Housing News Likely To Build

The sudden and steep downturn in Florida's high-flying residential real estate market was arguably the top local business story in 2006, and it's our guess that the fallout from the downturn and how well the market recovers could be the top business story of 2007. One reason: For many people, a home is their single largest investment. In some parts of the country, sales of new homes seem to have picked up, but the threat of sweeping foreclosures on homes financed with sub-prime loans looms large, too. With all this in mind, we asked three experts in the real estate industry - a housing consultant, a career real estate agent and an economist - to weigh in on what struck them about the 2006 real estate market and what may be in store for Tampa Bay's housing market.

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Appraisers' Valuations Under Review

With the real estate market bottoming out and mortgage fraud on the rise, professional appraisers say they're under more pressure to value homes at specific, and often inflated, amounts. As a result, some big national lenders and law enforcement officials say they are taking a harder look at the role of appraisers in questionable loan deals. It's against state law for an appraiser to agree to value a home at a predetermined amount or intentionally omit information that could mislead a lender about the value of a home. Home sales involving a mortgage typically can't move forward without an appraisal showing the lender that the home is valued at close to the sales price.

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Nationally, Existing-Home Sales Rise Again

Existing-home sales continued to recover last month following a rise in October, with the level of sales activity suggesting a turn in the market. Nationwide, total existing-home sales — including single-family, townhomes, condominiums, and co-ops — rose 0.6 percent to a seasonally adjusted annual rate of 6.28 million units in November, up from 6.24 million the previous month but 10.7 percent below the 7.03 million-unit pace in November 2005. The national median existing-home price for all housing types was $218,000 in November, which is 3.1 percent lower than November 2005 when the median price was $225,000. The median is a typical market price where half of the homes sold for more and half sold for less.

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Housing Market Trapped by Buyer Negativity

The housing market is stuck — in a standoff between home buyers and sellers. Real estate professionals call the situation an irrational resoluteness between buyers and sellers. Sellers are clinging to too-high prices and buyers are equally adamant about getting a bargain. Fitch Ratings recently said housing is in a fairly severe, multiyear contraction — one that isn’t based, as previous slowdowns have been, on rising interest rates and a sharply slowing economy. It’s being driven by perceptions, the Fitch analysts said. “A negative buyer psychology seems to have become pervasive,” Fitch reported this month. “The expectation or fear is that home prices have peaked and buying now would be a mistake.”

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Mortgage Rates Drift Upward On News Of Jump In Consumer Spending

The 30-year fixed-rate mortgage (FRM) averaged 6.18 percent with an average 0.4 point for the week ending December 28, 2006, up from last week when it averaged 6.13 percent. Last year at this time, the 30-year FRM averaged 6.22 percent.

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Tampa Bay Area Home Sales Down 43%, Prices Up 3%

The Tampa-St. Petersburg-Clearwater metropolitan statistical area (MSA) reported 2,182 existing homes sold last month, compared to 3,799 homes sold a year ago for a 43 percent decrease. The market’s median existing home price increased 3 percent to $229,000; a year ago, it was $222,900. A total of 474 existing condos changed hands in Tampa-St. Petersburg-Clearwater in November for a 38 percent decrease over the 762 condos sold the previous year. The market's median existing condo price was $154,100; a year ago, it was $178,800 for a 14 percent decrease.

Housing Slump Puts Big Strain On Economy

The economy felt the strain of the housing bust and lost momentum in the late summer, with more sluggish performances expected in the months ahead. Economic growth slowed to a 2 percent pace in the July-to-September quarter, the Commerce Department reported Thursday. The message was loud and clear: The deepening housing slump is crimping growth. Investment in home building declined at a 18.7 percent rate - even more than previously estimated - and was the largest cut in 15 years. That shaved 1.2 percentage points off third-quarter growth, the most in nearly 25 years.

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Not Much Change Seen In Mortgage Rates During The Holiday Season

The 30-year fixed-rate mortgage (FRM) averaged 6.13 percent with an average 0.4 point for the week ending December 21, 2006, up slightly from last week when it averaged 6.12 percent. Last year at this time, the 30-year FRM averaged 6.26 percent.

