Miami Real Estate Blog

TALLAHASSEE, Fla. – July 1, 2009 – Florida created a program to help first-time homebuyers get their federal tax credit early, allowing them to use up to $8,000 toward a downpayment. The effective date for the program is July 1; however, it will probably be another few weeks before the funds are available. As a result, some Realtors struggling to help homebuyers find the system confusing.

While most first-time homebuyers qualify for the tax credit (given by the government as an income tax rebate regardless of tax owed), they once had to buy a home first, submit the info to the IRS through their tax return, and wait for the $8,000 rebate. To help these buyers get the money early enough to use it as a downpayment, the State of Florida created a program of bridge loans, the Florida Homebuyer Opportunity Program (FLHOP), where money can be borrowed from the state and then paid back after the new homeowner receives his tax credit.

Under a different federal program, the Federal Housing Administration (FHA) has done something similar, yet with a significant difference: The federal program applies to FHA loans only, and buyers must still come up with a minimum downpayment of 3.5 percent.
 
“FAR’s Office of Public Policy has been getting a lot of questions from across the state regarding downpayment assistance for those who qualify for the federal first-time homebuyer tax credit,” says Florida Association of Realtors (FAR) Vice President of Public Policy John Sebree. “Given that there is a state downpayment plan and a federal downpayment plan (and at least one special exemption), it definitely gets confusing, and details have been slow to emerge. Many Florida Realtors say local housing authorities don’t have all the information they need to move forward with the state program, and some Realtors report that bankers are steering clear of the downpayment assistance programs altogether.”

Florida Homebuyer Opportunity Program (FLHOP)

The Florida Legislature created the state program during the recent legislative session, and it’s part of the 2010 budget effective July 1, 2009. Many details remain sketchy, but Sebree reports the following:

• Money for homebuyers may not be available until the first week of August. Lawmakers funded the program through doc stamp taxes applicable in the new fiscal year rather than through a lump sum commitment; and since today is the start of the new fiscal year, the program won’t be fully funded until the state collects new doc stamp taxes.

• Florida’s downpayment loan program can work with FHA loans. Florida Housing Finance Corporation (FHFC) – the state agency that funnels housing money to local housing agencies – received confirmation from FHA that borrowers who access the $8,000 tax credit through a state or local government program may use it to make up the required 3.5 percent downpayment, unlike the FHA downpayment loan program through private lenders.

• Florida’s local housing administrators will oversee the downpayment funds at the local level. (To find the administrator in your area, go to: http://apps.floridahousing.org/StandAlone/FHFC_ECM/AppPage_SHIPLGContacts.aspx). For local housing authorities, the program is similar to the SHIP program (State Housing Initiatives Partnership) with one major difference – the income limits. Currently, SHIP uses Area Median Income (AMI) and those are typically lower, and calculated differently, than the federal tax credit limit of $75,000. The $75,000 for a single income tax filer ($150,000 for joint filers) will be used for FLHOP.

• Realtors can start to promote the program to potential homebuyers. It takes time to close on a home, and local housing authorities should be taking applications now.
 
• FHFC says they’ve trained local administrators on procedures for the Florida downpayment program. Local housing authorities will have flexibility over the $8,000 loan, be able to include penalties, and create a structure dictating how the new homebuyer will pay back the money.

“It’s important to note that this money is a bridge loan to buyers; but once it’s repaid, local governments and housing authorities can keep the money and use it locally for affordable housing projects,” Sebree says. “This is a win/win for them. If the offices seem unwilling to work with Realtors, they probably don’t understand the program themselves yet.”

For specific questions about the $8,000 tax credit, homebuyers should consult a tax professional.

Resources for understanding the tax credit and bridge loans

FAR’s Homebuyer Center: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm

NAR’s The Basics: 2009 First-Time Home Buyer Tax Credit: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit?lid=ronav0019.

© 2009 FLORIDA ASSOCIATION OF REALTORS®

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ORLANDO, Fla. – June 29, 2009 – Once the dream of many a retiree and young person seeking to live in paradise, the prospect of living in Florida seems to be less attractive in the current economic downturn.

Data from moving companies and the Florida Department of Motor Vehicles suggest that fewer people are moving to the state and, at the very least, an equal number of residents are moving out.

Atlas Van Lines moved a total of 5,277 households into the state in 2008, but moved out 6,367 households, according to the moving company’s migration study.

Those numbers compare with the 9,069 households moving into Florida and the 7,180 moving out in 2004, when the state’s real estate market was just heating up.

