We are all aware of what’s going on in today’s real estate marketplace. There is no way that you can escape the news. It’s all over on the radio, television and in print. So where do you stand?
Firstly, the situation is not going to change anytime soon. There are too many factors that have contributed to our present market. One of the greatest, that most people are not aware of, is that of the mortgage lending business. This has greatly contributed the our present set of circumstances.
A little history. A long time ago when someone took out a mortgage, they generally had a relationship with their lender, who more often than not was their banker. The banker knew of their ability to repay a loan and lent money on this criteria. The banker also kept and serviced that loan for the life of that particular mortgage.
Well, the industry changed greatly in the past twenty years. Now, the originating lenders take the mortgages that they’ve made and then bundle them up and sell them to investors. Thus, giving the original lender money to go back out and sell more mortgages. This is great in that it brings more available money back into the marketplace. The downside is that the original lender no longer has the risk of carrying that loan. So, therefore, criteria became quite lax for procuring loans.
This is why we are seeing so much trouble with the subprime market. Too many loans were made to people who could marginally afford a home. With interest rates rising so has many adjustable rate mortgages and this further pushed many more people into that group. They couldn’t afford the higher payments and especially with the addition or higher insurance rates & property taxes.
Because so many of these loans were heading towards default, that it why we are seeing a collapse in the subprime market. It used to be that you could find a loan for someone with credit scores of less than 580. Now, that the subprime market is drying up, it is difficult to find a loan for someone with a FICO score under 620.
This fueled a lot of the buying and selling that we saw over the past several years. This, in addition to the fact, that a lot of people as they saw the prices of real estate moving up so quickly wanted to get in on the action also. Unfortunately, a lot of these people should not have. Many used their available funds or even home equities in their primary residences to purchase second homes or rental properties. When they could no longer afford these properties, they tried to sell them, but found that they couldn’t at a profit.
Many also used the increased value of their homes as a sort of spending account. Since incomes were not increasing relative to the value of their property, they would take money out, utilizing home equities, and use this money to buy cars, trips, etc.
But, this had to stop and it did! We were finding more homes languishing on the market. The builders were still building at an expanded pace. Therefore, even more homes on the market. The statistics show that most of these builders made profits last year, but that is now changing. Many, if not most, have seen losses this year. Many builders have stopped building speculation homes.
The combination of all of the things that I’ve just written about has contributed to the glut of properties available for sale. And yes, has driven down the price of homes. If you purchased a home within the last two years, you will find it quite difficult to sell it now at a profit and in most cases breaking even, if you are lucky.
Yes, there are many more factors that have also contributed to our state of affairs, but this is to just give you a general overview. So, now to the title of this blog.
It is definitely a buyer’s market and will remain so for quite some time. Right now in the two counties that make up the majority of the Greater Orlando area, there are over 20K single-family homes, condos, townhomes & villas for sale. This, when in what might be considered a normal market, when there was much less than 1/3 of that number of available properties for sale.
Buyers have a wide selection of properties to look at & choose from. Never has it been greater & especially when you note that the builders are offering such great bargains. Some even $100K and more off of the selling price. Others offering discounts, closing incentives & even a Harley-Davidson in addition. I’ve recently seen a home that was almost 2000sf with a starting price of approximately $250K. And this home wasn’t in the boonies or even near to such, it was right in the metro area.
Now, to the sellers. Unfortunately, there are many that just have to sell. They have to move whether it be for a job transfer, familial reasons, health, etc. These people have no choice. What I’ve stated over and over for these people is that you have to show Price & Value. Your home has to be in tip-top shape. People do not want homes that they have to do work on. There are too many others out there & they will just go to the next one. People are not going to overpay for a property. And this is where it also comes in – sellers have to be realistic in their expectations and pricing. 2005 is a long time ago and has nothing to do with our present real estate market.
Some may read this and think that I am a pessimist. I am not by any means, or at least try not to be. I consider myself a realistic optimist. We are still selling homes, but granted, they are selling at levels that we saw in the late 1990’s and early 2000’s. There is over a 16-month supply of available homes on the market.
Real Estate is a great investment, but it has always been meant as a long-term investment. Not, the short-term one it was considered in the recent past. It is no longer the cash cow that we saw through the past several years. There is no real estate bubble that we are going to see burst. But at the same time, you are not going to see lenders utilizing the line-up & sign-up routine of the past for mortgages. The criteria for such has been tightened.
