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Housing Meltdown

By Javier Gines:

I will like to share an article that i found in Business Week that puts the "Real" in Real Estate. You can find it at:

http://www.businessweek.com/magazine/content/08_06/b4070040767516.htm?campaign_id=widget_topStories

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Florida’s Existing Housing Market Mirrors National Trend At Year-End 2007

ORLANDO, Fla. -- Jan. 24, 2008 -- Florida’s housing market followed the national trend in 2007, as mortgage industry issues and a sluggish economy impacted sales and prices. By year’s end, a total of 130,241 homes sold statewide for a 29 percent decrease compared to the 183,988 homes sold in 2006, according to the Florida Association of Realtors® (FAR). However, 2007 is expected to be the fifth highest sales year on record for existing-home sales, according to the National Association of Realtors® (NAR).

“What we experienced during the five-year boom cycle (2001-2005) was not a normal housing market,” notes 2008 FAR President Chuck Bonfiglio. “It was a market like we have never seen before. Existing-home median prices went up statewide over the past five years by some 60 percent; prices only declined in 2007 from 2006 by 5 percent. People are still experiencing a sizable return on their investment if they have owned their home over the past six years. The outlook for 2008 is that the housing market should start to normalize, that we should see some gains by the end of the year. Continued efforts to resolve Florida’s property insurance and property tax issues will also help revitalize our state’s housing market.”

The latest market outlook from NAR predicts that, as conditions for the mortgage industry continue to improve, existing-home sales should hold fairly steady over the next few months, rise later in the year and continue to improve in 2009. “A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008,” says NAR Senior Economist Lawrence Yun. “Our consumer survey shows buyers today are in it for the long haul, planning to stay in their home for a median of 10 years. This is a wise approach to housing because the data shows the longer you own, the better your investment.”

Florida’s median sales price for existing single-family homes for year-end 2007 was $233,600; a year ago, it was $247,100 for a 5 percent decrease. The median is the midpoint; half the homes sold for more, half for less. At the end of 2002, the statewide median sales price for single-family homes was $137,800, for an increase of 69.5 percent over the five-year-period, according to FAR records.

Sales of existing condominiums in Florida also decreased last year, with a total of 41,478 condos sold statewide compared to 56,877 in 2006 for a 27 percent decline, according to FAR. The statewide median sales price for condos at year-end was $205,100, down 3 percent from the 2006 year-end condo median price of $211,500. NAR reported the national median existing condo price was $223,500 in October 2007.

Interest rates for a 30-year fixed-rate mortgage at the end of 2007 averaged 6.34 percent, according to Freddie Mac, down from the average rate of 6.41 percent at the end of 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 West Palm Beach-Boca Raton Metropolitan Statistical Area (MSA) reported 6,971 existing homes sold last year compared to 8,640 homes sold in 2006 for a 19 percent decrease. The market's median sales price for homes was $369,400; in 2006, it was $384,700 for a 4 percent decrease. A total of 5,674 existing condos changed hands in the MSA last year, down 8 percent from the 6,139 condos sold in 2006. The existing condo median sales price in 2007 was $198,000; in 2006, it was $220,400 for a 10 percent decrease.

“It’s absolutely critical now for people to work with a knowledgeable local Realtor who can help guide them through the process of buying or selling a home,” says John Mike, president of the Realtors Association of the Palm Beaches and a Realtor-sales associate with Prudential Florida WCI Realty. “We’re more than just a technological resource for a real estate transaction: A professional Realtor is a fountain of information and knowledge to have on your side when making one of the biggest financial investments most people will ever make. Just like in the military, you need the right intelligence to make the right decisions. When you go out to do battle in the real estate market, you ought to be armed with the best intelligence on the local housing market and community. That’s what a local Realtor will provide.”

Among the state’s smaller markets, the Gainesville MSA reported a total of 2,644 homes sold in 2007 compared to 3,174 homes the previous year for a 17 percent decrease. The existing home median sales price was $210,400; in 2006, it was $213,200 for a 1 percent decline. A total of 939 existing condos sold in the MSA last year compared to 1,284 condos sold in 2006 for a 27 percent decrease. The market’s existing condo median price was $154,900; in 2006, it was $153,400 for an increase of 1 percent.

J. Parrish, president of the Gainesville Alachua County Association of Realtors and president of Coldwell Banker M.M. Parrish, Realtors, says retirement trends for baby boomers likely will benefit the area. “You hear the research on how boomers are retiring earlier than their parents did, and that they want a more active lifestyle,” he says. “Therefore, they’re retiring to places where they can find the amenities of continued education, sports and cultural activities associated with university towns like Gainesville.”

© 2008 FLORIDA ASSOCIATION OF REALTORS
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Florida To Prosecute ‘Rescue Foreclosure’ Mortgage Scams

TALLAHASSEE, Fla. – Jan. 23, 2008 –Attorney General Bill McCollum today announced a multi-pronged initiative to combat mortgage-related fraud, specifically fraud involving “rescue foreclosure” scams. As part of the litigation and legislation-based initiative, McCollum filed a lawsuit asserting South Florida-based National Foreclosure Management and multiple affiliates defrauded at least 80 homeowners out of approximately $1.7 million in home equity.

Sen. Mike Fasano (R-New Port Richey) and Rep. Clay Ford (R-Pensacola) also unveiled new legislative proposals yesterday to crack down on mortgage rescue scams.

Beginning in October 2004, National Foreclosure Management – which now does business as American Home Rescue Inc. – selected homeowners who had substantial equity in their homes but were in the foreclosure process. According to the lawsuit, the company would offer to hold the titles to the homes for a year, refinance the debt, and provide cash and credit repair counseling to the homeowner, all while allowing the homeowner to remain in the house. The company claimed it would deed the property back at the end of the year after the foreclosure had been avoided and the homeowner’s credit repaired.

Once the company had obtained the title to the house, the lawsuit alleges that the company would strip the equity from the homes by refinancing them at inflated prices and by assessing fraudulent fees and costs, leaving little or nothing for the homeowner to recoup. The home would then be sold outright to an investor or a straw buyer who would lease the home back to the homeowner at a rental rate far exceeding the original mortgage payment, virtually ensuring the homeowner’s eventual eviction. According to the lawsuit, the homeowners would end up with neither the titles to the homes nor the equity that rightfully belonged to them.

The lawsuit, filed with the Office of Financial Regulation, seeks restitution to the affected homeowners, dissolution of the rescue foreclosure companies, and revocation of the mortgage brokers’ licenses.

“Mortgage fraud is a destructive crime that can destroy a family’s future in an instant, and we need stronger laws to protect Florida’s consumers,” said Chief Financial Officer Alex Sink, who oversees the Department of Financial Services and who heralded today’s actions as essential to the fight against mortgage-related fraud. “It is downright disgraceful that some would use trickery to steal the dream of homeownership from a struggling Floridian.”

The proposed legislation – SB 992 and HB 643 – offers the following provisions:

• A five-day right of cancellation period that allows a consumer to cancel the agreement with the foreclosure rescuer

• Requires that foreclosure rescuers include in the contract clear and conspicuous notice to homeowners of this right of cancellation, as well as a recommendation that the homeowner contact the lender or mortgage servicer prior to the signing of the agreement, and a provision that states the consultant is prohibited from accepting any form of payment until all services are completed

• Defines terms such as “Equity Purchaser,” “Foreclosure Consultant,” “Foreclosure-related Services” and “Foreclosure Rescue Transaction”

• Creates penalties, defining violations as unfair and deceptive trade practices subject to the penalties included in Part II of Chapter 501, Florida Statutes.