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Insurance Surcharges Could Add 9% In 2007

Many Floridians already facing soaring insurance rates will be hit with surcharges that could add 9 percent to their premiums next year, according to the association that pays claims for defunct insurers. The Florida Insurance Guaranty Association approved the latest 2 percent surcharge last week. It most likely will be added to most Florida property insurance policies in the spring. The association previously approved a 2 percent levy. Residents also face a 4 percent increase to offset state-run Citizens Property Insurance Corp.'s 2005 losses and an additional 1 percent for the Florida Hurricane Catastrophe Fund, which is backup coverage for insurers.

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Housing Starts Rise, Signalling Possible Market Shift

Housing starts were up last month, suggesting that the most severe housing slowdown since 1990 may be near an end. Builders broke ground on new dwellings at an annual rate of 1.588 million, up from October’s 1.488 million, the Commerce Department reported yesterday. Pessimists point out that favorable weather may have contributed to last month's increase in housing starts. And building permits, a sign of future activity that is less affected by weather patterns, fell 3 percent in November from October and were 31.3 percent lower than a year ago. If cancellations are included, the inventory of new homes for sale is close to an 8.5-month supply, according to David Seiders, chief economist at the National Association of Home Builders. Seiders expects the pace of new-home construction to bottom out early next year as builders shave supply to better match demand.

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Home Builders' Confidence Wanes

Home builder sentiment declined compared to last month, with builder operating margins sliding 723 basis points to an average of 7.8 percent. The National Association of Home Builders/Wells Fargo index of builder confidence fell to 32 in December, down from 33 in November, according to the association. A reading below 50 means most respondents view conditions as poor. In a troubling trend, more buyers are walking away after paying nonrefundable deposits: Builders' third quarter cancellation rates topped 42 percent.

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A day of confrontation, rare approval for insurers

After months of wrangling, state regulators in Tallahassee on Tuesday approved a property insurance rate increase of 8.2 percent on average statewide for both Allstate Floridian and Allstate Floridian Indemnity insurance companies. The companies had originally requested rate increases of 22.5 and 33.2 percent, respectively. After a contentious public hearing last month, the companies lowered their requests to 19.1 and 26.4 percent, respectively. Once the second-largest property insurer in the state, Allstate has dropped about 240,000 policies over the last two years, leaving it with about 500,000 policies. The changes are effective for new and renewal business as of Feb. 11 for both companies.

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Home Prices Drop 20 Percent in Some Markets

Home prices are "really down much more" than recent economic reports suggest, says Wells Fargo & Co. Chief Executive Officer Richard Kovacevich. The U.S. housing market hasn't bottomed yet because generous builder incentives continue to prop up sales and prices. "It's pretty ugly at the moment," Kovacevich told Bloomberg News last week. He estimates, based on internal data, that about 20 percent of the 375 metropolitan statistical areas in the country are experiencing 20 percent declines in home prices. But Kovacevich believes next year is going to be better. "There's no way that the housing market is going to be bad if you have 4.4 percent unemployment, 6 percent mortgages, and the economy is growing at 3 percent," he says.

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Pinellas County Considering Commuter Rail

Pinellas officials are dusting off a 10-year-old commuter rail plan that, like Tampa Mayor Pam Iorio's plan, calls for using CSX Corp. rail lines. And like Iorio, Pinellas leaders hear they'll have to wait a year or more if they want to talk about access to CSX's tracks in the Bay area. CSX is now focused on Orlando's commuter rail plan, set to launch in 2009. Pinellas officials, including Clearwater Mayor Frank Hibbard, want passenger service linking St. Petersburg, Clearwater, Largo, Safety Harbor and Oldsmar. A segment could extend to Tampa.

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Citizens Insurance To Eliminate Sinkhole Coverage

A proposal by Citizens would eliminate sinkhole coverage in base policies starting in March. Customers would have to pay more for sinkhole coverage, or accept that only a catastrophic collapse of at least 5 feet within seven days would be covered. Less serious sinkhole damage would be covered only if homeowners paid for the additional insurance. For Pasco County, the state capital of sinkhole claims, the change could save money - a 56 percent lower bill for most homeowners.

