The bad side of tax cuts will have the Federal Reserve increase interest rates.

Pool and BeachInterest rates are likely to increase following enactment of the recent tax reform bill (Tax Cuts and Jobs Act (TCJA), passed in December 2017,). With too much success, the Federal Reserve will probably increase interest rates for the fear of raising inflation. These pro-growth provisions will likely encourage additional capital investment.  During this period, the higher interest rates will help savers invest in instruments like bonds.  The downside is that higher interest rates results in higher mortgage rates.  Not only are higher interest rates affected by the tax cuts, there are changes to both interest paid and property tax deductions.

deposit-clipart-gold_theme_money_dollars_clip_art_7759 - CopyThe new tax reform bill made several significant changes to the individual income tax. These changes include a nearly doubling the standard deduction, new limitations on itemized deductions, reduced income tax rates, and reforms to several other provisions.

  • The standard deduction amounts will increase to$12,000 for individuals, $18,000 for heads of household, and $24,000 for married couples filing jointly.
  • Under pre-TCJA law, the Child Tax Credit was worth up to $1,000 per qualifying child, was refundable for taxpayers with earned income of at least $3,000, and phased out (decreased) for taxpayers with AGI above $75,000 ($110,000 for joint filers).
  • Beginning in 2018, taxpayers may only deduct interest on $750,000 of qualified residence loans.
  • If the taxpayer used the home equity loan proceeds for personal expenses, such as paying off student loans and credit cards, then the interest on the home equity loan would not be deductible. 
  • If  you pay taxes on your personal property and owned real estate, they may be deducible from your federal income tax bill.
  • Interest paid on a mortgage is tax-deductible if itemized on the tax return.  Taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt (the limit is $500,000 if married and filing separately).

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link

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Selling Homes with a Real Estate Agent in Florida

moneyhands_217w_gifMost people selling their home in Florida work with a licensed real estate broker or agent.  A good real estate agent will help you with the following:

  1. pricing your house, based on comparative market analysis (or comps similar to an appraisal), that helps set the current values of similar homes in your area;
  2. market your house to prospective buyers; and
  3. handle other tasks, such as reviewing house purchase documents and negotiating with buyers.

One of the first documents that is signed by the real estate agent is the Listing Agreement, which covers the following items:

  1. The type of listing. Most agents will want an exclusive right to sell listing, which obligates you to pay a commission to the agent regardless of who brings in the buyer.
  2. Duration of listing. In all cases, the listing agreement will cover a set amount of time. (typically at least six months to effectively market the property depending on price i.e. higher priced homes take longer to sell than moderately priced homes)
  3. Listing Price.  In determining a reasonable listing price, a real estate agent look at comparable sales and the length of time on the market to meet the seller’s goals.  For example, a seller might need to sell faster then the comparables and the listing should be priced accordingly.
  4. Items included or not included in the sale. The seller will list what is going to stay or go as part of the listing.  For example, a seller may plan to leave behind a built-in dishwasher (which is therefore part of the property that the agent is contracted to sell), but exclude a refrigerator that the seller plans to move to your new home.
  5. The real estate agent commission that a seller will pay (it should be noted that this is one of the highest cost that the seller will incure). This typically ranges from 5-6% of the house sales price, and is split between your listing agent and the buyer’s agent.

Seller’s Property Disclosure

money-7State law in Florida (Johnson v. Davis, 480 So.2d 625 (Fla. 1985)) requires sellers to disclose any facts or conditions about their property that they know about and have a substantial impact on the value of the property and that others cannot easily observe.  Some of these items can include the following:

  • defects in the electrical and other house systems,
  • conditions such as termites or asbestos, and
  • homeowners’ association fees (typically an addendum to the contract), deed restrictions, and other specified details of the property.

In addition, if your house was built before 1978, you must comply with federal Title X disclosures regarding lead-based paint and hazards, which is typically an addendum to the contract.

