Today's Local Real Estate News: "Inarguably, this is the worst time to buy a house."

As Bush and Bernanke promote the bailout of troubled homeowners, the Miami Herald reports that much of the trouble was caused by speculators:

“Mortgage defaults on investment properties are playing a major role in rising loan delinquency rates nationwide -- especially in Florida -- as speculators who can't find buyers amid a housing slump simply walk away from mortgages, says the Mortgage Bankers Association.”

“About 25 percent of homes with high-quality or ‘prime’ mortgages in default in Florida were not occupied by the owner of the house, according to MBA data as of June 30. Nearly one in three defaulted homes in Nevada, and about 21 percent in California, were not owner-occupied. The MBA considers a mortgage in default when the borrower is at least 90 days past due on the loan or in foreclosure.”

“‘The areas with the fastest growing delinquencies are the areas dominated by investor properties,’ said Jay Brinkmann, a research and economics vice president at the trade group.”

“The MBA looked at home starts during the past four years and determined California, Florida, Arizona and Nevada were among the states with the most home starts per person during that time. Investors and speculators followed the home builders into the states, Brinkmann said, hoping to cash in by buying homes and holding them for a period of time before selling at a profit.”

“The estimates of how many Florida buyers are speculators -- who bought so they could cash in on rising home prices -- have ranged from 30 percent to more than 70 percent.”

“Those investors were often taking out mortgages with the lowest payments possible, such as interest-only or adjustable-rate mortgages that had low initial interest rates, Brinkmann said.”

“Once the housing market cooled and interest rates went up, investors realized they were unlikely to make a profit, and simply began walking away from the mortgages, Brinkmann said.”

An article published by the Sun-Sentinel shows how national housing statistics can provide widely different conclusions:

“Compared with the first quarter, U.S. home prices rose in the second quarter at the slowest pace in nearly 13 years, according to government data that provides fresh evidence of the housing market's problems.”

“The Office of Federal Housing Enterprise Oversight on Thursday said in its quarterly report on the housing market that nationwide home prices grew 0.1 percent from the first quarter to the second quarter.”

“The agency's index of U.S home prices grew 3.2 percent in the second quarter from year-ago levels, the smallest year-over year price growth in 10 years.”

“Other reports have come up with different readings of the housing market.”

“The Standard & Poor's/Case-Schiller quarterly index, which tracks price trends among existing single-family homes across the nation compared with a year earlier, on Tuesday found that U.S. home prices fell 3.2 percent in the second quarter, the steepest rate of decline since S&P began its nationwide housing index in 1987.”

The Sun-Sentinel reports on some good news, thon growing median household income in South Florida:

The nation's poverty rate declined for the first time this decade, but the number of Americans without health insurance rose to a record high of 47 million in 2006, according to census figures released Tuesday.

The statistics offered a mixed picture of the economy's ongoing recovery from the recession of 2000-2001. While median household income rose for the second consecutive year in 2006, the increase appeared to be driven by a jump in the number of people in each household taking on full-time jobs, rather than a rise in wages.

Overall, South Florida had 716,609 people living in poverty, the data showed. Florida's poverty rate fell in the middle range of the 50 states, tying Kansas for 25th place, at 12.6 percent. Maryland had the lowest poverty rate, at 7.8 percent of the population. Mississippi had the highest rate, at 21.1 percent.

The percentage of people living below poverty — $10,294 a year for an individual — declined in Florida from 2005 to 2006, the data showed. The rate for Florida dipped to 12.6 percent from 12.8 percent, with a total of 2.2 million people living in poverty. The rate dropped in Miami-Dade, which has had one of the highest poverty rates nationally, going from 17.8 percent in 2005 to 16.4 percent in 2006. Palm Beach County's rate declined to 10.7 percent from 11.1 percent. Broward's rate increased slightly to 11.2 percent from 11.1 percent.

Mirroring a national trend, median household income also increased in Florida and South Florida from 2005 to 2006. The median is the point at which half made more and half made less.

Florida's median income grew by 4 percent, to $45,495, below the U.S. median of $48,200. Broward's grew by 5 percent, to $50,499; Palm Beach County's grew by 4 percent, to $51,677; Miami-Dade's grew by 8 percent, to $41,237.

The Sun-Sentinel published a letter by Douglas Cohen asking for fairness in our property tax system:

“Re the Aug. 22 letter, "Property tax reform proposal is our best hope": The letter writer says the lowered revenue caused by the decrease in property tax will not affect the educational system or other services but only take the money the governing bodies are wasting out of the system. Now it is hard to make the education system worse. So how we will have at least equal services with less money, the letter writer does not say.”

“Yes, our system is not perfect. All homes are not taxed equally. All taxpayers are not treated equally. The current system and the one being proposed rewards the individual who is a resident and never moves. The new homeowner pays a higher property tax on a similarly valued home. The nonresident bears a higher share of the property tax while using a lower portion of the services. The landlord who helps to provide housing for those who can't afford or do not desire the American dream of home ownership is punished with higher property tax. The young family just starting out with fewer resources is taxed based upon the current fair market value of the home but that family who does not move watches the value of their home increase while paying property tax based closer to their original purchase price.”

“So, if you want a fair property tax system, value all real estate based upon its fair market value. Total the amount of the fair market value in a tax district. Divide the total budget by that total fair market value. No significant difference for the length of ownership or type of ownership. Adjust the fair market value for all real estate every number of years, say three or five years.”

The Palm Beach Post published an outstanding letter by Gregory Block explaining why “now” is not a good time to buy:

“Sunday's front-page article ‘As house sellers remain dug in, buyers wait for price fallout’ outlines a number of factors that will put immense downward pressure on home prices - tightening credit standards, ballooning inventory, foreclosures, higher interest rates and adverse buyer psychology.”

“Inarguably, this is the worst time to buy a house, since someone buying now has a good chance of seeing his or her equity erode in a declining market. Yet the article quotes Douglas Rill, president of Century 21 America's Choice, as saying, ‘This is the time to buy a home, especially if you have less-than perfect credit or are self-employed.’ This absurd, self-serving assertion goes unchallenged by the reporter.”

“How can it be the best time to buy a home when housing analysts themselves are debating whether housing prices will fall by 20 percent or 40 percent? Surely, this is a better time to rent rather than buy. Rental costs are falling by the month as speculators who are not able to sell their houses are forced to rent them at prevailing market rates.”

“The best time to buy will be when housing prices again are affordable. Since the median household income in Palm Beach County is $60,000, prices will stabilize once the median home price falls to $180,000, or three times median household income. This indicates a 40 percent decline from today's median price. Today's buyer is likely to be underwater for the next decade, at the mercy of a medical emergency, divorce or job loss.”

“A person with ‘less-than-perfect credit’ is better served by learning financial management than he or she is by buying a home. These are the very same people who are now threatened with losing their homes due to adjustable-rate resets, or because they were talked into a home purchase that was out of their budget. It seems that The Post's journalistic integrity stops short of questioning the outrageous assertions of one of its major advertisers.”