Tag Archives: Florida real estate

Does ObamaCare Raise Taxes on Real Estate?

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We hear a lot of talk and rumors about ObamaCare and what its effects will really be on business and real estate.  Perhaps it’s a mystery because the new tax in the legislation was never introduced, debated, or reviewed until just hours before its passage.  Remember when Nancy Pelosi said “We must pass this legislation to find out what’s in it”?  She wasn’t kidding.  Nowhere was a new tax on real estate or capital gains talked about before its passage, so of course people are asking questions now that the new tax is set to take effect after the election. Does ObamaCare Raise Taxes on Real Estate?

ObamaCare and Taxes

With that said, it’s a new tax that isn’t going to affect everyone, so that’s the only silver lining.  They needed this revenue because Medicare is set to run dry in a few years, so this new tax will supply $210 Billion over 10 years and will help to extend the life of Medicare a few years.

Here is the breakdown as we understand it.  There are 2 new taxes.  One is a 3.8% tax on unearned income like interest, dividend, rents, capital gains and the second tax is a .9% tax on income such as salary, wages, commissions, etc.

The 3.8% tax will apply to individuals with an adjusted gross income above $200,000 and couples filing a joint return with more than $250,000 adjusted gross income. Once you meet those criteria, there are complicated formulas we won’t go into here.  It’s probably best to consult with your accountant on that.

Will the Fed’s New Stimulus Help Housing? The Fed has promised to pump money into mortgage backed securities as a way to buy down interest rates, also knows as the QE3 Stimulus.  Nobody knows what effect it will have on real estate.  All we can say is it couldn’t hurt.  However, rates have been low and the market is still relying on the overall economy to improve.  This action by the Fed will reduce borrowing costs, but it will also reduce rates paid to savers like senior citizens.  Seniors today cannot be happy.  We may see real inflation creep up and rates stay low, so seniors will actually lose money on the deal.

Real estate accounts for about 32% of GDP, so anything that gets real estate going may help the economy.  We believe that real estate and the economy need each other.  Having a balanced budget, lower taxes, and leadership in Washington where business could plan would best stimulate the economy and help real estate.  A rising tide lifts all boats, and we think real estate would take off if Washington tried this approach.

It’s a rather simple equation and yet our government is so divided we’re not sure that will get done.  So for now all we can do is report the effect the ObamaCare taxes will have on real estate transactions.  Last time I checked we had about a 4 Year + supply of $1 million homes on the market.  Taxing those transactions further won’t do anything to help housing.  I’d really like to know whose bright idea this was to sneak this tax in at midnight.  What happened to Obama’s promise of transparency and all bills would be viewable to the public for 3 days before a vote?  Was that just an empty campaign promise?

4 years later these things matter.  Taxes are set to rise in 2013; some from ObamaCare and some from Congress’ inability to pass a budget.  Did you know the Senate hasn’t passed a budget in 3 ½ years?  They just keep passing continuing resolutions and raising the debt ceiling.

Keep your eyes open.  If we find any other new taxes they try to sneak in on us we’ll be sure to point them out.

 

The Bear Went Over the Mountain

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To see what he could see. We’ve all heard this particular children’s song and it’s probably playing in your head right now. I thought this headline was appropriate because our year end sales numbers graph looks like home prices went up the side of a mountain through 2005 then fell off a cliff until 2009 before rebounding the past few years.

SW Florida Real Estate Year End Prices
Year End Prices Fort Myers-Cape Coral Florida Metro Area

Official sales numbers were just released this past week for the state of Florida and the SW Florida real estate market. Year end sale prices were up 14.67% from $93,400 in 2010 to $107,100 in 2011 The year end graph isn’t where prices finished the year but rather an average of what they were all year long. For instance, November median single family home prices in Lee County was $106,300 and December’s was $123,400, a whopping 16.09% jump over the previous month and a 36.05% jump over year ago December figures.

2011 was the 3rd best year on record for numbers of sales. Inventory declined throughout the first 3 quarters of 2011 or we very well could have sold many more. To put things in perspective, 2011 outsold 2005 by almost 2,000 homes. Everyone speaks about 2005 being the height of the market, but it is the 4th best year on record in terms of units sold. 2009, 2010, 2011 respectively were 1-3.

Quarterly Home Sales for SW Florida 200-2012
Lee County Quarterly Single Family Home Sales

While prices rise it’s quite natural volume will go down. It’s simple supply and demand. If we had more inventory than our market could handle, our prices would be lower and not rising. It’s always difficult to predict a top or bottom, but hindsight always provides crystal clear clarity. The reason is you can have a false bottom whereby prices bounce back for a few months only to retreat again later. On Wall Street it’s termed a dead cat bounce when the market does that.

With several years in the books it appears we can safely say the market bottomed in 2009. If the market would go lower in the future it would be a new market, not a continuing drop. We don’t see the market going lower year over year going forward; although monthly price swings are not out of the question as closings are dependant on what inventory there is and what’s actually closing in a given month.

We have no problem listing and selling properties. The skill is really getting them closed today. The regulatory and operating environment has never been so tricky as there are so many new regulations pertaining to new mortgages. If the lenders initial disclosure is off by a little bit, it requires by law to re-disclose everything and a new waiting period goes into effect.

Combine new lending rules with negotiations with HOA’s and condo association over fees, title issues, appraisal issues, inspection issues, and challenges with short sales and you can quickly see nobody can guarantee closing dates, and scheduled closings in one month can easily pop over into subsequent months.

