Buy a Tampa Condo and Save a Fortune!

If the idea of buying a condo in Tampa, FL and saving a fortune sounds like a sales pitch from a late night infomercial then you are wise to be skeptical – but keep reading because depending upon where you currently reside, buying Tampa real estate could very well save you a small fortune. Learn how to make the most from your earnings, save on taxes and protect your assets by investing in real estate in Tampa Bay.

Florida doesn’t have a state income tax. If you currently live in a state with high taxes like California, then switching your primary residence to Florida can save over 10 percent annually right off the top of your earnings.  Combined with a lower cost of living, new homes and historically low interest rates; buying a condo in Tampa could easily save you thousands of dollars annually just on the state income taxes alone!

Homestead exemption. Florida offers an attractive homestead exemption for owner occupied properties including condos. Additionally, future property tax increases are capped for as long as you continue to own your property and use it as your primary residence. There are additional property tax exemptions available for the elderly and disabled.

Bankruptcy protection. Unlike many states, Florida allows home owners to keep their primary residence even when filing bankruptcy. Should a financial crisis take place, it is good to have the peace of mind in knowing your home is safe for you and your family.

Future appreciation. Florida is growing at one of the most rapid rates in the nation and with good reason; the natural beauty, tax benefits and employment opportunities make it a highly desirable destination for young and old alike. Unlike many parts of the nation which continue to experience a decline in population, the Tampa area has continued to grow even during the recent downturn.

Still a good time to buy. Tampa condos have dropped from their high and are now available for competitive prices. Combined with relatively low interest rates, buying a Florida condo remains a solid investment.

Low maintenance and a great lifestyle. One of the benefits of owning a condo is the low maintenance and great amenities. Experience the best of both worlds with all the amenities a Florida lifestyle has to offer but without the hassle of daily maintenance and upkeep. Condo living provides everything from pool cleaning to a price break on utilities and communications leaving you free to enjoy the sun and fun of living in Florida.

Will the Housing-Rescue Law Help You?

image of a courthouseQuestions and answers about the Hope for Homeowners Act of 2008, signed into law by President Bush Wednesday to try to steer as many as 400,000 struggling homeowners away from foreclosure:

Q: What exactly will the legislation do?

A: It will allow those who qualify to cancel their old mortgage loans and replace them with 30-year fixed-rate loans for up to 90 percent of the home’s current value. The FHA will insure a total of $300 billion of the loans over a three-year period.

But the decision on whether to write such a loan remains up to banks, which would have to be willing to take a loss on the existing loans in exchange for avoiding an often-costly foreclosure.

Q: Who is eligible?

A: Eligible borrowers must have spent more than 31 percent of their monthly incomes on their mortgages as of March 1, 2008. The troubled loan must have originated no later than Jan. 1, 2008, and be on the borrower’s primary residence. And the borrower’s income must be verified.

Q: When does the program start?

A: It takes effect Oct. 1 and runs through September 2011, although the FHA isn’t likely to have it operating at full capacity until next year.

Q: Since lenders can pick and choose which loans to refinance, how can consumers determine if theirs will be selected?

A: Check with the bank or financial company servicing your mortgage, but it may be weeks before they make decisions concerning the new guidelines and assess individual loans.

Even then, keep expectations limited.

“Servicers are going to be reluctant to take the government up on their offer,” predicted Mark Zandi, chief economist at Moody’s “The earliest they’ll start taking them up on it is early next year. And even then it’s likely to be modest.”

Q: Is there anything a homeowner can do to improve chances of benefiting from the program, such as crunching numbers to make a case for the bank?

A: Not really. The best step is to keep up your payments as best you can.

Q: But doesn’t this provide an incentive to NOT pay your mortgage, if you’re barely keeping ahead of bills and are underwater on your house, so you can qualify?

A: No. If your situation deteriorates enough, the bank may reject any possible new loan.

“Turning yourself into a financial basket case is not going to work,” said Dan Seiver, a finance professor at San Diego State University. “If you turn into a complete deadbeat, the servicer is going to just foreclose and dump it.”

Q: So what should I be doing now besides trying to keep up with payments?

A: Talk to a local credit counselor and call the toll-free hot line of the Hope Now alliance — an industry group trying to coordinate a response to the mortgage crisis — at 1-888-995-HOPE. It is available 24 hours a day to provide mortgage counseling in multiple languages.

