Florida Real Estate Blog

US House Prices Slow Says Office of Federal Housing Enterprise Oversight

The Office of Federal Housing Enterprise Oversight "House Price Index" Shows Smallest Quarterly Increase Since 1994.

US home prices increased only slightly in the second quarter of 2007. according to the OFHEO House Price Index (HPI). The HPI is based on the sales and refinance transactions and was just 0.1% higher in the second quarter of 2007 than it was in the first quarter. Prices in the second quarter of 2007 were 3.2% higher than they were in the same quarter of 2006, the lowest annual price change since the 1996-97 period.

OFHEO's purchase-only index, based solely on purchase price data, indicated less appreciation for US homes over the past year than does the all-transactions HPI. The purchase only index increaseed 2.6% betwen the second and first quarters of 2007, compared to the 3.2% mentioned above for the HPI. However, for the second quarter, the purchase-only index increase was slightly higher at 0.5%.

Director James Lockhart said, "House prices were basically flat in the second quarter despite tightening credit policies, rising foreclosure rates, and weakening buyer enthusiasm. Significant price declines appear localized in areas with weak economies or where price increases were particularly dramatic during the housing boom." (Like in much of Florida - John Elwell)

In the period covered in the OFHEO report house prices grew faster than did prices of non-housing goods and services reflected in the Consumer Price Index (CPI). House prices rose 3.2% while the prices for other goods rose just 2.1%.

The West South Central and Mountain Zones showed the greatest appreciation with an average rate of 6%. New England continued to lag behind all of the other parts of the country with a 0.5% appreciation rate between the second quarters of 2007 and 2006.

Results concerning urban centers with the lowest appreciation rates showed that 18 cities with the lowest rates were in Florida and California.

SOURCE: OFHEO Press Release

BUSH ADMINISTRATION TO HELP NEARLY ONE-QUARTER OF A MILLION HOMEOWNERS REFINANCE, KEEP THEIR HOMES

FHA to implement new “FHASecure” refinancing product

WASHINGTON - President George W. Bush today announced  that HUD's Federal  Housing Administration (FHA) will help  an estimated  240,000 families avoid foreclosure  by enhancing its refinancing program effective immediately. Under  the new FHASecure plan, FHA will allow families with strong credit  histories who had been making  timely mortgage  payments before their  loans reset-but  are now in default-to  qualify for refinancing.

In addition, FHA will implement risk-based premiums  that match the borrower's credit profile with the insurance premium they  pay-i.e., riskier borrowers pay more.  This common-sense, risk-based pricing structure will begin on January 1, 2008.

"Many hard-working American  families who were able to  make their  mortgage payments  under the  initial teaser  terms of the  exotic loan are  now struggling to make ends meet because their  rates have  doubled or tripled," said HUD Secretary Alphonso Jackson. "FHASecure will  bring stability to the housing market and give  eligible  families who were in good financial standing before their  loans reset  a chance to keep their  homes."

The  combination of FHASecure and risk-based  premium pricing will permit FHA to return  to the role  it was originally designed to play, bringing stability to the real estate  market by helping  break today's cycle of foreclosures and price  depreciation  and creating much needed liquidity in the  now-constricted mortgage market.

FHA has recently experienced a substantial increase in the  number of conventional  borrowers refinancing  into FHA products. With FHASecure, it can help  even  more. The  number of these refinancing  transactions has tripled since the  start of 2006. FHA's transactions are projected to surpass 100,000 loans by the end of  the fiscal year.  To date, these figures  do not include refinances  for delinquent  borrowers.

The FHASecure initiative will operate under  the same  safe guidelines as the  FHA's existing mortgage insurance  program without affecting FHA's  financial health. Eligible  homeowners  will be required to meet strict underwriting  guidelines  and pay a mortgage insurance premium,  which offsets the risk to FHA's insurance  fund at no cost to the taxpayer.

The  risk-based insurance premium  structure will further expand  FHA's reach to additional underserved borrowers,  particularly minorities and first-time homebuyers who have  been  disproportionately lured into exotic  mortgages, and enhance  the FHA's overall  risk management. The  move to risk-based premiums  ensures  that FHA remains on solid financial  footing as a self-financed agency  for the long-term.

FHASecure, like  all FHA products, will be underwritten  to ensure  the borrowers  have the  ability to repay the loan, will require escrow  for taxes and insurance, and will continue to offer unprecedented foreclosure prevention assistance. The  FHA has never  permitted  and will not include pre-payment penalties or teaser  rates that are  common in exotic mortgages and have  caused much of the current  market troubles.

To qualify for FHASecure, eligible homeowners must meet the following five criteria:

A history of on-time mortgage  payments before the  borrower's teaser rates expired  and loans reset;

 

Interest rates  must have or will reset between June  2005 and December 2009;

 

Three percent cash or equity  in the home;

 

A sustained history of  employment; and

 

Sufficient income  to make the  mortgage payment.

"FHASecure is designed for families  who are good borrowers but were steered into  high-cost loans with teaser rates,"  said Assistant Secretary for Housing-FHA Commissioner Brian Montgomery. "These homeowners, many of whom are  minorities, need a safe,  affordable mortgage product that will help  build wealth. All FHA borrowers  pay mortgage insurance premiums  to offset claims to the FHA insurance  fund and ultimately prevent  risk to the taxpayer."

FHASecure will also bring much-needed  liquidity to the mortgage market. FHA anticipates  more lenders will offer  FHA-insured loans, pool them, and securitize them  with the Government National Mortgage  Association (Ginnie Mae), which has the  full faith and credit of the U.S.  government. This guarantee makes  Ginnie Mae's  mortgage-backed  securities  the safest  on the market  and helps to channel greater capital into the  housing market, benefiting  U.S.  homeowners.

Since its inception  in 1934, FHA has helped almost 35 million people become homeowners, making it the  largest insurer  of mortgages in the world. The 109th Congress  introduced the  Expanding American Homeownership  Act in June 2006 which would enable  FHA to be a safe option for more  underserved low- and moderate-income  and minority families so they can achieve the American Dream  of homeownership. Today, President Bush also urged  Congress to quickly pass the Administration's FHA modernization  proposal to help more families  in need.

For more  information about FHASecure and other FHA products, please call  1-800-CALL-FHA or visit www.fha.gov or www.hud.gov. For a list of your local homeownership  center  or a HUD-approved housing counseling center, go to www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

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HUD is the nation's housing agency  committed to increasing homeownership, particularly among minorities; creating  affordable housing opportunities for low-income  Americans; and supporting the homeless, elderly, people with disabilities  and people  living with AIDS. The Department  also promotes economic  and community development,  and enforces  the nation's fair housing laws. More information about HUD and its programs is available on the  Internet  at www.hud.gov and espanol.hud.gov.  For more information about FHA  products, please visit www.fha.gov.

Freddie Mac: Mortgage Interest Rates Continue Their Drop

Today 8/30/07,  Freddie Mac reported that the average mortgage interest rates for 30 and 15 year fixed-rate loans dropped again! Nationally the average mortgage interest rate for 30 year fixed-rate mortgages was 6.45% (6.41% in the southeast), a fall from 6.52% a week ago. The average interest rate for 15 year fixed-rate mortgages was 6.12%, down from 6.18% last week.

