The Wall Street Journal reports that over the past five years, the real estate boom in Florida and across the nation has been very good to property owners of all types, with one notable exception: landlords.

They have taken a beating as historically low Florida home loan rates and the prospect of rising home prices have turned thousands of would-be renters into buyers. Meanwhile, vacant apartments have often stayed that way until landlords reluctantly lower the unit’s rent out of necessity.

“In some cases we were giving away $50 to $100 in rent to keep people coming in the door,” said Warren Rose, whose family business, Edward Rose & Sons, owns 52,000 apartments in mostly small- and medium-sized cities around the country.

After five years of meteoric growth, the market is now slowly changing, with vacancy rates dropping and rents beginning their ascent in many parts of the country. Rose’s apartments in Virginia and the Midwest began seeing increased tenancy in the past 18 months, and lately he has been able to reduce concessions to potential renters while enjoying modest occupancy growth.

“It appears that a recovery is happening,” Rose said. “But time will tell.”

Landlords in Florida and across the U.S. are pinning their hopes on continued job growth and the end of the single-family housing surge in 2006. However, a weak market could hurt them yet again if unsold condos resurface in the market as a glut of rentals.

The national apartment vacancy rate fell to 5.8 percent in the third quarter of 2005, the lowest point since 2002, according to REIS Inc., a New York-based real estate research company. By the same token, actual rents collected by landlords increased 1.2 percent over the previous quarter to $895, the highest quarterly gain since early 2001.

United Dominion Realty Trust, Inc., a large apartment investment trust, thinks fundamentals are improving at its apartments in core markets such as Washington and Southern California, and more recently in its softer markets like Denver and Seattle. In 2002, the firm spent approximately $1,000 on discounted rent and bonuses to employees for each new tenant it got to sign a lease. Today it spends $350 and is nearing the 95 percent occupancy rate that companies pine for.

The company’s CEO, Thomas Toomey, expects to see more prospective renters because of higher mortgage rates and home prices. Last year, 25-30 percent of individuals who moved out of his apartments bought homes, whereas in the third quarter of this year, that number has decreased to a more moderate 15 percent.

One of landlords’ few bright spots during the downturn was that they could sell their buildings to people doing condo conversions - especially in markets such as South Florida - at very high prices. Apartments being turned into condos sold for an average of $166,000 last quarter, up from just $99,000 for units in buildings that were sold but remained as rentals, according to Real Capital Analytics, a New York-based real estate research and consulting firm.

Landlords currently have a window of opportunity to take advantage of extremely high home prices by offering affordable rents, especially in cities. Analysts say the relationship between rents and home prices has been out of synch since the job market took a dive in 2001, yet people flocked to buy single family homes at the same time because of historically low mortgage rates. The result is that in many cities, it is cheaper to rent than buy.

• In San Francisco, it costs 58 percent less to rent than to own, compared to 33% in 2001.
• In Washington, D.C., is costs 48 percent less to rent than to own, compared to 18% in 2001.
• In Denver, it costs 41 percent less to rent than to own, compared to 35% in 2001.

These home ownership costs are based on a 15 percent down payment by the buyer. They are also based on a conventional mortgage (standard, fixed-rate, 30-years) and do not take into account property taxes or insurance. Here in Florida, it remains to be seen whether rising home prices will slow enough impact the buying and renting trends that have surfaced in recent years. Keep your eyes peeled for a good deal if you are looking to buy, because despite the recent dropoff, there will still be opportunities to buy Florida real estate and profit from doing so. Proceed cautiously, though, as renting is often the safer bet. Consider all your options.

Between the unfortunate hurricane season, the exciting tourist attraction of DisneyWorld and the popularity of various beach resorts, Florida is constantly in the news. Recently, however, the soaring housing market has fueled this state’s time in the media spotlight.

Earlier this year, the area enjoyed 30% gains in home price appreciation. While these drastic increases are no longer the norm, one property group reported yesterday that in just the Palm Beach Metro area, housing prices increased 4% in October - from $400,000 to $416,000.

In July of this year, the US Census Bureau released information showing that Florida topped the list of the states adding the highest number of housing units, gaining nearly 200,000 homes over the period.

Michael Sklarz, the chief valuation officer for Fidelity National Financial, crunches numbers looking for the best balance of value and growth around the country. He often points to specific cities in Florida for the best deals.

In Pensacola, Florida, for example, the average days for a house on the market stands at a paltry 69. Meahwile, the median sales price is $211,761 and homes sold for an average of 96.45% of the listed price last year - they are currently 4,405 homes for sale in the Pensacola area.