One of the things that quite concerns me is what is going to happen when Wall Street feels the effects of the subprime market. Are we going to be asked to bail them out as we have with property insurance companies, etc? I hope not, they took on the risk & that is where it should stay. It’s not the public’s responsibility to bail out all of these companies. We, as individuals, cannot afford that.
Just remember – Price & Value. If you can show that, you can sell your home.
Until next time – Marc It Sold!
Thursday, July 5, 2007
Friday, June 22, 2007
Beach Blog
There are a couple of things that I’ve been noticing about the real estate market that I wish to relay to you. But, before I get to that there are some miscellaneous meanderings that I wish to write about.
The many of you that know me, are aware of the fact that I try not to be a braggart. Yes, we all tend to do it at some time or another in our life. This is only human nature. I try to make it a point to not do so for the simple fact that I do not wish to put others ill at ease. So with that said…
Here I am where it all started – that is my blogging. I’m on a vacation of sorts in Ft. Lauderdale. Actually right now, I’m sitting on the veranda of the Atlantic Hotel, right across from the beach, drinking a Pina Colada. Yummy, it is!!
It always amazes me at what life throws at us. Or, maybe, I should say at what paths our lives take us. I’ve said this before, and must reiterate that I consider myself a very lucky and fortunate person. Yes, I’ve had my ups and downs just like the rest of us. I doubt if there is anyone that can say otherwise about themselves. The degrees to which vary and we may not be able to see that from our standpoint, but that is just it – it’s from our standpoint and perspective.
I’ve been planning on coming down to Fort Lauderdale for many weeks. This week before I came down I took my little girl, Nicci (Chihuahua) to the vet. Unfortunately, she came home with me, but I had to bury her. To say that this has upset me is an understatement. But, I have to remember that she had almost 14 good years and she was such a good girl & companion. She was my baby!
But getting back to what I was saying earlier, things occur & sometimes you have to wonder. Maybe there’s a connection and maybe there isn’t, but since that fateful day with Nicci, my phone has basically been ringing off of the hook with buyers & sellers.
The reason that I mention this is because there were a couple of items in the newspaper today that I will get to shortly. Additionally, I was talking with an associate of mine & she said the same thing about the buyers all of a sudden coming out of the woodwork.
Now, don’t get me wrong, the market is going to take quite a while to readjust itself. There is no doubt about this. But this obviously bodes well with somewhat a shift in the climate.
I received an email today from ORRA, the local realtor association, stating that the median price homes in the local market went up in May. Thirty year mortgages dropped slightly this week from an eleven month high of last week. But they are still under 7%. The Florida legislature has finalized what they are planning to do with property taxes & I think that the governor is signing such. There was also an Associated Press article stating that “The U. S. economy should expand modestly in coming months as a healthy job market continues to trump weakness in housing prices…”
Again, I must reiterate, it will take quite a while for the market to even out, but it does seem as if there are finally some changes in sight. We can only hope so.
Until next time – Marc It Sold!
The many of you that know me, are aware of the fact that I try not to be a braggart. Yes, we all tend to do it at some time or another in our life. This is only human nature. I try to make it a point to not do so for the simple fact that I do not wish to put others ill at ease. So with that said…
Here I am where it all started – that is my blogging. I’m on a vacation of sorts in Ft. Lauderdale. Actually right now, I’m sitting on the veranda of the Atlantic Hotel, right across from the beach, drinking a Pina Colada. Yummy, it is!!
It always amazes me at what life throws at us. Or, maybe, I should say at what paths our lives take us. I’ve said this before, and must reiterate that I consider myself a very lucky and fortunate person. Yes, I’ve had my ups and downs just like the rest of us. I doubt if there is anyone that can say otherwise about themselves. The degrees to which vary and we may not be able to see that from our standpoint, but that is just it – it’s from our standpoint and perspective.
I’ve been planning on coming down to Fort Lauderdale for many weeks. This week before I came down I took my little girl, Nicci (Chihuahua) to the vet. Unfortunately, she came home with me, but I had to bury her. To say that this has upset me is an understatement. But, I have to remember that she had almost 14 good years and she was such a good girl & companion. She was my baby!
But getting back to what I was saying earlier, things occur & sometimes you have to wonder. Maybe there’s a connection and maybe there isn’t, but since that fateful day with Nicci, my phone has basically been ringing off of the hook with buyers & sellers.
The reason that I mention this is because there were a couple of items in the newspaper today that I will get to shortly. Additionally, I was talking with an associate of mine & she said the same thing about the buyers all of a sudden coming out of the woodwork.
Now, don’t get me wrong, the market is going to take quite a while to readjust itself. There is no doubt about this. But this obviously bodes well with somewhat a shift in the climate.
