That’s the opinion of Rick Diamond, a retired newspaper publisher and community activist who lives in Fort Myers, on what the housing market’s return will depend on.

According to Diamond’s editorial in the News-Press, commercial real estate broker Frank D’Alessandro sent a shock wave throughout the residential real estate community by predicting that the Southwest Florida housing market would not recover until the third quarter of 2008.

Yet in a July 2005 column, in which Diamond predicted the bubble was about to burst, D’Alessandro disagreed, stating, “While housing prices would be leveling off, the 5 percent annual population growth would be the key factor in maintaining current housing prices.”

D’Alessandro, who heads the largest commercial real estate brokerage in Lee County and often writes about real estate trends, admits that he was caught off base last year.

“With homes being grabbed up as soon as they came on the market, I assumed that future snowbirds, buying a second home, were major contributors to the boom. Instead it was speculators and, once the market showed signs of softening, they started to bail out, further depressing the market.”

This time D’Alessandro has more hard evidence to back up his prediction, pointing out that the local multiple listing service has a huge overload of 12,654 single-family homes and 7,819 condos on the market at median sale prices far in excess of the current median sales price of $264,100 for homes and $237,500 for condominiums.

This inventory does not include thousands of houses and condominiums for sale from a score of developers, including a number of national firms that were attracted to the area when Lee County was one of the hottest housing markets on the planet.

LEERY BUYERS

While most Realtors contend that a two-year recovery period is too long in view of our continuing population growth, many are hopeful that the outlook posed above will make sellers take a more realistic approach today when it comes to pricing their homes.

However, sales figures throughout Lee County do not bear that optimism.

While there are buyers waiting on the sidelines, many are waiting for prices to drop even further. A lack of affordable housing is the No. 1 problem facing potential buyers because, with house values more than doubling in the past five years, many buyers are priced out.

Nor has the big jump in homeowners insurance premiums or the increase in Florida mortgage rates made it any easier to buy a home.

Last year, the monthly payment on a $200,000 Florida mortgage at 5.25 percent was $1,100; today at a 6.25 percent rate the monthly payment is $125 higher — no small sum for people scraping by.

Buyers are now, understandably, much more leery about reducing monthly payments by taking out interest-only or adjustable-rate mortgages that, during the boom period, accounted for nearly 30 percent of the Florida home mortgage business.

Many families who purchased homes last year at peak prices, with small or no down payment and without fixed-rate mortgages are now facing foreclosures.

PORTABILITY IS THE KEY

Q: When will the market pick up? A: When prices begin to drop even more.

And there is movement in that direction already from new-home builders who, feeling the pressure from heavy investments in land and infrastructure, still need revenues even if their profit margins have to be cut.

Despite the glut on the market, they continue to build, but only at about half of last year’s record pace of 29,000 new homes and condominiums. Most builders are either cutting prices on existing models, whatever they can do to cover the closing costs or offer free upgrades.

However, most existing home sellers are reluctant to reduce their asking price significantly even though they should realize that few people are ever fortunate enough to sell at the peak of the market whether it is a house or a publicly listed stock.

More buyers will be making offers on the low end and sellers will have to have to decide whether to negotiate or to take their houses off the market for a year or two in the hope that prices will rebound.

Sellers have one important comfort zone, the Save Our Home Amendment that keeps their property taxes low. Selling at a reduced price, and purchasing another home or condo in Lee County, or in Florida, will mean that their property tax bill may be greater — even if they downsize.

Portability, the ability to carry your tax savings to a new property, will be the one measure that will jump-start the real estate market.

Auctioneer Perry Diamond stood on the pool deck of the historic home in West Palm Beach’s Flamingo Park and barked into his microphone.

“Looking for $600,000, do I have $550,000? $550,000? $500,000? Let’s kick it in at $500,000,” said Diamond.

Two dozen people sat before him, but no one budged.

“The auction is today. You’re going to buy it today, or it’s going to go back to the seller,” Diamond urged.

Still nothing.

Nevertheless, after 70 seconds of banter, Diamond declared that he had a $500,000 bid for a home that once listed for as much as $725,000.

“We can consider it sold subject to seller’s confirmation,” he said.

But there was no bid for the seller, John Neuharth to confirm. The personal trainer in West Palm Beach waited out the auction at a friend’s house, and two days later he said he was still confused about what happened.

