Cape Coral Real Estate News

Tips for Securing a Vacant House

2006-12-14T10:19:00.000-12:00

If a client’s home is going to be empty for the winter or even just the holiday season, here are some suggestions from police officers for keeping that property secure and discouraging intruders:

Sign the house up for security checks from the local police department. Generally, the officers assigned to the area will keep an eye on the property at no charge.

If there is a security system, make sure the security company knows the house will be empty and has an emergency contact.

Stop the newspaper and mail. Ask neighbors to keep an eye out for other unsolicited paper that may gather on the driveway or in the mailbox.

Arrange for a snow-removal or lawn care service.

If the property is winterized, post that information where it can be seen from the inside, but not the outside.

Remove anything from the house that is obviously valuable.
Put the lights on timers. Don’t leave lights on all night because that will alert intruders that the house is unoccupied.Make sure all the windows and doors are locked.Take a video of the house to make damages and theft easier to prove.

Source: The Charlotte Observer, Dan Tierney, Erica Beshears, and Lena Warmack (12/14/06)

Bump in New-Home Sales Considered Temporary

2006-09-28T07:18:00.000-12:00

Sales of new homes rose in August, but the gain is expected to be temporary, as the housing industry struggles with a near-record level of unsold homes.The U.S. Department of Commerce reports new-home sales increased 4.1 percent last month, but even with the increase, the median price of a new home fell to $237,000, a drop of 1.3 percent from August 2005. It was the first price decline from one year to the next since late 2003.Sales of existing homes fell for a fifth straight month in August, and the median price of an existing home dipped on a year-to-year basis for the first time in more than a decade. Construction of new homes and apartments fell 6 percent.Analysts were unimpressed with the August rise in new-home sales, noting that it followed a 7.5 percent drop in July and left sales 17.4 percent below the pace of a year ago.“August is just a blip. Housing is still headed down,” says Mark Zandi, chief economist at Economy.com.Many analysts say the government statistics understate the drop in new-home prices because they do not pick up heavy discounting as builders offer incentives. The inventory of unsold homes declined slightly, to 568,000 houses, but remains the second-highest level on record after July’s backlog of 570,000 unsold homes.Source: The Associated Press, Martin Crutsinger (09/28/06)

What to Consider Before a Home Auction

2006-08-29T08:10:00.000-12:00

Auctions are growing in popularity. Here are some basics that you should consider if you're thinking about selling a client's home through an auction.

Is the property a good candidate for auction? Are the sellers willing to close within 30 days of the sale? Can they handle an uncertain final sales price?

Choose an auction company with experience, referrals, and professional affiliations with organizations such as the National Auctioneers Association.

Plan to meet with a company representative, who will visit the home to assess the property.

Select an auction method. An absolute auction does not set a minimum amount, allowing the property to be sold at the highest bid. This could be above or below the price owners hoped to get. A reserve auction allows owners to accept or reject the final bid. Some auctions start at a minimum amount, which may or may not be disclosed to the public before the auction day.

Plan a marketing strategy that aggressively uses banners, radio and TV commercials, and other techniques.

Prepare for tours. As with any sale, the home must look its best.
Finish the sale. Once the homeowner accepts the bid, both sides enter a no-contingency contract to close within 30 days.

How to Get the Most from a Cooling Market

2006-08-02T04:57:00.000-12:00

A drop-off in buyer demand and rising home inventories has made putting a house on the market trickier for home owners whose properties appreciated during the boom and who hope to retain their gains, says a new report on RealEstateJournal.com, The Wall Street Journal's guide to property.RealEstateJournal.com offers these tips for selling a home in a cooling market:

1. Size up the playing field. Study your local market and investigate other homes for sale, local asking prices and what buyers are paying.

2. Price competitively. If a home is overpriced, a buyer will dismiss it and move on to the next one. Price a residence just below what the market will bear.

3. Do your legwork. Use the Internet and networking to locate a buyer.

4. Don't delay. Point out to a seller that even if an offer isn’t all he had hoped, taking it instead of waiting for a better deal can save money in the long run.

5. Negotiate. Offer concessions to potential buyers, such as making minor fixes. Small expenditures speed a sale and, ultimately, preserve price gains.

6. Play up a home's assets. Impress buyers with a repainted interior, clean closets, nice landscaping and an orderly garage.

Source: RealEstateJournal.com (08/01/2006)

Home Sales Dip in June as Market Stabilizes

2006-07-25T05:46:00.000-12:00

Existing-home sales declined modestly in June, while home prices were up slightly from a year ago, according to the NATIONAL ASSOCIATION OF REALTORS®.

Total existing-home sales — including single-family, townhomes, condominiums and co-ops — declined 1.3 percent to a seasonally adjusted annual rate1 of 6.62 million units in June from an upwardly revised level of 6.71 million May. Last month’s sales were 8.9 percent below the 7.27 million-unit pace in June 2005.David Lereah, NAR’s chief economist, says the housing market is flattening-out. “Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projection, which tells us the market is stabilizing,” he said. “At the same time, sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories. Home prices are only a little higher than a year ago.”The national median existing-home price for all housing types was $231,000 in June, up 0.9 percent from June 2005 when the median was $229,000. The median is a typical market price where half of the homes sold for more and half sold for less.“The change in price performance is directly tied to housing inventories; a year ago we had a lean supply of homes and a sellers’ market, with monthly home sales at an all-time record high,” Lereah said. Total housing inventory levels rose 3.8 percent at the end of June to 3.73 million existing homes available for sale, which represents a 6.8-month supply at the current sales pace. By contrast, in June 2005, there was a tight 4.4-month supply on the market.

New Opportunities for Home Buyers

NAR President Thomas M. Stevens from Vienna, Va., said opportunities have opened for home buyers. “People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now,” said Stevens, senior vice president of NRT Inc. “Relative to the five-year housing boom, this year is a buyer’s market in much of the country with plentiful supply, along with interest rates which remain historically favorable, so it’s a good time to buy a home.”According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.68 percent in June, up from 6.60 percent in May; the rate was 5.58 percent in June 2005.Single-family home sales eased 0.9 percent to a seasonally adjusted annual rate of 5.81 million in June from an upwardly revised 5.86 million in May, and were 8.2 percent below the 6.33 million-unit pace in June 2005. The median existing single-family home price was $231,500 in June, up 1.1 percent from a year ago.Existing condominium and cooperative housing sales fell 5.5 percent to a seasonally adjusted annual rate of 805,000 units in June from a pace of 852,000 in May, and were 14.6 percent below the 943,000-unit level in June 2005. The median existing condo price3 was $226,900 in June, down 2.1 percent from a year earlier.

Regional Market Conditions

Existing-home sales in the Midwest were unchanged in June, holding at a level of 1.52 million, and were 6.2 percent lower than a year ago. The median price in the Midwest was $175,000, which is 1.7 percent below June 2005.Existing-home sales in the West also were unchanged, at an annual pace of 1.41 million in June, and were 17.1 percent lower than June 2005. The median price in the West was $342,000, the same as a year ago.Existing-home sales in the South eased 2.3 percent to a pace of 2.57 million in June, and were 5.5 percent below June 2005. The median existing-home price in the South was $191,000, down 0.5 percent from a year earlier.Existing-home sales in the Northeast declined 3.5 percent to an annual sales rate of 1.11 million units in June, and were 9.8 percent below a year ago. The median price in the Northeast was $298,000, up 7.2 percent from June 2005.— NAR

Bankrate: Bernanke Keeps Mortgage Rates in Flux

2006-07-21T03:29:00.000-12:00

Fixed mortgage rates are more than one full percentage point higher than one year ago

RISMEDIA, July 21, 2006—Compared to one week ago, mortgage rates inched higher on both fixed and adjustable rate loans. The average 30-year fixed rate mortgage rose to 6.89 percent from 6.87 percent last week. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.3 discount and origination points. The average 15-year fixed rate mortgage, popular for refinancing, increased by a similar amount to 6.49 percent. On larger loans, the average jumbo 30-year fixed rate is now 7.05 percent. Adjustable rate mortgages were no different. The average 5/1 adjustable rate mortgage notched higher to 6.55 percent, and the average one-year ARM crept higher to 6.13 percent. Mortgage rates spent much of the past week treading water, but that all changed once Fed Chairman Ben Bernanke appeared before the Senate Banking Committee Wednesday morning. Almost immediately, Bernanke's words soothed investors concerned about the Fed raising interest rates too far. Yields on government securities started to fall, and mortgage rates declined right along with them. Treasury yields and mortgage rates dipped sharply between 10 a.m. and 11 a.m. Eastern time as Bernanke was speaking. Bankrate.com's weekly survey was largely complete prior to rates declining. Fixed mortgage rates are more than one full percentage point higher than one year ago. In July 2005, the average 30-year fixed mortgage rate was 5.78 percent, meaning that the monthly payment on a loan of $165,000 was $966.04. With the average 30-year fixed rate now 6.89 percent, the same loan originated today would carry a payment of $1,085.59. Despite recent increases, fixed mortgage rates remain an attractive refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.

Real estate's July report card

2006-07-17T02:11:00.000-12:00

This is the latest from John Burns, founder of Real Estate Consulting in Irvine, Calif.

Guest perspective: Will housing have a hard or soft landing?

The housing market has had four significant downturns in the last 20 years. The current downturn has been swifter than any of the prior four. The extent of this correction has been similar to the two "soft landings," but we don't seem to have landed yet.

1988-91: The 1988-1991 period was a hard landing, with many companies going out of business. The reasons for the severity were primarily: 1) Job losses, particularly in California and Florida; 2) government-induced wipeout of the savings and loan industry, which was providing most of the capital to builders; and 3) some speculative price appreciation that caused affordability problems. The job losses also led to horrendous consumer confidence.

1993-1995 and 1998-2001: The two soft landings in this cycle were primarily driven by rising interest rates. The job losses in 2001 were primarily in the Midwest and a few technology-dependent markets.
Thus far in the current cycle, we have landed to "typical soft landing" conditions -- not everywhere, but nationally. Significant price appreciation from 2002-2005, which was driven by speculative investors and homeowners, followed by rising interest rates, have created affordability problems. Thus far, the job market and consumer confidence are holding up just fine, which leads us to believe that consumers will return once interest rates stabilize and the investors have sold their holdings. We don't know how long this will take but we are fairly certain that there are too many listings for the recovery to occur sometime this year.

The landing will probably vary by market and even submarket. The landing is likely to be soft (which we define to be the majority of builders still making positive profits) because there is nothing wrong with the economy. However, each market has its own issues that need to be worked through.

These issues include:

New-home supply: In some markets, there is an oversupply of new construction in the peripheral areas.
Resale supply: In most markets, there is an oversupply of resale listings, which is likely to be exacerbated by an almost certain increase in forced sales due to adjustable-rate mortgage resets.

Affordability: In markets that were flooded with speculators, there are affordability problems that are likely to be with us for many years to come.

Demand: Job losses in the Midwest and a few other markets are also a problem, but job growth remains solid in the major housing markets in the South and West.

The length of time that it will take to work through these issues is impossible to forecast. However, if the Fed can a) maintain positive job growth of 1.5 percent-plus per year and b) keep mortgage rates from rising too much further, most markets will return to normal once resale supply returns to a normal level. Builders who paid high land prices in the peripheral areas are probably going to have the toughest time during this adjustment period.

Our grading system of the economy and the housing market is a "bell curve" model, with statistics at an all-time high receiving an "A," statistics near the long-term average receiving a "C," and the worst times ever receiving an "F." In this grading system, it is OK to be a "C" student.

Here is our current report card:

Economic Growth: C

The U.S. economy is healthy. Economic growth in the first quarter was revised to 5.6 percent. Growth in June was slower than expected but still solid, adding 1.85 million jobs in the last 12 months. The core CPI inflation rose to 2.4 percent, and total inflation was 4.2 percent.

Leading Indicators: C-

The leading indicators declined for the second month, suggesting that economic growth is likely to be more moderate than the pace of the first quarter. The spread between the 2-year and 10-year Treasury was essentially 0 at month-end, which is concerning. The S&P Super Homebuilding Index continues to decline, having fallen 36 percent in the last year and 41 percent since its peak.

Mortgage Rates: B-

Mortgage rates continued to rise in June, with the one-year adjustable mortgage rate 19 basis points higher at 5.82 percent at month-end, while fixed mortgage rates rose to 6.78 percent. The Fed raised its short-term interest-rate target for the 17th consecutive time to 5.25 percent, hinting that at least one more increase is likely.

Consumer Behavior: C+

Consumer confidence rose in June to 105.7, due largely to an improved outlook for the next six months and for the labor market. While consumers may be delaying home purchases because of affordability issues or investment perceptions, they have a confident outlook for the future, which is critical to a housing market recovery.

Existing-Home Market: B

While home-buying activity remains high, rising listings is creating a much more competitive housing market. May sales of existing homes fell to a 6.7 million annual sales rate, down nearly 7 percent from one year ago. The inventory of existing homes continues to rise, rising to 6.5 months of supply, the highest value since July 1997. There are a record number 3.6 million existing homes available for sale.

New-Home Market: B-

May new-home sales rose to a 1.23 million-unit annual rate, higher than many economists expected. New-home sales fell only in the Northeast during the month. The Housing Market Index, which measures builder confidence, dropped another four points to 42, a decline of 42 percent in the last year. Unsold new-home inventory has fallen to 5.5 months of supply, while the supply of completed homes fell slightly to 1.2 months.

Housing Supply: C+

Construction is declining. Housing starts increased to 1.96 million in May from 1.86 million in April, but remain down 4 percent from one year ago. Single-family starts rose to 1.58 million. Permit activity fell for the fourth month in a row to 1.93 million units, more than 8 percent below the permit level in May 2005.

Buyers of Overvalued Homes!!!

2006-07-16T10:24:00.000-12:00

US News and World Report has this on the nations housing markets.

Contrary to popular belief, the housing market hasn't cooled off that much. In fact, residential real estate prices continue to soar in a number of key metropolitan areas, according to a new study released this week.
That's a good thing, right? Actually, no–because the froth building in housing prices raises the distinct possibility of significant corrections to come in many of those regions.
In the first quarter, home prices nationwide rose an additional 7.3 percent, according to a joint study by the financial services firm National City Corp. and the research firm Global Insight. As a result, there are now 71 metropolitan areas–representing nearly 40 percent of all single-family homes–that can be classified as "extremely overvalued," according to the study. By comparison, only 64 metro regions were considered frothy at the end of last year and only 1 percent were classified as such in the first quarter of 2004.
The report further stated that Californians and Floridians ought to be the most concerned, as their states are home to 17 of the 20 most overvalued markets. The frothiest region in the country, according to the study, is Naples, Fla., where home prices are said to be 103 percent overvalued. Rounding out the top five markets are Salinas, Calif.; Port St. Lucie/Fort Pierce, Fla.; Merced, Calif.; and Bend, Ore., which are all more than 75 percent overvalued, according to the report. (Global Insight and National City based their judgments on valuations on several factors, including historical market premiums and discounts, household income levels in those regions, interest rates, and population density.)
"The fact that this number of metro areas – representing such a large percent of the total single family market–is extremely overvalued should be a cause for concern," said Richard DeKaser, chief economist for National City.
Another worrisome sign is that the 50 most overvalued markets at the end of last year were again the biggest winners at the start of 2006. Indeed, the 50 hottest markets saw a 10.1 percent increase in home prices, on average, in the first quarter.
This study's findings would seem to contradict other housing market reports that have shown a steady decline in home prices recently. For example, the Commerce Department has indicated that the median sales price on new single-family homes purchased has fallen around 3 percent since the start of the year.
But DeKaser notes that new homes are sold by developers, not families. And developers generally don't have the luxury that regular families do of living in their homes for several more years to wait out attractive offers. Moreover, DeKaser said new homes represent only a small percentage of the total housing market. For their part, National City and Global Insight relied on national housing data collected by the Office of Federal Housing Enterprise Oversight.
Under normal circumstances, the fact that housing prices are continuing to rise would be something to cheer. But the housing boom has been going for most of this decade. And housing markets can't be overvalued for too long, as imbalances in residential real estate prices will eventually lead workers to relocate to more affordable cities.
The bottom line: Real estate prices eventually correct themselves. And unfortunately for homeowners, it often takes years before home prices start to rise again, especially after a big run up.
National City recently studied 66 major metro regions over the past 21 years that suffered through a 10 percent or greater decline in prices for at least a two-year period of time. It found that home prices, once they begin to correct, tend to decline 17 percent on average before markets heal themselves.
"And the average duration of these adjustments is 3.5 years," says DeKaser.
So what about families who recently bought into one of these "extremely overvalued" markets in hopes of turning a fast buck? "I extend them my deepest sympathies," says DeKaser.

And this from the NaplesNews...

“WCI isn’t the only company dealing with the cooling down of the red-hot housing market by delaying the introduction of new homes and condominiums. Officials with The Ronto Group said Monday they will delay their two communities planned for East Bonita Beach Road from early 2007 to late in the year.”

“Robin Driskill, the company’s director of sales and marketing, said the high inventory of housing stock in Southwest Florida prompted the delay. ‘It wasn’t so much we didn’t want to move forward with (the communities); it is that there is so much investor product diluting what’s available,’ Driskill said.”

“In Southwest Florida, both Lee and Collier counties have more than a year’s supply of homes already on the market. That makes it a smart time to slow things down, even at the cost of a temporary impact on profit, Driskill said.”

“‘It does affect our bottom line. You have something out there that you want to put to work for you, but you are also not dumping money into the ground,’ Driskill said. ‘We have to do that or we dilute the value of our product, and everyone needs to look at it like that. It is just not wise.’”

“Kitty Green, VP for the Bonita Bay Group, said everyone is feeling some effect from a housing market that has seen astronomical increases in value in recent years, at least some of which were fueled by real estate speculators. ‘Our Sandoval community in Cape Coral is a primary buyer community, but they have to be able to sell their existing home to buy the next one, and with all the resales on the market, many are having trouble selling their homes,’ she said.”

“One worrisome sign is that not only have sales dropped, the amount of inquiries have too, Green said. ‘The decline in both is worrisome for different reasons,’ Green said. ‘Traffic is prospective buyers and is essential for future sales.’”

“The cutback in new homes was inevitable, given the percentage of speculative investment in the market during the course of the last year, said Mike Reitmann, executive VP of the Lee Building Industry Association. ‘Don’t know to what extent each one will do that, but each one is going to be evaluating the situation and doing what is prudent,’ Reitmann said.”

“Equally inevitable was the downward revision of profits and earnings for builders like WCI, Toll Brothers and Pulte Homes seen in recent weeks, said Brad Hunter of a Palm Beach-based analysis firm. Construction, insurance and labor costs have risen, interest rates are continuing their climb and the ability of builders to pass those costs to consumers has gone down, Hunter said.”

“‘That’s going to have a negative impact on earnings,’ he said. ‘Plus, sales are off drastically and traffic is down. I expect to see similar reports from other builders as the summer goes on.’”

Recent Condos Conversions Go Back to Rentals

2006-07-14T09:13:00.000-12:00

An estimated 25 percent to 40 percent of recently converted condos in Las Vegas, Phoenix, San Diego, Washington, D.C. and much of Florida will soon be converted back to rental units, says Marcus & Millichap, an investment brokerage firm.

Last year, at the height of the housing frenzy, 200,000 apartments were sold for conversion to condominiums on top of 135,000 new condos. Now that buyer demand is softening, developers are turning condo projects back into apartments and some landlords are inviting back tenants because they can’t sell the units.The conversion process has pushed rental prices up 12 percent to 15 percent in South Florida, but those increases could moderate if large numbers of reconversons occur, says Ron Shuffield of Esslinger-Wooten-Maxwell Realtors in the Fort Lauderdale, Fla., area.

But not all renters can expect such a break. In many major markets, including Seattle, Philadelphia, Los Angeles, and Portland, Ore., there's still a healthy supply-demand balance for condos, Marcus & Millichap says.

Source: USA Today, Noelle Knox (07/14/2006)

How many home inspections does a buyer need?

2006-07-10T02:34:00.000-12:00

One doesn't always do the job

Monday, July 10, 2006By Dian Hymer Inman News

Most buyers have inspections done before they conclude a home purchase. However, recommendations for further investigations often are overlooked, and this can have serious consequences.
One buyer bought a striking contemporary in a multiple-offer competition. The home inspector recommended that an engineer evaluate the foundation. The buyers failed to heed this advice. After closing, they began to worry about the unevenness in the floors. They consulted with an engineer who told them that the foundation was faulty and that the house was moving.

Had the engineering inspection been done during the inspection contingency time frame, the buyers could have renegotiated the contract with the sellers. Depending on how the contract was written, they might have been able to cancel the contract without penalty if they hadn't wanted to go ahead with the purchase.

However, these buyers discovered the seriousness of the problem after closing. At that point, their recourse was mediation and if that failed, binding arbitration, due to the provisions of their purchase agreement. As with all such proceedings, there's no guarantee that they will work out in your favor.

Other buyers bought a relatively new house that didn't appear to have any glaring defects. They noticed a damp smell, but attributed this to the fact that the house was located near a creek. They did not do any further investigations to find the source of the musty order. After the first heavy rains, the buyers noticed staining on the interior walls underneath the windows, as well as stains on the exterior stucco. The house was located in a relatively new subdivision in a small housing tract in Marin County, Calif. Other neighbors noticed similar problems.

The homeowners whose homes were adversely affected hired an attorney and sued the builder. However, the builder didn't have insurance to cover construction defects. And, he didn't have the money to fix the problems.

There are several reasons why buyers don't execute further inspections. One is the cost. Spending several hundred dollars or more to make sure you're making a wise investment is minimal when you consider the cost of correcting serious problems. In both of the examples above, the remedies cost thousands of dollars.
Another reason buyers forego recommended inspections is lack of time. The time frame for inspection contingencies is negotiable between the buyer and seller. Sellers like to see the shortest contingency period possible. This can boomerang on the seller if it means the buyers don't have sufficient time to complete due diligence investigations.

HOUSE HUNTING TIP: If you need more time for inspections, ask the sellers for an extension. One way to sweeten the request is to remove your inspection contingency subject to an extension of time to complete specific further inspections. This way the sellers know that you're generally satisfied with the condition of the property, but need more time before removing the contingency altogether.

In some cases, further inspections can be expensive. Some buyers don't proceed because they are short of funds and don't want to spend them on what might be a losing proposition. In this case, before giving up, you might ask the sellers to share the expense. If the issue in question is new information that the sellers were unaware of when they put the house on the market, they might be receptive to this approach to resolving the problem.

Home inspection reports are often loaded with disclaimers and recommendations to consult with other licensed professionals. The key is to determine which of these recommendations must be done.

THE CLOSING: Contact the home inspector directly and ask him to distinguish a cautionary note from a strong recommendation.

Will this dry spell ever end???

2006-07-07T11:16:00.000-12:00

I did a search again today on the MLS for single family homes in the Cape (excluding condos, townhomes and duplexes) and there are currently 4,600+ for sale in the Cape. This is quite scary. The city claims there are 10,000 people moving to the area each year. There are more homes waiting to be built in the pipeline from investors etc. and then I read in the News-Press that permits for single family homes were down in the low 200's for the month of May.

This does not look good folks. We just listed a 3/2 with 1700+ sqft on a freshwater canal in the SW for $245k. This time last year you couldn't find a pool home on a dry lot under $300k. Maybe this is what was coming. People talk about the investors/speculators who drove this market to where it was last year and the preceding two years. Do I fault them. Somewhat. But I also put blame on the builders for ruining the market. I spoke with a representative from Adam's Homes sometime last year around September and he informed me that at the time 98% of their business was investors. However they stopped taking on investors and were only selling to people or families that intended on actually living in the home instead of flipping the property.

Now I get emails from Adams Homes with spec homes they need to sell. Obviously these were investor homes that they walked away from. Adams Homes requires a $1000 down and they pay closing costs if you use their preferred lenders. They even provide a lot if they are available. Adams retains the rights to the home until the buyer closes on it. Of course, what we have been seeing is that these investors just simply walked away from their investments and Adams is stuck with excessive inventory. The same can be said for several other builders in the area.

Now I am not trying to bash Adams Homes. I am just stating what is known as well as perceived.

Well the rainy season is upon us considering the massive amounts of rain we received lately including today. It has definately helped. The Cape is looking much greener know. My only wish is that they try and get the county to do more landscaping along Veterans Pkwy from Del Prado all the way to Surfside. We tried contacting the city about this and they told us it was a county road so we need to address Lee County...not Cape Coral.

I see more things are taking shape along Pine Island such as the new Kohl's department store with the walls up. Pine Island Road is shaping up to be something quite nice. Now if only the city can do the same with the downtown area. It surely needs a major facelift.

10 Questions Buyers Should Ask Home Inspectors

2006-07-05T14:08:00.000-12:00

(July 5, 2006) -- Help your customers enjoy a high level of service from the service providers involved in their transaction. With inspectors, they should ask:

1. Will your inspection meet recognized standards? Ask whether the inspection and the inspection report will meet all state requirements and comply with a well-recognized standard of practice and code of ethics, such as the one adopted by the American Society of Home Inspectors or the National Association of Home Inspectors. Customers can view each group’s standards of practice and code of ethics online at www.ashi.org or www.nahi.org. ASHI’s Web site also provides a database of state regulations.

2. Do you belong to a professional home inspector association? There are many state and national associations for home inspectors, including the two groups mentioned in No. 1. Unfortunately, some groups confer questionable credentials or certifications in return for nothing more than a fee. Insist on members of reputable, nonprofit trade organizations; request to see a membership ID.

3. How experienced are you? Ask how long inspectors have been in the profession and how many inspections they’ve completed. They should provide customer referrals on request. New inspectors also may be highly qualified, but they should describe their training and let you know whether they plan to work with a more experienced partner.

4. How do you keep your expertise up to date? Inspectors’ commitment to continuing education is a good measure of their professionalism and service. Advanced knowledge is especially important in cases in which a home is older or includes unique elements requiring additional or updated training.

5. Do you focus on residential inspection? Make sure the inspector has training and experience in the unique discipline of home inspection, which is very different from inspecting commercial buildings or a construction site. If your customers are buying a unique property, such as a historic home, they may want to ask whether the inspector has experience with that type of property in particular.

6. Will you offer to do repairs or improvements? Some state laws and trade associations allow the inspector to provide repair work on problems uncovered during the inspection. However, other states and associations forbid it as a conflict of interest. Contact your local ASHI chapter to learn about the rules in your state.

