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State of the Market Report for North & Central Brevard

by Courtesy of Florida Realtors®' Industry Data & Ana

 

Information Courtesy of Florida Realtors®' Industry Data & Analysis Team

MLS Statistics - September 2012

Most housing metrics should follow their usual, autumnal movements - higher inventory and days on market, fewer sales, lower prices. That applies only to month-to-month seasonal trends; most indicators should still show improvement on a year-over year basis. As you already know, all real estate is local - down to the city neighborhood, suburban development and exurban lot. Let's dive into some local figures.

 

New Listings were down 1.4% for detached homes but increased 4.8% for attached properties. Pending Sales increased 30.2% for single-family homes and 5.5% for townhouse-condo properties.

 

The Median Sales Price was down 2.2% to $107,500 for detached homes but increased 42.9% to $130,000 for attached properties.  Months Supply of Inventory decreased 51.5% for single-family units and 46.3% for townhouse-condo units.

 

Not to get all negative like current political TV ads, but sluggish job growth, persistently high gas prices, drought-induced spikes in food prices and other global events could threaten consumer confidence. The Fed's mortgage purchases drove Freddie Mac's average 30-year fixed-rate mortgage survey to an all-time low of 3.40%. Employment growth remains critical, providing the jobs that will stimulate housing demand and push home prices up to help beleaguered homeowners that have been financially unable to sell for several years.

 

Single Family Homes As Investments

by Pat Argo

Single-family homes used for rental property have distinct advantages over other types                         of investments.

An investor can borrow 75-80% at fixed interest rates on appreciating assets with definite tax advantages and reasonable control. The financing alone is attractive compared to some investments that require 50% cash and have floating rates at prime plus for one or two years.

Home prices have adjusted 30-40% around the country, mortgage rates are incredibly low and rents have risen in the past two years due to more demand and shorter supply. Indicators like these point to a strong and sustained rental market.

Consider you bought a $125,000 home for cash that would rent for $1,250 per month. With $15,000 income and allowing for property taxes, insurance and maintenance, it is still reasonable to expect $10,000 net income. You'd have an 8% return on investment without considering tax savings or future appreciation compared with 5-year CDs paying less than 1.5% and a 10-year Treasury yield at 1.65%.

The reasonable control has a lot of appeal to many investors who find the volatility of the stock market unacceptable and don't want the risk associated with some of the alternative investments. Please contact me if you'd like to know more about available opportunities. 321-537-4721

  

Managing Your Insurance Premiums

by Pat Argo

The purpose of insurance is to shift the risk of loss to a company in exchange for a premium. Most policies have a deductible which is an amount the insured pays out of pocket before the insurance starts covering the cost of the loss.

In the process of managing insurance premiums, policy holders often consider adjusting their deductibles. Lower deductibles mean less money out of pocket if a loss occurs but obviously, results in higher premiums. Higher deductibles result in lower premiums but require that the insured bear a larger amount of the first part of the loss.

A small fire in a $300,000 home that resulted in $2,500 of damage might not be covered because it is less than the 1% deductible. If the homeowner can afford to handle the cost of repairs in exchange for cheaper premiums... it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible could be considered.

It is a good idea to review your deductible with your property insurance agent regularly so that you're familiar with the amount and to make any changes that would be appropriate.  If you have a mortgage you need to consider what their requirements may be as well.

 

 

Seized or Missed?

by Pat Argo

We've probably all said or at least thought "IF I knew then, what I know now, I would have done things differently." We should have stayed in school longer. We should have listened to our parents. We should have bought Apple stock in 2002 for $8.50 or gold in 2000 for $300.

Years from now, if we look back at 2012, it may be clear that this was the best buyer's market ever. The prices are down nationwide 35-40% from four years ago, mortgage rates have never been this low and rents are rising. Few homes have been built in recent years to keep up with a growing population. There may never be a better time to buy homes than now.

The housing affordability index which is considered to be good at 100 has increased to over 200 for several months. Shrinking inventories and rising prices in some markets are causing the index to fall for the first time in years.

This 'buying" opportunity applies equally to acquiring a home to live in or to rent as income property. It is estimated that about one-third of the homes purchased last year were done by investors. It is reasonable because the positive cash flows far exceed most other investment alternatives.

The question we're all faced with this year is whether we'll be saying we seized or missed an opportunity of a lifetime.

Thinking About Refinancing? Here's a Handy Re-Fi Calculator!

by Pat Argo

  

Some people believe they shouldn't refinance more often than once every two years. The determining factors are if you'll lower your payments and plan to stay in the home long enough to recapture the cost of refinancing. If so, you should consider refinancing.

Interest rates have actually come down significantly in the past 12 months and even more in the past 24 months. According to the Freddie Mac Primary Mortgage Market Survey®, rates on a 30 year fixed rate mortgage were down to 3.6% in August, 2012 compared to 4.27% one year earlier.

Refinancing in the example below would save the homeowner $67.04 per month and they would recapture the cost of refinancing in 3 years and 9 months based on approximately $3,000 of closing costs.

Click Here to make your own projection on a Refinance Analysis calculator.

Transferring Title Can Be a Taxing Event!

by Pat Argo

Transferring the title of a home from one person to another may seem simple but it could have a significant tax implication.

When a person inherits property, the basis is "stepped-up" to fair market value at the time of the decedent's death. On the other hand, a gift has a carry-over basis which means that the recipient receives the unrealized gain also.

As an example, let's say an elderly parent, in an attempt to get their affairs in order, gives their home to their adult child. The rationale might be that they are the sole beneficiary and will get the property eventually. In an effort to settle things early, unnecessary income tax may be incurred.

If the home was purchased for $20,000 and worth $100,000 at the time of transfer, there is a possible gain of $80,000. However, if the adult child inherited the property at the time of the parent's death, their new basis would be $100,000 or the fair market value at the time of death and the possible gain would be zero.

This is meant to be an example and many other variables could be involved. If you're concerned about a situation, you should definitely seek specific advice from a tax professional. As always, I'm here to help you and those you care about as your real estate professional.

Displaying blog entries 1-6 of 6

Contact Information

Photo of Pat Argo, Broker Assoc, CRS, GRI, RECS, SFR, S Real Estate
Pat Argo, Broker Assoc, CRS, GRI, RECS, SFR, S
Keller Williams Realty of Brevard
6905 N Wickham Road #405
Melbourne FL 32940
Cell/Text: 321-537-4721
Office: 321-259-1170
Fax: 321-435-3124