Flood Insurance

Monthly flood insurance premiums for more than 1 million homeowners are set to increase this week due to a rewrite by the U.S. Congress last year of the federal flood insurance program. As a result, home prices in flood zones around the country are being affected as potential buyers balk at the cost of premiums. Flood insurance is required by lenders when they give a mortgage in a FEMA designated flood zone. So the option of not buying flood insurance is only there for cash buyers who are willing to risk a flood. Federal flood insurance covers $1.3 trillion of property in all 50 states, with Florida, Texas, Louisiana, California and New Jersey making up two-thirds of all policies, according to Federal Emergency Management Agency, FEMA which runs the program. Federal subsidies have kept rates as low as 10 percent of the actual cost, but now all that is changing. Under the law, those who bought homes after July 2012 became ineligible for subsidies after Oct. 1. The flood insurance program amassed more than $20 billion in debt after Hurricane Katrina slammed into New Orleans in 2005 and it borrowed more after superstorm Sandy hit the East Coast in 2012. Owners of vacation homes began to lose federal subsidies in January, with annual rate increases of 25 percent until reaching full price. After Oct. 1, subsidies for businesses and primary homes began being phased out. FEMA is reassessing its risk calculations, drawing new flood maps that will bring higher rates to some areas. Those who buy homes in flood zones or sign up for new policies won’t be eligible for subsidies. The new flood insurance law was designed to reduce the National Flood Insurance Program’s growing debt. The measure, called the Biggert-Waters Flood Insurance Reform Act of 2012, phases in rate increases for the 20 percent of policyholders who have been receiving federal subsidies on premiums. The new law was written by Maxine Waters, a California Democrat, and Judy Biggert, an Illinois Republican, (who lost her November re-election). Waters, said she never expected the bill she sponsored to cause large rate increases. Florida is home to 37 percent of the nation’s 5.6 million flood policies, and is now trying to attract private companies to write flood policies and are considering starting a state-based flood insurance pool, rather than the FEMA policies. Florida policyholders have paid $16 billion into the federal program over the last 35 years. Various measures have been offered to stop or delay the rate increases. Louisiana is preparing to sue. Massachusetts Attorney General Martha Coakley proposed legislation this month to cap the amount of insurance lenders can require. Bills pending in the U.S. House and Senate to delay rate increases have bipartisan support, mostly from lawmakers in coastal states. On the other side are those who advocate market-based policies, who have urged members of Congress to leave the measure in place. Would-be homebuyers up and down the barrier islands and within a few miles of the Gulf oif Mexico, are walking away from contracts when they see the insurance costs, and some Realtors are using the “fear of flood insurance” as a marketing tool for homes that don’t lie in flood zones advertising, “No flood insurance required!” Dane Hahn is a real estate professional with Venice-based Sarasota Realty Associates. He can be reached at dane.hahn@gmail.com or by phone at 941-681-0312. See him on the web at www.danesellsflorida.com

Florida Home Owner Association regs.

This year, a bill was passed and signed into law that makes several changes to homeowners’ association (HOA) governance, including the requirement for the Department to create a website where HOAs and Community Association Managers (CAMs) are now required to register. The deadline for registration was November 22nd, and as of the deadline there were 12,723 associations representing 2,563,801 parcels meet the registration requirement. It’s important to note that although the initial registration deadline has passed, HOAs will continue to have an opportunity and obligation to register. DBPR will maintain the HOA registration website and provide an annual report to the Governor and Legislature each year until 2016. Home Owner Associations that have not registered, must do so to ensure you are in compliance with the law. To register, please visit www.myfloridalicense.com/hoa. If you have any questions throughout the one-time registration process, please do not hesitate to contact the Department at 800.226.9101. To register your Homeowners’ Association, you must create an online account. Once your account has been created, you will receive an e-mail with a temporary password; you may then create your own unique, secure password. Check your Junk Mail or SPAM folder for this e-mail if you do not receive your temporary password after a short amount of time. You can creat an account on line at www.myfloridalicense.com/hoa Create Your Online Account by going to the myfloridalicense site, or use: https://www.myfloridalicense.com/datamart/loginFLDBPR.do;jsessionid=0480CD7A080BE242DF3D3903368363C9.vo_fldbprm NOTICE: THIS IS FOR HOA’S ONLY. Please do not register a Condominium Association subject to Chapter 718, FS, do not register a Cooperative association subject to Chapter 719, FS, do not register a Timeshare Association subject to Chapter 721, FS nor a Mobile Home Park subject to Chapter 723, FS. Click here to register your Homeowners’ Association If you have questions or need assistance with completing the registration form, please call the Customer Contact Center at 850.488.1122 or use this convenient contact form. Chapter 2013-218, Laws of Florida, amended Chapter 720, Florida Statutes, to require homeowners’ associations, which meet the definition of section 720.301(9), Florida Statutes, to register with the Division by November 22, 2013. Homeowners’ associations that are required to register with the Division must be a Florida corporation responsible for the operation of a community or a mobile home subdivision in which: · the voting membership is made up of parcel owners · and membership is a mandatory condition of parcel ownership, · and in which the association is authorized to impose assessments that, if unpaid, may become a lien on the parcel. The term “homeowners’ association” does not include a community development district (CDD) or other similar special taxing district created pursuant to statute. Reporting requirements: · Legal Name of homeowners’ association · Federal employer identification number · Mailing and physical addresses · Total number of parcels · Total amount of revenues and expenses from the association’s annual budget For associations in which control of the association has not been transitioned to non-developer members, the following information must also be reported: · Legal Name of developer · Mailing address · Total number of parcels owned on the date of reporting If you are a Community Association Manager filing on behalf of the association, please provide your License Number. Dane Hahn is a real estate professional affiliatgged with Sarasota Realty Associates in Venice, FL. You can reach him at 941-681-0312, or by email at dane.hahn@gmail.com See him on the web at: www.danesellsflorida.com

Want to Buy a Business, Ask Your Wife

A couple of weeks ago I received an email from a friend who is transitioning out of the Coast Guard after a 4-year career as a senior cook. He has been in charge of the Galley at Portsmouth, New Hampshire Station for the last three years and has done a remarkable job there.

The Coasties actually like the food he makes, and according to the Sr. Chief, anyone who can eliminate complaints around the station is a big help. My friend's reason for sending me the email is that he is evaluating his future, and has found a bed and breakfast for sale on the oceanfront in Maine. He is considering the purchase of the place as the next chapter in his life—which amounts to about 27 years so far. He has a wife and three small children, and presently lives off base, so he is used to paying rent and having the family around him when he’s not at the station.

At the station he has an assistant chef (FS-3), and some enlisted folks who help out in the scullery and maintenance of the Mess Deck. He is responsible for developing menus, buying the produce and ordering the food stocks. He also schedules the work week so that either he or the assistant will be there for all 21 meals a week. Generally their hours are from 6AM to 6PM, and they divide the work with some overlaps.

As a Realtor and a friend, he asked my opinion as to whether buying the bed and breakfast was a good idea—and of course I was happy to throw in my 2 cents. What follows is a part of my reply: …you have obviously done your homework on how the business plan would work. My suspicion is you would be the "breakfast" guy, and the family would all pitch in regarding the "bed" portion of the equation. If you decide to move forward with this project, your next few years will be the stuff of a novel, so take notes. But even if you have ruled it out, no doubt your entrepreneurial spirit will rise to the top like cream in skim milk and another opportunity will find you.

Oddly, when the time is right, and you are listening to hear opportunity knock, OMG, there it is! I wanted as a friend to give you the best kind of advice I got from a very high priced lawyer who I engaged to keep me out of trouble. I approached him with a business plan and asked him to look it over for any weaknesses that I might have missed. He asked me, "are you going to do this?" and I said, "I want your opinion, is this something that seems like a good idea to you?" He said his opinion was his opinion and it was based on his life, his age, his resources and his willingness to take risks.

And he said that he couldn't help me one way or the other until I had decided what I was going to do. His role was not to decide what I would be good at, but rather to limit my risk once I had made my decision. I was not happy with the answer, but over time I have come to see he was right.

