TAX CREDIT EXTENSION INFORMATION FOR BUYERS! The National Association of Home Builders posted an excellent Question and Answer piece that explains all the details of the new housing tax credit. Buyers will appreciate this link:
http://www.federalhousingtaxcredit.com/ Be sure to take a few minutes to read the new opportunities for an expanded group of eligible buyers. In order to receive the credit, Buyers must have signed a contract by April 30, 2010 and they must close by June 30, 2010. With our inventories shrinking daily, time is of the essence. Buyers will have fewer and fewer properties from which to choose over the months ahead, so encourage your friends to start their home search today. ____________________________________________________________________________________ EWM ANNOUNCES CHAIRMAN'S CLUB 2008! 
_________________________________________________________________________________________________________ New Housing Stimulus Bill expected to assist first time home buyers: President George W. Bush signed into law a housing stimulus bill that is expected to bring greater stability to housing markets nationwide. The bill will help some 400,000 home owners nationally refinance into affordable, government backed loans and offer a temporary first-time home buyer tax credit that is expected to serve as an attractive incentive to buyers and help reduce high inventories of unsold homes. The first-time temporary home buyer tax credit would offer $7500 for the purchase of any home and be used for purchases between April 9, 2008 and July 1, 2009. July 2008 __________________________________________________________________________ Florida Property Tax Proposed Constitutional Amendment (Ballot Question # 1) On Tuesday, January 29, 2008, Florida voters will have an opportunity to amend the way we are currently taxed on our real estate holdings. Passage of the Amendment will require a positive vote equal to 60% of those voting. The benefits of the Amendment favor current homestead property owners the most, but there would be some benefits for non-homestead residential and commercial properties, as well. The Constitutional Amendment being offered to the voters is a product of the intense Legislative sessions held in October, 2007. While our legislators are not unanimous is their support of the Amendment, the leadership of our Florida Association of Realtors (FAR) is encouraging the passage of this ballot question. The feeling of FAR is that these new measures, especially the “portability” feature for homestead property owners, will offer immediate relief to homestead property owners who have been reluctant to purchase new homes over these past few years. Their hesitancy has been due to the fact that many homeowners have an existing favorable tax base provided to them through the Save Our Homes Amendment passed by Florida voters in 1992. Upon the purchase of a new home today, the law eliminates these tax savings, which in the longest cases have been built-up over the past 13 years. Provisions of the Amendment include the following: - Increase of the Homestead Exemption from $25,000 to $50,000. This additional exemption of $25,000 will only apply if the assessed value of the property exceeds $50,000. There are very few properties in South Florida assessed for less than $50,000; therefore, most properties in our area would receive the full additional exemption. However, this additional $25,000 exemption would not apply to the school district levies. Since the school district taxes represent approximately 40% of South Florida tax bills, the additional $25,000 exemption would be equivalent to about $15,000, making the new total annual homestead exemption equivalent to about $40,000. Assuming an average South Florida millage rate of 2 mils, a $40,000 exemption will save the homestead taxpayer about $800 per year, or about $300 more than the current homestead exemption saves.
- “Portability” allowing homestead property owners to transfer up to $500,000 of “assessment difference” to a new home. The amount of the “assessment difference” is the difference between the “just market value” and the “tax assessed value” of the owner’s current home. Homestead property owners purchasing a new home of equal, or greater, value will be allowed to transfer 100% of their “assessment difference”. The amount of “assessment difference” which can be transferred when the new home’s “just market value” is less than the old home’s “just market value”, will be reduced by the same percentage difference existing between the values of the two homes. For example, if the assessment difference which has accumulated in the old home is $500,000 and the old home’s value is $1,000,000 and the new home’s value is $600,000, the owner would be limited to using only 60% of his or her “assessment difference”, or $300,000, to reduce the tax assessed value of the new home. If the Amendment passes, owners who qualified for homestead exemption on January 1, 2008 will be allowed to transfer their “assessment difference” from a property where they held a homestead exemption in 2007. If an owner qualifies for homestead exemption for a new home by January 1st of any particular after 2008, they may transfer their “assessment difference” from a homestead property that they owned in either of the two immediately preceding years. All other features of the Save Our Homes Amendment would remain intact, including the limit of increase upon the annual tax assessed value to a percentage no greater than the previous year’s CPI or 3%, whichever is less.