New home sales surprised the experts and rose in July to 870,000 units. The biggest increase was a 22% jump in sales in the western section of the country. However, sales of existing homes fell, but not as much than had been predicted. Much of the decline in existing home sales was limited to the Mid-West.

A year ago the rate on 30 year mortgages was 6.44% and the rate for 15 year mortgages was 6.14%.

It will be interesting to see if the decline of the past several weeks will continue and whether it will help to spur home sales in Florida and the rest of the United States.

Do keep in mind that we live in a very large and complex country. What happens in California is not necessarily what is happening in Florida. And what happens in Florida may be a far cry from what occurs in Michigan. Real estate is still very much a local issue.

If you want to learn more about Freddie Mac or see the details of their survey, go to: www.freddiemac.com  and click on the link for "Current Weekly Survey". They break down the survey by specific regions in the United States so you can see how your state compares to other parts of the country. They also explain the mission of Freddie Mac and offer a lot of useful information for consumers.

If you would like to speak with a lender you can find some at my website: www.jelwell.century21bnr.com . You can also speak with your own bank, credit union, or mortgage broker to see what your particular interest rate would be should you decide to finance a home purchase.

Another Home That Will Likely Spend Months On The Market Unsold in Pasco County, Florida

Today we had our weekly "agents caravan". This is when we go around the area to tour the new listings that came on the market during the previous week. Most of them were pretty reasonably priced for what they were. Many sellers are now realizing that they can earn a profit, but that the days of 50% yearly appreciation are no longer here.

I visited one home in a nice upscale neighborhood. Most of these homes are less than 5 years old and are on 0.42 acre lots. This subdivision is located in a small somewhat sleepy college town that buyers like since it is an easy commute into Tampa. Similar homes in that subdivision hover around $300,000 in price. In 2003 you could get them for around $200,000. The houses there have a lot of positive things going for them.

However, the home I visited was priced at over $500,000! Nothing I saw inside would warrant that high a price. It was priced as high as homes in a luxury golf resort not faraway. I am sure the owners have convinced themselves that their home is "special". And to them I am sure it is. The question is, will it be special enough to buyers that they will pay $200,000 over similar homes for this "specialness"?

One feature of the home that I am sure the owners think adds great value to the residence is the stained concrete floors. No wood, no ceramic tile, and no carpeting anywhere. Just stained concrete everywhere! Now I am sure that there are some buyers who love stained concrete. But the majority of buyers of homes in this area and in this price range will not see them as a positive. And of those that do like them, they may not like the colors that the owners chose. Add to that the fact that bare concrete does not hide cracks, and there was a large one in the living room, and what the owners see as a selling point will probably turnout to be seen as a negative for the majority of buyers. Now toss in the very high price, and you have a long and lonely period of no visits or offers stretching far into the future. My prediction is that this listing will end up expiring with very few showings.

I know and like the listing agent, and only wish him the best of luck. But, in my opinion and the opinions of other agents, he has a very rough road ahead. I have little doubt that his price recommendation was much lower, but that the owners refused his advice and overpriced their home.

My advice to my readers, as always, is to go for the highest reasonable price, but do not get greedy. Keep in mind that what you think is a big selling feature may in fact turn people off. Listen to your real estate professional. S/he has the experience, training, and intuition to help you reach your goals as long as you consider his or her advice carefully. To do otherwise is set yourselves up for frustration and failure.

For more information or questions about this topic please call me at: 813-783-4444 or e-mail me at: jelwell1@tampabay.rr.com 

You are also invited to visit my webpage at: http://jelwell.century21bnr.com

The Conference Board Consumer Confidence Index Retreats

The Conference Board Consumer Confidence Index, which had surged in July, gave back all of the gain in August. The Index now stands at 105.0 (1985=100), down from 111.9 in July. The Present Situation Index decreased to 130.3 from 138.3 in July. The Expectations Index declined to 88.2 from 94.4.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world's largest custom research company. The cutoff date for August's preliminary results was August 22nd.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: "A softening in business conditions and labor market conditions has curbed consumers' confidence this month. In addition, the volatility in financial markets and continued sub-prime housing woes may have played a role in dampening consumers' spirits. But, despite less favorable conditions and in spite of all the recent turmoil, consumers still remain confident. And, current Index levels suggest further economic growth in the months ahead."

Consumers' assessment of present-day conditions in August was less upbeat than in July. Those claiming conditions are "good" decreased to 26.4 percent from 28.3 percent, while those saying conditions are "bad" increased to 16.3 percent from 14.5 percent. Consumers were also less positive in their appraisal of the labor market. Those saying jobs are "hard to get" increased to 19.7 percent from 18.7 percent. Those claiming jobs are "plentiful" decreased to 27.5 percent from 30.0 percent in July.

Consumers, once again, turned cautious in their short-term outlook. Those expecting business conditions to worsen in the next six months rose to 10.6 percent from 8.2 percent, while those anticipating business conditions to improve was virtually unchanged at 15.0 percent. The outlook for the labor market was also less favorable. The percent of consumers expecting more jobs in the months ahead declined to 13.0 percent from 13.8, while those anticipating fewer jobs increased to 15.3 percent from 14.9 percent. The proportion of consumers expecting their incomes to increase in the months ahead was virtually unchanged at 19.1 percent.

For more information or questions about this topic please call me at: 813-783-4444 or e-mail me at: jelwell1@tampabay.rr.com 

SOURCE: The Conference Board Press Release

Nationwide Insurance to Dump More Policy Holders in Florida

Yesterday Nationwide Insurance announced that to limit their exposure to risk in Florida they were going to begin cancelling the policies of 39,000 homeowners and 1,600 commercial policy holders. They said they were forced to do this to "ensure long-term stability for Nationwide's customers, agents and associates."

Their plans will unfold in the following manner:

Nationwide will not renew approximately 39,000 homeowner policies and 1,600 commercial policies.

Policies affected by this decision will begin non-renewing in January 2008.

Nationwide will begin notifying policy holders in September 2007.

Nationwide will continue to provide coverage for more than 176,000 personal lines property policies after implementing the announced reductions.

The company says that most of the affected homeowners will be offered coverage with Security First Insurance.

So what happened to insurance reform?? My bill is just as high as ever. Since the start of the year the State Farm and Allstate Floridian have been non-renewing large numbers of policies. And many of those insurance companies that submitted mandated reductions are now asking that those reductions be lessened. Boo, hoo. The companies that are now able to buy cheaper reinsurance from the state were supposed to pass those savings on to the consumers, but few if any of us have seen these savings.

And we have to wonder if property tax reform will turn out any better????

For more information or questions about this topic please call me at: 813-783-4444 or e-mail me at: jelwell1@tampabay.rr.com 

I also invite you to visit my website: www.jelwell.century21bnr.com

National Association of REALTORs: Existing-Homes Sales Stable In July

WASHINGTON, August 27, 2007 -

Existing-home sales were essentially unchanged in July, with increases in the West and Northeast offset by a decline in the Midwest, according to the National Association of Realtors®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – slipped 0.2 percent to a seasonally adjusted annual rate1 of 5.75 million units in July from an upwardly revised pace of 5.76 million in June, and are 9.0 percent below the 6.32 million-unit level in July 2006.