© 2008 FLORIDA ASSOCIATION OF REALTORS®
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Do Your Homework!

By Javier Gines

During my normal browsing through the net I found a very interesting article for homeowners. Unfortunately, I couldn't post the article, but guess what? I can provide the link. Lets keep our values up!

Do Your Homework

© 2008 All Rights Reserved. F-elle Brokerage Company & Real Estate Content
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NAR: Stimulus Package Must Include Loan Limit Increase

WASHINGTON – Jan. 21, 2008 – President George W. Bush and Congress are discussing economic stimulus packages to ward off a recession, and the National Association of Realtors® (NAR) is urging them to help homeowners and the national economy by loosening constraints on Fannie Mae and Freddie Mac.

“We believe that any stimulus package must address housing issues and increasing the conforming loan limits for these two government-sponsored enterprises,” says NAR President Dick Gaylord. “The increase in loan limits would not only improve liquidity in the mortgage marketplace, but also boost homebuyers’ confidence levels, resulting in increased sales and economic activity.”

NAR has been calling on Congress and the administration to increase the loan limits for Fannie Mae and Freddie Mac from the current ceiling of $417,000 to $625,000. “This change will permit more families to enter the housing market by making more mortgages available with lower interest rates. Increased home sales will lower inventories and immediately start stabilizing the housing market and the economy,” Gaylord says.

In addition, NAR has been actively advocating for quick passage of the Federal Housing Administration (FHA) reform bill. A reformed, modernized FHA program would offer a safe and affordable alternative to subprime mortgages, which are widely blamed for the current high rate of foreclosures and ensuing credit crunch. “FHA reform would not only ensure we don’t find ourselves in this very unfortunate situation again, but also it can help many families currently facing foreclosure,” says Gaylord.

In a letter to congressional leaders, NAR estimated that lifting the GSE loan limit to $625,000 would lower interest payments for consumers who get new “GSE jumbo” loans, reduce the supply of homes on the market by one to one-and-one-half months, strengthen home prices by two to three percentage points, and increase economic activity by $42 billion. An additional NAR report shows that increasing conforming loan limits could help reduce foreclosures by 140,000 to 210,000 and result in an additional 348,000 home sales.

“This is the quickest way to help the hurting housing market,” says Gaylord. “As the potential for an economic recession increases and the fragile housing market continues to teeter, raising loan limits and reforming FHA would immediately impact the marketplace without the need for any new, complex federal programs or tax dollars. We strongly urge Congress to take these actions, in any stimulus plan, to stabilize the housing market and protect homeowners.”

© 2008 FLORIDA ASSOCIATION OF REALTORS®
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More On Amendment 1

By Javier Gines:

2 FL leading newspaper have expressed their support for Amendment 1. You can read the following articles:

The Orlando Sentinel
Naples Daily News

© 2008 All Rights Reserved. F-elle Brokerage Company & Real Estate Content
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Crist Continues To Advocate Passage Of Amendment 1

TALLAHASSEE, Fla. – Jan. 14, 2008 – Governor Charlie Crist will spend a lot of time this week advocating passage of Amendment 1, the property tax reform proposal voters will consider on Jan. 29. The governor continues to visit families who will benefit from passage, and plans a promotional bus tour around the state on Wednesday.

“With a little more than two weeks before Election Day, the Yes on 1 campaign continues to gain momentum with new endorsements, our first commercial and several visits with homeowners across the state,” said Crist in a letter to voters. “You can expect to see more in the coming weeks … Support for Amendment 1 continues to grow and just (last) week the Construction Executives’ Association and the Florida Bankers Association joined several other organizations and associations supporting Amendment 1.

Other groups supporting Amendment 1 include:

• Association of Builders and Contractors
• Associated Industries of Florida
• Construction Executives’ Association
• Florida Association of Realtors
• Florida Bankers Association
• Florida Carpenters Regional Council
• Florida Chamber
• Florida Home Furnishings Association
• Florida Homebuilders Association
• Florida Manufactured Homes Association
• Florida Medical Association

The bus tour on Wednesday will cross the state with tentative stops planned in Volusia, Orange, Hillsborough and Lee Counties. For more information, visit the “Yes on 1” Web site at: http://www.yeson1florida.com

© 2008 FLORIDA ASSOCIATION OF REALTORS®
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NAR: Stable Existing-Home Sales Expected In Early 2008, Then Gradual Rise

WASHINGTON – Jan. 9, 2008 – Over the next few months, existing-home sales are expected to hold fairly steady as indicated by pending sales activity, then rise later in the year and continue to improve in 2009, according to the latest forecast by the National Association of Realtors® (NAR).

Lawrence Yun, NAR chief economist, says there is a pull and tug exerting itself on the market. “On the one hand, we have a pent-up demand from the four million jobs added to our economy over the past two years of sales decline,” he says. “On the other, consumers continue to wait for additional signs of market stabilization. There are more people with financial capacity now than in 2005, but many are trying to market-time their purchase. As a result, the exact timing and the strength of a home sales recovery is a bit uncertain. A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008.”

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in November, fell 2.6 percent to a reading of 87.6 from a strong upward revision of 89.9 in October, but remains above the August and September readings and indicates a broad stabilization. The index was 19.2 percent below the November 2006 level of 108.4. “Although there could be some minor slippage in the first quarter, existing-home sales should hold in a narrow range before trending up,” Yun says.

The PHSI in the South rose 2.3 percent in November to 100.7 but is 19.8 percent below a year ago. In the West, the index slipped 2.1 percent to 86.6 but is 18.5 percent lower than November 2006. The index in the Midwest fell 4.1 percent in November to 82.1 and is 18.6 percent below a year ago. In the Northeast, the index dropped 13.0 percent in November to 70.1 from a spike in October, and is 19.1 percent below November 2006.

Existing-home sales for 2007 will probably total 5.66 million, the fifth highest on record, then edge up to 5.70 million this year and 5.91 million in 2009, compared with 6.48 million in 2006. Existing-home prices for 2007 are likely to be down 1.9 percent to a median of $217,600, hold even this year and then rise 3.1 percent in 2009 to $224,400.

“Rising home prices in the affordable midsection of the country are likely to offset declines in some of the previously hot markets,” Yun says.

There are wide variations in housing market conditions around the country, with nearly two-thirds of the metropolitan areas showing price gains. Healthy increases in metro prices are occurring in places such as Pittsburgh; Beaumont-Port Arthur, Texas; San Jose, Calif.; and Bismarck, N.D.

“Our consumer survey shows buyers today are in it for the long-haul, planning to stay in their home for a median of 10 years. This is a wise approach to housing because the data shows the longer you own, the better your investment,” Yun says.

New-home sales are projected at 773,000 for 2007, and declining to 669,000 this year before rising to 730,000 in 2009, but well below the 1.05 million 2006. With an appropriate slowdown in production, housing starts, including multifamily units, are forecast at 1.36 million for 2007 and 1.09 million this year before edging up to 1.10 million in 2009; starts totaled 1.80 million in 2006. The median new-home price should drop 2.1 percent to $241,400 for 2007, and then rise 0.4 percent to $242,200 this year and gain another 5.9 percent in 2009.

“Some policy changes, such as raising the loan limit on conventional mortgages, would provide a significant boost to home sales, increase liquidity, strengthen home prices and lessen foreclosures, but it is unclear as to if and when the measure will be implemented,” Yun says. NAR strongly supports raising the Government-Sponsored Enterprise loan limit to at least $625,000 from the current $417,000 so that more consumers will have access to lower interest rates on safe conforming mortgages. “NAR estimates that raising the GSE loan limit will result in interest rates savings for an additional 330,000 homeowners,” he says.