I received an email today from ORRA, the local realtor association, stating that the median price homes in the local market went up in May. Thirty year mortgages dropped slightly this week from an eleven month high of last week. But they are still under 7%. The Florida legislature has finalized what they are planning to do with property taxes & I think that the governor is signing such. There was also an Associated Press article stating that “The U. S. economy should expand modestly in coming months as a healthy job market continues to trump weakness in housing prices…”
Again, I must reiterate, it will take quite a while for the market to even out, but it does seem as if there are finally some changes in sight. We can only hope so.
Until next time – Marc It Sold!
Wednesday, June 13, 2007
Property Insurance and a Little Bit about Taxes
Well, the Legislature has reconvened for a special session & as I may have stated previously, I’m very concerned that we will not see anything good come out of this. There are many reasons why I state this. Firstly, the proposed plan, which is somewhat different from what I’ve previously blogged about, is still inadequate. And there is obviously quite a bit of legislators that feel this way as well. Many of the legislators, including some Republicans, are quite miffed that this currently proposed plan was worked out basically behind closed doors. Marco Rubio, the House Speaker from Miami, stated basically that they have a choice of the proposed plan or no change to the current system. As I’ve stated before, it just seems that he looking to make a name for himself. He’s already proposed a couple of plans which did not merit anything more than a cursory notice.
It’s quite sad because the only victims here are the people of the State of Florida. This is true with the tax situation and what we’ll soon talk about, property insurance. But, before I go there, there is one major note that should be brought to your attention. The current proposed property tax seems to be only affording most of us a mediocre savings that would basically be obliterated within four to five years time. And as I’ve stated before, I have a major issue with our legislators just replacing one flawed system with an equally flawed system. What’s the purpose except for them to say “Look at what we’ve done for you!” and most likely not be in office when we have to repair that system. Go figure!
Anyway to Property Insurance and Citizens Property Insurance Corp, in particular. The long and short of this, and you may have read this in a previous blog of mine, Citizens was created by the Florida legislature basically to protect Floridians and offer policies to homeowners who could not buy property insurance elsewhere on the open market. Many insurers have left the state, especially in writing policies on property.
The problem here is that Citizens has been allowed to grow, recently, way beyond its proposed structure. Firstly, it was underfunded at the beginning and we’ve found ourselves having to bail it out twice already. We pay for this everytime we pay our insurance whether it be to Citizens or another carrier. At present, Citizens is being told that it has to rollback it’s rates to that of 2006. Sounds great to the consumer, but what happens if there is an unfortunate catastrophe in the State of Florida. Hum, let’s think! Oh, I know, we’ll be bailing Citizens out again. This has to stop! It is not fair to the people of this state to consistently bail this company out of bankruptcy.
Additionally, as I was previously alluding to, Citizens has been allowed to go way beyond it’s scope. They offer cheap insurance to basically irresponsible coastal developers. They build these large high-rise condos on the beach in areas that are prone to disasters. Does this make good business sense to anyone? Please let me know. Let me also mention, most carriers would not insure a project like this or, at the very least, at the rates that Citizens is charging these developers.
Let’s take this one step further, so they build a coastal high-rise. They sell these units and now the unit owners and the condo association need insurance. Since other carriers would probably not be interested in insuring this property in the first place, where do you think most of these people will wind up purchasing a policy from? You got it – Citizens. Do you possibly see a problem here?
The other problem is that people in the state’s interior will be paying for this mess and they do not deserve that responsibility. Our legislators need to take action and do it now! They need to be more responsible about the development of our coastlines. They need to be fiscally responsible to the people, not big business.
Please do not get me wrong. I am not a radical or subversive or whatever may come to mind in that respect. But, I do firmly believe if you have a problem or a broken system it needs to be repaired. Just as if you had a broken tooth, you’d go to the dentist. You just wouldn’t let it remain open and possibly abscess.
This brings me to another insurance matter that is being handled incorrectly also. It seems that the Legislature is planning on allowing our No-fault insurance for automobiles lapse when it becomes due in October. The reason behind this supposedly is that there is too much corruption in the fact of people abusing the system. Under the current system, you must carry at least $10K of Personal Injury Protection (PIP) coverage. Basically, the elimination of this will allow people to drive uninsured. This will only create a greater strain on us & also our hospitals. Yes, again the system needs to be fixed. It is definitely flawed and rank with fraud, but the elimination of it is not the correct answer. Deal with the fraud. Eliminate that, but not the whole concept.
Again, thank you for reading my rantings and ravings.