Mary Thomason, director of resource development for The Impact Group of Atlanta, a housing counseling group, also suggests tracking expenses and income closely in order to be able to forecast your cash flow for the next six months and give yourself better control of your finances.

Q: If the banks and lenders refuse to write these loans, then what?

A: Public and political pressure may prompt them to participate. If not, and more people continue to lose their homes, Zandi says the next White House administration subject them to additional regulations or investigations if they remain unwilling to take on the risks.

Q: What happens if I’m able to sell my home after I refinance?

A: If you sell during the next five years, you must agree to share 50 percent of any profits from the resale with the government. What’s more, homeowners can only retain equity gains based on a sliding scale. The homeowner would have zero equity from a sale in the first year, with the amount rising 10 percent in each succeeding year and capping at 50 percent from a sale in year five and thereafter.

The equity must be repaid because the maximum amount on the new loans will be capped at 90 percent of the current market value, which automatically gives the previously troubled homeowner 10 percent equity in the home.

Q: Where can consumers find more detailed information about the plan?

A: Click here for a six-page summary of the housing act, and the FHA’s Web site is a place to watch for updated information. Click here for the entire 694-page bill.

Information provided by The Associated Press – July 30, 2008

If you have any questions about the Tampa FL real estate market or homes in New Tampa please visit our website at

Tampa Florida Real Estate Has a Bright Future

With all the gloom and doom in the media it might seem that real estate is no longer a solid investment but that analysis is likely short-sighted.  Think back to where California was in the late 60’s or early 70’s and you have a good picture of what the future has in store for Tampa FL real estate.

While it is true that real estate throughout Tampa and parts of Florida have experienced a decline in the past two years, the long term outlook for real estate remains promising. Here are some of the top reasons why and a few tips on how to profit from the current downturn in the market.

Growth:  Florida has been growing at an average of nearly 1,000 people per day and is expected to continue that rate of growth for the foreseeable future. Florida is anticipated to become the third largest state in the nation within the next few years.

Business:  Tampa real estate is highly desirable for a variety of reasons including the natural amenities of sun and fun available on the beach but big business is another major attraction. As more business and corporations call the Tampa area home, the need for residential and commercial real estate will continue to rise. The sub-tropical climate and proactive business development council of the area are a win-win situation. In addition, an International airport, interstate and other infrastructure provide the support your company requires; from air, sea, rail or interstate the Tampa Bay area is fully accessible.

Quality of Life:  Compared to most MSA’s, Tampa offers a very attractive and competitive cost of living in addition to great schools, natural beauty and of course – arts. With three hospitals ranked among “America’s Best” by the U.S. News and World Report residents enjoy all the area has to offer without the high expense associated with most large cities.

High Impact:  Unlike northern cities, Tampa Florida’s growth and infrastructure are new. Biotech, high-tech and medicine dominate the rapidly growing entrepreneurial initiatives while the interstate, rail system and commercial development represent recent investments.

Robust Labor Force:  Tampa Florida has a diverse labor force of all ages and abilities. With a slightly higher than average minimum wage, Florida is considered a business friendly state with a large bi-lingual population, few unions and a “right to work” philosophy.

Remember, real estate is local and just as California experienced a major demographic, financial and infrastructure convergence that lead to the largest growth in the history of the nation, Florida is currently situated to follow the same path over the coming years. The current downturn in real estate may be one of the last buying opportunities in your lifetime.

Do Manufactured Homes Still Make Sense for Tampa Real Estate Buyers?

While the real estate bubble has certainly burst perhaps no area has experienced more dramatic slow-downs than manufactured homes; from insurance woes to underwriting issues, learn why manufactured homes are hurting – and how to profit from it when purchasing real estate in Tampa Bay, Florida.

There are many forms of manufactured homes but the most notable is the “mobile home” which is a popular and affordable housing alternative throughout Florida. According to the Department of Housing and Urban Development, 1997 and 1998 represented the height of mobile home sales for the South with over 250,000 new units shipped annually. In recent years that number has declined to the lowest level recorded; in 2007 only 65,000 units were shipped and placed in the South however, the sales price was the highest in history reaching an average cost of over $63,000 for the first time (excluding land sales).