NAR also encourages the Fed to make a single lump-sum cut in the Fed funds rate to 3.5 percent at the January Federal Open Market Committee meeting, rather than a series of modest cuts throughout the year. “Consumers are also looking to market-time interest rates, and the expectations of further rate cuts are pushing some home buyers to delay. Monetary policy will be much more effective with a one-time large cut, rather than a series of small cuts,” Yun added.

The 30-year fixed-rate mortgage is expected to rise slowly to the 6.3 percent range by the end of this year, but an additional cut in the Fed funds rate would lower short-term interest rates.

Growth in the U.S. gross domestic product (GDP) is seen at 2.1 percent in 2007, below the 2.9 percent growth rate in 2006; GDP growth will probably be 2.0 percent this year.

After averaging 4.6 percent for both 2006 and 2007, the unemployment rate is estimated to rise to 5.3 percent in the second half of 2008. Inflation, as measured by the Consumer Price Index, is projected at 2.9 percent for 2007 and 3.1 percent this year; it was 3.2 percent in 2006. Inflation-adjusted disposable personal income is forecast to grow 3.1 percent for 2007, the same as in 2006, and then grow 1.6 percent this year.

© 2008 FLORIDA ASSOCIATION OF REALTORS
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Study: Single Person, Non-Child Families Trend In 2007 Florida Home Sales

ORLANDO, Fla. – Jan. 8, 2008 – One in three Florida homebuyers is single, with 21 percent of 2007 home purchases made by single women and 12 percent by single men – just one finding from the newly-released Florida version of NAR’s “2007 Profile of Florida Homebuyers and Sellers.” Another highlight: Over two-thirds of Florida buyers (64 percent) had no children younger than 18.

The 2007 Profile of Florida Homebuyers and Sellers describes the characteristics and motivations of recent homebuyers and sellers in Florida to help real estate professionals track the changing demands of consumers in a dynamic market. Here’s a summary of the report’s findings:

Characteristics of homebuyers

• The median age of homebuyers was 43 years old. Among first-time buyers, the median age was 32.
• The 2006 median household income of homebuyers was $67,500 compared to $74,000 among homebuyers nationally.
• Sixty-four percent of homebuyers reported that there were no children under age 18 residing in the home.
• Fifty-nine percent of homebuyers were married couples, 21 percent single females, 12 percent single males, and 6 percent were unmarried couples.
• Eighteen percent of Florida homebuyers reported they were born outside the United States, compared to 9 percent nationally.
• First-time homebuyers accounted for 38 percent of homes purchased in 2007.
• Forty-nine percent of first-time homebuyers were between 25 and 34 years old.
• The median income of first-time homebuyers was $58400 compared to $58,600 among all first-time buyers nationally.
• Sixty-five percent of homebuyers between 18 and 24 purchased a home because of their desire to own a home of their own and establish a household.
• Thirty-eight percent of homebuyers reported using social networking Web sites, such as, MySpace, Facebook, LinkedIn, and Friendster. Among homebuyers aged 18 to 24, 76 percent reported using social networking sites.

Characteristics of homes purchased

• Twenty-seven percent of recent homebuyers purchased newly built homes.
• Fifty-eight percent of homes purchased were detached single-family homes.
• The typical homebuyer purchased a home 14 miles from their previous residence.
• The median price of homes purchased was $230,000 compared to $215,000 in the U.S.
• The typical buyer purchased a home that was 1,700 square feet in size.
• Recent homebuyers plan to live in their home a median of 10 years.

The home search process

• Twenty-five percent of recent buyers reported that their first step in the home-buying process was looking online for properties for sale. Eighteen percent of first-time buyers and 24 percent of repeat buyers reported their first step was to contact a real estate agent.
• Eighty percent of homebuyers used the Internet to search for homes.
• The typical homebuyer searched for a home for a median 8 weeks and saw a median 10 homes.
• Eighty-four percent of homebuyers used a real estate professional during their home search.
• Among homebuyers, the typical Internet searcher was 40 years old and visited a median 10 homes. The typical homebuyer that did not use the Internet to search for homes was 53 years old and saw a median 5 homes.
• Thirty-seven percent of homebuyers first learned about the home they purchased from a real estate professional; 19 percent first learned about the home they purchased through the Internet.
• Seventy-two percent of buyers viewed the Internet as a very useful tool in their home search.
• Real estate agents were viewed as a very useful information source by 67 percent of buyers, and as a somewhat useful information source by an additional 23 percent of buyers searching for a home.

Home buying and real estate professionals

• Seventy-one percent of homebuyers purchased their home through a real estate agent or broker.
• Buyers searched for a median of two weeks on their own before contacting an agent.
• A friend, family member, neighbor or relative referred 52 percent of first-time buyers to their agent.
• Ninety-eight percent of buyers ranked honesty and integrity as a “very important” factor when choosing a real estate professional to assist with a home purchase.
• When asked about their agent’s performance on those qualities considered important, 80 percent reported they were “very satisfied” with the honesty and integrity of their agent.
• Sixty-eight percent of recent buyers will definitely use their agent again, and an additional 19 percent will probably use the agent again or recommend to others.

Financing the home purchase

• Ninety percent of homebuyers financed their home purchase; 98 percent of first-time homebuyers financed the purchase of their home compared to 90 percent of repeat buyers.
• Savings were the chief source of the downpayment for most first-time homebuyers (69 percent).
• Fifty-three percent of repeat buyers used proceeds from the sale of their primary residence toward the downpayment; 46 percent relied on savings for a portion of the downpayment.
• Forty-seven percent of all buyers believe that their home purchase was a better financial investment than stocks, and an additional 30 percent of buyers feel their home purchase was at least as good an investment as stocks.

Home sellers and their selling experience

• The median age of home sellers was 48 years; they had a median income of $83900.
• Sixty-nine percent of home sellers were married and 61 percent had no children under 18 years old living at home.
• Fifty-one percent of home sellers traded up to a larger home when purchasing their next home.
• The typical home seller owned their home for 6 years.
• Fifty-three percent of recent home sellers reported that they undertook home improvement or remodeling projects within three months prior to putting their home on the market.
• The typical home was on the market for 10 weeks. 33 percent of home sellers did not reduce their asking price before their home sold.
• Recent sellers typically sold their homes for 96 percent of the listing price.
• Seventy-nine percent of sellers used an agent or broker to sell their home.
• Sixty-seven percent of all sellers were very satisfied with the selling process.

Home sellers and real estate professionals

• Fifty-nine percent of sellers contacted only one agent before selecting one to help assist in the sale of their home.
• When selecting a real estate professional, 36 percent of sellers received a recommendation from a friend, neighbor or relative.
• The reputation of the agent was the most important factor when choosing a real estate professional for 39 percent of recent sellers.
• Twenty-six percent of sellers used the same agent for their home purchase.
• For 37 percent of sellers, their most important expectation is that the real estate agent will help sell the home within a specific timeframe.
• Eighty-six percent of sellers reported that their home was listed or advertised on the Internet.
• Eighty-two percent of sellers used an agent that provided a broad range of services and managed most aspects of the sales transaction.
• Sixty-two percent of sellers reported they would definitely use the same real estate agent again.