Until next time – Marc It Sold!
It’s quite sad because the only victims here are the people of the State of Florida. This is true with the tax situation and what we’ll soon talk about, property insurance. But, before I go there, there is one major note that should be brought to your attention. The current proposed property tax seems to be only affording most of us a mediocre savings that would basically be obliterated within four to five years time. And as I’ve stated before, I have a major issue with our legislators just replacing one flawed system with an equally flawed system. What’s the purpose except for them to say “Look at what we’ve done for you!” and most likely not be in office when we have to repair that system. Go figure!
Anyway to Property Insurance and Citizens Property Insurance Corp, in particular. The long and short of this, and you may have read this in a previous blog of mine, Citizens was created by the Florida legislature basically to protect Floridians and offer policies to homeowners who could not buy property insurance elsewhere on the open market. Many insurers have left the state, especially in writing policies on property.
The problem here is that Citizens has been allowed to grow, recently, way beyond its proposed structure. Firstly, it was underfunded at the beginning and we’ve found ourselves having to bail it out twice already. We pay for this everytime we pay our insurance whether it be to Citizens or another carrier. At present, Citizens is being told that it has to rollback it’s rates to that of 2006. Sounds great to the consumer, but what happens if there is an unfortunate catastrophe in the State of Florida. Hum, let’s think! Oh, I know, we’ll be bailing Citizens out again. This has to stop! It is not fair to the people of this state to consistently bail this company out of bankruptcy.
Additionally, as I was previously alluding to, Citizens has been allowed to go way beyond it’s scope. They offer cheap insurance to basically irresponsible coastal developers. They build these large high-rise condos on the beach in areas that are prone to disasters. Does this make good business sense to anyone? Please let me know. Let me also mention, most carriers would not insure a project like this or, at the very least, at the rates that Citizens is charging these developers.
Let’s take this one step further, so they build a coastal high-rise. They sell these units and now the unit owners and the condo association need insurance. Since other carriers would probably not be interested in insuring this property in the first place, where do you think most of these people will wind up purchasing a policy from? You got it – Citizens. Do you possibly see a problem here?
The other problem is that people in the state’s interior will be paying for this mess and they do not deserve that responsibility. Our legislators need to take action and do it now! They need to be more responsible about the development of our coastlines. They need to be fiscally responsible to the people, not big business.
Please do not get me wrong. I am not a radical or subversive or whatever may come to mind in that respect. But, I do firmly believe if you have a problem or a broken system it needs to be repaired. Just as if you had a broken tooth, you’d go to the dentist. You just wouldn’t let it remain open and possibly abscess.
This brings me to another insurance matter that is being handled incorrectly also. It seems that the Legislature is planning on allowing our No-fault insurance for automobiles lapse when it becomes due in October. The reason behind this supposedly is that there is too much corruption in the fact of people abusing the system. Under the current system, you must carry at least $10K of Personal Injury Protection (PIP) coverage. Basically, the elimination of this will allow people to drive uninsured. This will only create a greater strain on us & also our hospitals. Yes, again the system needs to be fixed. It is definitely flawed and rank with fraud, but the elimination of it is not the correct answer. Deal with the fraud. Eliminate that, but not the whole concept.
Again, thank you for reading my rantings and ravings.
Until next time – Marc It Sold!
Wednesday, June 6, 2007
Property Taxes – The Saga Continues
I’ve been very concerned about where we are going with the property tax reform, as I am sure most of you in Florida are as well. Last evening there was a Town Hall Meeting in Apopka with Rep. Bryan Nelson. The plan that was revealed was interesting, but I am still very skeptical.
My first order of skeptism has to do with the implementation date. Previously it had been talked about by members of the Florida legislature that they would ask for a special election in August of this year. Both Mr. Nelson and an article in the Orlando Sentinel have stated that we will not vote on this until January 29, 2008, the same time that we vote for the Presidential Primary. Now here is one place where it gets a little conflicting. Rep. Nelson stated that we would not see any property tax abatement until they become due in November ’08, yet the Sentinel stated that it is understood that we will see immediate cuts this year.
Well, if we are going to vote until January, they are not going to institute this tax reform retroactively. Can you imagine the mess that this will make?
Anyway, it gets even more interesting. OK, so we know and understand that Save Our Homes, albeit even though it was full of good intentions, is a flawed system that needs to be changed. Well, this is what they are planning on doing. Presently, we take the assessed value of our home, subtract the exempt value to give you the taxable value and multiply that times the millage rate that is set by the city and county commissioners.