7. How long will the inspection take? On average, an inspector working alone inspects a typical single-family house in two to three hours; anything significantly less may not be thorough. If your customers are purchasing an especially large property, they may want to ask whether additional inspectors will be brought in.

8. What’s the cost? Costs can vary dramatically, depending on your region, the size and age of the house, and the scope of services. The national average for single-family homes is about $320, but customers with large homes can expect to pay more. Customers should be wary of deals that seem too good to be true.

9. What type of inspection report do you provide? Ask to see samples to determine whether you will understand the inspector's reporting style. Also, most inspectors provide their full report within 24 hours of the inspection.

10. Will I be able to attend the inspection? The answer should be yes. A home inspection is a valuable educational opportunity for the buyer. An inspector's refusal to let the buyer attend should raise a red flag.

Source: Rob Paterkiewicz, executive director, American Society of Home Inspectors, Des Plaines, Ill., www.ashi.org.

Florida consumer confidence rises for 'no apparent explainable reason'

2006-06-28T10:39:00.000-12:00

GAINESVILLE, Fla. -- June 28, 2006 -- Consumer confidence among Floridians in June rose four points to 90, reflecting optimism about the long-term future of the U.S. economy.

But University of Florida economists say they are unsure exactly why.

“The rise in confidence comes as a surprise given what is happening in the economy that should be affecting consumers,” says Chris McCarty, director of the survey research center at UF’s Bureau of Economic and Business Research. “Gas prices declined a bit in June, but so did the stock market. The Federal Reserve has induced rises in interest rates on credit cards and home loans. It’s unclear why consumers are so optimistic about the future.”

The rise in confidence was primarily in the questions reflecting expectations about the months and years to come.

Perceptions of U.S. economic conditions over the next five years rose 10 points to 85, while perceptions of U.S. economic conditions over the next year rose five points to 78. Expectations about personal finances a year from now rose four points to 96. Perceptions of personal finances now compared with a year ago was flat, at 88, as were perceptions of whether it is a good time to buy big-ticket items, which remained at 100.

Unlike other states, Florida has fared better in the economic expansion since the 2001 recession, particularly in the area of job creation and employment, McCarty says.

Consumer confidence nationally as measured by the University of Michigan in its mid-month release also shows a rise in confidence, but it follows a large drop from April to May, McCarty said. One reason for the rise nationally is that consumers may have over-reacted to negative economic news in the previous month and are now more optimistic, he said.

“Moving forward, we still expect high energy prices and the decline in the real estate market to have a negative effect on consumers in the coming months,” he says.

In particular, the real estate market will become more of a factor because those who took out low-interest adjustable rate mortgages three years ago will suddenly be affected when the loan matures and the mortgage payment is pegged to current interest rates, which have since gone up.

“It is unclear how many Florida households will be impacted by this phenomenon, but we should keep in mind that Florida has one of the highest rates of using these types of loans over the past several years, given the high appreciation of housing prices,” he says.

The research center conducts the Florida Consumer Attitude survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for June was conducted from 417 responses. The error rate is plus or minus 5 percent. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for the year. The value of the index is in comparing changes over time rather than looking at an isolated month.

Consumer confidence is designed to help predict buying patterns by measuring the mood of consumers toward purchasing. Although other economic indicators also predict buying patterns, consumer confidence tends to be available sooner.

© 2006 FLORIDA ASSOCIATION OF REALTORS®

Latest Updates in Real Estate in the Cape

2006-06-26T15:25:00.000-12:00

There has been an increase in the number of lots listed for sale and a decrease in sales and a softening in the prices for those that sold lately.

The rapid escalation in property values has caused property taxes to soar. Moreover, they will go up again next year. The property appraiser tabulates values based on sales made during the previous calendar year. The next assessment will reflect sales made during 2005 when prices were still rising which means another tax increase is coming. The rising cost of ownership is placing a burden on many lot owners, pressuring them to sell.

Home contractors are hunkering down and working off their land inventory. They are facing increasing material costs, higher mortgage rates and ever increasing impact fees, all of which are driving prices beyond the reach of many new homebuyers.

The lack of affordable housing in the area is becoming a serious problem. Nurses, teachers, firefighters, police and other public service employees are being priced out of the new home market.

The Lee County School District is concerned about hiring the teachers needed for the influx of students expected. They recently adjusted salaries to help attract teachers but they are still too low for home ownership in the area.

Another note...

The U.S. Justince Dept. Antitrust Division is investigating the contracts let for the Cape Coral utility expansion project. The contracts were managed for the city by an engineering firm so the city was not directly involved in the contract awards.

Government spokesmen have been tight lipped about the nature of the investigation but if the antitrust division is involved that indicates there may have been collusion by the bidders.

Interesting???

Until next time!

Real estate slowdown won't cause recession

2006-06-21T12:02:00.000-12:00

UCLA forecast: Risk of housing crash greater than people think

Wednesday, June 21, 2006By Glenn Roberts Jr.Inman News

If history is any indication, the country may be heading for a housing crash, according to the Anderson Forecast, a product of the University of California, Los Angeles.

"The risk of a housing crash rather than a slowdown is far greater than what most people think. In fact history is on the side of a crash," stated David Schulman, a senior economist for the UCLA Anderson Forecast, in his report, "Housing, Inflation and the Fed," released today. He added, "Every major housing cycle of the past 45 years ended with activity declines in excess of 50 percent. Because the current cycle was so powerful, why should we expect any less?"

The report also notes that the blame for a real estate bubble may fall on the Federal Reserve Board. "There is some truth to the notion that the Fed created the housing bubble to prevent the deflationary forces of collapsing stock prices to take hold in the real estate economy."

But now, the housing market is becoming a drag on the overall economy. "The driving force behind both the slower growth and the rising inflation is the housing market. The great housing boom of the past five years is unwinding under the weight of higher interest rates and unsustainable home prices," Schulman states in the report.He also suggests that the Fed "is in a box" because it is faced with rising inflation and a decline in housing activity. Ultimately, the housing market could be a casualty as the Fed works to curb inflation. "Central banks lose their credibility for failing to fight inflation," said Schulman, who expects the Fed to raise the federal funds rate at least one more time, with "a long wait before the next easing."

In a separate Anderson Forecast report, titled "Homes and Jobs and Bonds," forecast director Edward Leamer stated that the nation's economic problems will be mostly concentrated in the real estate sector, though this "will not produce a national recession," at least unless the manufacturing sector continues to topple.

"The housing market is like a powerful rocket whose fuel has been exhausted," Leamer states. Some observers expect this "rocket" to pick up new fuel and begin to accelerate again, while others expect it to gradually glide back down and still others expect that it will crash and burn, the report notes.

"Problems in housing have almost always led into recessions and attendant increases in unemployment that has amplified the housing adjustment. Our best guess is that this time, unlike all the other times, the problems will be mostly in real estate and will not produce a national recession," Leamer states.Historically, cycles in manufacturing and construction were roughly parallel, "with peaks and troughs occurring very close in time." But after the 2001 recession, job cycles for these two industries became disconnected. Construction jobs recovered and made substantial gains, while manufacturing jobs, which fell by 3 million from 2000-03, "have been drifting sideways ever since," the report states.

Globalization and automation may have something to do with the lackluster employment numbers in the manufacturing sector, the report notes, though Leamer states, "we do not expect manufacturing jobs to suffer as much as in earlier housing-related downturns." Meanwhile, "it appears as though construction is ready for a tumble."

Leamer also notes that home prices rarely drop, "and if they do, the decline is not very much." Regionally, there hasn't been a significant housing bubble since 2001 in the Midwest. The bubble has cropped up in the South in sales volume, not prices. In the Northeast, prices "have recently entered the stratosphere above the normal band," but should return to more normal levels. "This is a region where sales of existing homes will plummet and the associated jobs for real estate and mortgage brokers will suffer," the report states.

And in the West, "both prices and volumes (got) out of control in the last several years. Prices ... are starting to fall back to the normal band, but have another 10 percent to get back into the normal range."

The Anderson Forecast also includes a California-specific report by economist Ryan Ratcliff, titled "The California Report: At the Tipping Point," which concludes that construction employment will peak in the state in the third quarter before losing 100,000 jobs by 2008. Finance employment and manufacturing employment should remain flat in the state during this period, according to the report.

As with the national forecast, the statewide forecast predicts that the real estate slowdown will not produce a recession or a substantial decline in average home prices.But there are some unknowns that complicate the forecast, such as the unprecedented use of exotic mortgage products that represent a "potential squeeze ... on consumer finances. A substantial slowdown in consumption spending could certainly tip the economy into a recession, and distress sales from home owners squeezed out by an adjustable mortgage reset could all lead to a more severe drop in average home prices than we are predicting." Sustained declines in home prices are "extremely rare," though, and typically only occur during recessions.
If there is another round of job losses in California's manufacturing industry, "all bets are off," Ratcliff states. "Oddly, the fate of California's housing market may hang on a sector that has nothing to do with housing."

"Losing" on Real Estate Price a Matter of Perspective

2006-06-20T03:48:00.000-12:00

This article is well said....

When it comes to pricing your house when you’re ready to sell it, keep in mind you must sell in the market you’re in today. It doesn’t matter what your former neighbor got six months ago, or what properties are listed for now. All that matters is this -- whatever the last sale price in your neighborhood of your model -- that’s probably your sale price now.

When you’re looking at what you’ll gain on the sale of your house, let’s keep it in perspective. If house prices increased year after year at 4 percent per year and then suddenly people were selling their houses for 1 percent less than last year’s asking price, would that be reasonable? If so, then when property is moving up at 20 percent per year for several years and then suddenly you have to sell it for 5 percent less than the prices last year, would that be reasonable? The challenge is when we move from percentages to dollar amounts. If 5 percent represented $5,000, most people wouldn’t blink. It’s when 5 percent represents $25,000 that sellers start to freak.

In the DC area, we were experiencing astounding rates of appreciation as a region, 20 percent from 2004 to 2005 prices. Many homeowners have experienced a doubling in property values over the last five years. The average home price is now about $540,000, according to the local multiple listing system. Now, price appreciation has subsided and is sitting at a mere 5 to 8 percent region wide (depending on where you’re standing). Sounds pretty healthy, still, right? You would think.

However, there are stories from the field on how sellers are defending their prices as if their lives depended on it. While sellers are sitting on hundreds of thousands of dollars of equity, they can’t stand the idea of dropping their price by $25,000 or $50,000 to sell it today. The house that was $260,000 in 1999, is now selling for $569,000 today. But some sellers now want that same type appreciation and can’t imagine selling it for less than $589,000. Bringing it down the $20,000 or $40,000 to sell the property seems, well, just not fair.

What’s even scarier are the agents who are defending their prices in a correcting market. I have to keep in mind that nearly half the agents in the country (as well as here in the Capital region) were not in business five years ago. They’ve just now entered a market where prices have to be corrected, dropped -- improved, as it were.

However, as I talk with agents around the region about their listings, they’ll be the first to let you know, "It won’t sell for what the seller’s asking," but they’re too afraid to tell the seller the sobering news.
The market is like playing Russian roulette. Sometimes you don’t know what you have until you pull the trigger. Somebody needs to blink. Sellers seem to be saying to buyers, "I’ll drop my price, just make an offer." While buyers are blankly replying, "I’ll make an offer, just lower your price."
It’s this stalemate that has played a part in creating an abundant supply of houses on the market in the DC area. We’re talking upwards to 200 percent more homes on the market in any given year-to-year comparison. And, folks, after a dearth of homes in this area, it’s a good thing. Is it affecting prices? Sure thing. Will prices come down? Absolutely. Are sellers going to lose money? Well – in some cases.

For sellers staying in the same area, keep in mind, if you have to drop your price by 5 percent, then the seller of the house you’re buying (usually a lot more expensive) is probably going to drop the sales price by about the same percentage point. It means that while you may "lose" money on the sale of your home, you’ll more than likely "gain" it on the purchase up.
Keep in mind, the market is the market. When it’s time to buy, buy. When it’s time to move, then sell. Work with the market you’re in, not in the market you wish it would be.

Published: June 16, 2006 by M. Anthony Carr

Why New Home Prices Are Too High

2006-06-20T03:29:00.000-12:00

You have to wonder: Just how terribly -- if at all -- does government regulation raise the cost of new home construction?

The National Association of Home Builders reports that "rising interest rates and high land and production costs will continue to push the cost of housing beyond the means of many American families, and a disproportionate share of the blame for today's sky-high prices goes to misguided local government policies."
Really?

"The '90s were a pretty dog-gone good decade for housing. But we expect this decade and the next to be even better," said David Crowe, an NAHB senior staff vice president. "We expect interest rates to climb a little bit more this year, but then to level off. And we're expecting overall economic growth to be positive but not outstanding."

Does it not seem odd that while there are claims of "local" government over-regulation, the building industry did "pretty dog-gone good" in the 90s and expects to do "even better" in this decade? If builders did so well, perhaps that's evidence suggesting we need more local regulation.

The most obvious reason for steeper home prices and less affordability is that we simply have bigger houses. According to the Census Bureau, the average house now contains 2,434 square feet, up from 1,660 square feet in 1973.

If you super-size a home by 47 percent then even if construction expenses remained constant it's not hard to see why today's housing dreadnoughts cost more than homes in previous years.

This is not to say that minimum lot and home sizes add anything to the cause of affordable housing, or to suggest that rising costs for building permits, impact fees and transfer taxes are helpful. But c'mon, homes on steroids can't be overlooked -- homes which surely yield bigger builder profits per unit than smaller homes.
There would surely be a lot more money for affordable housing programs if a quasi-federal entity, Fannie Mae, had not overstated profits by some $10.6 billion, an accounting mess that will require enormous sums to resolve. You sure can't blame that one on local governments.

And then, of course, there's HUD. The record left by former Secretary Mel Martinez is fading with the speed of light. Martinez, you'll remember, said that closing rules should be revised so that settlement providers would be forced to be more competitive. Martinez estimated that consumers would save $10 billion a year.
The Martinez proposals arose in 2002. Let's see, 2002 was four years ago so by failing to enact modest reforms consumers have spent an additional and needless $40 billion on excess settlement costs.
Given that a typical new home cost $297,000 at the end of 2005, that means 134,680 new homes could have been built with $40 billion in settlement savings. That sure sounds like a lot of good work for builders.
Failing to reform closing monopolies doesn't seem to be the fault of local governments, either.
Of course, if FHA financing was more competitive that too could create more affordable housing. Efforts are now underway to "reform" the FHA program, including the idea of having loans with nothing down. In 1999 FHA loans were used to finance 9 percent of all new construction, a figure that fell to 4 percent in 2005.

Again, local governments have nothing to do with FHA's falling market share.
There are good reasons to make homes more affordable. In some cases local policies and practices are an issue, but local governments do not exist in a vacuum. There's also plenty of reason to look at federal policies and practices as well.

If the idea is that we need to re-think regulation, then let's start with something quick, easy and practical: How about a zoning rule which says no new home on any lot must have more than 1,660 square feet under roof?

For more articles by Peter G. Miller, please press here.
Published: June 20, 2006

Top things to know

2006-06-17T08:47:00.000-12:00

Shape up your credit and determine your affordability range before starting the hunt.

1. Don't buy if you can't stay put.

If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner.

2. Start by shoring up your credit.

Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

3. Aim for a home you can really afford.

The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.

4. Don't worry if you can't put down the usual 20 percent.

There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price.

5. Buy in a district with good schools.

In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.

6. Get professional help.

Even though the Internet gives buyers unprecedented access to home listings, it's still a good idea to use an agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.

7. Choose carefully between points and rate.

When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say five to seven years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.

8. Before house hunting, get pre-approved.

Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

9. Do your homework before bidding.

Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that's about eight to 10 percent lower than what the seller is asking.

10. Hire a home inspector.

Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.

Housing costs stimulate inflation, some economists say

2006-06-16T12:35:00.000-12:00

WASHINGTON -- June 16, 2006 -- The cost of housing -- rents and mortgages -- is behind the inflationary pressure that has hit the United States in the past few months, some economists say.

The U.S. Department of Labor said Wednesday the Consumer Price Index for May showed prices outside food and energy increased a steep 0.3 percent for the third month in a row. Behind that gain was a 0.6 percent jump in housing rental costs, also known as "owners' equivalent rent" or OER. It was the largest monthly increase since August 1990.

The cost of shelter makes up 23.4 percent of the index, the single largest component. "Shelter costs have accounted for more than half of the increase in core CPI in each of the last three months," says Patrick Jackman, economist at the Bureau of Labor Statistics, which issues the CPI data.

Rising interest rates make mortgages more expensive and push more people into the rental market.

London-based Capital Economics warns the rising demand for rental housing is a bad sign. "That is legitimate inflation and the Fed should worry about it," says Paul Ashworth, chief U.S. economist at Capital Economics.

Others economists aren’t so sure, including those at JPMorgan Chase, Moody's Economy.com and Putnam. They say inflationary pressures aren't as bad as they appear -- the cost of energy distorts things -- and there's a risk the Federal Reserve Board could overreact.

"The inflation story is probably being blown out of proportion," says Mark Vitner, Wachovia’s senior economist.

Fed officials are likely to react to increased inflation by raising interest rates by a quarter percentage point to 5.25 percent when they meet June 28-29. That would be the highest rate in 5½ years but still below the 6.5 percent peak hit in the last rate-increase cycle in 2000.

Source: Reuters News, Kelly Evans and USA Today, Barbara Hagenbaugh (06/14/06)

Think differently about second homes

2006-06-16T12:30:00.000-12:00

June 16, 2006 -- Buyers considering a second home but finding paying for the prospect unaffordable should take a look at some less-pricey alternatives.

Affordable second home opportunities are available for a buyer who approaches the market with an open mind and a sense of realism, says Suzie Laskin, a real estate associate with Prudential Joy Tarbell Realty in North Conway, N.H.

Here are some ways to think differently about second homes:

Think Thoreau. Property in undeveloped but beautiful spots can be available at affordable prices. Buying the property and building a cottage is the first step toward a fully completed dream.

Commune with neighbors. Condos or small properties that offer water access instead of waterfront can be much more affordable. Buyers won’t have their own private water frontage or dock, but shared situations work out better than expected most weekends because all the people who share rarely show up at the same time.

Don’t obsess about the address. Some addresses are more fashionable -- and expensive -- than others. Buyers who are content with a location that isn’t so popular often can get more for their money.

Make a second home a first. Make a weekend home a primary residence and rent something modest close to the office. This works particularly well for people who can figure out how to telecommute a couple days a week.

Source: The Boston Globe, Lisa Prevost (06/11/06)

I have my home on the market

2006-06-16T01:06:00.000-12:00

Yes...I know...another home on the market...tell me something new please. If you are interested or know of someone who is...

2430 sqft under air pool home built in 2004...4 bedrooms/3baths (pool bath) with seperate dining room, office, and family room. Open and airy kitchen with stainless steel appliances and front loading whirlpool washer and dryer with stands, 2 car garage on an oversized corner lot with CITY WATER!!!

I am offering a one year home warranty

What do they do???

2006-06-14T09:55:00.000-12:00

I recently read a News-Press article about the meeting held at city hall about the city water and sewer assessments for the people that live in zone 4. Being a real estate agent in the area, I can sympathize with these people. I also have to inform buyers that come into town and ask the same questions about when the water will come in and how much??? When I read the recent figure was now up to $22-25,000 I was amazed. I knew that it was high, but this figure is going to turn a lot of buyers away from buying properties without city water and sewer.

Most I deal with do not care for well and septic, and there is already issues with that because of low water levels, wells going dry and so on. Most of these families, and I could be mistaken, live paycheckto paycheck and this is just another burden to there income. Now is it nice to have city water and sewer....yes I think so. But to add on to already high tax bills is a killer.

Think...the average family comes to Cape Coral to relocate...the want to buy a home in the $250-300k range...lets round it to $300k. The estimated taxes on that new purchase is based on 90% of the sale price which makes it $270k. So the taxes to the homeowner are $5405 for the year. Add in the homestead and the taxes drop to $4911 per year. Now add in the cost of assessments for water and sewer down the road and you are looking at an additional $1250 a year. That is now....that figure could go up by the time they get to your neighborhood. So based on these figures...your annual property taxes for a $300k home will be $6161. That is quite a large number.

Now I know what you may be thinking...well then they do not have to move here or they do not have to buy a $300k home. This boils down to the costs of the homes and the supposedly overpriced market we are in. For the amounts of money that I see the city racking in...I do not see them using it towards beautifying the city. The downtown is supposed to be going through a facelift...haven't seen that yet!

I would love and welcome your feedback. Go ahead, I can handle written abuse.

www.capecoralhomesforsale.org

A Rush to Refinance Before Rates Rise Again

2006-06-14T05:20:00.000-12:00

(June 14, 2006) -- There were more mortgage applications last week than there had been for the previous four weeks, and more than one-third of them were refinancing.The Mortgage Bankers Association said its seasonally adjusted index of refinancing applications for the week ending June 9 increased 10.6 percent to 1,499. Still, it's lower than last year at the same time, when the index stood at 2,967.Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.61 percent,Fixed 15-year mortgage rates averaged 6.27 percent. Rates on one-year adjustable-rate mortgages (ARMs) increased to 6.09 percent from 6.05 percent.The refinance share of applications increased to 35.7 percent from 34.2 percent the previous week.

'So-called bubble' likely to deflate, not burst

2006-06-13T02:17:00.000-12:00

Harvard University report highlights affordability problems

Tuesday, June 13, 2006By Glenn Roberts Jr.Inman News

House prices surged faster than household income and inflation, the national home-ownership rate fell for the first time in over a decade, housing inventories shot up with slowing sales, and the volume of sub-prime loans has soared.
But despite these findings, released today by Harvard University's Joint Center for Housing, the outlook for the housing market is generally good."The greatest threat to housing markets is a precipitous drop in house prices. Large house-price declines appear unlikely for now. But if the economy falters, both job growth and housing prices will come under renewed pressure. This would spark higher default rates, especially among sub-prime borrowers, and turn housing from an engine of economic growth to a drag," according to the report, "The State of the Nation's Housing 2006."

By 2005, house prices were rising at the fastest pace since 1978, the report states, and "media reports of a housing bubble reached a fever pitch. But, when and if house prices do fall, the so-called bubble is more likely to deflate slowly rather than burst suddenly."

Typically, job losses, overbuilding and population outflows are factors in home-price declines, the report states. "While dips of a few percentage points are common, nominal house prices rarely drop by 10 percent or more." Though about half of the nation's 75 largest metro areas have seen nominal house prices drop by 5 percent or more at least once in the past 30 years.
Over the past several years, real estate economists have said that the strength in the housing market has served to buoy the nation's economy. Now, the performance of the general economy will help to determine how well the housing market weathers this slowdown. "Housing's contribution to economic growth is already diminishing and will begin to turn negative if home sales, starts, and home equity borrowing continue to decline."

Nicolas Retsinas, director of the Joint Center for Housing Studies, said, "We've turned the corner, certainly, from a seller's market to a buyer's market. The days of double-digit (price) appreciation are certainly behind us. The question before us, in this period of price correction, is, 'Will it be a flattening for the market or a more severe drop?'"
He added, "Overall, the market is probably fairly solid, but in the short term there will be some rough patches. The wild card ... is the economy."

While price appreciation is slowing, Retsinas said that prices likely will not moderate enough to eliminate affordability problems. Rising energy costs have also affected housing affordability. From 2001-04, the number of households paying half of their incomes for housing increased by 1.9 million -- an estimated 15.6 million low- and middle-income households are classified as having "severe cost burdens" for housing, according to the report. And about 49 percent of poor working families with children had severe cost burdens in 2004, while 75 percent had at least moderate burdens.

Affordable rental housing for those earning $16,000 or less each year shrank by about 13 percent from 1993 to 2003, according to the report, and "a significant portion of the remaining affordable stock is in financial stress."Household growth is expected to grow from about 12.6 million over the past 10 years to 14.6 million in the next 10 years, the report states, while "widespread affordability problems will also intensify."

An increase in foreclosures is likely as the market transitions, Retsinas said, given that it may not be as easy for some distressed homeowners to sell their properties and avoid a foreclosure process. "If I had a problem making my mortgage payment a year ago I could put my house on the market. If I had a problem this year it might not be quite as easy. I might not have that 'escape hatch.'"

Meanwhile, the overall home-ownership rate dipped from 69 percent in 2004 to 68.9 percent in 2005, the first drop after 12 consecutive years of gain, according to the report, as the rental market began to rebound.New single-family home sales increased 6.7 percent from 2004-05, while existing single-family home sales increased 3.4 percent and existing condo and co-op sales grew 9.3 percent. Median new single-family home prices grew 4.4 percent from 2004-05, existing single-family prices gained 9.4 percent, and existing condo and co-op prices rose 13.4 percent.

"Although 2005 surpassed 2004 on many measures, housing markets were clearly moderating. Indeed, the year-over-year change in sales of existing homes turned negative late in 2005," the report states, noting that a rise in interest rates is the likely culprit.

Slowing sales boosted the inventory of new and existing homes to a supply of about 5.3 months to 5.5 months in March 2006. The months' supply is used to gauge how long it would take to exhaust the for-sale inventory of homes given the current sales rate. A supply of six months is considered to be roughly equilibrium between a buyer's market and a seller's market, with a shorter supply indicating a seller's market and a longer supply indicating a buyer's market.The inventory of condos reached a "near-term oversupply," the report also concludes, with the supply climbing from 3.9 months to 6.9 months.

Investor demand for real estate is expected to cool, according to the report. "In the hottest markets, the overhang of investor properties may be absorbed rapidly if housing production continues to fall. The recent sharp increase in vacant single-family homes for rent suggests, however, that this process will not be smooth."Investors bought 4 percent of single-family homes built and 13 percent of condos sold, according to a June 2005 survey by the National Association of Home Builders, while investors bought an average 11 percent of new single-family homes and 15 percent of condos in the 30 large markets that posted the fastest price appreciation."Among the housing markets with the highest investor loan shares are several Florida and inland California metros, as well as Boise, Phoenix and Las Vegas. In most markets, the investor share more than doubled from 2000 to 2005," the Harvard report states.

"I think we've reached a point where housing is no longer seen as a purchase for investment. It's something to live in," Retsinas said.The volume of sub-prime loans has jumped "dramatically," the report notes, from $210 billion in 2001 to $625 billion in 2005, with last year's sub-prime lending total representing 20 percent of the dollar value of loan originations and about 7 percent of mortgage debt outstanding. The share of sub-prime loans that were at least 60 days delinquent or in some stage of foreclosure was seven times higher than that of prime loans in fourth-quarter 2005.

