Wednesday, October 31, 2007

Florida’s Property Tax Fiasco, Like the Energizer Bunny, Goes On & On….

Unbelievable! After all of these months of wrangling, town hall meetings, etc, this is the best that they could come up with. The major points of the proposed property tax amendment, which the citizens of Florida will vote on 1/29/08 are as follows:

The homestead exemption will be increased from $25K to $40 or 50K depending on who you speak to. According to the Orlando Sentinel it will be $40K, but a news report on TV and an email from Governor Charlie Crist both refer to “doubling the homestead exemption.”

There will be some portability of the Save Our Homes, whether you are trading up or down in the market.

Businesses will now have a $25K exemption on tangible personal property; and,

Businesses and non-homesteaded homeowners will have a 10% annual cap on their tax increases.

For the past six months we’ve been hearing all of this ballyhooing about property tax reform and this is what they are giving us? To most, this will only amount to an approximately $240 savings. Big Deal!! What happened to the supposed roll-back of our tax base to 2004 levels?? Now, that would have been a savings of sorts. But this is going to do very little for most people that are already experiencing a crunch.

To further exasperate the matter in today’s Orlando Sentinel, they are quoting Gov. Crist as stating that “taxpayers ‘should have hope in their hearts because it’s only going to get better and better and better. This is what they want. This is what they deserve.’”

Damn, I would like some of those drugs that he must be doing. OK, just kidding, but you obviously get my point. I can only think that the governor is alluding to the idea that there will be more tax cuts in the future. I think this is bogus. Once a tax cut is voted on and enacted, that is all we are going to see for quite a while. If this is all they can come up with now, do you seriously think that they’ll add to it in the near future? Look what they’ve done with the property insurance crisis, that should give you an idea.

The sad thing is that this will probably pass because people will be willing to settle for a little something than what they may perceive as nothing.

The legislature did do one thing right in that they’ve included portability of your SOH. Yes, this should increase sales in that people will not feel as ‘trapped’ in their homes as they may be now. But this is not enough. Do we demand more?

I have to wonder how much power we have as voters. I apologize if I appear cynical here, but… Yes, we do have the power to elect our officials and even vote them out of office. But what happened to ‘of the people, for the people, by the people.’ Unfortunately, but politics appears to be just another form of Big Business and the pandering to of such.

Look at the data, but distance between and have’s and have not’s is ever so widening. Moreso, then ever before and there is no end in sight of this abating.

Since I’m getting off the topic somewhat… Crist signed his letter ‘May G-d bless you…’ Now, don’t get me wrong, I do believe in g-d, but that is neither here nor there. What the heck ever happened to the separation of church & state? More and more we see the two intermingling.

Till next time – Marc It Sold!

Tuesday, October 30, 2007

Real Estate – Still One of the Best Investments Around – Do You Believe It?

You should! Yes, we’ve read and heard about the all the doom & gloom in the real estate and mortgage industries. And there is a lot of truth to this. But at the same time we need to look at the larger picture. I know that for some that may have gotten caught up in the fiascos of late, that this will be next to if not impossible to do; and, I can greatly understand that. The long and short of it is this - Real Estate was never meant to be a short-term investment and as a long-term investment, it has proven itself time and time again.

Let’s first look at what brought us to this point. Firstly, we found ourselves in a seller’s market, in which the demand was greater than the supply. Part of what led us to this was the attraction of ‘easy money.’ Lenders where making loans & people where procuring loans & in many instances neither should have. We’ve seen interest-only loans, 100% financing with loans, no documentation loans, adjustable-rate mortgage loans, etc. These in themselves are risky, nevermind that fact many did not see or in some cases were never shown the complete picture.

Then we come to the people that were trying to ‘flip’ houses. This is fine and dandy if you bought it at the low end of the market, but many were out there buying at the top of the market and are finding themselves encountering losses or worse yet, a foreclosure.

The lack of buyer confidence in recent months has been one of the principal reasons for holding back sales. That and the fact of high inventories and also that housing prices are out of sync with incomes in many areas. But we are now seeing an increase, unsteady as it may be, in buyer confidence.

It has to be understood that the market changed quite quickly. Builders in general do not have the ability to respond that quickly to market changes. It takes months of planning, permits are pulled, supplies are ordered, etc. This has added to our increase in available homes for sale and has pretty much dampened the existing home market. Builders have been discounting their homes to get rid of inventory. But, we are seeing a cutback in construction and this bodes well for the market in that it will lower the existing inventory & help to steady home prices.

It also appears that the mortgage market conditions are improving and that we are seeing more availability of loans. Granted, most of these are conforming and not subprime, but here we are seeing a resurgence of FHA backed loans.

Yes, we’ve seen a lot of doom & gloom, but there are also a lot of positive signs as well. Everything is relative and has to be put into perspective. This is not the first time that the real estate market has had to deal with a downside. This will also not be the last time. The real estate industry as with almost everything else is cyclical.

Right now interest rates are still relatively low at approximately 6¼%. We are entering an election year; and historically, this has also worked well for real estate sales.

We keep on hearing about the median price and lately we are hearing about it dropping. But much of this could be contributed to the fact that there are fewer transactions at the top of the ladder, so to speak; and, this will just distort the figures downwardly. I still feel that a better judge is the average sales price. Except if you purchased within the last two years during the market run-up, if you wish to call it; you will find what I consider a great deal of appreciation for most of us.

According to the average sales prices in the Greater Orlando area, if you purchased a home 3 years ago, it would have appreciated over 32%. That isn’t too shabby! If you bought that home 4 years ago, we’re looking at approximately a 52% appreciation. Most people on the average own their homes for at least 5 - 7 years. If you bought that home in Sept. ’99, your home would have appreciated approximately 113%.

Again, this just goes to show you that real estate is a great long-term investment if not one of the best. There are many great homes out there & some great deals also. Most expect the value of their home to appreciate over the next five years.

In general, home sales and home prices should increase in 2008 as compared with that of 2007.

Til next time – Marc It Sold!