Lawrence Yun, NAR senior economist, said the market is holding on despite temporary mortgage disruptions. “Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months,” he said. “Some buyers with contracts have been scrambling when loan commitments did not materialize at the last moment, while other potential buyers are simply waiting for the mortgage market to stabilize.

“The rise in sales and prices in the Northeast region on a fairly consistent basis in recent months is promising because this was the first region that underwent sales and price weakness after the boom. Now, it appears that it will be the first region to climb back, indicating that other regions could follow a similar path.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.70 percent in July, up from 6.66 percent in June; the rate was 6.76 percent in July 2006. Last week, Freddie Mac reported the 30-year fixed rate dropped to 6.52 percent.

The national median existing-home price2 for all housing types was $228,900 in July, down 0.6 percent from July 2006 when the median was $230,200, the highest monthly price on record. The median is a typical market price where half of the homes sold for more and half sold for less.

Total housing inventory rose 5.1 percent at the end of June to 4.59 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, up from an upwardly revised 9.1-month supply in June.

NAR President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said that mortgages are available for the majority of potential buyers. “For buyers able to qualify for conventional financing, there are ample opportunities in the current market,” she said. “Availability and pricing of conventional loans are reasonable, and FHA-insured mortgage applications have been rising as low- and moderate-income buyers seek alternatives to subprime loans. If buyers are in it for the long haul, now can be a good time to get into your home.”

Combs added it’s important to boost FHA’s viability. “NAR is advocating for a stronger FHA to help creditworthy borrowers who may be trapped in subprime loans with unfavorable terms,” she said. “We’d also like to see the elimination of prepayment penalties, which can trap borrowers in mortgages they can no longer afford.”

Single-family home sales slipped 0.4 percent to a seasonally adjusted annual rate of 5.00 million in July from an upwardly revised level of 5.02 million in June, and are 9.3 percent below the year-ago pace of 5.51 million units. The median existing single-family home price was $228,600 in July, down 1.0 percent from July 2006.

Existing condominium and co-op sales rose 1.4 percent to a seasonally adjusted annual rate of 750,000 units in July from 740,000 in June, but are 7.5 percent below the 811,000-unit level in July 2006. The median existing condo price3 was $230,600 in July, up 2.4 percent from a year ago.

Regionally, existing-home sales in the West rose 1.8 percent in July to an annual pace of 1.12 million, but are 15.2 percent below a year ago. The median price in the West was $349,400, up 0.9 percent from July 2006.

Existing-home sales in the Northeast increased 1.0 percent to a level of 1.02 million in July, but are 2.9 percent lower than July 2006. The median existing-home price in the Northeast was $290,900, up 5.9 percent from a year ago.

Existing-home sales in the South were unchanged at an annual rate of 2.26 million in July, but are 10.7 percent below a year ago. The median price in the South was $186,300, down 3.2 percent from July 2006.

Existing-home sales in the Midwest fell 2.2 percent in July to a level of 1.35 million, and are 5.6 percent below July 2006. The median price in the Midwest was $173,800, which is 1.8 percent below a year ago.

SOURCE: National Association of REALTORs Press Release

Florida Association of REALTORs: Florida's Existing Home Sales Still Stabilizing in July 2007

ORLANDO, Fla., Aug. 27, 2007 – With positive economic conditions such as low mortgage interest rates and job growth continuing in Florida, statewide sales of existing single-family homes totaled 11,674 in July and were closer to activity in July 2001 and 2002 – before the housing boom years – than the July 2006 figures, when 15,378 homes sold for a 24 percent decrease in the year-to-year comparison, according to the Florida Association of Realtors® (FAR).

Florida’s median sales price for existing single-family homes last month was $237,500; a year ago, it was $250,400 for a 5 percent decrease. The median is the midpoint; half the homes sold for more, half for less. In July 2002, the statewide median sales price for single-family homes was $141,700, for an increase of 67.6 percent over the five-year-period, according to FAR records.

In June 2007, the national median sales price for existing single-family homes was $230,300, up 0.1 percent from the previous year, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $594,260 in June; in Massachusetts, it was $364,000; in Maryland, it was $325,427; and in New York, it was $250,000.

NAR’s latest market outlook calls for existing home sales to gain momentum by the end of the year, with broader improvement in sales activity in 2008. “Existing-home sales should be relatively stable over the next few months, holding in a modest range, with some pent-up demand growing from buyers who’ve been on the sidelines,” says NAR Senior Economist Lawrence Yun. While noting that sales could be temporarily affected by recent mortgage industry disruptions, Yun added that the “fundamental momentum clearly suggests stabilizing price trends in many local markets.”

Sales of existing condominiums in Florida also decreased last month, with a total of 3,610 condos sold statewide compared to 4,449 in July 2006 for a 19 percent decline, according to FAR. The statewide median sales price for condos last month was $193,900, down 7 percent from July 2006’s condo median price of $209,100. NAR reported the national median existing condo price was $228,900 in June 2007.

Last month, interest rates for a 30-year fixed-rate mortgage averaged 6.70 percent, according to Freddie Mac, which was lower than the average rate of 6.76 percent in July 2006. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s larger markets, the Fort Lauderdale Metropolitan Statistical Area (MSA) reported 559 existing homes sold last month compared to 721 homes sold a year ago for a 22 percent decrease. The market's median sales price for homes was $373,700; it was $380,400 in July 2006 for a 2 percent decrease. A total of 562 existing condos changed hands in the MSA last month, down 19 percent from the 696 condos sold the previous year. The existing condo median sales price in July was $187,200; a year ago, it was $209,100 for a 10 percent decrease.

“We’re getting the word out that this is a great time to buy a home in the Fort Lauderdale area,” says Christine Hansen, president of the Realtor Association of Greater Fort Lauderdale and broker-owner of Century 21 Hansen Realty Inc. “It’s taken some time for buyers and sellers to adjust to the changing market, and now we’re seeing more interest and more offers. Fort Lauderdale is still a wonderful place to live, with beautiful beaches, diverse businesses and great job opportunities.”

Among the state’s smaller markets, the Fort Pierce-Port St. Lucie MSA reported a total of 371 homes sold in July compared to 400 homes a year ago for a 7 percent decrease. The existing home median sales price was $231,300; a year ago, it was $259,000 for an 11 percent decrease. A total of 48 existing condos sold in the MSA last month compared to 59 condos the previous July for a 19 percent decrease. The market’s existing condo median price was $166,700; a year ago, it was $188,300 for a decrease of 11 percent.

Sheri Wetzel, president of the Realtors Association of St. Lucie and broker with RE/MAX Midway, says that home sales are returning to a sustainable pace in the Fort Pierce-Port St. Lucie area. “This is a growing area in a convenient location for travel around the state,” she says. “We have a beautiful coastline, and we’re gaining new industry and businesses. Mortgage rates are still very favorable and buyers have more options right now. For most people, buying a house is a long-term investment in a place to call home for themselves and their families. It’s a decision that deserves time, attention and the expertise of a Realtor.”

Two charts showing statistics for Florida and its 20 MSAs are attached. One chart compares the volume of existing, single-family home sales and median sales prices; the other compares the volume of existing, condominium sales and median sales price in July 2007 to July 2006 based on Realtor transactions.

