have purchased in recent years.

Issues being proposed in the House plan include:

• Homestead property owners would pay tax based on their existing Save Our Homes value or current value minus 40 percent of their county’s current median home price, whichever is less.

• 5 percent cap on commercial and non-homestead property taxes

• Under portability, homeowners may transfer Save Our Homes benefits to a new homestead anywhere in Florida within two years of leaving their former homestead.

• Tangible personal property exemption of $25,000

• Limits the authority of local governments to increase property taxes

• Provides limitations on the assessed value of properties used for affordable housing

• 5 percent assessment growth limitation for all non-homestead properties

• More flexibility for the Legislature to limit assessments for working waterfront properties

• Election of all county property appraisers

FAR has a downloadable chart comparing the recent House proposal to Senate positions here.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

BACK TO THE MAIN PAGE

PricewaterhouseCoopers: ‘24-Hour Cities’ Top Markets To Watch

NEW YORK – Oct. 19, 2007 – More than 600 of the nation’s leading real estate experts expect the sizzling commercial real estate market in the U.S. to slow in 2008, with a healthy correction that will likely bypass long-term investors but penalize late-to-the-game speculators and overleveraged buyers, according to the “Emerging Trends in Real Estate 2008” report, released this week by PricewaterhouseCoopers LLP and the Urban Land Institute (ULI).

According to the report, real estate investors and developers believe uncertainty will characterize 2008. They expect capitalization rates to rise and risk to be repriced, with the harshest effects being felt by those who have relied on debt strategies. More than three-quarters (78 percent) anticipate more stringent underwriting standards in the year ahead. Yet, despite this apprehension, respondents expect most real estate investments to outperform both the U.S. stock and bond returns in the year ahead, and are counting on ample capital sources to cushion the property markets.

Respondents believe the correction in the commercial market will not be as severe as in the residential real estate market. Commercial real estate supply and demand is relatively strong, development is in check and the fundamentals are still healthy, according to respondents.

“The commercial real estate market has been going full throttle for several years with easy money and low interest rates that drove some sectors into questionable lending practices and highly leveraged spending,” said Tim Conlon, a partner in PricewaterhouseCoopers. “But the run went on too long for some participants. Those who went beyond moderation will likely experience some headaches in 2008.

“Depending on what happens with the U.S. economy as a whole, it could be painful for some, but overall, a correction could be good for the industry, keeping supply and demand in balance, curbing overdevelopment and flushing out low-quality investors. By the same token, there are still investment opportunities and there is still a good deal of demand from investors.”

Richard Rosan, president, ULI Worldwide, said the report points to the value of sustainable building, which results in development that remains in demand despite market cycles. “We are seeing an increasing emphasis on building efficiently to accommodate growth -- on pedestrian-friendly, mixed-use development, communities that provide housing near jobs, and development connected to transit,” Rosan said. “What is selling now and will continue to sell are projects that cater to strong consumer desire for convenience. Those are the best bets.”

He noted that the issue of climate change has elevated the importance of sustainable land use, giving such development a competitive advantage that will increase as the market improves. “It’s clear that building in a way to cut auto dependency is a key part of the solution to climate change,” Rosan said. “This is the type of development with long-term value.”

Markets to Watch

The top markets to watch, according to the report, are those that have positioned themselves as 24-hour cities with a global pathway to international markets. They all have a major international airport and/or shipping port, export-import hubs, an educated workforce and walkable residential neighborhoods. They have made a concerted effort to revitalize downtown areas or nearby urban suburbs that have made them magnets for corporate headquarters, business elites, the best and the brightest of the workforce as well as the largest share of investor dollars.

The most successful investment opportunities are markets on the coast, reinforcing the real estate truism that its all about location, location, location, the report says. But as many interior cities such as Denver have demonstrated, it is possible to transform a city into a 24-hour global pathway city with master planning around infrastructure, transportation and economic development.

The report ranks New York City as “the hottest commercial real estate market in the country” and the “ultimate American 24-hour city.” “Vacancies in New York are in the mid-single digits, rents have skyrocketed and pricing is at all-time highs,” states the report. And while the market may have peaked recently, the weak dollar actually makes the city’s monster prices look cheap to foreign investors who are pouring and parking money into Manhattan real estate, the report says.