Locally, 43 households moved out of Bradenton and 19 moved in between Jan. 1 and June 22 of this year, according to Atlas officials.

In a similar study, United Van Lines designated Florida a “balanced” state, meaning roughly as many households moved in as out in 2008. During the year, 13,487 households moved in and 13,470 moved out, according to the study.

The number of out-of-state driver’s license applications in Florida also dropped by 30 percent in a five-year period, from 585,000 in 2003 to 410,000 in 2008.

These figures don’t surprise Bob Bartz, president of the Manatee Chamber of Commerce.

“I think it’s a reflection of the current economic times,” Bartz said. “It’s anticipated that once people are back in a position where they can sell their homes where they currently live, they will still have a desire to live in Florida. But it appears that people in the Midwest and Northeast are unable to sell their homes.”

Bartz noted that Manatee is still feeling the effects of the rampant real estate speculation that took place during the county’s housing boom.

“I think this area got caught up more than other areas in the country,” Bartz said. “All the speculation that took place, and then the quick turnaround, caught up with us. It’s something that’s going to take some time to work out.”

According to the United study, the mid-Atlantic states received the most out-of-state relocations. Sixty-two percent of moves in the District of Columbia were from out-of-state people moving in. That figure was 58.2 percent for North Carolina and 56.4 percent for South Carolina.

Michigan led the out-bound moves in the country, with 67.1 percent of moving van hauls to other states. Indiana followed with 57 percent out-bound moves, and New York was in third place in terms of emigration, with 55 percent of moves heading to other states.

Not everyone puts stock in the data, however.

Miranda Oswald, vice president of sales and marketing with Lakewood Ranch Communities, said moving van records and driver’s license applications probably don’t take into account a significant segment of her market: purchasers of second homes.

Oswald said 1,700 people came through her office looking for homes in the first quarter this year. Roughly 18 percent of those potential clients were looking for second homes, Oswald said.

Out of 55 total sales this year of new product in Lakewood Ranch, 28 of the buyers were from in-state and 27 were from out of state. Of the out-of-state buyers, nine of them – or one-third – were second homes, Oswald said.

“They might not be moving furniture from one place to another,” Oswald said. “So a second-home buyer would not show up in either of those statistics.”

Don Schroder is more in the neutral migration camp.

The former chairman of the Anna Maria Island Chamber of Commerce and Realtor with RE/MAX Alliance thinks the tide is about to turn.

“I think we’ve kind of gone into the neutral position now,” Schroder said. “But I think people are coming back. Our market is so deflated that we’re a tremendous buy.”

Schroder said he’s also starting to see renewed interest from foreign and Canadian buyers.

Although Manatee County’s unemployment has soared from around 3 percent three years ago to 11.1 percent in May, Schroder notes the county still provides beautiful beaches and the Florida way of life that people are willing to seek out.

“There’s a lot of heartache out there,” Schroder said. “But there are also a lot of people who are making a go of it.”

Copyright © 2009 The Bradenton Herald, Fla., Brian Neill. Distributed by McClatchy-Tribune Information Services.

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MIAMI – June 24, 2009 – Joshua Hamann jokingly compares himself to the last human in a city overrun by zombies. He’s not suggesting his neighbors are zombies. The problem is, he has no neighbors.

Hamann dwells in a newly opened condo. And in the six weeks since moving into the gleaming new Everglades on the Bay in downtown Miami, he has felt pretty lonely. Hamann occupies one of only about 50 sold condos in his 49-story tower, out of 409 units.

A couple miles north at Midtown Miami, Alisha Marks knows the same feeling. “It was pretty much a ghost town when I got here,” she says.

It’s an odd time for South Florida’s condo market. Over development compounded by the credit crunch and a sluggish economy created an abundance of condo units.

So, what is life like for the few residents whose lights are on?

“Weird,” says Hamann, a 28-year-old project manager for a window shading company, who rents the $400,000 one-bedroom, one-bath unit on the fifth floor. Everglades on the Bay opened in April and offers residents great views, clean white walls, spotless carpets, stainless steel appliances, a well-equipped gym, a pool, and even party rooms. Hamann moved in immediately.

Since then, he has one neighbor on his floor. It took two weeks before his first experience of sharing an elevator ride with a neighbor. “He didn’t know how to react,” Hamann notes.

“I’m a sociable guy, but you can’t socialize with what isn’t there,” says Hamann, who commutes on weekends to the Gulf Coast where his wife lives. He jokes that before he moved in, he saw brochures featuring smiling “crowds” hanging around the pool.