Single-Family: Download July_2007_home_chart.pdf

Condominium: Download July_2007_condo_chart.pdf

The Florida Association of Realtors (FAR), the voice for real estate in Florida, provides programs, services, continuing education, research and legislative representation to its 150,000 members in 68 boards/associations.

© 2007 FLORIDA ASSOCIATION OF REALTORS®

SOURCE: Florida Association of REALTORs Press Release

Commerce Department Reports New Residential Sales Picked Up In JULY 2007

Washington - August 24, 2007  Sales of new one-family houses in July 2007 were at a seasonally adjusted annual rate of 870,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.8 percent (±12.0%)* above the revised June rate of 846,000 and is 10.2 percent (±12.3%)* below the July 2006 estimate of 969,000.

The median sales price of new houses sold in July 2007 was $239,500; the average sales price was $300,800. The seasonally adjusted estimate of new houses for sale at the end of July was 533,000. This represents a supply of 7.5 months at the current sales rate.

You can read the entire press release and the accompanying charts by downloading the following PDF formatted file: Download newressalesJuly-07.pdf

Note from John Elwell: The Commerce Department's report was good news after the sales of new homes fell 4% in June. Analysts had expected the new homes sales numbers to continue to drop in July and were pleasantly surprised at the bounce upward. However, sales of new homes are still down over 10% from a year ago. So we are not out of the proverbial woods yet.

Source: Department of Commerce Press Release

Countrywide Receives $2 Billion Strategic Equity Investment From Bank Of America

08/22/2007

CALABASAS, Calif., Aug. 22 /PRNewswire/ -- Countrywide Financial Corporation (NYSE: CFC), a diversified financial services provider and the leading mortgage lender and servicer in the U.S. announced today that it has received a $2 billion strategic equity investment from Bank of America (NYSE: BAC). The transaction was completed and funded today.

"Bank of America, with $1.5 trillion in assets, has the largest retail banking franchise in the U.S. and is one of the most respected companies in the world," said Angelo R. Mozilo, chairman and chief executive officer of Countrywide. "Bank of America's investment in Countrywide represents a vote of confidence and strengthens our balance sheet, enabling us to position Countrywide for future growth and success," added Mr. Mozilo. "This transaction benefits all of Countrywide's constituents, including investors, shareholders, mortgage customers, deposit holders, business partners and employees," concluded Mr. Mozilo.

"We believe that in the current turmoil the stock market has been underestimating the value in Countrywide's operations and assets," said Kenneth D. Lewis, Bank of America chairman and chief executive officer. "This investment reflects our confidence in their business and recognizes the importance of the company in providing home financing across the country. We hope this investment will be a step toward a return to a more normal liquidity in the mortgage markets. Countrywide has a strong mortgage origination business and it services the mortgages of one in seven American households."

Bank of America has invested $2 billion in the form of a non-voting convertible preferred security yielding 7.25 percent annually. The security can be converted into common stock at $18 per share, with resulting shares subject to restrictions on trading for 18 months after conversion.

The agreement between the parties is subject to customary standstill restrictions prohibiting the acquisition of beneficial ownership of additional voting securities of Countrywide.

Goldman Sachs & Co. acted as financial advisor to Countrywide and Wachtell, Lipton, Rosen & Katz served as legal advisor. Bank of America Securities acted as financial advisor to Bank of America, and Cleary, Gottlieb, Stern & Hamilton served as legal advisors.

SOURCE: Countrywide Financial Press Release

Freddie Mac: Mortgage Interest Rates Sink Lower

Today 8/23/07,  Freddie Mac reported that the average mortgage interest rates for 30 and 15 year fixed-rate loans dropped substantially. Nationally the average mortgage interest rate for 30 year fixed-rate mortgages was 6.52% (6.49% in the southeast), a fall from 6.62% a week ago. The average interest rate for 15 year fixed-rate mortgages was 6.18%, down from 6.30% last week.

The cause of the drop was partly due to the decision of the Federal Reserve to cut its lending rate to banks in an effort to calm fears of the credit crunch that has been so much in the news lately.

"Interest rates on conforming long-term fixed-rate mortgages and one-year adjustable-rate mortgages trended down by about one-tenth of a percent in the past week," said Frank Nothaft, Freddie Mac's chief economist. "This is as a result of yields on Treasury securitites coming down, and the Fed's decision to cut the discount rate," he explained.

A year ago the rate on 30 year mortgages was 6.48% and the rate for 15 year mortgages was 6.18%.

Do keep in mind that we live in a very large and complex country. What happens in California is not necessarily what is happening in Florida. And what happens in Florida may be a far cry from what occurs in Michigan. Real estate is still very much a local issue.

If you want to learn more about Freddie Mac or see the details of their survey, go to: www.freddiemac.com  and click on the link for "Current Weekly Survey". They break down the survey by specific regions in the United States so you can see how your state compares to other parts of the country. They also explain the mission of Freddie Mac and offer a lot of useful information for consumers.

If you would like to speak with a lender you can find some at my website: www.jelwell.century21bnr.com . You can also speak with your own bank, credit union, or mortgage broker to see what your particular interest rate would be should you decide to finance a home purchase.

UF Survey: Floridians Not Entirely Sold on New Property Tax Measure

GAINESVILLE, Fla. — The fate of a proposed property tax amendment that would affect the existing Save Our Homes amendment in a January statewide referendum is too close to call, a new University of Florida survey finds.

Fifty-eight percent of Florida voters said they would vote for the new “super exemption” measure, two percentage points shy of the 60 percent super majority needed to make the change to Florida’s constitution, said David Denslow, a UF economics professor who led the research.

“Whether the amendment will pass remains a wide-open question,” he said. “Besides the statistical insignificance of the difference between 58 and 60 percent, there is half a year remaining before the vote.”

The referendum, which goes to voters Jan. 29, would allow homeowners to choose between keeping the 3 percent property tax cap already available under the Save Our Homes provision or a new provision that would increase their homestead exemptions. If the amendment goes into effect, homes bought after that date would not qualify for the Save our Homes cap.

The survey indicates that nearly two-thirds, 65 percent, are inclined to stay with Save our Homes even if the referendum gives them a choice, Denslow said. And few respondents who report owning less expensive homes — a group that would benefit from the new super exemption — said they would switch, he said.

UF’s Survey Research Center added questions about the proposed property tax amendment to its monthly consumer confidence telephone survey in July. Of the 287 Florida homeowners who responded, 277 said they had formed an opinion. They were also asked the selling price of their homes. The survey had an error rate of between 3 and 4 percent.

The tax-cutting measure the Legislature is sending to voters allows homeowners to stay with the terms of the current Save Our Homes Amendment, which restricts the increases in their property tax bills to the rate of inflation or 3 percent of the assessment for the prior year, whichever is lower. Or they could take the new super exemption that knocks 75 percent off of the first $200,000 of a home’s value and 15 percent off the next $300,000.

Most likely to benefit in the near term would be people planning to buy expensive homes, Denslow said. “Anyone who moves into a new house that is worth $500,000, for instance, would be better off immediately because they would get a $195,000 exemption compared to a $25,000 exemption under the existing system,” he said.