For sale by owner (FSBO)

• Seventeen percent of sellers sold their home without the assistance of an agent compared with 12 percent of sellers nationally. Among all sellers, 3 percent were FSBO sellers who knew the buyer.
• Eighty percent of FSBO sellers sold a detached single-family home.
• For 19 percent of FSBO sellers, the most difficult task in selling their home was understanding and performing the necessary paperwork to complete the transaction, for 3 percent it was preparing the home for sale, and for 12 percent the most difficult task was getting the price right.

To download the complete report in PDF format, go to floridarealtors.org at: http://www.floridarealtors.org/LegislativeCenter/Research/index.cfm

© 2008 FLORIDA ASSOCIATION OF REALTORS®
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Florida Real Estate Market Reached Bottom In 2007, Report Says

ORLANDO, Fla. – Jan. 8, 2008 – A new report from the Attorneys’ Title Insurance Fund Inc. (The Fund) finds that Florida’s housing market slowed in 2007 in nearly every county analyzed. The report also shows that real estate markets flattened out in spring 2007, before the subprime mortgage crisis in August knocked markets down another 10 percent across the state. Since then, the state’s housing market has flattened and is expected to begin to recover during the next several years.

The 2008 Fund Real Estate Forecast, commissioned by Florida-based Attorneys’ Title Insurance Fund's Consumer Education Campaign, was created by economist Dr. Hank Fishkind of Orlando-based Fishkind & Associates, Inc., using deed data for more than 30 Florida counties. The report provides a snapshot of the national economic outlook and 33 county-specific forecasts for 2008 through 2010, as well as a section detailing how actual 2007 data compared to projections that were made in last year’s Fund 2007 Real Estate Forecast report.

“Florida is one of the leading states for job creation and outperformed the rest of the country despite the housing market meltdown,” Fishkind says. ‘The state’s population growth also slowed, but is still nearly greater than all of the other Southeastern states put together. Florida has a very large and powerful economy that has gone through a cyclical downshift, but it is still outperforming compared to the rest of the nation.”

The Fund’s 2008 Real Estate Forecast shows that Orlando continues to be the strongest residential real estate market in the state because of its large share of fast-growing industries, such as tourism, healthcare, education and defense manufacturing. Not all markets in Florida mirror Orlando’s resiliency, however. Miami-Dade is currently going through the worst condominium bust cycle that Florida has seen since 1975, according to Fishkind. Additionally, the report says that significant excess supply of single-family homes in the Fort Myers and Cape Coral markets will not begin to be absorbed until 2010.

“With Florida’s real estate market, it is important to maintain some perspective as recent reductions in home prices come after a very lofty and unsustainable peak, and prices are still up considerably compared to 30 years ago,” said Fishkind. “Florida has created a tremendous amount of wealth and – despite many of the problems that loose lending practices and subprime mortgages have caused – the state now has the highest level of homeownership ever. The market has some indigestion now, but housing markets will return to normal during the next few years; the damage for some is significant, but in the aggregate, Florida still had some significant economic gains.”

For more information, go to: http://www.myrealestatestory.com/template.cfm/5_6
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2007: Florida’s Top Real Estate Issues

What’s happening in my market?

The January issue of Florida Realtor magazine includes its annual forecast of local markets and, for most, the outlook holds generally good news – especially for the second half of 2008. Look for it in early January

What were the top real estate stories of 2007? The slowing home sales market tops the list, followed by Florida-specific concerns – property taxes and property insurance – along with troubles in the mortgage market and, finally, a proposed Hometown Democracy constitutional amendment that could go before voters in 2008. Here are the issues that shaped Florida’s real estate world in 2007 and a glimpse at what the New Year holds.

Home sales: Bad to worse, yet turning around?

Home sales slowed to a crawl in 2007; though some areas of Florida fared better. It’s a single story with multiple causes – the perfect storm. News stories in 2007 have, independently, pinned the blame on real estate investors with more money than common sense; mortgage brokers and banks willing to give a homebuyer more money than he can possibly pay back; and homebuyers who did not the time to read the mortgage terms associated with the biggest financial deal of their life.

Florida, along with a handful of other states, had the dubious honor of being at the epicenter of the home sales slowdown. In the October monthly sales report from the Florida Association of Realtors, the year-over-year number of home sales fell 29 percent, though price declines were more modest at 8 percent. While much of the mainstream media focuses on the drop, however, the figures more accurately reflect how out-of-control the real estate market was during the now-past boom years. Currently, Florida home sales compare favorably to five years ago. And over a five-year period, Florida housing prices have actually risen more than any other state except Hawaii, even with the recent price declines – up 96.23 percent in Florida, according to OFHEO, the government agency that tracks home price changes.

As the year ends, buyers have a bountiful inventory to choose from and demand exists. Many buyers fear, however, that prices will drop a bit more, making a current purchase ill-advised if they can wait it out. While that stance comes more from anxiety than actual fact, the market will turn – slowly, doggedly, yet evenly – barring any new housing-related crises, such as the mortgage meltdown that peaked in August.

Wild cards impacting the market in 2008 include:

• Business tactics: The word’s getting out – it’s time to buy. Mortgage interest rates remain historically low and much of the media, once focused on housing market woes, now seems to be picking up on some bright spots. A few Florida cities may already be seeing the early signs of a turnaround, and if buyers sense the market has bottomed out, those waiting for a better deal will jump in quickly, afraid to miss the trough. If that happens soon – a big “if” – the rebound could be quick, just as the slowdown seemed to happen overnight.

• Foreclosures: Subprime lending also empowered a number of homebuyers to purchase a home they could not afford once adjustable mortgage rates moved higher – in some cases, dramatically so. As ARMs adjust higher in 2008 and later, more homeowners could lose their home, adding inventory into a system that already has more homes for sale than buyers. However, actions by the federal government to save borrowers, banks or both could moderate the impact of foreclosures.

• Mortgage rates: In December 2007, 30-year fixed-rate mortgages were close to their lowest level in two years – 6.14 percent on Dec. 21. Most experts predict a slight rise in 2008 but within reasonable levels that won’t deter homebuyers. But mortgage rates always impact home sales and any significant increase could throw cold water on a recovering real estate market.

• Developer bankruptcies: Bonita-based WCI Communities is struggling; Miami-based Levitt and Sons went under. Financial troubles within the home construction industry present challenges to buyers under contract, homeowners living in unfinished developments, and financial institutions stuck with assets worth less than the money they lent. A strengthening real estate market will boost struggling builders, but a few could still face bankruptcy before the market regains its footing.

• Condominiums: Condos in many Florida cities proved a flashpoint for investors who sometimes buy and trade real estate as if it’s stock, willing to put down more money than a property is worth, sure in the knowledge that someone else will come along and pay even more. But the last person holding the deed when the market stalls is left with property worth far less than they owe the bank – and thousands of condo owners, including some developers, now find themselves “upside down.” In some Florida cities, this industry should struggle for a while even after the market rebounds.

• Legislative changes: A Jan. 29 ballot approval of property tax portability could entice Floridians who wish to move up or down to jump into the market. Lawmakers generally agree that not enough has been done, even if the amendment passes, and during the 2008 session of the Florida Legislature, which begins March 4, 2008, other initiatives are expected, notably those that offer more relief to businesses and non-homesteaded homeowners. Property insurance and housing affordability are other issues that could be impacted by legislative changes.

Property tax relief: Is it here yet?

The problem: As property values skyrocketed, property taxes – a percentage of property value – rose with them. Most local governments, flush with new tax money, spent it. Homesteaded owners, protected by Florida’s Save Our Homes constitutional amendment, saw only slight increases, which were viewed as unfair by non-homesteaded owners who picked up the slack. Commercial and non-homesteaded property owners balked and demanded property tax cuts.