So I wrote to my friend, that if you're going forward, go with 100% of your energy and brainpower. Be careful not to have one foot in the boat and one foot on the dock. If you are half-hearted about this, you will fail. I know family is important to you, as it always was to me, which means your wife needs to be equally committed. A commitment of this sort is going to mean you will have time for the family around the building and you might get out to some of the kids T-ball games or scouts but you'll have little time for vacations and travel.

If you're good with that, just know that's what to expect. And finally, I told him my wife and I may need a place to stay when we are "up north”, so let me know what happens, if he moves forward, I’ll post his address. Dane Hahn is a real estate professional with Sarasota Realty Associates in Venice, FL. You can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

Credit Score

All the time I hear people talk about their credit score. And everyone who is hoping to buy a house seems to have found a way to unearth the three-digit number that they claim is “their score”. I say I am always skeptical of the numbers they offer up—because one set of credit score numbers from one source can be different from the numbers from another source—for the same person. Credit score numbers are based on formulae and algorithms, and in my mind are based on five parts history and five parts of sorcery. This seemingly harmless number is strongly tied to the amount you can borrow. It influences the terms you will be offered. In order to stay on top of your finances, it is crucial for an individual to thoroughly understand credit scoring in order to make well-informed decisions. There are three main credit bureaus, Equifax, Trans Union and Experian. While each credit bureau uses a different method for calculating your credit score, individuals with a long history of paying their debts on time, using the appropriate types of credit and not exceeding their available credit lines are most likely to have a good credit score. The higher your credit score, the higher are your chances of securing a loan with desirable terms. Put yourself in the position of a lender, if you were considering lending money to someone you didn’t know, wouldn’t you would want to try to figure your chances of getting your money back, with interest, and on time? If you had Tony Soprano to help you collect the debt, maybe you wouldn’t mind a higher risk, but for a mortgage for a home—banks and other lenders live with your credit score as created by one or more of the three main credit bureaus. Since payment history is a clear reflection of an individual's likelihood of defaulting on financial obligations, your credit history is the biggest contributor in a credit score calculation. As the highest contributor to your score, individuals with a habit of paying bills late are most likely to suffer. Payment history is about 35% of your credit score. The next biggest contributor to your credit score is credit utilization, sometimes called outstanding debt. If your debts are close to your credit limit, your score will take a steep decline. Similarly, if you have outstanding balance on several accounts—let’s say several credit cards—expect that to count against you. Outstanding debt makes up 30% of your score. The next most crucial aspect of your credit score is the length of credit history. They say old credit is the best credit. This is indeed true because the longer your accounts are open, the better it is for your score. Credit history has a 15% contribution to the credit score. Your debts are your friends only if they are well managed. It’s better if they have been in place for years. Clients who always pay cash for everything—thinking that having no debt is better for their credit score--are often advised to borrow some money from a well-known bank. They should take a personal loan (which is generally a short term loan and unsecured) or an auto loan (if they already have a car that’s all paid for, consider refinancing the car). Accepting debt will demonstrate your willingness and ability to handle these loans, as long as you make your payments on time and in full. The last 20% of your credit score is partly based on the kind of debt you have, the more debt and the more appropriate the types of credit you have (and can manage in a timely manner), the better. Finance company accounts, retail accounts, instalment loans, and credit cards accounts are the ideal mix of accounts. And your recent activity rounds out the report. Meaning that if three or four loan companies have recently “pulled your credit”, this will lower your score. If you decide you want a mortgage, before you get started, spend some time with a lender and discuss your credit. Then, when you apply for a mortgage, you will actually have some credit, and they will see that you are someone able to manage debt. Dane Hahn is a real estate professional affiliated with Sarasota Realty Associates in Venice--serving both Sarasota and Charlotte Counties. You can reach him at dane.hahn@gamil.com or by phone at 941-681-0312. See him on the web at www.danesellsflorida.com

Homes Always Cost More

This is the season for giving thanks, and I think I can speak for all Realtors—nation-wide, this has been a year that we are thankful for. Home sales started up again, and the foreclosures and short sales are fewer and fewer. That’s really good for our communities, as even vacant homes get back on the tax roles and new owners take pride in their new house.

On my street there are an even half dozen homes that have new owners, and everyday there are contractors trucks in their driveways. New roofs, new pools, new kitchens and baths seem to be the main expenses, but these “additions” to the cost of the home brings employment to the contractors and their staffs, brings furniture sales, brings new appliance sales and—helps everyone.

The new homeowners are like the Freshman Class, in they come and they don’t know anybody—so they have a need to meet the neighbors, to take their place in the society, and to establish themselves. They will stick together because they all moved in the same year, and they will reach out to the rest of us for the names of contractors, doctors and dentists and where the best restaurants are.

The data is a little sketchy, but it seems like the first year expenses of owning a new (or different) home run around 15% of the selling price. Meaning that the buyer of a $200K home will be spending something on the order of $30,000 in general fix-up and re-dos, just the first year. And next year should be as good or better, just look at the headlines: Air Canada will be serving Sarasota with non-stop flights. Which is all the better for us Realtors, since Canadians love our climate and come here with cash (no US mortgages for non-citizens).

It’s time for a creative real estate agency to install a kiosk at the airport and capture the buyers as they arrive in town. Maybe the best idea would be for agents to offer free orange juice and a printout of the newest listings for sale in the area of your dreams. Another headline indicates home selling prices are climbing a bit. I can never tell which side the writer is taking until I get into that story. On the one hand, increases in price are good for the seller, and for the taxman. Of course there is the concern that with increases in cost, houses will no longer be affordable, and so perfectly nice people will be priced out of the market--but in truth if a seller wants to sell, he’ll drop the price until a buyer is found.

Meaning that affordability is a function of what the buyer will pay. And so it is that most of us remember to say thanks—remember to give thanks at Thanksgiving, only once a year. But in fact, buyers and sellers (and Realtors) have much to give thanks for. Both Sarasota and Charlotte Counties have wonderful infrastructure, including not just good roads but schools, libraries, hospitals, shopping, sporting arenas and entertainment venues. All of this costs us tax money—but it makes the quality of life, and therefore the appeal to live here all the better.

Dane Hahn is a real estate professional affiliated with Sarasota Associates in Venice, serving Sarasota and Charlotte Counties. You can contact him at 941-681-0312, or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

Buyer Confidence up

All the Realtors I talk to--myself included--are pretty happy with the general look of the real estate market right now. We’re in a completely different position than this time last year, with solid price increases, steady inventory and a building demand as we move into our “season”. So 2014--bring it on! National data in October reflects a positive adjustment in inventory of approximately 1 percent compared to previous months. After six months of steady improvement, housing supplies are now just 1.51 percent lower than they were one year ago, which signals a greater balance between demand and supply. As a seller, you may feel a little confused. Are you in a seller's market or a buyer's market? The quick answer is we are moving away from the buyer’s market of the last several years and moving closer to a seller’s market. A buyer's market simply means that conditions are favorable to homebuyers. High inventories of homes for sale, falling prices, and seller concessions are characteristic. A seller's market favors the seller with rising prices, quick sales and eager buyers paying close to or above asking prices with few requests for discounts or better terms. My office--just to discuss a topic I am conversant with--is promoting a number of higher end new construction properties. Starting new homes is something that requires confidence in the housing demand and the local economy. It doesn’t hurt to have deepish pockets on the part of the builders and willingness to invest the resources into the development of new homes--which may take a year to close (and therefore a year to get paid). And of course, high-earning buyers have rebounded more quickly from the recession than entry-level buyers. This, in turn, has prompted more home builders to go upscale to match the shift. Still, builder and buyer confidence is a function of national numbers. U.S. home prices in October were relatively unaffected by inventory supply shortages. Most notably, the median age of inventory – which in other words would be called Days On Market and which is a leading indicator of demand – has improved (is lower by) more than 12% over last year, demonstrating resilience to seasonal changes and stabilized inventory. This suggests that properties continue to turn over quickly in contrast to the usual patterns, despite increasing prices and stabilizing inventory. Nationally, list prices are 7.57 percent higher than where they were one year ago. So higher prices + faster sales = a better market. National Association of Realtors Chief Economist Lawrence Yun says, “We expect rising home price conditions to continue through the balance of the year.” Of course you have heard me on Local and Regional data verses National data. Remember, all business is done locally. Unlike the “’49ers” who went west when gold was discovered, I can’t sell houses in Utah just because the market there may be going great guns. I work here, live here and focus on things here. And comparing local real estate sales with national sales is really no different than comparing our weather with the national weather. Except for June, July and August I’ll take the Suncoast. Dane Hahn is a real estate professional serving the Suncoast of Florida, you can reach him at 941-681-0312 or by email at dane.Hahn@gmail.com. See him on the web at www.danesellsflorida.com

Adverse Posession

Squatters are in the news again.