However, if house prices were to rise as rapidly over the next five years as they did between 2000 and 2006, homeowners might be better off with Save Our Homes, which would limit annual increases in their assessment, he said.

Another group to gain by making the switch would be those with houses worth less than $200,000 because the taxable value of their house would be no more than 25 percent of its market value, Denslow said. Yet 71 percent of homeowners surveyed who said their houses were worth $200,000 or less said they would remain with Save Our Homes, he said.

Denslow believes they may be reluctant to make the change because it is irrevocable.

“Once you go with the super exemption, you have given up the Save Our Homes exemption forever,” he said.

Survey respondents were more likely to say they would remain with Save Our Homes if they had lived in their current houses for several years and expected to remain there for a long time, Denslow said.

Sixty-four percent of Republicans favored the proposed amendment, as did 58 percent of Independents and 54 percent of Democrats.

Denslow predicts the impact of the proposal would be “substantial” and vary widely by county. Rich, rapidly growing counties, such as Palm Beach, won’t be hurt too badly because a large proportion of its housing stock is worth more than the $200,000 exemption line, while counties such as Levy and Dixie, where growth is much slower and most new homes are much cheaper, will suffer, he said.

Credits

Writer    Cathy Keen, ckeen@ufl.edu, 352-392-0186

Source    David Denslow, denslow@ufl.edu, 352-392-0171

SOURCE: University of Florida Press Release

Report Indicates That the Economy May Improve a Bit in the Coming Months

The Conference Board release a report yesterday that indicates that things may pick up economically in the coming months. They reported that 6 of their 10 indicators increased in July. These positive indicators were consumer expectations, vendor performance, average weekly initial claims for unemployment insurance (inverted), real money supply, stock prices, and manufacturers' new orders for consumer goods and materials.

These were balanced against the negative indicators for July which were: building permits, manufacturers¡ new orders for nondefense capital goods, and interest rate spread.

There was no change in the average weekly manufaturing hours index.

So, according to The Conference Board, when the positve indicators were weighed against the negative indicators, the positives held the day. To this group, this foresees that in the short term the economy will probably continue to grow, but at a slow pace.

If you like this sort of statistical stuff and wish to read the complete report, you can download it in PDF format by clicking on the following link: Download conference_boardjuly07.pdf

SOURCE: The Conference Board Press Release

Foreclosure Activity Up 9% in July 2007

Yesterday, RealtyTrac® reported that 179,599 filings for foreclosures took place in the past month. This was an increase of 9% from June 2007 and a 93% increase over July of 2006. According to them this comes out to equal 1 foreclosure for every 693 households in the United States.

Forty-three states had an increases over the past year. Five states accounted for over half of the foreclosures. These 5 were California, Florida, Michigan, Georgia and Ohio. Contrary to the trend of most states, Texas, Utah and South Carolina continued to show slow-but-sure appreciation over the last 5 years.

Nevada, Georgia, and Michigan had the top foreclosure rates in the country. Nevada's rate was 3 times the national average and Georgia's was 2.3 times the national average. Filling out the rest of the top ten foreclosure rates, those above the national average, were Florida, California, Colorado, Ohio, Arizona, Massachusetts, and Indiana.

California, Florida and Michigan had the highest total number of foreclosures. California had a total of 39,013 foreclosures in July. Florida had 19,179 filings. No specific numbers were given for Michigan. Other states in the top ten for numbers of foreclosures were: Ohio, Georgia, Texas, Colorado, Arizona, Illinois, and Nevada.

Detroit was the metro area with the highest foreclosure rate, seven times the national average. Most of the other metro areas with high foreclosure rates were located in California.

Though just about all parts of the country are affected by the current foreclosure situation, it is also true that the vast majority of Americans are not experiencing problems. However, since we are such a large country, even a relatively small percentage can equal a large number of homes and a lot of money.

For more information or questions about this topic please call me at: 813-783-4444 or e-mail me at: jelwell1@tampabay.rr.com 

You are also invited to visit my webpage at: http://jelwell.century21bnr.com

SOURCE: Press Release from RealtyTrac®

Truth in Millage (TRIM) Notices Arrive in Florida

In Pasco County and the rest of Florida we are receiving our Truth in Millage or TRIM notices in the mail. The main purpose of these notices is to let us know what our property taxes might be for the year 2007.

Three major items on the notices are:

What your property taxes were last year, broken down by each entity that receives funds, ie. schools, city taxes (if you live in an incorporated area), water management, voter approved debt payments, etc.

What your taxes will be for the current year (2007) if the proposed budget changes are made. Again, itemized.

What your 2007 taxes will be if no budget changes are made. Itemized again.

You will also see what the county has determined to be the market value of your property. Do not be confused. This value is seldom what your property would actually sell for. In my experience it is usually less. They will also show you the assessed value. If your home is a Homesteaded Property you will probably see that the assessed value is less than the market value. That is due to the effect of the Save Our Homes statute which only allows the value of your home to rise 3% or the cost of living percentage each year for tax purposes. If your property is not homesteaded, then the market value and the assessed value will be the same.

Then the county will subtract any exemptions you may qualify for. The Homestead Exemption is the best known, but there are others for widows, disabled citizens, and disabled veterans. You can read more about these by visiting your county property appraiser's website.

Finally you arrive at the Taxable Value. This is the amount that the county will use to calculate your property taxes for 2007.

Also noted on the TRIM notices are the dates, times and locations of public meetings where you can voice your opinions on the budget changes that are proposed for the current year.

If you feel that there is an error on your TRIM notice contact your county property appraiser. If you want to learn more about the property tax process you can visit your county property appraiser's website. For those counties near Pasco County, you can go to my webpage and click on the County Property Appraiser menu button at: http://jelwell.century21bnr.com

For more information or questions about this topic please call me at: 813-783-4444 or e-mail me at: jelwell1@tampabay.rr.com 

Selling Your Home Via a Short Sale May Have Income Tax Implications

Many of you have probably heard about "short sales". Have you ever wondered what they are? First, let me make it clear that I am neither an accountant or a financial advisor. The information I am placing here is just to make you aware of situations where you may wish to consult with either of those professions before making a decision about going the "short sale" route.

Here is what happens in a short sale. Suppose Joe bought his house in 2005 when prices were high for $250,000. He had excellent credit so he got an 80% first mortgage and a 20% second mortgage so he had 100% financing. He owed the bank $250,000. He lived in the home until 2007 making his monthly payments, most of which were interest on the loan. when he lost his high paying job and could no longer make his payments. He had to sell his home. But homes similar to his were now selling for $210,000. Prices had fallen. Yet he still owed over $240,000! Now if he could have stayed in the home several more years, the market might have rebounded so that it went back above what he owed, but he did not have that option. What could he do? He was not wealthy so he could not absorb the $30,000 difference. One answer would be bankruptcy which is a very serious step with consequences that can follow you for years. Another possible answer is a "short sale".

