Average Mortgage Rates Lowest in at least 37 Years!

Rates on 30-year-fixed mortgages dropped this week to their lowest levels in at least 37 years, as the Federal Reserve pledged to pour money into the mortgage market in an effort to spur the moribund U.S. housing market. Freddie Mac, the mortgage company, reported Thursday that average rates on 30-year fixed-rate mortgages dropped to 5.19 percent, down from the year’s previous low of 5.47 percent, set last week.

The rate is the lowest since Freddie Mac’s weekly mortgage rate survey began in April 1971.Mortgage rates started falling after the Federal Reserve launched a sweeping new effort in late November to aid the U.S. housing market by purchasing up to $600 billion of mortgage-related securities and other debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. A daily survey found that the national average rate fell even lower Wednesday. Rates on 30-year, fixed mortgages was 5.06 percent, according to financial publisher HSH Associates, the lowest since the 1960s and down from 5.3 percent Tuesday.

It was the best news in months for anyone looking to lock in a 30-year, fixed-rate mortgage. But it was not expected to be a cure-all, and borrowers already in danger of foreclosure probably won’t be able to take advantage because only borrowers with stellar credit can qualify.

Average Weekly Mortgage Rates Lowest in Four Years

Rates on 30-year-fixed mortgages dropped this week to their lowest levels in more than four years, effects of a startling November unemployment report and a government plan to buoy the housing market.

Freddie Mac reported Thursday that average rates on 30-year fixed-rate mortgages dropped to 5.47 percent, down from 5.53 last week. The rate is slightly below this year’s previous low of 5.48 percent during the week of Jan. 24, and the lowest since March 25, 2004, when it averaged 5.40 percent.

Mortgage rates started falling after the Federal Reserve launched a sweeping new effort in late November to aid the U.S. housing market by purchasing up to $600 billion of mortgage-related securities and other debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

Rates: Historic One Week Drop

Rates on 30-year mortgages plunged this week to the lowest level since January after the government launched a sweeping new effort to aid the U.S. housing market.

Mortgage finance giant Freddie Mac reported Thursday that average rates on 30-year fixed-rate mortgages dropped to 5.53 percent in the largest one-week drop in 27 years. That was down from 5.97 percent last week, and the lowest since the week of Jan. 24, when it was at 5.48 percent.

Further drops could be on the way if the government launches an industry-backed plan to lower the rate on a 30-year mortgage to 4.5 percent by spending hundreds of billions to buy mortgage-backed securities issued by Fannie Mae and Freddie Mac.

That would follow an effort announced last week by the Federal Reserve, which is planning to purchase up to $600 billion of mortgage-backed securities and other debt issued by Fannie and Freddie and the Federal Home Loan Banks. Those institutions don’t make loans directly to consumers, but provide money to the mortgage market by packaging loans into investments.

The Fed’s move caused rates to immediately drop by about a half-point, and many in the real estate industry hope rates will keep dropping as the government increases efforts to battle the credit crisis.

Rates Dip Again this Week

Mortgage rates dropped for a second straight week, reflecting the impact the weakening economy is having on financial markets. Freddie Mac, the mortgage giant, reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.14 percent this week, down from 6.20 percent last week.

It marked a sharp decline since rates hit a high of 6.46 percent two weeks ago. Analysts attributed the back-to-back decreases to financial markets growing more confident that the Federal Reserve will cut rates again at its final meeting of the year in December in an effort to combat a severe slowdown many economists fear could deepen into a prolonged recession.

“Long-term mortgage rates fell slightly this week as signs the overall economy is weakening brought interest rates down market-wide,” said Frank Nothaft, chief economist for Freddie Mac.

Thirty-year mortgage rates hit a high for the year of 6.63 percent in late July and then dropped below to a seven-month low of 5.78 percent for the week ending Sept. 18.

