Today's Local Real Estate News

The Miami Herald reports on the economic impact of the housing bubble:

“Floridians are spending less on big-ticket items -- cars, furniture, appliances -- and economists say it's due to one main ailment: the slumping real estate market.”

“The principal problem, state economists said Wednesday, is that home construction and sales of existing homes have dropped even below the slowdown they had anticipated earlier this year. The level of sales of existing homes has dropped to 1997 levels. And the sluggish housing market has eroded consumer confidence and dragged down the sales of other expensive items such as automobiles.”

“Auto sales in Florida have plummeted in the past 18 months: During one three-month period in 2005, the state took in $1 billion from taxes on auto sales. The past three months: $906 million.”

“Sales of appliances and furniture have tumbled as well, according to forecasts, with state revenue from sales of those items dropping from a high of $428 million during fall 2006 to $402 million in the past three months.”

“’We think people are hunkered down,’ said Amy Baker, coordinator of the state Office of Economic and Demographic Research. ‘They don't feel as wealthy. They stop buying things.’”

The Palm Beach Post explains further:

“Amy Baker, coordinator of the Florida Legislature's Bureau of Economic and Demographic Research, said of the state's economy: ‘By almost any way you calculate it, if you looked at the housing market and all its related pieces - the finance piece, the Realtor piece, the building piece and the sales piece - by pretty much any measure, that is akin to a recession. It's just we don't define it that way.’”

“The culprit: Florida's tanked real estate market, they agreed. The downward spiral won't get better until early 2009, Baker said. That would be later than forecasters had projected.”

“The statewide housing sales slump - existing home sales are down to monthly levels last seen in 1997 - has stunted associated tax collections and is spilling into business and consumer spending, which in turn affects other tax collections, revenue estimators found.”

“In addition, Floridians' per capita income is growing at a rate much lower than normal: about 2 percent or less, more than half the 4.2 percent average increase of the previous 20 years.”

“‘We knew it was going to be bad. We knew it was going to be tough,’ Baker said. ‘What we didn't predict is the length of time that this adjustment's going to take to come back out of it.’”

But don’t worry, our Federal Reserve Board Governors nominees see no problems. The Philadelphia Inquirer reports:

“Delinquencies and defaults on subprime mortgages are likely to worsen, but they haven't hurt the nation's broader economy so far, three nominees to the Federal Reserve Board of Governors said yesterday.”

“Lawmakers are considering the nominees after Senate Banking Committee Chairman Christopher J. Dodd (D., Conn.) demanded that the Fed make stricter rules against lending practices that contributed to rising defaults on subprime mortgages, which are home loans to borrowers with shaky credit histories.”

“The candidates, nominated by President Bush in May, require Senate approval.”

“He [Dodd] questioned the nominees on whether the Fed could have done more, or done it faster, to police subprime mortgages and keep the number of defaults in check. Duke said that, ‘looking at it in hindsight, clearly something different could have been done.’”

“Klane said: ‘If the Fed had acted somewhat earlier, we might have had, to some extent, a better outcome.’”

Yet, in the face of all this bad news, the City of Hallandale is booting 140 residents out of their low-cost trailers just to provide more land for more developers. The Miami Herald reports:

“Hallandale Beach officials are preparing to buy the land out from under about 85 low-income residents of the Tower Mobile Home and RV Park.”

“The city plans to evict the residents, eliminate the mobile homes, and expand Peter Bluesten Park at 501 SE First Ave.”

“The municipal project was news to resident William Denham, 82, a decorated World War II veteran who recently was diagnosed with lung cancer. He lives on $900 a month from Social Security and a veteran's fund and pays $300 to rent his lot.”

“‘I have nowhere to go. What do I do now?’ Denham said, looking out at the property where plastic pink flamingos and wind chimes decorate some homes.”

“‘If I go anywhere else, I'm not going to be able to pay,’ Denham said. ‘If the rent is $700, then I have $200 to pay utilities and to eat on. My insurance on the car is $60 a month.’”

At least the City of Coral Springs sees the looming foreclosure crisis and is being proactive. The Sun-Sentinel reports:

“Coral Springs Beginning this fall, the city will begin a foreclosure education program to help people avoid losing their homes.”

“Throughout the country, the number of people falling behind on their payments is skyrocketing. Florida had the second highest total of foreclosure filings in the nation in June, following Nevada, according to RealtyTrac's June U.S. Foreclosure Market Report.”

“Coral Springs is no exception, where officials said there are now about 136 homes that have either been foreclosed on or are in the last stages of foreclosure, and another 640 are in pre-foreclosure, where banks have indicated they will begin the process if loans are not brought up to date.”

“While that's a minuscule percentage of the city's population, officials fear the number could only spike, especially as interest rates rise.”

“’That's hundreds of families being affected in our city,’ said Vice Mayor Roy Gold.”

Expect Realtors® to tell you the “Now is the time to buy,” after this announcement. The Miami Herald reports:

“Mortgage rates around the country edged down this week, with rates on 30-year home loans sinking to their lowest point in a month, good news for prospective buyers.”

“Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.68 percent. That was down slightly from 6.69 percent last week and was the lowest since early July, when rates stood at 6.63 percent.”

“The moderation is welcome for people in the market to buy a home. In mid-June, rates on 30-year mortgages had climbed to 6.74 percent, an 11-month high.”

“Rates on mortgages are ebbing as recent stock market turbulence has prompted investors to plow money into bonds, driving down rates on bonds. That, in turn, has pushed down rates on mortgages.”