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After Location, Selling Homes Is All Locution

Words matter. Wars have started over them. Civilizations have collapsed because of them. And it would appear the speed with which a house sells might be determined by them. As listings grow old on the vine in this flush-with-inventory market and frustrated sellers grapple for the slightest edge, the findings of several academics might offer some guidance. For example, a Canadian professor, as part of a broader study on real estate sales patterns, found homes where the seller was "motivated" took 15 percent longer to sell, and houses listed as "handyman specials" flew off the market in half the average time.

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A Few Doors Away, Miles Apart In Taxes

South Tampa's Corona Street demonstrates a familiar Florida phenomenon. Neighbors there pay radically different property taxes each year.

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Two Arrested In Tampa In Mortgage Fraud Scheme

The FBI and local authorities arrested two people Wednesday during a sting at a local title agency, part of a "red-hot mortgage fraud scheme" playing out across the country. The men were trying to obtain a fraudulent mortgage on a home at 811 Golf Island Drive, Apollo Beach. The men wanted to inflate the recorded sales price of the house from $690,000 to $910,000. At closing, $210,000 was to be paid back to a company started last month by one of the arrested men.

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Rate Decline Fuels Surge in Mortgage Applications

The volume of applications for home loans rose 11.4 percent last week, the highest level since October 2005, according to the Mortgage Bankers Association. Lower mortgage rates are the main reason for the surge in financing demand, says Mike Fratantoni, MBA senior economist, who noted that average rates have dipped about 0.8 percentage points since the early summer. Refinancing also continued to maintain its healthy pace, with requests for refinancings last week increasing 15.8 percent to the highest level since September 2005. Refinancings represented 52.6 percent of total application activity, which was the largest share since April 2004.

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Foreclosures rising in state

Squeezed by higher living costs and a slowing real estate market, more Florida homeowners are having a tougher time keeping up with their mortgage payments than a year ago, according to a national study. As of Sept. 30, 2.76 percent of 3.3 million mortgages in Florida were more than 30 days past due, the Mortgage Bankers Association said. That’s up from 2.47 percent of 3.1 million mortgages a year ago, and a slight uptick from June. Still, Florida’s overall delinquency rate ranks below the national average. And Florida’s foreclosure rate of 0.60 percent – or about one foreclosure for every 19,800 loans – was also well below the national rate of 1.05 percent.

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Mixed Economic Signals Keep Mortgage Rates Flat This Week

The 30-year fixed-rate mortgage (FRM) averaged 6.12 percent with an average 0.4 point for the week ending December 14, 2006, up slightly from last week when it averaged 6.11 percent. Last year at this time, the 30-year FRM averaged 6.30 percent.

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First-Time Homebuyers Jump Back in the Game

Sellers are getting the message and cutting their asking price, real estate professionals say. That, along with the recent drop in interest rates, is encouraging first-time buyers to start looking again. The interest rate picture has created some momentum for first-time buyers, not to write an offer today, but to start looking again and be serious about moving in January or February. A growing number of first-time buyers in Florida's Tampa Bay area are taking advantage of special deals from builders looking to unload newly constructed homes that are bloating their inventories. Affordability remains a problem for many would-be buyers. In the second quarter, buyers had to stretch more than ever before in 25 of the top 50 markets. Even with the recent price declines, to make homes as affordable as they have been in the last decade, home prices would have to drop another 7 percent in 2007 while incomes rose 4 percent.

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PMI paid in 2007 to be tax deductible

Homeowners who pay less than 20 percent down must many times pay for private mortgage insurance (PMI), but a law recently passed by Congress makes that cost fully deductible on income taxes starting in 2007. It applies to new loans for households making less than $100,000 per year.

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Flood Insurance a Smart Choice

Flood insurance can be a hard sell because many people — even those in very risky areas — don’t believe they'll ever need it. Many people who buy it do so only because their federally backed mortgage requires it. But because standard home owners insurance doesn’t cover flooding, owners of homes in even low risk areas should consider buying insurance because one-quarter of all flood claims are for damage in areas not designated high risk, according to the Insurance Information Institute.

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Homes for Sale Drop in Major Metro Areas, Not Tampa

The number of homes listed for sale in 18 major U.S. metropolitan areas was down 4 percent at the end of November, compared to a month earlier. For the last 20 years, inventories have declined about 2 percent around the holidays. Of the 18 markets tracked, only three — Miami, Orlando, and Tampa — saw the number of listed properties rise; others, like San Francisco and the District of Columbia, registered double-digit declines.

