Thursday, January 31, 2008

Mortgage Rates

These are turbulent times with many changes happening at lightening speed. These changes will affect your business and personal lives so we are trying to give you valuable updated information in a concise manner regarding 1) recent moves by the Fed 2) the effect on mortgage rates currently and predicted 3) proposed changes to Fannie Mae, Freddie Mac and FHA 4) How do you capitalize on the changing environment

First, as you all know, the Fed lowered the fed funds rate yesterday by .5% after a .75% drop 8 days earlier. These dramatic moves set a record for the sharp drop in a short period of time. This DID NOT immediately lower mortgage rates except on ARMs of 1 year or 6 months. Longer term mortgage rates are not directly linked to the fed funds rate or any short term index. Mortgages ultimately wind up as MBS (mortgage backed securities) which are traded on Wall Street. The opinions of the Traders are what directly affect our mortgage rates. Therefore the Trader's reactions to the Fed moves determine rates. The traders are making moves daily whereas the Fed only does so about every 45 days, normally. So yesterday after the move, mortgage rates were worse than last Tuesday prior to the Fed making a 1.25% cut to Fed Fund rates. Don't listen to Matt Lauer on this subject listen to us.

We do expect that the continuation of economic news reflecting a slowing economy will lead to lower mortgage rates. In fact, we are seeing that today. We are optimistic and excited about the probability of lower rates and perhaps the return of a "normal" yield curve. As you may know, in the past 2 years you could get a 30 year fixed rate at or below the rate on a 5/1 ARM. Borrow money on a 1 month LIBOR plus one percent and your rate was higher than a 30 year fixed rate just a month ago. This is not normal - even a UGA finance major knows that. We believe that over the next few months we may return to something like this: 1 year ARM = 5.0% - 5.25%, 5/1 ARM = 5.375% - 5.625%, 30 year fixed rate = 5.75% to 6.25%. This would be a good sign of a normalizing market just as more prudent risk management by lenders has been the start of normalcy.

What is the good news from a lower fed funds rate? Rates on Home Equity Lines of Credit (HELOCs) will be lower. For those of us who sometimes use our HELOCs to aid in cash-flow management our expense of borrowing has dropped by 2.25% in the past few months. Prime was 8.25% in August and today it is 6%. Anyone with an ARM,(1yr, 2yr, 3/1, 5/1 etc.) that is coming up on an adjustment in the next 6 months will not experience as much increase in their rate. The media has created great fanfare around the adjusting mortgages coming due this year. This drop may not fix everyone's problem but it will help. Many of these home owners may choose to refinance and lock-in a lower rate, especially if they expect to be in their home for at least 2 more years. Many businesses borrow based on Prime or LIBOR and their expense will decrease which will help the overall economy.

You likely have heard that Fannie Mae, Freddie Mac & FHA may be increasing their maximum loan amounts. This proposal is included in the President's "economic stimulus package". The proposal has passed the House and is currently in the Senate. As I understand it, the increase will be 125% of the average sales price for each area. I can not yet say how much, if any, this would increase the "conforming limit" over the current $417,000. We are trying to determine the "average sales price" for the Jacksonville MSA. When and if, the stimulus package passes and is signed into to law we will let you know.

How can you capitalize on lower rates? If you are a borrower determine if you could be borrowing money at a lower interest rate and what your expense to refinance your loan would be. If you can recapture the expense of a refinance in less than 2.5 years then you should consider the refinance - know your numbers. If you are selling real estate, be informed and advise your clients - sellers and buyers. If you are an investor, you may consider buying property to take advantage of lower priced homes and lower interest rates. Remember if the rates for borrowing are decreasing the rate you will get on your investments like money market and CDs will decrease. Maybe real estate is a better place for your discretionary investments.

Should you have any questions on the information presented here, please call or email us. We are happy to help you "know your numbers". Determine your current loan amount(s). Is your rate fixed or adjustable? If adjustable, when? What is your current rate? How long will you own this property? If you can answer those questions then we can tell you at what rate you should pull the trigger. Please call or email us to discuss. Have a great February!