October Statistics

Sales of single family homes rose just over 8% in October compared with September and while the chart trends upward as sales increase from early in the year, sales so far this year are about equal with last. This is actually surprising since it seems a much more active year for sales but perhaps that’s a factor of fewer Realtors in the marketplace.
Prices provide a more consistent downward trend of 16.8% year-to-date and a 36% decrease from peak prices in 2006 (according to the Case-Shiller Value Analysis).

Mortgage Rates Down this Week

Mortgage rates dropped this week, providing a dose of welcome news to prospective homebuyers.Freddie Mac, the mortgage giant, reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.20 percent for the week ending Nov. 6. That was down sharply from 6.46 percent last week.

The retreat in mortgages rates comes as the economy is getting weaker.“Mortgage rates fell this week amid new indications of a pullback in consumer spending and a weaker jobs market,” said Frank Nothaft, Freddie Mac’s chief economist.

Those factors are reducing investors’ concerns about inflation, which is helping to pull down mortgage rates. Thirty-year mortgage rates hit a high for the year of 6.63 percent in late July, and then dropped to a seven-month low of 5.78 percent for the week ending Sept. 18.

Sharp Rise in Rates this Week

Rates on 30-year mortgages spiked this week as the tumult in financial markets continued to be felt in housing finance.

Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.46 percent this week, up from 6.04 percent last week. The sharp increase pushed 30-year rates to the highest level since the week of Oct. 16.

Economic Uncertainty Effects Rates this Week

Rates on 30-year U.S. mortgages dropped sharply this week, falling to the lowest level in five weeks.Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.04 percent this week, down from 6.46 percent last week. The sharp decline pushed 30-year rates down to the lowest level since they stood at 5.78 percent the week of Sept. 18.

Analysts attributed the decrease to an easing of inflation concerns, which now have been replaced with rising worries that the country could be headed for a prolonged recession. Interest rates generally fall in periods of economic weakness.

Morgage Rates Highest in 8 Weeks

Rates on 30-year mortgages jumped to the highest level in eight weeks, squeezing some potential homebuyers out of the market, and reflecting how nervous lenders remain despite the massive global intervention in the credit markets. Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.46 percent this week, up from 5.94 percent last week.

It marked the third increase out of the past four weeks and pushed rates to the highest level since Aug. 21.In plain dollars and cents, last week’s increase means a homebuyer would spend about $55 more a month to buy the U.S. median-priced home of $203,100 with a 20 percent downpayment.

September Statistics

After a few months of trending upward, sales of single family houses dipped 11.04% in September compared with August but remained well ahead of last year's level (up, 30.59%). This sales activity again was driven by a steady downward march of price. Prices were down 8.28% for the month and 15.55% down year-to-date.

The single family home inventory bucks the sales trend by steadily declining. This could be explained by reports of 'Seller Fatigue' where property owners are electing to remain out of the current weak market.

Average Interest Rates Lower

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 5.94 percent this week, down from 6.10 percent last week. It marked the first decline since rates fell on Sept. 18 to 5.78 percent, a seven-month low.

Financial markets have been turbulent in recent weeks as investors have flocked to the safety of Treasury securities, sending those yields down sharply while rates on other types of corporate bonds have been pushed higher by growing concerns about whether the bonds will be repaid. Those crosscurrents have been reflected in mortgage rates, which also have been on a rollercoaster, hitting a high for the year of 6.63 percent in late July and then dropping below 6 percent in mid-September.

“Longer-term mortgage rates fell for the first time in three weeks, roughly following bond market yields,” said Frank Nothaft, chief economist for Freddie Mac.

Mortgage Rates....

Rates on 30-year mortgages have risen for a second straight week, climbing to the highest level in a month.Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.10 percent this week, up slightly from 6.09 percent last week.

It was the highest level since 30-year mortgages averaged 6.35 percent for the week ending Sept. 4. Financial markets have been turbulent in recent weeks as demand for safe-haven Treasury securities has pushed those yields down sharply while rates on other types of corporate bonds have been pushed higher by growing concerns about whether the bonds will be repaid. Those crosscurrents have been reflected in mortgage rates, which also have been on a rollercoaster, hitting a high for the year of 6.63 percent in late July and then dropping below 6 percent in mid-September.

