Stagnant housing market traps seniors who want to move

Alice Gordon was getting ready to put her villa up for sale in Palm Isles, but she's decided to wait.

After two falls, she uses a walker, and an aide helps her and does the grocery shopping. She wants to move into independent living, but Alice is putting her move on hold because of the flat real estate market.

How long was she told it would take to sell her place? "Forever," she said, laughing.

Alice's scenario is played out across the swath of retirement communities, especially in western Delray Beach, where people bought condos decades ago. Now many of them are trapped, unable to move because they can't sell unless they significantly drop their price. "The real estate market is making it extremely difficult for residents who want to go into assisted living or go up to be by their children," said Bob Schulbaum, longtime president of the Alliance of Delray Residential Associations, which has 65 members in the city and western suburbs that he estimates house about 70,000 people. "They're tapping their savings to bring in aides."

Luckily, that's not the case with Alice, whose villa is paid off, so she can afford to wait. But it's just one impact the market is having on the adult developments.

In the newer, largely single-home neighborhoods along Jog and Lyons roads west of Boynton Beach, the people are younger and more concerned about their savings lasting than selling their homes. "There's a world of difference. I don't see a mass exodus [when the market recovers]. It's the expenses of people staying in place," said Harriet Helfman, second vice president of the Coalition of Boynton West Residential Associations. "What I'm hearing people talk about is property taxes and their homeowner insurance. They've been dropped, and they don't know why."

Harriet lives in Venetian Isles, where most people are able-bodied and some still work. "I saw a moving van in here last week," she said. "But I don't see people clamoring to leave, but to acclimate to living with the current economic situation."

But Bob sees other problems. Condos sit empty after a relative dies when the heirs can't sell it. The lack of turnover is being felt.

"The older communities, especially, need new blood, people coming in who are interested in being on committees and boards," he said. "Where are the worker bees going to come from?"

People who want to move, but can't, may turn down needed improvements in their development, because they don't want to make the investment.

"If something has to come to a vote to make a purchase, a board can't put it through. Unhappy people are unhappy campers," he said.

That doesn't come up as much in homeowners associations, because the board approves the budget, said Barbara Katz, president of the coalition west of Boynton Beach. "Capital improvements are where that would come in," she said.

But she agrees with Bob about the real estate market.

"More people are feeling the crunch," she said.

People are late paying their maintenance fees. Homeowners who have to sell are forced to reduce their prices, and she's seeing a few foreclosures. "You very rarely saw that," she said.

Back in Palm Isles, Alice said she'll revisit her move every few months as the housing market recovers. "I was the first person to move into Palm Isles in 1990," she said. "I had no idea who would be moving in next. I wanted to live a good life and make a lot of friends. When my husband was alive, I always led a busy life. I've had the most wonderful time."

She wants to stay west of Boynton Beach, so she'll be close to her friends, her synagogue Shaarei Shalom and her doctors.

"I'm moving out with a heavy heart," she said. "I'm doing it for the peace of mind for myself and my family."

Marci Shatzman writes about the adult communities west of Boca Raton, Delray Beach, Boynton Beach and Lake Worth, and in Wellington. Her column appears every Sunday in Community News, and you can find some past columns on the Web site,

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

source: sun-sentinel.com

White House predicts tepid growth, rise in joblessness

WASHINGTON - The deteriorating housing market forced the White House to lower its projection for economic growth next year and raise its forecast for unemployment. Inflation was expected to moderate.

The new forecast came as the Commerce Department reported Thursday that the economy barreled ahead in the summer at a 4.9 percent growth rate, the strongest showing in four years. That impressive performance, however, wasn't expected to last through the current quarter, given the strains of the housing slump and credit crunch — problems likely to weigh on individuals and businesses alike.

Under the administration's new forecast, the gross domestic product, or GDP, will grow by 2.7 percent next year. Its old projection called for a stronger, 3.1 percent increase.