According to surveyed real estate experts, not only is the New York market hot, but the entire commercial real estate industry has also acquired a New York state of mind as Wall Street and real estate have converged. In part because of its sheer size, New York now sets the tone for the entire U.S. commercial real estate market and influences investor psychology as the bellwether for the rest of the country. According to the report, real estate used to be characterized by local buyers and local lenders, and is now dominated by national financial institutions and landlords, many of whom are located in New York.

Seattle is also a standout market for investors, receiving top or near top buy ratings for all property sectors. Growth controls and geographic barriers have led to concentrated high-density, mixed-use development, which has drawn residents to new downtown neighborhoods, making Seattle a 24-hour city on Asian commerce routes. With so many “corporate heavyweights” headquartered in or near Seattle, it has a highly diversified economy. Seattle is also the highest-rated metro area for home building.

Other top markets identified in the report demonstrate a clear bicoastal focus, with Boston and Washington, D.C. joining New York as the East Coasts most watched markets. On the West Coast, Seattle, San Francisco, Los Angeles and San Diego top the list. Denver is the lone non-coastal metropolitan area among the top markets to watch.

Washington D.C. The nations capital continues to be one of the most watched commercial real estate markets, because the government never stops and the ever-churning Washington machine provides a cushion for real estate owners against abrupt downturns.

Los Angeles. According to the report, southern California is the crest of the housing market slowdown as high prices have driven some business and residents to seek shelter in lower cost states. While the Orange County office market has softened, the office market in West LA has never been better. LA/Long Beach remains the nations top port, but transportation routes are clogged, creating a hindrance to trade.

San Francisco. This highly livable city’s market has been propelled by resurgent technology businesses. View space is once again commanding over $100 per square foot, even as supply creeps upward.

Boston. As the greater Boston market rebounds from the tech wreck of the early 2000s, it is seeing resurgence in its offices. New industries, such as professional services firms and biotech companies, are beginning to recycle space left vacant by corporate headquarter departures in the recent past. But questions remain about the depth of Boston’s tenant population, causing investors to keep a close and wary eye on the market.

San Diego. While one of the most attractive places to live, San Diego is a leading indicator for a market correction. Office turnover and out-migration of prime business centers to Del Mar and Oceanside have left San Diego’s downtown looking for new growth opportunities.

Denver. The only non-coastal city in the top tier, Denver has retooled its downtown to create an urban suburb, a hip and exciting urban core in the midst of a sprawling suburban area, connected to downtown via a light-rail transit.

While investors typically back away from smaller markets during a correction, markets to watch in this segment include: San Jose, Calif.; Honolulu, Hawaii; Austin, Texas; Raleigh-Durham and Charlotte, N.C.; Portland, Ore.; Sacramento, Calif.; Las Vegas, N.V.; Orlando and Tampa, Fla; Salt Lake City, Utah, Jacksonville, Fla.; Nashville, Tenn.; and Minneapolis, Minn.

Among property sectors, income-generating industrial and apartment sectors remain favored investment categories, according to the survey. Office space in dominant downtowns should perform better than in suburban-oriented markets. As tapped-out consumers restrain their spending, ratings may fall most dramatically for housing-related categories, with condominiums landing in the basement.

For the first time, the report also provides an outlook for Canadian real estate. Canada benefits from a more conservative investment environment than the United States, avoiding the consequences of lax underwriting. In Canada, institution-dominated markets appear to be avoiding “transaction mania,” but real estate values have reached record highs and a strong economy has accelerated tenant demand for space. Interviewees remain positive about sidestepping any serious impacts of a possible U.S. correction. Western provinces showcase the strongest growth trends and lowest vacancies in North America. Calgary and Edmonton are the top choices for investors. All property sectors share positive prospects, especially industrial and retail. Housing prices skyrocket toward new highs without overdoing mortgage financing.

The Emerging Trends report reflects interviews with and surveys of more than 600 of the industry’s leading real estate experts, including investors, developers, property company representatives, lenders, brokers and consultants. A copy is available at www.uli.org or www.pwc.com/imre.