Interest-only loans, which defer principal payments for a specified number of years, "went from relative obscurity to an estimated 20 percent of the dollar value of all loans and 37 percent of adjustable-rate loans originated in 2005," according to the center's report. "Payment-option loans, which let borrowers make minimum payments that are even lower than the interest due on the loan and roll the balance into the amount owed, accounted for nearly 10 percent of last year's loan originations."
Meanwhile, adjustable-rate mortgages, which doubled their share of the market to 35 percent in 2004, dropped slightly to 31 percent in 2005.

The construction of new rental properties has slowed from 275,000 units in 2002 to 203,000 units in 2005, which – along with the conversion of some rental units to condo units – has assisted in lowering the vacancy rate from 10.2 percent in 2004 to 9.6 percent at the end of 2005.

Existing-Home Sales Expected to Fall 6.8% This Year

2006-06-06T07:17:00.000-12:00

(June 6, 2006) -- The housing boom has ended but sales at historically healthy levels will continue, and price appreciation will return to normal patterns across much of the country, according to the NATIONAL ASSOCIATION OF REALTORS®.David Lereah, NAR’s chief economist, says home sales are settling into a slower pace. “In recent years we were occasionally challenged to find appropriate superlatives to describe surprisingly high home sales,” he says. “Now the housing market has cooled, but 2006 still expected to be the third strongest on record. In this case, experiencing a slowing from a hot market is a good thing because we need a solid housing sector to provide an underlying base to the economy, and slower appreciation will help to preserve long-term affordability. "But this is a time for the Fed to pause on rate hikes because we have some interest-sensitive housing markets that have become vulnerable,” Lereah adds.Existing-home sales are projected to drop 6.8 percent to 6.6 million this year from the record 7.08 million in 2005. New-home sales are forecast to fall 13.4 percent to 1.11 million from a record 1.28 million in 2005. Housing starts are likely to decline 6.2 percent to 1.94 million in 2006 compared with 2.07 million last year.NAR President Thomas M. Stevens from Vienna, Va., says rising interest rates have slowed home sales in many high cost markets, while job growth has boosted sales in some moderately priced areas. “Broadly speaking, rising inventories have taken the pressure come off of unsustainable home price growth,” says Stevens, senior vice president of NRT Inc. “For most of the nation, this means future home price gains will be much closer to the normal returns we expect from housing.”The 30-year fixed-rate mortgage should average 6.9 percent during the second half of the year, and the unemployment rate is expected to average 4.8 percent in 2006.The national median existing-home price for all housing types is forecast to rise 5.3 percent this year to $231,300. With more construction in 2006 taking place in lower cost housing markets, the median new-home price is projected to increase 0.8 percent to $242,900.“Historically, home prices rise 1.5 to 2 percentage points faster than the rate of inflation, so the rise we anticipate in existing home prices this year is actually a little above the high end of historic norms,” Lereah said. “The double-digit home price gains we saw in 2005 underscore what a superlative year it was.”Inflation, as measured by the Consumer Price Index, is seen at 3.1 percent in 2006, compared with 3.4 percent last year. Growth in the U.S. gross domestic product is likely to be 3.4 percent this year. Inflation-adjusted disposable personal income should grow 3.1 percent this year.

—NAR

Fed Uncertain on Rates as Inflation Concerns Multiply

2006-06-01T06:34:00.000-12:00

(June 1, 2006) -- Minutes from the Federal Reserve's May meeting reveal that central bank officials are increasingly concerned about inflation and uncertain of how to handle interest rates.At the May meeting the short-term interest rate was hiked a quarter of a percentage point to 5 percent. It was the first policymaking meeting since June 2004 — aside from the session following Hurricane Katrina — in which officials considered holding the short-term rate steady or raising it by more than a quarter-point.In addition to inflation, officials also expressed worries that the housing market could slow at a faster rate than anticipated.

Source: The Wall Street Journal, Greg Ip (06/01/06)

Boom May Be Over, But Landing Will Be Soft

2006-05-19T05:03:00.000-12:00

(May 19, 2006) -- WASHINGTON – The five-year boom in home sales may be over, but strong demographics and job growth promise only a short-term slowdown in most U.S. markets, NAR’s Chief Economist David Lereah told REALTORS® at Thursday’s Economic Issues & Residential Real Estate Business Trends Forum. His presentation took place during the 2006 REALTORS® Midyear Legislative Meetings & Trade Expo. Speculators and rising interest rates have ended the largest acceleration ever in existing-home prices, but the process is “a needed cleansing” that will help restore balance, said Lereah. Nationally, homes appreciated a remarkable 12.5 percent on average in 2005. Appreciation for 2006 will cool to 5.7 percent. But even with the slowdown, 2006 will be the fourth best year ever for residential real estate sales with an estimated 6.62 million existing homes sold, Lereah noted.In 2007, Lereah expects to see existing-home sales rise slightly to 6.7 million units but appreciation to slow to 4.2 percent. To help the industry track performance, NAR’s Research Department is working to develop a real-time pricing tool, “a real estate ticker,” that will update national average home prices every 15 minutes based on data from MLSs, Lereah told the crowd. To some degree, the next year or two will be “a tale of two cities,” said Lereah. Cities such as San Diego, Miami, and Naples, Fla., that have seen high price appreciation will see sharp drops in sales. Already, between first quarter 2005 and first quarter 2006, existing-home sales declined by 15 percent to 20 percent in Florida, California, and Arizona, he said. On the other hand, markets that didn’t see exuberant appreciation during the boom are actually experiencing shorter days on market. Lereah pointed to Charlotte, Dallas, and St. Louis as examples of this trend. Even declining markets should remain healthy as long as they have diversified economies and strong job growth, he said. “As long as days on the market don’t extend beyond six months, there’s no need to be concerned,” he said. The possible exception might be California, where a high number of adjustable-rate and interest-only mortgage loans might combine with a price downturn to create problems. Other possible clouds on the real estate horizon: inflation, high oil prices, and rising interest rates. Yet, Lereah said he doesn’t expect a recession. Strong business spending and a sound economy that should grow 3.5 percent in 2006 promise a positive outlook for real estate. And mortgage interest rates should stay low; Lereah said he expects two more rate hikes from the Federal Reserve in 2006, but rates won’t rise above 7 percent for the year. “The real estate market got ahead of itself, but now we’re going back to fundamentals and a more balanced market,” he concluded.

— By Mariwyn Evans for REALTOR® Magazine Online

Concerns, Concerns, Concerns

2006-05-15T14:01:00.000-12:00

SW Florida, in particular Cape Coral/Ft. Myers area has been experiencing price reductions for more than six months now. This time last year, a 2000 sqft home listed in the 240's wouldn't last a week. Now they are staying on the market for months. Inventory is high. Some 4800+ homes for sale. I did a recent check on the MLS for homes between 150 and $250k with 3 bedrooms and 2 baths, no pool and their were close to 400 homes listed in the SW part of the city. This causes concerns for buyers as well as agents. Listings are a dime a dozen now....no buyer's!!! I think it is going to get worse before it gets better.

Visit my website @ www.MarkDDiaz.com or www.capecoralhomesforsale.org

Things to consider when selling home in balanced market

2006-05-15T00:09:00.000-12:00

Wisest move is to sell current residence before buying another
Monday, May 15, 2006By Dian Hymer Inman News

For the first time in many years, experts believe we're heading toward a balanced market. A balanced market is one that favors neither buyers nor sellers.

In a seller's market, buyers usually face a lot of competition. They often need to bid over the asking price and waive contingencies to get an offer accepted. In a buyer's market, there are more sellers than buyers. Listings take longer to sell; buyers can afford to be choosy.
A balanced market is somewhere in between a seller's and a buyer's market. However, even in a balanced market, you'll find pockets of variability depending on supply and demand.

For example, in desirable neighborhoods where inventory is low, a balanced market might exhibit characteristics of a seller's market. However, this will only be the case for well-priced listings that are in prime condition, or priced-to-sell fixer-uppers that have a lot of upside potential.

In a hot seller's market, virtually everything sells. This is not the case in a more balanced market. Keep this in mind if you're thinking about selling your current home and buying a new one.

HOUSE HUNTING TIP: It's a great time to make this kind of move because interest rates are relatively low. However, if you intend to buy before selling, be aware that this is a riskier strategy for some homeowners than it was a year ago.

In a strong seller's market, the challenge is finding your next home. But, selling your existing home is often relatively easy. In a balanced market you will have an easier time finding a home, but it could take longer to sell. The other factor to consider is that it may be more difficult to predict ultimate sale price.

The real estate market is not static. Particularly in a transitional market, it can be stronger one month than it is the next. Unless you have ample funds at your disposal, you should factor this in to your home buying strategy.

One homeowner learned this lesson the hard way when they bought a new home in San Francisco before selling their existing Oakland, Calif., home. They made the move in 1994 when the real estate market was in transition. They bought their new San Francisco home when market activity was brisk.

Two months later when their Oakland home went on the market, the market softened enough to delay the sale a few months. The sellers reduced the asking price in order to hasten the sale. They ended up selling for less than they had budgeted for and had to sell stock in order to complete the transaction

If your funds are limited, a safer strategy is to put your home on the market before you buy your new home. You should be actively looking for your new home while you're waiting for your home to sell.

In markets where there are a lot of houses on the market, an offer that is made contingent on the sale of your existing home may be a workable. However, if you're trying to buy into a pocket of the market that is in high demand and where there aren't a lot of homes for sale, like the Upper Rockridge neighborhood in Oakland, a contingent sale offer may stand little chance of being successful even in a more balanced market.

Keep an open mind about your options. If you sell your current home before buying the new one, you'll know exactly how much money you have to work with. You don't have risk of coming up short of the funds you will need to make a financially prudent move.

THE CLOSING: You may have to make a move to an interim rental. But, that's better than racing to buy a home that may not work for you in a couple of years.

Another Day in the Doldrums

2006-05-12T11:24:00.000-12:00

Friday...May 12th..the day started out ok...usual stuff in the office...prospecting...emails...letter writing etc. I was talking to my colleague about a call I received from an agent in the area who wanted to provide me information on her listing here in the Cape. Before I even let her get into her presentation I asked her if this was the new thing now, calling other agents to tell them about their listings rather than the reverse prospecting that our MLS system has set up. I promplty explained to her in a nice way that she is wasting her time. I explained that her efforts were geniune but that this market is so saturated with listings, it may take some time to catch up.

I told her that we had a listing for a brand new home (investor) with over 1900 sqft under air with all appliances @ $259k and we were getting no offers. We lowered the price to $249 this week and we may see an offer in the next day or two. But there are no guarantees on that.

Now I know at this time last year, that house would have lasted less than 2 weeks on the market. It is so difficult to understand. But we have to keep plugging along.

I also saw in the news about the 50 year mortgage that began in California....SCARY!!! But this is what we are coming to, 40 and 50 year mortgages. Single family homes for sale in the Cape is @ 4883 units according to the latest MLS numbers. Remember, this is only single family homes. This does not include condos, duplex's and forget about mentioning lots. I just received an email for a dry lot in the Cape @ $69,000.

Things are changing...people are moving out and cashing in to buy something else in Georgia, South Carolina and North Carolina. I hear it's beautiful up there this time of the year.

Till next time.

Visit my site @ www.MarkDDiaz.com

Tips for selling in a declining real estate market

2006-05-09T23:51:00.000-12:00

Wednesday, May 10, 2006By Ilyce R. Glink Inman News

And they said the good times would never end.

Unfortunately for home sellers nationwide, the red-hot seller's market of the last few years has cooled – dramatically in some places. The National Association of Realtors (NAR) estimates that existing home sales will drop 6 percent in 2006, from last year's record highs.

If you've been waiting to sell, this isn't the news you want to hear. But it's still possible to make lemonade even if the market feels a little sour in your neighborhood.
The best thing you can do is be realistic about your local market. Here are some things to keep in mind:Your home may not sell at the price you want

Although homeowners have been conditioned to believe that their home will appreciate by double-digit leaps each year, it may be tough to get top dollar right now. While you can price your home wherever you want, buyers are sophisticated enough to know what's a fair price and what's not. You're better off pricing your home right when you list it than pricing it at some sky-high price and turning off prospective buyers.

Consider under-pricing your competition.

With more homes on the market, some savvy sellers are under-pricing the competition in order to draw more attention to their home. If you do it right, you may end up in a bidding war and may wind up with a bid that's above your original list price. The idea is that buyers will recognize a deal and flock to it in droves.

It's tough to sell by owner in a slower market

Many home sellers dream of selling on their own and pocketing the commission. But it's hard to sell on your own in a slowing market because you're up against homes listed by agents who are putting their advertising muscle into getting their properties sold. If you want to try listing by owner, give it a whirl: price it right, use one of the companies that allows you to list it in the local Multiple Listing Service (MLS), and make sure it looks as good as possible. But if it hasn't sold in six weeks, hire a full-service agent.

Discount brokerages are still forming

The concept behind a discount brokerage firm is that the company does some of the work for a much smaller-than-average commission. The new twist is the "give back." Some firms will give you back up to half or three-quarters of their share of the commission. While discount brokerage sounds great, you have to do a lot of the work yourself.

No one wants to fix anything

Vintage is in--if you're in the clothing business. Movie stars wear vintage (that is, old) clothing by famous designers to walk on the red carpet. But when it comes to buying a home, new or like new is hot. So, get your home into selling shape by clearing out clutter, repainting rooms, packing away or giving away excess furnishings and clothing, and cleaning or replacing your carpets. Today's buyer wants to move in and not worry about anything other than replacing window treatments (if that).

Curb appeal has never been more important

The Internet brings the world of home sales to our desktops, in millions of living colors. If the photos of your home don't reflect a gorgeous exterior with a fabulous garden, it's possible that prospective buyers perusing the Web will simply move on to the next listing. Make sure your exterior is in such magnificent shape that buyers have to stop for a closer look. That may mean hiring a professional landscaper to give your garden a makeover, or painting your exterior to make it shine.

While plenty of homes are selling, listing times are lengthening. Naturally, it would be nice to sell within a couple of days of listing your home, but the reality is that your home may sit for months before fielding an offer. The best thing you can do is keep visiting other homes on the market to see what's selling, and how long it takes.

More Evidence of Slowdown in Housing Prices

2006-05-09T05:44:00.000-12:00

(May 9, 2006) -- Economists point to three subtle signs that the housing market is cooling.
The yearly increase in mortgage interest paid by households rose to 15.8 percent in the first quarter — a 24-year high — from 2005’s annual growth rate of 14 percent. "The steep advance … reflects an earlier atypical reliance on variable-rate mortgage debt for the purpose of affording costlier housing," John Lonski, chief economist for Moody’s Investors Service.
The homeownership rate slipped from 69.1 percent last year to 68.5 this year. Jan Hatzius, chief economist at Goldman Sachs says, "The decline in homeownership is particularly interesting because it has occurred in the face of strong rental-to-condo conversions of apartment buildings, which have expanded the supply of owner-occupied units. Thus, declining homeownership is very likely due to a decline in demand, not a decline in supply of owner-occupied units."
The owner-occupied vacancy rate is rising sharply. At 2.1 percent, the current rate is the highest on record. Hatzius believes this over-supply of homes for sale is already pushing existing home prices downward and that home price inflation will turn negative by the end of the year.

Source: The Dallas Morning News

How to Take Full Advantage of a Buyer's Market

2006-05-08T08:18:00.000-12:00

(May 8, 2006) -- Home buyers are getting the big breaks in an increasing number of U.S. markets, says Tom Early, president of the National Association of Exclusive Buyers Agents.But even as the market shifts to favor buyers, to get the best deal, buyers must take the right approach. Some advice from Early: Stifle the guilt. Some buyers feel guilty about pressing their advantage. Remind them, if the shoe were on the other foot, the seller would show no mercy.Be patient. In slow-moving markets, it is sometimes a good bet to simply wait until a stubborn seller sees the light and drops his price.A price drop may be just the beginning. When a seller drops the price, it may be a signal that he is facing a deadline and will negotiate still more.Take full advantage of a buyer’s right to a home inspection. The buyer may find an issue that can be used to his advantage in gaining concessions.Insults don’t work. Wounding the sellers’ pride in their home is never a good tactic. Also making a ridiculously below-market bid may shock the owners into refusing to talk anymore.

Source: The Miami Herald

Rates on 30-year mortgages climb again

2006-05-05T13:54:00.000-12:00

WASHINGTON -- May 5, 2006 -- Rates on 30-year mortgages climbed this week, hitting their highest point in nearly four years, a development that will be weighed by people thinking about buying a home or refinancing the one they own.

Freddie Mac, the mortgage company, reported Thursday that for the week ending May 4, rates on 30-year fixed-rate mortgages averaged 6.59 percent, up slightly from 6.58 percent last week.

This week's rate was the highest since the week ending June 20, 2002, when 30-year mortgage rates stood at 6.63 percent.

It marked the sixth week in a row that rates on 30-year mortgages went up. These rates have been rising as Wall Street investors have worried about inflation picking up.

"We expect that the mortgage rates will continue to trend upward over the coming year but that upward trend will be modest at best," said Frank Nothaft, Freddie Mac's chief economist.

Even so, higher rates will affect peoples' appetite to refinance their home mortgage, he said.

"Fewer families will be refinancing; but of those who are, a larger percentage will be drawing some equity out of their homes, many to pay off previously existing home-equity loans and lines of credit as these loans become more expensive," Nothaft predicted.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, also edged up this week to 6.22 percent, from 6.21 percent last week.

However, one-year adjustable rate mortgages dipped to 5.67 percent this week, down from 5.68 percent last week. Rates on five-year, hybrid adjustable-rate mortgages averaged 6.21 percent this week, unchanged from last week.

The mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried an average nationwide fee of 0.6 point. One-year ARMs carried a fee of 0.8 point and five-year ARMs had a fee of 0.7 point.

A year ago, 30-year mortgages averaged 5.75 percent, 15-year mortgages stood at 5.31 percent, one-year ARMs were at 4.22 percent and five-year ARMs averaged 5.16 percent.
Higher mortgage rates are expected to slow home sales this year. For five years running, home sales have hit record highs, powered by low mortgage rates.

On the Net: Freddie Mac:

Fed Chief: Only 1 More Rate Hike

2006-04-28T07:31:00.000-12:00

(April 28, 2006) -- Federal Reserve Chairman Ben Bernanke raised hopes yesterday that the quarter-point rise in interest rates he expects to put in place at the Fed’s next meeting May 10 will be the last for a while. The Fed, which has raised rates 15 times at policy meetings in the past two years, "may decide to take no action at one or more meetings" in the future while waiting for economic information, Bernanke told Congress' Joint Economic Committee. "Of course, a decision to take no action at a particular meeting does not preclude actions at subsequent meetings," he added.Boosting the rate to 5 percent at the Fed’s next meeting is a necessary step, Bernanke said, because, "Our assessment currently is that the risks to inflation are perhaps the more significant at the moment, and we need to address that."Source: Associated Press (04/29/06)

In the home-buying frenzy, renters could reap bargains

2006-04-18T07:52:00.000-12:00

WASHINGTON -- April 18, 2006 -- Almost since the turn of the millennium, the (so-called) "housing bubble" has been front-page news and editorial page speculation. But that's only half the housing story. What has been happening in the rental housing market is unprecedented; also, it is important for understanding what has really been happening to home prices and home sales.

The rental market is the other side of the boom -- the dark side, for rental property owners, the bright side for families looking for a bargain. For the first time in US history, the absolute number of renters has been falling. There are fewer now than there were 10 years ago. The number of renters peaked at 35.7 million families in early 1995. By mid-2004, it was down to 32.6 million. There has been a modest increase since then, to 33.7 million; at that rate, the 1995 peak will not be reached again until the end of the decade. At the same time, the number of owners has increased by more than 11 million, from 64 million in early 1995 to 75 million today. It will be close to 80 million by 2010.

(It's useful to bear in mind the distinction between numbers and percentages. The homeownership rate has been rising through most of the past century, but population growth has meant that the absolute number of renters, as well as owners, has been increasing. The number of owners dropped slightly in the Great Depression; the number of renters has never dropped over any extended period.)

Rental property owners face extraordinarily high vacancies. Currently the national vacancy rate is just under 10 percent. To put this in context, the traditional dividing line between "tight" and "loose" rental markets is a 6 percent rate. In several large metropolitan areas, the rental vacancy rate is above 15 percent - not just older slow-growth industrial areas like Cleveland and St. Louis, but also rapidly growing areas such as Atlanta and Houston.

This decade-long trend has been largely overlooked. One reason may be geography. Rental markets are tight in and around New York City and Los Angeles -- not just the two largest cities in the US, but also the two media centers. But these are almost the only tight markets among the 75 largest metropolitan areas, containing almost two-thirds of the rental housing stock. (Only Boston and Honolulu are also tight.) West of New York, and east of California, double-digit vacancy rates are the norm.

This fact only attracted attention in the aftermath of hurricane Katrina. A couple of weeks later, the press noticed the ready availability of vacant rental units in nearby Southern cities, but treated it as a convenient coincidence.

It was convenient, but more than a coincidence. About 300,000 low-income families were displaced by the hurricane. The Census Bureau counts more than 1.1 million vacant rental units in the South alone that rent for less than the $800 monthly housing assistance the Federal Emergency Management Agency has provided to refugees; there are another 1.4 million in the rest of the country.

It's worth keeping the rental market situation in mind when reading the next round of stories about the housing bubble. The long-term shift from renting to owning indicates that the bubble is really pretty solid. Mortgage lenders are better able to provide homeownership opportunities. They have the technology to assess risk more accurately, and reach further down in the income distribution to identify reasonable would-be first-time homebuyers. These families share the "American dream" of owning their own home.

As homeownership increases, house prices will continue to rise - not every month in every market, but from year to year broadly across the United States. And a substantial supply of rental homes and apartments will be available as well.

• John C. Weicher is director of the Center for Housing and Financial Markets at the Hudson Institute. From 2001-05, he was assistant secretary for housing and federal housing commissioner at the U.S. Department of Housing and Urban Development.

Where is this market headed???

2006-04-13T03:55:00.000-12:00

That is the million dollar question???

I can't seem to figure it out. You talk to fellow agents and they do not have the answer. You read the local papers and everything is negative about the market yet the writers and even the local gurus that have been here for quite some time think this is just a hiccup, that we are in a correction and prices are reverting to the norm they should be.

I am not so sure. I did a search yesterday in the MLS for gulf access homes in the SW cape (CC22) which covers an area west of Chiquita up to Veterans and down to Cape Harbour area. There were exactly 203 listings for single family homes with gulf access. This is just in one portion of the Cape!!! And this is only gulf access homes!!! Single family homes on dry lots was over 200 listings. Thats over 400 listings for single family homes in one section of the SW Cape. This is scary folks. Where is everyone going. Are the taxes driving everyone out. Is it the hurricanes? It must be the prices of homes. Affordability??? Everyone trying to cash out while they can. I'm not so sure it is employment because we are supposed to have one if not the lowest percentages of unemployment in the country.

I will agree that the taxes are very high considering the fact that if you buy a new or even a re-sale home in the $250's that your taxes are going to be at or over the $4000.00 mark.

I have had clients change there mind about buying here because of the taxes. I think we are in for a very long year and you will continue to see homes sit for longer periods.

Just in April alone and we are on the 13th, only 24 properties have sold and only 29 have gone pending. And this is supposed to be the peak time of the year.

I welcome your comments. Please visit my website at www.MarkDDiaz.com or email me @ markddiaz@hotmail.com

NAR: Housing Market to Stay on High Plateau

2006-04-11T06:11:00.000-12:00

(April 11, 2006) -- Home sales should generally level out and remain at historically high levels, according to the NATIONAL ASSOCIATION OF REALTORS®.David Lereah, NAR’s chief economist, says mortgage interest rates are trending up but will remain favorable. “Economic growth and job creation are providing a favorable backdrop for the housing market, but rising interest rates have an offsetting effect,” Lereah says. “Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau, meaning this will be the third strongest year on record.” Lereah expects the 30-year fixed-rate mortgage to rise to 6.9 percent by the end of the year.Growth in the U.S. gross domestic product is forecast at 3.7 percent in 2006, while the unemployment rate should average 4.8 percent.Existing-home sales are projected to drop 6.0 percent to 6.65 million this year from a record 7.08 million in 2005. New-home sales are likely fall 10.9 percent to 1.14 million from the record 1.28 million last year — both sectors would see the third best year following 2005 and 2004. Housing starts are forecast at 2.00 million in 2006, which is 3.2 percent below the 2.07 million in total starts last year.NAR President Thomas M. Stevens from Vienna, Va., says home prices are expected to cool, but not as much as in earlier projections. “Although housing inventories have been improving, the balance is still a bit more favorable for sellers and annual appreciation remains in double-digit territory,” says Stevens, senior vice president of NRT Inc. “Even so, the market is in a process of normalization — appreciation will return to normal single-digit patterns, providing solid investment returns into the future.”The national median existing-home price for all housing types is likely to increase 6.4 percent this year to $221,700, while the median new-home price is expected to rise 2.3 percent to $242,700.Inflation as measured by the Consumer Price Index is seen at 3.4 percent in 2006. Inflation-adjusted disposable personal income should grow 3.8 percent this year.

Second-Home Sales Hit New Record in '05

2006-04-05T11:17:00.000-12:00

(April 5, 2006) -- Sales of vacation homes and investment homes set new records in 2005, with the combined total of second-home sales accounting for four out of 10 residential transactions, according to the NATIONAL ASSOCIATION OF REALTORS®.The annual report, based on two surveys, shows that 27.7 percent of all homes purchased in 2005 were for investment and another 12.2 percent were vacation homes.

All together, there were 3.34 million second-home sales in 2005, up 16 percent from an upwardly revised total of 2.88 million in 2004. The market share of second homes rose from 36.0 percent of transactions in 2004 to 39.9 percent in 2005.Vacation-home sales increased 16.9 percent last year to a record 1.02 million from a downwardly revised 872,000 in 2004, while investment-home sales rose 15.7 percent to a record 2.32 million in 2005 from an upwardly revised 2.00 million in 2004.David Lereah, NAR’s chief economist, says all the factors at play in the second home market were favorable in 2005. “To begin with, the baby boom generation is driving second home sales – they’re at the optimum point in life when people become interested in second homes, they’re at the peak of their earnings, interest rates remain historically low and boomers want to diversify investments,” Lereah says.