Amid a slow South Florida housing market for home sales and a growing glut of properties, frustrated sellers increasingly are turning to auctions in search of quick transactions. Auctioneers hype the process as a way to build buzz and move homes in a moribund market.

But as the failed example above shows, auctions offer no magic solution.

BUYERS CALL THE SHOTS

First and foremost, no amount of breathless banter can motivate buyers who don’t want to buy. Moreover, the nuances of auctions are lost on buyers and sellers who aren’t familiar with the process.

Real estate auctions have yet to lose the stigma of a vehicle for unloading foreclosure properties and other less-than-desirable homes.

The latest home sales figures from the Florida Association of Realtors last week show that even the most steadfast residential real estate bull is going to have a hard time denying the bear is in the house. An auction may be a clever gimmick, but if the Florida mortgage costs don’t add up, the house isn’t going anywhere.

After soaring to $400,000 in September 2005 during an unprecedented five-year real estate boom, the median price of an existing home in Palm Beach County plunged to $365,500 last month, a 9 percent year-over-year drop. It tied with the Treasure Coast for the third-largest drop in the state.

Buyers are officially calling the shots.

SELLERS ABSORB MARKETING COSTS

The shifting dynamics have led to thousands of frustrated sellers such as Neuharth, looking at everything from auctions to value-range pricing.

Neuharth quickly learned a key difference between auctions and traditional sales. In auctions, sellers pay their own marketing costs (he spent $10,000 on newspaper ads). In traditional sales, Realtors bear those expenses.

In the above case, it did little good. Sometimes a great selling strategy can only go so far. Shortly after he declared the property sold, Diamond acknowledged there was no sale.

“Sometimes you want to cry. Let me introduce you to one of those times,” Diamond said while standing in Neuharth’s dining room.

It’s not uncommon for an auctioneer in a reserve auction to make a bid on behalf of the seller, and Diamond said he declared the home sold simply to save face for the seller.

But the seller was upset that his auctioneer went ahead with an auction when only one bidder showed up with the requisite check for $25,000. Neuharth also didn’t understand why the auctioneer proclaimed his home sold, leaving Realtors at the auction with the impression that the house was off the market.

“I am not pleased. There shouldn’t have been an auction because there was only one registered bidder. This is so new to people, and there’s a lot of confusion,” Neuharth said.

DEGREES OF RISK VARY

For now, the hype and expectations have outpaced the reality of auctioning homes in a slow market. Neuharth’s home was offered in a reserve auction, a type of sale that’s the least risky to sellers but also the least likely to lure bidders into making an offer. That’s because there’s a magic number that seller and auctioneer have in mind — and don’t share with bidders.

Sellers who want to strike a middle ground can try a “minimum-bid auction,” which is the route chose by Robert Bono, who plans to auction his home next month.

The minimum bid is $269,900, a little more than half the home’s listing price of $515,000.

“It’s a little frightening. The downside is that you don’t know exactly what it’s going to sell for. Theoretically, it can sell for the minimum opening bid,” Bono said.

Still, he hopes the auction nets him a quicker sale and gets him out from under his Florida mortgage loan on the house, an investment property that — as of right now — is producing no income.

“Listing it on the multiple listing service is going to make it one of thousands. And I don’t have a tenant in there, so it’s costing me $3,000 a month,” Bono said.

But his prospects are iffy at best. You just can’t sway large-scale market influences, and too many buyers are still priced out of this market, even with slashed auction deals. Bono is one of what some Miami real estate experts say will be a growing number of home sellers choosing auctions in today’s sluggish market. But will it pay dividends for him?

Anyone keeping an eye on Florida mortgage loan activity also has to keep an eye on baby boomer activity. How come? Because this older segment of the population has always kept the housing market in the Sunshine State strong.

That’s why this is sobering news: The rate of second home ownership among 50- to 60-year-olds has remained flat during the 12-year period between 1992 and 2004, according to a report sponsored by Radian Group Inc. and the Research Institute for Housing America of the Mortgage Bankers Association.

Early boomers were no more likely to own a second home than older generations of homeowners. Those who did take out a Florida mortgage on a second home are using the residence on a limited basis, too: One-half spend two weeks or less and two-thirds spend four weeks or less per year in their second home, the report found.