The recent turmoil in credit markets has pushed those rates up from a seven-month low of 5.78 percent on Sept. 18, to above 6 percent for the past two weeks.

After 5 Weeks of Decline, Rates Move Up
Rates on 30-year mortgages, which had been falling for five weeks, jumped sharply this week, reflecting the turbulence in global credit markets. Freddie Mac reported Thursday that its nationwide survey found that the average for 30-year, fixed-rate mortgages rose to 6.09 percent this week, up from 5.78 percent last week. Last week’s rate had been the lowest level for 30-year rates since February.
The increase, which pushed rates above 6 percent for the first time since early September, was blamed on turbulent financial markets, which in recent weeks have been hit by the biggest upheavals on Wall Street since the Great Depression.“Mortgage rates followed Treasury bond yields higher this week amid market uncertainty over the current state of the economy,” said Freddie Mac chief economist Frank Nothaft.
The big declines in mortgage rates before this week were attributed in part to the government’s announcement on Sept. 7 that it was taking over Fannie Mae and Freddie Mac following huge losses the companies experienced because of soaring defaults on mortgage loans, reflecting the deep slump in housing.

Average Mortgage Rate Lowest in Seven Months

Rates on 30-year mortgages dropped sharply again this week, falling to the lowest level in seven months, as rates continue to decline following the government's dramatic takeover of mortgage giants Fannie Mae and Freddie Mac. Freddie Mac reported Thursday that its nationwide survey found 30-year, fixed-rate mortgages declined to 5.78 percent this week, down from 5.93 percent last week.It was the fifth consecutive weekly decline and pushed the 30-year mortgage to the lowest level since it stood at 5.72 percent the week of Feb. 14.

The decreases have accelerated over the past two weeks since the government announced on Sept. 7 that it was taking control of Fannie Mae and Freddie Mac because of huge losses the companies were experiencing due to soaring defaults on mortgage loans as home prices slump.

Mortgage Rates Drop Significantly

Rates on 30-year mortgages dropped sharply this week, falling to the lowest level in five months, as the government’s dramatic takeover of mortgage giants Fannie Mae and Freddie Mac had the hoped-for impact of lowering mortgage rates.
Freddie Mac reported Thursday that its nationwide survey found that 30-year, fixed-rate mortgages dipped to 5.93 percent this week, down from 6.35 percent last week.
The sharp decline pushed the 30-year rate below 6 percent for the first time since late May and marked the lowest level for this rate since they averaged 5.88 percent the week of April 17.
Private economists had predicted that the government’s move on Sunday to take control of Fannie Mae and Freddie Mac would result in lower mortgage rates for consumers because it removed a huge uncertainty about the future of the two firms, which own or guarantee half of the nation’s mortgages.

Homestead Exemption-The Recapture Rule,
or What Goes Around Comes Around
You may be rushing to check the assessed value of your homesteaded property in the next couple of years as values in the neighborhood decline. Won't you be shocked to find that your assessed value has gone UP! Welcome to Florida's Recapture Rule.
Homesteaded property owners have enjoyed the Save our Homes assessed value cap of 3%/annum since 1993. As values skyrocketed, property taxes for homesteaded owners remained low thanks to the Save our Homes amendment. If you'd like to check out the amount of assessed value reduction for your property take a look at your tax statement (or look up your address on www.bcpa.net/search.asp) and compare the SOH value with the Just Value. Now that values are declining, the Recapture Rule, passed in 1995, will come into play. The Recapture Rule provides that county Property Appraisers may increase assessments up to the 3% cap, even in declining markets, until the Just Value figure is reached.

