With a little more than two weeks left before Congress leaves for the August recess, NAR is working hard to get a Housing Stimulus bill on the President’s desk.
In the latest edition of the NAR’s President’s Podcast, NAR’s Chief Lobbyist Jerry Giovaniello explains what is included in this complicated legislation and why it is so important to REALTORS® and the housing market.
For information about how to receive these new benefits, please read below or visit the Department of Revenue’s Web site online at www.myflorida.com/dor. You may also wish to contact your local property appraiser’s office.
Citizens will gain the freedom to purchase a new home without huge tax penalties. Rental home owners, second home owners and businesses will benefit from limits on future tax increases. The amendment contains two provisions that we have long advocated: doubling the homestead exemption and the ability for Florida families to take with them their Save Our Homes tax savings.
Specifically, the constitutional amendment:
1. Doubles the homestead exemption for almost all homeowners, providing an average savings of about $240 annually. The new exemption applies fully to homesteads valued over $75,000, and partially for homesteads valued between $50,000 and $75,000. This new exemption does not apply to school taxes.
2. Allows portability: The Governor has heard from many Floridians that they feel trapped in their homes. Portability allows homeowners to transfer their Save Our Homes tax benefits from their current home to a newly purchased home within any Florida county. Portability applies to homes purchased in 2007 and later, and the benefit is capped at $500,000.
3. Provides an assessment cap of 10 percent for all properties not previously capped: While homestead properties are already capped at three percent, now all other properties, including rental properties, second homes, and business properties, will be protected from huge tax increases. This new exemption does not apply to school taxes.
4. Creates a new $25,000 exemption for business property, including office furniture, computers, machinery and equipment.
The passage of Amendment 1 will help jump start Florida’s housing market and make Florida even more business friendly. Again, I encourage you to please read below or visit the Department of Revenue’s Web site online at www.myflorida.com/dor for information about how to receive these new benefits.
What you should do to receive benefits of Amendment 1
On January 29, 2008, an overwhelming 64 percent of Florida voters helped change Florida’s property tax system. To receive some of the benefits of the changes enacted on January 29, certain homeowners must take action by March 1, 2008.
The Constitutional amendment created four new opportunities for taxpayers to obtain tax relief:
1. Increased homestead exemption
2. Portability of “Save our Homes” benefit
3. $25,000 exemption for tangible personal property
4. 10 percent annual assessment cap for non-homestead property
What taxpayers must do to receive these new benefits:
1. Increased homestead exemption – Homeowners that are currently receiving the homestead exemption will automatically receive the increased homestead exemption. No action is necessary.
2. Portability of “Save our Homes” benefits – If you received the homestead exemption in 2007 on a home that you sold or otherwise abandoned during 2007 and have purchased a new home by January 1, 2008, you are eligible to take some or all of the benefit of “Save our Homes” to your new home. In order to receive this benefit, you must apply by March 1, 2008 to your property appraiser for your new homestead exemption and for the transfer of the “Save Our Homes” benefit to your new homestead for 2008.
3. $25,000 exemption for tangible personal property – Tangible personal property taxes apply only to certain taxpayers in Florida – typically businesses and certain owners of mobile homes. The tax does not apply to homesteaded property. In order to receive the $25,000 exemption for tangible personal property, taxpayers subject to the tax must file a tangible personal property return with their property appraiser by April 1, 2008.
4. 10 percent limit on annual assessment increases for non-homestead property – The 10 percent limitation does not apply until 2009. No application is necessary for 2008.
If you have any questions about what action you must take to receive these new benefits, please contact your local property appraiser. For information on how to contact Florida’s property appraisers, go to http://dor.myflorida.com/dor/property/appraisers.html.
Apply by March 1, 2008, to transfer your “Save Our Homes” benefit to your new home.
The Florida homestead exemption “Save Our Homes” benefit is now “portable” because of the passage of the constitutional amendment on January 29, 2008. The “Save Our Homes” benefit is the difference between the assessed value and market value of a homestead property due to the annual limit on increases in assessed value. Portability means that, from now on, you can transfer some or all of your old home’s “Save Our Homes” benefit to your new home.