Under the new plan, without SOH, you would take the Just Market Value (not sales price or market value as determined on the open market) and multiply that by 20% to get to your taxable value for homes of under $300K. Therefore, you would be receiving an 80% exemption. For homes valued from $300K – 1M, the exemption would be 70%. Personally, I think that this is too high going up to $1M. Unfortunately, we know that they will be appeasing a lot of well-to-do people with special interests, but we’ll get to that later.
Now, there is another twist, this will not pertain to the education tax that we currently pay. That will still be worked under the current program because they do not want education to be affected. While I understand this, that only makes the system convoluted, so now we are going to have two taxing systems.
Additionally, if you have greater savings under the current plan, than you will be allowed to stay with the Save Our Homes, but the rate would be increased from the current ceiling of 3% to 5-7%.
Are you confused yet? It just seems that we are taking one flawed system and replacing with another flawed system. The Orange County Property Appraiser was at the meeting, I had wanted to ask him what the cost would be for his department to implement this new system.
The property appraiser stated that the loss in revenue to Orange County would amount to approximately $73M. Yet, the Orlando Sentinel stated today that we are talking twice that figure. This is very disconcerting. Were we just being fed information that might appease us? How can there be so much disparity?
They did show where the cuts would come from in general terms. There was, of course, some from fire & police, but the major portion was just lumped in a general category for programs. Unfortunately, this means that the programs that are really needed are going to be cut or totally eliminated. According to the Sentinel, it appears that the cuts will come from health care, after school programs, etc.
Being on the Board of a not-for-profit health care, I am very concerned that we are going to further push an already stretched segment of the health care industry. There have already been cuts on the federal and state levels as to reimbursement, etc. Health care clinics serve all, but are a main source for the working poor and those with no insurance. A further cut in funding will only force these centers to eliminate some services, cut hours or even worse close much needed centers. This will only put a greater burden on our hospital emergency rooms which is where these people would be forced to go for medical care.
Let’s get real, the special interests need to be taken care of! So, again the people that are in the most need will be the ones that will have the least benefit & relief.
When you really come down to the numbers, it’s again the ones that have are going to get more of a benefit than the have-nots. This is definitely a shame.
There are too many topics that come to mind that I would like to touch on, but don’t’ want to be any more long-winded than I’m presently. So, hopefully, within in the next week, I’ll be writing a little more about Property Insurance and they way our Government works. It is time for some changes to be made. The system is broken and needs to be fixed – not mended. And the reality of all this, is that we are the victims, we are paying for it all.
Until next time – Marc It Sold!
My first order of skeptism has to do with the implementation date. Previously it had been talked about by members of the Florida legislature that they would ask for a special election in August of this year. Both Mr. Nelson and an article in the Orlando Sentinel have stated that we will not vote on this until January 29, 2008, the same time that we vote for the Presidential Primary. Now here is one place where it gets a little conflicting. Rep. Nelson stated that we would not see any property tax abatement until they become due in November ’08, yet the Sentinel stated that it is understood that we will see immediate cuts this year.
Well, if we are going to vote until January, they are not going to institute this tax reform retroactively. Can you imagine the mess that this will make?
Anyway, it gets even more interesting. OK, so we know and understand that Save Our Homes, albeit even though it was full of good intentions, is a flawed system that needs to be changed. Well, this is what they are planning on doing. Presently, we take the assessed value of our home, subtract the exempt value to give you the taxable value and multiply that times the millage rate that is set by the city and county commissioners.
Under the new plan, without SOH, you would take the Just Market Value (not sales price or market value as determined on the open market) and multiply that by 20% to get to your taxable value for homes of under $300K. Therefore, you would be receiving an 80% exemption. For homes valued from $300K – 1M, the exemption would be 70%. Personally, I think that this is too high going up to $1M. Unfortunately, we know that they will be appeasing a lot of well-to-do people with special interests, but we’ll get to that later.
Now, there is another twist, this will not pertain to the education tax that we currently pay. That will still be worked under the current program because they do not want education to be affected. While I understand this, that only makes the system convoluted, so now we are going to have two taxing systems.
Additionally, if you have greater savings under the current plan, than you will be allowed to stay with the Save Our Homes, but the rate would be increased from the current ceiling of 3% to 5-7%.
Are you confused yet? It just seems that we are taking one flawed system and replacing with another flawed system. The Orange County Property Appraiser was at the meeting, I had wanted to ask him what the cost would be for his department to implement this new system.