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Allstate backtracks on rate hike request

Allstate Floridian is willing to cut its proposed 2007 rate increase in half. At least for now. When Allstate officials went before state regulators last month to ask for a 19 percent statewide rate increase, they were told to come back when they had reworked their numbers. Monday, Allstate did just that, returning with a request for less than half of what they originally sought - an average 8.1 percent increase for homeowners and 6.9 percent for condo owners. But the state's third-largest property insurer also left the door open for more increases.

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As Home Sales Fall, St. Joseph Sales Rise

When traditional methods just don't work, many unsuccessful home sellers turn to divine intervention. Statues of St. Joseph, the Catholic saint believed to help home sales, skyrocketed in popularity after the housing market took an autumn nose dive. For some sellers, praying to St. Joseph is all the luck they need. Others desperate to unload a house try burying the statue in the front yard, facing the road.

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Existing-Home Sales to Trend Upward in 2007

Existing-home sales are expected to rise gradually in 2007 from current levels, with annual totals slightly lower than 2006, while new-home sales will continue to slide. Existing-home sales for 2006, finishing the third-best year on record, are projected at 6.47 million, a decline of 8.6 percent from 2005. For 2007, sales expected to rise steadily to an annual total of 6.40 million, which would be 1 percent lower than this year’s total. Buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates, have a window of opportunity.

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$5.55-million bidder takes Avila mansion

The sprawling but embattled mansion in north Hillsborough County built by Paul Bilzerian was auctioned for $5.55-million Monday by a bankruptcy judge.

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Fewer homes for sale in major U.S. cities

The number of homes listed for sale in 18 major U.S. metropolitan areas at the end of November was down 4 percent from a month earlier, the Wall Street Journal reported on its Web site on Tuesday.

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Homeowners demand action on soaring insurance rates

Rather than stand by as insurance rates climb rapidly along with gas, property taxes and other living expenses, tens of thousands of Florida residents are demanding action. Come Jan. 16, when the Legislature begins a weeklong special session to address the state's insurance crisis, some of these newly minted consumer activists will swarm the state Capitol.

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Lower Mortgage Rates Equal Big Savings

Freddie Mac reports a decline in mortgage rates during 10 of the last 13 weeks, with the 30-year fixed rate presently at 6.11 percent and the 15-year fixed rate at 5.84 percent. Buyers of homes priced at the national median of $221,300 would save $13,763 over 30 years by obtaining a mortgage at the current rate, versus the average rate of 6.44 percent for the year. The decline in fixed borrowing costs is enabling home owners to refinance out of adjustable-rate mortgages before their payments reset or tap into their home equity to pay off other debts or make big-ticket purchases. The Mortgage Bankers Association reports a nearly 14-percent jump in refinancing applications last week.

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Countrywide says housing slump has a year to go

The slowdown of the U.S. housing market will last through 2007 as inventories are pared enough to prompt a change in consumer psychology, the chief executive officer of the nation's biggest mortgage lender said on Tuesday. Mortgage lending has slowed as rising inventories in the housing market led to a "hard landing" for the industry after a decade of strong growth, Countrywide Financial Corp. CEO Angelo Mozilo said at a Merrill Lynch & Co. conference in New York. Mozilo said he expects the industry will see lending volume grow progressively from 2008 to 2010 because of a build-up of demand. Until then, the industry will continue to consolidate and eliminate excess capacities.

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Freddie Mac Economist Sees Improvement in 2007

The housing correction is about two-thirds finished, but the market will hit a trough in the first half of 2007, predicts Freddie Mac Chief Economist Frank Nothaft, speaking at the 10th annual Home Building Conference, sponsored by the New York Society of Security Analysts. "We're most of the way there," he says. "We've still got a bit of decline going forward. I do think by the second half of 2007 we will see home sales and activity picking up, not back to 2004 and 2005 levels, but above the trough." Nothaft predicts average home prices across the United States will appreciate by 3 percent in 2007.