For those of you who may not know what a squatter is, it's a person or persons who move into a building with no legal ownership or permission from the owner, and act as though the property was their own, openly and notoriously.

The term we use in the business is "adverse possession", meaning taking possession of a property without the right to do so. But with adverse possession comes a specific set of rules which says that if a "squatter" lives in the property, openly and notoriously, and pays the taxes, after seven years he can apply to the town to deed it to him--in theory because the owner has abandoned the property.

Today towns will sell a property for back taxes--unless the taxes are current. I'm not a lawyer, but I can tell you that squatters pop up here and there year after year. We would occasionally see them in the states where owners would be absent for months or sometime years at a time. So Florida is a good fertile area for squatters, and so is northern New Hampshire, Maine and Vermont where little cabins and cottages were often vacant for years, and sometimes the owners no longer ever used these cabins and squatters moved in.

My grandfather had a cabin in Charlestown, New Hampshire, almost on the Vermont border. It was nothing special, two stories and about 5 or 6 acres of stoney fields. As kids my mother and uncle used to go there with their family. Later they would take their friends up for long weekends. My grandfather lived in New Jersey and during his lifetime the family used the "farm" for winter vacations, ski vacations and occasional summer outings, but as the family grew up (and got older) Cape Cod was more to their liking--still he kept the "farm".

In the last years of his life he would occasionally talk about the "farm" and how he'd like to go back and see it again, but that wasn't to be--when he died it had probably been 10 or 15 years since he had been there. Following the death of my grandmother about 15 years after my grandfather's death, my uncle--who had inherited the "farm"--went up to Charlestown to see what condition it was in.

And lo and behold, he had squatters. These were not the Florida variety of squatters who move into a home as a place to stay, with little hope of future ownership. These folks were well on their way to ownership of grandfather's farm, having lived there for years.

At the end of grandmother's life she wasn't on top of the tax bills--and really didn't notice that the taxes were being paid by others. In his situation, if no bill came in the mail, no money was due, and so this clue slipped through the cracks. So then my uncle had to figure what to do with these people. Of course the sheriff was willing to evict them, but lawyers were needed to deal with them, since they were--at least to all outward observers--good citizens. Employed at the Charlestown Lock Co. making door locks and the like, they were liked by the neighbors and known around town. Still they didn't want to rent the place, which might have been the best solution, and so they were evicted and had to make up a story about why they had to move.

And so armed with this history, I was surprised when we had squatters move into our neighborhood just this past season here in Englewood. The Florida squatters are not hoping to acquire the title by adverse possession, they were just looking for a free dwelling, and maybe one that they could live in for a month or two.

They picked a nice house, albeit one with tallish grass and dark windows. Somehow they found a way to get in, and soon enough they had the electricity turned on. The didn't bother having the water turned on, they connected a hose from the sprinkler pump to an outside faucet, which charged the water pipes in the home--so the toilets would flush. Even though this isn't drinking water, they still were able to make use of it.

That house was in the hands of a bank. The owner had been evicted, but the ownership was still in limbo, the bank holding off on taking on the ownership and thereby having to pay the back taxes even without a potential buyer. And because of the cloudy ownership, there were no "owners" who the sheriff could call. And to make matters worse, the squatters had a (forged) lease from someone which gave them the right to be there.

So when the president of our association was made aware of the situation by neighbors who noticed there were lights on in the house and a car there at night--and who also noted that the sprinkler well was pumping water into the house--he went right over with the sheriff.

The people were surprised to be visited at about 7 PM by this little band of upset neighbors with the sheriff in tow. But they produced the lease they said they had received by mail from the owner who advertised his place for rent on Craig's List. The sheriff said he couldn't do anything until the owner was contacted, and that couldn't be in the evening, but they would be able to call the name on the lease--and also the name on the property deed in the morning.

And you know what? In the morning the squatters were gone. Maybe they just moved on, I noted this week that the Charlotte County sheriff's office has rounded up 4 squatters--fewer than they thought they would catch--but proof that there are still squatters in all the nicest neighborhoods.

Dane Hahn is a real estate professional serving Sarasota and Charlotte Counties. He can be reached at dane.hahn@gmail.com or by phone at 941-681-0312. See him on the web at www.danesellsflorida.com          

Drug Money Estates

This column finds me in Central America, looking at property in Columbia and Panama. Well, not exactly looking to purchase, but more accurately “just looking”. I can report with some accuracy that one million dollars US will buy a pretty nice property in Cartegenia, and a smaller amount will buy a smaller property. Columbia is a country of "haves" and "have nots". Most of the residents fall into that latter class, but the cartels and some of the wealthy families most certainly are haves. Cartagenia is a city in Columbia, and is a city where the average income is around $500/month. So as it turns out, we were romancing the stone in the Old City, when it became pretty obvious that there is a new residential area, and it's a "gold coast" of spectacular condos. How could this city afford to build these properties? Where is the money coming from? Well, it's all guesswork, but here goes: One of the topics I follow is the cycle of real estate. The cyclical concept is really a prediction by those of us who live the market every day what will happen next...based on the concept that all civilization rests on change. But the real estate cycle, which has it's trigger points based on the ups and downs of the buyers and sellers can be modified when large quantities of cash need a home. And so it is in Cartegenia where large amounts of cash have found their way into the real estate market, and an Gold Coast of tall buildings has literally sprouted up out of the sand along a stretch of beach called Boca Grande. (Here they pronounce it Gran-day, opposed to the more nasal New York-ish pronunciation GRAND that we have come to accept in Englewood.) Syndicates in Cartegenia, (or cartels if you are more comfortable with that term), have found that they can spend the extra money they may simply have kicking around by building condominiums, and then waiting for buyers to find them. So today there are a multitude of beautiful white and largely empty buildings along a gorgeous stretch of Atlantic Ocean beach. I was not able to visit these condos in person, but my source here was our guide—a man of some 55 years and who was born and raised in Cartegenia. Building residences for people who are not ready to buy does fly in the face of reason and modifies the real estate cycle so that what we expect to happen simply does not, and what we don't expect seems to when we don't think it should. OK, so the message here is our crystal ball is a little cloudy—I would have expected a smallish building boom to be getting underway, but there are hundreds of condos all ready for buyers as I write this. Maybe HDTV will have a segment on these lovely buildings. A few months back I wrote that in the cycle of real estate there is a Seller’s Boom and then there is a Buyer’s Boom. Think of a seesaw, at some point in time sellers can pretty well set their prices and terms, and buyers just have to agree if they want to purchase a property; other times buyers are in control, and sellers who want to sell have to cave in to the buyers wants and desires. The beginning of the buyer’s market cycle will be quite hazy to all involved. As sales volume stagnates, sales prices erode, sellers become desperate and then lower prices to attract the few buyers left in the market—and then, not finding buyers, they default or abandon the property. The increase in inventory and the lower prices attract buyers and a buyer's market in underway. In a sellers market, the primary driver is buyer greed and optimism. A buyer's desire to get a good deal now before the market prices climb to a new record high. Sensing the “feeding frenzy” sellers react with a quick upward value trend, which normally will eclipse the previous value trend, and new record sales are recorded. But when there is an artificial building boom, all bets are off, and the cycle goes all askew. Time will tell what will happen here, but I suggest there will be some wonderful opportunities for buyers who want to live in this island paradise. Dane Hahn is a real estate professional serving Sarasota and Charlotte counties. You can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