A short sale is when a bank/lender agrees to accept less than the amount of the remaining prinicpal of a mortgage as a satisfaction of the debt. In Joe's case, the first mortgage holder was probably owed, let's say, $195,000. They might agree to accept less so that Joe could lower the price of the home to a level where it could sell. Why would they do this? Well, not because they have big hearts. It is simply a way to avoid the costs and trouble of a foreclosure that could leave them with even less money in the end. Of course, the second mortgage company could be left "out in the rain" losing everything. So they are going to want a piece of the pie as well. So between the two lenders they work out what they both are willing to give up to get the price of the home to a saleable level. If they both are willing to forgive enough of what Joe owes them, he can lower the price of his home to a competitive level and sell it. Joe is off the hook. Right? Not quite.

Here is the surprise. The money that the banks forgive is considered income to Joe and will be reported to the IRS on the 1099 form. He may end up paying income tax on that amount. Think of it as a kind of money gift from the banks. At the start they lent him $250,000 now they forgiving, or letting him "keep", $30,000 of what he borrowed and that is income to him, as far as the IRS is concerned. This scenario is what you have to watch out for.  You could have a nice little income tax bill waiting for you at the end of the year. If you are bankrupt or insolvent you may escape the taxes, MAY.

As I said, I am not an accountant or financial advisor. The best advice I can give you is that if you are considering doing a short sale of your  home, do not just discuss it with your lenders. You should consult immediately with your tax attorney, accountant or financial advisor to learn what tax ramifications you may, or may not suffer if you have a short sale. Better to know ahead of time so you can make the best decision for your particular situation. It may be that a short sale is the best way to go for you. But check with the professionals

Housing and Urban Development (HUD) has resources for people who are having problems keeping their homes. You can access their pages at: http://www.fha.gov/foreclosure/index.cfm

For more information or questions about this topic please call me at: 813-783-4444 or e-mail me at: jelwell1@tampabay.rr.com 

Two Florida Property Insurance Companies Withdraw Their Requests For Rate Increases

TALLAHASSEE (08/17/2007) - The Florida Office of Insurance Regulation (Office) announced today that AMEX Assurance Company and IDS Property Casualty Insurance Company withdrew their filings. The companies had requested a 49.1 percent rate increase for their homeowners' insurance lines of business.

During 2006, the insurance industry pointed to the high cost of reinsurance for the ever-increasing residential property insurance rates. Reinsurance is the insurance companies buy to cover large losses. The Legislature responded during the January Special Session by passing House Bill 1A which expanded the Florida Catastrophe Fund, making $12 billion in less expensive reinsurance available from the state. In March, companies submitted rate filings to the Office estimating how much this lower-priced reinsurance would reduce their rates. AMEX and IDS each filed a reduction of -26.1 percent.

The law also required all companies to make a second filing, after they negotiated their 2007 reinsurance coverage, which shows the actual savings. AMEX and IDS indicated their rate reduction of -26.1 percent in March was incorrect and that each company instead requires a rate increase of 49.1 percent.

To date, two hearings have been held to evaluate the "true-up" filings, four more have been scheduled and two are in the process of being scheduled. The Office had scheduled the AMEX and IDS hearing for August 21; the Office canceled the hearing following the companies' decision to withdraw their filings.

The schedule of upcoming public rate hearings and the television schedule to view them are located on the Office's website at: http://www.floir.com/pcfr/RateHearings.htm

SOURCE: Florida Office of Insurance Regulation Press Release

National Association of Home Builders (NAHB) Applauds Federal Reserve Move to Calm Markets

In response to the troubles in the credit markets, evidenced by the large numbers of mortgage lenders jumping off the cliffs like lemmings, the Federal Reserve lowered the discount rate that it charges banks by 1/2 of a percentage point. They felt that the crisis had arrived at a point where some action by them was needed. This move should make banks more confident that capital will be available and make them more willing to make loans that could get the country, and especially the housing market moving again.

However, this move will not have the same strength of effect that a cut in the Federal Funds rate would have. This is the rate that banks use when borrowing from one another. It will be interesting to see if at its next meeting the Federal Reserve makes cuts here in an effort to further stimulate the economy. I know those of us in the housing market will welcome such a move.

In response to the Fed's move, the National Association of Home Builders issued the following press release today.

WASHINGTON, Aug. 17 /PRNewswire-USNewswire/ -- The 235,000-member National Association of Home Builders today released the following statement after the Federal Reserve Board's announcement that it is temporarily cutting its discount rate by half a percentage point in conjunction with other steps:

"The National Association of Home Builders (NAHB) applauds the Federal Reserve Board for moving to temporarily reduce the primary credit rate by 50 basis points. NAHB also applauds the Fed's move to allow the provision of term financing for as long as 30 days, renewable by the borrower, and to accept home mortgages and related assets as collateral for discount window loans to banks. Such changes reflect the Federal Reserve Board'swillingness to act quickly to help restore orderly conditions in financial markets, provide depositories with greater assurance about the cost and availability of funding, and help ease liquidity concerns that are affecting the mortgage market.

"NAHB also strongly encourages the Federal Reserve Board to continue closely monitoring market conditions to determine whether further action is necessary, including a cut in the target federal funds rate ahead of the September 18 FOMC meeting."

SOURCE National Association of Home Builders

Countrywide Financial Goes Looking For Money

From many sources I am hearing that Countrywide Financial Corp. is borrowing money to meet its needs in a housing market that is currently on the ropes. Countrywide is one of the largest mortgage companies in the United States. My own mortgage is with them.

Word is that they had to borrow $11.5 billion to fund their loan obligations. As you have read in some of my recent posts, several smaller companies were not able to borrow funds, and therefore entered bankruptcy leaving buyers and sellers at closing tables with no money with which to fund the loans that they had been approved for. What a mess to say the least.

If the current credit crunch continues for many more months, perhaps even a giant like Countrywide could be forced to fall on its sword as well. That would be like an atomic bomb going off in the home lending world, in my humble opinion.

In order to limit its risk exposure, Countrywide has said that it will no longer fund many sub-prime loans or jumbo loans. These two types of loans do not conform to the industry standards that allow them to be readily sold on the secondary mortgage market. That is when one lender buys mortgages from another company. Some of you may have had this happen to you. When you first get your mortgage you make your monthly payments to XYZ Mortgage Company, but several months or years later you get a letter saying that your mortgage has been bought and will now be serviced by ABC Mortgage Company.

To ensure that their loans are saleable the lenders want them to conform to standards set by Freddie Mac and Fannie Mae. Sub-prime loans do not normally conform since the borrowers usually have poor credit records and jumbo mortgages do not qualify since they are for amounts greater than $417,000, the limit over which Freddie Mac and Fannie Mae will not purchase them. Both of these types of loans usually have higher interest rates than conforming loans. As you have no doubt heard on the news, sub-prime loans seem to be going into foreclosure left-and-right.

Due to its huge share of the mortgage market, what happens to Countrywide could have wide-ranging effects on everyone involved with buying, selling, building, maintaining, and furnishing homes. Hopefully this market will begin to correct itself and the public will once again have the confidence to make home purchases. So much of what happens is based more on perception than reality. Let's hope things get back on the right track SOON!

If you have any questions concerning this topic you can call me at: 813-783-4444 or e-mail me at: jelwell1@tampabay.rr.com 

You are also invited to visit my webpage at: http://jelwell.century21bnr.com

US Commerce Department: Home Construction Is At Its Lowest Level Since 1997

On the US Commerce Department website today it was reported that new home construction was down 20% over a year ago. This is the slowest construction pace since 1997, a decade ago!. We all remember the red hot pace with which new homes were going up and older homes were being sold prior to 2006. That has turned completely around now.