© 2007 FLORIDA ASSOCIATION OF REALTORS

BACK TO THE MAIN PAGE

On The Move

According to data just released by the U.S. Census Bureau, 39.8 million U.S. residents moved between 2005 and 2006. The moving rate remained statistically unchanged from 2005 at 14 percent. Nearly half of the reasons given for moving (18.4 million) were housing-related, such as wanting a bigger or smaller house. The West had the highest moving rate (16 percent), followed by the South (15 percent), the Midwest (13 percent) and the Northeast (10 percent). Other findings include: In 2006, nearly one-third (30 percent) of all people living in renter-occupied housing units lived elsewhere a year earlier. The moving rate for people living in owner-occupied housing units was 7 percent. Also, most movers stayed within the same county (62 percent), while 20 percent moved from a different county within the same state; 14 percent moved from a different state and 3 percent moved from abroad. To see the census data, go to: http://www.census.gov/Press-Release/www/releases/archives/mobility_of_the_population/010755.html

FAR Issues Call-to-Action For Property Tax Reform

TALLAHASSEE, Fla. – Oct. 17, 2007 – A Florida House committee approved significant property tax relief yesterday afternoon that creates a 3 percent assessment cap on non-homestead and commercial properties that the state currently offers only to homestead properties.

But senators, many unconvinced, now will consider the House’s revisions. To move the initiative forward, the Florida Association of Realtors® (FAR) issued a Call-to-Action and asks all Realtors to take a minute to contact their senators at: http://votervoice.net/target.aspx?id=flar:18849791

“FAR President Nancy Riley and our Tallahassee lobbying team met with House leaders late into the evening (Monday) night, and we have continued to make the case for property tax relief that would be felt by all property owners in Florida, not just homestead owners,” says John Sebree, FAR vice president of public policy. “(Yesterday) we met with numerous other elected officials, including the governor, lieutenant governor, and House and Senate leaders.” FAR’s meetings with lawmakers continued today.

The 3 percent yearly cap would also end Florida’s current property tax system that readjusts values when a property is purchased, meaning a new owner of commercial or non-homestead property would no longer be hit with a large and unexpected tax increase upon ownership since the assessment cap remains in place forever. (Homestead property would still be readjusted upon sale – property tax portability would offset that difference.)

The House bill also calls for a penny increase in Florida’s sales tax to offset the decrease in funding from property taxes. The one-penny sales tax would “buy-out” the portion of the property tax for the “required local effort” (the school portion of everyone's property taxes). The money raised by the sales tax increase would be earmarked for education. House estimates call for a 15 percent across the board property tax reduction if this swap measure is included in the final package.

The House and Senate begin work today on compromise legislation, and FAR leaders don’t want important protections created in the House bill to be eliminated during the process.

“Our focus now turns to the Senate,” says Sebree. “We need to apply pressure to Senators to accept these major additions to the current legislation being considered in the special session.

Make your voice heard: http://votervoice.net/target.aspx?id=flar:18849791

© 2007 FLORIDA ASSOCIATION OF REALTORS®

BACK TO THE MAIN PAGE

Florida’s CFO Joins National Coalition Calling For Mortgage Changes

TALLAHASSEE, Fla. – Oct. 17, 2007 – With the mortgage crisis continuing to affect the country and the financial markets, Florida Chief Financial Officer Alex Sink has joined a coalition of national elected officials and consumer organizations urging mortgage companies and lenders to adhere to basic principles of transparency and fairness.

By joining the coalition, Sink is calling on companies to follow the coalition’s “Mortgage Protection Principles” in order to strengthen their business operations going forward and to prevent yet another mortgage meltdown.

“As Florida’s chief financial officer, I am highly concerned about our state’s economy and the financial health of our consumers,” said CFO Sink, who oversees the Department of Financial Services. “We are asking all financial institutions to help consumers avoid foreclosure, to be more diligent in their efforts to increase disclosure and to assist homeowners understand more about the financial decisions they make.”