Who's Buying Up Florida

If the Mormon church can complete a real estate deal they are working on, they will own nearly 2 percent of the state of Florida. This week they put forth plans to buy most of the real estate presently owned by the St. Joe Co. for more than a half-billion dollars. Completion of the deal will leave the Utah-based Mormon Church with 678,000 acres, more than any other private holding in Florida, according to widely shared but unconfirmed rankings of top landowners. Folks who follow these mega deals learned of the deal just this week from a corporate representative of Church of Latter Day Saints, which owns the nearly 295,000-acre Deseret Ranches in Central Florida. Besides their prior holdings in Florida, the Mormons also have a real estate and timber business, and have already built several communities along the Panhandle coast. According to the representative, AgReserves Inc., will buy an additional 382,834 acres – the majority of St. Joe’s timberlands – in Bay, Calhoun, Franklin, Gadsden, Gulf, Jefferson, Leon, Liberty and Wakulla counties for $565 million. AgReserves is a taxpaying company, owned by The Church of Jesus Christ of Latter-day Saints, and will maintain the timber and agricultural uses of the Panhandle acreage. Owned by the Mormon Church for nearly 60 years, Deseret Ranches sprawls across Orange, Osceola and Brevard counties and propoerties like these are increasingly seen as critical to the region’s water supply, road and rail network and future development. AgReserves--as the operating company, has a good track record with regard to land stewardship and prudent resource management. According to Paul Genho, chairman of AgReserves. “We will apply that same commitment and expertise to managing the property we are acquiring in Florida’s panhandle.” Last week, Gov. Rick Scott signed an executive order that created the East Central Florida Corridor Task Force to plan for roads, development and environmental protection in an area dominated by Deseret Ranches. Commissioner of Agriculture Adam Putnam was enthusiastic about the announced deal as long-term investment in the state’s timber and cattle business. No other metropolitan area in the state borders such a huge and potentially developable piece of property as Deseret Ranches, which covers a largely roadless and unpopulated area southeast of Orlando. With 44,000 head of cattle, the ranch property also is one of the nation’s largest producers of calves and manages thousands of acres of citrus groves, vegetable farms and timberlands. Orlando, Orange County and state water authorities have been planning for years to accommodate their growing populations by pumping water from Taylor Creek Reservoir within ranch boundaries. The seller, St. Joe Co. said the sale would help the company focus on its general real estate development. St. Joe still owns 184,000 acres after the sale. Dane Hahn is a real estate professional helping buyers and sellers in Charlotte and Sarasota counties. You can reach him at 941-681-0312, or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

Can't afford to Move

A recent survey of people who stay in their homes long after they probably should move found these “top 10 reasons” given. These are the worst reasons not to sell. Bad reason #1: "I can’t afford to move." Sellers who say this mean that they are stuck in the house they live in, maybe they owe more than they could sell the house for, and when that’s the case, they are often deferring much-needed maintenance and foregoing life’s pleasures. Actually they can neither afford to move nor stay--without making drastic lifestyle changes. There may be options here. Refinancing or renting out part of the house could represent a solution that may make this home affordable, but there may also be genuinely affordable housing out there. Usually this reason is given by folks who have not investigated all their options. Bad reason # 2: "It’s my home, and I’m used to the area." The suburbs change every day, so don’t count on your neighborhood or community staying the same over the decades of extended living that lie ahead for you. The changes you will see are not always for the better. As a homeowner, if you want permanence in your neighborhood, look toward homes found around universities or natural wonders like National Parks or unique ecosystems like wetlands. Bad reason #3: "There’s nowhere else I like as much as here!" Sellers who make this statement have rarely explored all the corners of their region. Are you really sure the home you live in is the best you can do? The best your money can buy? Check the magazine rack for “best places to live, or best places to retire”, issues. Life is not a dress rehearsal, keep your eyes open and you will find a step up opportunity. Bad reason #4: "I can’t afford the areas I really like." Lately real estate values have taken some dramatic shifts and will likely continue to do so. Most sellers do not know exactly what they could sell for or exactly what comparable housing in their preferred neighborhood would cost. More and more properties have separate rental-income suites that make moving up financially feasible. Some owners live in the suite and rent out the house until they can afford to reverse this arrangement. Take the positive approach, "How can I afford the area I really love?" Bad reason #5: "I’ll leave this house feet first, in a box." People are living longer today, and their active engaged living can last for decades. Digging in your heals to stay--out of fear of losing control of your life and ending up in a "home"--is a bad reason to stay. Get out and explore your housing options, everything from reverse mortgages to communal living choices can give you reasons to get moving. Five runner-up bad reasons not to sell include: 1. All my friends live near this house. 2. I raised my kids in this house. 3. My beautiful summer garden makes up for everything. 4. I renovated once and I can’t do it again. 5. The thought of packing and moving is too much. The bad reasons to stay go on, but they are still bad reasons. Too often, stress related to problems that keep us hanging on to our "home" shields us from decisions that make more sense by solving problems and relieving stress. Dane Hahn is a real estate professional serving Sarasota and Charlotte Counties. He can be reached at dane.hahn@gmail.com or by phone at 941-681-0312. See him on the net at www.danesellsflorida.com

Real Estate Investing

My father’s wisdom suggested that because buying a home is a long-term investment--you should buy as much home as you can possibly afford. And that general opinion has been in place for a good number of years, and even up to today. Think of your home as an investment, they said. Well look over the sales data for the last 5 or 6 years--some investment that was. But this is now, and the question is, what makes sense for today? I say, buy all the home you need, but draw the line there. Over the long haul, home values generally increase and so it is possible to build equity over time, but that depends largely on what you paid for the home, how robust your market is, and how long you occupy the home. When all the stars are in alignment, your home MAY be a good investment, but don’t buy your new home as an investment, buy it as the best place to live for you and your family. Sometimes you have to sell off your investments, that can be painful enough--but it really hurts when you have to sell off your residence. To choose the right home, you have to try to see as far into the future as possible: How long will you likely live in the home? How large is your family likely to grow? What activities will you have and what space requirements? Where do you want to live – near work, near family, in a certain school district? These questions are a way of trying to figure the number of bedrooms, baths and living areas you want as well as other features you want your home to have. Woodworkers always want a shop, artists want a studio, and chefs want a fancy kitchen. You probably know what you will want in a house, but it’s a good thing to discuss with your spouse. I have sent people who were really undecided on their needs home with the assignment to have some wine and decide what they want. Now it’s time to look at affordability. How much can you buy, and how much home can you get for your money? The trick with buying a home is getting as much as you can on your wish list without becoming “house poor.” House poor means you can afford your house payments but you can’t afford to do anything else. House poor can sneak up on you if unforeseen expenses come your way, or if you refinance to cover the cost of a college education, and suddenly have much bigger living expenses. That’s why lenders have a conforming loan standard that they use as a benchmark for pre-qualifying you as a borrower. This is true whether you’re a first-time home buyer or a millionaire move-up buyer. To qualify you, lenders use two ratios – income to mortgage debt, and income to total debt. To qualify for a 30-year fixed rate conforming loan that is federally insured, your income to mortgage debt can be no higher than 29% of your gross annual income, and your debts plus mortgage payment can be no higher than 41% of your gross monthly income. An easy way to “ball-park” what you can afford is to take your total annual income from all sources, and multiply times three. That means that if you make $3000 gross income per month, ( $3,000 a month is $36,000 a year, times 3 is $108,000. You should think that $108,000 is your maximum purchase.) Under the banks conforming loan standard, your house payment (principal, interest, insurance and taxes) should be no larger than $870.00. If you’re carrying credit card debt, student loans, or pay child support, the monthly debt service must be accounted for. To get the income to total debt ratio, multiply your monthly income by 41%. If you make $3000, your total debt including your house payment can be no larger than $1,230.00. That means to qualify for a $870.00 house payment, your debt service can be no higher than $360 per month. This formula is time-tested, and it’s designed to help you minimize the risk of home buying by making sure you can afford your payments over time. Qualifying to buy a home is only the first step. You will want to be able to handle whatever home expenses come your way - repairs, rising utilities, remodeling or other updates, and ongoing maintenance. If you’re relocating, and believe you’ll only be living in your home three to four years, a fixed-rate loan may cost more than you need. You may be better off with a hybrid loan sometimes called a 5-25 or a 7-23. That’s a 30 year loan that gives you a lower fixed rate for the first few years, and then adjusts after that. Talk to your lender and see what you can qualify for before you go shopping for a home. Get a pre-qualification letter and give a copy to your Realtor to help with negotiations. Lock in your rate, so you can calculate your payments and obligations accurately. If mortgage interest rates go up, that could impact the amount your lender will loan you. If you qualify for a smaller amount, consider buying a smaller home or a home in a less expensive neighborhood. It’s really about affordability. The more comfortable your payments are, the more likely you are to enjoy your new home. Dane Hahn is a real estate professional serving Florida's Sarasota and Charlotte Counties. You can reach him at dane.hahn@gmail.com, or by phone at 941-681-0312. See him on the web at www.danesellsflorida.com