All these challenges affect the real estate market and can push high end or low end closings from one month to another, ultimately effecting month end numbers. In the end, these numbers all work out in the wash, so we like to look at year end numbers or a moving average throughout the year. So many people focus on one point in time when the market is always in flux and needs constant attention to understand what’s going on.

That’s what we’re here for, to keep you updated with unbiased information good or bad. We’re in the midst of season, and as predicted season started early and seems to be going well. I guess we’ll know in April or May for sure. In the meantime, stay tuned.

Watch our January 2012 Market Report

 

SW Florida Future of Real Estate Market Report January 2012-New Year\’s Resolutions

Grey Saturday

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We sincerely hope everyone had a wonderful Thanksgiving as we all have so much to be thankful for, even if times seem tough for many across SW Florida.  For those eager shoppers we hope Black Friday was a day to score wonderful bargains.

We were trying to come up with a name for the day after Black Friday this year and we decided on Grey Saturday, because official sales numbers were released for the Florida real estate and market and SW Florida scored mixed results, earning it the Grey Area status.

Fort Myers, Cape Coral Single Family Home Listing Inventory
SW Florida Listing Inventory

Last month we reported a change in direction in listing inventory and said we wanted to keep an eye on those numbers going forward.  For the 2nd straight month, listing inventory rose.  The numbers aren’t staggering as we’re talking about a difference of 231 homes, but it is a recent trend nonetheless.

Fort Myers, Cape Coral Florida Home Prices
Greater Fort Myers- Cape Coral Home Prices

Single family home prices were up 15% over last year, but they are down 7.69% from last month.  We are in a volatile market because agents can’t count on which closings will actually close in a given month.  Transactions are becoming trickier to count on as governmental regulations are holding up closings, causing delays, and wreaking havoc on the market.  It’s not uncommon for buyers to receive approval on their short sale and then walk from the deal because of the length of time, or because they became impatient and went for another deal more likely to close.

Banks have told us the foreclosure backlog was coming and we are starting to see more assignments in the 4th quarter.  Another large bank has told us to watch out for 1st quarter 2012 for even more.  These bank foreclosures may be just what the doctor ordered for our market though because in certain submarkets there is a feeding frenzy to buy.  We have short sales, and some traditional sales of which not all are priced at market value, which is typical in any market, up, down, or sideways.  We’ve had a lack of foreclosure properties as banks were stymied with the legal debacle of the robo-signing issue that caused them to go back and evaluate if they had legal standing to foreclose and the paperwork to prove it.

We’re starting to see rising inventory and it’s not because of foreclosures.  We are entering season which is a time when properties are gobbled up like a Thanksgiving turkey, so we’d expect to see inventory decline in the next few months even if the banks do release more foreclosure inventory.  SW Florida’s appetite when it comes to a bargain is insatiable, much like a Black Friday sale.

Last month we had Trick or Treat Day, so we’d like to see a solid direction in the market.  The past few months have brought ups and downs in median prices.  Combining the recent up and down price swings, rising inventory, predicted rising foreclosure activity, and tempering that with the upcoming season means we have a market to keep our eyes on.

We really believe we’re going to have a good season.  What good is a bargain basement sale to a shopper in an empty store?  Shoppers want inventory, and this year may be one of the last good years to get the bargain.  Even after a downward price drop of 7.69%, prices are still up 15% over last year’s prices.  The absolute statistical bottom of the market may have been last year, and we may look back on 2011 in years to come as a time when buyers say to themselves, “I wish I would have hung in there and bought that bargain.”

When the economy improves and lending standards get back to normal, we’ll all look back at 2010 and 2011 and say “I wish I would have bought more.”

Good luck and good hunting!

 

Marquee En Ville Builder Closeout

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Marquee En VIlle in Sarasota Florida is offering Ellis Team clients who mention they are working with us a $40,000 cash credit to buyer at closing as part of their close-out package.

As Top Agents in the state of Florida, we often hear about special pricing and offers the public never hears about.  Please be sure to mention you arre working with the Ellis Team at RE/MAX Realty Group, or call our office at 800-860-4042 for more information.

Holidays-What to Expect

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Traditionally, showings go down during the holiday season. However, the showings that do occur tend to be serious buyers. We’ve sold several homes this week, and we’re still negotiating a few sales before Christmas.

The week between Christmas and New Years tends to be very busy. We have a lot of visitors to SW Florida during the week. They tend to be new to the market. Some buy, many come back later in the year after deciding SW Florida is a nice place to own property. Activity is gernerally slow from Jan 1-January 15, then showings pick up again.

Our team has been very busy listing properties. We will have several enter the market just after the holidays. During 2005, we had a difficult time keeping more than 5 properties in inventory as they would sell so fast. We’re getting back to normal at 70.

The Ellis Team has always carried listings for years, except for the last two or so. The reason is we advertise homes more and expose them properly to the market. We call it a Flight to Quality. When the market turns just a bit, the relative in the business or the Realtor down the street offering a deal just doesn’t seem like a deal anymore. Sellers want their home sold, and they want to trust the Realtor working for them will do everything possible to sell their home, not skimp on costs.

Look for more homes to enter the market after the Holidays, and for buyer activity to pick up. View Ellis Team listings, or View entire MLS if you’d like to see properties currently for sale. For more information, listen to our Weekly Radio Show Online, or visit our Website or call us at 800-860-4042