North Carolina Treasurer Richard Moore, who leads the coalition, said, “As investors, as leaders and as citizens, we are deeply concerned about the mortgage crisis that has hit our country on so many fronts. We call on mortgage companies and lenders of all sizes to abide by these basic principles of fairness and transparency. We have the holdings, the clout and the conviction to encourage positive behavior, and we hope that all companies will adopt these principles.”

The group’s Mortgage Protection Principles include:

• Matching borrowers with the most appropriate, fair and affordable loans for which they qualify
• Verifying and documenting the borrower’s ability to repay the loan for all subprime loans
• Ensuring that subprime loans with an adjustable rate feature are affordable, rather than basing a borrower’s loan qualification on a teaser rate
• Not charging prepayment fees or penalties on any subprime loans
• Not offering incentives for employees or brokers to place borrowers into higher cost loans than those for which they qualify
• Clearly disclosing all expected broker compensation, from lenders or elsewhere, for any loan options presented to the borrower
• Providing borrowers with a fixed-rate option whenever presenting adjustable rate products
• Making the same services available to all similarly-situated borrowers and ensuring that they do not discriminate on any prohibited basis
• Conducting criminal background checks to ensure that mortgage brokers are of high moral character

The coalition also includes Kentucky Treasurer Jonathan Miller, New York State Comptroller Thomas DiNapoli, the leaders of the American Federation of State, County and Municipal Employees (AFSCME) and UNITE HERE and several other financial organizations.

The mortgage crisis has impacted investors, consumers and homeowners. Many subprime mortgages have been resetting, meaning that a low introductory rate resets to the market rate, and leaving many Americans with higher rates that they are unable to afford. In August and September, $32.6 billion worth of mortgages reset, and the high volume of resets is expected to continue through next year. The August 2007 U.S. Foreclosure Market Report shows a total of 243,947 foreclosure filings nationwide for the month, up 36 percent from the previous month and up 115 percent from August 2006. In addition, the report showed a foreclosure rate of one filing for every 510 households – the highest figure ever noted in the report.

Since the end of last year, more than 80 mortgage lenders, mainly subprime, have closed their doors or suspended new loan activity. Some of the largest, like New Century Financial and American Home Mortgage, filed for bankruptcy and Countrywide Financial shares have lost almost 60 percent of their value. The world’s largest bank, Citigroup, announced just yesterday that its earnings were off by 57 percent for the third quarter – due in large part to subprime impacts.

© FLORIDA ASSOCIATION OF REALTORS

BACK TO THE MAIN PAGE

Home Buyers Confused By Market Reports

ORLANDO, Fla. – Oct. 15, 2007 – Are potential buyers worried about real estate or just overwhelmingly confused? Last week, two studies came out. One put Orlando in the top 10 nationwide for a great time to buy, while the second listed Orlando-Kissimmee as one of 11 nationwide markets with a greater than a 50/50 risk for price declines.

Time to buy

Forbes magazine examined current home sales patterns and sales projects in the country’s 40 largest real estate markets to identify the most attractive markets. Based on models that estimated 2008 housing inventory, sales rates and turnover, the magazine compiled a list of markets that are experiencing price declines, but where buying looks attractive because there is likely to be an increase in sales in the near future.

Only one Florida city made the list, but Orlando ranked at No. 8, noting a recent 2.4 percent price decline since 2006. However, authors expect that decline to turn around fairly quickly.

Not time to buy

On the other hand, PMI Mortgage Insurance Co. noted in its second-quarter U.S. Market Risk Index that Orlando was one of 11 metropolitan statistical areas (MSAs) with a greater than 50 percent chance of price declines over the next two years. The Risk Index – which considers elements such as home prices, market volatility, affordability and employment – creates scores, with any score greater than 500 considered “at risk” for an increase.

Orlando-Kissimmee scored 506 – slightly less than two other Florida MSAs on the list, West Palm Beach-Boca Raton-Boynton Beach with 532; and Fort Lauderdale-Pompano Beach-Deerfield Beach with 507.

Even the Risk Index had some good news for Florida cities, however. The second quarter saw two MSAs drop off the list, meaning their chance for a price decline over the next two years went from greater than 50 percent to below 50 percent. They include Miami-Miami Beach-Kendall with 466, and Tampa-St. Petersburg-Clearwater with 462.