Global Warming

We have friends from up North who think that our living in Florida is tempting the rising oceans to flood our home and wash me and my lovely wife out to sea. She is pretty sure that Global Warming will one day bring our demise. In their opinion my generation had much to do with all the so-called warming. Somehow, living in the woods of New Hampshire we had unusually large carbon footprints and somehow laid waste to the countryside and atmosphere. I admit I had 4 chainsaws when we decided to move to Florida, and I had used them regularly clearing land, making firewood, and burning brush. So apparently I need to accept some of the blame. But now, all of a sudden, the reports of the impending demise of our planet happily may be premature. I note that the arctic ice has begun to refreeze and at least some of the reports of whole earth melting and a great flood caused by rising oceans are now subject to additional discussion. So who’s right? Well, the bulk of climatologists are convinced that the release into the atmosphere of carbon dioxide by the combustion of the fossil fuels oil, coal, and natural gas in recent years has accelerated the warming of the Earth to what could be a dangerous level in the near to mid future, there are increasing signs that these dire warnings have been somewhat overblown. By far the most complete data on climate parameters is obtained by meteorological satellites. And when reviewing the data, it is important to distinguish between weather and climate data. Weather data are, by their very nature, concerned with relatively short-term predictions-days or at most weeks. Climate data, on the other hand, involve parameters that range over years to decades and even to centuries and geological eras. Although satellites have been in use for only a very limited time in geological-era terms-about a half-century-there are other data on climate variations that go back many millennia. A large, vocal, and growing community of scientists and policy analysts has been questioning the climate-change orthodoxy for a number of years. They insist that many of the so-called signs of warming, such as arctic ice depletion and extreme weather disturbances, are not necessarily caused by human-made greenhouse gases but by natural meteorological phenomena, and that the global push for 'green' energy technologies such as wind power and solar farms is both unnecessary and economically disastrous. Although certainly controversial, these views are indeed supported by geological data over the millennia, which suggest that the current indications of global warming have been encountered often in past eras, and perhaps more important, that not only do satellite data not provide the essential verification of the computer models (whose predictions on temperature and ocean level rise vary from year to year by several hundred percent) but they also indicate that although there are regional variations, there has actually been no global warming (or cooling) since 1998. Germany and the UK have recognized the negative economic consequences of subsidizing limited green-energy sources and ignoring newly discovered large fossil-fuel resources such as shale oil and natural gas. And a recent bill introduced in Congress (H.R. 2413) calls for NOAA to reduce funding for climate-change research in favor of improved short-term weather forecasting. So my friend's concern of rising water levels seem to be unwarranted and now I can feel comfortable selling Florida homes to people who—I know in my heart—will not drown in their sleep due to glacier melting. Florida really is a pretty nice place to live, especially if you are retired, and so when our friends from up north are no longer worried about the oceans rising—that makes it all the sweeter. Dane Hahn is a real estate professional serving Charlotte and Sarasota Counties. You can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

Buyer knocks down a $4 million home

What DAY is it? What day is IT? If you answered Hump Day, you’ve apparently been watching too much TV. But in the real estate business, it really we just had a real Hump Day, and here’s why. Every once in a while the stars align, the moon is in it’s seventh house, and the real estate agents begin to tremble as FINALLY all the parts that make a strong market come into focus. For the last few months real estate sales have been growing and holding. Growth against last year has been strong, and most of the really crappy properties have been snatched up by investors with the promise of returning them to the market “fixed up” and ready to sell at a profit. More on that in a week or so. Even the big homes, in the over $1 million range are moving again, and I smiled to see a $4 million dollar home up on St Armand’s circle was recently sold and now they are taking it down in favor of building a new and bigger more modern home. I suppose if you have gabillions of dollars in your various accounts, maybe you don’t want a home with used bathrooms and last year’s tile patterns. I’m too much of a Yankee for that—if it were me, I would have bought a vacant lot. I mean why knock down a $4 million home? The owner answered, “it was all for the deepwater dock and the view…” And yet, with all the good real estate news, mortgage rates had begun to climb and each upward tick in the cost of borrowing money shut a few more buyers out of the market. Quantitative Easing (QE) is not my favorite economic concept because it means the Federal Reserve is buying Government bonds back from the owners using freshly minted money; money which has no value of it’s own which is obviously inflationary. QE is a method of keeping the bond rates low (which keeps the mortgage rates low). It turns out that Wednesday this week really was Hump Day—it was the day the world thought QE was coming to an end—tapering they called it, and tapering would cause mortgage rates to soar because, as we had been told, the market was strong and the economy was getting better. But then…nope. Didn’t happen. Even as the President spoke for an hour or so in the morning, discussing all the wonders of the economy, in the afternoon the Fed announced that the economy was still too weak, unemployment still too large, and inflation was not yet a huge problem. So armed with these concepts, they decided to prolong QE, which had the effect of lowering mortgage rates overnight. We got over the hump. So is it a good time to buy or sell? Yes. For sellers, the August resale home numbers were plus 12% from last year, and September will no doubt be similar. The new construction is selling briskly even where total sales numbers are a function of how many homes can be built. So if you plan to sell, clean up, paint up, fix up and get the house ready for the buyers who are ready and now can still find cheap mortgage money. If you’re a buyer, the time is right. Homes are still affordable. Get yourself pre-approved with a bank or well-known mortgage company. Give a copy of your pre-approval letter to the Realtor you are planning to buy through. When you are in need of a mortgage, you are not a cash buyer, but if you are pre-qualified and pre-approved, you are ALMOST a cash buyer. If you actually have cash, you eliminate having to get financing and the bank’s appraisal and that is of great value to the sellers, who will be on pins and needles from the time they accept your offer until the home inspection is complete. If you have a pre-qualification letter, you demonstrate to the buyers that you can afford the house—even thought it still has to appraise. One note regarding that approval letter: if the mortgage company approved you for a home up to $300,000 and gave you a letter so stating, and you find a house at $275,000 and decide to offer $259,000. Don’t hand over the letter that says you can go to $300K, have the mortgage agent write a new letter that says you are good to $260K. If negotiations take you to $265,000, have the mortgage person write a letter Okaying you up to $265K. The mortgage agent wants to have your mortgage business, so these letters are no problem. Dane Hahn is a real estate professional serving Charlotte and Sarasota counties. You can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