Using Retirement Money Now on a Vacation Home Can Pay Off

About 12% of second home owners said they intended to sell their main home and eventually use their second home as their primary address - debunking speculation to the contrary.

The study, “Housing Trends Among Baby Boomers,” was conducted by Gary V. Engelhardt and released during the MBA’s annual convention Monday in Chicago.

Information for the report was pulled from a variety of sources, including U.S. Census Bureau information and the 2004 Health and Retirement Study, which is funded by the National Institute on Aging.

“There have been relatively few scientific studies on second home ownership and mortgage activity,” Doug Duncan, MBA’s chief economist and senior vice president of research and business development, said in a news release. “The report indicates that baby boomers are not acting differently than their parents when it comes to second home ownership. However, the baby boom cohort is so large, even if they follow typical buying patterns, they will have significant impacts on many local housing markets.”

The study found 43 million U.S. households headed by someone age 50 or older owned their main residence and 6.6 million homeowners of that age group owned a second home. Those second homes were often located in well-known vacation areas, such as Florida.

A study such as this contributes to the notion that Florida mortgages may slide through the next year or two.

We recently went over various ways in which borrowers can fund a down payment. Here’s a related topic:

Private mortgage insurance.

PMI is extra insurance a lender may require you to buy if you’re forking over less than 20% of a property’s value as that down payment. It’s necessary because owners who put down small amounts are more likely to default on a Florida home loan.

Remember: If you opt for mortgage insurance, once you earn 20% equity in your home, you should be able to cancel the insurance.

An important thing to understand about PMI is that the 20% equity threshold relates to your home’s value, not necessarily 20% of the Florida mortgage amount. If you get a great deal and buy your residence below market value, buy a fixer-upper and fix it up to increase its value, or pick a locale that suddenly becomes popular and rapidly appreciates in value, your mortgage amount might be very different from the value of your house.

In the end: If you’re required to pay for PMI, keep tabs on the changing value of your home. Compare this to the balance remaining on your Florida home mortgage and see where thingd stand.

This year in the South Florida housing market, sales centers for many proposed housing developments have been quiet as a library.

Not at Loft 3.

Last weekend, the downtown Miami real estate project aimed specifically at middle-income buyers had to keep its doors open to sales past midnight. The 33-story project is on track to be sold out by the end of this week.

Amid the ongoing slump in the housing market, there appear to be pockets of strong demand for well-located housing at prices middle-income buyers can afford. In Loft 3, for example, one-bedrooms start at $159,000 and two-bedrooms at $293,000, which means — finally — some affordable housing options for many residents.

“This has been a very, very underserved market,” said Oscar Rodriguez, who heads the attainable housing division of Related Group, the Miami developer building Loft 3.

After a five-year housing boom left home prices way out of reach for many buyers, the demand for projects like Loft 3 is drawing more builders into the “workforce” or “attainable” housing niche.

Canyon-Johnson Urban Funds of Los Angeles recently announced an investment in a condo in Miami’s Little Havana neighborhood, where buyers can put 5 percent down payments on units starting at $250,000. G.L Homes in Sunrise reported brisk sales for Boynton Beach houses starting at $312,000.

The starting numbers are lower than the existing-home median prices of $270,800 for condos in Miami-Dade and $370,300 for houses in Broward, according to the Florida Association of Realtors.

BUYERS FILING IN

At Loft 3’s sales center this week at Northeast 2nd Avenue and Northeast 2nd Street, dozens of buyers filed in — county employees, city police officers, a Miami-Dade College professor.

It felt like 2004 all over again, right down to the investors who have otherwise largely disappeared from the market as Florida mortgage costs have risen above their record lows attained in 2001-2005.

Two real estate agents from Swire, a developer that has built much of Brickell Key in Miami, came in to each buy units, one as a condo investment.

“I am buying a unit for myself and for a client who lives in Spain,” said Samira Ramirez, who was joined by her colleague, Susanne Rohatynsky. Both said they already own condos on Miami’s Brickell Avenue. “My clients think the price points are very good. I will try to resell my unit.”

One prospective buyer, who works for Miami-Dade County government, said he was tired of commuting from South Miami. Another, a dance professor at Miami-Dade College’s Wolfson Campus in downtown Miami, said her kids are moving out of their Kendall house.