On a recent Friday morning, Hamann encountered exactly three people over the course of several hours – two security guards, and a concierge.

Several stops in the fitness center? Empty.

Several visits to the pool? Empty.

Several visits to the laundry room? Empty.

The building is emptier than the cheap seats during a Marlins game at LandShark stadium.

“This is how it goes every day,” Hamann said, adding that he interacted with more neighbors growing up in rural Kentucky, where farms were spaced a mile apart.

Why all the empty units with no residents?

In Miami-Dade alone, more than 23,000 new condominium units have come onto the market since 2002, according to Condo Vultures, a real estate firm that also researches trends in the condo market. Most of the new units are concentrated in the Brickell, downtown, and Midtown Miami communities. Thousands more have been built in Broward. Even more are in the pipeline.

During the boom, most of those units were considered “sold.” But since the market busted because of bad loans, wildly optimistic bank lending practices and a tightening credit market, many of the newer condo buildings sit largely empty as sold units wait to close or have been returned to the developers.

An occupancy report, commissioned by the Miami Downtown Development Authority and released last week, indicated the glut may be slowly disappearing. Even so, roughly one-third of the inventory, 8,300 units in the downtown and Midtown Miami area are unsold. For projects completed since 2008, just 34 percent of the units have closed, according to the report.

Some of the sold units may not yet be occupied, and some of the unsold units may have been rented out. Take a nighttime drive along Biscayne Boulevard or Brickell Avenue and one will notice lots of dark windows in those sleek new high-rises.

Mimi Scott faced a similar situation at the Radius tower in downtown Hollywood. The condo opened in November 2007, and she moved in shortly after. It was ghastly quiet, she says.

“I didn’t like it,” says Scott, a retired playwright who lives part of the year in South Florida.

“There still aren’t a lot of people down the hall. There are a couple of neighbors near me. But more empty than full units, at least on my floor.”

But for Alisha Marks, a 28-year-old public relations executive, things are slowly getting better in her building.

Marks has lived in a one-bedroom condo at Midtown Miami for six months, and has only recently begun to see neighbors.

Marks thought of her once-empty floor in the 28-story tower as a playground of sorts, “but after a while you begin to miss that interaction,” she says.

She says the silence in a largely empty building is “kind of creepy – but more strange than creepy – because of the silence and the emptiness.”

“In the past month or so, I have gotten a few neighbors. And now the adjustment is to having them around. They’re fine, but going from no one else to three people on my floor almost makes it seem loud, too loud!”

But all is not lost in these empty buildings, according to Jack McCabe, president of Deerfield Beach-based McCabe Research & Consulting, LLC.

While McCabe believes the most recent condo boom “happened five or six years too soon,” he doesn’t believe it has to take that many years to get the empty and available units into the hands of responsible owners.

“It could take up to five to six years, but many people will tell you the condo market will trail close behind the single-family home market,” McCabe says. “And that market is still one to two years away from serious signs of recovery.”

Copyright © 2009, The Miami Herald, James H. Burnett III. Distributed by McClatchy-Tribune Information Services.

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MIAMI (AP) — June 22, 2009 – The number of condo owners who aren’t paying maintenance fees is on the rise, causing headaches for the other owners and, in some cases, animosity between neighbors.

Condo associations around South Florida are using a variety of tactics to retaliate against the deadbeats, including closing pools, towing cars and posting lists on bulletin boards of those who don’t pay fees. State officials say that the situation has gotten downright dangerous in some cases.

“The frustration people have, it leads to terrible animosity,” said Bill Raphan, the state’s assistant condo ombudsman.

Owners who are having financial difficulties often stop paying their condo fees — but that money is essential for utilities and services used by everyone in the building. Whether it’s one owner — or 50 — that doesn’t pay the monthly fees, it’s up to the rest of the condo to cover the shortfall.

But some owners are strapped themselves and can’t pay more. As a result, water and lights have been shut off in some condos. Trash has piled up and landscaping is nonexistent.

At the 310-unit Mirassou Condos in Miami-Dade County, county officials shut off water to the entire building because the condo’s association bounced a check and failed to pay a $109,000 past due bill.

Roughly a third of the units are bank-owned or in foreclosure. After the county turned off the water, residents allegedly tampered with the meter to keep it running illegally. The county and the association eventually agreed on a payment plan, and the water was turned on again.

Or take the Island Shores condo in North Miami Beach. Eduard Sotolongo is a condo board member who said he started calling the towing service to haul away the cars of people who haven’t paid fees when their cars were parked in guest spots or other unauthorized spaces.