"The housing market decline has been more significant than we expected," said Edward Lazear, chairman of the White House Council of Economic Advisers.

The more pronounced housing slump — along with the expectation that problems will persist into next year — was a big factor in the administration's downgrade of its economic growth forecast for 2008.

In the third quarter alone, builders slashed investment in housing projects 19.7 percent, on an annualized basis, the biggest cut in a year. That lopped just over a full percentage point off GDP from July through September.

Lazear said he expects the drag from housing on the economy to continue "at least through the first half of 2008." He also noted that the credit situation seems to have gotten "a bit worse again" in the last few weeks.

The pickup in overall national economic activity in the third quarter didn't change the picture forming in the current October-to-December quarter. That scenario indicates the economy will lose considerable steam. Growth is expected to clock in at a pace of just 1.5 percent or less in the final three months of this year.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

source: sun-sentinel.com

Property tax portability rewards longtime residents

The retired fundraiser from New York City paid $225,252 for a house in the gated Ponte Vecchio development west of Boynton Beach in early 2003 as South Florida's housing market was flourishing.

Her three-bedroom home with arched doorways and Roman columns on a quiet cul-de-sac quickly soared above $300,000 in market value, but she pays taxes as if it's worth much less.

Pelton, a recent widow, now wants to sell and buy a more expensive property in Highland Beach with higher taxes. Under a Florida lawmakers' proposal scheduled to go before voters in January, she and other residents on the move could carry with them accrued tax savings up to $500,000. For Pelton, that would mean about $2,600 less in taxes for the first year in her new home.

This so-called portability is one part of a new tax plan that also would increase the existing $25,000 homestead exemption to about $40,000 and cap taxes for businesses and second-home owners. The package needs the approval of at least 60 percent of voters on Jan. 29 to take effect.

While portability would reward longtime residents, it would do nothing for first-time home buyers or retirees from out of state and may not immediately help people who bought at the peak of the housing boom in 2005.

"It's far from perfect," said Lori Parrish, Broward County's property appraiser. "But it's something. It's another tool in the toolbox for home buyers and sellers."

Portability grew out of an unforeseen consequence of Save Our Homes, the constitutional amendment approved by Florida voters in 1992.

The amendment was designed to keep people from being forced out of their homes by limiting property-tax increases to 3 percent a year. But the cap disappears when homeowners move, forcing them to pay substantially more in taxes because home values skyrocketed during the housing boom of 2000 to 2005.

Many South Florida homeowners are staying put to avoid those huge tax increases, and that has contributed to the housing market's malaise. Home sales across the region have declined for at least two years, in part because of the property tax implications people face when they move.

Proponents say portability would boost home sales, helping the beleaguered market recover. Here's how Pelton would benefit from buying a $450,000 condominium in Highland Beach:

Property appraisers in Palm Beach and Broward counties say they assess homes and condos at about 85 percent of the purchase price. For Pelton, that would be $382,500. After she subtracts the $40,000 homestead exemption, and the $135,406 in tax savings (the market value minus the assessed value) from her current home, her condo would then be assessed for tax purposes at $207,094.

Based on Highland Beach's tax rate of nearly 2 percent, her taxes would be about $3,600, which is roughly $300 more than the $3,272 she's paying now. Without portability, her tax bill on the condo would be about $6,200.

"That will be a big step to encourage people to buy and sell," Pelton said recently. "I can't see this failing once they count the ballots."

But John Mike, chairman of the Realtors Association of the Palm Beaches, said he's unhappy that the tax proposal doesn't help everyone.

"This is not enough to fix what has to be fixed," Mike said.

Despite the plan's shortcomings, Parrish, Mike and Palm Beach County Property Appraiser Gary Nikolits intend to vote for it.

"If you're hungry, and someone is offering you a loaf of bread, it's better to take it than to go without anything at all," Nikolits said.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

source: sun-sentinel.com

Bush mortgage plan won't help S. Fla. housing market

South Florida won't get a big boost from President Bush's plan to freeze interest rates for homeowners nationwide who are bracing for sharp increases in their adjustable-rate mortgages, analysts say.