- Allowance of a $25,000 annual exemption for business tangible personal property. This exemption would also include school district levies. Tax savings would be equal to about $500 per year.
- Limit the increase of non-homestead property tax assessed values to 10% per year for levies of all taxing authorities other than school districts. The assessment increase limitation would apply until there is an ownership change or until there is an improvement to the property that increases its just market value by at least 25%.
This Amendment will provide substantial future tax savings (depending upon the "assessment difference" described above) to Homestead Property Owners desiring to move; however, it offers little relief to non-homestead property owners. While we would have preferred to see more benefits offered to our second-home and commercial property owners, we recommend passage of this Amendment. ____________________________________________________________________________ 2008 Outlook from the desk of Ron Shuffield, President, EWM Managing expectations begins with managing information: Simply put, expectations drive our actions and decisions. Part of our job as realtors is to help set, monitor and influence those expectations. Providing the proper information to buyers and sellers so that they can set their personal expectations paves the way for smooth and orderly transactions. Expectations are set by a series of events. Things that you say or do, or even the way you say them, combine to form expectations. Think about how our buyers and sellers are currently being influenced as they read today’s headlines. It would be easy for buyers to believe that values are going to plummet to depression level prices while sellers may still believe that they are entitled to double digit returns from purchases made just a few months ago. Realtors have the information to share at their fingertips. Comparing inventory numbers with the number of homes and condos that are selling paints an instant picture of what expectations should be. It takes extra time to organize reliable information but it is time that is always well paid. Here’s a look at where we are today: Single Family Homes The median price of a single family home in Dade county on August 31, 2007 was $385,000 a decrease of 1% from January 31, 200l7. Monthly sales continued to slide from 877 sales per month for the three months ending August 2006 to 585 per month for the same 3 months in 2007. Inventories rose to 14,909 units representing a 41% increase over one year before. The months of inventory supply stood at less than 4 months in August 2005, 12 months in August 2006 and 25 months in August 2007. The median price of a single family home has increased 148% since January 2002 when the median price was only $155,000. Condominiums The median price for a condo is now $250,000, down 4% from January 2007. Inventories have increased 37% this past year to 24,827 units while sales decreased 36% to only 685 average monthly closed sales for the 3 months ending August 31, 2007. The months of supply were 4 months in August 2005, 17 months in August 2006 and 36 months in August 2007. The median price of a condo has increased 117% since January 2002, when the median value was $115,000. 2008 Market Outlook We know that an inventory supply of 6 to 12 months provides a balanced exchange among buyers and sellers. Needless to say, we have far surpassed those levels reaching upwards of 36 months. We are encouraged over the long term that the world views South Florida as a destination that will continue to grow in value over time. There are thousands of potential part time home buyers as well as investors waiting on the sidelines for the right moment to take advantage of better valued South Florida properties over these next months. In the short term, we are going to see a reduction of values throughout most of 2008. Reductions will not be uniform across all markets or across all product types. Neighborhoods and or buildings with high concentration of investors and speculators will have greater declines in value. The most desirable properties in areas or buildings with high percentage of owner/occupants will maintain their values while some may even experience most increases. The first sign of a recovery will be a decline in our inventory levels. The build-up of inventory began in April 2005 when we had 14,000 homes and condos in inventory in Dade and Broward counties. In August 2007 we had 80,000 homes and condos in inventory. These numbers are expected to increase into 2008 but at monthly increases far less than the double digit increases of 2006. Once the inventory levels begin to fall back, values will then have a chance to begin re-building. Some higher end price ranges have already begun to see reductions in the number of properties for sale. We forgot that we have seen much steeper downturns in our volume of sales in past cycles – only to see the turn-around come ever so quickly as the buyer confidence rekindles. We have all spoken first hand to many potential buyers over this past year who has told us they are sitting out the market. The number of properties rented through the MLS is up 54% over two years ago, another good indication of the demand that is “waiting in the wings”. By 2011, Florida is projected to bypass New York as the third most populated state in the nation behind California and Texas which will create additional housing demand. South Florida market fundamentals are very strong with solid interest from international and second home buyers, good corporate growth, low