The property appraiser stated that the loss in revenue to Orange County would amount to approximately $73M. Yet, the Orlando Sentinel stated today that we are talking twice that figure. This is very disconcerting. Were we just being fed information that might appease us? How can there be so much disparity?
They did show where the cuts would come from in general terms. There was, of course, some from fire & police, but the major portion was just lumped in a general category for programs. Unfortunately, this means that the programs that are really needed are going to be cut or totally eliminated. According to the Sentinel, it appears that the cuts will come from health care, after school programs, etc.
Being on the Board of a not-for-profit health care, I am very concerned that we are going to further push an already stretched segment of the health care industry. There have already been cuts on the federal and state levels as to reimbursement, etc. Health care clinics serve all, but are a main source for the working poor and those with no insurance. A further cut in funding will only force these centers to eliminate some services, cut hours or even worse close much needed centers. This will only put a greater burden on our hospital emergency rooms which is where these people would be forced to go for medical care.
Let’s get real, the special interests need to be taken care of! So, again the people that are in the most need will be the ones that will have the least benefit & relief.
When you really come down to the numbers, it’s again the ones that have are going to get more of a benefit than the have-nots. This is definitely a shame.
There are too many topics that come to mind that I would like to touch on, but don’t’ want to be any more long-winded than I’m presently. So, hopefully, within in the next week, I’ll be writing a little more about Property Insurance and they way our Government works. It is time for some changes to be made. The system is broken and needs to be fixed – not mended. And the reality of all this, is that we are the victims, we are paying for it all.
Until next time – Marc It Sold!
Friday, May 18, 2007
Property Insurance – Our Nemesis II
Unfortunately here, in the State of Florida, we have a couple of items that are creating havoc with our economy and even forcing some into foreclosure. But that is another story and those people need to take blame for getting into something that they shouldn’t have in the first place.
Anyway, back to property insurance. Here’s an example. I know some people in western Oregon. They have a home of about 4000sf on many acres with out buildings, etc. Their homeowners insurance runs them $1000 a year plus another $500 for earthquake insurance. I on the other hand have an approximately 1500sf home on about 1/3 or an acre and am paying approximately the same for my homeowners insurance.
I need to backtrack a little to a previous post where I wrote about insurance companies and actuaries & how they had to know what they were getting into and the rates that they have been charging. Well, I’ve come to learn a little more about the history of homeowners insurance in Florida.
Insurance companies competed by keeping their rates low & then came Hurricane Andrew. After that catastrophe, most had huge losses but 11 of them went bankrupt. So the remaining companies started raising rates to match their level of risk & cancelling policy renewals.
Then our government decided that we needed to do something about this and passed laws to keep our insurance rates down. And then, finally, they created Citizens Property Insurance. This was to be the insurer of last resort. Remember this as we come back to that in a little while.
Well, lo & behold, then came the hurricanes of ’04 & ’05. Unfortunately, this bankrupt some companies as well. Oh yes, I forgot to mention, one of those companies was Citizens Property Insurance. But, don’t worry, we got taxed to bail it out. It even states on everyone’s policies in the State of Florida something to the effect of “Citizens Property Insurance Assessment, Florida Catastrophe Fund Assessment, Citizen’s Recoupment Fee,” etc.
Now, our Governor is asking that these insurance companies pass the buck or I should say the bill along to their customers outside the state of Florida. Additionally, they are allowing Citizens to grow and they were allowing them to raise their rates as well, but then enacted legislation to freeze their rates. They were giving Citizens the go ahead to compete head on with other insurers so they were no longer the insurer of last resort, when you couldn’t find insurance elsewhere.
So now, Citizens has basically gone belly up twice and, as I’ve stated, we are paying for this. It may sound good that there is an insurer out there with affordable rates. But what’s ultimately going to happen is that they are going to grow into probably the largest insurer in the State of Florida and when another unfortunate catastrophe hits this state we are all going to be left with the bill. It’s just a matter of time before Citizens Property Insurance goes bankrupt again.
Citizens Property Insurance is a problem that needs to be addressed quickly!
Until next time – Marc It Sold!
Anyway, back to property insurance. Here’s an example. I know some people in western Oregon. They have a home of about 4000sf on many acres with out buildings, etc. Their homeowners insurance runs them $1000 a year plus another $500 for earthquake insurance. I on the other hand have an approximately 1500sf home on about 1/3 or an acre and am paying approximately the same for my homeowners insurance.
I need to backtrack a little to a previous post where I wrote about insurance companies and actuaries & how they had to know what they were getting into and the rates that they have been charging. Well, I’ve come to learn a little more about the history of homeowners insurance in Florida.