“I want to be able to walk to work, to go to the Carnival Center,” said Diane E. Brownholtz, who has lived in South Florida for 31 years. “I grew up in Chicago, so I know what it is like to live in a city.”

The project is the Related Group’s third in downtown Miami that is largely focused on middle-income buyers. Related, headed by developer Jorge Perez, previously built Loft Downtown and is building Loft 2, a building that vaults the Metromover line. Both are on Northeast 2nd and 3rd streets.

As Florida home loan costs have risen, prices have soared and the market has turned, Related has refocused part of its efforts on building lower-priced condos near employment centers and mass transit hubs, such as a large development it is proposing near Jackson Memorial Hospital.

GOVERNMENT SUPPORT

Still, many developers say land and construction costs so much that they can’t sell for lower prices without government support. The city allowed Related to use a city-owned garage across the street for resident parking and Related bought the land several years ago, when land prices were better.

Related’s size, as one of the biggest firms in its field, often allows it to strike better deals with contractors and for construction materials.

The formula is paying dividends this week, despite an overall challenging market. By Thursday — less than a week after opening — the developer said 415 units were sold with 80 left. The activity prompted the kind of statements not heard in months. Said Frantz Cesar, a buyer in his 50s, as he walked out the condo’s sales center:

“You feel like you have to buy something before prices start going up again.”

Joseph Michalak can’t wait to show you his new pad — all luxurious, 3,000 cavernous square feet of it.

The 37-year-old just moved into a lakefront house with Roman columns and Spanish archways, a manicured lawn and a pool in the backyard.

But more than the amenities in his South Venice home, Michalak likes the price tag — $1,500 a month, or about $1,000 less than what he would pay on a monthly Florida mortgage for the $400,000 home.

A few years ago, Michalak would never have been able to afford such digs. But a softening Southwest Florida housing market is proving a boon for renters who suddenly can find swank homes with top amenities at slashed prices.

The phenomenon is driven by investors who gobbled up homes during Florida’s 2004-05 real estate boom and now are unable to sell at a profit. Many have resorted to renting to help pay their exorbitant Florida mortgages.

There’s no shortage of high-end rentals on the market. Websites that list Sarasota rentals have dozens of listings with the word “luxury” in the ad, most for less than $2,000 per month.

Many investors are renting $300,000-and-up homes for $1,000-1,500 per month, said investor Ellie Vratanina of Baltimore. Vratanina, who manages or owns about a dozen properties in Sarasota, shrugs that “you can’t flip ‘em like you used to.”

The real estate market slowdown isn’t driving down rents for people on low or fixed incomes; rents in Sarasota, Manatee and Charlotte counties have risen steadily for the past few years. But for renters looking to upgrade, now is the time.

Renters like Michalak, who works for a California-based communications form, have learned to take advantage of sagging Florida real estate.

He researched online for two months before settling on his home in Island Walk, a massive new subdivision. Going through an apartment complex or mortgage brokers hardly entered his mind because he knew an investor would be more desperate.

“I knew if I went through a broker, they have to have their cut. The difference is in what I am getting,” he said.

Bryan Cobb of Sarasota turned his search for the right rental into a three-month scavenger hunt, scouring websites, newspaper ads and simply driving around looking at “For Rent” signs.

Cobb, a single father who works as a manager for a telecommunications tower operator, was tired of living east of I-75 near neighbors who left boats on their lawns. He wanted a house with a backyard for his 5-year-old daughter, McKenzie. The hunt paid off when Cobb found a 2,000-square-foot home in Sarasota’s deed-of-trust restricted Emerald Gardens for $1,395.

When the Florida housing market began to slow, Cobb knew he’d be able to get more house for less money.

“We did a lot of looking. This house was a step above,” he said.

The effort was worth it. Scott Corbridge, president of the Sarasota-Bradenton chapter of the National Association of Residential Property Managers (NARPM), and the broker for the home Cobb rents, said the home’s owner lowered the rent from $1,510 to $1,395 in order to find a tenant.

Corbridge said he has seen other investors cut rental costs $200-300 per month to attract tenants. But it’s not always easy.

Finding affordable, investor-owned rentals is a crap shoot around Sarasota, Charlotte and Manatee counties, and indeed the entire state.