Despite these differences there are some pro’s, con’s and a few major profit opportunities for those interested in pursuing the purchase of mobile homes as an alternative to higher priced Tampa, Fla homes.

Look at the Land. With mobile homes falling out of popularity  – especially older mobile homes that can be difficult to insure – there are bargains to be found among those savvy enough to spot a good deal. Add up the cost of the improved land, impact fees, sheds and other buildings that can be salvaged then add a small amount toward the value of the mobile home. If the total is equal to or within 25 percent of the total replacement cost of the land alone then it could be a diamond in the rough.

Prospective Income. Check zoning to determine if the mobile home can be used as a rental, home office or other income producing asset while building your own home on the property.

Multiple Zoning. Verify if zoning allows more than one mobile home to be placed on the property in order to double the potential income without having to invest substantial sums. The difference in rental between a mobile home and site built construction is usually less than 10 percent even though mobile homes cost ½ to 1/3 the cost of a similar home.

Cautionary Tales

There are several things to keep in mind before purchasing Tampa FL real estate with a mobile home but the two most important include:

Insurance. Verify the cost of insurance with at least three agents prior to making an offer.

Re-Sale.  Dwindling sales of mobile homes make them less attractive to many underwriters and tougher guidelines can result in fewer qualified buyers.

Copyright 2008

Tampa Real Estate & Regional Economic Conditions

map of FloridaTough economic times impact Tampa, Florida real estate in a variety of ways – the key is to know how to use the trends to profit in tough times.  Bank closings, rising inflation and bail-outs haven’t been in the news this often since the 70’s but a quick review of regional economic conditions and the real estate environment can turn bad news into opportunities for profit for those “in the know”.  Below are the top trends to watch with tips on how to profit.

Rough Retail Rentals:  In the past retail space typically signified future growth potential but the opposite also holds true: faltering retail rentals often signify more problems on the horizon. Many retail rentals are in trouble for a variety of reasons; online shopping, consumer cut-backs on spending and loss of discretionary income just to cite a few culprits. Watch for high vacancy rates in retail or commercial real estate as an early indicator of future potential problems.

School Grades:  One of the biggest secrets to real estate success is learning how to identify a lasting trend. For those interested in preserving the value of your home or purchasing a Tampa real estate investment that is destined to grow in value search for top notch schools or schools in the early stages of turn-around. Unlike retail space that is dramatically altered due to local and national economic conditions, good schools are always a necessity. In fact, during tough economic times fewer parents can afford private schools so grade “A” public schools are in higher demand than ever.

Fiscal Responsibility:  It pays to stay abreast of the local business climate and the fiscal responsibility of the county commissioners.  Tax short-falls always end in two ways; increased taxes or decreased services. Tampa real estate investors or home buyers with thin margins need to anticipate what areas will be prone to high crime rates, lower property values or higher taxes before the changes go into effect. Likewise, learn to track major employers in the region for signs of health; large lay-offs or downsizing can lead to a “mini-recession” in any area heavily dependent upon one or two major sectors while upward momentum may indicate growth, strong hiring or even expansion.

Owner Occupancy:  While sales data and home prices say a lot about an area perhaps the single most important factor to consider is the rate of vacant homes, owner occupancy and rental rates – in that order. Vacant homes are a major menace to be avoided so while you might stumble upon a great foreclosure deal, take time to consider the long term implications of a high inventory of homes in the area. Next in line is the number of homes occupied by the owner; neighborhoods with high rates of owner occupied homes and low vacancies demonstrate a desirable neighborhood with mature infrastructure. These are often ‘steady’ choices unlikely to experience major long term declines. Banks and lending institutions pay special attention to these same factors so take time to determine how many homes are on the market, how many vacant homes exist and the percentage of owner-occupied homes.

Hidden Home Hazards in Older Tampa Real Estate

image of an older homeWhen it comes to purchasing a home in Tampa, Florida, what you don’t know can hurt you. Lurking behind every wall or crevice is an array of hidden home hazards that can jeopardize your health and wealth if you are unfortunate enough to buy a property plagued by these common problems. Use this handy checklist when viewing Tampa homes for sale and follow-up on any unknown items before making a final offer on any property.