There are significant motivational differences between vacation-home buyers and investment buyers, he adds. “Vacation-home buyers are making lifestyle choices and purchasing primarily for their own enjoyment,” he says. “Investment-home buyers are seeking rental income and portfolio diversification, although vacation-home buyers also mentioned diversification.”What factors are driving second-home purchases? For vacation-home buyers, 41 percent plan to use the property vacations, 31 percent to use as a family retreat and 28 percent to diversify investments, according to an NAR survey. For investment-home buyers, 55 percent are seeking rental income and 35 percent want to diversify investments.The median price of a vacation home in 2005 was $204,100, up 7.4 percent from $190,000 in 2004. The typical investment property cost $183,500 last year, up 24 percent from $148,000 in 2004. NAR President Thomas M. Stevens from Vienna, Va., says that not all second-homes sales are necessarily a second home: “Some of these purchases may be a third, fourth or fifth investment property, showing that housing is a good investment,” says Stevens, senior vice president of NRT Inc. “The lion’s share of investment homes is actually the primary residence of a renter. Most investment owners are seasoned buyers who understand the long-term benefits of ownership, but not everybody is cut out to be a landlord.” Four percent of all home owners hold three or more properties; 11 percent own two properties.Typical vacation-home buyers in 2005 were 52 years old, earned $82,800, and purchased a property that was a median of 197 miles from their primary residence.

However, 47 percent of vacation homes were less than 100 miles and 43 percent were 500 miles or more. Investment-home buyers last year had a median age of 49, an income of $81,400, and bought a home that was close by – a median of 15 miles from their primary residence.More than three-fourths of vacation-home buyers have no interest in renting their property, and 21 percent say it would become a primary residence on retirement, compared with only 2 percent of investment buyers. Fourteen percent of investment buyers and 6 percent of vacation-home buyers purchased a property that their son or daughter can occupy while in school.In describing characteristics that vacation home buyers value about their property, 40 percent want to be close to an ocean, river or lake; 34 percent close to family members; 27 percent close to preferred recreational activities; 27 percent close to their primary residence; 26 percent close to mountains; 24 percent close to a preferred vacation area; and 17 percent close to a job or school.Activities of interest that affected the decision to buy a particular vacation home include beach, lake or water sports, cited by 37 percent of buyers; golf, 29 percent; theme parks, 18 percent; winter recreation, 16 percent; hunting or fishing, 12 percent; and boating, 9 percent. Smaller categories included gambling; biking, hiking or horseback riding; and tennis.The largest concentration of vacation home buyers are in the Midwest, accounting for 33 percent of vacation home sales, although the property may be located in another region.

Buyers in the South accounted for 30 percent of vacation home transactions, the West, 20 percent, and the Northeast, 17 percent.Most investment home buyers are in the South – 38 percent of the total.

Buyers in the Midwest and Western regions each purchased 24 percent of investment property, and the Northeast, 15 percent.

One-third of vacation-home buyers and 36 percent of investment-home buyers said it was very likely that they would purchase another home, in addition to properties currently owned, within the next two years.

Lereah says it is difficult to project where the market will go in 2006. “Vacation-home sales will remain strong for the foreseeable future given the fact that baby boomers are favorably positioned in terms of affordability, as well as being at the stage in life when people are most interested in making that kind of a lifestyle purchase,” he said. “Discretionary purchases of that nature are more likely in a healthy economy, and that is looking positive as well.”“On the other hand, investment home sales are likely to decline this year, in part because of higher interest rates,” Lereah says. “There are fewer incentives to speculate in the market with price appreciation cooling in much of the country, and more oversight is being encouraged in the mortgage market. It’s hard to say how much speculation there may be in housing, but it’s probably a single-digit percentage of total home sales.”

NAR survey data shows only 2 percent of homes are sold in one year or less, but investment homes likely are under-represented in that particular reporting sample.Lereah expects a soft landing for the housing sector in 2006 with existing-home sales declining 5.7 percent to 6.67 million, the third highest on record. “Long term, the outlook for second homes is favorable because more people will be moving into the prime years for buying a second home,” he says.

Currently, there are 36 million people aged 50 to 59. However, there are 45.2 million people aged 40 to 49. “That younger segment will become a driving force in the second home market over the next decade,” he says.The second-home report is based on two surveys. One, to determine market share and to extrapolate sales data, was conducted in March 2006 of a panel of recent home buyers. That survey captured data for 3,406 home buyers in 2004 and 2005, with roughly equal samples for each year; data were weighted to correspond with demographic findings in an earlier mailed survey.

To determine median home prices, most of the demographics and buyer preferences, NAR mailed an eight-page questionnaire to a national sample of 145,000 buyers who purchased their homes between mid-2004 and mid-2005 based on county records. It generated 7,813 usable responses; the response rate was 5.4 percent. Data in this report only includes data from respondents who indicated that they purchased a vacation home or investment property. A more extensive study, The 2006 National Association of Realtors® Profile of Second Home Owners, currently is underway and will be released in late spring. This study will be based on a large sample of existing owners and will update NAR’s benchmark study of second home owners that was published in 2002.—NAR

This market and where are we heading?

2006-04-02T02:43:00.000-12:00

I recently received the latest "Growth Engine of Southwest Florida" paper from the City of Cape Coral in the mail. Although it pleases me to see the amount of changes being made with new commercial businesses and restaraunts going up at every corner it seems, the housing is what really bothers me. The city stated in the report that last year alone they received over 7,000 permits to build single family homes. Now I can almost guarantee that a good majority of those permits belong to investors/speculators that just absolutely flooded this area.

Here is my concern. There are currently 4,098 single family homes, not condos, not townhomes, not duplex's, but homes on the market for sale. And this is based only on the Greater Ft. Myers MLS. This does not include the Cape Coral MLS. I belong to both MLS boards so I know for a fact that there are realtors in the area that only belong to one board and therefore, more single family homes are on the market than the previous mentioned number.

OUCH!!!!

Here is the other issue, where are all the buyers??? We are just not seeing them. Homes are staying on the market longer. People are putting there houses up for sale for reasons most of us are not even sure why. Where are all these people going??? On top of that, some believe they can obtain prices on their homes based on prices from early last summer. That is not going to happen. If you drive up to the NW or NE Cape you see alot of empy homes for sale. Did I mention investors. We even found out through one of our clients that he has a friend who decided to invest, that he cannot flip his property fast enough and that he is making payments on the mortgage with a credit card. SCARY!!!

The problem to that persists is the taxes. The city taxes you on a new home you purchased based on 90% of the sales price or $2100.oo per 100,000. So what that means to a new family moving into the area looking at a $300,000 home is that they will be taxed right around the $6,000 per year mark. That is insane.

We recently had an office meeting discussing this market and knowing the number of homes that are actively for sale. We were also informed that there are even more homes in the pipeline (permitting stage) to come. We also found out that there are several builders in the area that are having financial problems. Most likely it is those builders who opened their doors to investors telling them they could put little money down and have a home built in a year. I have heard that with a cetain builder that now it is taking more than a year to build. I see this picture as investors who put their little bit of money down say 9 months ago or more and then they see where the market is and then they are basically walking away from their deposit. This leaves the builder with a partially finished home that they must use their own monies to complete and then try and sell.

Will the Cape continue to see growth....absolutely. I am not sure that it will be at the same torrid pace we have seen in the last 2-3 years. I have been here almost three years. I come from the east coast of Florida. Miami to be exact and I have spoken with friends there that tell me the same thing about this market. There are a ton of homes for sale. Just drive down the streets and it seems that there are 3-6 "For Sale" signs.

We are in a "buyers market" now folks. So be prepared to see your homes sit on the market for quite some time because the buyers have the upper hand now with so much to pick and choose from.

Housekeeping Made Easy

2006-03-31T16:34:00.000-12:00

HousekeepingChannel.com

One of the first major steps sellers must take before putting their homes on the market — besides finding a real estate practitioner, of course — is to clean each room from floor to ceiling. Windows must sparkle, lighting fixtures must shine, and tabletops must be clutter free. Depending on how long your clients have lived in the home, this step could be one of the hardest tasks to tackle. To get them started, refer them to this Web site for time-saving tips on cleaning, de-cluttering, organizing, and time management. They’ll find advice for virtually every area of the home, including the exterior. The site, heavy with articles and how-to guides, has a no-frills design that requires a lot of scrolling to view all of the articles for each topic — and many articles appear in more than one section. However, your clients will probably find that the tips are well worth those minor frustrations. These are some highlights:

Kitchens. Potential buyers will pay special attention to the kitchen, so it has to look its best. This section of the site houses articles and checklists related to keeping the kitchen clean. Sellers with limited time will learn about The 10-Minute ‘New’ Look, a quick way to clean the most visible areas of the kitchen and other high-traffic areas of the home. Your customers can get their granite countertops sparkling with tips from Stone Care Made Easy, an article about cleaning natural stone surfaces. And to really speed up the cleaning process, sellers can Form a Family Cleaning Team.

Tools. When your clients need the right tool to get their home clean, they can learn about the latest and greatest products here. From Organizing tools to Furniture & Dusting products, they’ll find a little bit of everything.

Garages, Patios & Home Exteriors. With all of the focus on sprucing up the inside of the home, it’s easy to forget about the other important areas. Encourage sellers to put these Garage Organizing Tips to use and to do some Exterior House Cleaning before prospective buyers arrive. If getting rid of the junk that’s filling up the garage and patio is a problem, sellers can learn about The Virtual Garage Sale as a way to get rid of their extra stuff.

Windows. Natural sunlight does wonders for the appearance of a home, so remind sellers to give their windows a good cleaning. If they don’t know where to begin, they can start by learning simple strategies used by professionals for Painless Window Cleaning. Make sure they don’t forget to Clean Screens, too. It’s also important that any window coverings are free of dust and dirt, so share these Inside Tricks to CleaningWindow Shades and Blinds.

HC-Pedia. If sellers clearly don’t have a clue about cleaning, they may need to consult this dictionary of cleaning terms. Each term includes a brief definition, but a more detailed explanation — including suggested uses for cleaning products, safety tips, and advice for cleaning various surfaces — appears when you click on a term. For example, under the entry for Acoustical Tile Ceiling, you’ll learn that dirt can be removed by using a dry sponge. Or clean a Rust Stain by rubbing it with a sponge dampened in lemon juice or plain white vinegar.

30-Year Mortgage Rates Fall a Second Week

2006-03-27T01:57:00.000-12:00

WASHINGTON (AP) -- March 24, 2006 -- Rates on 30-year mortgages, which had jumped to the highest level in 2 1/2 years, edged down for a second straight week.

Mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.32 percent this week, down from 6.34 percent the previous week.

The latest decline was the second in a row after 30-year rates had reached a high of 6.37 percent the week of March 9, the highest point since rates averaged 6.44 percent the week of Sept. 5, 2003.

Analysts attributed the latest decline to good news on inflation easing investors' worries about price pressures. Wholesale prices tumbled by 1.4 percent in February, the biggest drop in nearly three years, while consumer prices were up a tiny 0.1 percent last month after having jumped by 0.7 percent in January.

"The most recent economic indicators … showed that inflation is, indeed, being held in check. That news allowed long-term mortgage rates to drift a little lower," said Frank Nothaft, Freddie Mac's chief economist.

The National Association of Realtors reported Thursday that sales of existing homes shot up by 5.2 percent in February after five straight months of declines.

Analysts said the unexpectedly strong showing for sales last month was heavily influenced by unusually warm weather but also offered hope that the housing market will slow this year but not collapse.

"The housing industry remains fundamentally fit as we move into the spring buying season," Nothaft said.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.97 percent this week, down from 5.98 percent last week.

One-year adjustable rate mortgages edged up slightly to 5.41 percent, compared to 5.37 percent last week.

Rates on five-year hybrid adjustable rate mortgages also rose, climbing to 5.96 percent, up from 5.93 percent last week.

The mortgage rates do not include add-on fees known as points. The 30-year and 15-year mortgages carried an average nationwide fee of 0.6 point while the one-year ARM and the five-year ARM carried average fees of 0.7 point.

A year ago, 30-year mortgages averaged 6.01 percent, 15-year mortgages stood at 5.56 percent, one-year adjustable-rate mortgages were at 4.24 percent and five-year hybrid adjustable rate mortgages averaged 5.35 percent.

Copyright © 2006 Associated Press

Building Costs Go Higher and Higher

2006-03-21T06:10:00.000-12:00

(March 21, 2006) -- Construction costs are soaring with building costs estimated to have jumped 9.5 percent last year after averaging only 3 percent a year for the past decade.The problem is worse in fast-growing parts of the country. In Florida, costs are expected to rise 10 percent to 12 percent in 2006, compared with a national increase of 8 percent to 10 percent, according to U.S. Commerce Department.In Las Vegas, high-rise condominium projects are being canceled due to higher-than-expected building costs. Demand for land has skyrocketed, with prices averaging $708,000 per acre in the third quarter, a 99 percent increase over 2004.Higher material costs accounted for half the rise in construction spending last year, the U.S. Commerce Department estimates.

NAR: Housing market readjusting to normal balance

2006-03-14T09:32:00.000-12:00

WASHINGTON -- March 14, 2006 -- A lower level of home sales expected this year will create a more level playing field for buyers and sellers on the heels of a five-year sellers’ market, according to the National Association of Realtors® (NAR).

David Lereah, NAR’s chief economist, says the number of homes on the market has been improving nicely. "The cooling from overheated sales conditions in recent months is helping to bring inventory levels up to the point where buyers have more choices than they’ve seen in the last five years," Lereah says. "Annual price appreciation is still running at double-digit rates, but the cause of those sharp increases is going away. As the market readjusts, price appreciation should return to more normal rates of growth this year."

The national median existing-home price for all housing types is projected to rise 5.8 percent in 2006 to $220,300. The median new-home price should increase 5.4 percent this year to $250,200.

Existing-home sales are expected to fall 5.7 percent to 6.67 million in 2006 from the record 7.08 million last year. At the same time, new-home sales are forecast to decline 7.7 percent to 1.18 million from a record 1.28 million in 2005 -- each sector would be at the third highest year following the tallies for 2005 and 2004. Housing starts are likely to total 1.98 million this year, down 4.3 percent from 2.06 million in 2005.

NAR President Thomas M. Stevens says some homebuyers and sellers have unrealistic expectations. "Some sellers in markets that have had rapid appreciation are listing the price of their home too high, but those homes are just languishing on the market," says Stevens. "At the same time, some buyers who have believed hype about a housing bubble are hoping prices will drop, but that’s not happening either.

"Consumers need professional assistance to understand and negotiate the current market realities. Sellers should listen to their agent’s advice to competitively price and show the home, and buyers may want to choose a buyer’s agent to represent their interests and help them negotiate favorable terms. Today’s market has changed a lot from the conditions we’ve seen during the last five years."

The 30-year fixed-rate mortgage should increase gradually to 6.9 percent in the fourth quarter.

Inflation as measured by the Consumer Price Index is projected at 3.3 percent this year. Inflation-adjusted disposable personal income is expected to grow 3.7 percent in 2006.

Growth in the U.S. gross domestic product is forecast at 3.5 percent in 2006, while the unemployment rate is seen to average 4.8 percent this year.

© 2006 FLORIDA ASSOCIATION OF REALTORS

Coming Soon: 50 year Mortgage Loans

2006-03-13T06:42:00.000-12:00

(March 13, 2006) -- Fifty-year mortgage loans are the buzz of the lending industry, with 40-year mortgage loans becoming more popular in California and other parts of the country where many buyers are priced out of the market.About one-quarter of the loans closing in California have 40-year terms, says John Marcell, president of the California Association of Mortgage Brokers.Fannie Mae says it plans to expand its purchase of 40-year mortgages, making them an option for more lenders. For 50-year loans to become a reality, Fannie Mae would have to agree to purchase them as well. Mortgage brokers hope that will happen."It's a good idea for consumers," says Marcell. "There's nothing wrong with a 50- or 60-year mortgage."

Source: Inman News, Janis Mara (03/11/2006)

Housing Market Readjusting to Normal Balance

2006-03-13T06:40:00.000-12:00

(March 13, 2006) -- A lower level of home sales expected this year will create a more level playing field for buyers and sellers on the heels of a five-year sellers’ market, according to the NATIONAL ASSOCIATION OF REALTORS®.David Lereah, NAR’s chief economist, said the number of homes on the market has been improving nicely. “The cooling from overheated sales conditions in recent months is helping to bring inventory levels up to the point where buyers have more choices than they’ve seen in the last five years,” Lereah said. “Annual price appreciation is still running at double-digit rates, but the cause of those sharp increases is going away. As the market readjusts, price appreciation should return to more normal rates of growth this year.”

The national median existing-home price for all housing types is projected to rise 5.8 percent in 2006 to $220,300. The median new-home price should increase 5.4 percent this year to $250,200.Existing-home sales are expected to fall 5.7 percent to 6.67 million in 2006 from the record 7.08 million last year. At the same time, new-home sales are forecast to decline 7.7 percent to 1.18 million from a record 1.28 million in 2005 – each sector would be at the third highest year following the tallies for 2005 and 2004. Housing starts are likely to total 1.98 million this year, down 4.3 percent from 2.06 million in 2005.NAR President Thomas M. Stevens from Vienna, Va., said some home buyers and sellers have unrealistic expectations. “Some sellers in markets that have had rapid appreciation are listing the price of their home too high, but those homes are just languishing on the market,” said Stevens, senior vice president of NRT Inc. “At the same time, some buyers who have believed hype about a housing bubble are hoping prices will drop, but that’s not happening either.“Consumers need professional assistance to understand and negotiate the current market realities. Sellers should listen to their agent’s advice to competitively price and show the home, and buyers may want to choose a buyer’s agent to represent their interests and help them negotiate favorable terms. Today’s market has changed a lot from the conditions we’ve seen during the last five years.”

The 30-year fixed-rate mortgage should increase gradually to 6.9 percent in the fourth quarter.Inflation as measured by the Consumer Price Index is projected at 3.3 percent this year. Inflation-adjusted disposable personal income is expected to grow 3.7 percent in 2006.Growth in the U.S. gross domestic product is forecast at 3.5 percent in 2006, while the unemployment rate is seen to average 4.8 percent this year.

Florida Real Estate Headlines

2006-03-07T04:55:00.000-12:00

Sign of the Times...

There was a lot of housing data released last week, with all signs pointing to the expected slowdown in the market.

Florida single family homes sales down, prices up. In FAR's latest housing survey, 12,815 single family existing homes sold in January compared to 15,745 homes sold a year ago- a decline of 19%.

Florida's median sales price for existing single-family homes last month rose 21% to $248,600.

Same story for the Florida condo market. For the first time FAR is reporting closed sales of existing condominiums by Realtor members throughout the state, along with median sales price, with the January 2006 figures.

Here is what they came up with... 4,456 existing condos sold statewide, an 18% decline from January 2005 figures. The statewide median sales price for condos rose 12% to $221,300 in January.

National existing home market softens. NAR reports that sales of single family homes, town homes, condos and co-ops in January were at a seasonally adjusted annual rate of 6.56 million, the lowest level in two years and a 2.8% drop from December figures. The inventory of unsold homes on the market increased 2.4% to 2.91 million-the largest supply since August 1998.

January chill extends to new home market. New home sales nationwide slipped 5% in January to an annual rate of 1.23 million units. The median new home price shot up 6.7% from the previous January to $238,100-a gain that experts attribute to incentives offered by builders that boost their costs but do not lower the final sales price.

Lets do the numbers-

30-year fixed-rate mortgage: 6.24% down from 6.26% the previous week.

Be sure to visit my website @ www.MarkDDiaz.com

Decline in Pending Home Sales Eases

2006-03-06T05:58:00.000-12:00

(March 6, 2006) -- A slide in pending home sales is beginning to level out, an indication of a more sustainable level of home sales in the months ahead, according to the NATIONAL ASSOCIATION OF REALTORS®. The Pending Home Sales Index, based on contracts signed in January, slipped 1.1 percent to a level of 116.3 from an upwardly revised index of 117.6 in December, and is 4.8 percent below January 2005. After hitting a record of 128.2 last August, the index declined at a more rapid pace through December, averaging nearly 3 percentage points per month.The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed; pending home sales typically are finalized within one or two months of signing.An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales.David Lereah, NAR’s chief economist, had foreseen a flattening in the index. “This looks like we’re touching down for the soft landing we’ve been expecting,” he said. “We are at a much more sustainable level of home sales now – a welcome cooling from the super-heated conditions that were driving exceptional price gains. This will give people the time to be more thoughtful about a process that is the biggest single investment most of us make in our lifetime.”“Home sales at this level are historically strong and provide a solid foundation for the overall economy,” he said. “Business spending will lead economic growth this year, and housing wealth will help to support consumer spending.”Regionally, the PHSI in the Midwest rose 6.0 percent in January to 114.3 but was 1.0 percent below January 2005. In the Northeast, the index increased 0.4 percent to 94.8 but was 12.0 percent below a year ago. The index in the West declined 1.9 percent to 115.8 in January and was 13.6 percent lower than January 2005. The index in the South dropped 5.1 percent to a level of 128.6 in January but was 2.0 higher than a year ago. — NAR

30-year mortgage rates fall for 2nd week

2006-03-04T15:23:00.000-12:00

WASHINGTON -- March 3, 2006 -- Rates on 30-year mortgages edged down slightly this week, the second consecutive decline, according to a nationwide survey of rates.

Mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.24 percent this week, down from 6.26 percent last week.

The 30-year mortgage declined for three straight weeks at the beginning of the year, then posted four straight increases, hitting a high for this year of 6.28 percent three weeks ago.

Analysts noted that all of the changes have been very small. They forecast that moves for the rest of the year were likely to be modest also as long as the Federal Reserve does not feel the need to push interest rates up more aggressively to fight inflation.

"Our forecast calls for rates on 30-year fixed-rate mortgages to increase about one-quarter of a percentage point by the end of the year," said Frank Nothaft, chief economist for Freddie Mac.

If that forecast proves accurate, it would mean 30-year rates would be at 6.5 percent by December. Other analysts think that rates could go as high as 7 percent by the end of this year.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.89 percent this week, unchanged from last week.

One-year adjustable rate mortgages edged up slightly to 5.34 percent from 5.32 percent last week.

Rates on five-year hybrid adjustable rate mortgages edged up to 5.97 percent this week, from 5.96 percent last week.

The mortgages rates do not include add-on fees known as points. The one-year adjustable rate mortgage had a nationwide average fee of 0.8 point last week. The other three mortgage categories carried nationwide average fees of 0.6 point.

A year ago, 30-year mortgages averaged 5.79 percent, 15-year mortgages stood at 5.33 percent, one-year adjustable-rate mortgages were at 4.14 percent and five-year hybrid adjustable rate mortgages averaged 5.17 percent.

On the Net: Freddie Mac:

Market not as bad as everyone thinks...

2006-03-02T08:34:00.000-12:00

If you continue to read the bad press...eventually you are going to believe it!!!

Stevens on Today Show: Cooling No Cause for Alarm(March 2, 2006) -- NATIONAL ASSOCIATION OF REALTORS® President Thomas M. Stevens appeared on NBC's "Today" show this morning, dispelling fears of a housing market crash.In a segment titled "Real Estate Market May Be Cooling Off," Stevens said although there has been a lot of talk about a hard landing in real estate, he isn't worried. Interest rates are still low, and homes are selling for 12 percent more than they did a year ago in January.But Stevens acknowledged that sellers need to recognize the reality of the market. More inventory means they may not be able to count on the giant gains of the past few years."Just because the neighbor might have sold their home two months ago and realized a 40 percent gain in a period of a year or two years, I think they have to evaluate what they need to do to get that home sold based on the competition in the marketplace," Stevens said.To see the full transcript of the interview, along with a video clip, go to REALTOR.org.

BUILD IT AND THEY WILL COME

2006-02-28T15:00:00.000-12:00

What hurricanes? Commercial and residential Realtors with a market
niche based on the state's tourism industry were not disappointed in
2005. The preliminary number of visitors to the state released
yesterday showed a record number of tourists, which fueled demand
for single-family homes used for short-term rentals, hotels or related
service industries. According to Gov. Jeb Bush, a new record-high of
85.8 million visitors in 2005 represents an increase of 7.6 percent over
the same period in 2004, based on research from Visit Florida, the
state's official source for travel planning. It also marks the first time
annual visitation to Florida has exceeded the 80 million mark. Domestic
travel to Florida increased 7.7 percent to more than 79 million in 2005
with domestic visitors representing 92 percent of total visits.
Internationally, an estimated 2.1 million Canadians visited Florida in
2005, an 8.2 percent increase from 2004. Overseas travel to Florida
increased by as much as 6.3 percent over 2004, to 4.7 million in 2005.

Florida's housing market shows price gains in January

2006-02-28T14:52:00.000-12:00

ORLANDO, Fla. -- Feb. 28, 2006 -- Coming off several years of blistering home sales at a record pace, Florida's housing sector followed the national trend in January and showed signs of some market adjustments, according to the Florida Association of Realtors® (FAR). Still, the statewide median sales price for existing single-family homes last month rose 21 percent to $248,600; a year ago, it was $205,100.

Housing industry analysts nationwide noted it may take a while for home price growth to cool, following a long period of short supply and sellers accustomed to exceptional price gains. In January 2001, the statewide median sales price for single-family homes was $115,800, which means a gain of about 114.6 percent over the five-year-period, according to FAR records.

Realtors from across the state report that more homes are available for sale, improving what had been tight inventories in many markets. Statewide, sales of single-family existing homes totaled 12,815 in January compared to 15,745 homes sold a year ago for a 19 percent decrease.

2006 FAR President Mike Dooley notes that the market is coming into better balance between buyers and sellers. "For years, many areas in Florida reported tight inventories of homes available for sale," he says. "Now that buyers are seeing more choices, it’s even more important for both buyers and sellers to seek advice from real estate professionals. With the expertise and services that Realtors bring to the table, they help to bridge any differences between buyers and sellers that may arise during the sales process and work to keep the transaction going smoothly for everyone involved."

In December 2005, the national median sales price for existing single-family homes was $209,300, up 10.8 percent from the previous year, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $548,430 in December; in Maryland, it was $311,914; in New York, it was $279,900; and in North Carolina, the statewide average resales price was $209,810.

Sales of existing condominiums in Florida also decreased last month, with a total of 4,456 condos sold statewide compared to 5,461 in January 2005 for an 18 percent decline, according to FAR. The statewide median sales price for condos rose 12 percent to $221,300 last month; a year ago, it was $197,300. NAR reported the national median existing condo price was $228,100 in December 2005.