Short Sale BUYERS May be Responsible for Doc-Stamps
Many of you have heard or seen reports that the State dept of Revenue for purposes of determining the transfer tax (stamps on the deed) will base the tax on the sale price + the amount of forgiven debt on the mortgage. So if a property with a mortgage of 300,000 sells for $200,000 the tax would be $2,100 (SP 200,000 + debt forgiven 100,000 X .007). This policy is not in effect now as a final decision from the Dept of Revenue is not expected for several weeks. However, here’s the kicker so please pay close attention. If the above ruling is issued and a deal closes and the tax on the debt that was forgiven is not paid the State will look to the BUYER for payment. The tax, although normally paid by the seller, may be paid by either buyer or seller so both are liable and it is much easier to find the Buyer as they can usually be reached at the property they purchased. The seller on the other hand may have left the state and it could be difficult to track them down. Any buyer pursuing a short sale needs to make sure the closing agent is calculating the tax using the total amount of the mortgage debt as the basis and make sure the lender authorizing the short sale agrees to pay the full amount.

Mortgage Rates Continue Decline

Rates on 30-year mortgages fell for a third straight week, dropping to the lowest level since mid-July. Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages dipped to 6.35 percent this week, down from 6.40 percent, the previous week. It marked the third consecutive decline and left rates at the lowest level since July 17 when they stood at 6.26 percent.

The 30-year mortgage, which hit a high for this year at 6.63 percent on July 24, has been above 6 percent since late May as financial markets have become convinced that rising inflation pressures will keep the Federal Reserve from cutting interest rates further to bolster the weak economy. Frank Nothaft, chief economist for Freddie Mac, attributed this week’s decline in mortgage rates to recent reports indicating that consumer spending may slow further now that the boost from the economic stimulus payments is fading.

Nothaft noted that personal incomes, the fuel needed to support consumer spending, dipped by 0.7 percent in July, the worst showing in three years and a worrisome signal that spending could falter in the months ahead.

Trend in Monthly Value Decline Continues to Slow

WHEW...that's a mouthful! Last month we noted that the decline in prices slowed for the first time since October of last year. This trend continued for the period ending 30 June according to the Case-Shiller Value Analysis just released.

We're not out of the woods yet as far as price softening is concerned but this is an encouraging sign of the turnaround that will eventually occur.

Weekly Mortgage Rates Dip Again

Rates on 30-year mortgages fell for the second straight week, declining to the lowest level in more than a month. Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages dropped to 6.40 percent this week, down from 6.47 percent last week. In addition, the points/fees charged to get this rate dropped to six-tenths of a point (.006 of the principal balance). This had been .7 all through August.

The new rate was the lowest since the week of July 17 when 30-year mortgages stood at 6.26 percent.The 30-year mortgage has been above 6 percent since late May, reflecting the view of financial markets that rising inflation pressures will keep the Federal Reserve from cutting interest rates further even though the economy is still mired in a period of significant weakness.

Average Mortgage Rates Dip

Rates on 30-year mortgages fell slightly this week to the lowest level since mid-July. Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages dipped to 6.47 percent this week, down from 6.52 percent, which had been the rate for the previous three weeks. The new rate was the lowest since the week of July 17 when 30-year mortgages stood at 6.26 percent.

The 30-year mortgage has been above 6 percent since late May as financial markets have become convinced that rising inflation pressures will keep the Federal Reserve from cutting interest rates further even though the economy remains mired in a period of significant weakness.

Is Your Property's Assessed Value too High?

Florida property taxpayers are turning their attention to appealing unfair property tax evaluations. Only valuations -- and not tax bills -- are subject to appeal.

Typically, taxpayers look at the "bottom line" and react based on the projected dollar amount of taxes. After the legislative increase of the homestead exemption local government revenues dropped in 2007, many property tax bills in Florida will appear lower. Confusion reigns because while tax bills may be lower, valuations have increased an average of 15 percent.