Many distressed borrowers across the region can't benefit because they're investors or homeowners at least 90 days late on their house payments. To qualify for help under the program announced Thursday, residents must be living in their homes and current on their mortgage payments.

What's more, Bush's proposal is focused on preventing a national foreclosure crisis and not meant to aid individual states, such as Florida and California, that are leading the housing bust after the boom of 2000-2005.

Some economists say there's nothing in the president's proposal that will trigger a rebound in a South Florida housing market that has been mired in a slump for almost two years.

"It's not going to help areas that need help the most, and Florida certainly is one of those," said Per Gunnar Bergland, chief economist for Moody's Economy.com, a Pennsylvania research firm.

Bush said relief is designed for homeowners holding adjustable-rate subprime mortgages they took out between Jan. 1, 2005, and July 31, 2007, and are facing a steep increase in their interest rates before July 31, 2010.

About 1.2 million people could be eligible for help, but only a fraction will get the five-year rate freeze. Others would get assistance in refinancing with their lenders and moving into loans secured by the Federal Housing Administration, Bush said.

Also, the aid will come only to those who ask for it, he said. Thousands of borrowers who are falling behind on their payments have been sent letters about the options, and the president also urged people to call a new hotline: 1-888-995-HOPE.

"There is no perfect solution," Bush said, as he announced the agreement hammered out with the mortgage industry. "The homeowners deserve our help. The steps I've outlined today are a sensible response to a serious challenge."

About 2 million subprime mortgages — loans to borrowers with poor credit histories — will reset over the next two years from their introductory rates of around 7 percent to 8 percent to levels as high as 11 percent, adding hundreds of dollars to the typical monthly payment.

A recent surge in mortgage defaults in South Florida and nationally has contributed to the worst housing slump in more than two decades and piled up billions of dollars in losses for big banks, hedge funds and other investors while hammering financial markets worldwide. Some economists fear the housing problems may push the country into a recession.

"We should not bail out lenders, real estate speculators or those who made the reckless decision to buy a home they knew they could never afford," Bush said after meeting with industry leaders at the White House. "But there are some responsible homeowners who could avoid foreclosure with some assistance."

As of June, 6.6 million homeowners nationwide had subprime mortgages, Economy.com's Berglund said. Of those, 1.7 million face resets to higher interest rates between January 2008 and July 2010.

Last year, 42 percent of mortgages originated in Broward County were subprime, according to the U.S. Department of Housing and Urban Development. In Palm Beach County, 32 percent were subprime mortgages.

The number of Americans who fell behind on their mortgage payments in the third quarter rose to a 20-year high, the Washington-based Mortgage Bankers Association said.

In Broward County, 2,110 residents were behind on their mortgages in November, almost triple the 770 of a year ago, according to Realestat.com of Plantation.

Palm Beach County had 1,387 residents behind on their home loans last month, up from 515 a year ago.

People facing foreclosure typically are behind on their mortgage payments at least three months and have been notified by lenders that they intend to take back the properties.

Louis Spagnuolo, vice president of mortgage banking for WCS Lending in Boca Raton, thinks that Bush's plan will help.

He said people still can qualify if they are no more than 60 days behind on their house payments. They also must have at least 3 percent equity in their properties and a credit score of 660 or lower.

Berglund, wonders, though, whether lenders and loan servicers will be sued by investors for altering the terms of the loans. He also points out that many subprime borrowers obtained loans with little or no documentation and may be unable or unwilling to prove their income now to qualify for the rate freeze.

"We don't think this will be enough to turn the market around or even stabilize it," he said.

Lauderhill Mayor Richard Kaplan, who will deliver a report Monday to the City Commission about the effect of subprime mortgages on local governments, said more has to be done to help those people who need it.

"This is a good first step, but it's not the last step," Kaplan said.