This release marks the first time that FAR has reported monthly condo sales in the state's metropolitan statistical areas. In conjunction with the University of Florida Real Estate Research Center, FAR began compiling data on closed condo sales for comparison purposes in 2005.

Last month, interest rates for a 30-year fixed-rate mortgage averaged 6.15 percent, up from the average rate of 5.71 percent in January 2005. 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 Orlando Metropolitan Statistical Area (MSA) reported higher existing condo sales last month but slower sales of single-family homes. A total of 439 condos changed hands in January compared to 185 condos a year ago -- a dramatic increase of about 137 percent. The market's median sales price for condos rose 42 percent to $185,100; a year ago, it was $130,400.

Beverly Pindling, president of the Orlando Regional Realtor Association and broker- partner/sales training manager with Orlando Real Estate Professionals, says condos offer an affordable housing choice for many buyers, as well as a more maintenance-free lifestyle.

"The Orlando area offers exciting options for residents," she says. "There are job opportunities here, a new medical school is coming and, compared to many places in the north, the cost of living here is lower. Orlando is a convenient, comfortable place to work, shop, live and obtain an education."

Among the state’s smaller markets, Ocala reported higher sales of existing single-family homes in January, with a total of 428 homes sold compared to 378 homes a year ago for a 13 percent boost. The median sales price rose 39 percent to $166,200; a year ago, it was $119,600.

Wilbur Van Wyck, president of the Ocala/Marion County Association of Realtors and broker-owner of Coldwell Banker Riverland Realty in Dunnellon, says people are drawn to the area's scenic beauty, relaxed lifestyle and friendly community. "People are coming up from South Florida where traffic and living conditions are much more congested," he says. "This area is gorgeous and it's a great place for retirees to live."

© 2006 FLORIDA ASSOCIATION OF REALTORS

Don't overlook tax break of home mortgage points

2006-02-26T12:41:00.000-12:00

NORTH PALM BEACH, Fla. -- Feb. 24, 2006 -- If you have ever taken out a mortgage, you probably already know of the tax advantage provided by deducting your mortgage interest payments.

But many homeowners overlook another tax break available for points paid to get a home loan. In some cases, points also could shave tax bills for folks who refinanced or got an equity loan or line of credit.

Each point is 1 percent of the loan amount. Lenders charge points as a way to make a profit, and borrowers generally pay points in exchange for lower mortgage rates.

If you paid points, the amount should be listed on the 1098 statement from your lender. This document also notes how much mortgage interest you paid. Both of these deductible amounts go on line 10 of Schedule A. (If the points aren't on that statement, but show up elsewhere -- for example, on your closing documents -- enter them on line 12. Check the Schedule A instructions for details.)

Getting the maximum deduction

On a conventional mortgage (usually a fixed-rate, 30-year loan that is not insured by a federal agency), points may be paid by either buyer or seller or split between them. Even if the seller pays all the points, the buyer gets the deduction. Exactly how much of one and when depends on the loan circumstances.

Loan points are fully deductible in the year paid if they meet all these requirements: The loan is secured by your main home, the house you live in most of the time. Paying points is an established business practice in your area. The points are generally what is charged in your region. You use the cash method of accounting: You report income in the year you receive it and deduct expenses in the year you pay them. Most individuals do this. The points are not paid in place of amounts ordinarily stated separately on the settlement sheet. That is, you cannot pay points in exchange for lower or no appraisal fees, inspection fees, title fees, attorney fees and property taxes. The funds you come up with at or before closing, plus any points the seller pays, must be at least as much as the points charged. The money does not have to apply just to the points. It can include a down payment, escrow deposit or earnest money. But it all must come to at least as much as the points. For example, you took out a $100,000 mortgage and were charged $1,000 (one point). However, your lender only required a $750 down payment. In this case, you cannot deduct the full $1,000 points payment, only $750 of it. The remaining $250 must be deducted over the life of the loan. And you cannot have borrowed any of the money you paid at closing from your lender or mortgage broker. The loan is used to buy or build your main home. The points are computed as a percentage of your mortgage's principal amount. The amount is clearly shown on the settlement statement as points charged for the mortgage. The points may be shown as paid from either buyer or seller funds.

These point deductibility rules apply to loan costs associated with your primary residence. When the loan is tied to a property that is not your main home, the points cannot be fully deducted in the year the loan was made. Points paid on a loan secured by a second home or vacation residence, regardless of how the cash is used, must be amortized over the life of the loan.

Refi points

While points-deductibility definitely is a tax-saving option buyers should explore any time they get a loan to buy another home, a taxpayer who simply refinances also might be eligible for this tax break.

In most refinancing cases, a homeowner must deduct any loan points over the life of the loan. But if part of the refinanced mortgage proceeds are used to improve the main home and tests 1 through 6 listed previously are met, the portion of points attributable to the improvement can be deducted in the year paid. Any points related to the refinanced existing balance, however, are not eligible for immediate tax-deduction purposes; they still must be amortized over the life of the refinanced loan. These points-deductibility rules also apply to home equity loans or home equity lines of credit.

If, however, you use your refi to get some extra cash or take out a home equity loan or line of credit and then use the money for something else, such as paying college costs or buying a car, you still can deduct the points, but not all at once. The points deductions must be parceled out over the equity loan's term.

To figure the annual deduction amount, divide the total points paid by the number of payments to be made over the life of the loan. You should be able to get this information from your lender. For example, a homeowner who paid $1,500 in points on a 30-year second mortgage (360 monthly payments) could deduct $4.17 per payment, or a total of $50 for 12 payments, for each tax year of the loan.

Challenging the amortization rule

Last year, a California couple won a tax-court ruling against the IRS demand that refi points be paid over the life of the loan.

In this case, Gary and Rebecca Hurley paid $4,400 in points to refinance their home in 1999. The home equity funds eventually were used to make substantial home improvements. The upgrades took several years to complete, but when the Hurleys filed their 1999 return, they deducted the total points since they knew they were going to use the loan funds toward improving their residence, as the rules state.

The IRS disagreed and instructed the couple to spread the deduction over the life of the 15-year equity loan. The IRS' contention: Since all the loan money was not used in the 1999 tax year for the improvements (it took the couple until 2003 to complete the house work), the immediate deduction was not allowed.

The Hurleys went to tax court. Last September, the court agreed with the couple. Specifically, the judge concurred that the refinancing was done, as required by tax law, "in connection with" home improvements, therefore entitling the Hurleys to deduct all of their points in the year they got the loan.

The judge also said the IRS offered no evidence that current rules require the eligible home improvements be done in the year of the refinancing.

A couple of notes here. First, the Hurleys followed the cardinal rule of dealing with the IRS: They kept copious records detailing their deduction-related expenditures.

Secondly, and more importantly for the rest of us, the ruling sets no tax-law precedent. The judge issued what is known as a summary opinion, a ruling that is not treated as the basis for future tax arguments.

However, the Hurleys' persistence shows that it is possible to fight the IRS and win, as long as you go in prepared, are patient and have the means to hire a good tax attorney. Who knows? Another tax court judge might just have the same point of view as the one who heard the Hurleys' case.

Serial refinancing

Amortizing also comes into play for serial refinancers -- homeowners who take repeated advantage of low mortgage rates to get better and better home loans. The good news for most homeowners is that they don't lose that portion of the first refi's points that they've been amortizing.

The IRS says you can deduct any remaining balance of the points in the year the mortgage ends, either due to a prepayment, refinancing, foreclosure or similar event. Say, for example, our hypothetical refinancer got his loan three years ago. It was a 30-year loan, so he deducted $50 in points on his last three tax returns. Now he decides to refinance again because rates are even lower. Since the first refi is paid off via the second refi, he probably can deduct the remaining $1,350 in points on his next tax return.

But, this immediate, and often large, points tax break doesn't apply in every case. If, for instance, the second refinancing is with the same lender, the IRS says you cannot immediately deduct any remaining balance of your first refi's points. Instead, the remaining points balance from the first refi is added to your new refinance amount. You then continue to deduct them, along with any points from the second refi, for the life of your new loan.

So while points paid on refinanced loans usually don't provide immediate tax breaks, even when amortized they can save you some tax dollars. You can learn more about homeownership tax advantages and the tax basics of owning your own home at Bankrate.com. If you want the technical scoop straight from Uncle Sam, check out Internal Revenue Service Publication 530, Tax Information for First-Time Homeowners, and Publication 936, Home Mortgage Interest Deduction, and if you want to know if paying points makes sense for you, see "Paying mortgage points: a primer."

© 2006 Bankrate.com

Affordable housing has lawmakers' attention

2006-02-23T06:51:00.000-12:00

Affordable housing has lawmakers' attentionBy Aaron Deslatte CAPITOL BUREAU

For younger families, police, firefighters and service-sector workers, Florida is becoming a dream state only the wealthy can afford.

The bubbling real-estate market pouring tax revenue into government coffers is also eliminating potential employees from classrooms, grocery checkouts, hospitals and fire stations - vital services where the pay doesn't match the price of homeownership.

Lawmakers are floating a range of affordable housing ideas this year, from covering down payments on homes for teachers to requiring cities, counties and school districts to build housing complexes on vacant land they own. But for any to pass this spring, the Legislature will have to revisit a decision made after the 2001 terrorist attacks - and subsequent economic downturn - to limit taxes from real-estate sales devoted to affordable housing construction.

''The American Dream to me is property ownership, and we're killing it,'' said Sen. Mike Bennett, a Bradenton developer who heads the Senate committee handling affordable housing. ''We're at a crisis point. We're finding it's slowing down economic development because companies can't find workers. Hospitals can't find nurses. Local governments can't find police officers and firefighters.''

Through the 1990s, state spending on affordable housing rode the rising tide of home sales up to $250 million. But when Florida's economy tanked in the months after Sept. 11, lawmakers began using trust-fund dollars to balance the budget.

Last year, at the behest of Gov. Jeb Bush, the Legislature capped the amount of money dedicated for affordable housing at $243 million starting in 2007 - less than half of the money that would otherwise go to affordable housing. Meanwhile, housing costs have exploded from a median existing home price of $141,000 in 2002 to $250,000. ''Someone who could buy a house four years ago without any government assistance all of a sudden needed $30,000, $40,000, $50,000 of help from somewhere to buy a house,'' said Mark Hendrickson, an affordable-housing expert and former director of the Florida Housing Finance Agency.
Now a growing number of lawmakers want to eliminate the cap so they can pass new programs to help would-be homeowners.

''We had a good reason to keep the lights on (in 2002) but we've had time to enjoy that largess for some time, and we have not backed off,'' said House Growth Management Chairman Randy Johnson, R-Celebration.
Johnson, Bennett and other lawmakers say Florida can't afford the cap anymore if it wants to increase low-cost housing in its highest-growth communities in Southwest Florida, Central Florida and the Panhandle.

''We want teachers from around the country to know you can come here and buy a house,'' said Rep. John Stargel, R-Lakeland. Stargel's House Choice and Innovation Committee hopes to cut into Florida's projected 32,000-teacher shortage by using $50 million in Sadowski money to offer up to $18,000 in aid to new teachers trying to buy a home. The Sadowski Act Trust Fund, created by the Legislature in 1992, committed an increase in real-estate documentary stamp fees to help pay for affordable housing.

Rep. Mike Davis, R-Naples, hopes to devote another $30 million to $50 million to encourage local governments to build new housing projects - but only with new money not going to existing affordable housing programs.

Their biggest obstacle to scrapping the cap could come from the governor's office. Bush wants to leave the cap intact so that future governors and lawmakers have more say over where doc stamp revenues are spent.
''Affordable housing five years ago was not as significant a problem as it is today. It should not be driven by the funding source to determine how much we appropriate. It should be driven by the need,'' Bush said recently.

Last week, the governor proposed $545 million - a 26-percent increase - for affordable housing programs in his budget request to lawmakers, $300 million of which is one-time money for hurricane recovery.
But even half a billion dollars isn't enough to meet what housing experts say will be a need for more than 529,000 new homes for workers statewide by 2010.

''My guess is the next governor and Legislatures will have to (ignore the cap),'' the governor said. ''We're going to have a serious work-force-housing issue for a while.''

Consult agents to earn top sales price for your home

2006-02-23T03:22:00.000-12:00

February 22, 2006 Spring is traditionally the peak home sales season. Home sellers know if they want to earn top sales price, they must have their house or condo in tip-top condition during this best home sale time of the year when the largest number of buyers are in the market.But the 2006 home sales season started off much differently than usual in most communities. Perhaps it was the mild weather in many areas.For some unexplained reason, the number of homes listed for sale grew abnormally large in January and February, traditionally slow home sales months.The result for buyers is an especially enjoyable "buyer's market" in most areas. That means there are more homes for sale than there are qualified buyers, which means that home buyers can be especially aggressive with their price and sales term negotiations.

HOW TO SELL YOUR HOME FOR TOP DOLLAR. The first step is to get your home into its best physical condition. This includes cleaning, repairing and painting so your residence shows its best.The second step is to have customary local inspections made and necessary repairs completed before listing your home for sale. Such inspections might include pest control, radon, building code compliance and energy efficiency.The third step is to have a professional home inspection. While not required, savvy home buyers insist on such inspections as a sales contingency. However, many buyers will accept the seller's professional inspection report.When the report reveals an unexpected problem that you don't want or can't afford to have repaired, just sell the home "as is" but disclose the defect. An "as is" sale means the seller won't pay for any repairs but that all known defects have been disclosed.If you don't know a local qualified professional home inspector, the American Society of Home Inspectors has the toughest, most respected standards. To find members, go to www.ashi.org or phone (800) 743-2744.The fourth step to a profitable home sale is to interview at least three successful real estate agents. Even if you plan to sell your home alone, it's smart to interview three agents to find out the market value of your home and all the details of today's home sales.The agents you interview won't mind if you want to sell your home alone. They know most do-it-yourself home sellers fail and, within 30 to 60 days, list with one of the agents interviewed.

HOW TO LOCATE THREE REALTY AGENTS TO INTERVIEW. The reason it is critical to interview at least three successful agents is to compare their evaluations of your home. Don't be misled by a charismatic agent who gushes with enthusiasm for your home. Also, watch out for the enthusiastic agent who says your home is worth far more than the other interviewed agents estimate.To find agents to interview, consider agents who send you their monthly newsletters about local home sales prices.In addition, look for agents whose "for sale" signs turned to "sold" signs within a reasonable time. Finally, ask nearby friends and business associates for names of real estate agents who recently sold their homes.

Renovating to Raise Sales Price? Beware

2006-02-22T03:17:00.000-12:00

( February 21, 2006) -- Plenty of home owners have tapped into their home equity in recent years to finance improvement projects in the hopes of boosting resale value. However, it's important to avoid overimproving, as owners likely will not recoup their costs when they sell. If owners must unload their property quickly, there is even a chance that they could owe more than the dwelling is worth. "Over the last 10 years, we've seen a fairly significant core of the population spending more than half the value of their home on improvements," says Kermit Baker, director of the Joint Center for Housing Studies at Harvard University.Remodeling expenditures hit $127 billion in 2004, marking a gain of 6 percent from the previous year, according to the center. To avoid overimproving, home owners are encouraged to consult a real estate professional, who can conduct a comparable sales analysis and provide information about how certain projects would impact resale value. Experts also discourage unique designs that are not likely to be appealing to a wide range of buyers. The 2005 Cost vs. Value Report, which is published jointly by Remodeling magazine and REALTOR® Magazine, shows that home owners can recoup more than 100 percent of the cost of upscale siding and mid-range bathroom upgrades, 95 percent of the cost of a two-story addition, and close to 99 percent of the costs of a minor kitchen remodel.

Source: The Washington Times, Shelly K. Schwartz (02/17/06)

Despite hurricanes, Florida's population expected to grow

2006-02-21T13:39:00.000-12:00

GAINESVILLE, Fla. -- Feb. 21, 2006 -- The spate of devastating hurricanes should not deter Florida’s population growth, which is expected to increase steadily over the next quarter century with the fastest growth occurring in metropolitan fringe areas, a new University of Florida study finds.

The state’s population, estimated at about 18 million people in April 2005, is forecast to reach about 20 million in 2010 and nearly 25 million in 2025, said Stefan Rayer, a demographer with UF’s Bureau of Economic and Business Research.

By 2030, the Sunshine State is expected to have 26,419,200 residents, about a half million more than last year’s projections called for, he said.

“Overall, Florida is one of the fastest growing states in the country and that is unlikely to change,” Rayer said. “While rates have declined since the 1970s, the growth rate is still very healthy, with projections calling for the years 2000 to 2010 to have the largest population increase in Florida’s history.”

The active 2004 and 2005 hurricane seasons are unlikely to have much effect on state population growth, although some adjustments were made for four counties that were especially hard-hit by the storms, he said. These four counties were Escambia, Charlotte DeSoto and Hardee.

The counties projected to grow the fastest are Flagler, Sumter, Osceola, Walton, Collier and St. Johns. Flagler, Sumter and Osceola are expected to more than double in size by 2030, with Walton, Collier and St. Johns close behind, he said.

“Most of these counties are at the edge of metropolitan areas that are booming,” Rayer said.

The other fastest growing counties, Walton and Collier, are considered desirable for their coastal amenities, he said.

In sheer numbers, however, the largest counties are projected to add the most residents. While two-thirds of all counties are expected to grow faster percentage-wise than Miami-Dade, Florida’s largest county is projected to have the greatest population increase numerically, with about 775,000 more residents by 2030. It is followed by Broward, Orange, Palm Beach and Hillsborough counties.

Because of the 2004 hurricane season, the 2005 county population estimates were reduced from those of a year earlier by 3,600 for Escambia, about 3,000 for Charlotte, 1,500 for DeSoto and 450 for Hardee, Rayer said. In the case of Charlotte County, that results in about 6,000 fewer residents predicted for 2030, with the population projection being revised from about 239,000 to 233,000, he said.

“In the past, effects of these hurricanes have usually been short-lived,” he said. “The population may have declined from one year to another, but after that the growth pretty much picked up.”

The slowest growing county is projected to be Monroe, followed by Pinellas. “These two counties have grown very slowly in recent years because of the factor of land,” he said. “There just isn’t a lot of space left to build.”

The counties expected to add the fewest number of new residents are the small counties. Liberty, Lafayette, Hamilton, Glades and Jefferson, each with populations of less than 15,000, are projected to grow by 3,000 or less residents by 2030, he said.

© 2006 FLORIDA ASSOCIATION OF REALTORS

Mortgage Options for Tricky Situations

2006-02-20T09:14:00.000-12:00

( February 20, 2006) -- When customers want to close on a new home but their current home hasn't sold yet, there are a number of financing arrangements that can help bridge the gap. The odds of such a situation occurring is higher when the real estate market cools. The most common interim financing tool for buyers is a a short-term bridge loan, which finances the down payment and closing costs for a new home. When buyers sell, they repay the bridge loan. While it provides lots of flexibility, this type of loan usually carries high interest rates.A better alternative for some is a bridge loan with deferred interest payments. It pays off the first mortgage, eliminating one set of mortgage payments, plus it covers the down payment and closing costs on the new home. The seller often doesn’t pay anything until he sells his home.A third possibility is 100 percent financing on the new mortgage. With no down payment needed, the buyer can manage until his old home is sold. However, the buyer must be approved to hold two mortgages. Source: Wall Street Journal, Kirsti McCabe (02/18/06)

Freddie Mac: 30-yr. mortgage rates rise

2006-02-20T02:54:00.000-12:00

WASHINGTON -- Feb. 17, 2006 -- Rates on 30-year mortgages edged up for a fourth straight week, rising to the highest level in two months, Freddie Mac reported Thursday.

The giant mortgage company said its nationwide survey showed that rates on 30-year mortgages rose to 6.28 percent, up from 6.24 percent last week.

It was the fourth consecutive increase and left the 30-year mortgage at the highest level since it stood at 6.30 percent the week of Dec. 15. Rates on 30-year mortgages had dropped as low as 6.10 percent in mid-January before beginning their latest increase.

Economists believe the path of mortgage rates this year will be heavily influenced by what the Federal Reserve does with the short-term interest rates that it controls.

New Federal Reserve Chairman Ben Bernanke in congressional testimony on Thursday left the door open for further rate hikes, and many economists believe the Fed will raise rates at least once more at its March 28 meeting and possibly at a May 10 meeting as well.

Private economists are predicting that the 30-year mortgage by the end of this year will have risen to between 6.5 percent and 7 percent, enough to slow the booming housing market.

"So far this year, fixed-rate mortgages have risen only slightly," said Frank Nothaft, chief economist at Freddie Mac. "Long-term rates are only marginally higher than they were two months ago."

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.91 percent this week, up from 5.83 percent last week.

One-year adjustable rate mortgages increased to 5.36 percent this week, compared with 5.34 percent last week.

Rates on five-year hybrid adjustable rate mortgages rose to 5.95 percent this week, up from 5.89 percent last week.

The mortgage rates do not include add-on fees known as points. The one-year ARM carried a nationwide average fee of 0.7 point last week while the other three categories carried an average fee of 0.5 point.

A year ago, 30-year mortgages averaged 5.62 percent, 15-year mortgages stood at 5.14 percent, one-year adjustable-rate mortgages were at 4.15 percent and five-year hybrid adjustable rate mortgages averaged 5.05 percent.

On the Net: Freddie Mac: http://www.freddiemac.com

Survey: FSBOs sell for $45,000 less in Florida

2006-02-20T02:43:00.000-12:00

ORLANDO, Fla. -- Feb. 17, 2006 -- A study conducted for the Florida Association of Realtors (FAR) found the cost a FSBO seller in Florida paid in 2005 for going it alone: $45,000. The median price of a home sold represented by a licensee was $255,000; the median price of a FSBO was $210,000.

The results can be found in the "The Florida 2005 Profile of Home Buyers and Sellers," a study conducted on behalf of FAR by the National Association of Realtors (NAR) in tandem with their national study on buyers and sellers.

The study looked at the characteristics of homebuyers in Florida as well as the steps they took to find a home. It also focused on buyers' views of licensee representation and how they financed the purchase. For home sellers, the study dug deeper into the process for those represented by a licensee, but it also looked at FSBO (for sale by owner) sellers to find out more about their reasons and methods.

Homebuyers

The Internet continues to play a large role in the home-search process. According to the survey, 87 percent of homebuyers in Florida used a real estate professional in 2005, but only 38 percent of them found the house they would eventually purchase through their practitioner; 15 percent found their home online. On average, homebuyers searched for six weeks and visited eight homes before purchasing, but they searched on their own for an average of two weeks before contacting a licensee. Most -- 78 percent -- used the same licensee through the purchasing process.

Home sellers

It pays to get a home listing: The study found that over one-third of sellers (36 percent) represented by a licensee used the same licensee to help them buy a home. A majority of represented sellers, 71 percent, listed their home with the first licensee they interviewed.

The state had a high percentage of home sellers choose to go it alone as a FSBO, however. In Florida, 29 percent of homes sold as a FSBO; nationally, it was 13 percent, and in the South, which includes Florida, the average was 17 percent. (In the West, only 7 percent sold as FSBOs.) While 27 percent of Florida FSBOs were listed exclusively by the homeowner, 2 percent were listed by a licensee at the onset but sold as a FSBO after the listing expired.

Other major findings

• The median household income of homebuyers in Florida was $73,200 compared to $71,600 in the U.S.
• First time homebuyers in Florida accounted for 22 percent of homes purchased in 2005, and they had a median income of $49,400.
• Sixty-four percent of recent buyers ranked neighborhood quality as the most important factor influencing the location of their home purchase.
• Eighty-five percent of homebuyers in Florida financed their home purchase, and 18 percent financed the entire purchase price.
• The typical home was on the market for three weeks.

Survey results are also available online. On the Planet Realtor home page, click on "" under "Also on Planet Realtor."

© 2006 FLORIDA ASSOCIATION OF REALTORS®

Median Lee home price hits $293,100

2006-02-16T15:06:00.000-12:00

Fourth-quarter surge up 48 percent from last year
By Bloomberg NewsOriginally posted on February 16, 2006

Lee County's median home price jumped 48 percent from a year ago, reaching $293,100 in the fourth quarter — No. 2 in the nation, according to the National Association of Realtors.The biggest fourth-quarter gain was in the metropolitan areas around Phoenix and Mesa, Ariz., where the median price jumped 49 percent to $268,400. No. 3 was Orlando, up 42 percent to $261,800.

Meanwhile, U.S. home sales fell 4.7 percent in the fourth quarter from a record in the previous three months, another sign the housing market is cooling, according to the NAR report.Sales of existing single-family homes and condominiums declined to an annualized pace of 6.9 million, seasonally adjusted, from 7.24 million in the third quarter, the trade group said Wednesday. The median price for a single-family house rose 14 percent from a year earlier, compared with 15 percent in the third quarter, the fastest appreciation in 26 years.

The housing market is slowing from a "red hot" pace as rising mortgage rates make homes less affordable, said Richard Yamarone, chief economist at Argus Research Corp. in New York. Home sales probably will settle to the third-best year on record after posting all-time highs every year since 1999, he said."So we don't get the gold medal in housing this year — we have to settle for the bronze," Yamarone said. "There's still plenty of demand for housing in the U.S., even with the higher mortgage rates."

AFFORDABILITY FALLS

Affordability dropped to a 14-year low in the fourth quarter as home prices continued to rise even as financing became more expensive, NAR said. Affordability probably will slip to a 16-year low in 2006, according to the forecast.The median price for an existing single-family home rose 14 percent to $213,000 in the fourth quarter from a year earlier and probably will slow to a pace of 7.8 percent in the current quarter, NAR said.

Home prices typically are compared with a year earlier because the mix of the market changes during the year. The median price is the point at which half the homes sell for more and half for less.During the fourth quarter, the median single-family home price rose in 143 U.S. cities, declined in six and was unchanged in Canton, Ohio, the group said in a separate report issued today. In the third quarter of 2003, after mortgage rates fell to the lowest level since the 1950s, all the metropolitan areas in the study had price gains for the first time in two decades.

The biggest decline was in South Bend, Ind., where prices fell 5.3 percent to $89,900, followed by Springfield, Ill., and Erie, Pa., both down 2.9 percent.