Again, tax appeal filing deadlines vary from county to county, But all appeals must be filed within 25 days of mailing of notices of proposed taxes for the year.The 25 days starts to run on the date of mailing of the notice of proposed taxes.Don't procrastinate, as any time extensions are not authorized by statute. For more information in Broward County, visit the Property Assessor's website: http://bcpa.net/value.asp

Real Estate Statistics for July

Sales for the month of July remained fairly steady with continued downward pressure on prices. Sales fell just over 2% while prices declined over 4% compared with the June.

Source: Realtor Association of Greater Fort Lauderdale

Ambivalence Reigns: Average Rates Remain Steady for Third Week

Rates on 30-year mortgages remained at the same level for a third week while rates on other types of home loans posted small declines. Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.52 percent this week. That was the same rate as the two previous weeks and represented the second highest rate of the year.

The highest rate so far this year was 6.63 percent hit for the week ending July 24. Frank Nothaft, chief economist for Freddie Mac, said 30-year mortgages did not budge because financial markets can’t decide whether the economy is getting weaker or is stabilizing. He noted that retail sales came in weaker-than-expected for July while demand for consumer credit grew in June by more than twice the amount that economists had been expecting.

Mortgage Rates Trending Upward
Mortgage industry experts polled by Bankrate.com last week think that mortgage rates are likely to rise over the next 30 to 45 days. More than two-thirds of the panelists (71 percent) look for higher rates; about one-fifth (21 percent) think rates will fall, and a lonely minority (8 percent) believes mortgage rates will stay about the same.

Weekly Average Mortgage Rates Unchanged

Rates on 30-year mortgages didn't budge this week, while rates on other home loans were a mixed bag.Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.52 percent for the week ending Aug. 7. That was the same as last week's rate, which marked the second-highest of the year. The highest _ 6.63 percent _ came the week ending July 24.Meanwhile, rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, rose to 6.10 percent this week, up from 6.07 percent last week.

Pending Sales to New Listings Ratio

In our unending search for silver linings in this market, we Realtors search high and low. I've been plotting the number of pending sales to new listings for some time now. As you can imagine this ratio got pretty low as the market changed as hopeful sellers jumped into the market at the time buyers decided we were too pricey.

There are a few explanations for the trend represented in the chart to the right. In my opinion, this evidences a gradual acceptance of reality by sellers, that only those properties that NEED to be sold are coming on the market and that those properties are more realistically priced and attracting buyers. Clearly we want to see this ratio continue to increase as a sign of the return of a healthier real estate market. I'll keep you posted.

Monthly Value Decline Slows Slightly

In this political season we're innundated with parsed statements attempting to find a silver lining in any situation. Consider the title of this post as one of those statements.

Values (according to the Case-Shiller Value Analysis) declined again in May 2008 but the decline slowed compared to the previous month for the first time since October of last year. It's too soon to declare the much-anticipated market-bottom but this statistic does deserve our attention.

I really like the Case-Shiller data since it measures value of properties sold against previous sales of the same property (not just closed sale figures).

Housing Bill and Oil Prices Calm Mortgage Rates

Rates on 30-year mortgages, which shot up last week to the highest level in nearly a year, dropped slightly this week following passage of a housing rescue bill.

Freddie Mac reported Thursday that the nationwide average for 30-year mortgages dipped to 6.52 percent this week, down from 6.63 percent last week. While the new level was still the second highest this year, it was down slightly from last week when investors were concerned about financial troubles at Freddie Mac and Fannie Mae, which together hold or guarantee nearly half of the nation’s mortgages.

On Wednesday, President Bush signed into law a sweeping housing rescue plan, which had won final approval in Congress on Saturday. The measure aims to help up to 400,000 families avoid foreclosure by allowing them to refinance into more affordable mortgages.It also expands the assistance the federal government can provide Fannie and Freddie as a way of reassuring investors about the financial health of two mortgage titans.The fall of oil prices from their record highs also contributed to the downward pressure on mortgage rates, analysts said.“Mortgage rates moved lower this week as a drop in commodity prices eased market concerns over inflation pressures,” said Frank Nothaft, chief economist at Freddie Mac.