Classified advertisements in other high-growth Florida counties, such as Palm Beach County, illustrate the same phenomenon.

Some rentals are clustered in new developments; while others are spread around established neighborhoods.

Finding a Gulf Coast deal is as easy as looking in the classified section, where an advertisement touts a remodeled, waterfront Punta Gorda apartment for $720 per month or a half-million dollar condo in downtown Sarasota for about $1,400 a month. That’s a fraction of what the Florida mortgage loan cost would be, and renters are taking advantage.

Many renters find themselves opting for investment properties to get close to destinations they couldn’t afford as buyers: downtown and the waterfront.

Ellen Jacobs of Sarasota, a 60-year-old retiree, rents a $1,000-a-month condo eight minutes from downtown Sarasota.

“If I was buying, I’d be out by I-75,” she said. “Renting “is still not financially smart. But it’s smart for my overall needs and lifestyle.”

Purchasing a home is not as difficult as it used to be. One reason for this would be the ease with which you could be pre-approved for a Florida home mortgage.

Another is the fact that lenders have relaxed certain requirements. For example, the status quo of shelling out at least 20 percent of the purchase price on a down payment doesn’t hold true anymore. Moreover, the standards on where the money you use for this payment are far looser than ever before.

Take a look at the following examples of where these funds may originate from:

Checking, Savings, or Money Market Account
If you already have the cash available in your checking, savings or money market account, lenders will deem you a less risky borrower. The money is considered liquid funds: easily and quickly accessible. It demonstrates that you are financially stable enough to handle paying back the Florida mortgage loan.

Stocks, Bonds, or Mutual Funds
You will need to show all documentation relating to the sale of these stocks, bonds and/or mutual funds. Also keep a deposit receipt if you deposited the funds into your checking or savings account.

Gifts
You may receive a monetary gift from family members to make the down payment on a new house. This would include your parents, siblings, grandparents, and aunts and uncles. You will need to fill out a “gift letter” provided by your Florida home loan lender that states how you are related to the person giving you the down payment gift, the amount of the gift, and possibly the source where the person got the money for the gift and is signed by you and the gift-giver.

Retirement Accounts
Having a retirement account such as a 401k is another way to prove your financial stability and that you have the ability to save money. If you borrow against your 401k for a down payment, it may be counted by the lender as an additional debt and be added into debt-to-income ratio. This may affect how much of a loan you qualify for.

Also, if you cash out part of your 401k, you may have to pay tax penalties. Be sure you’re aware of everything involved in using your retirement account for a down payment.

Sale of Personal Property
You can use the profits from the sale of personal property (such as a car or other valuable items) toward a down payment. You need to have a paper trail to prove ownership, sale and transfer of ownership of the item. Ask your Florida mortgage banker what type of documentation you’ll need for whatever you’ll be selling. Make sure you are paid with something other than cash. A check might be wisest.

Employer Assistance
Some employers will provide assistance to employees when looking for housing because if fosters loyalty toward the company and because employees with a house are less likely to jump around from job to job. Make sure you have copies of all the paperwork to show your lender.

Secured Loans
Usually, you aren’t allowed to borrow money for a down payment. But it is acceptable in a few cases, but it must be secured by an asset, such as another property or even a car (as long as you owned the car free and clear). For instance, you might get a home equity line of credit if you’re planning on renting your old house or if you haven’t yet put your current home on the market and want to start looking for a new home.

The production of national and Florida home loans will slide 19 percent this year to $2.46 trillion, the fifth-highest year on record, then drop another 14 percent in 2007 before stabilizing the next year, the Mortgage Bankers Association said on Tuesday.

The U.S. housing market is “normalizing” because the pricing surge of the previous five years was unsustainable, MBA chief economist Doug Duncan told reporters at the MBA’s 93rd annual convention.

Mortgage loan creation was at least $3 trillion in each of the past three years, reaching an all-time high of $3.9 trillion in 2003.

While Florida mortgage demand is still strong, across the country, home loan creation should drop to $2.12 trillion in 2007 and hold at that level in 2008, with rates on 30-year fixed-rate loans rising “modestly” in that time to 6.8 percent from just below 6.4 percent now, the trade group said.