You must apply to your property appraiser to transfer your “Save Our Homes” benefit. For contact information on Florida’s property appraisers, go to http://dor.myflorida.com/dor/property/appraisers.html.
Portability for 2008
Portability first becomes available for homeowners who had a 2007 homestead exemption on their Former home and established a new homestead by January 1 ,2008.
If you moved into a new home by January 1, 2008, you have through March 1, 2008, to apply to your property appraiser for your new homestead exemption and for the transfer of the “Save Our Homes” benefit to your new homestead for 2008.
If you have already applied for a homestead exemption on your new home, you must complete a separate application by March 1, 2008, to transfer the “Save Our Homes” benefit to your new homestead.
Portability for 2009 and after
If you move into a new home after January 1, 2008, and prior to January 1, 2009, and had a previous homestead exemption in either 2007 or 2008, you must apply for your 2009 homestead exemption and the transfer of your “Save Our Homes” benefit by March 1, 2009.
In future years, you will be able to transfer your “Save Our Homes” benefit to a new home if you had the homestead exemption on your old home in either of the two preceding years.
The NATIONAL ASSOCIATION OF REALTORS® congratulated the U.S. Congress for quickly passing a national economic stimulus package and thanked President George W. Bush for his leadership and willingness to promptly enact legislation that will help thousands of families, the housing market, and the U.S. economy.
“We believe the economic stimulus bill that Congress sent to the president today is strong legislation that will quickly impact the nation’s families and economy,” said NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “We are pleased that both the Federal Housing Administration (FHA) and the Fannie Mae and Freddie Mac (GSE) loan limits have been increased, even if only temporarily. This will be a major stimulus for the housing industry and for people who want to own a home.”
Increasing FHA loan limits will help an additional 138,000 Americans achieve the dream of homeownership and will allow nearly 200,000 homeowners to refinance and potentially keep their home, according to NAR research. In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will bolster the severely stressed housing finance market by immediately infusing much needed liquidity into the nation’s mortgage market. “While such an increase will not solve the full range of housing challenges, it will play a vitally important role in improving the nation’s economy and making the dream of homeownership more attainable for thousands,” said Gaylord.
An economic impact study conducted by NAR earlier this month estimated that increasing the GSEs’ conforming loan limits would result in as many as 500,000 refinanced loans and could help reduce foreclosures by as much as 210,000. In addition, over 300,000 additional home sales could be generated, housing inventory would be reduced and home prices would be strengthened by two to three percentage points. “These are real results and will have an immediate and sustainable impact for families across our country,” said Gaylord.
A decrease in the median sales price has spurred the area’s housing affordability index to reach 100 percent, which along with a reduction in inventory by nearly 2,000 homes indicates a swing toward stabilization of Orlando’s current buyer-favoring housing market.
The median sales price of a single-family home in the Orlando area in December 2007 dropped in one month by $11,000 to $223,900, reports the Orlando Regional Realtor® Association. The median sales price for December 2007 is 10.44 percent below that of December 2006 ($250,000), and the year-end median home sales price ($245,000) is 1.21 percent below 2006 ($248,000).
The decrease in the median home price to $223,900 means that the area’s affordability index has improved tremendously – in December 2007 the index jumped to 100.3 percent. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home.) Buyers who earn the reported median income of $51,335 can qualify to purchase one of 6,936 homes in Orange and Seminole counties currently listed in the local multiple listing service (MLS) for $230,617 or less.
The first time homebuyer affordability index climbed in December as well, to 71.4.
The number of sales in the Orlando area declined by 48.33 percent in December 2007 compared to December of last year (1,005 to 1,945), and the number of sales that took place in December 2007 also decreased over the number of sales that occurred in November 2007 (1,029, which is revised from 963 as reported last month). Total year-end sales for 2007 (16, 673) were down by 39.50 percent over 2006 (27,559).
The area’s average interest rate was 5.93 percent in December 2007 — which represents a continuing downward trend since a high of 6.60 percent in August.