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link

Interest Rates Are Likely to Continue to Increase

Main EntranceAfter nearly a decade of low-interest rates, the Federal Reserve has started increasing the federal funds rates (the interest rate that it charges banks) and the banks are also raising rates they charge to consumers (the consumer).  While it brings higher costs for borrowers, it going to help savers with higher returns.  Consumer discretionary spending traditionally moves in the same direction with interest rates in the short-term due to more people working and increased incomes which inevitably lead to increased spending.

  • The CPI report indicates that a rate hike is still likely.  New Labor Department data out this past Friday shows that workers’ wages in the U.S. continue to rise.
  • With a low unemployment rate, an inflation rate drifting toward the Federal Reserve’s target, and increased spending, current interest rates don’t adequately match the strength of the economy, which is considered to be very strong.
  • However, consumer spending will continue to increase since most consumers will not see a measurable change in purchasing power.

loan_application_clip_art_24699As of September 13, 2018, the benchmark 30-year fixed mortgage rate jumped seven basis points to 4.78 percent from 4.71 percent last week, according to Bankrate.com’s weekly survey of the nation’s largest mortgage lenders. The average rate for 15-year fixed mortgages also climbed five basis points to 4.21 percent, while the average rate for adjustable-rate mortgages, or ARMs, shot up six basis points to 4.20 percent.

Meanwhile, mortgage demand continues to cool as rates climb. Total mortgage applications dipped 1.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s weekly survey ending Sept. 7.

Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.  Inflation and interest rates are often mentioned in the same breath, and this is because inflation and interest rates are closely related. In the United States, baseline interest rates are set by the central bank, the Federal Reserve Bank also known as the Fed.   Basically, here is how the Fed reacts and controls interest rates:

  • In order to control high inflation, the central bank increases the interest rate.
    When interest rate rises, cost of borrowing rises. This makes borrowing expensive.
    Hence borrowing will decline and as such the money supply (i.e the amount of money in circulation) will fall. A fall in the money supply will lead to people having lesser money to spend on goods and services. Hence, they will buy a lesser amount of goods and services. This, in turn, will lead to a fall in the demand for goods and services.  With the supply remaining constant and the demand for goods and services declining; the price of goods and services will fall.
  • In low inflationary situations; the interest rate is reduced. A fall in interest rates will make borrowing cheaper. Hence, borrowing will increase and the money supply will also increase. With a rise in money supply, people will have more money to spend on goods and services. So; the demand for goods and services will increase and with supply remaining constant this leads to a rise in the price level (i.e inflation).

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link

A couple of reasons that we are not heading for a housing bubble

Here are some best reasons that we are not heading toward a housing bubble:

  • Foreclosure rates are down.  A major cause of the housing crash last decade was the number of foreclosures that hit the market.  According to  ATTOM Data Resources, there were reported on 676,535 U.S. properties in 2017, down 27 percent from 2016 and down 76 percent from a peak of nearly 2.9 million in 2010 to the lowest level since 2005.  Those 676,535 properties with foreclosure filings in 2017 represented 0.51 percent of all U.S. housing units, down from 0.70 percent in 2016 and down from a peak of 2.23 percent in 2010 to the lowest level since 2005.

Foreclosures

  • Mortgage standards have increased since the the last bubble.  Originating a loan has become more time consuming because of the process of collecting volumes of information and documentation from borrowers and verifying everything to make sure the loan file is accurate. Lenders can pay big fines for originating faulty loans like they did during the bubble era. Now,  lenders they are checking everything.  However, this comes at a cost that is pasted on the home owners.  Access to mortgage credit remains tight and making it too difficult for responsible borrowers to get loans. Before the housing crisis, lenders were making loans to people who couldn’t afford a mortgage. But now the opposite problem exists in the other direction. Mortgages today have default rates as low as you can possibly get.  The following chart shows the histroical default risk associated with home mortgages:

Mortgage Default Rates

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link

 

 

Tampa Bay Single Family Market Update August 2018

We have presented an overview of the national, state and Tampa Bay County Residential market.