Economic growth will keep slowing through the rest of this year but should return “‘to near normal growth’ during 2007 and 2008,” the MBA said.

Report on mortgage rates

Short-term Florida mortgage rates jumped after the Federal Reserve hiked interest rates 17 times by a quarter-point each time since June 2004. The rising rates and several years of double-digit price surges crimped home affordability and dashed incentive for the home refinancings that were driving loan production.

“Long-term interest rates have remained low in the face of rising short-term rates, equity prices have risen nearly 20 percent, capital expenditures remain strong, the trade sector has turned from a big drag on growth to a modest stimulus and energy prices have dropped sharply,” Duncan said of his forecast for longer-term stability.

The Fed likely will keep interest rates unchanged with the federal funds rate at 5.25 percent rate through 2008, the trade group predicts.

ARMs length

The difference between fixed and adjustable Florida home loan rates is at its skimpiest in more than five years, decreasing the incentive for borrowers to take out adjustable-rate mortgages (ARMs).

The share of ARMs - which have been a huge driver of loan origination, particularly as borrowers sought to get into costlier or bigger homes - has been sliding and should continue to decline, the MBA said.

Apprxomately $1.1 trillion to $1.5 trillion of ARMs will be eligible to reset next year, the MBA estimated. How those loans play out could have a significant impact on the housing and mortgage debt markets.

Around $600 billion to $700 billion of those loans will likely require Florida mortgage refinancing into various loan products, including fixed rate loans, while $500 billion to $800 billion will reset.

Angela Hicks suffered many disappointments trying to buy her first home.

“I looked and looked for nine months. Everything was just out of my reach,” she told the Florida Times-Union.

An affordable housing shortage has reached a crisis in North Florida as home ownership remains out of reach for about 60 percent of the region’s work force.

Hurricanes, the resulting rise in insurance rates and construction costs, coupled with higher property values and tax increases, all during an era of historically low Florida mortgage loan rates, have caused housing prices to soar a lot faster than wages.

In Clay County (see map, in red), single-family home prices and land costs have increased about 80 percent since 2002.

NOTHING AFFORDABLE OUT THERE

A minimum-wage earner, who makes $6.40 per hour and about $13,300 a year, would need to work about 170 hours per week to afford a median-priced home in North Florida, which was about $181,000 in 2005.

The median sales price for a home in Clay County in 2005, the most recent available, was $199,100, according to the property appraiser’s office.

Officials define a home as affordable if the owners spend no more than 30 percent of their income on housing. Few homes in Clay are priced at $140,000 or less, said Barbara Taylor, coordinator of Clay County’s State Housing Initiative Partnership, or SHIP, which provides low-income families assistance when putting a down payment on a new or existing home.

Homes she looked into this year for under $140,000 were dilapidated, shed-like structures, 900 square feet or smaller, or were in less desirable neighborhoods.

“Where are our teachers, health-care workers, firefighters and police officers going to live if they can’t afford a home here?” she said. “Gardeners, housekeepers, restaurant workers?”

Another hurdle is insurance.

About 90 percent of Clay County homes were built before 1990 and some companies won’t write policies on homes more than a decade old.

The Florida League of Cities, the state Department of Community Affairs, Florida Housing Finance Corp. and Florida Housing Coalition are bringing officials, developers and housing experts together for seminars that began October 13 and end August 15 to discuss solutions that include density, changing land use and improving transportation.

North Florida real estate shot up dramatically in the past five years, and developers don’t seem to be building anything but high-end dwellings.

CONSTRUCTION LOANS

Pete Morgan and Ben Dinkins, two Orange Park, Fla., developers, are in the process of building Clay County’s only affordable housing, according to Betty Andersen, director of the Clay County Housing Finance Authority, appointed by the Clay County Commission to issue commercial real estate loans to developers who agree to their terms for selling.

The authority is funded mainly through the sale of 30-year tax-free bonds. But the market is so bad now, the authority isn’t issuing any bonds.

Existing funds were used to give construction loans to Morgan and Dinkins to build Kingsley Junction, 14 two-story cracker-style detached single-family homes on Railroad Avenue in Orange Park, priced at $140,000 to start. That makes for an affordable Florida mortgage payment for people with modest incomes.

Three homes are complete, and Hicks recently closed on the first one.