Insurance companies competed by keeping their rates low & then came Hurricane Andrew. After that catastrophe, most had huge losses but 11 of them went bankrupt. So the remaining companies started raising rates to match their level of risk & cancelling policy renewals.
Then our government decided that we needed to do something about this and passed laws to keep our insurance rates down. And then, finally, they created Citizens Property Insurance. This was to be the insurer of last resort. Remember this as we come back to that in a little while.
Well, lo & behold, then came the hurricanes of ’04 & ’05. Unfortunately, this bankrupt some companies as well. Oh yes, I forgot to mention, one of those companies was Citizens Property Insurance. But, don’t worry, we got taxed to bail it out. It even states on everyone’s policies in the State of Florida something to the effect of “Citizens Property Insurance Assessment, Florida Catastrophe Fund Assessment, Citizen’s Recoupment Fee,” etc.
Now, our Governor is asking that these insurance companies pass the buck or I should say the bill along to their customers outside the state of Florida. Additionally, they are allowing Citizens to grow and they were allowing them to raise their rates as well, but then enacted legislation to freeze their rates. They were giving Citizens the go ahead to compete head on with other insurers so they were no longer the insurer of last resort, when you couldn’t find insurance elsewhere.
So now, Citizens has basically gone belly up twice and, as I’ve stated, we are paying for this. It may sound good that there is an insurer out there with affordable rates. But what’s ultimately going to happen is that they are going to grow into probably the largest insurer in the State of Florida and when another unfortunate catastrophe hits this state we are all going to be left with the bill. It’s just a matter of time before Citizens Property Insurance goes bankrupt again.
Citizens Property Insurance is a problem that needs to be addressed quickly!
Until next time – Marc It Sold!
Friday, May 11, 2007
Property Taxes – Our Nemesis! – con’t
I was actually planning on writing about our other nemesis – Homeowners Insurance, but today’s Orlando Sentinel had much ado about property taxes and Marco Rubio’s new plan.
It seems that State Rep. Rubio’s previous plan was too drastic for many in the Senate, if not the House, to swallow. As you may have read in my previous posts, I have been a strong opponent to his plan. His new plan just seems to be a rip off of the one I wrote about yesterday, the one that was proposed by David Simmons of Maitland.
Unfortunately, Rubio’s new plan again goes too far. He is proposing that we pay property taxes on only 20% of the first $300K of the assessed value; 30% for the next $700K; and, then 70% of any assessed value over $1M.
This equates to a home with an assessed value of $300K, would only have a taxable value of $60K. As good as this sounds & what it will mean to our pocketbooks, this is absolutely outrageous – totally ridiculous. I don’t know if this man is trying to just make a name for himself in the short-term or what. My mind is just boggled thinking of the repercussions from a move like this. Yes, I agree that we need property tax reform, but come on guys, let’s use our heads.
Can you imagine the catastrophic cuts that will have to occur on the city & county level if something like this passes. Granted, I agree that there needs to be some trimming & more accountability, but this is not the way to go about it. With cuts like this it has to affect our basic services, nevermind what it could do to education.
Yes, a tax cut will finally get rid of Save Our Homes & at least we are seeing some that might be more equitable. Yes, a tax cut will also allow some long-term homeowners to possibly move who otherwise may have felt trapped because they might have been hit with a huge tax increase.
If Rubio’s plan or something similar with drastic tax cuts comes to fruition, all we are going to see is an increase in taxes somewhere else. Again, this is absolutely ridiculous. And the fact of the matter is that we will most likely pay more in the long run.
Hmm, so what purpose does this really serve except for someone getting their name in lights. I hope that I am wrong about Mr. Rubio, but all the signs point otherwise.
I look forward to seeing a property tax cut – as a homeowner & as a realtor®. I don’t like what’s happened with property taxes. Tax relief will surely help fuel more housing transactions. I think that it would surely help turn around a market that we are seeing flounder. I know that it would surely bring more buyers out of the woodwork. But again, our lawmakers have to be realistic.
Until next time – Marc It Sold!
It seems that State Rep. Rubio’s previous plan was too drastic for many in the Senate, if not the House, to swallow. As you may have read in my previous posts, I have been a strong opponent to his plan. His new plan just seems to be a rip off of the one I wrote about yesterday, the one that was proposed by David Simmons of Maitland.
Unfortunately, Rubio’s new plan again goes too far. He is proposing that we pay property taxes on only 20% of the first $300K of the assessed value; 30% for the next $700K; and, then 70% of any assessed value over $1M.