Looking at other Florida housing markets

Palm Beach, is one of the pricier communities in Florida. As an example, there are currently 165 resales on the market, ranging in prince from $595,000 to $33,600,000. While this price may be too rich for some buyers because their debt-to-income ratio doesn’t enable them to qualify for a mortgage, Palm Beach is seeing no shortage of sales - people are always willing to shell out in order to live near world famous golf courses and resorts.

In Orlando, increasing inventory is stabilizing the once stellar seller market. Properties stay on the market longer than in the beginning of this year, say local realtors. Homes under the $150,000 mark are very difficult to find, as they are the first to sell. This is due to the rapid price increases of the last three years — up to 73% in some areas.

Across the board, homes are selling quickly and selling well. It’s the perfect time to see what sort of Florida home loan you could fetch.

Recent analysis of the real estate market in Sarasota and vicinity (right) indicates a significant shift that now favors prospective buyers, reports Re/Max agent Gary Brey of the Sarasota Group. There number of properties currently listed for sale in Sarasota and surrounding areas has increased greatly, tripling from on year ago. The existing inventory reflects a decrease in demand.

Rather than an apocalyptic collapse, what we are seeing is a flattening of the market. Buyers do not need to worry about the depreciation of their purchase, as values are still expected to rise over the long term. They can, however, expect to see a more normal appreciation level — something between 8 and 12 percent per year, which is still substantial. Expecting the 20 and 30 percent gains of the past five years to continue is just not realistic.

To reflect this condition, asking prices are now being reduced. Sellers can expect to wait longer for their properties to be purchased, rather than fielding multiple competing offers immediately. A buyer is particularly likely to lower his/her asking price if he/she is in a hurry to sell. In other words, they will have to accept a more modest gain. They are not going to lose money by selling their homes in Florida, but gains will be much more conservative.

There are also signs less investor money will be funneled into the market in the coming years. This is due in part to new construction developers trying to control the market by placing buyer/investor limits and restrictions on purchases. Investor money seems to be turning back to the stock market as the U.S. economy continues to flourish and Florida real estate, while still stable, appears to have stabilized somewhat.

STILL A GOOD OPTION FOR BUYERS

In the last three years the local market has adjusted. Sarasota property was undervalued when compared to areas such as Naples, Miami and Boca Raton, and continues to lag behind despite the gap being narrowed.

Thus, the Sarasota area remains very attractive price-wise and continues to be a viable alternative to the more expensive areas in the state. One factor which will continue to drive the Sarasota real estate market is the millions of Baby Boomers retiring in the next 10 years. Florida continues to be the number one retirement destination in the county.

Also this week, Florida home loan rates finally dropped off a bit. This is the first time in many weeks that rates have fallen across the board, representing more good news for buyers. If you are looking to buy a home in Southwest Florida, conditions are turning in your favor. Better start doing your research!

Despite the ongoing increase in rates, mortgage applications had been on the rise. Until recently. Based on figures released by the Mortgage Bankers Association, U.S. mortgage applications fell last week. They dragged down by a decline in nationwide home refinancing to a 16-month low - even as interest rates dropped.

The trade group said its seasonally adjusted index of application activity for the week ending on November 25 decreased 1.8% to 624.1, down from the previous week’s 635.4.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.20% last week, down 0.06 of a percentage point from the previous week’s 6.26%. It was the second decline in four weeks.

The MBA’s seasonally adjusted purchase mortgage index rose 0.8% to 476.2 from the prior week’s 472.3. The index is considered a timely gauge on U.S. home sales.

Meanwhile, the company’s seasonally adjusted index of refinancing applications dropped 6.3% to 1,484.3, compared with 1,584.1 in the previous week. The index fell for a sixth straight week, and volume was at its lowest level since the week ended June 25, 2004, when the index reached 1,386.9.

It would be easy, right? I mean, what does a real estate agent actually do?

This question was asked by Larry Johnston, a retired Florida judge. After reflecting on his legal career, he decided that if he had it to do over again, he would have chosen a profession that does not require any real work. Johnston decided to visit a local real estate school and see if this common perception of the industry is accurate. What he found surprised him, and he shared his experiences in a column featured in Florida Today.

His introduction to the trouble-free world of Florida real estate sales began at the A-Plus School of Real Estate in Melbourne, which offers flexible hours and reasonable rates. The first thing he learned was what you need in order to become a Florida real estate agent. You must…

• Be at least 18 years of age.
• Have a high school education.
• Pass this class.
• Take the Florida Real Estate Exam.
• Be of good character.

Johnston met the instructor, a former stand-up comedian, before class. Maybe he would learn something at A-Plus, he figured, as opposed to when he took boring real estate courses in law school. The subject of the night when Johnston attended was the preparation of the Contract for Sale and Purchase, and the four elements involved in every contract.