Lead:  Homes built prior to 1978 are likely to contain lead paint; a known neuro-toxin that can result in mental retardation among children and other severe health related issues. Tampa real estate investors and landlords are required by law to notify tenants of the potential for lead paint which can result in higher vacancy rates among those with young children. Large fines or lawsuits have been associated with lead paint exposure. De-leading a home can be expensive so make sure you understand the full cost, responsibilities and other obligations required before buying an older Tampa home that contains lead paint. Closely related is the use of lead pipes in older construction. Lead was frequently to solder pipes including those responsible for drinking water to the home. Lead can also be found in the soil.

Water:  The quality of water can have a dramatic impact on the health and well-being of your entire family so it is a good idea to have the water tested and/or obtain a copy of the recent water testing results for community water systems.

Asbestos:  Older homes often contained asbestos shingles, insulation or other building materials. Asbestos is a known carcinogen that may also lead to respiratory problems, rash and other conditions.

Mold:  Toxic mold and mildew have become big problems in many areas including hot, humid Florida. While many mold and mildew problems may result in health related issues, toxic mold is capable of causing severe illness in some individuals. Mold and mildew is spread by spores which can hide in air vents, basements, furniture or even carpeting after a flood or other water related damage including leaking roof.  In fact, mold or mildew may remain long after the original repair has taken place so a thorough inspection is required.

Radon:  Radon is a gas capable of causing headaches, fatigue and other health complaints. It is odorless and invisible so the use of a radon detector is required to measure the presence and severity of radon in the home. Newer homes that are tightly weatherized and lack proper ventilation can lead to an increase in radon exposure.

In addition to having a complete appraisal and home inspection, take time to perform additional testing for lead, asbestos, radon and mold especially before purchasing older homes in the Tampa real estate marketplace.

Tampa Real Estate Review: Community Facts Wesley Chapel

image in wesley chapel homesWesley Chapel, FL real estate is in high demand so this week we will spend a little time covering the community facts beyond the basics for zip code 33543 located in Pasco County Florida.

The 33543 zip code of Wesley Chapel Is a relatively small community with a population of only 5,690. The median age is a bit lower than that of Florida as a whole at only 33 years however, the median household income is significantly higher than average at nearly $66,000 compared to only $38,800 for Florida as a whole.  The area is evenly split with slightly more than half of households engaged in white collar work versus blue collar jobs.  Fewer than 100 households in the area report unemployment. Over 95 percent of households hold a High School diploma or higher with the majority having earned a bachelors or graduate degree making this a wonderful community for entry level white collar families or those newly graduated from college and thinking of starting a family.

Wesley Chapel tend to track close to those of all Tampa real estate but have experienced a slightly above average drop in price from July of 2007 to July of 2008 from an average of $242,000 to $206,000. The vast majority of homes are owner occupied with fewer than 100 homes available for rent. Of those available for rent, there is an average vacancy rate of approximately 5.5 percent which is nearly half the current national average.  However, rental rates tend to be fairly low so unless you are able to acquire a foreclosure or older home, most residents in this area prefer to own rather than rent. On the other hand, a rental might work well for those new residents seeking to learn the area before buying their own home.

The average commute time for most Wesley Chapel households is 33 minutes or just slightly higher than average which reflects the low density area. In fact, Wesley Chapel has only 455 people per square mile making it a very low density area albeit in close proximity to most amenities. Most construction in the area has taken place within the past ten to fifteen years leading to a higher than average percentage of homes with a mortgage.

Sales of existing homes in Wesley Chapel have fallen dramatically in the past two years with recent estimates showing a continued sluggishness; however, there are relatively few foreclosures. Homes tend to be newer and previously priced above current selling prices so many home owners seem to be waiting for prices to stabilize, considering a short sale or in rare cases – allowing the property to go into foreclosure.  For buyers seeking a high demand area, low interest rates and newer Florida homes for sale; Wesley Chapel deserves a second look.

Case-Schiller Index and Tampa Real Estate

Not sure what the Case-Schiller Index is or how it related to real estate? Don’t worry – you aren’t alone. Many real estate investors who routinely purchase Tampa Bay real estate don’t even realize the value of using the Case-Schiller fact, many never realized that Tampa is one of only 20 metropolitan areas that comprise the index!