Weekly Mortgage Rate Yo-yo; Sharply Higher this Week
Mortgage rates shot up this week with 30-year mortgages climbing to the highest level in nearly a year, reflecting concerns in financial markets about the troubles at corporate giants Fannie Mae and Freddie Mac.
Freddie Mac reported Thursday that its nationwide survey showed rates on 30-year mortgages surged to 6.63 percent this week, up sharply from 6.26 percent last week. That represented the highest level for 30-year mortgages since they stood at 6.68 percent the week of Aug. 1.
Other mortgage rates showed similar hefty increases which analysts attributed to financial market jitters over rising mortgage losses at Fannie and Freddie.Analysts said that the rising cost of funds for Fannie and Freddie had an immediate impact on the nationwide average for all mortgage rates since both companies are such big players. Fannie and Freddie either own or guarantee nearly half of the nation's mortgages.

Weekly Mortgage Rate Update: Six-week Low

Mortgage rates fell this week with 30-year mortgage rates dropping to the lowest level in six weeks as investors became less worried that the Federal Reserve would soon tighten credit policy to stall inflation.

Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.26 percent this week.That was down from 6.37 percent last week. It marked only the second weekly decline in the past eight weeks and left the 30-year rate at the lowest point since it averaged 6.09 percent the week of June 5.

Analysts attributed the decline in part to comments made this week by Federal Reserve Chairman Ben Bernanke. He indicated in his mid-year economic report to Congress that the central bank was poised between concerns about rising inflation pressures and the weakening economy.

Many analysts viewed Bernanke’s comments as a signal that the central bank will delay tightening rates to give the fragile economy and banking system time to recover. The Fed is hoping that the sluggish economy will help dampen inflation on its own.“Mortgage rates fell this week amid market speculation that the Federal Reserve may not raise the overnight bank lending rate this year after all,” said Frank Nothaft, chief economist for Freddie Mac.

Other rates dropped as well, according to Freddie Mac’s nationwide survey.Rates on 15-year fixed-rate mortgages, a popular option for refinancing, dipped to 5.78 percent, down from 5.91 percent last week.

Weekly Mortgage Rate Update
I'll let the 'professional' bloggers opine on the tumult in the banking world. In the meantime, prospective home buyers should note that rates on 30-year mortgages edged up this week, while rates on other home loans were a mixed bag.Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.37 percent this week. That was up from 6.35 percent last week.Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, dipped to 5.91 percent this week, compared with 5.92 percent last week.

Short Sales/Foreclosures and Property Taxes
Buyers anticipating property tax assessments based strictly on purchase price of properties purchased as short sales or foreclosures need to take note of the following statement found on the home page of the Broward County Property Appraiser:

If you purchase a property in a foreclosure or short sale, your actual purchase price may not reflect the just (market) value used for determining your taxes. Instead, Florida law requires our office to use the reasonable market price of a sale of similar homes in your neighborhood (or a similar area) sold under normal financial conditions to determine the assessment. Regardless of your 2008 purchase price, assessments in Florida are done a year in arrears. This means your 2008 assessment is based on the sales in your neighborhood (excluding foreclosures, short sales and non-arm's length transactions) between January 2, 2007 and January 1, 2008.

Buyers, concerned about exactly what this "reasonable market price" might be should contact the Property Appraiser's Office (use the link above).

Real Estate Statistics for May

Sales increases enjoyed earlier this year evaporated in May with continued downward pressure on prices. Sales were down 14.6% from April and 15.7% year-t0-date. Average prices declined 13.7% from April and 10.5% year-to-date.

source Realtor Association of Greater Fort Lauderdale

First Quarter Single Family Home Value Analysis

Single family home values appear to have fallen at an accelerated rate in the first quarter of 2008. The attached graphic presents the results for the Miami/Fort Lauderdale market using the Case-Shiller index.