Sotolongo said one resident threatened his life when his car was towed.

“You feel like buying a shotgun because it feels like the Wild West,” Sotolongo said.

In Hialeah, 44 of the 96 units at the Lancaster condo are in foreclosure. Association president Rolando Tato decided to close the pool.

At first, he said, it was to save money. Then he disclosed the real reason: “I don’t want the people who don’t pay the bills to have that enjoyment.”

Rudy Martin is a condo owner who hasn’t paid his fees. More than a year ago, he quit paying the maintenance charges on his Deerfield Beach condo. Martin now avoids his neighbors or endures “chilly stares.”

Often, he felt compelled to explain his situation when he ran into neighbors: “I felt like I had to talk to them and justify it, so they didn’t think I was scumbagging them.”

Copyright © 2009 The Associated Press. Information from the Miami Herald. All rights reserved.

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ORLANDO, Fla. – June 19, 2009 – Speculators are buying up an uncounted but certainly significant percentage of homes for sale in cities where the meltdown hit hardest.

Homes.com reports a 30- to 50-percent year-over-year increase in home searches in foreclosure-heavy states, including California, Michigan and Florida. In these states, helping long-distance investors find and close on properties has become a burgeoning real estate specialty.

The investors run the gamut from international speculators seeking a house or two to venture capital firms that buy bundles of homes for 25 cents on the dollar — most in need of renovation and some with substantial tax liens.

Will these investments lead to riches? Possibly, if housing prices go back up and if investors are able to fix up and rent the properties out while they wait to sell, experts say.

Source: Smart Money, Anne Kadet (06/01/2009)

© Copyright 2009 INFORMATION, INC. Bethesda, MD

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BOCA RATON, Fla. – June 18, 2009 – New rules to safeguard the integrity of home appraisals are complicating the deals they’re supposed to protect.

Real estate agents, mortgage brokers and buyers, as well as homeowners who want to refinance their loans, are feeling the effects of rules designed to prevent inflationary appraisals that helped fuel the housing boom.

“The intentions were good, but the execution was very poor,” said Louis Spagnuolo, vice president of mortgage banking for WCS Lending in Boca Raton.

Since May 1, home appraisals must be ordered at an arm’s length, often through a national management company. Gone are the days when a mortgage broker or lender could hire a familiar appraiser to close a deal. Now, communication between the appraiser and real estate agents is discouraged.

South Florida real estate professionals and their clients say the rules contribute to low appraisals, which jeopardize home sales and refinancing applications. They’re worried that the recent uptick in sales could slow as a result.

Chuck Luciano of Keller Williams Realty recently represented a client who agreed to sell a five-bedroom Boca Raton home for $1.085 million. An appraiser from Miami estimated the value at $1.025 million.

“The seller didn’t want to drop the price, and the buyer said, ‘Why should I pay more than the bank says it’s worth?’” Luciano said. “I lost the deal.”

The new rules were proposed by New York Attorney General Andrew Cuomo, who pushed for the standards after spending more than a year investigating industry appraisal practices. They govern only loans that will be sold to Fannie Mae and Freddie Mac, government run mortgage companies that buy most of the nation’s home loans, and not loans guaranteed by the FHA or VA.

One problem, real estate agents and mortgage brokers say, is that the management companies assign appraisers who don’t know the area and lose experienced appraisers by taking a large percentage of the fees.

Another common complaint: appraisers value properties on the low end to appease lenders, which are scrutinizing appraisals now after suffering large loan losses in recent years.

Bill Burton of Boca Raton was trying to refinance into a loan with a 4.75 percent interest rate. Burton has a high credit score and lives in an upscale development. But his Deerfield Beach mortgage broker said the bank turned him down after insisting that the appraiser include in his report two sales from a less-desirable community nearby.

“I can’t fathom not being approved,” Burton said. “It’s a disgrace.”

But appraisers and the management companies blame the flood of foreclosures and short sales for skewing the value estimates downward.

Mortgage brokers and real estate agents are upset because they’ve lost control of appraisals, said Dan Morden, an appraiser in Broward and Palm Beach counties. “That’s a bitter pill for them,” Morden said.

Two management companies that do business in South Florida say the complaints are unfounded.

Charles Ware of Elite Appraisal Management in Michigan said his firm grades appraisers and assigns them to nearby properties. Valuation Logistics in Oregon typically keeps $25 of the average $450 appraisal fee, chief executive Scott Olson said.

“Our appraisers are getting almost all of their money,” Olson said.