First, let’s begin by examining what the Case-Schiller Index is and how it is typically used. Case-Schiller is considered an alternative index for financial performance much like the S&P. Developed by Robert Shiller and Karl Case, the Case-Schiller index compiles data on 20 specific metropolitan areas around the nation each month. There is a two month lag in publishing the findings but the report is released on the last Tuesday of each month.

No discussion of the Case-Schiller index would be complete without mentioning how it varies between other housing indicators including the widely popular data released from NAR or the National Association of Realtors. Unlike NAR data which compiles sales data from every area of the country, Case-Schiller tends to focus on major metropolitan areas which can demonstrate strong fluctuations that correlate with other economic indicators.

This can be good or bad depending upon your area of the country. Over the past several years some states experienced widespread appreciation and price increases while others barely moved. For those outside of major metropolitan areas the extreme fluctuations (both high and low) associated with the cost of housing was over-estimated by national averages. On the other hand, if you reside in one of the metropolitan areas measured directly then the Case-Schiller may be a more accurate representation of the current status of sales – albeit, still a lagging indicator.

So, what does the Case-Schiller index currently report? As of Q1 of 2008, the Tampa market is down roughly 17.5 percent overall…believe it or not, that actually looks pretty good compared to other high growth areas. Las Vegas took the number one spot with a stunning 22.8 percent drop, followed by Miami (21.7), Phoenix (20.8) and Los Angeles (19.4). Essentially, the cost of purchasing Tampa homes for sale is back to where it was three years ago – before correcting for inflation! Since inflation is running a cool 4 percent annually the savings is even greater. Combined with historically low interest rates below 7 percent the opportunity to purchase Tampa real estate appears to be holding steady with a strong buyers market in effect.

The Freddie-Fannie Fiasco and Tampa Real Estate

By now everyone in the nation has heard about the government proposal to “bail out” Freddie and Fannie after the recent financial fiasco but Tampa house investors and home buyers may not fully recognize the implications for their own financial future. Here to help sort it all out is a short primer on the good, bad and ugly of the Freddie/Fannie fiasco.

The Good

While there is a great deal of controversy about the proposed “bail-out” one thing is certain; without Freddie and Fannie the future of the mortgage industry would be bleak indeed. Combined, Freddie and Fannie underwrite over 50 percent of all mortgages and nearly 70 percent of some types of “ordinary” and sub-prime mortgages. The average buyer would find it increasingly difficult to obtain a mortgage of any type in the future should Freddie and Fannie fail.  Stabilizing the mortgage industry is good for future buyers and sellers (after all, you need someone to buy a home and most people will need a mortgage to complete the sale).

The Bad

Critics of the rescue plan point to the moral hazard of guaranteeing funds for share-holders and others who invested or speculated in the market. Most investments are inherently risky – that is why there are prospectus sheets to read; employees of Enron, Worldcom and other financial investments gone bad were left to suffer the losses just like millions of people do each and every year. It is what the free market and enterprise is made of so why the decision to add to the financial burden by bailing out shareholders as well? The “moral hazard” argument has many vocal advocates but is unlikely to result in more than hurt feelings since the government has made it clear the quasi government duo are “too large to fail”.

The Ugly

Whether you agree or disagree with the decision to bail-out Freddie and Fannie there are several long term implications for the future that every Tampa real estate investor and home buyer should be aware of:

1. Rising inflation. A Falling dollar, rising fuel costs, wars and now one of the biggest bail-outs in recent history are adding to the rapidly rising rate of inflation. Inflation eventually leads to everything costing more –including the cost to build new homes. While the price of real estate may continue to decline rising interest rates and escalating inflation are set to offset any gains.

2. Mortgage limits. It seems likely that the rumors of limiting mortgages from ten – to four or less – is likely to take place in the more restrictive lending environment proposed after the bail-out. This could potentially impact Tampa real estate investors who desire to use mortgages to purchase single family homes as part of their investment portfolio.

3. Tighter standards. Tighter lending standards lead to larger down payments, higher interest rates and greater difficulty acquiring a mortgage. Potential buyers are likely to find it increasingly difficult to obtain favorable rates in the future.

4. Legislative oversight. One of the most controversial provisions of the bail-out is the long list of legislative oversight which will be required of financial institutions in the future. Although all the details are not finalized, the current trends strongly suggest the move toward greater government intervention, restrictions and quality control measures sure to impact the industry for years to come.

