This blog is an avenue to relate information and sites that may be of interest to you in regard to real estate. There will be miscellaneous meanderings about me and opinions in regard to Central Florida and Orlando homes for sale and real estate in particular.
The program utilizing the Government’s $8K tax credit as a downpayment became effective July 1. Unfortunately, there is no money as they are relying on current home sales’ Doc Stamp taxes to fund the necessary reserves.
The Florida Homebuyer Opportunity Program’s (FLHOP) $8,000 tax credit is a bridge loan (short-term loan) administered by the state’s local State Housing Initiatives Partnership (SHIP) program.
Florida’s lawmakers are offering this loan to first-time homebuyers eligible for the federal government’s $8,000 tax credit utilizing current programs. But unfortunately, the rules for the SHIP and FLHOP programs differ and this is making for some issues. Because of such, some of the state’s local SHIP offices may not be ready come the first week of Aug., the likely kick off date due to collections.
The legislation does not stipulate an education requirement as there are currently with other SHIP programs, but the primary lender may require such.
In some instances these monies can be used as part of the required downpayment, but “those who access through any other FHA-approved lender must (as with any standard FHA loan), provide the 3.5% themselves.”
The Florida Legislature approved a budget in which they are providing $30.1M to downpayment assistance programs allowing people to use the Federal $8K tax credit for a downpayment.For 5 months as of July 1, those qualifying for the First Time Homebuyers Tax Credit, will be able to apply for downpayment assistance through their local county housing authority to be able to utilize the $8K tax credit for a downpayment at closing.In return, this amount will be repaid when the borrower receives their tax refund.
This is surely a win-win situation for all.It will definitely help many of those who are limited in purchasing a home because of the lack of an adequate downpayment.Hopefully, this will also further spur on what I’m seeing as an improving economy and especially consumer confidence.
All of the details have not been worked out, but I would suggest that you contact your local housing authority as quickly as possible.Theoretically, this will help over 3000 first time homebuyers.Now to the federal guidelines for the First-Time Homebuyer Tax Credit:
To qualify, the home must be your principal residence (therefore, neither vacation homes nor rental properties)
purchased prior to December 9, 2009.
To be considered a first-time homebuyer, you may not have owned a home for the three years prior to the date you closed on this home.
The home must cost at least $80,000 to receive the full tax credit, otherwise the credit will be prorated to 10% of the purchase price.
To qualify for the full tax credit, your Adjusted Gross Income (according to your 1040 Form Tax Return) must be below $75K for single individuals and $150K for married couples.Reduced amounts are available above those limits, but are phased out at $95K for singles & $170K for couples.
There is only one restriction and that is that you can not sell the home for three years otherwise you will have to repay the tax credit.
Bear Lake Woods is an approximately 100 single-family home community located in the Seminole County portion of Apopka built in the mid ‘90’s with the majority of the homes in the 2000sf range.
Bear Lake Woods is a great place to live!
For information on Apopka and Seminole and Orange County real estate and Apopka and Seminole and Orange County homes for sale in addition to Apopka and Seminole and Orange County relocation contact Marc Grossman, your Apopka and Seminole & Orange County Realtor @ 407-463-1034. Additional information is available for SeminoleCounty real estate, Orange County real estate, West Volusia County and South Lake County.
To learn more about Marc and the services he has to offer, visit his website.
Posted on February 9, 2008 by Marc Grossman in Mortgages
First a little history. The Federal Reserve System (commonly referred to as The Fed) is the central banking system of the US and is made up of 12 regional banks. The Fed manages the nation’s money supply via its use of monetary policy. This refers to The Feds ability to influence the availability of money and credit which affects interest rates and therefore the economy.
Are we good so far? For our purposes here we are going to have a limited discussion and only touch upon one area of the monetary policies.
Banks are required by The Fed to have a certain portion of the total value of their demand accounts on hand. If a bank falls below this level, it can borrow the funds from another bank that has a surplus with The Fed. These are typically overnight loans. The interest rate on these borrowed funds is determined by the banks themselves but is influenced by The Fed via the Federal Funds Rate. These are more closely aligned with short term interest rates. This is the rate that we’ve been hearing so much about in the news. It must be understand that this is a target rate set by The Fed. The rate that is actually paid by one bank to another is negotiated between the two parties. This has nothing to do with mortgage rates.
Now we come to mortgage rates. The Fed DOES NOT control mortgage rates. Mortgage rates are market determined and are on the long term end of the interest rate spectrum. These are generally determined by the bond market. It’s a financial market where debt securities are bought and sold. And this brings us to Mortgage Backed Securities. You may not have heard of these specifically, but you’ve most likely heard of Fannie Mae, Freddie Mac and to a lesser extent Ginnie Mae. Basically what they do is package many mortgages together and issue them as MBS’s. In order to get investors to buy these, they must pay rates of interest that are competitive with alternative interest-paying investments such as Treasury bonds. There is a correlation between mortgage rates and long term interest rates. Long-term rates are governed by the overall health of the economy, and the expectations of future growth.