The livelihood of real estate agents and mortgage brokers depends on sales, said Guy Cecala, publisher of the Inside Mortgage Finance newsletter. Changes that appear to stand in the way of that are sure to draw criticism.

Regardless, more conservative appraisals likely are here to stay, he said.

“It’s a political reality.”

Copyright © 2009 Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune Information Services.

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NEW YORK – June 17, 2009 – Foreclosures drive down the value of neighboring homes an average of $7,200 per home with the total loss in property values totaling $500 billion, says a recent report from the Center for Responsible Lending, a consumer advocacy group.

The study calculated that homeowners living within 300 feet of a foreclosed residential property experienced a drop of 1.3 percent in home value; those living 300 to 500 feet of the foreclosed home see a drop in value of 0.6 percent.

Ellen Schloemer, the executive vice president of the Center for Responsible Lending, estimates that foreclosures would affect an estimated 91.5 million neighboring homes over the next four years.

“As the foreclosure crisis continues to worsen, the contagion is spreading,” Schloemer says. “You can’t just say those foreclosures are hurting someone else.”

Source; The New York Times, Bob Tedschi (06/12/2009)

© Copyright 2009 INFORMATION, INC. Bethesda, MD

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TAMPA – June 12, 2009 – It may be a bit tougher now for investors to flip short sales for big profits.

Attorneys’ Title Insurance Fund notified its 6,000 member lawyers this week that it will not insure deals made with a popular – but controversial – method for closing flips of short sales. A short sale occurs when a mortgage holder agrees to allow a home to sell for less than the mortgage balance so that foreclosure can be avoided.

The Orlando-based fund is a major underwriter for lawyers who write title insurance in Florida. In a letter to lawyers, the fund said it has become aware of short sale programs advertised on the Internet that promise to make investors lots of money with little or no work.

The letter says they involve investors entering option deals with homeowners for “the exclusive right to purchase their property for a period of time.”

The investor negotiates a short sale with the mortgage holder by convincing it that the price it is offering is the market value of the property. The investor then finds a buyer for a much higher price. The sales happen simultaneously, and the investor pockets the difference.

The problem is that “the original lender is not told that the buyer is flipping the property on the same day for thousands more than the lender has been told is the market value of the property,” the letter states.

The fund’s decision could have a major effect on short sale flips because many investors use lawyers to close deals when traditional title companies won’t.

The option contract method has been gaining steam as a way to work off inventory in a bad real estate market.

Critics say mortgage holders are misled and don’t realize they could be selling for more. Some real estate agents and buyers complain that the option contracts lock some buyers out of the market. That’s because some types of loans forbid flips.

Some lawyers have raised concerns that sellers may have to pay the difference later.

But proponents say investors can make money and homeowners can avoid foreclosure. They say mortgage holders would lose even more money if they foreclosed on the home.

Copyright © 2009 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.

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TALLAHASSEE, Fla. – June 9, 2009 – The cost to file for a foreclosure in Florida courts just took a sizable jump due to legislation that takes effect this month.

Banks and other lenders will have to pay for the fee increase, which is part of a package of laws predicted to generate $220 million for the state’s court system.

Prior to June, the filing fees were $295 and they are not set at a sliding scale. For properties valued at less than $50,000, the fees increased to $395. For homes and businesses between $50,000 and $250,000, new fees are $900. And for properties over $250,000, fees jumped to $1,900.

Circuit Judge Cynthia Z. Mackinnon said the increase was the largest in “many years” but is understandable considering the state’s financial woes. She supported the Legislature’s decision to tie the increase to the amount of the defaulted loan.

While some experts have said the fee increase might make lenders more reluctant to legal actions on defaulting property owners, Greg Hallam, former president of the Mortgage Bankers Association of Florida, said the new fees mean more to the state coffers than to banks.

“I honestly don’t think that would matter to a bank,” Hallam said. “The new fees are minimal to banks. If you can get out of a foreclosure with less than a $20,000 loss, it’s a party.”

The state is home to one of every six loan defaults in the country, according to California-based RealtyTrac, with 119,200 foreclosure-related court filings during the first quarter alone. State court officials have said Florida has a backlog of more than 300,000 cases clogging the judicial system.

There are alternatives to losing a home in foreclosure, Mackinnon said. “The Ninth Circuit’s mediation program, stimulus money and these increased fees will hopefully all work to both parties’ advantage, and more of these cases will get worked out,” the judge said.

Copyright © 2009 The Orlando Sentinel, Fla., Mary Shanklin. Distributed by McClatchy-Tribune Information Services.

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