unemployment, mortgage rates still historically low, a dwindling supply of developable land and a population that is still growing by almost 70,000 new permanent residents per year in just Miami and Fort Lauderdale. Add ample housing supply and a dose of sunshine and the attention of the entire globe and you have all the ingredients for a world class region! If we are prepared with good information about changes in the market conditions and continue to communicate the steps we are taking to professionally adjust to the market, we can foster a strong feeling of confidence. If we know the days on market are increasing, or that a price reduction is warranted, we need to quickly align the expectations that we are managing so that we can more effectively perform the job for which we have been entrusted. In short, our level of success in serving our buyers and sellers is linked in direct proportion to our level of communication with them!!! ________________________________________________________________________________________________ Labor Day update from the Desk of Ron Shuffield, President, EWM Our HomeServices of America leader and president, Ron Peltier, was featured yesterday afternoon in a live interview on CNBC. I have attached the link so that you can hear his answers to where we are in this real estate "cycle". While South Florida certainly has the honor of having the largest inventory of new condominiums in the nation, we are not alone in dealing with an "adjusting" market which is still occurring across the entire country. As you will hear Ron say, he believes that we are in the "7th or 8th inning" of this cycle which began in mid-2005. At the quarterly meeting with my counterparts from across the country last month in Omaha, Warren Buffett said that he believes we will continue to see adjustments throughout 2008. He went on to say that he sees these next months as a great opportunity for our individual associates, as well as for our company as a whole, to build "market share". We have already seen the number of new Florida licensees drop from over 51,000 in 2005 to probably around 10,000 by the end of 2007. And additionally, many of our small to mid-size competitors have either closed are merged into other firms over these past months. You can just look around at the many seasoned associates who have recently joined with us to see that your professionalism is attracting other quality people. As Mr. Buffett points out, these markets provide great opportunites for the committed professionals in our business to excel. Here is one of his many great quotes: "Be fearful when others are greedy. Be greedy when others are fearful." As fear grips many over these next months and years ahead, there are going to be many opportunites for us and for our buyers to do very well.
It doesn't require a lot of analysis to see that the business is now in the hands of fewer Realtors. While sales are certainly tougher to make today, there are many EWM Associates who are standing out even more now than before in their respective market areas. Sellers are looking for Realtors who have a plan of action and who are responsive to their needs. Each of us now has the opportunity to control a larger share of a smaller pie. Over the past 30+ years of watching these markets, I have seen those who work harder in these transitioning markets always emerge as the new leaders as the market rebounds. I know that these past months haven't been easy, but we are now in the final phase of this cycle... where our sellers now agree that more aggressive pricing is needed. It's a time that will allow all of us to excel, but we have to put forth extra effort each day. We have seen significant price reductions over the summer and more sales are happening as a result. Hopefully, you are preparing a new market analysis for each one of your sellers at least every other week. Neighborhood and condo building comparables change daily; therefore, we need to be able to inform our sellers of these changes on a timely basis. The deals being made today are due to our having the most current information to share with our buyers and sellers. The information will not always reveal declining values, so we need to share the numbers with our buyers, as well as our sellers. It doesn't take a lot of research to be the most knowledgable Realtor in your market area. When you have these numbers on the "tip of your tongue", buyers and sellers will immediately recognize your market knowledge... plus you will have a much higher level of confidence when speaking with them. And, don't forget to introduce your buyers to one of our HomeServices Lending financial representatives. HomeServices Lending's joint venture with Wells Fargo Bank has now emerged as one of our stongest sales tools. The lender in the deal is now the most important component of the deal! Our MLS rental activity is up 54% over last year... not because tenants can't afford to purchase, but because the media has temporarily scared them away from buying. People are still moving! Most of these new tenants are closely watching the "for sale" inventory, so that they can be ready to take advantage of better values. And lastly... our international friends still have South Florida as #1 on their list. We will forever be in the enviable position of being located smack-dab in the middle of the 900 million people who call the western hemisphere home! The best is yet to come..... ________________________________________________________________________________________________________________________  From the Desk of Ron Shuffield, President, EWM.
