Here are the sales results for properties on Anna Maria Island for July, 2008. The spreadsheets below indicate sales of single family, condo and multifamily properties in the City of Anna Maria, Holmes Beach and Bradenton Beach. Comparisons are drawn between July '07 and July '08 and for year-to-date data for both periods.
Please note that with the new Multiple Listing System, there are still some glitches in pulling property types from the sold data, and in combining numbers for ALL types, including multifamily (duplex) with residential and condo statistics. In order to eliminate as much statistical error as possible, I've separated the duplex information. The new system refers to all multifamily properties, including duplexes, as income properties, and will not average in that information with residential.
Additionally, residential is a category which includes everything from mobile homes to townhomes, half-duplexes, single family, condos and co-ops. I have endeavored to report only townhomes, singlefamily and half-duplexes as residential. Condos are reported alone.
Despite my best efforts and many, many hours of learning the new system, with the assistance (sometimes) of able personnel at the MLS Exchange where all Mid-Florida Multiple Listings are stored, there are some inconsistencies in numbers of sales.
Within each of my data summaries, however, I can feel reasonably secure in knowing that the specific information is correct. And without spending many more hours on analysis, I'll never know why July 2008 sales of residential and condo units show eight and six, respectively, but that the total shows 15 (for example).
Surely, it's a matter of how this system has imported information from the old (Rappatoni) provider. So use this information with care.
In prior years, I have reported multifamily within each of the graphics above, and included their numbers in the total, or 'All Types' row. The new system won't allow that, with all multifamily now under "Income" properties. So here is the data for multi.
Multi-Family Sales 7-1-07 thru 7-31-07
Clearly, we are seeing a stabilization of sales values among single-family homes, and a continued erosion of values in condo and multifamily properties. Should you wish to contact me regarding any of this information, its methodology or its implications, I'm always ready to talk!
John van Zandt
John@CallTheIslanders.com
Cell 941-685-8822
Here's a recent summary of the HOPE for Homeowners Act of 2008 which has a lot of information for those now suffering through the housing crisis and at risk of defaulting on their mortgages. This information comes from the law offices of Barnes Walker, with their permission.
August 1, 2008
To Our Realtor® Friends:
As part of our continuing effort to assist you in helping your clients buy and sell real estate, we offer you the following summary of the federal law just recently enacted by Congress and signed into law by the President to assist homeowners threatened by rising mortgage payments they can no longer afford by offering them a way to refinance and keep their homes:
A Summary of the
“HOPE for Homeowners Act of 2008”
1. Effective Date. The Act takes effect on October 1, 2008, and runs through September 30, 2011. The Federal Housing Administration (FHA) is responsible for administering the Act, and there is some doubt as to whether (a) the FHA will be ready to supply the guidelines necessary to provide the benefits under the Act by the effective date of October 1, or (b) mortgage lenders will have established FHA mortgage loan programs to take advantage of the Act by that date.
2. Benefits. The Act will allow qualifying homeowners to cancel all of the mortgage debt on their home incurred on or before January 1, 2008, and replace it with an FHA-insured, 30-year fixed-rate mortgage loan equal to 90% of the home’s current value. This cancellation will:
a. Forgive (i) all of the homeowners’ debt above 90% of the current value of their home, and (ii) any prepayment penalties on current mortgage loans.
Example: Original home purchase price: $400,000.00. Original interest-only first mortgage: $320,000.00. Original interest-only equity line second mortgage: $40,000.00. House appreciates during the housing boom to $500,000.00. The equity line is increased to $130,000.00 and fully borrowed upon by the owner. After the housing bust, the current home value is $200,000.00. The new FHA mortgage loan would be for 90% of $200,000.00 or $180,000.00. Since the original mortgage loans were interest only, $450,000.00 in principal on both mortgage loans would still be owed prior to the new FHA mortgage loan, but all except $180,000.00 of that debt would be cancelled; i.e., $270,000.00 would be forgiven.
b. Based upon current market rates, the homeowners’ new fixed interest rate could be 1-2% lower than the rates of their previous variable rate first and second mortgages, therefore lowering their payments.
c. The homeowners have a new fixed interest rate, which will never go up like the rates of their old variable-rate mortgage loans.
3. Requirements & Obligations. The borrowing homeowners must meet the following requirements and agree to the following obligations:
a. The FHA-insured mortgage loan cannot exceed $550,400.00.
b. The home must be the homeowners’ primary residence, not a second home or rental or investment home. Further, the homeowners are not eligible for an FHA mortgage loan if the homeowners own a second home or, arguably but less likely, rental houses. The Act does not indicate what the status of a second home would be if it is both a vacation and rental home for the homeowners.
c. The homeowners must not have intentionally defaulted on their current mortgage loans to qualify for an FHA-insured mortgage loan under the Act.
d. The homeowners must have a monthly mortgage payment to income ratio greater than 31% as of March 1, 2008; i.e., their total monthly mortgage payments must exceed 31% of their monthly income. Before homeowners can use an FHA mortgage loan, the homeowners’ lender must document and verify the homeowners’ income with the IRS.