As you can see one is long term whereas the other is short term. So when you hear that The Fed cut the rate, you can not always expect an equal and immediate change in the mortgage rate. In fact, in many cases the opposite has occurred.
For information on Central Florida, Orange County and Seminole County real estate and Central Florida, Orange County and Seminole County homes for sale in addition to Central Florida, Orange County and Seminole County relocation contact Marc Grossman, your Central Florida, Orange County and Seminole County Realtor @ 407-463-1034. Additional information is available for Seminole County real estate, Orange County real estate, West Volusia County and South Lake County.
To learn more about Marc and the services he has to offer, visit his profile & website.
The article was in regard to John Vogel, Jr’s. plan to not only solve the problem that we’re facing but to go one step further.
The plan is the best thing that I’ve read so far since we’ve been faced with this dilemma, but I see one major flaw. Let’s first look at what the situation is. According to Mr. Vogel, “Two million homeowners are in danger of losing their homes” via foreclosure. What I am understanding is that he is proposing that the federal government administer a program that would refinance these properties facing foreclosure with a fixed-rate mortgage interest of 3.5%. The homes would be assessed at 80% of their current value and the homeowner in concession for participating in this program would give up any future profit from the home’s appreciation.
The latter part is what is an issue with me. Yes, I do believe that for the help received the homeowner should pay in one form or another. But this then leads to the question, What incentive is there for the homeowner to keep up the property? I don’t see many except for the homeowner to be able to keep the home and not risk foreclosure at this point in time and they would recoup their investment at sale.
The problem that I’m presently seeing is that many homeowners are willing to just walk away from their homes without regard to the financial and credit implications of a foreclosure. I’ve spoken with two people this week that are planning on such. I’ve even talked to them in regard to a Deed In Lieu of Foreclosure. One was possibly interested, the other didn’t care. I’m sure what I’m seeing is not an isolated incidence.
I think this program has some great merit and is the best that I’ve come across so far, but I think we also need to possibly go one step further and maybe allow the homeowner to share in the profits at sale. Let’s say limit it on a sliding scale depending on the house value, etc. or even just a flat percentage of the profits.
One point that I haven’t mentioned so far is that the home property in question would be entered into a pool of affordable housing. Now some of these homes will most likely fit that criteria, I don’t see homes in the upper price ranges fitting such.
I do agree with his opinion that a program such as this will free up capital. I further believe that it would increase consumer confidence and help propel the real estate market.
At the same time I also have a question if government intervention is the right answer. Yes, I can the benefits as written above. But the main question that comes to mind is, Will the lesson be learned? I’m afraid to say that even though it will by many, there will be many more that won’t learn the lesson and will continue with the attitude – well they bailed me out once, they’ll do it again. I don’t think that this is far-fetched.
But at least it is a plan and a feasible one at that.
For more information on Central Florida and Orlando real estate and Central Florida and Orlando homes for sale in addition to Central Florida and Orlando relocation contact Marc Grossman, your Central Florida Realtor @ 407-463-1034. Additional information is available for Seminole County real estate, Orange County real estate, West Volusia County and South Lake County.
To learn more about Marc and the services he has to offer, visit his profile & website.
Yes, you heard me correctly. Now is an excellent time to purchase that Central Florida home that you’ve been dreaming about! You don’t believe me, well then read on.
If you look historically, you will note that the real estate market is cyclical, but this can also be said of many facets of our society. Check the relationship of recession and inflation in the basic economic cycle. I’m not going to go into that for this article, but you should be able to see my point. One more point, think of a fad, any fad, and you will realize that they as well are cyclical. OK, so onward.
Today, December’s statistics for Monthly Sales and Inventory were published by ORRA (Orlando Regional Realtor Association). Now, while the number of homes being sold in the past month is not equivalent to the sales records that we’ve seen in the past several years – homes are being bought and sold everyday!
We are so very lucky to live in the type of democracy that we do. We have what some may call a Supply and Demand Democracy, whereas the simple aspects of supply and demand control the market and price. Yes, there may be other external forces, but we are just dealing in the basic concept here. No offense, but this is just simple Economics 101. There is no reason to further complicate the matter.
The one main issue that we are experiencing is that the inventory levels are comparatively quite high, but they have been showing a downward trend over the last couple of months. This is a very good sign and will hopefully continue this trend.