“It’s a good start place,” said Hicks, who now lives in an apartment and can’t wait to prepare her fenced-in back yard for her foster children. “I want to give them a good home where they are safe and happy. It’s very attractive; it’s what I need.”

Andersen said Morgan and Dinkins are heroes at the moment for agreeing to the project.

“There’s a real issue out there, a lack of workforce housing,” said Morgan, who is Orange Park’s mayor and serves on Clay Habitat’s board of directors. “Don’t you think teachers, policemen, firemen should be able to buy houses? These people are essential to the well-being of society, and we’ve created a scenario where they can’t afford to buy a house here.”

HOME-BUYER ASSISTANCE

To live in Kingsley Junction, income limits and buyer education classes are required. Plus, investors can’t buy and flip them for profit.

Meanwhile, Realtors say fixer-uppers — homes needing thousands of dollars worth of repairs — are plentiful in Clay County. But that’s not what most folks want, said Realtor Tiffany Lee-Pitt, adding that financial help is out there, but buyers and sellers don’t always know where to look.

“Homeowners aren’t educated enough to know about the availability of homes and the assistance programs available to them,” she said.

Some banks and credit unions have first-time home buyer assistance programs, and there are a number of government-backed programs to provide Florida home mortgage help to middle- and lower-income buyers as well.

For instance, SHIP, established in 1992, uses fees from recording deeds and Florida mortgages to help low income people put down payments on new or existing homes. The fees collected at the county level are sent to the state and a portion is returned to the county’s SHIP program. Home buyers who qualify can get from $20,000-40,000 in down payment assistance.
Hicks got assistance from SHIP.

So did Marsha Loper, a single mother who raves about the SHIP program that helped her purchase a 1,200-square-foot three-bedroom home in a quiet part of Green Cove Springs.

“Without it, I wouldn’t have been able to achieve my goal. I have been recommending it to every single person. Homes within my price range were pretty trashed,” she said.

Unfortunately, Taylor said, SHIP funding allocated for both 2005-06, and 2006-07, is gone.

“It went much faster than we anticipated. That’s an example of the need out there,” Taylor said. “I wish a bunch of developers would call me tomorrow and offer to build affordable homes.”

The U.S. Department of Agriculture’s Rural Development Office — aimed at promoting rural development — helps put low-income families in homes with very low-cost home loans.

For example, a Clay County family, with a $24,000 annual income, just closed on a home with a monthly Florida mortgage payment under $500.

There’s also Clay County Habitat for Humanity, based in Middleburg, a non-profit Christian housing program. Through volunteer labor and donations of money and materials, Habitat builds simple houses and sells them to low-income families using no-interest loans.

Homeowners are required to make a down payment, keep up the monthly Florida mortgage payments and to invest hundreds of hours helping build the home or other Habitat homes. To date, the program has helped 98 families qualify and get themselves into decent homes.

The Miami Herald asks an interesting question this week: Is this what a housing bust looks like?

Across the country new home prices fell last month by the largest amount in 35 years, while owners are being warned to brace for further declines, especially in formerly hot markets. Yet after years of increases, some buyers say prices are still out of their range; they’re still hesitant to apply for any Florida home loans.

The price decline for new homes in September came while the national sales pace actually picked up, rising by 5.3 percent. It was the second consecutive increase in sales following three months of declines. But even with the improvement, sales activity is down 14.2 percent from a year ago.

South Florida housing market: A different trend

The picture is somewhat different in the South Florida housing market, where prices in general are steady - but sales continue to decresae. Some economists say sales are not likely to rise until prices fall, which is what is happening nationwide.

Many potential Florida mortgage applicants are remaining on the sidelines, waiting to see figures fall further.

Separately, new housing starts in Miami-Dade declined 35 percent in the third quarter compared to the same period last year, real estate consulting firm Metrostudy reported Thursday. It reported that Broward housing starts were up more than 40 percent.

But Bradley Hunter, director of Metrostudy’s South Florida division, said the jump in the Broward housing market was largely due to the fact that builders started more townhomes last quarter than single-family houses, which come with a more expensive price tags.

According to Moody’s Economy.com, many of the formerly hot sales markets in Northeast and in Florida, California and Arizona could see severe the price drops, given the double-digit price gains in those areas in recent years.