To add to the bad news, applications for building permits fell by 2.8% last month. So a pick-up in building in the near future does not seem likely.

The only place in the whole country where there was an increase in new housing construction was in the Midwest. All other areas showed declines to some degree.

On my local front here in Central Florida, we see that owners of homes are finally seeing the light and reducing their prices to levels that reflect the current market. Developers and home builders are cutting prices drastically and offering all kinds of incentives to buyers and real estate agents, especially on inventory homes. I am seeing prices close to $100 per square foot. Something I have not seen since 2003! Once a builder has a home finished, he wants to move it and is willing to do just about anything reasonable to get it off his inventory list.

If you would like to download a copy of the Commerce Department's report in PDF format, click on the following link: Download newresconstAug1007.pdf

If you have any questions concerning this topic you can call me at: 813-783-4444 or e-mail me at: jelwell1@tampabay.rr.com 

You are also invited to visit my webpage at: http://jelwell.century21bnr.com

Florida Rejects Proposed Rate Reductions of 3 Property Insurance Companies

TALLAHASSEE (08/14/2007) - This week, the Florida Office of Insurance Regulation denied the rate requests of three companies for not substantially lowering their property insurance rates pursuant to House Bill 1A.

"Governor Crist and the Legislature made some courageous decisions during the January Special Session," said Insurance Commissioner Kevin McCarty, "and we will not allow companies to file incomplete or inadequate rate reductions affecting the policyholders of this state."

The Office sent Notices of Intent to deny the rate filings because the reduced rates filed did not adequately reflect all of the savings realized when the state offered less expensive reinsurance to companies last spring.  Reinsurance is the insurance that companies buy to cover large losses.

"House Bill 1A made $12 billion of less expensive reinsurance available from the state, and the law requires the insurance companies to pass along that savings to their policyholders in the form of lower rates,"said McCarty.  "Not to be invested in extra, duplicative reinsurance contracts or profit margins."

Companies have until September 30th to submit their final reduced rate filings mandated by the law and the Office will continue to review each one to ensure they are complete and reflect the policyholder savings ordered by the Legislature.

Last week, the Office postponed a public hearing for State Farm Florida Insurance Company, State Farm Florida Fire and Casualty Insurance Company and State Farm Mutual Automobile Insurance Company. The Office issued subpoenas directing the three companies to appear in Tallahassee to answer questions about its business practices. The companies failed to provide all of the information requested in the subpoenas by the date set forth in the subpoenas; therefore, the Commissioner postponed the hearings until the requested information is provided in its entirety.

The Commissioner has the authority to hold a public hearing to question a company about their filing pursuant to Florida law. The schedule of upcoming public rate hearings and the television schedule to see them are located on the Office's website at http://www.floir.com/pcfr/RateHearings.htm.

More information on the companies' rate filings which were rejected is listed below.

Cypress Property & Casualty with 63,129 policy holders had proposed a -5.4% reduction.

First Floridian Auto & Home with 91,295 policy holders had proposed a -8.3% reduction.

Travelers Indemnity Co. of America with  4,596 policy holders had proposed a -8.3% reduction.

SOURCE: Florida Office of Insurance Regulation Press Release

Freddie Mac: Mortgage Interest Rates Climb Slightly

Today 8/16/07,  Freddie Mac reported that the average mortgage interest rates for 30 and 15 year fixed-rate loans rose slightly. Nationally the average mortgage interest rate for 30 year fixed-rate mortgages was 6.62% (6.57% in the southeast), a rise from 6.59% a week ago. The average interest rate for 15 year fixed-rate mortgages was 6.30%, up from 6.25% last week.

Frank Nothaft, Freddie Mac vice-president and chief economist said, "Interest rates on prime conforming fixed-rate mortgages ticked up a little in the past week, in line with 10-year Treasury rate movements and retracing part of last week's decline. Problems in the non-prime (subprime) mortgage market where funds are expensive and har-to-get have not affected the prime conforming market."

Other data released this week showed that core inflation at the wholesale level increased 0.1% in July, or 2.3% year-over-year, below what had been expected. Core inflation at the retail level rose 0.2%, or 2.2% year-over-year, as had been expected.

Do keep in mind that we live in a very large and complex country. What happens in California is not necessarily what is happening in Florida. And what happens in Florida may be a far cry from what occurs in Michigan. Real estate is still very much a local issue.

If you want to learn more about Freddie Mac or see the details of their survey, go to: www.freddiemac.com  and click on the link for "Current Weekly Survey". They break down the survey by specific regions in the United States so you can see how your state compares to other parts of the country. They also explain the mission of Freddie Mac and offer a lot of useful information for consumers.

If you would like to speak with a lender you can find some at my website: www.jelwell.century21bnr.com . You can also speak with your own bank, credit union, or mortgage broker to see what your particular interest rate would be should you decide to finance a home purchase.

National Association of REALTORS: Second-Quarter Metro Homes Prices Improving But Sales Down in Most States

WASHINGTON, August 15, 2007 -

Home price trends are improving in metropolitan areas but existing-home sales during the second quarter were below a year ago in most states, according to the latest quarterly survey by the National Association of Realtors.

In the second quarter, 97 out of 149 metropolitan statistical areas 1 show year-over-year increases in median existing single-family home prices, including nine areas with double-digit annual gains; 50 had price declines; and two were unchanged.  In the first quarter of 2007, revised data shows 83 areas had annual price increases, while in the fourth quarter of 2006 only 68 areas were up.

Lawrence Yun, NAR senior economist, said the price trends are encouraging.  “Although home prices are relatively flat, more metro areas are showing price gains with general improvement since bottoming-out in the fourth quarter of 2006,” he said.  “Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets.”

Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate2 of 5.91 million units in the second quarter, down 10.8 percent from a 6.63 million-unit pace in the second quarter of 2006.  Six states showed increases in the sales pace from a year ago; one was unchanged and complete data for two states were not available.

The national median existing single-family home price was $223,800 in the second quarter, down 1.5 percent from the second quarter of 2006 when the median price was $227,100.  The median is a typical market price where half of the homes sold for more and half sold for less, but there has been a downward skew in the national comparison because sales have declined in many high-cost areas and risen in some lower cost markets.

“Since all real estate is local, this report on metro area home prices is more meaningful than our monthly data on national prices because metro areas are less subject to price distortion that can result from geographic changes in the composition of sales,” Yun said.

NAR President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, explained how homes are holding their value.  “Unlike stocks, where significant equity can vaporize overnight, there is little volatility in home prices, and most homeowners are experiencing very healthy long-term gains,” she said.

“The costs of construction trends up from one year to the next, so even in areas that experience price declines, owners who maintain their property generally retain most of the equity that has built-up in their homes over time.”

A separate NAR survey shows the typical owner stays in a home for six years.  “While local conditions vary greatly, a typical owner who bought six years ago is seeing a 45 percent increase in the value of their home.  Even so, it isn’t valid to directly compare homeownership with stocks.  Although a home is normally a long-term appreciating asset, it is primarily shelter – most owners sell when their needs change, not when the market turns,” Combs said.