Meanwhile, as the foreclosure pressure intensifies, people are seeking relief from consumer-based groups across South Florida.

Through Sept. 30, the Consumer Credit Counseling Service in West Palm Beach has worked with 2,411 clients who sought relief from mounting housing costs. For all of last year, the nonprofit agency worked with 900 such clients.

The vast majority of clients took out adjustable-rate loans that are due to reset in the coming months, said Jessica Cecere, president of the counseling service.

"We're definitely hearing the same old sad song over and over again," Cecere said. "There are a lot of variables to this plan, but the premise on which it stands — to stop the bleeding, if you will — sounds good to me."

This story includes information from wire reports.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

source: sun-sentinel.com

Home foreclosures hit record high in third quarter

WASHINGTON - Home foreclosures shot up to an all-time high in the third quarter, fresh evidence of the problems afflicting distressed homeowners amid the housing meltdown.

The Mortgage Bankers Association in its quarterly snapshot of the mortgage market released Thursday said that the percentage of all mortgages nationwide that started the foreclosure process jumped to a record high of 0.78 percent during the July-to-September period. That surpassed the previous high of 0.65 percent set in the prior quarter.

More homeowners also fell behind on their monthly payments.
The delinquency rate for all mortgages climbed to 5.59 percent in the third quarter. That was up from 5.12 percent in the second quarter and was the highest since 1986, the association said. Payments are considered delinquent if they are 30 or more days past due.

Homeowners with spotty credit who have subprime adjustable-rate loans were especially hard hit. Foreclosures and late payments for these borrowers also reached all-time highs in the third quarter.

The percentage of subprime adjustable-rate mortgages that entered the foreclosure process soared to a record of 4.72 percent in the third quarter. That was up from 3.84 percent in the second quarter. Late payments jumped to a record high of 18.81 in the third quarter, up from 16.95 percent in the second quarter.

The association's survey covers more than 45 million home loans nationwide.

The new figures came as President Bush, accused by Democrats and other critics of not doing enough to help stem the mortgage crisis, was set to unveil a plan Thursday that would allow some homeowners with certain subprime home loans to freeze their interest rate for five years. The plan aims to prevent some distressed borrowers from losing their homes. It also is intended to ease the danger facing the economy from a wave of foreclosures -- something that would further aggravate problems in the housing market.

Homeowners with spotty credit histories or low incomes who took out higher-risk subprime adjustable-rate mortgages have suffered the most distress as the housing market went from boom to bust.

Initially low interest rates that reset to much higher rates have clobbered these borrowers. Analysts estimate that nearly 2 million adjustable-rate subprime mortgages will reset to higher rates this year and next.

Doug Duncan, the association's chief economist, said in an interview with The Associated Press that foreclosures and late payments are likely to stay high or get worse in the coming quarters.

The mortgage meltdown has hit financial companies with billions of dollars in losses from bad subprime mortgage investments. Some lenders have been forced out of businesses. The situation has elevated the odds of the country falling into a recession. It has roiled Wall Street and has offered lots of fodder for Democrats and Republicans to blame each other for the mess.

Against this backdrop, the Federal Reserve next week is expected to slice a key interest rate for a third time this year to bolster the economy.

Duncan said there were a host of factors to blame for the rise of foreclosures and late payments in the third quarter: broad-based declines in home values; the resetting of adjustable-rate mortgages to higher rates; the drying up of credit for subprime and ``jumbo'' mortgages, those exceeding $417,000; and economic weakness in some parts of the country.

California and Florida -- the two largest states in terms of outstanding mortgages -- were key drivers in the increase in the national foreclosure rates, the association said. The two states together accounted for 33.7 percent of the subprime adjustable-rate loans that entered the foreclosure process in the third quarter. The two states combined also accounted for 42.4 percent of creditworthy "prime'' adjustable-rate mortgages that started the foreclosure process.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

source: sun-sentinel.com