Always a good time to buy

To understand slow real estate markets better, PMI also studied homebuyers who purchased during down cycles over the past 25 years to see the long-term effects. But they found that it’s never really a bad time to buy. PMI economists assumed a 20 percent downpayment and found that even during the worst times, buyers had a positive return on their home investment over 10 years.

“Homeownership is a good way to build long-term wealth” and homebuyers “shouldn’t panic when we are going through a phase like that,” says Mark Milner, PMI’s chief risk officer.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

BACK TO THE MAIN PAGE

Survey Says: Falling U.S. Dollar Is No. 1 Investor Worry

JUPITER, Fla. – Oct. 15, 2007 – The falling U.S. dollar is the number one worry of U.S. investors, according to an investor survey conducted by Weiss Research’s MoneyandMarkets.com.

Among more than 2,325 investors voluntarily responding to the recent poll, 43 percent ranked the dollar decline as their single most serious concern. The fear of a recession or depression was a distant second, cited as a primary concern by only 20.8 percent of the respondents. Ranked third and fourth were terrorist threats, wars or future geopolitical crises (10.5 percent) and inflation (10.2 percent).

Respondents were asked, “What is the single most serious concern facing investors today?”

The summary of all responses included: the declining US dollar, 43.1 percent; a recession or depression, 20.8 percent; terrorist threats, wars or future geopolitical crises, 10.4 percent; inflation; 10.0 percent; the mortgage and housing crisis, 8.1 percent; and a stock market crash or bear market, 7.6 percent.

“The dollar has been declining steadily against most major currencies for over five years, with the Dollar Index recently falling to its lowest level of all time,” said Martin D. Weiss, Ph.D., president of Weiss Research. “So it should come as no surprise that investors are worried about it. Many appear to recognize the long-term consequences of a falling dollar on stocks, bonds, and real estate as well as the economic impact on our country as a whole.”

For protection, Weiss recommends investors consider strong foreign currencies, natural resources and other assets that go up when the dollar falls. “Years ago,” Weiss said, “it was difficult for average investors to buy foreign currencies or natural resources. Now, however, they are readily available through exchange-traded funds and other easy-to-trade instruments.”

© 2007 FLORIDA ASSOCIATION OF REALTORS

BACK TO THE MAIN PAGE

Improvement In Mortgage Market Bodes Well For Housing In 2008

WASHINGTON – Oct. 11, 2007 – Conditions in the mortgage market are improving for consumers, which should help to release some pent-up demand in early 2008, according to the latest forecast by the National Association of Realtors® (NAR).

Lawrence Yun, NAR senior economist, notes that widening credit availability will help turn around home sales. “Conforming loans are abundantly available at historically favorable mortgage rates. Pricing has steadily improved on jumbo mortgages since the August credit crunch, and FHA loans are replacing subprime mortgages,” he says.

Yun says it’s important to place the current housing market in perspective, and that 2007 will be the fifth highest year on record for existing-home sales. “Although sales are off from an unsustainable peak in 2005, there is a historically high level of home sales taking place this year – a lot of people are, in fact, buying homes,” he says. “One out of 16 American households is buying a home this year. The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains.”

He emphasizes all real estate is local with naturally large variations within a given area. “Markets like Austin, Salt Lake City and Raleigh have been outperforming recently and will continue to do well next year,” Yun says. “Other areas like Denver and Wichita will likely move up in the price growth rankings due to very positive local economic developments.”

Existing-home sales are expected to total 5.78 million in 2007 and then rise to 6.12 million next year, in contrast with 6.48 million in 2006. New-home sales are forecast at 804,000 this year and 752,000 in 2008, down from 1.05 million in 2006; a recovery for new homes will be delayed until next spring.

“A cutback in housing construction is a positive sign for the market because it will help lower inventory and firm up home prices,” Yun says. Housing starts, including multifamily units, are likely to total 1.37 million in 2007 and 1.24 million next year, down from 1.80 million in 2006.