OK, I’m sure that some of you are thinking, so what about the subprime debacle that I keep on hearing and reading about in the news. This needs to be put into perspective. According to some of the many articles that I’ve read, the subprime mortgages represent only a quarter of all loans procured. How about the other 75% of the conventional, FHA and other loans that are supposedly performing well? And there have been an extraordinary amount of loans that have been written over the past several years.
We all saw the run up in sales and prices. There was no way that this could have been sustainable for an extended period of time. Yes, the median sales price has dropped as has the average list and sales prices as well. But they are still above the levels of 2½ years ago while this so-called run up was going on.
If you bought your home 3 years ago December in Central Florida utilizing the average sales price, you would have seen an 18½% increase over that period of time. And that translates to over $50K. That is not chump change in any way whatsoever. If you’ve read my past posts, you will note that I’ve stated time and time again, that real estate is not now nor has it ever been a short term investment.
Not all areas of the country are experiencing a downturn in prices. In many areas of the country just the opposite is happening.
I’m not going to sit here and blame the media totally for this negativity. Yes, we know that there are only a few major media conglomerates and they are trying to shore up revenues on all fronts and we know that sensationalism sells. But I also think a good part of it is that they do not understand real estate as well as a professional realtor does. Don’t underestimate your realtor’s knowledge.
In 2005, we were seeing monthly year over increases in the median price of homes of almost 35+% fairly regularly. In 2007, the largest decrease we saw was a little over 10% with the majority of months showing a much less than 4% decrease in year over median price.
We are very lucky to live in Central Florida and the Greater Orlando area. Our region has been for many decades been a destination area. This has helped us greatly. This region is the best performing region in the state of Florida because of such.
There are some great values out there and with interest rates relatively low – This is a great time to buy that dream home!
For more information on Central Florida and Orlando real estate and Central Florida and Orlando homes for sale in addition to Central Florida and Orlando relocation contact Marc Grossman, your Central Florida Realtor @ 407-463-1034. Additional information is available for Seminole County real estate, Orange County real estate, West Volusia County and South Lake County.
To learn more about Marc and the services he has to offer, visit his profile & website.
OK, let’s start with a brief understanding of the mortgage industry. You buy a property and obtain a mortgage. The lender then packages that loan with many others and then they are sold to investors. Simple, right! OK, so now we come to the mortgage debacle that we are seeing in the subprime market and we’ve all read about the bailout that President Bush is proposing.
So now let’s get back to our investor. They bought a package of loans at a certain rate of return expected. But if the rates are frozen, then this investor is going to get a lower rate of return on his money. This is akin to you having a Certificate of Deposit and the bank suddenly telling you that they are going to give you less interest because they’ve run into a bad stretch there for a while. I don’t think we need to discuss how you’d feel about that.
But let’s go back to our investor again. So, he’s told that he’s going to be making less on the securities that he bought. Not only that, the government is stepping and is going to preclude all of these lawsuits that would have been raised. You have to understand – when the investor bought those securities they basically had a contract which has now been broken.
So let’s take this to the next step, when this happens to these investors – well let’s just put it like this – do you think that they will be investing any more of their money into these Mortgage Backed Securities (MBS’s)? No, and this further leads to the mortgage markets further drying up.
The fact is there will not really be that many homeowners who will benefit from this. Now, don’t get me wrong, I do not wish to see anyone lose their home for any reason and that includes foreclosure. Oh yes, one other factor, all this is only a voluntary measure for the mortgage servicer (not even the original lender in most instances) to decide upon.
OK, so let’s say all this gets worked out and there is a five year temporary freeze. This leads to many more questions, such as will the borrower face a reset in rate later on? What is the cost of this going to be and who’s going to pay for it?
Now, granted, there is a partial win-win situation here, but only slightly and for very few. If this ‘bailout’ does go into effect, there will be some homeowners that will get a break on their mortgage and avoid foreclosure, while at the same time the investor will not lose that particular loan to default.
There was a commentary in the Orlando Sentinel by Beth Kassab on 12/12/07 entitled, “Who really will be helped in mortgage mess?” At one point she mentioned that she called U.S. Treasury Secretary Henry Paulson’s office in regard to this proposed freeze. His office in turn told her “to call the American Securitization Forum – the group that represents the investors, loan services,” etc. Hmm, can you spell L-O-B-B-Y-I-S-T-S?
The criteria that will be used to identify the homeowners that might be eligible is limited. Government intervention is not the answer for negligence, etc. Mortgage reform is something that should be talked about. We have a lot of excellent mortgage professionals out there, but at the same time we had lenders giving away the bank so to speak. You see, that once the lender sells that loan, they no longer have an interest or liability in that loan.
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.
Benjamin Franklin wrote “There never was a good war or bad peace” in 1773.
Alexander Hamilton appointed 1st Secretary of Treasury in 1789.
