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BizLine: October 2006
BizLine

HOMEOWNERSHIP

Renting vs. Buying
Too often, renters compare the cost of their monthly rent to the cost of owning a home and decide the latter is “something I can’t afford.”

A new brochure, “Why Rent When You Can Buy?” published by the National Association of Realtors® (NAR) shows how the financial advantages of homeownership, from property appreciation to income tax deductions, make renting more expensive.

“Owning a home makes sense for a lot of current renters, but many would-be homeowners are reluctant to take those first steps,” says NAR President Thomas M. Stevens.

During the past 10 years, the cost of rental housing in the United States has increased an average of 3 percent per year, and average rents are projected to rise 4.1 percent this year alone. A current monthly rental payment of $1,000 would increase every year and amount to a total of $137,567 after 10 years, with no wealth accumulation. In contrast, a $210,000 home bought today with a $10,000 down payment and a 20-year, 6.5 percent fixed rate mortgage would cost $1,100 monthly and yield a net worth of $138,521 in 10 years.

“Why Rent When You Can Buy?” is available in English and Spanish. NAR offers 100 brochures to members for $50. To order copies, click here or call (800) 874-6500.

Slowing Market, Rising Values?
Three of five Florida homeowners believe the value of their home will increase in the next 12 months despite reports that the state’s unprecedented five-year housing boom is waning. That’s according to a survey of more than 1,000 homeowners commissioned by the Attorneys’ Title Insurance Fund. Released in July, the annual survey also found that:

• Homeowners are split about whether now is a good or bad time to buy Florida real estate (42 percent for both). Residents in select regions like Orlando (43 percent), Sarasota County (53 percent) and West Palm Beach (49 percent) are slightly more likely to believe that now is a good time to buy a home than regions such as Broward County (39 percent), Miami-Dade (34 percent) and Tampa (42 percent).

• Some 16 percent of homeowners cite the impact of a housing bubble as their biggest concern; even fewer cite rising mortgage interest rates (13 percent), depreciating home values (5 percent) or becoming the victim of real estate fraud (1 percent) as their biggest real estate concern in Florida. For more information, go to www.fundhomeinfo.com.

MONEY MATTERS

At What Price?
Who can afford a home in your community? The Florida Housing Coalition, of which FAR is a member, offers a research tool covering 18 of Florida’s largest metropolitan areas.


Low-Cost Loans
Low- to moderate-income Florida residents now have access to $100 million more in discounted home financing through the Florida Housing Finance Corp. (FHFC), which funded 1,100 mortgages worth about $119 million last year. FHFC’s First Time Homebuyer Program offers 30-year, fixed-rate loans at low interest rates. Residents impacted by last year’s hurricanes have access to low interest loans, and needn’t be first-time homebuyers to qualify.


Drive Time
A recent study by the Brookings Institution says that for every $10,000 saved in annual transportation costs, a household can afford to spend about $100,000 more on a home. Housing represents 20 percent of the average household budget, while transportation accounts for 19.4 percent.


LICENSING NEWS

Renewal Fees Take a Holiday
If there’s anything better than a holiday, it’s getting paid for the time off. Every individual real estate licensee in Florida can now enjoy a two-year fee break since the Department of Business and Professional Regulation (DBPR) announced it’s waiving license renewal fees for one complete two-year renewal cycle, effective Sept. 30, 2006, and running through March 31, 2008.

The DBPR extends the waivers to real estate licensees as a result of accrued surplus funds in a DBPR-administered account, says Trey Goldman, Florida Association of Realtors® (FAR) legislative counsel. This real estate trust fund holds money that real estate licensees have paid the department for the cost of licensure.

“The DBPR is basically giving back what members have already paid,” Goldman says.

Sales associates will save $85, and brokers will save $95 in renewal fees, according to the DBPR fee structure. All licensees must still renew their licenses to meet the required two-year interval deadline. And, Goldman points out, the $5 fee collected to combat unlicensed activity is not included in the fee waiver. Also, companies—corporations, partnerships and branch offices—are excluded from the program.

More good news is that FAR members will also net much-improved customer services from DBPR’s Division of Real Estate, Goldman adds. Gov. Jeb Bush signed a measure during the 2006 legislative session that adds five new DRE positions. “FAR has and will continue to lobby for better services from state agencies,” says Goldman.


SURVEY SAYS

Hurricane Impact
Following the hurricanes of 2004 and 2005, insurers in Florida and elsewhere raised premiums and reduced coverage, impacting homeowners and business owners alike. To understand the storms’ impact on housing and economic activity, the Florida Association of Realtors® (FAR) commissioned a study, “The Impact of Hurricanes on Housing & Economic Activity: A Case Study for Florida,” from the National Association of Realtors® (NAR).

Historically, Florida has accounted for the most losses from hurricanes: 38 percent of total U.S. insurable losses, according to ISO, an insurance industry research firm. The report also makes a strong case for a national disaster insurance program.

Title Insurance
The State of Florida plans to embark on a comprehensive study of title insurance rates after a preliminary report by the state Office of Insurance Regulation revealed that homeowners are paying premiums as much as 136 percent higher than consumers in other states pay for comparable coverage.

The average cost of title insurance in 2004 was $2,048, which, according to the report, now accounts for about 14 percent of settlement costs.

“We will combine the data from this study with an analysis of what consumers are presently paying to set fair and accurate rates for this industry,” says Florida Insurance Commissioner Kevin McCarty.