Ben Stephens Alan Vanderheiden

Wednesday, January 23, 2008

Florida Statistics

Fewer people move to FloridaCAPE CORAL, Fla. – Jan. 23, 2008 – When Eric Feichthaler became mayor three years ago, this town was booming. The city issued 800 permits that month to build single-family homes.Cape Coral still has thousands of empty lots, but last month, it issued just nine permits.A number of factors explain the downturn, and many of them are not unique to Florida. But it is becoming clear the Sunshine State is losing some of its luster.Census figures show that in 2007, the number of people who moved to warm and sunny Florida from other states outnumbered those who left by just 35,301, down from 268,347 in 2005. It was just the second year since 1990, when the Census Bureau started keeping such records, that the state saw fewer than 50,000 net U.S. arrivals.For many years, Florida was like a stateroom in a Marx Brothers movie: more and more people kept arriving, and hardly anyone left. During the 20th century, Florida’s population boomed, with growth rates ranging from 20 percent to 80 percent per decade. Florida is now the fourth-largest state, with about 18.1 million people.Experts blame the recent slowdown on a combination of circumstances: The national mortgage crisis and the bursting of the real estate bubble, hurricanes, Florida’s steep insurance rates and property taxes, and rising unemployment.The shift is felt most in places like Cape Coral, which went from barren southwestern Florida swampland to bustling bedroom community – one of the state’s centers of a building and buying boom. But now there is a sea of unsold homes and undeveloped lots in this 115-square-mile city.“It was very good before. It was like houses everywhere, buildings coming up everywhere and all of a sudden, everything stopped,” said Elliot Aguilar, a 35-year-old electrician and married father of five who lost his permanent job and is working a lower-paying temporary position. “If this continues, we probably have to move to another state.”Feichthaler said he is glad certain folks have left – “the people that came in three years ago in a gold-rush mentality” – even if that’s causing some upheaval. The downturn, he said, is leading to more affordable housing and the departure of unlicensed contractors, shady title agents and other scam artists.All of that, however, is of little comfort to those suffering from the downturn.Foreclosures in Lee County, of which Cape Coral and Fort Myers are a part, shot up more than fivefold last year, to 12,566, according to RealtyTrac, which records such data. The median price of single-family homes in the county fell to $239,300 in October from $322,000 two years earlier, according to the Florida Association of Realtors.And unemployment in the Fort Myers metropolitan area has climbed to 5.4 percent, its highest level since 1994, in large part because roughly one in three people in Cape Coral work as real estate agents, title insurers, contractors or in some other job linked to a sagging housing market.The slowdown is not just here along the Gulf Coast. Across the state, people tired of hurricanes and high housing costs are reconsidering Florida.Beth Mann, 27, lived in West Palm Beach until a year and a half ago, when her husband, Michael, was offered a teaching job in Georgia. He took it – at a higher salary than he was paid in Florida – and they moved to Buford, Ga.Their house is three times bigger. Their property taxes are 75 percent less. Their homeowner’s insurance bill has been cut nearly in half.“We’re like, ‘Why didn’t we move sooner?’” she said. Eight other homes on the Manns’ street are also occupied by former Floridians.A recent Mason-Dixon poll found 43 percent of Floridians said their quality of life is declining and 37 percent believe the decline will continue in the next year. One in three said they would tell a friend or loved one not to move here; one in five said they are seriously considering a move.Stanley Smith, who heads the Bureau of Economic and Business Research at the University of Florida, blamed hurricanes, taxes, insurance and housing prices.Florida actually grew in 2007 by an estimated 193,735 people, including births and immigrants. That’s a sizable number, just not as big as in years past.“Florida isn’t going to be losing population, but the increase will be smaller than it was in these boom years,” Smith said.A 2005 report by Smith forecasts a decline in people moving to the state through 2030, but the overall population is still expected to increase by more than 10 percent in each of the next two decades.In Cape Coral, where the population has more than doubled to about 150,000 since 1990, some welcome the downturn. Bob Janes, a Lee County commissioner whose district includes Cape Coral, said it may give officials time to improve mental health care, roads and other services.But Feichthaler, who is challenging Janes for his commission seat, said the decrease in property values and the resulting plunge in tax revenue will mean the city must cut $6 million to $7 million to avoid tax increases. There have been municipal layoffs, and more are possible.Many remain optimistic.“People still want to follow the sun,” Janes said. “And as soon as it gets cold up north, they think more and more about the sun.”Copyright 2008 The Associated Press, Matt Sedensky (Associated Press Writer).