If you have any questions about the Tampa real estate market or New Tampa, FL homes for sale please give me a call at 813-317-4009.

Worst of Housing Crisis Is Behind Us

image of housesArticle by John M. Berry (Bloomberg News)

The intense pain caused by the bursting of the housing bubble is beginning to ease. Really.

That may be hard to believe, given the rapid increase in mortgage foreclosures, big year-over-year declines in home prices and housing starts, and continuing writedowns in the value of mortgage-backed securities.

Yet a close look at the recent flow of housing data provides convincing evidence that the worst of the decline is over. Investors who are fleeing financial-institution stocks — including those of Fannie Mae and Freddie Mac — ought to think twice about the housing outlook.

Take sales of existing homes, which account for about 85 percent of all U.S. housing sales. They peaked at an annual rate of 7.25 million in the fall of 2005 and fell to 4.89 million in January. In May, it was 4.99 million.

The recent figures aren’t a guarantee that such sales won’t decline a bit more in coming months. Still, their relative stability probably indicates that home prices have dropped enough to encourage buyers to re-enter the market. And there’s no reason to think the huge drop in sales since 2005 will be repeated.

Sales of new homes, like those of existing homes, have also moved sideways in the last couple of months. They might fall again, though probably not by very much. After all, they peaked at a 1.4 million annual rate in the summer of 2005 before dropping to a 512,000 rate in March, so a decline of that magnitude literally couldn’t be repeated.

In other words, the worst is behind us.

Smaller GDP Drag

The same is true about the drag of falling home construction on economic growth.

While single-family housing starts are still going down, a glance at a graph shows a smooth, flattening trajectory suggestive of a near-term bottoming. They are off 63 percent from a top at more than a 1.8 million rate early in 2006. How much farther can they fall?

Shrinking home construction clipped more than a percentage point from the increase in the gross domestic product in the fourth quarter of 2007 and the first quarter of this year. Partly as a result of housing woes, growth was limited to a 0.6 percent annual rate in the fourth quarter and 1 percent in the first.

The smaller monthly declines in new home construction point to a housing drag on GDP this spring about half as large as the previous two quarters. That’s one reason second-quarter growth may exceed 2 percent. The Bureau of Economic Analysis will release its first estimate of second-quarter GDP on July 31.

Problem with Prices

Home prices are more problematic. The S&P/Case-Shiller index for 20 metropolitan areas was down 15.3 percent in the year ended in April, a record.

Keep in mind, though, that one factor in the price declines is that financial institutions are putting their foreclosed properties on the market at prices low enough to entice buyers. That’s an unavoidable part of the process of cleaning up the mess left by a bursting bubble. In the short run, it creates the appearance of more bad news.

Almost 2.5 percent of U.S. homes were involved in the foreclosure process in the first quarter of this year, according to the Mortgage Bankers Association. And almost 19 percent of homeowners with subprime mortgages were behind in their payments in the quarter. The delinquency rate for prime mortgages was up to 3.7 percent.

`Beginning to Hope’

Here’s the better news on home prices. The recent Case- Shiller monthly figures — which are probably more informative right now than year-over-year changes — show that prices rose in eight of the 20 metropolitan areas in April, and the index’s overall April decline was 1.4 percent, compared with 2.2 percent the month before.

Karl Case, one of the creators of the index, said in a June 24 interview that there was some positive news in the latest figures.

“I’m beginning to hope that there are going to be some surprises in the next few months that would indicate we are at or near a bottom in probably a third to half the country,” said Case, an economics professor at Wellesley College in Wellesley, Massachusetts.

Even if the damage to the overall economy is diminishing, the pain for individual owners unable to pay their bills or refinance to reduce their payments won’t go away soon.

Also, while the worst of the impact on the economy may be behind us, there’s no reason to expect a rapid rebound in housing. With lending standards very tight and mortgage-interest rates rising, sales are likely to remain soft. Until the inventory of unsold new homes begins to be worked off, housing starts won’t climb much either.

Still, as the saying goes, if you’re in a hole, the first thing to do is stop digging. In the case of housing, we’re ready to throw down the shovel.

(John M. Berry is a Bloomberg News columnist. The opinions expressed are his own.)