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Citizens Insurance rate hike is put on hold

The Citizens Property Insurance board voted unanimously to delay a decision on whether to increase rates on wind-only policies an average of 55.8 percent starting March 1. It also grants a reprieve to about 400,000 wind-only Citizens policyholders, some of whom could see their premiums nearly double in 2007.

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Slowing Housing Market Helps Keep Mortgage Rates Down

The 30-year fixed-rate mortgage (FRM) averaged 6.11 percent with an average 0.5 point for the week ending December 7, 2006, down from last week when it averaged 6.14 percent. Last year at this time, the 30-year FRM averaged 6.32 percent. This is the lowest the 30-year FRM has been since the week ending January 19, 2006, when it averaged 6.10 percent.

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Condos At The Hamptons at Tampa Palms To Be Auctioned Off

J.P. King, the real estate auction house known for selling off luxury properties across the country, is gearing up to sell 100 condominiums this weekend in Tampa, and is predicting many more condo auctions in Florida next year. The company plans to auction off 100 units at The Hamptons at Tampa Palms, an upscale development in New Tampa that was built as an apartment complex and later converted into condominiums. Of the 100 units Bay Communities will auction off, 40 will have no reserve price, which means there's no minimum price for bidders. The Hamptons has sold only about 56 units, which means about 260 remain on the market.

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Energy, Housing Costs Outpace Income Growth

Household income growth continues to be weak at a time when people's fixed costs like housing and energy remain stubbornly high. The problem could be particularly bad for those who have adjustable-rate mortgages, because they potentially face even higher housing costs should interest rates head back up, says the most recent U. S. Metro Economics report released by the U. S. Conference of Mayors. Although median income increased for the first time in this decade by 1.2 percent to $46,326 in 2005 according to 2005 Census Bureau data, it’s still below 1999’s peak of $47,671. Most important, says the report, only the highest earners, the top 20 percent of households with incomes greater than $92,000, realized a gain.

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Aqualea Resort and Residences Is Back On Track

Work has begun on the much-anticipated Hyatt project, a mega resort that is expected to help fill two voids on the beach: available rooms and parking spaces. Crews last week began laying the groundwork for what will become the 150-foot-tall tower of the Aqualea Resort and Residences, a $140-million project that will include 250 condominium hotel units and 18 condominiums. The overall project is expected to be finished in 27 months. The condo hotel units will be individually owned but primarily rented to guests. Those units will cost between $500,000 and $2-million, while the traditional condominiums will cost between $2-million and $5.5-million.

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US mortgage applications surge in latest week

U.S. mortgage applications rose sharply last week, fueled by a surge in home refinancing loans as interest rates sunk to their lowest levels in more than a year, an industry trade group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended Dec. 1 increased 8.1 percent to 647.6 from the previous week's 599. Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.98 percent, down 0.15 percentage point from the previous week, the lowest since the week ended Oct. 7, 2005, when it stood at the same level. Interest rates were also below year-earlier levels of 6.32 percent.

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Checking into condo-hotels

You may want to consider buying a property in a condo-hotel. A relatively new concept, condo-hotels, as the term implies, allow buyers to own an apartment unit in a hotel. As with any condo, buyers share costs for the upkeep of common areas but maintain ownership of their own unit – but with the added advantage of being able to get a maid to change the sheets or room service to send up a trolley full of sandwiches day or night.

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House Meets On Insurance

Florida's legislative leaders have been crowing for months about the importance of a solution to Florida's property insurance crisis. House Speaker Marco Rubio is demonstrating just how critical he considers the issue, summoning the 120 members of the Florida House to Tallahassee for three days this week for a seminar on the conditions that have prompted soaring insurance bills, the exodus of private insurers and the state's growing role as insurance provider.

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Pending Home Sales Confirm Market Is Stabilizing

Pending home sales for October slipped 1.7 percent from September and 13.2 percent from a year earlier, the NATIONAL ASSOCIATION OF REALTORS® reports. The latest Pending Home Sales Index, based on contracts signed in October, is at a reading of 107.2. NAR says the index shows an encouraging “narrowing” trend, as the year-over-year decline is slimmer than the previous two months; In September, the index was 13.6 percent below a year earlier, while in August the decline was 14.0 percent. David Lereah, NAR’s chief economist, says the numbers show that the market is stabilizing. A fairly steady pace of home sales can be expected for the next two months.