An analysis of all available data over the past six years shows almost every market experienced price gains from the second quarter of 2001 to the second quarter of this year.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.37 percent in the second quarter, up from 6.22 percent in the first quarter; the rate was 6.60 percent in the second quarter of 2006.

The best total sales performance was in Wyoming, where existing-home sales rose 10.8 percent from the second quarter of 2006.  In Iowa, the second-quarter sales pace rose 4.1 percent from a year ago, while North Dakota experienced the third strongest gain, up 2.9 percent.  Oklahoma, Indiana and Nebraska also posted annual sales gains.

In the second quarter, the largest single-family home price increase was in the Salt Lake City area, where the median price of $233,100 rose 21.9 percent from a year ago.  Next was Binghamton, N.Y., at $111,200, up 19.8 percent from the second quarter of 2006, followed by Salem, Ore., where the second quarter median price increased 16.7 percent to $227,900.  Most of the metros with price declines were modest, although four areas experienced double-digit drops.

Median second-quarter metro area single-family home prices ranged from a very affordable $71,700 in Elmira, N.Y., to 12 times that amount in the San Jose-Sunnyvale-Santa Clara area of California where the median price was $865,000.  The second most expensive area was San Francisco-Oakland-Fremont, at $846,800, followed by the Anaheim-Santa Ana-Irvine area (Orange County, Calif.), at $727,000.

In addition to Elmira, other affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, at $76,700, and the Saginaw-Saginaw Township North area of Michigan, with a second-quarter median price of $86,900.

In the condo sector, metro area condominium and cooperative prices – covering changes in 55 metro areas – show the national median existing condo price was $226,800 in the second quarter, up 1.0 percent from $224,500 in the second quarter of 2006.  Thirty-seven metros showed annual increases in the median condo price, including seven areas with double-digit gains; one was unchanged and 17 areas had price declines.

The strongest condo price gains were in the Salt Lake City area, where the second quarter price of $162,200 rose 25.2 percent from a year earlier, followed by Reno-Sparks, Nev., at $220,500, up 17.0 percent, and the Austin-Round Rock area of Texas, where the median condo price of $172,100 rose 14.9 percent from the second quarter of 2006.

Metro area median existing-condo prices in the second quarter ranged from $116,400 in Greensboro-High Point, N.C., to $608,700 in the San Francisco-Oakland-Fremont area.  The second most expensive condo market reported was Los Angeles-Long Beach-Santa Ana, at $413,400, followed by the San Diego-Carlsbad-San Marcos area at $368,600.

Other affordable condo markets include Wichita, Kan., at $117,900 in the second quarter, and Rochester, N.Y., at $118,900.

Regionally, existing-home sales in the Northeast fell 6.8 percent to an annual pace of 1.05 million units in the second quarter from the same period a year ago.  The median existing single-family home price in the Northeast rose 0.7 percent to $298,000 in the second quarter from the same period 2006.

After Binghamton, N.Y., the strongest price increase in the Northeast was in the Allentown-Bethlehem-Easton area of Pennsylvania and New Jersey, with a median price of $274,500, up 12.8 percent from the second quarter of last year, followed by the Reading, Penn., area, at $157,800, up 11.2 percent, and Glenn Falls, N.Y., which rose 10.7 percent to $175,500.

In the Midwest, total existing-home sales dropped 8.4 percent to a 1.39 million-unit annual level in the second quarter compared with a year ago.  The median existing single-family home price in the Midwest was $163,500, down 2.2 percent from the second quarter of 2006.

The strongest metro price increase in the Midwest was in the Bismarck, N.D., area where the median price of $151,400 was 9.2 percent higher than a year ago.  Next was Gary-Hammond, Ind., at $137,800, up 7.3 percent from the second quarter of 2006, and Bloomington-Normal, Ill., at $161,500, up 7.0 percent.

Total existing-home sales in the South were at an annual rate of 2.31 million units in the second quarter, down 10.7 percent from the second quarter of 2006.  The median existing single-family home price in the South was $185,000 in the second quarter, which is 1.6 percent below a year earlier.

The strongest price increase in the South was in the Beaumont-Port Arthur area of Texas, at $127,700, up 11.8 percent from a year ago, followed by the Cumberland area of Maryland and West Virginia, with a 9.3 percent gain to $109,300, and Raleigh-Cary, N.C., at $225,100, up 8.4 percent.

In the West, the existing-home sales pace of 1.16 million units fell 16.9 percent from the second quarter of 2006.

The median existing single-family home price in the West was $349,400 in the second quarter, down 0.4 percent from a year ago.

After Salt Lake City and Salem, the strongest metro price increase in the West was in Farmington, N.M., at $201,900, up 14.0 percent from a year ago, followed by the Spokane, Wash., area, at $197,700, up 10.4 percent from the second quarter of 2006.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

SOURCE: National Association of REALTORs Press Release

Florida Association of REALTORS: Florida’s Housing Market For 2nd Quarter 2007: Sales Activity Remains Soft

ORLANDO, Fla. – Aug. 15, 2007 – In second quarter 2007, Florida's housing sector in many markets continued to report higher inventory levels of homes for sale, median prices edging down and sales activity reflecting a buyer’s market.

Statewide, sales of single-family existing homes totaled 37,709 during the three-month period, a decrease of 30 percent compared to 53,723 homes sold during the same time a year earlier, according to the Florida Association of Realtors® (FAR).

The statewide existing-home median sales price was $239,200 in the second quarter; a year ago, it was $250,400 for a decrease of 4 percent. In 2002, the second-quarter statewide median sales price was $137,400, which reflects an increase of about 74.1 percent over the five-year period. The median is a typical market price where half the homes sold for more, half for less.

To gain insight into current trends in Florida’s real estate industry, the University of Florida’s Bergstrom Center for Real Estate Studies conducts a quarterly survey of industry executives, market research economists, real estate scholars and other experts. When assessing the state’s single-family markets, those polled in the second quarter 2007 survey viewed absorption activity as a sign the markets are continuing to move toward stability, said Dr. Wayne Archer, the center’s director.

While acknowledging the potential impact of the subprime mortgage “meltdown” on Florida’s housing sector, along with the issues of property taxes and high insurance rates, Archer said, “Those of us who have watched markets for a long time realize the picture can change rather dramatically in a short period of time if something allows people to sell their house more quickly, such as a change in the property tax situation or a sudden improvement in the economy.”

Continuing low mortgage rates remain another positive influence on the housing market. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 6.37 percent in second quarter 2007; one year earlier, it averaged 6.60 percent.

The latest industry outlook from the National Association of Realtors® (NAR) predicts that existing-home sales will continue to be stable over the next few months. Long-term fundamentals of the housing market remain favorable, said NAR Senior Economist Lawrence Yun, who expects a modest upturn for existing-home sales toward the end of the year.

“With the population growing, the demand for homes isn’t going away – it’s just being delayed,” Yun said. “More buyers, and cutbacks in new construction, will eventually draw down the inventory levels and support future price appreciation.”

Looking to Florida's existing condominium market, sales of existing condos also decreased during the quarter, with a total of 12,415 condos sold statewide compared to 16,566 in second quarter 2006 for a 25 per