NAR President Pat V. Combs says, “Housing is still a good long-term investment, and we’ll be seeing a broad, modest improvement in home prices in 2008. With widely varying conditions, the best advice for consumers is to consult a Realtor in their area to learn about local market conditions because supply and demand can change from one neighborhood to the next.”

Existing-home prices will probably slip 1.3 percent to a median of $219,000 in 2007 before rising 1.3 percent next year to $221,800. The median new-home price should drop 2.1 percent to $241,400 this year, and then increase 1.0 percent in 2008 to $243,900.

The 30-year fixed-rate mortgage is expected to average 6.4 percent for the next two quarters and then edge up to the 6.6 percent range in the second half 2008. Additional cuts expected in the Fed funds rate will help to keep mortgage interest rates historically favorable.

Growth in the U.S. gross domestic product (GDP) is estimated at 2.0 percent this year, below the 2.9 percent growth rate in 2006; GDP is likely to grow 2.7 percent next year.

The unemployment rate is forecast to average 4.6 percent this year, unchanged from 2006. Inflation, as measured by the Consumer Price Index, is expected to be 2.8 percent in 2007, compared with 3.2 percent last year. Inflation-adjusted disposable personal income will probably increase 3.6 percent in 2007, up from 3.1 percent last year.

© 2007 FLORIDA ASSOCIATION OF REALTORS

BACK TO THE MAIN PAGE

HUD Awards $18 million To Fight Housing Discrimination

WASHINGTON – Oct. 11, 2007 – The Department of Housing and Urban Development (HUD) awarded 88 grants totaling $17.1 million to recipients in 37 states and the District of Columbia to help fight housing discrimination.

In addition, HUD awarded $1 million to New America Media, a division of Pacific News Service, to develop the department’s first coordinated national media campaign to educate the public about discriminatory lending through television, radio and print advertisements.

“Last year there were a record 10,328 housing discrimination complaints filed with HUD and its state and local partners,” says Kim Kendrick, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. “These grants will allow us to continue with efforts to educate the public and the housing industry about their rights and responsibilities under the Fair Housing Act. The national media campaign that we will develop is also very important. Without the campaign, we believe that the consequences of discriminatory lending will not only continue, but may escalate.”

The grants, funded through HUD’s Fair Housing Initiatives Program, will be used to investigate allegations of housing discrimination, educate the public and the housing industry about their rights and responsibilities under the Fair Housing Act, and work to promote equal housing opportunities.

The grants were awarded under one of two initiatives:

• Private Enforcement Initiative grants (PEI) – HUD awarded $14 million to help groups investigate alleged housing discrimination, and enforce the Fair Housing Act and state and local laws that are substantially equivalent to the Act.

• Education and Outreach Initiative grants (EOI) – HUD awarded $3.1 million to groups that educate the public and housing providers about their rights and obligations under federal, state, and local fair housing laws.

A list of all grant recipients and summaries about their programs are listed at www.hud.gov.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

BACK TO THE MAIN PAGE

HUD Releases $44.1 Million For Homebuyer Counseling

WASHINGTON – Oct. 10, 2007 – Approximately 700,000 families will get help through more than $44 million in housing counseling and counseling training grants announced by the Department of Housing and Urban Development (HUD), with 20 agencies in Florida sharing $765,000.

Homebuyer counseling can help families become first-time homeowners and qualify for a mortgage. Renters and homeless individuals and families will also benefit from the counseling offered by the grants. The grants were awarded to 19 national and regional organizations and nearly 370 state and local housing counseling agencies.

National and regional agencies distribute much of HUD’s housing counseling grant funding to community-based grassroots organizations that provide advice and guidance to low- and moderate-income families seeking to improve their housing conditions.

More information about HUD and its programs is available at www.hud.gov and espanol.hud.gov.