1. A contract can only exist between two or more people. A corporation is considered a person under the law. The person must be competent. Or at least supposedly.
2. There must be an offer and acceptance of the same terms.
3. The contract involves a promise to do a legal act. For example, gambling debts are not legal acts and therefore cannot be enforced. Sports buffs, take notice.
4. There must be some consideration between the parties — in other words, both parties must get something out of the bargain.

And there you have a short course in real estate contracts. Easy enough, no?

To enhance his understanding of what it takes to be a real estate agent, Johnston spent the day driving a broker friend to some of his appointments. When he told his new cohort that he wanted to become a millionaire selling real estate, the response was laughter.

“Being a real estate agent is hard work,” the broker said. “People overestimate the amount of money we receive and underestimate the amount of work we do. A new agent needs to find a good mentor with good ethics. You must be patient, love people and have a flexible schedule. Also, remember you can spend weeks on a deal that falls apart, and you will get nothing.”

Interesting. Maybe law school wasn’t so bad after all.

Jacksonville home sales are remaining strong. According to numbers from the Florida Association of Realtors (FAR), over 1,500 homes were sold in Jacksonville in October, a 38% rise from last year at that time. The median price of a home also went up in the area, rising 20% to $191,600.

Other Portions of the state didn’t fare as well.

For example, home prices continued to rise but the number of sales fell in October overall, notably in southern areas directly impacted by Hurricane Wilma’s march across the state. This occurred after a recent surge in the southern Florida home loan market. Most insurers stopped issuing new policies when the hurricane neared the state, and, following the storm, some lenders required a new home inspection of properties before they would release mortgage money.

Median prices on the rise

Despite storm problems, however, the state’s median home price rose 28% from last October to this October - from $188,800 to $241,000. In September 2005, the median price was $247,800. FAR records indicate the statewide median sales price near the end of 2000 was $116,100, an increase of 107% over the five-year-period.

Many real estate agents across the state report gains in housing supply, providing buyers with a larger selection of homes to consider. Statewide, a total of 16,029 existing single-family homes sold last month compared, to 16,844 homes a year ago for a decrease of 5%.

The national median existing-home price in September was $212,000, up 13.4% from the previous September’s median price of $187,000, according to the National Association of Realtors (NAR).

News on Florida home loan rates

Interest rates for a 30-year fixed-rate mortgage averaged 6.07% in October, a slight increase from the average 5.72% in October 2004. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s larger markets, the Daytona Beach metropolitan statistical area (MSA) reported that 1,037 homes sold in October for an 18% gain over numbers from the prior year’s time. The median home price in Daytona Beach rose 35% during this period, from $165,000 to $223,30o.

Shawn M. Goepfert, president of the Daytona Beach Area Association of Realtors and owner of Ideal Realty of Volusia, says that demand for Daytona-area homes is now catching up with supply.

“We started 2005 off with only about 1,000 residential listings, really robust sales and it taking only about two or three weeks to get a contract,” said Goepfert. “That demand really pushed up our sales price, but in the last 30 days, our inventory has increased to about 3,000 residential listings.”

Other larger Florida housing markets with strong sales and price increases include Tampa-St. Petersburg-Clearwater, with 3,735 homes sold, good for an increase of 4% over the same time period. Home prices also rose over the year with the median price up 35%. It currently stands at $225,700.

Among the state’s smaller MSAs, Lakeland-Winter Haven posted a 24% gain in home sales in October, with 513 homes changing hands. The market’s median sales price rose 50% in October to $173,500; last year, it was $115,500.

“I think people have discovered our little secret,” said Peggy Daley, treasurer of the Lakeland Association of Realtors and a Realtor with ImperiaLakes Realty Services in Lakeland. “We’ve got the best of everything. People are moving here in droves from South Florida, plus people from the North keep coming down and quickly realize that we’re centrally located with easy access to Tampa or Orlando — but without the traffic.”

Florida home loan numbers soared in other, smaller parts of the state, as well. Ocala and Tallahassee both saw increases in the numbers of homes sold, along with the average prices on houses in those markets. This bodes well for the future of real estate across the state.

As questions about the state of the real estate market continue, lenders are cutting back on financing and tightening standards for condominium projects. The Wall Street Journal reported Tuesday that certain lenders have been requiring developers to put more of their own money into projects, sell units faster and provide proof of experience completing their planned condo projects.

“Lenders are looking toward more worst-case scenarios,” Dwight Dunton, president of Bonaventure Realty Group LLC, a real-estate developer based in Arlington, Va., told the newspaper.

The latest in condo sales

The most recent figures from the National Association of Realtors show that condo and co-op sales over the last 12 months are up 35% from 2002, while their median price in the most recent month was $229,800, up 61.6% over the typical price in 2002.