John Holbrook - REALTOR 904-415-0171

Friday, January 18, 2008

1364 Shipwatch Amelia island Plantation

View from the extensive deck at 1364 Shipwatch. 4th Floor oceanfront. Renovated 3 bedroom/3 bath. Large rooms! Located on the Amelia Island Plantation. Championship caliber golf and tennis. 10 minutes to Historic downtown Fernandina Beach, the Amelia Island Airport or the Ritz Carlton.

See additional info at

Newly remodeled beachfront three bedroom, two bath cottage located on Historic Amelia Island's North end that can be enjoyed today with endless possibilities for tomorrow. Incredible views of the Atlantic Ocean and Fort Clinch Styate Park. Ownership interest includes a deeded 300 feet of oceanfront beach that is part of a private eight member community.
See more pictures at

Monday, January 14, 2008

Property Tax Vote

Our position: Amendment 1 would help rein in local government spending
Our position: Amendment 1 would help rein in local government spending
January 13, 2008
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Floridians should vote yes on Amendment 1, the property-tax cut on the Jan. 29 ballot, but not just because it will put a few extra dollars in their pockets.Amendment 1 isn't just about cutting taxes. It is about controlling government spending. It is a reality check for local governments that feasted on escalating property values over much of the past decade instead of lowering tax rates.As property values rose, tax collections soared. Levies doubled between 1997 and last year, including 42 percent in just three years. Property taxes grew three times faster than growth in population and inflation combined. At the same time, government services didn't seem to get any better. What a waste.
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With even a modicum of self-control, cities and counties could have lowered their property-tax rates. Most didn't, and spending more than doubled.Even after lawmakers approved a rollback of the tax rate last year, almost half of Central Florida's cities and counties set their rates higher. Others raised fees for services, like fire protection, that should be paid for through property taxes.There is no guarantee that Amendment 1 would force local governments to behave responsibly. They could still try to raise tax rates or fees. But if Amendment 1 passes and taxes do not drop, Floridians will demand answers. That alone is a powerful incentive for local governments to be more responsible.Amendment 1 would increase the average savings from the state's homestead exemption from $500 to about $800. Businesses and second-home owners would get a cap on property assessments. It would pump up the state's stagnant real-estate market by giving homeowners "portability," allowing them to move and transfer part of their Save Our Homes benefit that now saves an average of $1,000.Let's be clear. It is not fair that Save Our Homes gives long-term homeowners big tax savings while more recent homeowners pay higher taxes for houses of comparable value. But Save Our Homes is rooted in the state constitution, and voters will never remove it.Opponents argue that portability only adds to the unfairness and would discriminate against new home buyers who move here from other states. They say that if challenged in court, a judge could order governments to repay billions of dollars in tax payments to resolve past inequities caused by portability or Save Our Homes.But the reality is that it would be impossible to untangle Florida's complex property-tax structure and calculate who paid too much or too little over the years. Even if it were possible, the courts would not order such a remedy because it would impose financial ruin on governments and threaten important public services.Amendment 1 would not make Florida's tax system fairer. But if it forces local governments to spend more wisely, all Floridians will benefit. County/City 2001 Per Capita Property Taxes 2006 Per Capita Property Taxes Annual Growth Orange $387.30 $549.60 7.25% Orlando $386.57 $548.24 7.24% Belle Isle $165.21 $364.38 17.14% Winter Park $363.57 $665.96 12.87% Windemere $302.47 $667.02 17.14% Osceola $356.10 $576.10 10.10% Kissimmee $141.34 $303.50 16.51% St. Cloud $114.45 210.17 12.92% Volusia $273.40 $419.70 8.95% Debary $118.37 $310.42 21.27% Deltona $88.56 $154.60 11.79% Lake $204.80 $417.90 15.34% Clermont $201.41 $340.44 11.07% Eustis $166.91 $282.20 11.07% Leesburg $187.71 $313.89 10.83% Tavares $148.16 $312.73 16.11% Seminole $238.9 $357.9 8.41% Sanford $218.44 $359.48 10.48% Lake Mary $388.52 $570.36 7.98% Oviedo $221.58 $358.04 10.07% Winter Springs $140.33 $253.16 12.53% - Source: Florida House of Representatives -->
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Mortgage Market Info