Home Repairs Can Turn Lemons Into Lemonade

2006-02-15T07:50:00.000-12:00

( February 15, 2006) -- If the house your clients are selling isn't perfect, they should consult with an expert to find out exactly what the imperfections are and how much it would cost to have the problems fixed, says Kathleen Kuhn, CEO of HouseMaster home inspection service.By acknowledging the problems and finding solutions, they can make necessary repairs that raise the value of the property or they can make realistic adjustments to the listing price, keeping in mind that the buyers will have to make the repairs. Kuhn estimates that for every $100 of repairs a home needs, a buyer will try to negotiate $200 off the asking price. High-ticket items like a new roof, moisture problems, or electrical repairs can potentially cost the seller even more. Here are Kuhn’s tips for dealing with home imperfections:

Persuade the seller to get a home inspection first. A seller who understands the defects is more likely to accept a realistic sale price.

Consider making repairs that boost the home value. Needing a new roof is a sales challenge; having a new roof is an asset.

Disclosure is key. Failure to disclose defects can result in costly legal action. Make sure the seller understands this.— REALTOR® Magazine Online

Rules Help Home Buyers Haggling Over Real Estate

2006-02-14T07:31:00.000-12:00

( February 13, 2006) -- Rejection is the first rule of real estate negotiation. "Never make an offer you think they will accept," says Thomas Early, president of the National Association of Exclusive Buyer Agents.His second rule: more rejection. "Make the seller say no at least twice. It's too easy to say no the first time."Accept rejection. Unless it's truly the house of your dreams, don't be disappointed if a seller turns down your initial offers. Rejection is a normal part of the negotiating process. Some would even call it essential, Early says.Other tips for getting the best deal include:* Plan to buy in the off season. In many communities that is during the end of the year holidays and right before business picks back up. In warm weather resort communities, the dog days of summer can be a good time to buy.* Accept imperfections. Lots of buyers demand spacious, well-maintained homes in upscale neighborhoods. There are few bargains that meet that description.* Look for motivated sellers. The more desperate homeowners are to sell, the more likely they are to accept discounted offers.* Don't fixate on list price. The true value of a home might not be reflected in its listed price. A property's listed price simply reflects what a seller hopes to get. If you think the house is worth less, make an offer.Source: Bankrate.com, Holden Lewis (02/10/06)

Demand for Lots Fell Significantly

2006-02-13T06:32:00.000-12:00

During the six month period ended December 31, 2005, there were about 1,500 lot sales reported by the MLS Realtors in Cape Coral. The number of lot sales during the second half of 2005 fell well below any six month period since the second half of 2000.

The high cost of lots is cooling off potential buyers' interest. Many buyers were investors looking to resell and that part of the market is slowing down.

Home warranties: Good or good-for-nothing?

2006-02-13T04:55:00.000-12:00

NORTH PALM BEACH COUNTY, Fla. -- Feb. 8, 2006 -- What's your home warranty really worth? That depends on the language in the contract and who is standing behind it.

There are two basic types of home warranties. With a new home, many builders will offer a warranty on the home, usually for about 10 years, to cover the structure. Some builders provide their own warranties; others contract with third-party companies. In either case, the warranty spells out what is covered and outlines a procedure for requesting repairs if something goes wrong.

On an existing home, a buyer or seller can purchase a one-year warranty that works almost like an extended service contract. The warranty usually costs $350 to $600 and covers just the electrical and mechanical components of the house, such as the furnace, appliances and air conditioning. If something isn't working, the homeowner calls the warranty company, which dispatches a local contractor. The homeowner pays a minimal fee. If the repair falls under the scope of the warranty, that's the only cost the homeowner has to pay.

Ron Phipps, broker with Phipps Realty in Warwick, R.I., sees one-year warranties as a good value for both buyers and sellers. "The reality is that almost all houses have issues that come up after closing," he says. "For a $35 to $50 service call, it's most advantageous to the buyer to know that someone's taking care of it."

If he wasn't already sold, one incident last year would have convinced him. Two months after one closing, the home's heating system, dishwasher and hot-water heater all broke down. Since the seller had purchased a one-year home warranty contract, the buyer was covered.

"What was nice was that the seller didn't even hear about it," says Phipps.

A warranty is not necessarily blanket protection. And what is actually covered and what a homeowner believes is covered could be very different things.

For instance, a one-year warranty on an existing home may cover problems with the hot-water heater. But it may not cover anything caused by rust or poor maintenance. So if the water heater gives out and the repairman finds rust, you might have to pay the bill yourself.

The key: Read the contract to know exactly what it covers and for how long, what you have to do to make a claim, and what deadlines, if any, you'll face.

New home warranties

With a new home, "The warranty is only as good as the builder," says Janet Ahmad, president of HomeOwners for Better Building, an organization that promotes good home building and consumer-friendly legislation. "There are some good builders who stand behind what they build."

"It's extended protection," says David Crump, director of legal research for the National Association of Home Builders and co-author of "Warranties for Builders and Remodelers."

"A good warranty provides peace of mind. It provides a means of correcting any flaws or defects in construction that otherwise would be the purchaser's sole responsibility."

The most important thing you can do with a home warranty is read it. Before the closing, take a close look at the contract. What does it cover? What does it exclude? How long will the home be covered? What is the procedure if you have a repair problem? What is the timetable for making repairs? What rights, if any, do you give up by signing on the dotted line?

Buyers should "look at the claims procedure and make sure it's something they understand," says Crump. "They should read this and understand how it works -- it's the basis of making their claim."

"They should read the extent of their coverage so they know what is covered and what is not," he says. "A warranty is not necessarily going to provide them with a perfect product. A warranty is going to provide them with product that is acceptable under certain professional construction industry standards or guidelines," he says.

Get a copy in advance of your closing and go through it step by step. If there is anything you don't understand, call your attorney or the closing attorney and get a thorough explanation.

Questions to ask: Will you deal directly with the builder or do you now have to go through a third party? Do you retain the right to sue if there are significant problems or are you giving up that right in favor of binding arbitration? Does the contract limit the builder's liability if there is a problem?

Too many times, buyers don't see the warranty until closing and have no idea what's in it, says Nancy Seats, president of Homeowners Against Deficient Dwellings, a grassroots consumer advocacy group. And many of the contracts are "written in legalese," she says.

Her advice: "Read the exclusions very carefully and really think about the implications of those exclusions."

A mandatory binding arbitration clause is included in many warranty contracts and is an important point to consider.

Builders say it's a great way to limit court time and costs. "It's a better way of getting matters resolved," says Crump. "It cuts to the chase and does so less expensively and more expeditiously."

But some consumer advocates believe the arbitration process favors the builders, especially if the builder regularly uses the same arbitration service and names a specific arbitration company in the contract.

"You do not want an arbitration service that gets repeat business from your adversary," says Calvin "Kelly" Vance, a Spokane, Wash.-based lawyer who specializes in construction defect and real estate cases.

Other points to note are appliance replacement clauses and liability-limitation clauses that limit the amount you can collect if there's a problem.

Many appliance replacement clauses state that if the appliance cannot be repaired the company will replace it at little or no cost to the homeowner. The problem there comes in an interpretation of what "unrepairable" means. Is your washing machine considered repairable if an obsolete part from Taiwan is needed and it may take six months to come in? It can be costly to leave this open-ended. Ask the company to explain in writing the criteria for determining if something cannot be repaired before you sign.

If you see stipulations in the warranty that bother you, like mandatory binding arbitration or a liability limitation clause, alter the contract, says Ahmad. "Strike them out. Say, 'Do you have a problem with that? Why do we need a limiting warranty that limits the builder liability?'"

The bottom line, says Ahmad, if a warranty seems restrictive or unfair, don't sign it. "I think consumers need to say, 'No, I'm not accepting your warranty.'"

Resale home warranties

As with a new home warranty, you want to read the policy on a one-year warranty and understand what's covered and what may be excluded. Usually, one-year warranties cover the "moving parts" of a home, like appliances, heaters and air conditioners, and do not include conditions caused by poor construction or bad maintenance.

"It's really just a service contract," says Jim Hood, editor in chief of ConsumerAffairs.com, a news and advocacy site.

Hood says he sees a number of complaints on one-year warranties. Some of the most common: long response times and claims by repair people that the fixes aren't covered under the contract. As a result, he says, "The homeowner ends up spending a lot of time and trouble calling, trying to get someone to do something."

But others see value in the service, especially for buyers who've already sunk every spare dollar into the house.

"I think they are very important to have, as long as it's a reliable company," says Ahmad.

Phipps says he's noticed that his agency spends a lot less time following up with minor repairs than before they started recommending the warranties to sellers. "Now with the program, it's delightful," he says.

"And if the seller doesn't pay for it, I recommend the buyer get it," Phipps says.

If you're considering one, first research the warranty company. How will they select the people they send to your home? And what's their track record? Check out the company with other homeowners, the state and any local or national consumer groups.

Are there complaints or pending actions? What are current and past customers saying about the company? If you have doubts, consider taking out a service contract for your heating or air conditioning with a local company that will actually perform the service, says Hood. Another alternative: Put some cash aside specifically for home repairs.

A little self-reliance

If there's a home in your future, and it comes with a warranty, do your own research before you sign. What, if anything, can you find out about the warranty company or the builder when it comes to being responsive to repairs? A quick Internet search can let you know if the warranty company or builder is dogged by complaints or if customers are satisfied. If the company has other customers in your immediate neighborhood -- such as in a condo or town-house complex -- see if they would buy or renew a contract with that firm.

With a new home, talk to other homeowners in the subdivision about the builder's warranty. If you're buying an existing home, get a few references from the warranty company or your real estate agent.

What you want to know: Are owners satisfied with the warranty or have they had problems with it? Is the home holding up well and does the builder, or the warranty company, stand behind the product? Is it fairly easy to get repairs completed? Are repairs done well, and is there a fairly quick response time? Are most things covered or are there a lot of out-of-pocket costs? Did the homeowner have to jump through any hoops to prove that the item was protected under the warranty?

In addition, "Many builders offer a warranty on their own, not as part of a commercial warranty process," says Crump. "The builder will replace or repair defective components in a stated period of time. There are lots of good reasons to do that, and buyers can also look for that."

© 2006 Bankrate.com, Feb. 8, 2006.

Deadline Nears for Florida's Homestead Exemption

2006-02-10T08:36:00.000-12:00

( February 9, 2006) -- The Florida Association of REALTORS® is reminding Florida residents that the deadline to claim the state’s homestead exemption is March 1.Any Florida property owner with legal title to a home who uses it as his or her permanent, primary residence by Jan. 1, 2006, can claim the homestead exemption. The exemption allows the home owner to deduct $25,000 from a home’s assessed value, reducing property taxes commensurately.Home owners claiming the exemption for the first time must provide their deed and Social Security number. Mobile home owners also must bring a title or vehicle registration. Once a home owner has received a homestead exemption, it is automatically renewed for that property annually.— REALTOR® Magazine Online (02/09/06)

Tenant-in-Common Investments Attract Rich, Hopeful

2006-02-10T08:31:00.000-12:00

( February 10, 2006) -- The latest strategy for investors in commercial property eager to avoid capital gains tax is based on an old English form of ownership called tenancy in common.Unlike a real estate investment trust or a limited partnership, a TIC is structured so that participants are direct owners of real estate, allowing them to qualify for a tax-free like-kind exchange under Internal Revenue Service section 1031. As long as the investor keeps trading property, he doesn’t owe tax.Investors in TICs can have a piece of a major property with top-shelf tenants. It’s an investment that is usually well beyond what an individual investor could afford on his or her own. Although to have a piece of this pie, an investor must generally demonstrate that he has net assets greater than $1 million or annual income greater than $200,000.TICs are attracting an increasing amount of interest despite downside risks that can be as great as the upside potential. “The number of sponsors who have popped up because they have dollar signs in their eyes, but they don't have a lot of experience ... that scares me,” says Patricia DelRosso, president of Inland Real Estate Exchange in Oak Brook, Ill., and president-elect of the Tenant-in-Common Association, a trade organization.Source: BusinessWeek, Peter Coy (02/13/06)

FREE REPORTS!!!

2006-02-07T16:48:00.000-12:00

I invite you to visit my website @ www.MarkDDiaz.com for your selection of FREE buyer and seller reports. There are some really good tips and advise to help you through what most consider as the biggest investment you make in your lifetime, next of course to your kids.

2006 Home Sales Slower, But Sustainable

2006-02-07T05:17:00.000-12:00

( February 7, 2006) -- Home sales this year are expected to stay below the peak levels in 2005 but will remain historically strong, according to the NATIONAL ASSOCIATION OF REALTORS®.David Lereah, NAR’s chief economist, says the sales slowdown has already occurred. “Right now, home sales are a little lower than projected, but they can be sustained around current levels,” Lereah says. “Sometimes people lose sight of the fact that real estate is cyclical. Even so, sales will continue at a historically high pace with modestly higher interest rates as the year progresses, and 2006 is forecast to be the third-strongest year on record.”Existing-home sales are likely to decline 4.7 percent to 6.74 million this year, down from a record 7.07 million units in 2005, while new-home sales are expected to fall 8.5 percent to 1.17 million from a record 1.28 million in 2005; both sectors would see their third-best year after the totals for 2005 and 2004. Housing starts are seen at 1.87 million units in 2006, down 9.3 percent from 2.06 million last year.The 30-year fixed-rate mortgage should rise to 6.9 percent by the end of the year.NAR President Thomas M. Stevens from Vienna, Va., says home sellers are making some adjustments. “It’s easy to understand that sellers have taken it for granted that it would be fairly easy to sell without much compromise during the recent sales boom,” says Stevens, senior vice president of NRT Inc. “Now that buyers have more choices, it’s even more important for sellers to seek advice from real estate professionals. Pros can recommend the right mix of improvements to maximize return, as well as bridge the differences between buyers and sellers that often arise in the negotiation process. Consumers should keep in mind that not all real estate professionals are REALTORS®, who subscribe to a strict Code of Ethics.”The national median existing-home price for all housing types is expected to increase 5.0 percent this year to $219,200. At the same time, the median new-home price is projected to rise 5.7 percent to $250,900.Inflation as measured by the Consumer Price Index is forecast at 3.1 percent in 2006. Inflation-adjusted disposable personal income is likely to grow 3.9 percent this year.Growth in the U.S. gross domestic product is seen at 3.4 percent in 2006. The unemployment rate should average 4.8 percent this year.NOTE: Minor revisions to monthly seasonally adjusted annual sales rates for 2002 through 2004 will be made when the January existing-home sales report is released on Feb. 28. Each February, NAR Research incorporates a review of seasonal activity factors and fine-tunes historic data for the past three years based on the most recent findings.Additionally, within the next two months, NAR will revise national and regional median existing-home price data back to 1999. The fixed reporting sample of representative multiple listing services has been updated to reflect geographic changes over time so that the monthly samples for regional price measurements are as accurate as possible. The changes in price patterns will be consistent with previously reported data.

Florida Real Estate Headlines

2006-02-06T05:15:00.000-12:00

Gov. Jeb Bush announced last week the biggest tax cut package in state history, part of his $70.8 billion budget for the fiscal year beginning July 1, 2006. With $5.8 billion in new money, thanks in large part to tax proceeds from the state's booming housing market, the governor's budget calls for more than $1 billion in tax relief for property owners (the average homeowner stands to get back $155, though big landowners will benefit most from the plan); $198 million tacx cuts, exemptions and credits for businesses; $2 million to repair or rehabilitate homes in communities severely impacted by the 2004 and 2005 hurricanes; $50 million to retrofit older homes for hurricane resistance; and $243 million for the state's affordable housing programs.

Hire your spouse, save $$$

Here's a tax strategy to think about for next year. The IRS allows self employed individuals to hire their spouse (even for a nominal amount-as low as $250 per month), provide him or her 100% health benefits and deduct the entire cost of those benefits. This includes health care premiums, long term care insurance, over the counter medicine, first aid supplies, elective surgeries and dental expenses such as orthodontics. Refer you accountant to http://www.irs.gov/publications/p535/ch07.html for additional information.

Let's do the numbers

30 year fixed-rate mortgages: 6.23%, up from 6.12% the previous week.

Florida consumer confidence: +4 points in January to 95, its highest level in six months.

U.S. consumer confidence: +2.5 points in January to 106.3, its highest level in more than three years

Be sure to visit my website @ www.MarkDDiaz.com

Older, Wiser, Wired

2006-02-04T17:22:00.000-12:00

Nearly half of all seniors use the Internet as part of the homebuying process, and most stay within their home state when they retire, according to "Moving Forward: 50 and Beyond," a nationwide study commissioned by the Senior Advantage Real Estate Council.

The survey polled consumers aged 50 or older who had purchased a home within the preceding six months. Among the findings:

. Of the seniors who use the Internet as part of the homebuying process, 61 percent went online to find a Realtor, 92 percent of them to compare prices and 19 percent to research specific neighborhoods.

. Eighty-two percent moved less than 100 miles from their previous home.

. Of the senior homebuyers who did move to a new state (18 percent), the No. 1 choice was Florida.

When Real Estate Markets Begin to Soften

2006-02-04T16:48:00.000-12:00

When Real Estate Markets Begin to Soften and prices flutter downward, guess where appraisers turn to keep ahead of the market cycle? That's an important question at the moment in dozens of major markets around the country--from Southern California to Florida to Washington D.C., New York and Boston.

Appraisers' valuations in changing markets can be crucial to sales transactions going through. Or they can be deal killers. When the final valuation comes in substantially less than the contract price agreed to by a buyer and seller, the lender may not fund the loan or may require a much larger downpayment. If the valuation confirms the contract number, on the other hand, everybody is happy and the sale can proceed to closing.

The special challenge to appraisers in decelerating markets is to stay abreast of he pace of price declines underway in specific areas or price brackets. That can be tough because residential appraisals make heavy use of "comparables"-- recently closed sales in the immediate vicinity of houses similar to the one being appraised--and the most recent comparables in some segments may be five to six months old.

If a market segment has turned downward abruptly in the past three to four months, but the only comps available to the appraiser date back five or six months, the appraiser could end up overvaluing the house he or she is currently appraising. That, in turn, could put buyers and lenders into harms way since the expected equity in the property ma be illusory.

For help, some appraisers have turned to real estate agents in there prospective areas for timely insight and information into softening markets more than in rising markets. Though appraisers still must use the most appropriate comparables available to them, they can make adjustments to the final appraised values based on supplementary information they receive from agents and brokers.

When you hear about houses sitting for 90 days or longer and then being re-listed at $200,000 or $300,000 less, you've got to take that into account, especially when the only comparables available date back a few months.

We are now seeing an absolute glut of homes on the market in the upper and middle brackets in price range. That means sellers "haven't quite gotten the message yet " that if you want to sell, you need to back off your listing price even if you know older comparables would support your high price.

Adjusting to this market

2006-02-02T05:43:00.000-12:00

Back to basics...supply and demand.

Now we are into February, the days are beautiful...mid 70's not a cloud in the sky. But where are all the buyers? I believe we will start seeing an influx here soon, man I hope so, in the coming months into springtime. I think sales are brisk in part because of seasonal reason like cold weather keeping people from coming down here as well as higher interest rates and a shift in buyer's views about the market-fueled of course by all the media attention. However, the latest stats show that we are still getting 1,100 people a day moving into the state.

So where are they going???

I was out with a nice gentleman this morning viewing gulf access properties, older homes in very nice neighborhoods surrounded by older homes and a few new construction here and there. His idea is to find an older home that needs alot of work or possibly tearing it down to build a new home in it's place. Right now the prices are ripe for the taking and I think he has a good plan. Most people here are looking to sell to net a fortune and move into a bigger home in the area or out of the state. But they are coming to realize that the market for much older homes with gulf access is not the same as the market for a brand new construction home twice the size on water. The areas we looked at were particularly nice, such as the SW area off of Pelican south of Cape Coral Pkwy, one of my favorites. Great neighborhood, centrally located, close to Tarpon Point Marina and very good access to the gulf. Plus the neighborhoods and homes remind me of the typical South Florida neighborhoods. I should know, I am a third generation Floridian from the east coast area.

Florida consumer confidence up

2006-02-01T10:24:00.000-12:00

GAINESVILLE, Fla. -- Feb. 1, 2006 -- Florida’s consumer confidence rose four points in January to 95, its highest level in six months, reflecting optimism about record-high employment, an upswing in the stock market and a pre-holiday dip in gas prices, University of Florida (UF) economists report.

The increase in confidence was broad-based, with growth in all five components of the index. The largest gain was in perceptions of U.S. economic conditions over the next five years, which rose six points to 90. Expectations about personal finances a year from now rose five points to 100. Perceptions as to whether it is a good time to buy big-ticket items also increased five points to 110. Perceptions of U.S. economic conditions over the next year rose four points to 88. Finally, perceptions about personal finances now compared with a year ago inched up one point to 89.

“Consumers continue to be optimistic about the economy here in Florida,” says Chris McCarty, director of the survey research center at UF’s Bureau of Economic and Business Research. “The employment situation here in Florida is better than it has been in decades, at least in terms of people having jobs. The stock market had a pretty good run in January, too, ending near 11,000.” Plus, McCarty adds, high heating bills have not burdened residents because the state has had uncharacteristically warm weather this winter.

Gas prices were edging down in November and December, even though they have risen since then. Although gas prices are still slightly higher than they were at this time last year, McCarty says they have been offset by steady personal income growth.

“This all translates to higher consumer confidence, and during the holiday season resulted in a moderate increase in sales, mostly due to sales in November rather than December,” he says. “But moving forward, we expect a decline in consumer confidence as several factors come to bear on the consumer.”

Energy prices are expected to increase, at least through April, and although interest rates may not rise much higher, they are unlikely to decline for quite some time, he said.

“This has already put pressure on housing prices and sales in some key Florida markets,” he says. “Homeowners that were expecting quick turnover in their property will no doubt be forced to hold on to it longer. This will be particularly true for those that purchased high-priced condominiums in Florida’s coastal markets.”

The slowdown in housing will affect other areas of the economy, such as sales at furniture, appliance and home-improvement stores, McCarty says. He predicts that by the end of 2006, housing prices will slowly decline in some areas, affecting consumers’ ability to extract home equity and ultimately hurt spending.

The research center conducts the Florida Consumer Attitude survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for January was conducted from 436 responses. The error rate is plus or minus 5 percent. Consumer confidence is designed to help predict buying patterns by measuring the mood of consumers toward purchasing. Although other economic indicators also predict buying patterns, consumer confidence tends to be available sooner. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year. The value of the index is in comparing changes over time rather than looking at an isolated month.
© 2006 FLORIDA ASSOCIATION OF REALTORS®

Real Estate Headlines

2006-01-30T08:33:00.000-12:00

Signs of the Times

Despite four hurricanes and ongoing recovery from the 2004 storm season, 248,565 existing single family homes changed hands last year, a 2% increase over 2004 sales activity. To be sure, not all Metropolitan Statistical Areas (MSA's) ended the year in the black; eight of 20 declines. But the state posted a modest increase in sales, thanks to strong performance in markets such as Ft.Myers-Cape Coral (26% increase), Tallahassee (22%), Gainesville (20%) and Jacksonville (13%). As for home prices, all MSA's finished 2005 with double-digit median sales price increases. The median price was highest in Naples ($371,700), lowest in Ocala ($109,600). Statewide, the median sales price for 2005 was $235,100, 29% above 2004 levels.

Cape looks to replace boat lift with lock

2006-01-26T07:29:00.000-12:00

By Pete Skibapskiba@news-press.com Originally posted on January 26, 2006

Boaters in a fast-growing area of Cape Coral may have an easier time getting to salt water soon.Cape Coral officials are looking at two proposals to replace the troublesome Ceitus boat lift in its northwest canal system with a new lock.The main advantage will be that more boats will be able to pass over the lock at one time than ever could with the lift.

The spreader canal is a very popular water access route to the Caloosahatchee River, the Gulf of Mexico and back bays. The canal also is located in a fast-growing area of the city.Northwest Cape Coral could have more than 4,800 waterfront homes when the area is built out, according to city estimates.
The city attracts 10,000 new residents each year and recently crossed 150,000 in population, many of those owning boats. There are 48,247 registered boats in Lee County.The current Ceitus lift is one of three city-controlled structures that separate salt and fresh water areas to protect the saltwater from pollutants that wash off lawns, streets and from septic tanks. The others are a boat lift behind Four Mile Cove Eco Preserve and Chiquita lock.The lock would be more efficient and not as prone to breaking, said John Barth, 79, of Cape Coral, a former engineer with U.S. patents on similar equipment.
"The lift cannot be used to take sailboats over the dam unless the sailboat has a removable centerboard. Other larger boats cannot use the lift." Barth said. "Constant repair costs money."A new lift was put in last year at a cost of about $220,000, but continues to break down, stranding boaters. The lift is used by an estimated 2,500 boaters a year.

Easier access to the Gulf through a lock would please the thousands of boaters in the area, according to Northwest Cape Coral Neighborhood Association member David Scott.A lock can allow four boats through in the five minutes it takes the lift to move one boat, Barth said.City planners have received the two proposals to design and build a lock. City officials responsible for lift maintenance and reviewing the lock proposals could not be reached Wednesday.

As a courtesy, a committee from the neighborhood association was allowed to review the proposals, Scott said.Cost amounts were not given on the design and building proposals, Scott said. It is too early in the process. "I think the city will just look at the proposal's qualifications at this point," Scott said.As a comparison, however, an estimated replacement cost for the Chiquita lock on the south spreader canal is an estimated $4.5 million.Cost remains a factor in considering the plans, Cape Coral City Councilman Tim Day said. The lock would be located in his district.

"There is so much development planned up there we should get the builders to come up with some money for it," Day said. "It would be to their benefit."The committee from the neighborhood association believed the two designs would benefit boaters. Of their 340 members, at least 70 percent have boats.
"The lock designs look like like they would work," Scott said. "If it gets put 100 feet north of where the lift is, it will solve a couple problems."