National and Regional Single Family Market

According to NAR, existing single family homes sales have decreased with projected annual sales of 5,380,000 units in June 2018 annually versus 5,500,000 units in November 2016.  Statistics in the South have increased slightly with annual sales in June 2018 of 2,250,000 versus 2,240,000 in June 2017.

National Existing Home Sales

As of June 2018, there was a 4.3 month supply of inventory available, which was up 2.4% from the previous year, nationwide.

National Sales Price

Meanwhile, the median nationwide existing single family home price was $276,900 in June 2018, which is up 5.2% from a year ago.  The median price in the South was $237,500, which was up 2.7% from the previous year.

The average nationwide existing single family home price was $314,900 in June 2018, reflecting a 3.8% increase from a year ago.  The average price in the South was $276,100, which is up 2.1% from the previous year.

Florida Single Family Market

The following data was prepared by the Florida Association of Realtors (FAR).

As can be seen in the following charts, sales of single family homes at its height (in recent years) increased in the second quarter of 2017, compared with second quarter of 2016 numbers.  Sales in Second Quarter 2017 were 79,888 compared to 77,023 in Second Quarter 2016.  This represents a 3.7% increase. Recently, sales of single family homes have decreased slightly to 60,204, but remain higher than the First Quarter of 2016 (57,779) and First Quarter of 2015 (57,676), and slightly lower than the First Quarter of 2017 (60,733).

Florida Closed Sales

STATE OF FLORIDA HISTORICAL CLOSED SALES FIGURES

Closed Sales Figures

Although there was a slight decrease in the number of sales, pricing has increased in First Quarter of 2018 to $248,000, up 9.7% from the same time period in 2017 at $227,000.

STATE OF FLORIDA MEDIAN SALES PRICE FIGURES

Florida Median Sales Price

Fl Median Sapes Price Chart

Tampa Bay Single Family Market

The following data from the Tampa-St. Petersburg-Clearwater MSA (includes Hernando, Pasco, Pinellas and Hillsborough Counties) was prepared by the Florida Association of Realtors (FAR).  As can be seen in the following charts, sales of single family homes have generally remained stable in 2016 over 2015 to a high in the Second Quarter of 2017.

TAMPA AREA CLOSED SALES FIGURESTampa CLosed Sales

Pricing of homes has stabilized with a median sales price in the First Quarter of 2018 of $225,000, representing an 8.4% increase from First Quarter of 2017 of $207,500.

Median Sales Price TAMPA AREA MEDIAN SALES PRICE FIGURES

Tampa Median Sales Price

CONCLUSION

The Tampa Bay MSA area experienced large growth in residential housing during the residential “boom” period of the early to mid 2000’s. Since the beginning of 2013, the market has shown increases in both pricing and sales figures.  These figures continue to show improvement.

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link

Today’s Golf Course Industry

The primary data source used to form my opinions was National Golf Foundation publications. In most cases, this information is quoted verbatim.  There are three generally accepted traditional categories of golf courses; municipal, daily fee, and private courses.

 NATIONAL MARKET TRENDS

The golf course industry continued to undergo a slow and steady cycle of self-balancing in 2017. This right-sizing in the supply of United States golf facilities is the ongoing byproduct of an unsustainable period of growth (1986-2005) in the world’s best-supplied market.

At the end of 2017, there were a total of 14,794 golf facilities in the U.S. The net reduction represents a 1.5% contraction of the U.S. golf facility supply from 2016. Demand for land to develop residential and commercial real estate continues to fuel the supply correction in golf. For golfers, the quality of supply continues to gradually improve as some courses close and many remaining ones undertake improvements, both major and minor.

GOLF COURSE FACILITIES

Golf Course Facilities

SOURCE: NGF

In addition to the lower openings of golf courses, recently there has been a trend of courses closing nationwide.  As can be seen in the above chart, this has caused the net growth of courses to be negative.  Since 2006, the cumulative reduction in the total number of U.S. golf courses is 6.9%. By comparison, there was a 44% increase in the number of courses over a two-decade course building boom from 1986-2005.

