Headlines: Volume 12 Issue 21

Washington report

NAR testified last week before a joint House committee hearing in support of a national disaster insurance bill sponsored by two Florida congressmen and backed by FAR. The Homeowners’ Defense Act of 2007 (H.R. 3355) by U.S. Representatives Ron Klein and Tim Mahoney currently has 36 co-sponsors, all Democrats, although a number of Republicans have expressed interest in supporting the bill. The bill calls for the creation of a “risk consortium,” which states voluntarily could join to pool the risk from state-sponsored insurance funds. The consortium would transfer the risk to private markets through the use of bonds or reinsurance contracts. Any savings realized from spreading the risk would have to be passed along to consumers in the form of lower premiums. H.R. 3355 may be debated and voted on by the House Committee on Financial Services before the end of September. House leadership has expressed support for the bill and promised a vote by the full House after it is passed in committee. The Bush administration opposes the measure, saying it encourages “overdevelopment in hurricane- and earthquake-prone areas” and interferes “with well-functioning private insurance markets.”

Market watch

Single-family and condo sales may be soft, but Florida’s new home market appears to be stabilizing. That’s according to a University of Florida report released last week, which pointed to a persistent demand for homes and a lack of overbuilding as factors in buoying new home sales. The findings are from a quarterly survey of Florida real estate trends completed in July. “There’s a growing feeling of apprehension or caution, but the results from our survey remind us that the underlying markets for real estate are still in good shape,” says Wayne Archer, director of UF’s Bergstrom Center for Real Estate Studies. “Residential is the only area where there’s a problem. Apartments, retail, office, industrial and hospitality all remain stable and healthy.” More

A third of home loans originated by mortgage brokers failed to close in August as investors shied away from riskier borrowers, according to a new survey of 1,700 mortgage brokers sponsored by trade publication Inside Mortgage Finance. Three years ago, a survey of real estate salespersons found that only 4% of transactions failed to close on average. The survey also found that nearly half of borrowers with adjustable rate mortgages were not able to refinance their loans. That’s a major concern of policymakers, as an estimated 2.5 million mortgages given to borrowers with weak credit will reset at higher rates by the end of next year, according to the Federal Deposit Insurance Corp.

NAR’s Pending Home Sales Index, based on contracts signed in July, fell 12.2% to a reading of 89.9 from the June index of 102.4, and was 16.1% lower than July 2006 when it stood at 107.1. The index is a leading indicator for the housing sector, based on pending sales of existing homes. An index of 100 is equal to the average level of contract activity during 2001, which was the first year tracked as well as the first of five consecutive record years for existing-home sales.

Demand for the supply

Where will Florida’s future homebuyers come from? A demographic report prepared for Florida’s Taxation & Budget Reform Commission – Florida Demographic In-Depth Analysis – offers some answers. The analysis looks at recent trends and projects how the state will change. For example, newcomers to the state accounted for 88.7% of the population growth between April 1, 2000, and April 1, 2006; and in 22 counties, all growth can be attributed to the arrival of newcomers. Projections call for a population increase in Florida of 44% by 2030, with most of those new residents (potential homebuyers) the result of migration.

Scam alert

Did you receive what appeared to be an email from the IRS offering you $80 to participate in a “Member Satisfaction Survey”? It’s a scam, prodding recipients to report private info like their social security numbers and PIN numbers. The IRS says it never sends unsolicited e-mail. If you receive one, forward it to: phishing@irs.gov.

Money matters

The White House announced last Friday a new program to help property owners with adjustable rate mortgages avoid foreclosure by converting to a fixed-rate FHA loan. To qualify for an FHASecure mortgage, homeowners must meet the following five criteria:

A history of on-time mortgage payments before teaser rates expired and loans reset.
An interest rate reset between June 2005 and December 2009.
3 percent cash or equity in the home.
A sustained history of employment.
Sufficient income to make the mortgage payment.
More information about this program is available at (800) CALL-FHA or visit the FHA Web site.

Virtually sold?

Have you ventured into the online virtual reality world, courtesy of Second Life? It’s a Web site that allows users to create a virtual version of themselves and go about daily life in a virtual world. So far, Second Life has more than 9.4 million “residents,” or should I say “virtual residents.” OK, sounds a bit like “The Truman Show.” But business transactions are happening in the virtual world, and some Realtors are carving out their own niche (or is that a “virtual” niche?). A Coldwell Banker office in Seattle spent almost $50,000 on a Second Life presence to market its homes and direct buyers to the firm’s Web site. Agent Suzanne Lane has even made it possible for Second Lifers to tour a $3 million home, allowing buyers across the globe to walk through the property as if they were touring it in person. It remains to be seen whether the 5,700-square-foot home will sell as a result of Second Life, but Lane says 3,700 visitors have completed the virtual tour so far.