Clear Title

Reading through the classifieds this week I noticed a number of Petitions for Quiet Title in the legal ads. Just so you know what this is, if you recently bought a house—let’s say a foreclosure acquired from a lender or municipality, the chances are you bought the property “as is” without any title insurance, and if you paid cash, there may be no title insurance. Or, you may have bought a short sale and received a “quit claim deed”—which essentially says, “The seller transfers all the rights he has in the property to you”, (but he may not have 100% of the ownership rights, which is always a concern). Or you may have owned a home for some years, without knowing who owned the vacant land next door, and even a bona fide search does not show a live owner. You may even have used the land as though it was your own…land like this might have been planned to be a road but was never built, and the tax cards show it is owned by a bankrupt corporation, maybe a developer. A “quiet title” is a title to real property that does not have any disputes over ownership of the property. It is said that when a deed is filed and recorded and the deed is clear of any encumbrances or claims of ownership, then you are engaging in the act to quiet title. But what if there are other claims—or what if there could be other claims? A petition for quiet title is a lawsuit that you as the probable property owner would bring to quietly settle real or potential land disputes. It is used to determine in court who has rights to the disputed land. A quiet title petition can be filed in Florida by first establishing occupation of the land and then filing a quiet title petition with the local court with proof of who owns the land. This proof can be mortgage documents and title documents. There are many ways for a title to become clouded. The seller's ex-spouse could still have some legal claim to it. An ambiguous will could make it unclear if the seller really inherited the property. Or you might want to remove a lien that's been paid off, but not listed, or make sure that the title you bought at that foreclosure sale is completely free of clouds. By filing to resolve these questions, you can get it on the record that the property is 100 percent yours. You must make a good faith attempt to warn anyone with a claim on the property that you plan to assert your ownership. The first step is to search county land-title and tax records, probate records and any other appropriate information sources. If you turn up any names that might have a claim on the property, you must contact them by mail, if possible, as well as posting a notice in the paper of record. You can't win a quiet title action just by invalidating someone else's claim, the ”Quiet Title Action” website states: To win your case, you have to prove the strength of your own claim to the property. If you can show the judge evidence that the title is yours and nobody responded after your title search, the decision should be simple. If one of the other owners challenges you, determining title may involve weighing the respective claims. If the judge confirms your title, you can record the court’s decree and that gives you a legally valid title. This is something you'll need if you want to sell the property or use it as collateral for an equity loan. There are law firms that will handle this effort for you, although you can bring the petition on your own. But as Abraham Lincoln said, “a man who acts as his own lawyer has a fool for a client.” Dane Hahn is a real estate professional serving Sarasota and Charlotte Counties. You can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the net at www.danesellsflorida.com

"Honey, we can finally afford that divorce."

My regular readers understand that I am pretty conservative, quite a bit more old-fashioned than the young-folks who elected our president. So I was pleased that one of the very few good things to come out of the recent long-term recession was that fewer divorces were being filed. My wife and I are passing 43 years of marriage and I can tell you I understand it's not all a bed of roses. But we have hung in so long that our kids tell us when they review their friends, we are about the only parents they can point to who are still married. Anyway, getting back to divorces, as it turns out about the only asset that disgruntled couples have to "split" is the equity in their home. So during the recession, when there was no equity, there was no financial reason to get a divorce--and as we all know, Americans won't do anything unless the money is right. Well the money is right all of a sudden. The market is coming back and so are the divorces, now that home values are back to their 2003-4 values. I wrote a column a few years back about a couple I had done some real estate work for. Actually they are married to each other and both are lawyers. Their legal practice focused on divorces, and due to the recession, had weakened so much that they were in jeopardy of losing an investment home they owned in North Port to foreclosure. As it turned out, they were able to pull off an 11th hour short-sale, but due to their other holdings, they had to make up the deficiency amount (the difference between the amount owed and the sale proceeds). These outcomes are reason enough for many people to hold back on their future investments, even though there are some great home values out there right now. Which brings me to the headlines in our local papers. You would think if you reviewed a week's worth of headlines that housing values are up, no wait, down--and affordability and mortgage rates are up, no wait, they're down too, and new homes are selling like hot cakes, no wait, maybe not. What is really going on? Well it all depends where you sit. If you are a simple newspaper reader, you must be totally confused. Let's look at our area, (and by our area I mean zip 34223, 34224 and maybe a peppering of North Port and Venice). Prices are growing back up a bit, so if you are thinking of selling, the likely-hood of selling your home for an appropriate price in the next 5 or 6 months is pretty good--as long as there has been regular maintenance and the neighborhood is not threadbare. If you are thinking of buying, today there is a limited inventory, but generally it's fairly priced, and today much less of the inventory is offered by a bank or lender, so any offers you are considering making are welcomed and will be negotiated quickly. If you are still waiting for the market to hit bottom, you missed that opportunity, which actually occurred about 18 months ago, so you are SOL. If you are thinking of buying a new home, remember the data that gets into the newspapers is probably national in scope, or if the paper is tying to do a really good job, the data could be statewide. My point is that our area is different from the state-wide data or the national data. Here there are perhaps 5 or 6 builders building homes right now. I have had a chance to talk to most of them and can report some of them have sold all the homes they can build for the next year (so new starts will be recorded, but are already contracted) other local builders may have larger crews and will continue to build homes that could be sold right away, but these are not affecting the available inventory in a significant way. My message here is--don't take the information you see in the larger papers as being accurate here in our area. Rates are going up, yes. But the new higher rates are still lower than most of us expect will be the norm in a year or two, so if rates are your "hot button" buy now. These rates will go up for a few more years and likely at that time, they will level off in the 6-7% range. Today you can fin 3.5% if you want a 10 year or even a 15 year mortgage. Think 4.25 for a 30 year mortgage. Actually "jumbo" mortgages are available in the 4.25% as well, so if you're chasing down a $750,000 home, get it now. Here's a quick way to figure out what a 6% mortgage would cost you on a monthly basis. At 6% annually, you pay 1% per month, so a $100,000 mortgage costs $1,000 per month. If you wait for a year or two when the mortgages are back at 6% to buy a $200,000 home, your mortgage will be $2,000/month. (Remember this includes interest AND principle). Affordability rates are really easy to mis-report. How about this: home prices have gone up 12% but salaries have only increased by 2%. So the Affordability index indicates that home sales will take a nosedive. Well, here's the deal,that kind of reporting is done by a recent college graduate who is reading the Associate Press releases for that day. In fact, homes have been undervalued for long enough so that as the prices grow, sellers will lower their asking prices if the homes don't sell. Home prices always will come down to find the first buyer. Banks used to determine what you could afford would be about three times your annual family salary. So if a couple each are making $35K, they could afford a home in the $210,000 range. Plus or minus, depending on condition, location, desirability of the school system and neighborhood. As I say, affordability is in the eye of the buyer. So what's our area's real estate market looking like? Let's say it's much better than the bad headlines, and a little worse than the good ones. Dane Hahn is a real estate professional serving our area, including Sarasota and Charlotte Counties. Reach him at dane.hahn@gmail.com or 941-681-0312. See him on the net at www.danesellsflorida.com

The HARP 3.0 Home Affordable Refinance Program

The federal HARP (Home Affordable Refinance Program) mortgage program has been a godsend to homeowners with existing mortgages who desired to stay in their homes, but found their home worth much less than they owed. HARP allows them to refinance at a much lower rate, thereby lowering their monthly payment, while continuing to own and live in the home. Originally HARP 1.0 was pretty restrictive and few people took advantage of the program, but when HARP 2.0 was designed, it was far less restrictive, and more and more homeowners took advantage of the program. But HARP is scheduled to expire at the end of 2013. It appears it will be extended, more on that in a minute. To be eligible for HARP your present mortgage must: 1. Have been securitized by Fannie Mae or Freddie Mac on or before 5/31/2009, with a loan-to-value (LTV) equal to or less than 200% of the current market value of your home. 2. You must be current on existing mortgage payments and 3. make sufficient income to support the new mortgage payments. (The interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax deductible for Federal income tax purposes.) A tax advisor should be consulted for further information regarding the deductibility of interest and charges. In a recent conference meeting Michael Stegman of the U.S. Treasury told attendees that President Obama is working to extend the program and make some significant changes. These would include accepting privately held, non-Fannie Mae or Freddie Mac home loans into the HARP program. Privately held mortgage loans, meaning someone like Wells Fargo or Bank of America holds the mortgage instead of Fannie Mae or Freddie Mac, are the reason that millions of underwater homeowners cannot qualify under HARP 2.0. Government statistics indicate that these mortgages are responsible for nearly 2/3rd of mortgage delinquencies, a growing problem for the entire housing market. The President doesn’t necessarily need Congressional or even the bank’s approval to move forward as the Treasury department already has the authority to modify many of these privately held mortgage loans, compensating investors for their losses in the process. Most industry analysts agree that the program has been quite successful, particularly given the underwhelming results of earlier iterations of refinance and modification programs. There have been complaints that a series of remaining frictions have allowed lenders to extract higher profits on heavily underwater loans. New Jersey Senator Robert Menendez and California Senator Barbara Boxer have introduced legislation aimed at protecting lenders from losses on refinancing privately-held underwater mortgage loans. The proposed changes would also extend HARP 3.0 for another twelve months. There are several encouraging points to this Home Affordable Refinance Program legislation of interest to those not eligible for HARP 2.0: Incentives to Increase Lender Participation Allow For Non Fannie and Freddy Mortgage Loans Eliminate The Mortgage Cutoff Date of May 31st, 2009 Extend HARP 3.0 by Another Year This is the kind of encouraging HARP 3.0 news underwater homeowners have been waiting for and would benefit the government by reducing delinquencies and foreclosures. If there’s one constant in Washington it’s that Democrats and Republicans can’t even agree to disagree. The longer they delay updating HARP 3.0 the more underwater mortgage holders are motivated to just walk away from their homes. Dane Hahn is a real estate professional serving Florida's Sarasota and Charlotte Counties. Call him at 941-681-0312, email at dane.Hahn@gmail.com or see him on the web at www.danesellsflorida.com