Florida programs receiving money include:

• Apopka – Homes In Partnership Inc., $30,846.23
• Bradenton – Manatee Opportunity Council Inc., $42,000.00
• Cooper City – Haven Economic Development Inc., $34,461.63
• Daytona Beach – Central Florida Community Development Corp., $34,461.63
• Daytona Beach – Mid-Florida Housing Partnership Inc., $45,307.86
• Jacksonville – Jacksonville Area Legal Aid Inc., $34,461.63
• Miami – Miami-Dade Affordable Housing Foundation Inc., $20,000.00
• Ocala – Ocala Housing Authority, $40,000.00
• Opa-Locka – Opa-Locka Community Development Corp., $20,000.00
• Pensacola – CCCS Of West Florida – Main Office, $45,307.86
• Port Charlotte – The Housing Corp., $23,615.41
• Riviera Beach – Housing Partnership Inc., $27,230.82
• Rockledge – Family Counseling Center of Brevard Inc., $45,307.86
• Sanford – The Center For Affordable Housing Inc., $41,692.45
• Sarasota – Goodwill Industries Manasota Inc., $41,692.45
• St. Petersburg – St. Petersburg Neighborhood Housing Services Inc., $48,923.27
• Tallahassee – Tallahassee Lenders Consortium Inc., $52,000.00
• Tallahassee – Tallahassee Urban League Inc., $52,538.68
• Tampa – Tampa Housing Authority, $34,461.63
• West Palm Beach – Credit Card Management Services Inc., $41,692.45

BACK TO THE MAIN PAGE

Growth, Stability And Opportunity In The Sunshine State

ORLANDO, Fla. – Oct. 4, 2007 –The Milken Institute/Greenstreet Partners 2007 Best Performing Cities Index – 200 Largest Metros, along with its complementary study of the best 200 small metro areas, ranks cities on their ability to create and sustain jobs, which translates into employment opportunities and salary growth.

For the third consecutive year, Florida metropolitan areas scored high on the 200 Largest Metros index, taking three of the top six spots – including this year’s top-ranked metro, Ocala.

The Orlando-Kissimmee MSA ranked No. 5, followed by Naples-Marco Island at No. 6. All together, 16 metro areas in Florida placed in the top 100 spots nationally in the largest metros index. In the complementary small metro area index, two areas in the Panhandle (Panama City-Lynn Haven and Fort Walton Beach-Crestview-Destin) ranked in the Top 20 for Best Performing Cities Index.

The index measures both long-term (five years) and short-term (one year) projections for employment and salary growth. Researchers attribute Ocala’s strong showing to job growth, averaging 5.8 percent during the past two years, and a robust housing market.

According to the research, Ocala, as well as the Orlando-Kissimmee and Naples-Marco Island metro areas in Florida, scored well in the index because of their tourism and tech-based manufacturing.

“There are dynamic forces at play at the national level that are being reflected at the local metro level,” says Ross DeVol, director of regional economics at the Milken Institute. “One of the key distinguishing characteristics of successful places over the long-term is the entrepreneurial strength of its residents. Entrepreneurs replenish the jobs lost in declining industries and firms,” DeVol said.

Here are the Top 10 performers (with last year’s ranking in parentheses) of the 200 largest metros:

1. Ocala, FL (13)
2. Wilmington, NC (59)
3. Riverside-San Bernardino-Ontario, CA (10)
4. Phoenix-Mesa-Scottsdale, AZ (15)
5. Orlando-Kissimmee, FL (6)
6. Naples-Marco Island, FL (3)
7. McAllen-Edinburg-Mission, TX (7)
8. Provo-Orem, UT (23)
9. Las Vegas-Paradise, NV (11)
10. Raleigh-Cary, NC (45)

The full study is found at: http://bestcities.milkeninstitute.org

© 2007 FLORIDA ASSOCIATION OF REALTORS®

BACK TO THE MAIN PAGE

Realtors Encourage Senate To Expand Flood Insurance Program

WASHINGTON – Oct. 3, 2007 – Speaking before the Senate Banking Committee yesterday, the National Association of Realtors® (NAR) expressed support for reforming and expanding the National Flood Insurance Program. The NFIP helps protect homeowners, renters and commercial property owners from losses sustained from flooding.

Since its creation, the NFIP has helped reduce the escalating costs of repairing flood-related damage to homes, buildings and contents in participating communities. “A strong real estate market is the linchpin of a healthy economy,” said NAR President Pat V. Combs. “To ensure that real estate continues to be a good long-term investment and maintain vitality in the residential and commercial markets, certain safeguards must be in place, including federally backed flood insurance made available through the NFIP.”

