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Realtors rethink the future of real estate

ORLANDO, Fla. – Nov. 9, 2012 – Real estate faces a transformation, given the nation’s economic concerns, demographic shifts and socio-economic trends. At the National Association of Realtors® (NAR)’s convention in Orlando this week, a two-year study, called ReThink that kicked off in August, will give the association insight into the ways it must change.
“NAR takes its role as a leader in the real estate industry very seriously,” says NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami, and 2002 president of Florida Realtors. “As Realtors gather this week in Orlando, we’re focused on the road ahead, not only for real estate but also for the future of our families, communities and nation’s economy. The ReThink initiative leverages the experiences and insights of Realtors, academia, consumers and others to plan for, and adapt to, dynamic changes in the industry.”
NAR launched the ReThink Initiative in August during its annual Leadership Summit in Chicago, and it will conduct cross-country workshops through May 2013, including two this week in Orlando. When completed after two years, ReThink will analyze its findings and create a shared vision and action strategy about the future that Realtors want to create for their association, industry and American society.
The current debt-driven recession’s impact on the housing market is a significant consideration, for example. Although surveys indicate that most Americans still believe in the value of homeownership, many believe that ownership will become more difficult in the coming years. Demographic forces like retiring Baby Boomers, emerging Echo Boomers and increasing ethnic diversity will affect both the demand and supply side of residential real estate.
Other elements are likely to impact U.S. real estate, as well. Global immigration and foreign capital flows will influence demand for U.S. housing, and environmental concerns could affect urban and suburban design. Technology and the growing influence of data will impact the real estate industry and society in ways that few fully understand today.
Workshop participants are asked to consider a focal question: In an ever-changing world, what is the future of the real estate industry in 5-10 years, and how will this affect consumers, real estate professionals, industry organizations and associations?
Realtors unable to attend a session can experience it online and provide feedback and insights just like the live ReThink events. The online experience will be available soon at http://rethinkfuture.com.
“For over 100 years, Realtors have demonstrated their value to buyers, sellers and investors in the real estate transaction,” says Veissi. “Now we’re going beyond that as we develop a vision for the future for the next century and beyond.”
© 2012 Florida Realtors®

Average rate on 30-year FRM rises to 3.40%

WASHINGTON – Nov. 9, 2012 – The average U.S. rate on the 30-year fixed mortgage was little changed this week, staying slightly above its record low. Cheaper mortgages are helping drive a modest housing recovery.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan rose to 3.40 percent from 3.39 percent last week. Five weeks ago, the rate touched 3.36 percent, the lowest level on records dating to 1971.
The average on the 15-year fixed mortgage slipped to 2.69 percent. That’s down from 2.70 percent last week and close to the record low of 2.66 percent reached three weeks ago.
The average rate on the 30-year loan has been below 4 percent all year. It has fallen further since the Federal Reserve started buying mortgage bonds in September to encourage more borrowing and spending.
Low mortgage rates have helped lift home sales this year. Home prices have also increased, and builders are more confident that the market will improve and have started more homes.
Lower rates have also persuaded more people to refinance. That typically leads to lower monthly mortgage payments and more spending.
Still, the housing market has a long way to a full recovery. And many people are unable to take advantage of the low rates, either because they can’t qualify for stricter lending rules or they lack the money to meet larger downpayment requirements.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans also remained at 0.7 point.
The average rate on a one-year adjustable-rate mortgage edged up to 2.59 percent from 2.58 percent. The fee for one-year adjustable rate loans was steady at 0.4 point.
The average rate on a five-year adjustable-rate mortgage dipped to 2.73 percent from 2.74 percent. The fee was unchanged at 0.6 point. AP Logo Copyright © 2012 The Associated Press, Marcy Gordon, AP business writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Survey: More renters think it’s time to buy