Buy Now, Sell Later

These last few weeks have offered a ton of contradictory real estate news. Sales are up, sales are down. It all depends on which story you are reading or which TV station you are watching. I say time out, the reports of how the market is doing are a function of so many things, and the reporting is sloppy at best. If you want to know how well or poorly the market has recently done, don't look at how things were on one day or one week or as the government seems to prefer, even one month. Remember the real estate cycle: a buyer decides to buy, a buyer shops for a house (new or used), a buyer applies for a mortgage, a buyer decides on a house to buy and makes an offer, the offer is negotiated, a contract is signed, then if the house is existing, it only takes 4 more weeks before the house is sold, if it's new and to be built, add 40 weeks. This process may take 3-4 months, assuming the buyer does not have to sell a house to make the whole thing happen. So how can you have any confidence in a report that sales were off last month? Last month was July, a dead month in the north, and certainly dead in Florida. So as they say in the Realtor ads, “every market is different”—and that's the one piece of truth you can take to the bank. So let's take a “longer view” of the market. Economic growth continues to gain momentum in the second half of the year, as expected, despite the slow start at the beginning of 2013. The housing recovery continues, and manufacturing and business investment are rebounding, helping to boost growth. Furthermore, consumer spending and the employment sector appear to be growing sustainably, which may help to offset downside risks from the expected tapering of the Federal Reserve’s securities purchases. “Our macroeconomic and housing forecast shows very little change from July, and the steady pickup during the past few months validates our expectations for the second half of the year,” said Fannie Mae Chief Economist Doug Duncan. “The biggest risk to this forecast is the expected reduction in the Federal Reserve’s asset purchases, which would likely put additional upward pressure on interest rates and lead to some volatility in capital markets. The housing recovery appears to have weathered the fiscal uncertainty, although immediate growth is expected to be modest rather than robust while the market awaits an easing of credit conditions in the presence of rising interest rates. The rise in mortgage rates has led to a drop-off in refinance activity but does not appear to have had much impact on home purchase activity to this point. Even though home prices are expected to continue to climb, the pace is predicted to slow from the dramatic levels seen during the past 12 months. But again, all markets are different, and the market that is important to you and me is the one in which we operate. So as long as there are buyers snooping around, and homes for sale, there will be some sales. I expect that August will represent generally slow sales, and that market sales will increase in September and level off for October through December before revving up for January. If I were planning to buy, I would buy now. If I were planning to sell, I would offer my home for sale in February, after the inventory of cheaper homes has been sold off during January. February is the month the Canadians, Germans, English and American buyers realize that—just like in musical chairs, when the music stops they need to be seated--so if they are looking for a home, then they need to find a place before they are all sold. Dane Hahn is a real estate professional serving Sarasota and Charlotte County, you can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

Minnenials Love that City Life

I can’t tell you how many times I have had a potential real estate buyer come sit with me in my office and tell me what she wanted in a new (or different) home. Normally buyers are not exactly sure what they want, I have sent many of them home with a pad and pencils, and the assignment to have a glass of wine and write down what they want in their next home. But mostly there are only two kinds of buyers, ones who already live in the area and are moving up or down; and buyers from out of town who now need to be in the area due to retirement or a job change. These buyers may also be moving up or down, but they generally don’t know the area, home prices and tax rates, (or even the local amenities, golf courses, marinas and quality of the schools), so they need information and almost always, hand holding. What brings this topic to mind is an article in the current Fortune magazine which takes the position that the demand for a home in the suburbs is dying: The End of the Suburbs. The article goes on to say that the suburbs were “ground-zero” for foreclosures and short sales and that the urge to own a large home on a large lot has waned. More and more buyers are choosing to move back into the cities. The story cites homeowners distaste for long commutes, the growth of suburban crime (and conversely less urban crime), the social aspect of having many nearby neighbors of all heritages, and the ability to walk to services and restaurants. Since WWII the United States population shift has been from the cities out to the suburbs, but now according to the author, that tide seems to be reversing. Even though the American dream of home ownership--meaning a cute house with a picket fence and enough lawn to toss a football or room for an outdoor play set, is still in the majority--there are families who are turning their backs on that lifestyle and are opting for a city based condo or apartment, or perhaps more of a planned unit development. Those who practice conspicuous consumption and live in a McMansion, or have a fancy waterfront home, or maybe an honest-to-goodness mansion--if they really want to flaunt their wealth--probably will never change their minds and join the smaller-is-better group. But there may be a trend here and it's worth watching. As I look at this trend, I assume that the shift here is really a generational shift, and not a “hey I have an idea, let’s sell the 4-bedroom home and buy a little apartment,” kind of a shift. I am a proponent of the old theory that “You Are Now What You Were Then”. This theory states that what ever was going on while you were in your teen years will affect you your entire life. Look at the years you were in your teens and see if this isn't right. I could see this in my parents who were in their teen years during the depression, and the days leading up to WWII. They knew what being poor was like--they saw their families lose almost everything. So they were careful with money their whole lives. And they feared war and were very vocal about national politics--because they had seen the results of world politics, League of Nations, et. al. leading up to the “big” one. Looking at the people in their 70's, who were in their teens in the 1950’s, these are the ones who saw their folks recently home from the war, strive to buy a little house, then a bigger one. They saw their folks being able--in some cases--to buy 2 cars, and take vacations. And today, these folks are restoring 1954 Chevy's and are retiring to warmer climates. They don’t mind taking risks, because in their teens and the years after, they saw many years of a good economy. And they have been the ones buying larger homes. Those who were teenagers in the 1960’s and are now in their 60's were affected by Viet Nam, the marijuana scene, psychedelic music and "peace and love". These folks are from the age of Aquarius, they are former hippies and the earth mothers and tree huggers. They have led the EPA and OSHA, and are behind the movement to remove the Glen Canyon Dam and save the Snail Darters and Scrub Jays. I believe these 60-somethings are the group that has moved back into the commune concept of city life--even if it is modified to become “The Villages”. Those who were teenagers in the 1970’s and 1980's , are the ones who are now evaluating “village vs. suburbs”. They are the helicopter moms and dads who hover over their kids, who arrange play dates and won’t let their kids walk to the school bus. You see them parked at the bus stop, which to me misses the point of having a publicly supported school bus system. If you’re going to get up, get dressed, and get in the car, you may as well drive the children to school, and save the tax-payers the cost of the bus. The first buyer I ever met who wanted to live in a “commune-concept” was a Canadian who was being transferred to New England, as I recall he was with Bauer Skates. These people wanted neighbors so close that they could shout to them if they needed help or were in some kind of trouble. It’s not that this didn’t make sense, but this is a foreign concept in New England. Everyone I was used to working with wanted PRIVACY. Large lots. Views (not of other homes), and well, privacy. Remember Robert Frost's poem, "Good Fences Make Good Neighbors"--that's the New England viewpoint. Oddly there was a brand new smallish subdivision under construction that offered homes on 1/5 acre lots that was exactly what this customer wanted--and bought. But specifically New Hampshire--home drinking water mostly comes from a private well and home sewage goes into your own septic tank and leach field. This is because most of the towns don't (or didn't) offer municipal services. This means that your water and sewage may require 1.5 acres so they can be far enough apart--just so you are not drinking your sewage. The smallish sub division I refer to was the first to be built on the new sewer system and in that part of town which already had “public” water--it was the first in which the zoning was adjusted to handle smaller lots. So will the trend of new buyers wanting to make the move back to the city get “legs”? Time will tell, but there seem to be no shortage of homes in the Englewood area that appeal to both those who need big, and those who prefer small clusters, so I think we're in pretty good shape for now. Dane Hahn is a real estate professional serving Sarasota and Charlotte Counties. You can reach him at 941-681-0312 or at Dane.Hahn@gmail.com. See him on the web at www.danesellsflorida.com