e. In exchange for this FHA-insured mortgage loan, the homeowners must pay to the FHA a substantial share of any cash they receive from the future sale or refinancing of their home. The cash the homeowners receive comes from (i) any appreciation or increase in the value of the home that occurs over time; and (ii) the initial 10% equity they receive when they obtain the FHA mortgage loan, plus the increase in that equity that occurs as they pay down the mortgage loan. The cash derived from appreciation is divided and paid 50% to the homeowners and 50% to the FHA. The cash derived from equity is shared between the homeowners and the FHA based upon when the sale or refinance closing occurs in relation to the closing on the FHA loan as follows:
FHA Share Homeowners’ Share
Within 1 year: 100% 0%
Within 2 years: 90% 10%
Within 3 years: 80% 20%
Within 4 years: 70% 30%
Within 5 years: 60% 40%
5 years or more: 50% 50%
There is no phase-out over the years of FHA’s entitlement to its share of the cash from the sale or refinance closing, whether said cash is derived from appreciation or equity.
Example: Using figures from the previous example, the devalued home of $200,000.00 begins to appreciate again, ending at a value of $300,000.00, when it is sold at that price 3 ½ years from now. The $180,000.00 mortgage loan is paid down from $180,000.00 to $160,000.00. Commission and closing costs total $20,000.00. The homeowners’ and the FHA’s shares are calculated as follows:
Appreciation = $300,000.00 price - $200,000.00 value at the time of the FHA mortgage loan = $100,000.00.
Gross Equity = $200,000.00 value at the time of the FHA mortgage loan - $160,000.00 current FHA mortgage loan balance = $40,000.00. Net Equity = $40,000.00 Gross Equity - $20,000.00 in commission and closing costs = $20,000.00.*
FHA Homeowners
Homeowners’ Share of Appreciation = 50% x $100,000.00 = $50,000.00
FHA’s Share of Appreciation = 50% x $100,000.00 = $50,000.00
Homeowners’ Share of Equity = 30% x $20,000.00 = $ 6,000.00
FHA’s Share of Equity = 70% x $20,000.00 = $14,000.00
TOTAL $64,000.00 $56,000.00
*The Act is silent as to how closing costs will be handled. This example reflects the author’s best guess.
4. Limitations & Uncertainties. Even if a homeowner qualifies and meets the requirements of Paragraph 3 above, these new FHA-insured mortgage loans will probably be difficult to obtain due to the following limitations of the Act:
a. The Program is voluntary for lenders, so the Act does not require that either first or subordinate mortgage lenders agree to a replacement and cancellation of their mortgage loans in exchange for an FHA mortgage loan.
b. The home’s “current value” for FHA purposes is the amount for which it could be sold. The current mortgage lender, however, will lose another 10% of that value because its current mortgage loans must be written down to 90% of that value, whereas, if the lender completed a foreclosure of the home, it would recover 100% of that value. This is a disincentive for the mortgage lender to agree to an FHA mortgage loan unless the cost of foreclosure and the cost to the lender of selling the home after foreclosure – e.g., broker’s commission, repair costs, payment of delinquent taxes and association dues, maintenance costs over time, etc. – exceed that 10% of the value.
c. The lender must pay the FHA for the benefit of the FHA’s insurance: (i) an initial premium equal to 3% of the loan amount, and (ii) an ongoing premium of 1½% of the loan balance annually. These premium payments create an additional disincentive.
d. The homeowners’ mortgage lender must believe, and make representations and warranties to the FHA, that the homeowners’ current income and expenses will allow them to repay the FHA mortgage loan, as determined by the FHA’s current affordability requirements. This creates legal liability to the FHA on the part of the lender.
e. If the homeowners cannot afford to make the payments on an FHA mortgage loan equal to 90% of the home’s current value, the FHA mortgage loan amount must be decreased until the homeowners can afford the payments necessary to repay the decreased loan amount. This, in turn, increases the amount that the first mortgage lender and subordinate lien holders must write off, creating a further disincentive.
f. The mortgage lender involved in originating the FHA mortgage loan is typically the homeowners’ first mortgage lender, and it is required to obtain the agreement of subordinate mortgage, judgment, and tax lien holders to extinguish their loans and release their liens before the FHA will approve the new mortgage loan. This require the first mortgage lender to pay the subordinate lien holders for a release of their liens, which is another financial disincentive for the first mortgage lender to agree to an FHA mortgage loan.
g. While the program is authorized to insure $300 billion in mortgage loans, that amount is expected to serve only approximately 400,000 homeowners in the entire United States.
h. If homeowners are barely making their mortgage loan payments, ignoring other debt obligations to make their mortgage payments, or are soon going to be unable to make their mortgage payments, their mortgage lenders probably will not agree to an FHA mortgage loan until the homeowners stop making those payments. On the other hand, if the homeowners choose to stop making payments before their ability to do so ends, the homeowners have intentionally defaulted and would be ineligible for the new FHA mortgage loans. Therefore, homeowners are in a “Catch-22.”