Golf Course Renovations

Renovation, not new construction, is the largest source of U.S. golf course development activity. Approximately 1,100 course renovations over the past decade represent a total investment of at least $3.25 billion. That doesn’t factor in minor rehabilitation projects. The new courses that are being built demonstrate an increased focus on being playable and enjoyable.

PARTICIPATION

 This statistic shows the number of participants in golf in the United States from 2006 to 2016. In 2016, the number of participants (aged six years and older) in golf amounted to approximately 23.82 million.  The US golfer base saw a boom from the late 1990’s and early 2000’s where the golfer base climbed to nearly 30 million.  This does not bode well for the golf industry as core golfers account for the most rounds played at most courses.

Number of participants in golf in the United States from 2006 to 2016 (in millions)

Golf Course Participants

ROUNDS PLAYED

The average active golfer from this data set plays 16.4 rounds per year. Notice that we say “Active Golfer” and this might not represent the average golfer. Florida is on top of the chart as expected with 25.1 rounds per year. Golfers in Colorado play the least in our top 20, with the average golfer playing just 14.4 rounds per year.

Golf Rounds Played

Accessibility and Affordability

With 75% of facilities open to all players, it matches the highest public-to-private ratio in history. The municipal facility count hit 2,497 in 2017, an all-time high for the industry. The average price paid for an 18-hole round is $34 (Public peak season, weekend greens fee with cart, adjusted for discounts (weekdays, twilight, walking, senior, etc.)). The average price for a 9-hole round is $19.

Golf Facility Operations

The U.S. golf industry’s 15,014 regulation golf facilities generated $33.286 billion in operating revenue in 2016, up from $28.945 billion in 2011, representing a compound annual growth rate of 2.8%.  The total number of golf facilities declined during this period (down by 737 facilities, or 4.7%, from 2011), however average revenue for the remaining facilities grew as the U.S. economy recovered from the major economic downturn that ended in 2010.  Lower unemployment and stronger growth in consumer spending and tourism supported golf facility operations in 2016, as did the absence of extreme weather across most of the country.

Average Prices Paid for Golf Courses

With the majority of golf course transactions being in the $1 to $3 million dollar range, nationally, there has been an influx of first-time golf course buyers entering the golf course market.  According to sales data compiled by Marcus & Millichap, the following trends in golf course prices since 2006:

Golf Course Sales

According to Marcus and Millichap, profitable deals where sellers are seeking a 10% cap rate (10X EBITDA) still need to show incredible upside to trade at that price in terms of revenue growth. However, the better located courses with quality course conditioning and high levels of customer service (including leagues and events) will continue to provide owners with solid returns.

SUMMARY

Although a golf course closes every 48 hours in the United States based on statistics from the NGF, there has been an increase interest in renovations of existing golf courses. The compression of golf facilities since 2006 of about 6% compares with growth of 44% from 1986 to 2005. Rounds played nationally were up in 2014, 2015 and 2016, and that the reduction in supply is not impacting demand.

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link

Sunset Pointe at Collany Key

 

An established luxury residential condominium development known as “Sunset Pointe at Collany Key” has units available in its third phase in Tierra Verde, Florida.  This development is located in southern tip of Pinellas County, which is one of the most populated counties in Florida and part of Tampa Bay community.  These units provide spectacular natural views coupled with a premier amenity package.  The Phase 3 building will contain 30 luxury, three bedroom, three and one half luxury residential units ranging in size from 2,721 to 2,939 square feet of living area with large front and rear balconies as well as garages on the first level.  Although the top units provided unparalleled panoramic views of the Gulf of Mexico, the second floor units will feature oversized balconies with private stairs and dramatic water front views.  The community amenities package includes a waterfront resort style heated pool and spa, fitness room, outdoor kitchen and meeting area, sunset pavilion, and nature trail.  The prices sill start at $1,265,250.  If you are interested, please feel free to contact me. 

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link