Florida HOA & Mortgage payoff question

Q: I am dealing with a HOA situation and am looking for some advice. I live florida and the home I live in is about to be foreclosed on. I have a feeling that the HOA association might come back and go after me for the back assessments. Knowing that you are on the HOA board how often due you go after people in these situations and, if so, what percentage of the back hoa fees have you settled it for ? I appreciate your help. Dane's Answer--I won't kid you, I'm no lawyer. I am on an HOA board and I am a Realtor. But the state of Florida frowns on Realtors practicing law, and so be aware: advice--as they say--is only as valuable as what you paid for it--and in this case my advice is free. I am not clear on whether or not you had declared bankruptcy, your email indicated that you might have done this in 2009, so assuming you did, most of your debts will have either been settled for something less than they were originally, or they will have been written off all together by your creditors. I will assume you did have a personal bankruptcy, and because the house was your principle residence, it was excluded. Now you are having trouble with the mortgage and are about to lose the home to the bank. The bankruptcy would have cleared any HOA fees that had accrued up until that time (2009) but not any HOA fees due and payable since then. On a brighter side for you, banks rattle their swords for a number of months before they strike. Meaning that you can probably live in the house for maybe many months even after they start foreclosure proceedings. At some point there will be an auction, and generally the bank will buy the property back at that time. Legally right now the deed is in your name, but the mortgage and note allow the bank to take back your deed for cause, (and that includes lack of payment) and sell the deed--ownership of the property--to the highest bidder. At auction there are usually nosey neighbors, investors, some hopeful buyers and a representative of the bank. Unless the auctioneer is able to get the bids up into the current tax assessed value range, and therefore sell the property to a member of the public, the bank will normally buy the property. If a sale is made to a member of the public, you will be moving out ASAP. Sometimes within 24 hours, so be aware that a quick move may be required. But usually the bank becomes the owner, and then it's pretty much business as usual around the house. The bank will likely be in touch and give you some options, (they may demand you to vacate, they may offer to rent the place to you, or they may send over the sheriff and change the locks) at this point get some legal advice, you should be able to afford a lawyer since you have not paid a mortgage or any rent for some time. But once the bank owns the property, the HOA indebtedness will switch over to them. And the HOA will place a lien on the bank and get paid when the property is sold the next time. But all HOA's act differently. Some HOAs are actual professional companies run by lawyers who know their stuff, others are run by an elected board of residents, who are most likely retirees. Just to give you a sense of the varying quality of these boards, Florida has a new law that says board members are required to sign a document saying that they have read the bylaws and covenants. Doesn't that give you a warm fuzzy? Q: I am on a fixed income, and get monthly disability. A financial planner has reviewed my accounts and suggests I pay off my mortgage to become essentially debt free, but this will use up about half of my savings. Is this a good idea? Dane's Answer--Here's my wishy-washy answer: yes and no. It's a great idea to be debt free, but given that you are not being pressured to clear out the mortgage by your lender, why would you want to be without half of your savings? So years ago my father-in-law wanted to buy a condo for his second retirement--after the home on Cape Cod (his first retirement home) became too much for him and his wife, and the Hyannis hospital was almost an hour away. So he found a nice condo in New Hampshire, near the kids and the local hospital, and then was faced with a way to pay for the property. He was surprised that at 85 he qualified for a 30 year loan. But he went ahead with that concept and moved to NH. When the house on the Cape sold, he paid off the mortgage. But getting back to your question, you will need a few sheets of paper and a sharp pencil to make your decision. Of late, very low mortgage rates have been available, most of them were advertised, and you may have seen them in the high 2%s. My suggestion is to refinance into a low rate mortgage, maybe even a 10 year term, and forget paying off the existing mortgage now. But do the math. What does it cost you now, and what will it cost you if you refinance? Any money you save will be additional income for you. But cutting your savings in half to pay off a loan that is not in trouble will put you in a bind if you need the cash at a future time. Once you've closed the note, the only way to get emergency cash back back would be to remortgage the home, so if you can comfortably afford it, make the adjustments available to you in refinancing now, and stay the course. Dane Hahn is a real estate professional serving Sarasota and Charlotte counties. You can reach him at 941-681-0312 or at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

Detroit Blight Authority to tear down 30,000 Buildings

<!--[if !vml]--><!--[endif]--> <!--[if !vml]--><!--[endif]--> <!--[if !vml]--><!--[endif]--> Detroit has agreed to aggressively tear down abandoned homes and buildings through a pilot project dubbed the Detroit Blight Authority, (an unofficial name designation), that recently cleared out 10 blocks of property near Detroit’s Eastern Market. The U.S. Treasury Department has made $100 million available to Michigan for this effort.

There are still another 30,000 empty buildings in Detroit that qualify for razing.

The DBA  project is a partnership between the city and Bill Pulte, grandson of the founder of Pulte Homes. In just a matter of weeks, this partnership has removed dozens of abandoned structures and cleared brush and debris from 10 square blocks. Let’s say, it's a start...but there are still 29,980 buildings to go.

And Detroit has just discovered there’s a considerable cost related to owning vacant buildings. Because the impending bankruptcy has forced a review on where all the money has been going, it was just discovered the lights in many of these vacant buildings were still on and the city is still paying for the electricity, and the water and sewage are also still on, and so is the gas. Just turning off the utilities at these vacant buildings will save thousands of dollars, razing them will remove the “attractive nuisance” that a vacant building offers and will prepare the land for reuse.  Naturally the city hopes to receive a bailout, or at least federal funding for the project.

Bill Pulte emphasized that neither he nor the Pulte company has an interest in the land cleared so far or the plans to redevelop it. The Detroit Blight Authority (DBA) together with the Detroit Future City project want to right-size the city’s resources to reflect its much smaller population, now down over 65%  from the glory days of the 1960's.

Since the city filed for bankruptcy, the world's financial community has been watching their every move.  Once city managers determine that it's OK for a city to file for bankruptcy, it's assumed others will follow suit. Cities file under Chapter 9, and once they see just how the financial community handles Detroit, some say dozens of other cities across the country--including several in California will follow suit. Meanwhile, Detroit continues to be a tale of two cities. As Charles Dickens wrote of London, it was the best of times, it was the worst of times, the same can be said of Detroit. The business community keeps on doing what has to be done to run its businesses, whether the business is local, national or international. The dysfunctional city government's public bankruptcy has little to do with private business. The two have been functioning side by side for decades, so it's just more business as usual. The city's unions and retirees are screaming and shouting and filing lawsuits, all to no avail because the government will be run by a federal judge who has done this before, and he or she will have the ultimate say. The union leaders can scream and shout all they want, but it's only for the benefit of their membership. Once upon a time they could have negotiated, but they passed up the opportunity. That decision might have been political suicide. The city services will continue. In fact, the citizens might even see some improvement over the next few months as the solvency of the city improves. But the unions will have to beg for whatever is left, they will plead their cases, but it's the judge who will decide. It's too bad that it will be the retirees and bondholders who will be paying for the sins and actions of the city's free spending six decades. For many who have been enjoying the fruits of ill-conceived programs, their income streams will be abruptly coming to an end. It's a pity that Detroit came to see too late they simply can't continue with 60 years of political baggage and croneyism.  But the future city and her future generations will be far better off if their leaders learn the lessons this bankruptcy can teach.  Dane Hahn is a real estate professional serving Sarasota and Charlotte Counties. Reach him at 941-681-0312 or at dane.hahn@gmail.com. See him on the web at: www.danesellsflorida.com.