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Seniors can get new property tax exemption beginning Jan. 1

The Pinellas County property appraiser will accept applications for an additional property tax exemption for qualified older homeowners from Jan. 1 through March 1. This year, 17 municipalities plus unincorporated Pinellas offer the additional exemption. To qualify, homeowners must meet all of these requirements:

- At least one property owner is 65 or older as of Jan. 1, 2007.

- The applicant qualifies for or already receives a homestead exemption.

- The total household income is $23,463 or less, plus a cost-of-living adjustment to be determined by the state Department of Revenue in mid January. (Nontaxable Social Security income is not included in that total.)

- The homeowner lives in an area offering the exemption.

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Insurance Rate Relief Is No Given

Citizens policyholders face 150 percent premium increases over the next three years under one provision in the 2006 legislation, which passed on the last day lawmakers met in May. A separate provision allows some policies to increase as much as 10 percent a year without state approval. By law, Citizens must charge rates higher than private insurers. If the Citizens increases survive, private policyholders soon would face similar rate hikes.

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Mortgage-Rate Mojo

Ever wonder what causes mortgage rates to rise and fall? Well, know that they fluctuate along with other interest rates. Interest rates are affected chiefly by inflation and the market for debt (notes, bills, and bonds, among other instruments). With inflation relatively low over the past decade, we've enjoyed historically low interest rates. However, interest rates have been slowly rising over the past two years. The Federal Reserve ("the Fed"), currently headed by Ben Bernanke, has been hiking up short-term interest rates via an adjustment in the rate of interest on "federal funds" in response to concerns over inflation. The "fed funds" rate is the interest rate a bank can charge another bank for use of its excess money. The Fed can also change the "discount rate," or the rate paid by a bank to borrow short-term funds from the Fed. The prime rate and other rates (such as mortgage rates) are based primarily on these two interest rates. The Fed raises these interest rates when the economy appears to be growing too briskly, since brisk growth can spur inflation. When the economy is sluggish, the Fed might cut these rates to give American enterprise a boost. Lower rates give companies and people (including homebuyers) an incentive to borrow money or refinance existing loans at lower rates. However, remember that the money markets themselves (basic supply and demand for money at each price point) exert the biggest influence over interest rates, though the Fed is a big influence on market expectations.

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Slump Doesn't Yield Expected Bargains

The housing slowdown isn’t giving buyers the big bargains that they might have hoped, and where there are discounts, buyers aren’t leaping to grab them, says Karl E. Case, an economics professor at Wellesley College, who specializes in real estate. Case says the most recent survey he and a colleague conducted among home buyers revealed growing pessimism about buying in a down market. “They’re scared they’re going to buy something very expensive that’s going to fall in value,” he says. Sellers, meanwhile, are being “stubborn. They seem to be holding out so far.” The result: “People are staring each other down.” Case described home prices as having “downward stickiness,” meaning they don’t fall nearly as much as they rise during the strong periods. In previous down periods, Case points out, the economy has been in a general slump. This time, in most parts of the country, the economy is growing and adding jobs. Case concludes the housing market is in “that flat period, of four to six quarters, where prices don’t plummet. They hold on.”

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Tampa Area Home Sales Down 35%, Prices Flat

The Tampa-St. Petersburg-Clearwater metropolitan statistical area (MSA) reported 2,419 existing homes sold last month, compared to 3,735 homes sold a year ago for a 35 percent decrease. The market’s median existing home price was unchanged at $225,800. A total of 545 existing condos changed hands in Tampa-St. Petersburg-Clearwater in October for a 51 percent decrease over the 1,119 condos sold the previous year. The market's median existing condo price was $159,900; a year ago, it was $198,400 for a 19 percent decrease.

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Long-Term Mortgage Rates Down For The Fifth Consecutive Week

The 30-year fixed-rate mortgage (FRM) averaged 6.14 percent with an average 0.4 point for the week ending November 30, 2006, down from last week when it averaged 6.18 percent. Last year at this time, the 30-year FRM averaged 6.26 percent. This is the lowest the 30-year FRM has been since the week ending January 26, 2006, when it averaged 6.12 percent.

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