Possible solutions (pick one): A constitutional amendment approving property tax portability to be voted on in January. Or a citizens amendment being promoted by House Speaker Marco Rubio. Or an amendment that will be created by Florida’s Taxation and Budget Reform Commission. Or new laws created by the 2008 Florida Legislature that expand the property tax reform laws passed during a June 2007 special session. Or the result of a court case involving a property tax reduction plan approved at that same June session.

Or none of the above. Or, perhaps, all of the above.

Each property tax reform initiative developed so far has had one group waving the flag of passage, while local governments and civil servants quickly form an opposition team, with many teachers, firefighters, health care professionals and others saying any property tax reduction will surely result in a cutback of services. Some homeowners may look at the potential tax savings – perhaps only hundreds of dollars a year – and turn a sympathetic eye to these government servants. Consequently, passage of a constitutional amendment reforming property taxes, which would require approval by 60 percent of voters, could become a challenge.

But the fight for property tax reform will continue even if the final solution remains unclear. FAR, as the forefront protector of Florida property owners, considers relief the lynchpin of its 2008 legislative efforts, and the association will remain in the thick of things until a solution is found. FAR strongly backs passage of Amendment 1 on the Jan. 29 ballot (http://www.floridarealtors.org/LegislativeCenter/TopInitiatives/index.cfm)

Property insurance: Improving but not there yet

One year ago, property insurance topped FAR’s list of real estate stories for the year, but things have improved – slightly. In January, a special session of the Florida Legislature boosted the state’s reinsurance fund, lowering risk for insurers. But savings were less than promised, so the state started carrying a bigger stick when insurers requested rate adjustments. Add to the mix a legislative change in the state’s insurer, Citizen’s Property Insurance Corp., that froze rates and expanded coverage, and Florida property owners now have a few more affordable choices.

A key component of the ongoing battle, however, cannot be legislated or changed. While the state has experienced two years without having a hurricane that hit land, another blow will again send insurers packing even though they enjoyed highly profitable years. Lawmakers and regulators could still tinker with the rules to encourage greater savings, even as the big insurers continue to limit their risk, notably in coastal areas.

Mortgage market meltdown

Rising home values convinced mortgage lenders that their risk was limited. If a homeowner puts no money down and loses a home to foreclosure, banks recoup their investment and more if the home went up in value. But when home prices started to decline, the lenders’ risk increased – even on mortgages issued under the old rules.

In the heyday of the seller’s market, mortgage lending looked like the old West, with gamblers and gunslingers running wild and turning a profit. Now that the dust has settled and the gunslingers have moseyed into the sunset, here’s what’s left heading into 2008:

• Tightened lending standards: The subprime mortgage meltdown that peaked in August caught industry experts by surprise. Mortgages became harder to get as lenders raised their credit standards. Barring unseen complications, most credit-worthy borrowers should see a brighter 2008.

• Financial bankruptcies: Homeowners aren’t the only ones facing bankruptcy; some lenders are also in trouble. In some cases, mortgages became impossible to get as lenders halted operations. Washington Mutual and Countrywide cut back their mortgage businesses significantly; H&R Block backed out; Citigroup reported troubles; and the list goes on.

• FHA resurgence: With subprime mortgages harder to the find, the federal government plans to expand mortgage programs under the FHA, and bills to do so are already working their way through Congress. FHA Commissioner Brian Montgomery hopes his agency’s programs “fill the void” as the subprime market continues to unravel.

The undemocratic Hometown Democracy

Hometown Democracy is a citizens’ initiative to amend the Florida Constitution that, if approved by voters, would require all local comprehensive land-use plan changes to be put to a referendum-like vote. That would force Florida citizens – rather than the local leaders they elected to office – to make decisions on thousands of complicated land-use planning issues. Hometown Democracy has the potential to greatly impact Florida’s real estate industry.

A bright spot appeared in 2007, however: A law now allows voters to rescind their signature from any proposed citizens constitutional amendment should they have second thoughts; and Associated Industries of Florida has been working with a coalition of businesses and associations to prevent the proposed Hometown Democracy constitutional amendment from appearing on next year’s general election ballot. The new law gives signers of a petition 150 days to cancel their first signature; for more info, go to: (http://www.fbnnet.com/hometowndem/Form_DS-DE_19R_Petition%20Revocation_Final.pdf).


© 2007 FLORIDA ASSOCIATION OF REALTORS®

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President Signs Extension Of IRS Deduction For Mortgage Insurance

WASHINGTON – Dec. 21, 2007 – President Bush signed legislation yesterday that extends the IRS tax deduction for private mortgage insurance (PMI) premiums. Qualified borrowers get the deduction for mortgage originations between 2007 and 2010.

The deduction was first approved late in 2006 and initially applied only to the 2007 tax year. Extension of the tax deduction was part of the Mortgage Forgiveness Debt Relief Act of 2007 approved earlier this month by both the U.S. House of Representatives and the U.S. Senate.

Families with an adjusted gross income of $100,000 or less may use the PMI tax break. Families with incomes up to $109,000 receive a partial deduction.

“Continuing this tax deduction will help low- and moderate-income consumers, particularly first-time home buyers who are unable to put down 20 percent,” says Kevin Schneider, president of the Mortgage Insurance Companies of America (MICA). “On average, the annual tax break could be worth $350 per taxpayer.”

Even with home prices declining in many areas, many families find it difficult to accumulate a 20 percent downpayment.

“This important tax deduction is a crucial component in keeping the American dream of homeownership alive for many families,” says Suzanne Hutchinson, MICA executive vice president. “As risky, exotic loans are no longer considered viable housing finance options, more secure loans with private mortgage insurance remain readily available for qualified borrowers.”

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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Commercial Real Estate Fundamentals Sound – Investment Slowing

WASHINGTON – Dec. 21, 2007 – The fundamentals in commercial real estate remain healthy with only slight increases in vacancy rates expected for the office and industrial sectors during 2008, although credit restrictions have recently slowed overall investment activity, according to the latest Commercial Real Estate Outlook of the National Association of Realtors® (NAR).

The report said commercial fundamentals are essentially sound. “Although vacancy rates remain relatively low for all sectors, they are expected to rise slightly in the office and industrial markets during the coming year because much of the space being absorbed is in high-quality buildings or is built-to-suit,” says NAR Chief Economist Lawrence Yun. “As a result, there is a fair amount of older space on the market, particularly in the industrial sector where obsolescence is a factor, although industrial rents are showing healthy gains. Vacancy rates in the retail and multifamily sectors are projected to tighten in 2008 with rents rising in all sectors.”

Yun said the credit crunch has been impacting the market over the last few months, but 2007 is already a record for commercial real estate investment. “Tighter credit conditions will limit individual commercial real estate investment deals moving forward,” he says. “Because capitalization rates are already very low, it is likely that commercial property prices will ease. The era of rapid commercial property price increases has ended.”

A record $325.0 billion was invested in commercial real estate in the first 10 months of 2007, up from $306.8 billion for all of 2006; that total does not include transactions valued at less than $5 million or investments in the hospitality sector, based on analysis of data from Real Capital Analytics.

Patricia Nooney of Saint Louis, chair of the Realtors® Commercial Alliance, says commercial real estate investment is expected to stay historically strong. “Even with the credit crunch there’s been no significant impact on institutional investors, and it’s unrealistic to set new records every year in a cyclical business,” she says. “There’s been a shift in investment activity to foreign buyers, who are taking advantage of the dollar’s decline relative to other currencies. With many areas showing favorable fundamentals, commercial property in the U.S. has become very attractive to foreign investors.”