Stephen Foster’s song, “Oh! Susanna” was first performed at a saloon in Pittsburgh, Pennsylvania on September 11, 1847.
1st newspaper cartoon strip was printed in 1875.
1st commercially successful electric bus line opened in Hollywood in 1910.
Spain left the League of Nation due to Germany joining in 1926.
Boulder Dam was dedicated by President Franklin D. Roosevelt in 1936.
Jewish ghettos of Minsk & Lida Belorussia were liquidated in 1943.
1st mobile long-distance car-to-car telephone conversation in 1946.
The twin towers of the World Trade Center in New York City disintegrated after being hit by 2 commercial airliners hijacked by Al Qaeda terrorists in 2001 killing 2793 and unfortunately more due to health risks that occurred from this disaster.
I was originally not going to put this one in because we all should be so firmly aware of it, but an article in yesterday’s USA Today entitled, “Is 9/11 Becoming Just Another Calendar Date?” brought back feelings that I had last year in wondering the same.
In December 2001, this date was also proclaimed Patriot’s Day by the US Congress.
The Dreaded ‘R’ Word – Recession
Even the Fed appears to be concerned about the reality of an economic slowdown. It has to. The jobs report showed that August was the first monthly drop in four years. This almost solidified the fact that the Fed will reduce the rate by at the least of 1/4%. It really needs to be at least 1/2%, but…
The mortgage debacle and real estate slowdown are affecting other industries. There have been widespread slowdowns in many industries due to what’s happening in these industries. The fallout is there. There have already been cuts with companies providing home siding, nevermind that of the construction industry itself. Kohler, a major plumbing supplier, is cutting back and therefore eliminating jobs. And there are more job losses to come from this. Unfortunately, there has to be. We are already seeing cuts in the automotive, furniture and wood products & semiconductor industries. We’ve even heard of Home Depot & Lowe’s posting lower than expected earnings. You’d have to be blind to not notice that many of these are a direct reflection on what’s going on in the real estate world.
So we have unemployment up and consumer confidence down. There is turbulence in the world financial markets because of such. You don’t think that this could push the economy toward a recession!
Let’s look at the big picture. Many have used the equity in their home for continued consumer spending. This market is tapped with lower home prices & higher interest rates equating to lower household wealth, people will have to reduce spending. We are seeing that with the retail reports.
I hope that we do not head into a recession. Granted, I don’t know if the Fed has the ability to stop it. But then again the market can change around quickly. Time will tell. Wish I had a crystal ball, but…
The Spanish expedition established the first permanent European settlement in North America, St. Augustine, in 1565.
The Dutch surrendered New Amsterdam to the British, who renamed it New York, in 1664.
NY Athletic Club formed in 1868.
1st appearance of ” The Pledge of Allegiance” was published in The Youth’s Companion in 1892 to commemorate the 400 anniversary of Columbus’ discovery of America.
Gaeston, Texas was struck by a hurricane that killed an estimated 8000 people in 1900.
The comic strip “Blondie,” created by Chic Young, was first published in 1930.
A peace treaty with Japan was signed by 49 nations in San Francisco in 1951.
President Gerald Ford granted an unconditional pardon to former President Richard Nixon in 1974.
Today is International Literacy Day, which was designated by UNESCO in 1965.
Today is also the second annual International Angel Day, which is dedicated to children.
The Fed Rate Cut
Well, even though, the Fed stated that the real estate market and mortgage debacle are not directly related to the overall health of our general economy. They must take note of the recent jobs report. With more and more layoffs and foreclosures, they is almost no way that they can get away without a rate cut. I think that almost everyone would agree that this is certain. But now the question comes into play of how much of a rate cut. Many feel that it should be 100 basis points (1%). I doubt if the Fed will go to that extent. I’m pretty sure that they would rather due only a 1/4% cut, but this is not enough. It has to be at least a 1/2% cut to be of any value at this point in time. We’ll see when they meet on the 18th.
To further enforce this feeling, Countrywide announced that it was cutting its workforce by 12,000 jobs, which is approximately 20% of its work force. Even IndyMac, which actually noted a profit recently, is cutting its workforce by 1,000, which is approximately 10% of its employees. But this extends way beyond just the mortgage and real estate industries. Office Depot it cutting back on store openings. They only plan on opening 100 stores, down from 150 of earlier this year.
This is affecting us all. It is unfortunate that Congress and the government can not agree on how to handle this situation. I am not proposing helping out the lenders, for they helped create this situation that we are all facing, but something needs to be done to reduce the foreclosures that are on the horizon and I think that there are more there than most can imagine.
The program utilizing the Government’s $8K tax credit as a downpayment became effective July 1. Unfortunately, there is no money as they are relying on current home sales’ Doc Stamp taxes to fund the necessary reserves.