WASHINGTON – Nov. 9, 2012 – Americans show growing confidence that home prices will increase over the next 12 months, according to results from Fannie Mae’s October 2012 National Housing Survey.
At the same time, consumers expect an even higher surge in rental prices, suggesting that more renters may be motivated to jump into the real estate market in the coming months, survey authors say.
“This has been a year of steady growth in the percentage of consumers with positive home price expectations,” says Doug Duncan, senior vice president and chief economist of Fannie Mae. “Increasing household formation, encouraged by an improving labor market, is adding additional momentum to the housing recovery and putting upward pressure on rental price expectations. Expected increases in both owning and renting costs may encourage more consumers to buy and add further strength to the housing recovery already under way.”
In October, survey respondents, on average, expected home prices to increase 1.7 percent in the next 12 months. The share who said home prices will decrease in the next year dropped to 10 percent – 13 percentage points lower than October 2011 and the lowest level since the survey’s inception in June 2010.
The percentage of respondents who believe mortgage rates will go up climbed 4 percentage points to 37 percent following a steep drop in September. Respondents’ average rental price expectation jumped by 0.8 percent to 3.9 percent, and 50 percent believe home rental prices will rise in the next year – a 3 percentage point increase over last month and the highest level since the survey began.
Survey highlights
Homeownership and renting • Consumers’ average home price change expectation edged up slightly to 1.7 percent. • Ten percent of those surveyed say that home prices will go down in the next 12 months, a 13 percentage point decrease since October 2011. • After a sharp drop last month, the percentage who think mortgage rates will go up rose 4 percentage points in October to 37 percent. • 72 percent of respondents say it’s a good time to buy, while 18 percent say it’s a good time to sell. • The average rental price expectation increased by 0.8 percent to 3.9 percent. • 50 percent said home rental prices will go up in the next 12 months, a 3-percentage point rise over last month.
The economy and household finances • The percentage who expect their personal financial situation to get better over the next 12 months remained level at 43 percent. • 19 percent of respondents said their household income is significantly higher than it was 12 months ago, a slight increase from last month’s total of 17 percent. • Household expenses remained stable over the past month, with 56 percent responding that their household expenses stayed the same compared to 12 months ago.
© 2012 Florida Realtors®

Banked-owned sales no longer a bargain

SEATTLE – Nov. 9, 2012 – While “foreclosure” remains a buzzword for bargain seekers, a study finds that the actual discount off a “normal” price is far less than it used to be.
According to a study by Zillow, the national average discount of a real estate owned (REO) property compared to a non-REO was only 7.7 percent in September – a sizable change from the 23.7 percent average discount that peaked nationally in August 2009 and less than the average 9.1 percent discount one year earlier.
In some areas of Florida, REOs aren’t a bargain at all. Zillow included three Florida metro areas in its analysis and claims an average REO savings of only 2.9 percent in the Miami-Fort Lauderdale market – a significant drop from the peak of 22.7 percent in August 2008 and a notable decline year-to-year; in September 2011, a South Florida REO sold for 6.8 percent less.
In Tampa, a REO in September 2012 sold for 9 percent less than a non-REO sale, down slightly from the 9.6 percent discount one year earlier, but significantly lower than the peak 29.1 percent discount recorded in November 2008.
In Orlando, the REO discount of 4.6 percent rose slightly year-to-year; in September 2011, it was 2 percent. However, both numbers are down from the peak 24.4 percent discount for a REO recorded in January 2010.
In two cities – Phoenix and Las Vegas – REOs no longer come with a discount, with sale prices roughly equal to other home sales.
“The smallest foreclosure discount is found in places where competition for homes” is high, says Zillow Chief Economist Dr. Stan Humphries. “People are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability.”
Year-over-year foreclosure discounts fell in roughly three-quarters (76.9 percent) of metro areas analyzed, and all metros are down from their peak. Nationwide, foreclosure discounts reached their height in 2008 and 2009, and in some areas peaked at more than 30 percent.
© 2012 Florida Realtors®

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Health care overhaul turns into a sprint

WASHINGTON (AP) – Nov. 8, 2012 – Its place assured alongside Medicare and Medicaid, President Barack Obama’s health care law is now in a sprint to the finish line, with just 11 months to go before millions of uninsured people can start signing up for coverage.
But there are hurdles in the way.
Republican governors will have to decide whether they somehow can join the team. And the administration could stumble under the sheer strain of carrying out the complex legislation, or get tripped up in budget talks with Congress.
“The clarity brought about by the election is critical,” said Andrew Hyman of the nonpartisan Robert Wood Johnson Foundation. “We are still going to be struggling through the politics, and there are important policy hurdles and logistical challenges. But we are on a very positive trajectory.” Hyman oversees efforts to help states carry out the law.
In the two years since passage of the Affordable Care Act, the Obama administration has been consumed with planning and playing political defense. Now it has to quickly turn to execution.
States must notify Washington a week from Friday whether they will be setting up new health insurance markets, called exchanges, in which millions of households as well as small businesses will shop for private coverage. The Health and Human Services Department will run the exchanges in states that aren’t ready or willing.
Open enrollment for exchange plans is scheduled to start Oct. 1, 2013, and coverage will be effective Jan. 1, 2014.
In all, more than 30 million uninsured people are expected to gain coverage under the law. About half will get private insurance through the exchanges, with most receiving government help to pay premiums.
The rest, mainly low-income adults without children at home, will be covered through an expansion of Medicaid. While the federal government will pay virtually all the additional Medicaid costs, the Supreme Court gave states the leeway to opt out of the expansion. That gives states more leverage but also adds to the uncertainty over how the law will be carried out.
A steadying force within the administration is likely to be HHS Secretary Kathleen Sebelius. The former Kansas governor has said she wants to stay in her job until the law is fully enacted. “I can’t imagine walking out the door in the middle of that,” she told The Kansas City Star during the Democratic convention. Her office declined to comment Wednesday.
Republicans will be leading more than half the states, so governors are going to be her main counterparts.
“Republican governors are at the center of the health care universe right now,” said Michael Ramlet, health policy director at the American Action Forum, a center-right think tank. “They do not have a uniform position across the board.”
Major regulations due shortly and covering issues including exchange operations, benefits and protections for people with pre-existing health problems could signal the administration’s willingness to compromise.
A recent check by The Associated Press found 16 states and the District of Columbia on track to setting up their own exchanges, while nine have decided they will not do so. The federal government could end up running the new markets in half or more of the states.
While major changes can’t be ruled out, they don’t seem very likely to former Senate Majority Leader Tom Daschle, D-S.D., who is close to the administration. AP Logo Copyright © 2012 The Associated Press, Ricardo Alonso-Zaldivar.