I know that we all recognize that the dramatic appreciation that we have experienced over these past 4 to 5 years has "taken a breather" this year, but we are still making sales. We anticipate that our EWM sales volume will be down 16% to 17% from last year once we close out 2006. Not bad... when you consider that 2005 was our biggest year in history. The good news for Florida... and particularly for South Florida... is the fact that our permanent population is continuing to grow. Population growth is the # 1 driver of our business and no one is disputing that we will continue to grow in large numbers. Every one of these new residents needs a place to live. At the end of the day, our business is a supply & demand business. With a limited supply of South Florida land and an ever-increasing demand over time, it is inevitable that values will continue to increase as we look into the future. I have been "working and living" Florida real estate for 33 years... since 1973. There have always been market adjustments along the way during those years. These adjustments are very normal. Real estate values must be measured over an extended period of time... not month-to-month. After three years of super-heated sales activity, South Florida's residential market is taking a well-deserved break this year. This is a good thing......No market can sustain back-to-back double-digit increases year after year. With the departure of speculators hoping for immediate double-digit profits, South Florida's real estate market has returned to a more normal sales pace, reflecting true buyer demand. If we had been in a "balloon market" going into 2006, values would have dramatically fallen over the course of this year. But, sales prices have retreated only slightly after the 20% to 25% annual increases of these past three years. Owners who closed on their purchases, or entered into pre-construction contracts, prior to mid-2005 have seen equity built in their properties in a very short period of time. Those who purchased in the early 2000's have enjoyed significant gains in the value of their investments. Now is the time that "patient money" goes to work in building solid, longer-term returns. As the cost of land and construction rises over time, the ones who control desirable properties today are the ones who will watch their assets grow... just as others have over the past generations. Before the end of this first decade of the new millennium, will we all wish we had purchased more real estate? You can bet on it! Do we still need to reduce some of our asking prices today? Yes. Will properties appreciate again? Absolutely! Will 2007 bring a stabilization of the market? Yes, as buyers and sellers adjust to the new reality of living on a new pricing plateau. Will the adjustments be as dramatic as we are hearing from the media today? No. South Florida's market fundamentals are still very strong: on-going demand from international and second-home buyers (albeit somewhat less than last year), good corporate growth, low unemployment, mortgage rates still at historically low levels, a dwindling supply of developable land, and a population that is still growing by almost 70,000 new permanent residents per year in just Miami and Ft. Lauderdale.
......Add a dose of sunshine and the attention of the entire globe and you have all the ingredients for a world-class region in the making! We forget that we have seen much steeper downturns in our volume of sales in past years... only to see the turn-arounds come ever-so-quickly as the buyers' confidence levels re-kindle. We have all spoken first-hand to many, many potential buyers over these past 9 months who have told us that they are "sitting out" 2006 to see what happens. Our MLS rental activity is up 23% over last year and rental prices, already up 15% over last year, are still increasing... another good indication of the demand that is "waiting in the wings". Some of these people have already re-entered the market in their search for a new home and I predict that most all will be back next year. By 2011, Florida is projected to bypass New York as the third most populated state in the nation... behind California and Texas. And... those numbers don't count all of our second and third-home friends who will be sharing our shores. A lot of people will be joining us over the next 25 years. So... what should we be doing to ease the anxiety that comes with each new front-page article or national news segment? Our feelings about most things are influenced more by our expectations, whether perceived or real, than by anything else. If we are prepared for something, we generally accept it a lot better. Our buyers and sellers are the same. If we have prepared them with good information about changes in the market conditions and continue to communicate with them on a regular basis about the steps that we are taking to professionally adjust to the market, that will foster a stronger feeling of confidence. If we know that the days-on-market are increasing or that a price reduction is warranted, we need to quickly realign the expectations that we are managing so that we can more effectively perform the job for which we have been entrusted. In short, our level of success in serving our buyers and sellers is linked in direct proportion to our level of communication with them. Keep the communication flowing. Staying on top of a transitioning market takes extra care... and we are here to help you. These next months are going to be good ones to sharpen our skills and to broaden our knowledge. I think that the opportunities before us will also be fun, as we measure the rewards of our efforts. "We are all fortunate to be living and working in probably the most exciting real estate market on earth. So much of life is just being in the right place at the right time. Little did I know when I found South Florida over 30 years ago how lucky I would be!!!" -Ron
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