5. Effect on Credit. The Act is silent regarding the effect on homeowners’ credit if they obtain an FHA-insured mortgage loan under the Act. Since the Act is silent, and the mortgage lender and subordinate lien holders are actually writing off all or portions of the debts owed to them by the homeowners, we are assuming that use of these FHA mortgage loans will adversely affect the homeowners’ credit ratings, although we do not know by how much.
Please contact Barnes Walker, Chartered, at 941-741-8224 if you would like
more information about this Act or how it applies to a specific homeowner.
Also, please contact us for presentations of the following free seminars for Realtors®:
Short Sales 101
Real Estate Tax Appeals 101
Amendment 1 & Homestead Portability
Contract to Closing
Business Sales 101
Sincerely,
Garret T. Barnes Adron H. Walker
Here's an article that just came to me via email from the Florida Association of Realtors. I'd like to add a couple of additional caveats:
-- If you're in a flood zone, you'll save money with a property built since 1978 or so, particularly if it's elevated. That way, flood waters sweep under your first living floor, and your premiums are a lot less than if you're in the base flood plain.
-- When you're looking to buy, seek a concrete block home with a hipped roof (that is, a roof that comes down to the top of the highest wall without a gable) to save up to about 30% over other structures.
-- Get a wind mitigation survey from an inspector to see how better to protect your home from windstorms.
-- Provide your insurance company with a four-point inspection to show them your older home complies with current safety practices, like having electrical breakers instead of fuses, tie-downs from roof to rafter and rafter to plate, and so forth. You'll save money in the long run.
So read the article below to glean additional tips. And work with your insurance company to reduce your risk -- and your premiums!
John
Homeowners insurance: Tips for reducing premiumsORLANDO, Fla. – July 29, 2008 – Property insurance can be expensive, and many homebuyers don’t fully understand what they’re buying or how they can save money. The general key: Pay for adequate coverage without being grossly underinsured.Homebuyers and owners should consider the following when trying to save costs:• Determine the limits you want on your homeowners insurance, what value you need to insure, get multiple quotes.• Consider purchasing your homeowner, auto and umbrella insurance with the same company so a multi-coverage discount will apply.• Having smoke, burglar alarms and a sprinkler system could mean bigger discounts.• Get a quote for insurance that would pay to replace your belongings, rather than pay you based on their depreciated value.• Ask your agent what documentation you need to substantiate a claim, in case of theft or fire. Make sure you videotape all of you personal properties including what is in the drawers and cabinets and send the tape to someone you trust for safekeeping.• Make sure you carry enough liability coverage to protect you against a lawsuit if someone slips, trips or gets hurt on your property.“Always read the policy when you receive it and ask your agent to slowly and carefully explain any provisions you don’t understand,” says insurance lawyer Frank N. Darras. “Finally, never buy insurance from a company you don’t recognize.”© 2008 FLORIDA ASSOCIATION OF REALTORS®
Boosting Fannie and Freddie
To help stabilize markets, which were shaken in the past few weeks by steep declines in the stock prices of Fannie Mae (
Fannie and Freddie guarantee the purchase and trade of mortgages and own or back $5.2 trillion in mortgages.
The bill allows Treasury over the next 18 months to offer Fannie and Freddie an unlimited line of credit and the authority to buy stock in the companies if necessary.
Shares of Fannie closed 12% higher and those of Freddie 9% on Wednesday. Fannie's stock is down 79% and Freddie's 84% over the past year.
"This [backstop] sends a signal ... to help calm the market, that we'll not walk away," said Sen. Richard Shelby, R-Ala., the lead Republican on the Senate Banking Committee.
Shelby, saying the country is "in a real crisis," has long advocated for stricter oversight of Fannie and Freddie. "I believe if we'd pushed the GSE legislation four or five years ago, we wouldn't be here today," he said.
Both critics and supporters of the Paulson plan have expressed concern that loaning or investing money in the companies could leave taxpayers with a
In a speech in New York on Tuesday, Paulson characterized the proposal as a way to support Fannie and Freddie and bolster the capital markets and economy.
"The best way to protect the taxpayer is to have very flexible powers which are temporary," Paulson said.
While the bill sets parameters on the Treasury's authority, it doesn't necessarily force its hand, Seiberg said. For instance, the measure requires the Treasury to take into consideration the need that it should be given priority over other GSE investors when it comes to being paid back. But "consideration" means "the Treasury has discretion in what it can seek. It doesn't have to ensure it gets paid back first," Seiberg said.
The Congressional Budget Office on Tuesday estimated the potential cost of a rescue could be
Helping at-risk borrowers
The bill also aims to help homeowners at risk of foreclosure and to bolster regulation of Fannie and Freddie. Among other things, it would:
Increase the Federal Housing Administration's role.
Lenders would also agree to pay upfront fees to the FHA equal to 3% of a home's appraised value. Borrowers must agree to pay an annual premium to the FHA equal to 1.5% of their new loan balance. They must also agree to share with the government any profit they realize from selling or refinancing.
The cost of the new FHA program - which would begin on Oct. 1 and be in place for just a few years - would be funded by fees from Fannie and Freddie.
While the bill authorizes the FHA to insure up to $300 billion in loans, the CBO estimates that the agency is only like