Real Estate Q&A: Short sale may be worth the extra tax hit


FORT LAUDERDALE, Fla. – Nov. 8, 2012 – Question: I have decided to sell my home through a short sale. I have heard that the deadline for the tax waiver is the end of the year. After that, you have to pay taxes on any debt that the lender forgives. I don’t want to owe money to the government. Now I’m unsure whether to go through with the short sale. – Sarah
Answer: The Mortgage Forgiveness Debt Relief Act of 2007 does expire at the end of this year, and industry groups and observers are concerned about the effect on homeowners and the real estate market in general. Most pundits, including me, think the law will be extended at some point. Still, this isn’t something you can count on.
As it is now, the amount the lender forgives on most primary residences is not taxable. No extension would make short sales less attractive next year and beyond because sellers would have to pay taxes due to the forgiven debt. This could result in tax hits of a few thousand dollars or considerably more.
Despite the potential tax liability, a short sale still may be the best choice – particularly if you owe much more than the house is worth, you’re getting divorced or you have to move quickly for a new job. Consult an accountant and see about your specific situation. Despite its reputation, the Internal Revenue Service often is willing to work with taxpayers.
About the writer: Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He is the chairperson of the Real Estate Section of the Broward County Bar Association and is an adjunct professor for the Nova Southeastern University Paralegal Studies program.
The information and materials in this column are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed. Nothing in this column is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.
Copyright © 2012 Sun Sentinel (Fort Lauderdale, Fla.), Gary M. Singer. Distributed by McClatchy-Tribune News Service.

Builder Confidence in 55+ market skyrockets


WASHINGTON – Nov. 8, 2012 – Builder confidence in the 55+ housing market for single-family homes showed significant improvement in the third quarter of 2012 compared to the same period a year ago, according to the National Association of Home Builders’ (NAHB) latest 55+ Housing Market Index (HMI) released today. The index more than tripled year over year from a level of 12 to 36, which is the highest third-quarter reading since the first index in 2008.
“Many builders and developers in the 55+ housing segment are reporting an increase in demand from consumers,” says NAHB 50+ Housing Council Chairman W. Don Whyte. “We’re seeing improvement in certain parts of the country where people are moving off the fence and either purchasing a home or renting an apartment designed to more specifically suit their lifestyle.”
There are separate 55+ HMIs for three segments of the 55+ housing market: single-family homes, multifamily condominiums and rental apartments. Each index measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic). An index number below 50 indicates that more builders view conditions as poor than good.
Although all components of the 55+ single-family HMI remain below 50, they at least doubled from a year ago: present sales climbed 25 points to 36, expected sales for the next six months increased 27 points to 42 and traffic of prospective buyers rose 20 points to 33.
The 55+ multifamily condo HMI had a significant increase of 13 points to 23, which is the highest third-quarter reading since the inception of the index in 2008; however, condos remain the weakest segment of the 55+ housing market. All 55+ multifamily HMI components increased considerably compared to a year ago as present sales rose 13 points to 22, expected sales for the next six months jumped 19 points to 29 and traffic of prospective buyers climbed 11 points to 22.
Meanwhile, the 55+ multifamily rental indices, which already recovered substantially last year, showed continued but more modest increases in the third quarter: present production climbed six points to 31, expected future production increased nine points to 35 and current demand for existing units and expected future demand improved two points to 42 and 44, respectively.
“Like other segments of the housing industry, the market for 55+ housing is continuing on a steady upward path, driven by improving conditions in additional markets around some parts of the country,” says NAHB Chief Economist David Crowe.
Crowe says he expects the positive trend to continue, but “the speed of the recovery is being constrained by factors such as tight mortgage credit, making it difficult for potential 55+ customers to sell their current homes, and shortages of inputs to construction such as buildable lots that are beginning to emerge in some market areas.”
© 2012 Florida Realtors®