The NFIP is a unique partnership between local, state and federal governments. It allows participating communities to purchase insurance as protection against flood losses in exchange for state and community floodplain management regulations that would reduce future flood damage. In exchange, the NFIP makes federally backed flood insurance available to homeowners, renters and business owners in these communities. More than 20,000 communities currently are participating in the NFIP.

Testifying on NAR’s behalf, 2006 California Association of Realtors® (CAR) President Vince Malta said, “The NFIP is a win-win in that it promotes responsibility by homeowners, the community and the government. Compliance with NFIP building standards resulted in nearly 80 percent less damage annually. In addition, the cost of flood damage was reduced by nearly $1 billion because communities are implementing sound floodplain management requirements and property owners are purchasing flood insurance.”

NAR supports reforms that protect the integrity of NFIP by fully funding existing and future obligations to policyholders, increasing awareness of flood risks through consumer education and outreach, and ensuring that the 100-year floodplain maps are updated quickly. NAR also believes that any NFIP reform measure should include mitigation measures for severe repetitive loss properties.

NAR encouraged Congress to strike a balance between ensuring the long-term fiscal viability of the NFIP while avoiding changes that may result in market inequities and housing affordability problems, especially for low- and moderate-income homeowners and renters.

Before taking any future action to eliminate the existing subsidy, Congress must thoroughly analyze the impacts of eliminating subsidies on homeowners, renters and local economies. “Eliminating subsidies would result in higher flood premiums, increase the cost of property ownership and rents in these areas and could lead to further foreclosures and reduced property values,” said Malta.

“It is critical that flood insurance remain accessible for all individuals who own or rent property in a floodplain. We urge the Senate to move forward to enact a comprehensive policy that protects not only homeowners, but also all taxpayers, because proactive planning resulting cost savings. We look forward to working with Congress in implementing this important legislation,” Malta said.

© 2007 FLORIDA ASSOCIATION OF REALTORS

BACK TO THE MAIN MENU

Mortgage Problems Continue To Hamper Pending Home Sales

WASHINGTON – Oct. 3, 2007 – Pending sales of existing-homes activity will be dampened near-term as mortgage disruptions continue to impact the housing market, according to the National Association of Realtors® (NAR).

The Pending Home Sales Index, a forward-looking indicator, fell 6.5 percent to a reading of 85.5 from an upwardly revised 91.4 in July, based on contracts signed in August. It was 21.5 percent below the August 2006 index of 108.9.

Lawrence Yun, NAR senior economist, says the mortgage market impact is quantifiable. “Fewer contracts were being written because of mortgage availability issues, and a separate internal survey of our members shows more than 10 percent of sales contracts fell through at the last moment in August, primarily the result of canceled loan commitments,” he says. “The volume of activity we’re seeing today is below sustainable market fundamentals because some creditworthy people are trying to buy homes but can’t because of the credit crunch.

“The impact was greater in high-cost markets that are more dependent on jumbo mortgages. In some areas, as much as 30 percent of signed contracts were falling through in August when the credit crunch problem peaked,” Yun says. “The problem has since become less severe, though jumbo loan rates are still higher than they would be under normal conditions. Therefore, sales activity in late fall will better reflect market fundamentals.”

The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

Annual changes in the index are more closely related to actual market performance than are month-to-month comparisons. As the relatively new index matures and seasonal adjustment factors are refined, the month-to-month comparisons will become more meaningful.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

The PHSI in the West was down 2.7 percent in August to 80.3 and was 27.1 percent below a year ago. In the Midwest, the index fell 2.9 percent from July to 78.1 and is 18.0 percent lower than August 2006. The index in the Northeast fell 8.3 percent in August to 77.3 and was 18.3 percent below a year ago. In the South, the index dropped 9.5 percent in August to 97.8 and was 21.3 percent below August 2006.

© 2007 FLORIDA ASSOCIATION OF REALTORS

BACK TO THE MAIN MENU