Confused About The Market?

Confused about the direction of the housing market? It's no wonder, everyone is buzzing about the changing real estate market. The future may not be as gloomy as feared.

BusinessWeek.com asked economists at leading real estate research firms to provide their outlooks and the less-than-popluar consensus: Home prices will continue to fall in some markets, and the over all rate of appreciation will slow in most places. Declines in homes sales, directly influencing price trends, will cause price decreases again in 2008. Foreclosures will increase and those struggling to hold onto their homes will have less net worth as these homes lose value. Housing starts may see double-digit depreciation, the sharpest decline since 1991, the worst year for housing starts on record.

Grim as that might sound, there are some bright spots. Nationwide, home prices will either be level or up slightly in 2007, with many large markets seeing small increases. While new home sales will be down for the year, existing home sales will also be stable. And housing starts won't see the drastic decline they did in the early '90s or early '80s.

We are in a self-cleaning market and keeping in mind that expectations are somewhat lower this year there is still good reason for optimism. The ongoing market correction will make the dream of buying a home a reality for many who could not afford the rapid cost of home price increases.

Speculation on prices appreciating as much as 50% as opposed to the average annual rate of 10% were due to buyers and sellers taking advantage of low interest rates and good economic conditions. Property investors drove prices to new heights the first half of the decade to flip homes for profit. Then as interest rates rose and the gap between income and housing costs widened, homebuyers never materialized as expected. Investors were forced to dump their property, flooding many places with homes for sale and forcing prices to a more realistic level. Home price trends usually tend to lag 9 to 12 months behind sales trends and predictions indicate prices will be weakest in 2008 and rebound in 2009.

The real estate market is softening and more homes are taking longer to sell. However, the good news is that those two factors and due to interest rates remaining at historically low levels brings the dream of owning a home with in reach for many home buyers.

http://images.businessweek.com/ss/06/12/1212_realestate07/source/10

Florida Issues

PROPERTY TAXES:

Florida is looking for a way to lower property taxes. The House proposal would roll back local property tax rates, and go to voters with a proposal to change the constitution to eliminate real estate property taxes altogether. The House also wants to cap how much incoming local tax revenue can grow. To help cities and counties make up the lost revenue, the House also is considering a sales tax increase from 6 percent to 8.5 percent.

Gov. Charlie Crist has proposed extending the Save Our Homes Amendment, which caps property tax growth at 3 percent for homesteaded property, to business and rental property.
Crist has also proposed doubling the $25,000 homestead exemption for owner-occupied homes to $50,000 before taxes are due.
Crist also wants to let homeowners keep their Save Our Homes cap when they move. Currently, the cap isn't portable, so if homeowners move, they can see their property taxes jump.

INSURANCE:

Lawmakers already tackled a big piece of the property insurance problem, passing a wide-ranging law in a January special session that many hope will lower rates.
Legislators may consider outlawing the Florida-only subsidiaries of national insurance companies that base their rates only on Florida losses while their parent companies make large profits.
Lawmakers may look at efforts to encourage more mitigation of older homes and buildings, hoping to reduce overall hurricane damage.

http://www.miamiherald.com/775/story/22198.html .htm