The NAR forecast in four major commercial sectors analyzes quarterly data for various tracked metro areas. The sectors are the office, industrial, retail and multifamily markets. Torto Wheaton Research and Real Capital Analytics provided historic metro data.

Office market

With jobs still being created, the demand for office space remains positive and is helping to absorb the more than 30 million square feet of new space becoming available in the current quarter. Investment grade office properties with solid income streams will be the most in demand by institutional investors, equity funds and foreign investors.

Since not all of the vacated space is being back-filled or leased, office vacancies are forecast to rise to 13.2 percent by the fourth quarter of 2008 from an estimated 12.9 percent in the current quarter; it was 12.6 percent at the end of 2006. Annual rent growth in the office sector should be 8.0 percent this year and 2.0 percent in 2008, after rising 5.2 percent in 2006.

Projections for the fourth quarter show areas with the lowest office vacancies include New York City; Honolulu; Tucson, Ariz.; Long Island, N.Y.; Los Angeles; and Riverside, Calif., all with vacancy rates of 10.0 percent or less.

Net absorption of office space in 57 markets tracked, which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 55.4 million square feet in 2007 and 43.0 million next year, but below the 81.2 million in 2006.

Office building transaction volume in the first 10 months of this year totaled a record $173.5 billion, compared with $133.5 billion for all of 2006. So far this year foreign investors purchased $12.5 billion worth of office properties, with buyers from the Middle East and Germany accounting for half of that volume.

Industrial market

The weaker dollar is fueling an increase in exports, but leasing activity has declined in port distribution hubs, and vacancy rates in those markets are edging up; some users are building or renting in secondary markets.

With abundant land and relatively low concerns regarding site remediation, secondary and tertiary markets are experiencing greater interest. So far this year, almost 16 percent of industrial investment has taken place outside of the 58 primary markets tracked.

Vacancy rates in the industrial sector are projected to average 9.4 percent in the fourth quarter and 9.5 percent by the end of 2008; vacancies averaged 9.4 percent in the fourth quarter of 2006. Annual rent growth will more than double to 3.3 percent by the end of 2007 and is seen at 1.3 percent a year from now, compared with a 1.4 percent annual gain at the end of 2006.

The areas with the lowest industrial vacancies include Los Angeles; San Francisco; Tucson; Orange County, Calif.; Portland, Ore.; and Las Vegas, all with vacancy rates of 6.1 percent or less.

Net absorption of industrial space in 58 markets tracked is expected to total 127.4 million square feet in 2007 and 144.0 million next year, down from 205.4 million in 2006.

Industrial transaction volume in the first 10 months of 2007 was $35.8 billion, compared with $38.9 billion for all of 2006.

Retail market

Even with a decline in consumer confidence, retail vacancy rates remain fairly stable. Declining production of new space will help improve fundamentals in this sector during 2008.

Vacancy rates in the retail sector will probably rise to 8.9 percent in the current quarter from 8.0 percent at the end of last year, and then ease to 8.6 percent by the fourth quarter of 2008. Average retail rent should grow by 2.2 percent this year and 1.9 percent in 2008, after rising 3.9 percent in 2006.

Retail markets with the lowest vacancies include San Francisco; Orange County, Calif.; San Jose, Calif.; Ventura County, Calif.; Washington, D.C.; and San Diego, all with vacancy rates of 5.5 percent or less.

Net absorption of retail space in 53 tracked markets is forecast at 18.6 million square feet for 2007 and 24.7 million next year, up from 10.5 million in 2006.

Retail transaction volume in the first 10 months of this year totaled $52.9 billion, exceeding the $46.9 billion for all of 2006. The Southeast is the most sought-out region this year.

Multifamily market

The apartment rental market – multifamily housing – is experiencing increased demand from the slowdown in home sales. With a rising population and a growing number of households, vacancies are tightening and rents are rising.

Multifamily vacancy rates are projected to average 5.4 percent in the current quarter, down from 5.9 percent in the fourth quarter of last year, and then continue to decline to 5.1 percent by the end of 2008. Average rent is likely to rise 3.1 percent for 2007 and 3.8 percent next year, following a 4.1 percent increase in 2006.

Multifamily net absorption is expected to total 234,400 units in 59 tracked metro areas in 2007, below the 229,500 last year, but should rise to 245,800 in 2008.

The areas with the lowest apartment vacancies include Northern New Jersey, Salt Lake City, San Jose, San Diego, Nashville and Philadelphia, all with vacancy rates of 3.3 percent or less.

Multifamily transactions in the first 10 months of this year totaled $62.3 billion, compared with $87.4 billion for all of 2006. The sale of buildings originally constructed as condos are being sold to multifamily investors in markets like Washington, D.C., and South Florida. Many markets have seen condo “for sale” signs change to “apartment for lease” signs almost overnight. Some condominium complexes are being converted into office buildings, and others are becoming mixed-use projects.

The NAR Research Division for the Realtors Commercial Alliance publishes the Commercial Real Estate Outlook. Organizations in the RCA include the CCIM Institute, the Institute of Real Estate Management, the Realtors Land Institute, the Society of Industrial and Office Realtors, and the Counselors of Real Estate. The RCA also provides commercial products and services.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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IRS Ruling: State Grants for Hurricane Mitigation Are Tax-Free

TALLAHASSEE, Fla. – Dec. 13, 2007 – Florida Chief Financial Officer Alex Sink announced yesterday that grants awarded to homeowners through the My Safe Florida Home (MSFH) program are not taxable income and do not have to be reported when filling out federal income taxes.

CFO Sink made the announcement after receiving a Letter Ruling from the Internal Revenue Service (IRS) stating that MSFH grants will be excluded from “gross incomes for federal income tax purposes.”

“Floridians taking personal responsibility to harden their homes and receive a grant from the My Safe Florida Home program shouldn’t be hit with an additional tax bill in January 2008,” says CFO Sink, who runs the Department of Financial Services and the MSFH program. “I commend the IRS for granting our request that mitigation grants should not be considered part of a homeowner’s income.”

Following a June 2007 request from CFO Sink, the IRS issued a Letter Ruling in late November that all grants given through the MSFH program will not be considered income and will not be reported as income to the federal government. Without this recent ruling, matching grant recipients could have been facing a tax liability of $1,250 on a $5,000 MSFH grant, based on the IRS Flat Tax calculation rate of 25 percent. The ruling potentially saves approximately $2.15 million in additional federal income taxes.

The MSFH program resumed offering wind inspections and expanded statewide in April 2007 after conducting a pilot program during the previous year. During the last 7 months, the MSFH program has performed approximately 114,000 free wind inspections, and a total of 127,816 inspections since the program began. Approximately 15,985 homeowners have been approved to receive matching grants and are working with the MSFH program to harden their homes. Statewide, the program has issued a grand total of more than 2,637 grants to homeowners for more than $8.6 million.

Property insurance savings

Many Florida homeowners who participate in the free inspection program also receive insurance premium discounts without making any improvements since the inspection form, once sent to their insurer, can show hurricane mitigation features that are already in place. Sink says that 95,807 (76 percent) of participating homeowners are eligible for an average discount of $210 on their wind insurance premiums, based on the current structure of the home during the free MSFH wind inspection. Over the last seven months, the program has alerted Floridians to a potential savings in windstorm insurance premiums totaling more than $20 million.