However, sales volume is off 10.4% since the record level hit in June, as sales have fallen in three of the last four months, one of the latest signs of a slowing real estate market.

Some lenders told the Journal they are pulling out of some markets. One of them, Brian Harris, the managing director and global head of commercial real estate at UBS, told the newspaper that his company has basically removed itself from Miami.

The tighter standards could limit the flow of new developers into the market, according to the report. Matthew Texler, of Meridian Capital Group LLC, agrees with this assessment.

“What we saw in the last 12 to 24 months was so many people who had never done a condo deal in their lives getting into the condo market,” said one of the vice presidents of this mortgage broker company. “[Now] it’s becoming very difficult for the newbies to get their deals done.”

The move is also making developers more cautious about promising units to potential buyers.

Dan Kodsi is president of Royal Palm Communities, a developer in Boca Raton, Fla. He told the paper he typically would pre-sell units before going to lenders with the sales numbers to assure financing. Now as he plans a 60-story, 500-unit condo tower in the hot Miami market, he’s looking for financing first because of concerns that he won’t be able to raise the cash for the project.

Fannie Mae announced today that it will apply new conforming loan limits on single-family mortgages in 2006. The new limit will be $417,000 and is determined by the Office of Federal Housing Enterprise Oversight (OFHEO), based on federal data on average home prices nationwide.

As a result of the new loan limit, the company estimates that as many as an additional 466,326 homeowners would be eligible for a conforming loan next year. This figure would include those wishing to apply for a Florida home loan, whether it were of a fixed-rate or adjustable-rate variety.

Conforming loan limits may adjust annually. These adjustments are based on the October-to-October changes in the mean home price, as published by the Federal Housing Finance Board (FHFB). The FHFB figures come from its monthly survey of lenders, which takes into account both new and existing homes.

New limits were also set multi-unit loans for 2006 as follows:

• Two-family loans: $533,850
• Three-family loans: $645,300
• Four-family loans: $801,950.
• The 2006 loan limit for second mortgages will be $208,500.

Most loans Fannie Mae purchases are well below the conforming limit. The average loan size for single-family properties in the first three quarters of 2005 has been about $172,000.

Best Beach Real Estate is opening its second office in South Beach, for a total of three offices in the Miami area. The Miami Beach-based company’s new office follows its recent success in the South Florida real estate market and is scheduled to open in December 2005. Best Beach will be located on one of South Beach’s busiest and most desirable streets, at Alton Road and 12th street.

“As our business continues to experience explosive growth year over year, we are looking at providing more locations to service our customers in the South Beach area,” said Managing Director Abraham Chehebar. “The new office will primarily serve South Point, Venetian Island, Dilido Island, Star Island, Fischer Island and the west side of South Beach.”

The other two Best Beach office locations are Collins Avenue and 13th street in South Beach, and Collins Avenue and 71st Street in North Beach.

The official opening of the second South Beach office will be bolstered by a marketing and advertising campaign that will celebrate Art Basel, one of Miami’s most popular, recognized art festivals. As the arts are clearly of heavy interest to the market segment Best Beach are looking at serving in this area, it makes perfect sense to associate the new branch with the arts from day one, according to Alberto Bassal, the firm’s Marketing and Development Director.

The real estate agency has been offering real estate services since 1996, and has built an impeccable reputation. With high-profile clients, a diversified portfolio of Miami Beach real estate, and with more than 1,000 owned units, it looks poised for continued growth. The company’s philosophy has always been exceptional customer service, a family-oriented approach and extensive knowledge of Miami Beach’s neighborhoods and the overall market. Best Beach also specializes in Florida condominium conversions and remodeling.

Rates on a 30-year mortgage continue their steady ascent. Edging up slightly this week, Florida home loan rates posted the 10th consecutive increase- resulting in the highest level in more than two years.

According to Freddie Mac the nationwide average for 30-year fixed-rate mortgage rose a hundredth of a percentage point to 6.37 percent from last week’s 6.36 percent.

• Rates on 15-year, fixed-rate mortgages rose to 5.90 percent from 5.89 percent.
  
• One-year adjustable rate mortgages rose to 5.20 percent from 5.12 percent.
  
• Rates on five-year hybrid adjustable rate mortgages rose to 5.86 percent from 5.81 percent.

As with many mortgages, the rates do not include add-on fees known as points. All categories of mortgages in the Freddie Mac survey carried a nationwide average fee of 0.6 point last week.

Representing a significant change in direction the 30-year mortgage is now nearly a full percentage point above its low-point of this year of 5.53 percent set the week of June 30. The current rates still represent an overall historical low. According to the Florida Association of Realtors the market remains consistent despite both rising rates and prices. However a proliferation of properties indicate the beginning of a downtrend.