This equates to a home with an assessed value of $300K, would only have a taxable value of $60K. As good as this sounds & what it will mean to our pocketbooks, this is absolutely outrageous – totally ridiculous. I don’t know if this man is trying to just make a name for himself in the short-term or what. My mind is just boggled thinking of the repercussions from a move like this. Yes, I agree that we need property tax reform, but come on guys, let’s use our heads.
Can you imagine the catastrophic cuts that will have to occur on the city & county level if something like this passes. Granted, I agree that there needs to be some trimming & more accountability, but this is not the way to go about it. With cuts like this it has to affect our basic services, nevermind what it could do to education.
Yes, a tax cut will finally get rid of Save Our Homes & at least we are seeing some that might be more equitable. Yes, a tax cut will also allow some long-term homeowners to possibly move who otherwise may have felt trapped because they might have been hit with a huge tax increase.
If Rubio’s plan or something similar with drastic tax cuts comes to fruition, all we are going to see is an increase in taxes somewhere else. Again, this is absolutely ridiculous. And the fact of the matter is that we will most likely pay more in the long run.
Hmm, so what purpose does this really serve except for someone getting their name in lights. I hope that I am wrong about Mr. Rubio, but all the signs point otherwise.
I look forward to seeing a property tax cut – as a homeowner & as a realtor®. I don’t like what’s happened with property taxes. Tax relief will surely help fuel more housing transactions. I think that it would surely help turn around a market that we are seeing flounder. I know that it would surely bring more buyers out of the woodwork. But again, our lawmakers have to be realistic.
Until next time – Marc It Sold!
Thursday, May 10, 2007
Property Taxes – Our Nemesis!
Finally someone has come up with a tax-cut proposal that is somewhat realistic. David Simmons, a state representative from Maitland, has proposed a property tax plan that will offer big tax cuts, but asks homeowners of larger more expensive homes to get a lesser tax cut percentage. More in line with how income taxes work. Basically using a sliding scale approach.
Here’s how this would work. All homeowners would get a tax break of 65% on the first $100K of assessed value of their home. For homes valued $100-200K, these people would receive a 55% tax cut on the second $100K of the homes taxable value. This would be further reduced to a 45% tax cut on the next $100K of taxable value and so forth with homes valued over $600K receiving a 5% tax break.
Breaking this down, this would mean that a home valued at $200K (remember we are talking assessed value not the market value of a property) would pay taxes on approximately 40% of the homes value, while the owner of a $500K home would pay on approximately 56% of the homes value.
This is much more reasonable and differs greatly from Marco Rubio’s plan which is to eliminate the property tax altogether on your primary residence & to raise the sales-tax. This would have created a major shortfall in revenue for local and county governments. Fiscally, I could never see this work in the long-run.
As some of you have read my previous posts, my main concern with all of the tax proposals out there was that they were offering to fix a flawed system with an equally flawed system. Yes, these politicians could all say, “Look what we’ve done for you.” That would only be short-lived.
What are the implications of creating these revenue shortfalls? Well, I wouldn’t be surprised if we would see a property tax again in the near future.
Granted, I am not saying that the tax cut plan proposed by David Simmons is flawless, but it seems to be the most realistic & best conceived of all that have been offered.
Until next time – MARC IT SOLD!
Here’s how this would work. All homeowners would get a tax break of 65% on the first $100K of assessed value of their home. For homes valued $100-200K, these people would receive a 55% tax cut on the second $100K of the homes taxable value. This would be further reduced to a 45% tax cut on the next $100K of taxable value and so forth with homes valued over $600K receiving a 5% tax break.
Breaking this down, this would mean that a home valued at $200K (remember we are talking assessed value not the market value of a property) would pay taxes on approximately 40% of the homes value, while the owner of a $500K home would pay on approximately 56% of the homes value.
This is much more reasonable and differs greatly from Marco Rubio’s plan which is to eliminate the property tax altogether on your primary residence & to raise the sales-tax. This would have created a major shortfall in revenue for local and county governments. Fiscally, I could never see this work in the long-run.
As some of you have read my previous posts, my main concern with all of the tax proposals out there was that they were offering to fix a flawed system with an equally flawed system. Yes, these politicians could all say, “Look what we’ve done for you.” That would only be short-lived.
What are the implications of creating these revenue shortfalls? Well, I wouldn’t be surprised if we would see a property tax again in the near future.
Granted, I am not saying that the tax cut plan proposed by David Simmons is flawless, but it seems to be the most realistic & best conceived of all that have been offered.
Until next time – MARC IT SOLD!
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