Cape is no longer just a haven for retirees

2006-01-25T05:04:00.000-12:00

By Don Ruanedruane@news-press.com Originally posted on January 21, 2006

Old, gray Cape Coral — once ridiculed as God's waiting room — isn't what it used to be.The median age is about 42, and the population has jumped past 150,000, enough to rank it among the state's top 12 population areas."I like what's happening," said Earle Tolles, 82, who has lived in Cape Coral since 1961 and built many of the seawalls lining the city's canals.
"You had to have growth to have the amenities," he said. "It's added a lot to the lifestyle such as new restaurants and shopping."Once a retirement haven, the city is populated with thousands of children who play soccer, baseball and football on city fields. They attend three public high schools, five middle schools and 10 elementary schools.
Instead of opening a senior center, the city just opened a skateboarding park.Frank Odle, 84, started to sell Cape Coral real estate in 1962 and moved to the city in 1963."I saw it when it had its first few hundred people. Today, it's phenomenal," Odle said.
"Way back in the early days I never envisioned a city this big. I just didn't think it would happen," Odle said. "Now I can envision it larger. I envision it as a nice, beautiful city as the years go by."City officials project a buildout population of 413,000 people by 2080. A consultant is revising the city's projection and could have new numbers in March.
Baby boomers and Hispanics will drive the numbers up, Odle said.Hispanics account for 14,388 residents, about 9.6 percent of the city's population. There are 4,263 blacks or about 3 percent of the population, according to the city's Human Resources office.Hispanics have been part of Cape Coral since its beginning, but their contributions haven't been noted, City Councilman Mickey Rosado said. Family members often follow others who move here, he said. Some of his relatives have moved here from California and New York.
The 2000 Census found nearly 9 percent of the city's residents were foreign-born."I see a magnificent opportunity to not have a segmented city," Rosado said. "That's what makes this city so great. We want people to know one another."

What has the market been like????

2006-01-24T08:30:00.000-12:00

Well I have to tell you, it has been an up and down rollercoaster this month so far. I get calls and emails that people are planning trips down here in February and March and even into April...I guess we find ourselves trying to compare last January of 2005 to this year and it doesn't even come close. Talk of the market slowing down still fills all the papers locally as well as nationwide. I cannot speak for the other markets but I have noticed things changing around here.

But here is what is surprising...

November 2005...48 residential properties went pending

December 2005...112 residential properties went pending with 1 property at over $1 million and another at over $2 million

January 2006...209 residential properties went pending with 3 of those properties listed at over $1 million

So it still seems to me that properties are still being scooped up in our area. I still believe there are very good bargains out there and now is the time to buy because I see the market switching to a buyer's market.

On a lighter note...my family and I just purchased a new puppy, my two boys are enamored and are constantly hovering around the pup. But I am glad. I believe in kids having dogs and especially growing up with a puppy so that the puppy learns who his family is.

My kids decided to name the dog Moose. He is an american staffordshire terrier with a brindle patch over his right eye and patches of brindle on his back and rear. He is quite the specimen.

Till next time.

Please visit my website for all your Cape Coral real estate needs...www.MarkDDiaz.com

Inventory growth indicates buyer's market, expert says

2006-01-23T05:43:00.000-12:00

I picked this up from a recent news article in the local paper...information is from a reputable real estate broker/agent in the SWFLa area.

"There is no doubt that the real estate market has had a stellar performance over the last five years. Each year this market has posted record sales and appreciation. After each good year there were those that wondered if it could continue," said Grimes. Now that our prices have gone up so fast, fueled by investors' "gold fever," the market forgot one important point. That is, investors can fuel the market, but it takes users to sustain it."Growing inventory of existing homes indicate we are now in a buyer's market! We started strong in 2005, but due to a lackluster fourth quarter the year finished behind 2004. Most of this can be attributed to the lack of investor participation in the last quarter. Sales for 2005 were about 5 percent below that of 2004," Grimes stated.
Fewer sales mean a build-up of inventory, which adds downward pressure on pricing. As sellers sense that prices are falling they rush to put their home on the market before it's too late to cash out, resulting in a for sale sign on every corner as there are more homes for sale than end users."Overall, the existing single-family inventory is up 130 percent since last year. Most of this change has taken place since September. When you examine the change by price range you will see that the biggest change was in the price range between $250,000 and $400,000. Inventory in this price range was up by 116 percent." Grimes will be providing information on price points by geographic area at both Market Watch events. "This change in available homes for sale does not factor in the pre-sold new construction that is in the pipeline. Many of these units have been purchased by investors who hope to "flip" the units upon completion. Some will be successful, others will not," predicted Grimes.
"Buyers may wait on the sideline, hoping for better prices. These buyers are betting against the odds. I feel this may be the best year to buy, because the buyer will have two things he did not have last year. They are choice and the ability to negotiate," Grimes concluded.The change in the market is nothing to fear in the long run because little has changed relating to the market fundamentals. Yes, there has been upward pressure on interest rates but not to the point of derailing the market. Emotional greed fueled the bull market, and in the short run emotional fear will slow it down. As history has shown, prices will correct, and the excess inventory will be absorbed. Then as the sales pace picks up so will the prices.

Lee jobless rate lowest in 6 years

2006-01-20T04:38:00.000-12:00

Lee jobless rate lowest in 6 years
By The News-press Originally posted on January 20, 2006

Lee County's jobless rate fell to 2.3 percent in December — the lowest mark in six years — as hiring boomed in construction and the hospitality industry.Only about 6,000 people — of a total labor force of nearly 265,000 — were without work in the month, according to data from the Florida Agency of Workforce Innovation.A year ago, as the area began to recover from Hurricane Charley's August strike, the rate was 3.6 percent.Collier County's rate was 2.4 percent, down from 3.5 in 2004. Charlotte County's rate was 2.7, nearly half the 5 percent rate in December 2004 as the county reeled from Charley's direct hit.In Lee County, the sector that includes construction added about 1,900 jobs over last year, a growth rate of 6.9 percent. The leisure and hospitality sector, gearing up for peak winter tourist season, added about 1,800 jobs over December 2004, a gain of 7.1 percent.Overall, the county's non-agricultural job market grew by 4.1 percent over December 2004 for a total of about 219,200 jobs.

Housing Market to 'Normalize' in 2006

2006-01-10T08:23:00.000-12:00

(January 10, 2006) -- The key word for the housing market in 2006 is balance, with a return to a more normal rate of price growth, according to the NATIONAL ASSOCIATION OF REALTORS®.David Lereah, NAR’s chief economist, says current trends in the housing sector are healthy. “We don’t need to break a record every year for the housing market to be good—in fact, cooling sales are necessary for the long-term health of this vital sector,” Lereah says. “A modest slowdown in home sales, coupled with improvements in housing inventory, means the market is in the process of normalization. That will help to bring balance between home buyers and sellers, yet sales will remain historically strong.”After setting a fifth consecutive annual record, projected to be 7.10 million units for 2005, existing-home sales are forecast to ease by 4.4 percent to 6.79 million this year, which would be the second highest on record. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006—that also would be the second best year in history. Total housing starts for 2005 are seen at 2.07 million units—the highest since setting a record 1972—with a 6.6 percent slowing to 1.94 million this year.“A lot of demand has been met over the last five years, and a modest rise in mortgage interest rates is causing some market cooling. Along with regulatory tightening on nontraditional mortgages, there will be fewer investors in the market this year,” Lereah says. The 30-year fixed-rate mortgage is likely to increase gradually to 6.7 percent during the second half of the year. “This will preserve generally favorable affordability conditions and keep the housing market at a more sustainable sales pace.”NAR President Thomas M. Stevens from Vienna, Va., says price appreciation should be at more normal levels across most of the country. “Buyers are no longer competing for a tight supply,” says Stevens, senior vice president of NRT Inc. “That means home prices generally will rise much closer to long-term norms, which is the overall rate of inflation plus one or two percentage points. Lower price appreciation will keep the door open to first-time buyers while preserving the investment advantages of home ownership for sellers.”The national median existing-home price for all housing types, projected to jump 12.9 percent to $209,100 for 2005, is forecast to rise 5.1 percent to $219,700 this year. The median new-home price, which should be up 4.6 percent to $231,300 for 2005, is expected to increase 6.0 percent this year to $245,200.Inflation as measured by the Consumer Price Index is projected to rise 3.4 percent for 2005 and 3.0 percent in 2006. Inflation-adjusted disposable personal income is forecast to increase 1.3 percent for 2005 and 4.6 percent this year.Growth in the U.S. gross domestic product is likely to be 3.6 percent for 2005, with GDP seen at 4.0 percent this year. The unemployment rate is expected to drop to 4.8 percent by the end of the year.

Panel of economists predicts strong economic growth in 2006

2006-01-09T02:45:00.000-12:00

MILWAUKEE -- Jan. 6, 2006 -- America's 2006 economy will be markedly better than 2005, despite a softer housing market, a panel of trade-group economists said Thursday.

"The U.S. economy is kind of a juggernaut," said Paul Merski, chief economist for Independent Community Bankers of America. "Look at the last few quarters, how it shook off oil price spikes and hurricane shocks."

Merski predicted a 3.8 percent economic growth rate this year, with 2 million new jobs and an unemployment rate dipping to the 4.8 percent to 4.9 percent range.

As for inflation and interest rates, "we'll have to wait to see how hot the economy is" and how heavy a hand Federal Reserve Board officials use in managing it. He predicted the Fed will raise the benchmark federal funds rate, which banks charge each other for overnight loans, from its current 4.25 percent to 4.75 percent by April.

Merski declared the nation's housing boom over - "frankly, that's a healthy thing, since we were running into affordability problems in many areas"- and predicted shrinkage in the mortgage market this year too.

The banking official's comments came at a Webcast conference hosted by the Homeownership Alliance in Washington, D.C., which also featured chief economists of mortgage financiers Fannie Mae and Freddie Mac, the National Association of Home Builders and the National Association of Realtors. His was among the sunnier forecasts.

"We're certainly more pessimistic," said Fannie Mae's David W. Berson. "We predict an 8 percent drop in home sales, with price gains of only 3 percent (but) the job market's going to be pretty good." He expects 2.4 million new jobs this year and a long-term economic boost from immigration.

Realtors' economist David Lereah predicted a 4.1 percent economic growth rate this year, a 4 percent to 5 percent drop in housing resales and bigger drop in new home construction. The housing market may only be taking a one-year breather, he said, "but the risks I see is that slower housing activity will inhibit consumer spending and job creation."

Builders' economist David Seiders said this is the year that "housing turns from being the economy's power growth engine to a slight drag," a gloomy role it may continue in 2007.

Two housing bright spots: Manufactured home sales will surge, courtesy of rebuilding efforts in Gulf Coast areas damaged by 2005 hurricanes, and consumers will continue to spend freely on remodeling, "supported in part by the tremendous equity they've built in their homes," Seiders said.

So when does the housing slowdown hit?

It probably already has, said Freddie Mac economist Frank E. Nothaft.

"The housing sector probably crested in the fall of '05," Nothaft said. Year-end figures aren't in, but are likely to show a fourth-quarter sales slump, he said.

All five economists see mainly good times for most Americans in coming months - barring unforeseen catastrophes.

Among the scenarios the economists believe could trip up the economy: a sudden end to heavy foreign investments here; another major increase in oil prices; a sudden Federal Reserve shutoff of borrowing ability to combat rising inflation; widespread dumping of investment properties.

"This is nothing I see happening," Merski emphasized, and the others agreed. "But it is a risk."

(c) 2006, Milwaukee Journal Sentinel, Michele Derus, Jan. 5, 2006. Distributed by Knight Ridder/Tribune News Service.

Housing prices vary by ZIP

2006-01-07T13:12:00.000-12:00

Bargains still can be had in off-water areas

Originally posted on January 05, 2006
By Don Ruanedruane@news-press

So-called real estate bargains for people willing to search still exist in Cape Coral.But they'll probably have to forsake a waterfront view and access to the Caloosahatchee River to get it.A review of recently sold homes by The News-Press shows that sales in the four ZIP code areas north of Veterans Parkway averaged $8,000 to about $70,000 less than the median price for a home in Lee County. The median price reported for November by the Florida Association of Realtors was $295,400.

Prices varied throughout the city because of factors such as waterfront locations, availability of city utilities and commuting distances, according to real estate experts.The News-Press reviewed recently sold home prices reported between Oct. 2 and Dec. 25 by the Lee County Property Appraiser's Office. The review found an average low price range of $227,100 in ZIP code 33909, north of Pine Island Road and east of Santa Barbara Boulevard, to $287,111 in ZIP code 33990, between Hancock Bridge and Veterans parkways.
The average week involved about 126 sales throughout the city.The hottest markets were ZIP code 33904 in southeast Cape Coral (average price $391,794) and 33914 in southwest Cape Coral (average price $350,756).

A major selling point is the waterfront access they provide boaters to the Caloosahatchee River. "Not everyone can afford a great home on the water. It's a matter of choice where people want to live," said Fran Davis, general manager of the Birchwood Realty-Century 21 office on Del Prado Boulevard.
Adrian Santiago, 30, moved into a new home in November on Northeast 14th Terrace for under $200,000. His home is in the lower priced ZIP code 33909. The ZIP code covers the area north of Pine Island Road and east of Santa Barbara Boulevard."It's a comfortable home. I wasn't looking for anything luxurious," said Santiago, a paramedic with experience as a property appraiser. He used the knowledge he gained from each job to select a home site that suits his family's needs and their future, he said. He bought the lot in 2004.
"It was a low price. It was perfect timing. It's an up and coming area," Santiago said.One reason why the northeast has lower prices is the lack of saltwater access, Davis said. Up to 10 other houses were under construction on his street while his home was being built, but Santiago said he likes being part of the area's growth.That's good, because there is going to be a lot more growth in that area, according to Davis. "The area is a good area. It's going to boom someday," Davis said.

The triggers of the anticipated explosion are development along Pine Island Road, the widening and development of Del Prado Boulevard north of Pine Island and the arrival of city water and sewer services, Davis said. The city hopes to install utilities in the northeast area in about four years.
"Whenever you put in city water those areas seem to explode," Davis said.But it's the saltwater canals leading to the Caloosahatchee River south of Veterans Parkway that made the area tops in sales during the 13-week period. ZIP code 33904, east of Santa Barbara and south of Veterans, averaged 33 sales per week — the most in any ZIP code. ZIP code 33914, west of Santa Barbara and south of Veterans, averaged 29 sales per week — the second highest number of sales.

"The interest is in the water. The value is in the land," said Bill Campbell, 52, who put his canalfront home on Versaille Drive on the market in late December.Campbell checked asking prices for other homes in the neighborhood, where many homes date to 1960, before pricing his home at $565,000. The price is comparable to other homes and he is under no pressure to make a quick sale, he said. He plans to move to West Virginia where he thinks he will get more house for his money and live closer to relatives.Waterfront homes are the only kind to buy for Dan Turner, 43, who is fixing up a canalfront home at 5236 Wisteria Court. He buys, remodels and sells homes.

"I prefer the waterfront. They are the fastest rising value," Turner said.Buyers usually are not looking for their first home, Turner said. They might be people who know the area from past visits and decided to move here after selling a business up North. Some are professionals with the income to afford waterfront property. They want waterfront because they want to go fishing or boating, he said.

"Waterfront property is very desirable, plus you have The Golf Club," Gloria Letendre, a broker associate with Keim Associates Inc., said, to explain the popularity of the city's southeast section.Southeast Cape Coral residents also have an easier commute than residents in other parts of the city, she said.While Cape Coral's average sale price of $310,628 for the 13-week period fell below the latest median price for the whole county, the city's real estate still costs more than the median prices reported for Punta Gorda-Charlotte County ($236,900); Florida ( $250,500) and the United States ($216,600). But it would fall below the median price of $479,800 for Naples.

But Cape Coral will continue to attract home buyers, Letendre said."We have a great lifestyle," said Letendre. There are golfing, boating, fishing and other activities, she said. There are people who have the cash from selling their homes up North who want to relocate here, she said.

"There were about 35,000 people in Cape Coral when she arrived 21 years ago. Today, an estimated 146,000 people live in the city."It's just booming. People need places to live," Letendre said.

Pending Sales Index Shows Housing Market Slowing

2006-01-05T07:46:00.000-12:00

(January 5, 2006) -- Pending home sales, a leading indicator for the housing sector, slowed for the third consecutive month in November, demonstrating that a market transition is firmly in place, according to the NATIONAL ASSOCIATION OF REALTORS®. NAR's Pending Home Sales Index, based on contracts signed in November, slipped 2.5 percent to a reading of 120.6 from 123.7 in October, and is 2.5 percent lower than November 2004.The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed; pending home sales typically are finalized within one or two months of signing.David Lereah, NAR’s chief economist, says the index remains at a historically high level. “Although pending home sales are trending down from a record in August, the index remains well above a mark that is considered to be historically strong,” he says. An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales.“We are clearly experiencing a market transition, moving from a prolonged boom to a more balanced period of sustainable sales,” Lereah says. “In other words, home sales have been peaking for the last five years and we will land on a high plateau in 2006—a market that will be healthy for both buyers and sellers. Investment fundamentals for housing remain solid, preserving generally favorable affordability conditions while offering solid returns as well as a place to live.”Regionally, the Pending Home Sales Index in the Midwest rose 3.4 percent in November to 116.0 but was 3.7 percent lower than November 2004. In the South, the index declined 1.9 percent to 132.8 in November but was 1.8 percent above a year ago. The index in the West fell 5.1 percent to 127.7 in November, and was 4.6 percent lower than a year ago. The index in the Northeast was down 8.3 percent to a level of 93.3, and was 8.0 below November 2004.

Housing market to 'normalize' in 2006

2006-01-04T02:05:00.000-12:00

WASHINGTON -- Jan. 11, 2006 -- The key word for the housing market in 2006 is balance, with a return to a more normal rate of price growth, according to the National Association of Realtors® (NAR).

David Lereah, NAR’s chief economist, says current trends in the housing sector are healthy. "We don’t need to break a record every year for the housing market to be good -- in fact, cooling sales are necessary for the long-term health of this vital sector," Lereah says. "A modest slowdown in home sales, coupled with improvements in housing inventory, means the market is in the process of normalization. That will help to bring balance between home buyers and sellers, yet sales will remain historically strong."

After setting a fifth consecutive annual record, projected to be 7.10 million units for 2005, existing-home sales are forecast to ease by 4.4 percent to 6.79 million this year, which would be the second highest on record. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006 -- that also would be the second best year in history. Total housing starts for 2005 are seen at 2.07 million units -- the highest since setting a record in 1972 -- with a 6.6 percent slowing to 1.94 million this year.

"A lot of demand has been met over the last five years, and a modest rise in mortgage interest rates is causing some market cooling. Along with regulatory tightening on nontraditional mortgages, there will be fewer investors in the market this year," Lereah says. The 30-year fixed-rate mortgage is likely to increase gradually to 6.7 percent during the second half of the year. "This will preserve generally favorable affordability conditions and keep the housing market at a more sustainable sales pace."

NAR President Thomas M. Stevens says price appreciation should be at more normal levels across most of the country. "Buyers are no longer competing for a tight supply," says Stevens, senior vice president of NRT Inc. "That means home prices generally will rise much closer to long-term norms, which is the overall rate of inflation plus one or two percentage points. Lower price appreciation will keep the door open to first-time buyers while preserving the investment advantages of home ownership for sellers."

The national median existing-home price for all housing types, projected to jump 12.9 percent to $209,100 for 2005, is forecast to rise 5.1 percent to $219,700 this year. The median new-home price, which should be up 4.6 percent to $231,300 for 2005, is expected to increase 6.0 percent this year to $245,200.

Inflation as measured by the Consumer Price Index is projected to rise 3.4 percent for 2005 and 3.0 percent in 2006. Inflation-adjusted disposable personal income is forecast to increase 1.3 percent for 2005 and 4.6 percent this year.

Growth in the U.S. gross domestic product is likely to be 3.6 percent for 2005, with GDP seen at 4.0 percent this year. The unemployment rate is expected to drop to 4.8 percent by the end of the year.

© 2006 FLORIDA ASSOCIATION OF REALTORS

Real Estate Develops a Split Personality

2006-01-03T16:35:00.000-12:00

(January 3, 2006) -- With interest rates on the rise, analysts and real estate professionals expect the record number of homes now on the selling block to spend more time on the market.

Merrill Lynch reports that the backlog of unsold residences is currently at a nine-year high and the number of unsold newly constructed houses has soared 20 percent in the past year. David Rosenberg, the firm's North American economist, believes the result will be a "softer pricing environment and a reversion to a buyer's market from a seller's market."

As the residential property market continues to show signs of a slowdown, more and more market watchers now caution that a cooldown in the commercial real estate market also could be seen in the months ahead despite the fact that many Wall Street banks remain eager to finance such large projects as office skyscrapers and upscale condominium complexes.

Real Capital Analytics Inc. reports that approximately $220 billion in U.S. commercial space changed hands last year, a significant increase from $186 billion in 2004. Buyers of commercial office properties could be making the safest bets because the fundamentals supporting the office market—job growth, fewer new buildings coming onto the market, and so forth—are on the upswing.

Source: The Wall Street Journal (01/03/06); Haughney, Christine

Fla. trailer town may agree to disappear

2006-01-03T04:05:00.000-12:00

BRINY BREEZES, Fla. -- Jan. 2, 2006 -- The news traveled fast, as it usually does in this tiny trailer-park town.

A secret suitor was offering to buy the entire municipality for $500 million -- more than $1 million per mobile home. Over shuffleboard courts, pinochle tables and whittling benches, word of the fabulous price soon spread.

" 'A million is a million' and 'Wow, a million dollars!' " said Bob Kraft, 78, a retired high school English teacher from Detroit, recalling initial reactions to the proposal. "That looks good to a lot of people."

If the gargantuan sale goes through, the buyer is expected to wipe this unpretentious beach enclave off the map, obliterating one of the most conspicuous vestiges of the long-ago era when a Florida seaside paradise could be had cheap.

Hundreds or thousands of luxury condos would probably rise in its place, a prospect that has evoked an unexpected surge of nostalgia for this cluster of boxy aluminum homes that are just somewhat wider than rail cars. They sit just feet from one another.

"We used to be an embarrassment," said Tom Byrne, 67, a retired insurance sales manager from Long Island, who had just been boasting to neighbors of reeling in a bluefish. "Now it turns out we're quaint."

Trailers of one kind or another have been on the property since the 1930s, when a farmer allowed passing "tin-can tourists" to park on his beachfront acreage. But in recent decades, many Florida beaches have proved far too pricey for trailer parks, and some communities have forbidden them in fits of snob zoning.

"Briny," as it is known locally, was becoming increasingly noticeable as a throwback, particularly as the coast has become lined with ostentatious mansions and million-dollar condos. But with the specter of so much more development in this area north of Boca Raton -- even though it would be far more grandiose than a trailer park -- has come a sense that a way of Florida life is disappearing.

"It'd be like selling my hometown," said Mayor Jack Lee, 56, who grew up there. He opposes the sale. "We're already living a millionaire's lifestyle -- even without the millions."

"I don't want to live in a condo," said Polly Brady, a retired teacher from Massachusetts.

She and her husband, Tim, a retired vice principal, bought one of the most valuable trailers in town -- on a lot overlooking the beach -- for $150,000, three years ago, they said.

"My kids thought I was crazy," Tim Brady said. "People have preconceptions about trailer parks. But we love it."

The identity of the bidder has not been disclosed by the residents who serve on the park's board. Ken Doyle, president of the corporation that owns the town's 43 acres, would say only that "we're quite sure it's a solid offer."

The owners of the mobile homes all are shareholders in the corporation. In early December, it was announced that nearly three-quarters of the residents in this town of 488 homes had voted to appropriate $30,000 to pay lawyers to pursue the offer.

Earlier this year, 13 homes were for sale in Briny Breezes; since news of the proposal in October, there are none, Brady said.

The founders of the trailer park -- residents themselves who formed the corporation and purchased the land from the farmer decades ago -- set up rules intended to block a developer's buyout, preventing any one person from buying up too many lots, residents said. The buyout proposal avoids those limits by buying the whole corporation of which residents own shares.

The town has 1,100 feet of frontage on the Intracoastal Waterway and about 600 feet on the Atlantic Ocean, and it has long been attractive to developers. The bid is more than 10 times what Briny Breezes is assessed for by Palm Beach County. Residents noted that it may be worth it because by purchasing the entire town, the potential buyer may be purchasing flexibility in what might be built there.

The residents of Briny Breezes, most of them retired, play shuffleboard and join a multitude of hobby clubs, from carving to choir. They say hello to one another as they pass in the narrow streets -- easily done, because many drive around in open golf carts. Some residents boast of being the second or third generation of their family to live there, another strand that holds the community together.

But with one of the largest such real estate sales in Palm Beach County history in the balance, the bid has opened a tense rift among neighbors.

Some are eager to vote for the sale, tempted by the prospect of a purchase price 20 times what many put into their homes. The renewed fear of Florida hurricanes in the wake of recent storms, moreover, has many wondering how long it might be before a direct hit will take it all away anyway.

"It's a mobile home park, we're on the ocean, and there are hurricanes," said Jack Taylor, a retired manufacturer of fire alarms and safety devices. "It's time."

But others rise to anger at the mere thought of selling out. On both sides of the debate, Brinyites tout their devotion to their community, and it is difficult to say even after conversations with more than a dozen residents exactly how a vote might turn out.

Many are loath to come out and say they want to sell. "This is a wonderful place," said Bill Tolford, 81, a retired optometrist from Maine, over a Manhattan outside his beachfront home one night recently. He has been traveling to Briny since the mid-'50s, when his parents had a place. He calculates his home would fetch $1.46 million in the deal. "It's an overly fair price. I know how hard it is to accumulate a million dollars. When you can get it, take it."

Even before the proposed buyout came to light this fall, there were signs that the old Briny lifestyle -- spartan and sunny at the same time -- might be fading. In recent years, participation has dropped off on the shuffleboard courts; attendance has fallen at Briny's annual stage production. The types of people buying into the community have changed, too, residents said, with more who bought purely for weekend visits. One woman bought a place only to be able to walk her dog on the beach.

"It has changed, but I would still rather spend the rest of my days here," Kraft said. "The money is good, but is it enough to buy another place this close to the beach? Not these days."

Copyright 2006 washingtonpost.com

Florida home sales show small gain, higher price

2006-01-02T16:39:00.000-12:00

ORLANDO, Fla. -- Jan. 2, 2006 -- The pace of Florida's housing market eased somewhat in November -- traditionally a slower month for home sales -- with statewide sales of existing single-family homes totaling 17,219 for a 1 percent increase over last year’s sales activity of 17,110 homes, according to the Florida Association of Realtors® (FAR). Housing markets nationwide are starting to see a better balance between demand and supply, according to many housing industry analysts, placing homebuyers and sellers on a more even footing.

The statewide median sales price rose 31 percent in November to $250,500; a year ago, it was $191,300. In November 2000, the statewide median sales price was $117,900, which is an increase of about 112 percent over the five-year period. The median is the midpoint, which is a typical market price where half of the homes sold for more and half for less.