From the desk of Alan Vanderheiden at


This will prove to be an interesting week…..there are a number of economic reports coming out this week, not least of which is corporate earning for 4Q 2007. These reports will provide the direction for the markets over the next few weeks.

It’s nearly certain that the Fed will cut the Fed Fund Rate again this month. Even money says it will be by .5%. They seem to now understand the impact of the past six months on the economy and are poised to do their part to help. Everyone on Wall Street and in Government is doing everything they can to avoid using the “R” word…..recession. By definition a recession is two consecutive quarters with negative growth. That has not yet happened but if we get a poor report on 4Q 2007 then all eyes will be on this first quarter of 2008. Fed stimulation will do as much to encourage consumer confidence as anything else.
We continue to enjoy very attractive interest rates. The market has been on a roller coaster ride for the past three months but overall the trend is down for rates. Several lenders are beginning to watch for “soft markets” which will reduce the LTV on all mortgage programs across the board. Florida as a whole has been designated as a soft market by several lenders. Not all of our lenders have jumped on this trend…..we have three or four that have not placed Nassau County in this position. We are still able to write 100% loans with a few of our lenders. Yes… is nice to be a broker.

John Holbrook
Prudential Chaplin Williams Realty

Thursday, January 3, 2008

December 2007 Recap

John Holbrook – Realtor - Amelia Island, Fernandina Beach & Yulee Florida

December 2007 Nassau County Florida Real Estate Recap of closed sales (sold properties) that were recorded in the MLS as of 1/3/08.

December Sold MLS 2005
Residential 100, Condos 88, Lots 42

December Sold MLS 2006
Residential 88, Condos 27, Lots 11

December Sold MLS 2007
Residential 42, Condos 5, Lots 12

Current Active Listings 636 lots and acreage, 779 Homes, 322 Condos.

Average selling price for December of 2005 was $329,000 compared to $284,000 for December of 2007.

Search The local MLS with the REALTOR IDX feed at

B of A National Monthly Real Estate Agent Survey
Lower Prices Help Traffic, But Further Price Declines Scaring Buyers

Traffic up as lower prices and mortgage rates help ease affordability. Our
traffic index improved to 28 in December from 20 in November, still at weak
levels, as agents lowered expectations for the typically quiet month and bargain
prices lured some buyers off the sidelines.

Spring season likely to disappoint. We expect traffic to fall short of expectations
in Spring as fewer buyers’ qualify for mortgages based on tighter lending
standards and lower appraisals, based on responses to our survey. We do not think
that December is a good barometer of Spring traffic given that traffic is generally
light in December and expectations are low.

Foreclosures drive prices lower. Our price index was essentially flat at 18 in
December, up from 17 in November (readings below 50 indicate sequentially
lower prices). Agents noted price declines in every market we surveyed as more
foreclosures undercut asking prices, forcing sellers to match lower prices. We
think further price declines will reduce buyers’ confidence and traffic for fear ofoverpaying before home prices bottom.

John Holbrook - REALTOR 904-415-0171