Homes of all types spent an average of 116 days on the market before being sold in December 2007; and the average home sold for 92.52 percent of its original asking price. In November, those numbers were 114 and 93.77 percent, respectively.
The majority of single-family homes (183) that changed hands in December 2007 were sold for between $200,000 and $250,000, a trend that was evident throughout 2007 (3,006 of the 13,181 single family homes that were sold in 2007 fell into this price category). Another 105 homes were sold in December 2007 for between $250,000 and $300,000. Two hundred fifty-five homes sold for less than $200,000 in December, and 262 sold for more than $300,000. On the far ends of the scale, 22 homes were sold for $1 million or more while only three homes sold for less than $50,000. By year’s end, 354 homes in the Orlando area sold for more than $1 million.
Inventory
There are currently 24,298 homes available for purchase through the MLS. Inventory decreased by 1,874 homes in December 2007, which means that 1,874 fewer homes entered the market than left the market. November 2007 saw a decrease (of 158) homes, while October 2007 saw an increase of 20. Compared to last year, the December 2007 inventory level (24,298) is 24.4 percent higher than it was in December 2006 (19,537).
The inventory level reflects a 24.18-month supply at the current pace of sales.
There are 18,328 single-family homes currently listed in the MLS. Most (6,673) are listed in the $200,000 - $300,000 price range. Condos currently make up 3,887 offerings in the MLS, while duplexes/town homes/villas make up the remaining 2,083. Most condos (559) are priced at $200,000 to $250,000; most duplexes/town homes/villas (521) also fall into the $200,000 - $250,000 range.
Condos and Townhomes/Duplexes/Villas
The sales of condos in the Orlando area declined by 77.0 percent in December: A total of 84 condos changed hands in December 2007 compared to 361 in December 2006. In a month-to-month comparison, December 2007 condo sales (84) decreased by 27.6 percent from November 2007 (116). Year-end condo sales are down by 58.0 percent (2,101 condos were sold in all of 2007 compared to 5,003 in 2006).
Thirteen condos (13) that changed hands in December 2007 were sold for between $120,000 and $140,000; followed by another 13 condos that were sold for between $160,000 and $180,000. At year’s end, the majority of condos (342) had sold in the $140,000 to $160,000 range.
Orlando homebuyers purchased 116 duplexes, town homes, and villas in December 2007, which is a 30.9 percent decline over December 2006 when 168 of these alternative housing types were purchased. Duplex, town home, and villa sales in December 2007 were up by 30.3 percent compared to the number of sales that took place in November 2007 (89). Overall, duplex, town home, and villa sales were down in 2007 (1,391) by 39.0 percent (2,264 sales in 2006).
The majority (32) of duplexes, town homes, and villas sold in December 2007 fell into the $200,000 to 250,000 category. That pattern was consistent throughout the entire year, which saw the majority (403) of duplexes, town homes, and villas sold within the $200,000 t0 $250,000 range.
MSA Numbers
Sales of existing homes within the Orlando MSA (Lake, Orange, Osceola, and Seminole counties) in December were down by 42.1 percent when compared to December of last year. Throughout the entire MSA, 1,213 homes were sold in December 2007 compared with 2,096 in December 2006. By year’s end, 19,976 homes were sold in the Orlando MSA while 33,106 homes were sold by year’s end last year (a 39.7 percent decline).
Seminole County’s December 2007 sales dropped 40.0 percent below that of December 2006 (281 to 468), while Orange County fell 49.4 percent (541 to 1,069). Lake County saw a 27.5 percent decline in the number of sales in December 2007 compared to December 2006 (221 to 305), and Osceola County experienced a 33.1 percent drop (170 to 254).
Each county’s year-end sales comparisons are as follows:
Lake: 31.3 percent below 2006 (3,139 homes sold in 2007 compared to 4,571 in 2006);
Orange: 41.6 percent below 2006 (9,847 homes sold in 2007 compared to 16,848 in 2006);
Osceola: 45.6 percent below 2006 (2,702 homes sold in 2007 compared to 4,966 in 2006); and
Seminole: 36.2 percent below 2006 (4,288 homes sold in 2007 compared to 6,721 in 2006).