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 (866) 513-6734. Homeowners who receive free wind inspections through the MSFH program will get a detailed inspection report, 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.

Additionally, 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®

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NAR: Worst Is Over – Existing-Home Sales To Trend Up In 2008

WASHINGTON – Dec. 11, 2007 – Existing-home sales are projected to trend up in 2008, with pending home sales showing a slight near-term rise, according to the latest forecast by the National Association of Realtors® (NAR). However, a recovery for new-home sales is unlikely before 2009.

Lawrence Yun, NAR chief economist, says the worst part of the credit crunch has already worked its way through the data. “The unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was underperforming,” he says. “Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels.”

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in October, increased 0.6 percent to an index of 87.2 from an upwardly revised reading of 86.7 in September. It was the second consecutive monthly gain, but still 18.4 percent below the October 2006 index of 106.8. “The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007,” Yun says.

The PHSI in the Northeast jumped 16.0 percent in October to 80.6 but is 11.1 percent below a year ago. In the West, the index rose 8.4 percent to 87.3 but is 16.9 percent lower than October 2006. The index in the Midwest slipped 1.4 percent in October to 85.5 and is 11.7 percent below a year ago. In the South, the index dropped 7.8 percent in October to 91.6 and is 25.3 percent below October 2006.

“The improvement in the Northeast reaffirms a trend apparent for some months now that shows signs of recovery, noteworthy because that was the first region to slump, and the gain in the West indicates some easing of interest rates for jumbo loans,” Yun says. “Lawmakers need to understand that raising the loan limits on FHA and GSE-backed conventional loans will markedly improve mortgage availability.”

Existing-home sales are likely to total 5.67 million this year, the fifth highest on record, rising to 5.70 million in 2008, in contrast with 6.48 million in 2006. Existing-home prices should be down 1.9 percent to a median of $217,600 for all of 2007, and then rise 0.3 percent to $218,300 in 2008.

“Home price growth in the vast affordable midsection of America will help raise the national median existing-home price slightly in 2008. I then expect price appreciation to return to more normal patterns in 2009, perhaps rising one or two percentage points above the rate of inflation,” Yun says.

“Even with a modest decline in the national aggregate price this year, it’s important to keep in mind that nearly two-thirds of the metro areas in the U.S. are showing price increases,” he said. “The apparent disparity results from fewer sales in high-cost markets, so a change in the mix of sales is dragging down the national median home price.”

Areas showing healthy price gains include disparate markets such as Gary-Hammond, Ind.; Binghamton, N.Y.; Corpus Christi, Texas; and Spokane, Wash. “We can’t emphasis enough how much local conditions vary, even within a given area, so it’s important for consumers to make decisions based on local market conditions.”

New-home sales are forecast at 788,000 this year and 693,000 in 2008, down from 1.05 million in 2006; no sustained improvement is seen for new homes until 2009. Because builders have correctly adjusted production, housing starts, including multifamily units, will probably total 1.36 million this year and 1.16 million in 2008, down from 1.80 million last year. The median new-home price is projected to drop 3.0 percent to $239,100 for 2007, and then decline another 0.2 percent to $236,600 in 2008.

The 30-year fixed-rate mortgage is estimated to rise slowly to the 6.4 percent range by the end of 2008, with additional cuts in the Fed funds rate lowering short-term interest rates.

Growth in the U.S. gross domestic product (GDP) should be 2.1 percent in 2007, down from a 2.9 percent growth rate last year; GDP growth is forecast to improve to 2.4 percent in 2008.

The unemployment rate is likely to average 4.6 percent for 2007, unchanged from last year, but rise to 5.0 percent in 2008. Inflation, as measured by the Consumer Price Index, will probably be 2.8 percent this year and 2.7 percent in 2008, down from 3.2 percent in 2006. Inflation-adjusted disposable personal income is estimated to grow 3.1 percent this year, the same as in 2006, and then grow 2.2 percent next year.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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FAR Offers A Total Of $106,000 In Scholarship Awards

ORLANDO, Fla. –Dec. 11, 2007 – Florida high school seniors: Are you filling out college applications and poring over potential scholarship programs? Then make plans to enter the Florida Association of Realtors®’ (FAR) 2007-2008 Scholarship/Essay Contest for High School Seniors for a chance to win up to $10,000 in scholarship funding.

Entering the contest is easy. Students write a typed, double-spaced essay – 500 words or less – on the topic, “How Does a Realtor Professional Benefit the Community?” This topic allows students the freedom to write about the wide range of Realtor professionals who work in a variety of fields, including residential brokerage, commercial brokerage, industrial and office brokerage, farm and land brokerage, real estate appraising, property management, land development and real estate counseling, to name just a few of the general specialties. Or essays may address such points as the benefits of homeownership to society, or to families on a personal level, or how the selling of commercial real estate encourages economic growth.

“This scholarship program offers Florida Realtors the opportunity to demonstrate their dedication to their community by helping young people continue their education and realize their dreams for the future,” says 2008 FAR President Charles “Chuck” Bonfiglio. “There’s a side to the real estate profession that often goes unheralded – Realtors do a lot more for the community than people may realize. Now in its eighth year, our successful scholarship program is just one example.”

Now in its eighth year, FAR’s scholarship program benefits students from across the state, with prize money going to the first-, second- and third-place essays in each of the Association’s 13 districts. Students turning in the top district-winning essays will each win a $5,000 scholarship prize while the second-place entries will each receive a $1,500 scholarship award. Plus, students will be recognized for winning third in each district with a $500 scholarship award. The 13 district-winning essays will go on to compete to win three $5,000 FAR scholarships on the statewide level, for a total of $106,000 in scholarship awards. All essays, along with an official Essay Cover Form, must be postmarked before or on March 7, 2008, and mailed to the Florida Association of Realtors, 7025 Augusta National Drive, P.O. Box 725025, Orlando, FL, 32872-5025.

Check with the high school guidance office to obtain an application kit and essay cover form for FAR’s 2007-2008 Scholarship/Essay Contest for High School Seniors. Or go to the media section of FAR’s Media Center Web site, (http://media.floridarealtors.org) to download the scholarship/essay contest application kit, official cover form and list of FAR District Vice Presidents.

FAR’s statewide scholarship awards program is open only to high school seniors who reside in the state of Florida and plan on continuing their education at a college, university, technical school or other institution of higher learning. Children whose parents are licensed real estate practitioners are not eligible for contest entry; nor are children with parents employed by any local Realtor board/association or by the Florida Association of Realtors.

Just think: Write 500 words or less and win up to $10,000 – scholarship money that could cover the costs of tuition at a local community college or pay for a lot of the tuition costs at a Florida state university. Now that’s a scholarship that will go FAR.

© 2007 FLORIDA ASSOCIATION OF REALTORS

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UF Survey: Florida’s Real Estate Report Mixed

GAINESVILLE, Fla. – Dec. 7, 2007 – All is not gloom and doom with Florida real estate, according to the latest University of Florida study, which finds a positive outlook for commercial properties despite the bad news in the housing market.

“There is more than one world of real estate, and while you can paint a very grim picture of single-family housing and condos, rental and commercial property look on balance to be healthy and normal even though they are not as rosy as they were a year ago,” said Wayne Archer, director of UF’s Bergstrom Center for Real Estate Studies.

The findings are from the center’s quarterly survey of Florida real estate trends that was completed in October. A total of 339 professional real estate analysts and investors participated in the survey, with appraisers making up the largest group, 60 percent, followed by consultants, 10 percent, and brokers, 9 percent.