Florida's Tax and Budget Reform Commission Places New Proposal on November Ballot

The commission that convenes every twenty years is taking its stab at addressing Florida's inequitable property tax system. If approved by 60% of the voters, this amendment will do several things

1. Starting in 2009, limit assessment increases to 5% a year on all non-homestead property. This is down from the 10% included as part of Amendment 1 passed in January, and keeps it permanent (Amendment 1’s cap lasted only for 10 years.)


2. It requires the Florida Legislature in 2010 to abolish the state’s required local effort for schools. It will be somewhere between $9-11 billion dollars, and that money can be made up in any combination of 4 ways:

• An increase of up to one percentage point to the sales tax (The Florida statewide sales tax is currently 6%)


• Spending reductions for other components of the state budget and revenue increases resulting from economic growth attributable to lower property taxes


• The repeal of sales tax exemptions, but not including food, health services, prescription drugs, the sale of real property, and items for resale


• Other revenues identified or created by the Legislature.

While not perfect, this proposal would provide a significant transition of our deeply flawed property tax system toward a more equitable position. Substantial relief for 'non-homestead-protected' property is crucial for the return of a robust real estate market (upon which much of the entire state's economy depends). It will be an interesting political season as the various groups with interest in this issue (which is almost everyone) begin to take up sides.

Real Estate Prices-Still Some Distance to Go

In a speech yesterday (Tuesday, 22 April); Yale University Economist, Robert Shiller predicted the percentage decline in real estate prices will exceed that experienced during the Great Depression in the 1930s (which was a 30% decline nationally). According to Shiller, Home prices rose about 85 percent from 1997 to 2006 adjusted for inflation, the biggest national housing boom in U.S. history. "Basically we're in uncharted territory," Shiller said. "It seems we have developed a speculative culture about housing that never existed on a national basis before." Many people became convinced that housing prices would increase 10 percent annually, a notion Shiller called crazy. Shiller, who admits to being bearish, says that real estate cycles take years to correct.

Keep in mind all real estate is LOCAL and our experience in South Florida will have larger numbers. Our price appreciation from 1997 to 2006 was 106% (for single family homes) so if we apply Dr. Shiller's formula our correction should be in the neighborhood of 37% or more.

Tenants, the Forgotten Victims of Foreclosure

That great bargain rental rate in the fabulous new condo could become a major headache for the tenant if the property goes into foreclosure during the term of the lease. It is wise for anyone renting property in the present market to keep the possibility of foreclosure in mind when shopping for a place to live. Certainly, if the tax record for the property contains a lis pendens reference; the matter should be questioned and resolved by the landlord prior to executing a lease. Keep in mind that mortgage and other obligation delinquencies may not be reflected in the tax record so it shouldn't be relied upon as the sole source of due-diligence. Renters may find that engaging an attorney to help protect advance rents, security deposits and lease-obligations is money well spent, especially in these turbulent times.

Value Declines of 'Expensive Homes' Slower than Lower Price Points

The Case-Shiller Value Analysis is a well-respected study of housing values in several major markets in the US. Shiller's Standard & Poor's/Case-Shiller home price index is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month. I've plotted their single family home values (selling price) for the Miami/Fort Lauderdale market and found that value declines have been greater for homes with lower price points. Based on Case-Shiller's data; homes selling for less than $267,899 have declined by 19% since the peak in December 2006. Homes selling between $267,900 and $393,966 declined 18% from peak and homes selling for more than $393,966 have declined by 11%.

Keep in mind, Gentle Readers, these data reflect actual SALES within these price points. Hanging on to inflated asking prices will not necessarily result in slower decline! It is still important to price property consistent with what buyers are willing to pay in the present marketplace.

A Reason to Buy Now?

According to projections by PMI Mortgage Insurance Company, rates for thirty-year fixed mortgages should bottom out in the second quarter of 2008 and begin a steady rise from that point. According to PMI’s projection, rates could increase by 12% between 2nd quarter 2008 and the end of 2009. Even with further price declines likely, this change should urge reluctant buyers to step forward and make their purchases as increases in their monthly mortgage payment could outweigh purchase price savings.