The national median sales price for existing single-family homes was $216,200 in October, up 16.6 percent over last year, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $538,770 in October; in Maryland, it was $297,682; in New York, it was $269,000; and in North Carolina, the average resales price was $215,762.

Interest rates for a 30-year fixed-rate mortgage averaged 6.33 percent in November, up from the 5.73 percent rate recorded last year. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s larger metropolitan statistical areas (MSAs), the Tampa-St. Petersburg-Clearwater MSA reported higher figures in both sales and median price last month, with a total of 3,799 existing single-family homes changing hands for a 16 percent increase over the 3,276 homes sold last year. The market’s median sales price increased 33 percent to $222,900; a year ago, it was $167,100.

George Bodmer, president of the Greater Tampa Association of Realtors and co-owner of Bayside Realty Group Inc. notes that mortgage rates, while edging up, remained favorable in November, which encouraged buyers to enter the market.

“The real estate market follows the jobs, and this area is basically a community that goes to work,” he says. “We've got places to work, places to play, good schools and even with high demand and a tight inventory, we've been fortunate in that we still have homes available to buy. Buyers know housing is a good investment.”

Other larger markets reporting higher sales in November include: Jacksonville, where 1,425 homes sold for a 20 percent gain; and Orlando, where 2,656 homes changed hands for a 2 percent increase. The median sales price also rose in both markets: in Orlando, 45 percent to $254,600; and in Jacksonville, 17 percent to $190,000.

Among the state’s smaller MSAs, Tallahassee reported a 21 percent increase in home sales last month, with a total of 357 homes sold compared to 296 homes changing hands last year. The area’s median sales price rose 12 percent over the same period to $179,800; a year ago, it was $160,600.

“Tallahassee has a lot to offer and buyers are realizing it's a great place to live,” says Mike Ferrie, president of the Tallahassee Board of Realtors and sales associate with Blue Chip Realty Inc. “Our economy is strong, with diverse business and employment opportunities. And the forecast for jobs in this area continues to be good for the future as well.”

Other smaller MSAs in the state also had higher home resales last month, including: Lakeland-Winter Haven, where 475 homes changed hands for a 17 percent boost; and Gainesville, where 275 homes sold for a 13 percent gain. The median sales price in those markets also rose over the same period: in Lakeland-Winter Haven, 37 percent to $166,900; and in Gainesville, 18 percent to $197,100.
© 2006 FLORIDA ASSOCIATION OF REALTORS®

Updates around Lee County-SW Fla-Cape Coral

2006-01-02T05:24:00.000-12:00

Cape Coral...

Crews cleared land for the addition of a major commercial project in the city.

Dubbed Mid_Cape Corporate Center, the McGarvey Develpment Company of Bonita Springs plans to build the 30 acre office, restaraunt, retail and industrial campus at the triple crossroads of Hancock Bridge Pkwy, Santa Barbara Boulevard and Pine Island Road.

Construction on the 300,000 square foot, seven-building project could begin as early as next month. There will be three single-story buildings, two two-story structures and two three-story office buildings.

In other news...

Workers are preparing land next to the Kiwanis Thrift Store at 652 N. Del Prado for construction of a three-story medical center for Southwest Florida Neurological Associates, which plans to put a 24,000-square foot medical office building next to the store. The physicians in the group plan a $4 million center that could include a surgery center to serve their mostly back pain practice. Plans include physical therapy and MRI areas to aid diagnosing problems.

Please visit my website @ www.MarkDDiaz.com

Average 30-Year Mortgage Dips to 6.22%

2006-01-02T05:14:00.000-12:00

(December 30, 2005) -- The national average commitment rate on a 30-year, fixed mortgage slipped to 6.22 percent from 6.26 percent the week before, according to Freddie Mac.The agency reports that long-term mortgage costs fell in the latest week in response to recent government reports, including one implying that inflation is in check. The national average commitment rate on a 15-year, fixed mortgage dropped to 5.76 percent from 5.79 percent. Adjustable-rate mortgages were lower this week as well, with the average rate on a one-year, adjustable-rate mortgage sinking to 5.15 percent from 5.22 percent and the five-year hybrid ARM dipping to 5.79 percent from 5.82 percent.

Please visit my website @ www.MarkDDiaz.com

Office, Apartment Rentals Forecast to Grow in '06

2006-01-02T05:09:00.000-12:00

(December 28, 2005) -- The office-leasing and rental-apartment markets will pick up steam in the coming year, recording gains in both occupancy and rental rates, according to a Marcus & Millichap study. The real estate investment brokerage expects office rents to rise about 4 percent nationally in 2006, as the vacancy rate falls to 13.7 percent by the fourth quarter from about 15 percent during the same period of this year. The hottest office markets next year will be New York City-Manhattan; Orange County and Riverside-San Bernardino, Calif.; Tampa; and the District of Columbia, the study says. Rounding out the top 10 are Fort Lauderdale, Los Angeles, San Diego, Oakland, Calif.; and Tucson, Ariz. As for the rental-apartment market, Marcus & Millichap expects high homeownership costs, condominium-conversion projects that lower rental supply, and slight gains in the job market to reverse a downturn that began four years ago. The top apartment markets will be Orange County, Calif.; Fort Lauderdale, Fla.; Las Vegas; San Diego; and New York City.

Source: Wall Street Journal (12/28/05); Corkery, Michael

Mold Still Impacts Real Estate Transactions

2006-01-02T05:06:00.000-12:00

December 27, 2005) -- Research shows that mold problems continue to add a new element of risk to real estate transactions. Ninety-nine percent of builders and real estate lenders polled for a recent survey said mold can influence the value of a property deal, while 60 percent said they were aware of cases in which prospective buyers backed out of real estate transactions because they feared potential mold problems. Seventy-six percent of respondents cited possible mold liability involving investment properties as a concern. Presently, most property-casualty, business risk insurance, and directors and officers policies do not cover mold. When it comes to supporting mold prevention protocols, 59 percent of respondents said a preferred mortgage rate would be the biggest factor in approving a protocol; while 49 percent said having mold included in their insurance coverage would be the biggest factor.

Please visit my website @ www.MarkDDiaz.com

Bracing for the boom!!!

2006-01-01T15:41:00.000-12:00

They're coming and we're not ready.While Southwest Florida is used to growing by as many as 25,000 people a year, the baby- boomer growth is likely to be even greater.With 20, 30 and even 40 years of retirement ahead of them, whether they stay could depend on what they find.

Statistics indicate they will be better educated, wealthier, more active, more mobile and have longer lives than their parents.And they will fly into the newly expanded Southwest Florida International Airport to join others already cruising our congested roads.
"They are spoiled — that's not a bad word," said Wayne Daltry, county Smart Growth director. "They want not to be stuck in traffic. They can go anywhere, and they're leaving the place that isn't giving it to them."The influx will mean a continued investment in infrastructure, including roads, schools, public safety and the service industry. Lee County is still playing catch-up to unprecedented growth of the past decade. The county grew from 335,000 in 1990 to 440,000 in 2000 to more than 547,000 last year."You're looking at big-city stuff — we opened seven or eight new schools just this year," said Lee County Sheriff Mike Scott, who added 44 deputies in 2005 and sees that trend continuing with the expected growth. "They are going to have a vehicle or two, be on the roads, and have the same needs for fire and safety protection."
The county's 25-year road construction plan calls for toll overpasses and toll lanes on heavily congested roads such as Daniels Parkway near the airport."We're having to add lanes all over the place," said Glen Ahlert of Lee County's Metropolitan Planning Organization.
Two-lane arteries are expected to become a thing of the past, with a few exceptions such as McGregor Boulevard.With its trademark palm trees, McGregor will remain the same for the simple reason there is no room to widen it.In other areas, two lanes will become four. Four lanes will be built out to six.
"Some places six isn't enough and we're trying to figure out what to do," Ahlert said."Colonial corridor is going to see a lot of improvements and it's going to be under construction off and on for the foreseeable future."
Plans are under way to widen Interstate 75 to six lanes, and other arteries will be beefed up in preparation for the influx, said Debbie Tower of the Florida Department of Transportation."We're putting a lot of attention on regional roadways and regional connections," she said.But just improving the roads won't be enough for the discriminating boomer who absolutely, positively must fly himself.
"As baby boomers retire, those that are flying an aircraft in Chicago or Ohio" will be flying on down to an expanded Page Field, said Gary Duncan, assistant aviation director.Additional hangar space is planned for the north end along with a new terminal and an additional taxiway, Duncan said.
Bill Kagan, 58, has lived here all his life and has been flying for 40 years. He has watched Page Field change over the years and expects it to continue expanding as boomers arrive."I do have a lot of friends who either do have plans to move here or already have places here," he said. "Florida is great for flying. The weather is so great you can fly almost every day."Data indicate boomers will have more money to spend and will pay more taxes, according to a study by Thomas, Warren and Associates: "The Impacts of Mature Residents of Florida."
"Certainly, some of the people buying in the big developments down in Estero have got money to spend and might be inclined to retire early and spend it," Ahlert said.Sheriff Scott said having more education and money could be a requirement with the skyrocketing home values and cost of living.
"They are going to need it, obviously, because we are pricing ourselves right out of house and home here," he said.Ahlert agreed, noting that whether boomers attracted to Florida will stay could depend on the availability of affordable housing for service workers."A lot of those we've been attracting lately have been more affluent ... (others) we have pretty much priced out of the market," he said.
That makes it difficult to hire workers needed to serve them, officials said.Meanwhile, Lee County will have to come up with hundreds of millions of dollars just to pay for road construction alone.
"Let's be realistic," said Commissioner John Albion of the shortfall in the budget for long-term road construction. "We're probably talking about $300 million — minimum."And where will we be in 20 years? Stuck in traffic next to a boomer."It'll probably be fairly congested," Ahlert said with a laugh. "I think it will still be busy and a lot of roads torn up for construction because there are a lot of improvements that need to be made."

The housing boom that won't die

2005-12-30T15:12:00.000-12:00

The obituary for this decade's housing boom has been written many times in recent months, but the market continues to shrug off reports of its demise and show continued strength.

Certainly many numbers have spelled doom. Just this week the National Association of Home Builders/Well Fargo Housing Market Index, which measures builder confidence, posted another decline to fall 20 percent below its high for the year in June. In addition a forecast for the nation's 100 largest markets done by Economy.com and home property-valuation service Fiserv CSW for Fortune magazine found tougher times ahead in many markets, with 16 percent of markets expected to see home values decline in 2006, and nearly 30 percent to lose ground over the next two years. Overall home values are forecast as posting a modest 7 percent gain in prices in 2006 and flat prices in 2007.

And to pile on, a week ago home builder Toll Brothers (Research) warned it would have trouble meeting 2006 earnings forecasts and said it appeared that home demand would slow next year to pre-boom levels.
But then comes Tuesday's housing start and building permit figures for November from the Census Bureau. They bounced back from a weak October to easily top forecasts. Both readings, in fact, were the fourth best on record. And the number of single-family home starts matched a February record.

David Seiders, chief economist with the NAHB, said it's too soon to say that housing is out of the woods based on Tuesday's report, but it's probably too early to say it's definitely reached its peak. "The thing we're trying to figure out is are we close to or are we past the tipping point. So far the jury is out," he said.

The NAHB is forecasting a slight decline in building in 2006, but Seiders said it is possible the market could surprise to the upside once again, especially if mortgage rates don't climb another half-percentage point as the trade group forecasts. Others say that the latest report of a building rush shouldn't be mistaken for the housing market showing continued gains. "It could be that home builders are trying to work off the supply of permitted properties they have in the pipeline," said Orawin Velz, economist with the Mortgage Bankers Association. "If you look at leading indicators of the housing market, you really have to say this cannot be sustained."

Softness in pricing

Seiders said it's clear from talking to builders that rising interest rates are putting a crimp in demand for housing. That means builders are having to edge down the bumpy road traveled by the nations' automakers ... using incentives to keep sales strong. "There are some price reductions going on in the new home market," he said. "More commonly it is the non-price incentives, giving away some amenities, paying closing costs."
Of course home builders aren't like the automakers trapped by high fixed costs and union contracts that make cutting staff difficult. If the housing market does cool significantly, there could be the loss of 500,000 construction jobs in the next two years according to the UCLA Anderson Forecast. Another 300,000 jobs could be lost in the finance sector.

The importance of housing in powering the U.S. economy is one reason that some many economists have been keeping such a close eye on the strength of the market. But so far they've been wrong every time they've projected a slowdown ahead in recent years.

"Last year all the forecasting was underestimating what the market would do," said Pam O'Connor, CEO of Leading Real Estate Companies of the World, the nation's largest network of independent residential real estate firms. "Most people in our business would say we're past the peak, but that's still tempered by a lot of demand out there. You've still got a lot of baby boomers buying and trading up."

The Census Bureau figures show the supply of new homes on the market rising 20 percent over the last year, and increasing or staying level every month during that period. But Seiders said that some of that growth is in homes permitted but not started, which are counted as new homes for sales in the report. Homes completed but not yet sold have stayed relatively steady, he said. O'Connor and others say that the building rush in the latest report doesn't necessarily suggest there will be a glut of new homes on the market driving down prices.

"While there has clearly been a cooling in the marketplace, I attribute this to a return to economic equilibrium in the real estate market," said Manhattan real estate lawyer Neil Garfinkel. "This is the marketplace which we are returning to and it's a positive."

Risky mortgages could be harder to get

2005-12-30T01:34:00.000-12:00

WASHINGTON -- Dec. 14, 2005 -- Qualifying for a low-payment, high-risk mortgage is getting harder.

Federal regulators plan to issue a notice this month that could make lenders more hesitant to offer "non-traditional" mortgages -- such as interest-only loans and option adjustable-rate mortgages -- to people with weak credit or finances.

In the third quarter, 33% of first mortgages approved by lenders were non-traditional loans, compared with 1% five years ago, according to LoanPerformance, a research firm.

Interest-only and option ARMs are fairly complex mortgages. Typically, borrowers make artificially low payments for a period, such as five years. Afterward, payments shoot up to reflect current interest rates and the principal owed. Regulators worry that some borrowers lured by these mortgages' initial low payments won't be able to handle higher payments later. Lenders would then be at risk for loan defaults.

Interest-only loans and option ARMs have likely contributed to the surging housing market, because they let borrowers buy more expensive homes than they normally could afford. Non-traditional mortgages have become more widely available as companies have rushed to meet demand. Quicken Loans, for example, began offering option ARMs this year and interest-only loans two years ago.

If non-traditional mortgages become scarcer or if borrowers turn away, "That could have a cooling effect" on the housing market, says Glenn Costello, a managing director of Fitch Ratings.

Borrowers who use such loans would see their mortgage balances rise over time if their monthly payments don't cover the loan's interest, Federal Reserve Governor Susan Bies has warned. And lenders risk higher defaults if they ease up on safeguards, such as verifying borrowers' income, Bies says.

Regulators plan to formally weigh in on the risks of these mortgages by year's end. The notice will address how banks qualify borrowers for loans, the lenders' portfolio risk and the "payment shock" borrowers could face as their payments rise, says Barbara Grunkemeyer of the Office of the Comptroller of the Currency.

The likely result? This will "pressure lenders to tighten standards," says Keith Gumbinger of HSH Associates, a publisher of loan information. "That may mean that somewhat fewer borrowers qualify."

Some mortgage lenders aren't waiting to take action. New Century Financial says it's cutting back on interest-only loans because they were "highly concentrated in the (company's) portfolio" during some quarters. Washington Mutual and Golden West Financial have raised the introductory interest rates on option ARMs in recent months.

2005-12-29T16:58:00.000-12:00

Top five things to look for in 2006

1) Schools

As Cape Coral continues to grow, look for more of the schools you already know, as well as entirely new schools.The city plans to open two more charter schools this year: a middle school next to Oasis Charter Elementary and an elementary school near Burnt Store Road and Ceitus Parkway.Early in the year, Cape Coral Charter School, run by Charter Schools USA, and Hector A. Cafferata Jr. Elementary, run by the Lee County School District, are scheduled to move into their permanent buildings.
The district also plans to expand four Cape elementary schools: Pelican and Skyline will each get 36-classroom additions, while Cape and Caloosa will each get 18 additional classrooms. The expanded schools are expected to be ready in time for the 2006-07 school year.

2) Downtown

Cape Coral doesn't really look like a city, but its leaders propose to change that.The Community Redevelopment Area's 432 acres, planned to take on the role of downtown, stretch along both sides of Cape Coral Parkway from Southwest Second Court to Cape Coral Bridge. The area also runs north along Del Prado Boulevard from the parkway to Southeast 44th Terrace.
With new building codes adopted by Cape Coral City Council last November, the downtown area is poised for possible large development. The new codes allow for buildings from two to 12 stories high and an increase of about 9,100 homes.
Proposals for the area's development as a vibrant center to the city include Villagio, a $380 million project with four 12-story condominiums, parking structures, offices and retail shops.Other proposals include, but are not limited to, the Piazza di Venezia, a $400 million, 20-acre project with a plaza, condominiums, a theater, offices, hotel and convention center. VK Development plans a 12-story condominium building with six floors of parking, offices and retail shops at Bimini Basin.Plans call for the Hampton Inn & Suites to open in February as the first major project in the construction of the downtown.

3) Crowded Conditions at City Hall

City workers are running out of elbow room at City Hall, and the problem will only get worse in 2006, Cape officials say.
As the city grows, its government plans to hire even more employees to meet the demand. Unfortunately, the current City Hall and nearby public safety building aren't big enough to comfortably house all those new people.Now city officials are considering adding a second wing to City Hall or even building a second building across the street.
A new public safety building is planned to be built in 2007, and a new City Hall could come in about the same time period.The city is studying how much space it will need in the coming years. A consultant is expected to discuss space estimates in early 2006.

4) Commercial Development

Construction crews have begun preparing land for possibly the largest commercial project being built now in the city, the Mid-Cape Corporate Center.Billed as the first Class A development in the Cape, the 30-acre office and industrial campus sits behind the Publix at the triple crossroads of Hancock Bridge Parkway, Santa Barbara Boulevard and Pine Island Road.
As a Class A development the campus also will feature three-story buildings with restaurants, offices and retail shops, along with single-story industrial buildings.The entire project promises seven buildings with 300,000 square feet of space. There could be about 1,000 people employed at the site when the project is completed.
Several commercial projects to watch through the new year were outlined by the Cape Coral Council for Progress' third annual "Capeopoly" presentation.A 1.2-million-square-foot regional mall would probably rank as the largest Cape Coral project yet to be built. Plans call for it to be open in three to five years at the north side of Pine Island Road near Bubba's Roadhouse and Saloon restaurant.Kismet Industrial Park could start construction of two 20,000-square-foot buildings and one 50,000-square-foot building on 25 acres in the new year.
The 70-acre Greater Cape Coral Commerce Park at Pondella and Pine Island roads could have 60,000 feet of retail and 150,000 square feet of office space. The park also plans 400,000 square feet of other office space.Home Depot plans a 115,000-square-foot store at Veterans Parkway and Skyline Boulevard.
Cape Coral residents probably can count on Publix building more stores, Cape Coral Hospital expanding and the Cape Coral Chamber of Commerce building a new headquarters.

5) Residential development

New homes will continue to rise like new grass on lots throughout Cape Coral.The city issued 7,694 permits during its budget year, which ended Sept. 30. That's up from 5,392 in 2004 and 3,819 in 2003. The rapid growth, 45.2 percent a year, according to CNN Money, keeps pressure on the city to provide utilities, roads, parks and other services.Watch for communities such as Sandoval, Coral Lakes and Tarpon Point to fill in with homes and condominiums. City officials also hope to develop strategies this year to provide affordable housing for workers such as teachers, police officers and firefighters. Median home prices in Cape Coral ranged at the end of the year from $203,000 in northeast Cape Coral's 33909 ZIP code area to $345,000 in southeast Cape Coral's 33904 ZIP code area. The latest median home price in Lee County was reported at $322,000. The city is trying to establish more commercial activity centers near major roads to encourage a mix of residential and commercial development.

2005-12-29T16:44:00.000-12:00

Sales of existing US homes dropped 1.7 percent in November while the stock of unsold homes on the market climbed to a 19-year high, the National Association of Realtors said.

Admitting a slowdown is now under way, the industry group said existing home sales dropped to a seasonally adjusted annual rate of 6.97 million last month, the lowest since March."Housing activity has peaked," said David Lereah, chief economist for the association. But he insisted the market will not implode after years of red-hot growth. "There are no balloons popping."

Inventories of unsold homes increased 1.2 percent to 2.9 million, the most since April 1986.
The strength of the US housing market is credited by economists with sustaining consumer spending over recent years, helping the economy to expand by a robust 4.1 percent in the third quarter.

"The cooling US housing sector should apply a dampener to consumer spending as 2005-2006 unfolds, but some of this could be offset by still-decent job growth," said Sherry Cooper, chief economist for BMO Nesbitt Burns.

Lereah said home sales in 2005 would likely set a record of about 7.104 million and would slow only moderately in 2006 to 6.84 million.Signs of froth in the market persist. The median sales price for a US home rose 13.2 percent year-over-year in November to 215,000 dollars.

"Double-digit annual increases will become less common in the coming year," NAR president Thomas Stevens said.

2005-12-29T16:35:00.000-12:00

Lee County existing-home sales back up in November

Sales of existing homes in Lee County rebounded in November following disruptions from Hurricane Wilma a month earlier.The median price was $295,400, up 49 percent over last year, but down from $322,000 in October, according to data released today by the Florida Association of Realtors.

Nationally, existing home sales fell to an eight-month low, leaving the number of homes on the market at the highest level since 1986.Home sales dropped 1.7 percent to a 6.97 million annual rate, according to the National Association of Realtors.

Purchases have been slowing since they reached a record pace of 7.35 million in June.In Lee County, however, sales grew again. Buyers purchased 810 existing homes in November, up four percent from November 2004, and more than triple that of October, when 264 homes sold, according to the state asssociation.The number of sales had fallen off sharply in October — down 52 percent from October 2004 — as insurance companies ceased writing policies with Hurricane Wilma looming.

2005-12-28T16:04:00.000-12:00

Statistical Analysis Eases Bubble Talk, Shows Rents Growing

There's been plenty of press lately on softening markets around the country and now there are more articles finding ink about how the real estate bubble isn't really a bubble, hasn't burst and is more likely just seeping out some air. I've had a Google News Alert established for months now on "real estate bubble." It's amazing how many local newspapers keep reporting about the bubble – somewhere else. Not in Florida, Texas, North Carolina., etc., but somewhere else – those poor people.

Then today's search results brought in these headlines:

"Proof that the real estate bubble hasn't burst"
"A challenge to real estate bubble reports"
"The real-estate bubble media coverage bubble"
"Bye-bye bubble"
"Self-correction of real estate bubble"

In reading the articles they all seem to be saying, "Um … wait a minute, we may have overreacted to the bubble stories and now it's not a story." Through deeper reading, you'll find industry watchers and insiders have come out with the big guns in the area of statistical analysis. Without statistics, business people don't move forward and these stats have been showing that in many places across the country, there are some very strong markets taking a breather, but by no means has any bubble popped.

The National Association of Realtors is even predicting a record year for 2006. Now, you might say, "Well, of course they're saying that to quell the fears that people's home values are in jeopardy." Maybe yes, maybe no. The problem for all the bubble prognosticators, however, is that markets across the country are still strong. Rarely do you find a market absolutely diving and people heading for the hills. The "softening" is more like a return to a normal market, not a bursting of a market.

In light of the fact that the Washington, D.C. region has the strongest economy and job growth in the country, I was surprised at the latest breather in the market. However, in looking over our own real estate stats, I've discovered that investors should be raising rents right now if they want to take advantage of a run on the rentals the last four months.

Investors inside any hot market need to look over the stats just as much as those who are selling. They must keep up with the real estate values so they know when to sell and move money to other investments. And they especially need to watch average rents as they don't want to get left behind in the growth of their monthly cashflow. What's happening here is probably doing the same in other markets where sales are either headed downward or taking a breather -- rental inventory is being eaten up, rents are on the rise and days on the market have been slashed. At least for the last few months, it's turning in favor of the landlords.

According to the rental stats from the region's MLS, Metropolitan Regional Information Systems, Inc., in the District of Columbia, the average days on the market for rentals has dropped below three weeks. The average days on market last year at this time was more than 10 weeks. In addition, the average unit rented last month is bringing in $840 more annual income than the average unit rented a year before. Wealth-building is on the march.

In neighboring jurisdictions around D.C., the same is happening -- Montgomery County, Md., days on market dropped less than half to 30 days. Fairfax County, Virginia's days on market has dropped to just 23 from 59 in a November to November comparison from this year to last. Meanwhile, the average unit annual income is up by more than $1,000 compared to a year ago in Fairfax. Montgomery County investors are bringing in nearly $100 more per month last month than they were able to fetch a year before -- that's $1,200 per year increase in revenue.

I've always been a 'buy 'em and hold 'em" kind of investor. And other investors who have done the same are now smiling. The wise wealth building goes something like this -- buy low, hold and rent out (for years), sell and roll money to a larger property. This is what we refer to in the business as a commonsense approach to building wealth. Yes, those investors who purchased when there wasn't a frenzy are now smiling -- all the way to the bank.

2005-12-28T02:43:00.000-12:00

Back to work...trying to catch up on what has been happening around here. Remember that real estate bubble everyone has been talking about, well my colleague was checking this morning on the local MLS and found that there are 161 homes in the month of December that are pending sale. Three of them are over the $1 million price tag. Like I said before, this is still a very good market, especially gulf access.

30 year fixed-rate mortgages: 6.30%, down from 6.32% the previous week. A pair of 26 year old engineers from London have developed a concrete based mixture in a bag that when you add water inflates into a 172 square foot interior space. The bag weighs 500 pounds and when inflated becomes a durable hut with a ten year lifespan...all in about 40 minutes...INTERESTING! The cost is $2100.00 per bag.

An amusement park in S. Ft. Myers is expected to open soon, the park covers about 7.5. acres and includes go-kart tracks, a small roller coaster, bumper boats, amusement rides for small children, rock climbing wall, bungee jump, an arcade, a deli and a kids concession area. The park has about 10.5 acres of room for future expansion.

Increased SEER Ratings on air conditioners up to 13 SEER are to take effect on January 23, 2006.

The City of Cape Coral is trying to reach an agreement with the Cleveland Indians of Major League Baseball to play their spring training games here in the Cape. Ft. Myers is already home to the Boston Red Sox and Minnesota Twins.

Keep in touch!