The report’s release coincides with Florida being reported as one of a handful of states most vulnerable to the effects of the subprime mortgage fallout, with one widely quoted property expert even going so far as to say that “Florida is the epicenter of all things wrong with the housing industry,” Archer said.

“What these apocalyptic accounts fail to consider is that job formation and migration to the state are still strong, and these are the factors that drive the real estate market,” he said.

Many of the pessimistic reports look only at the single family and condo picture, which are not doing well, but investment, occupancy and rental rates for retail, office, industrial and hospitality are considered to be progressing normally, although not in as good a shape as a year ago, Archer said.

The outlook for nearly all of the commercial and rental markets — apartment, office, retail and industrial — calls for them to increase slightly less than the rate of inflation compared to slightly more than the rate of inflation that was predicted a year ago, he said.

“With all the horror stories in the news about foreclosures, people can’t help but be a little more sober and cautious,” he said.

The one segment of the single-family market upon which the UF survey collects detailed information, the new home market, is the least distressed, Archer said. “While the outlook for existing home sales is grim for the next quarter or two and possibly even over the next year, the outlook for new home sales looks like it’s going to be stable a year from now, at least in some markets,” he said.

Inventories of existing single-family homes are at their highest levels in a long time, with part of the problem stemming from second home purchases, Archer said. Many people who were disappointed with the stock market returns invested their retirement savings in second homes or rental homes with the intention of selling them for a quick profit, only to have the market turn sour, leaving a huge inventory, he said.

To make matters worse, people who might normally meet the marginal requirements for a mortgage can no longer qualify because of the current credit crunch, Archer said. At the same time, homeowners who are selling expect to get the same price they might have received a year or two ago, he said.

“Unfortunately, those prices had inflated enormously and in most cases there is simply going to have to be some adjustment over the next year or two,” he said.

Florida’s housing picture is the worst on the southwest coast, particularly for existing single-family homes, but it is mixed in southeast Florida, Archer said. “While the condo story for Miami and southeast Florida is disastrous, it’s a different situation with freestanding single-family homes, where the volume of sales is expected to stabilize in the next year or so,” he said.

One factor to its advantage is that the southeast coast is a haven for international investment and the recent decline in the dollar makes it even more attractive, he said.

The single-family housing market is healthiest and apartment occupancy rates most stable in north and central Florida, Archer said. In Jacksonville, half the respondents expect an increase over the next year in absorption rates, the ability of the real estate market to sell off houses that are for sale, he said.

© 2007 FLORIDA ASSOCIATION OF REALTORS

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Tax Tips For Real Estate Developers And Investors

CHICAGO – Dec. 6, 2007 – As 2007 comes to an end and planning for 2008 begins, real estate developers and investors should consider some tax tips that could save money for companies in the long run:

1. Properly account for lease income. You may be accounting for your lease income for tax purposes based on the cash received or on the terms of the lease agreement. However, a Code section specifically addressing leases may require the income to be accounted for differently.

2. Determine if you are a dealer or an investor. Do you know your status as either a dealer or an investor for tax purposes? Proper planning up front will ensure the desired treatment upon disposition of the property.

3. Allocate land cost to your benefit. To defer income upon the sale of parcels from a tract of land purchased, proper allocation of the cost among the various parcels must be done. The IRS requires that the cost be “equitably apportioned.” But how? There are several methods available that should be considered when allocating cost.

4. Color your building green. Including solar and other alternative energy property in a new building can generate tax credits. A new owner can deduct up to $1.80 per square foot of the cost of an energy efficient commercial building instead of depreciating it over 39 years.

5. Take full advantage of depreciation. Has your company recently undertaken new construction projects, expansions or renovations? Substantial long-term savings could result from a cost segregation study, which categorizes your assets into the appropriate and most tax-advantaged depreciable lives.

“To learn how these tax tips may apply to your real estate business, please contact your tax advisor,” said Jerry Williford, tax senior manager in Grant Thornton LLP’s real estate industry practice.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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Outside Remodeling Projects Pay Off, Realtors Report

WASHINGTON – Dec. 4, 2007 – Many buyers judge a house by its exterior, or so it seems from the results of the 2007 Remodeling Cost vs. Value Report. Three of the four projects with the highest national percentage of costs recouped this year were exterior upgrades, according to the report, which was produced by Hanley Wood, LLC, in cooperation with the National Association of Realtors’ (NAR) Realtor Magazine.

The study found the most profitable project on the national level was upscale siding replacement, recouping 88 percent of costs upon resale. Wood deck additions and wood window replacements also returned 85 percent and 81 percent, respectively. On a national average, the only interior project to return more than 80 percent of remodeling costs this year was a minor kitchen remodel, returning 83 percent of project costs at resale.

“The results of this year’s Cost vs. Value report underscore the importance of curb appeal in the buyer’s eye,” says 2008 NAR President Dick Gaylord. “Realtors know what attracts buyers in their local markets and can help your house put its best façade forward, so to speak – it’s another way Realtors add value to the real estate transaction.”

The 2007 Remodeling Cost vs. Value Report compares construction costs with resale values for 29 midrange and upscale remodeling projects comprising additions, remodels and replacements in 60 markets across the country. Data are provided for nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the report’s 10th consecutive year.

Four new projects were added this year: the aforementioned wood deck addition, a back-up power generator, and both a midrange and upscale garage addition. Nationally, the back-up power generator only returned 58 percent of the investment on resale, although the return was highest in the West South Central region, which comprises Arkansas, Louisiana, Oklahoma and Texas, at 68 percent. Buyers in the Pacific region of Alaska, California, Hawaii, Oregon and Washington value their garages: The midrange garage addition returned nearly 70 percent nationally but 88 percent in this region, while the upscale garage addition returned approximately 65 percent nationally but 78 percent in this area.

Homeowners in the Pacific region could also expect to see some of the highest percentages of remodeling expenses returned at resale, with 13 of the 29 projects returning 90 percent or higher of project costs. Homeowners in the East North Central region of Illinois, Indiana, Michigan, Ohio and Wisconsin might expect some of the lowest returns; only one project – upscale fiber cement siding – returned more than 80 percent upon resale (82 percent of costs recouped), while nine projects returned less than 60 percent of project costs.

The least profitable projects were a back-up power generator, sunroom addition and home office remodel. The back-up power generator returned the lowest percentage of initial cost in the East North Central, New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island and Vermont), Pacific and West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) regions.

Sunrooms are least popular in the East South Central (Alabama, Kentucky, Mississippi and Tennessee), Mountain (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico and Wyoming), and West South Central regions. Home office remodels return the lowest percentage of project costs in the Middle Atlantic (New Jersey, New York and Pennsylvania) and South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia) regions.

Gaylord explains that the resale value of any given remodeling project depends on a variety of factors. “When considering a remodeling project, particularly with an eye toward resale, it’s important to evaluate your home’s current condition, how the project will change the existing space in your home, as well as how your remodeled home will compare to other homes in your community,” says Gaylord.

“For example, using a breakfast nook to expand the kitchen seems like a good use of space, but using the same space to add a first-floor bathroom in an older home that doesn’t have one will draw more buyers,” Gaylord says. “Realtors see hundreds, if not thousands, of homes every year with their buyer clients and can provide valuable insight into what projects and improvements will make a difference with buyers in your area.”

Results of the report are summarized in the December 2007 issue of Realtor Magazine. To read the full project descriptions, access national and regional project data, and download a free PDF containing data for any of the 60 cities covered by the report, visit www.costvsvalue.com.

© 2007 FLORIDA ASSOCIATION OF REALTORS

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