Prospective investors in Florida foreclosures need more than a buy low, sell high philosophy. They have to buy fast, too.

A local banker told me cash buyers in the marketplace have rose from three to 24 percent. Cash buyers have a distinct advantage because some homes need to sell before a foreclosure sale appears. This means that more savvy investors with cash are here already picking up the best properties, the cream of the crop. By the time everyone else figures out that this is the time to buy, the best properties will be gone.

A few years ago, even a few months ago, this was less of an issue. In addition to a smaller proportion of cash buyers, supply skyrocketed. In September 2006, Florida had the country’s highest foreclosure activity - more than four times higher than the national average – and accounted for 27 percent of the nation’s total.

By the start of July 2007, the Sunshine State had fallen to number two behind California but its foreclosure listing filing rate still grew 23 percent from earlier in the year. In February of this year, filings increased from January while it dipped four percent nationwide.

According to the latest research report from RealtyTrac Inc., however, the tide is changing. The number of Florida homes in some stage of foreclosure dropped seven percent from February to March as the national amount rose five percent.

Judging when the market will rebound for sure and property values will once again begin to climb is difficult. We probably have not hit bottom yet, despite the most recent swerve, but the surge in cash buyers is already a factor. If the savvy buyers are here with their cash, we should all pay attention!

For anyone looking to get in at a very low cost, and set themselves up for either reselling properties or renting them out for a substantial profit, the time to buy is now.

Insurance Industry's Windfall Sends Real Estate on Downward Spiral

Weather forecasters are not the only ones paid when they make mistakes. Insurance companies profit pretty well, too.

And the Florida real estate industry is paying the price.

It’s been two years since a hurricane struck The Sunshine State, but residents continue to face rising insurance rates or dropped coverage. According to the Insurance Information Institute, rates are likely to rise between 20 and 100 percent over the next year for the 43 percent of the U.S. population living in coastal areas stretching from southern Texas to the northern tip of Maine. In addition, the Institute singles-out Florida as a possibility for even higher increases.

While current commercial and residential borrowers struggle to pay the premiums and prospective ones become hesitant to buy because of it – thus slowing the real estate sales market – insurance companies are laughing all the way to the bank. According to a St. Petersburg Times article last week, the property and casualty industry in America made almost $60-billion in 2006.

Eight hurricanes and three tropical storms either struck or brushed Florida between 2004 and 2005. Before, the average cost of homeowners insurance in Florida was $930. After, the cost had nearly doubled to about $1,600. For those living on or near the coast, such as Panama City residents, the cost of insuring a condominium or a house is closer to $3,000. Combine that with the fact that the last two hurricane seasons have been quiet and it’s clear why insurance companies are doing well.

Since the real estate industry took a hit from the active hurricane seasons, it should also benefit from the slow ones. The finger pointing for why this hasn’t happened goes to hurricane forecasters. These forecasters are trying to justify their grants and jobs by coming up with more reasons why they cannot be relied upon, but still should be considered an authority.

Dr. William Gray, a University of Colorado professor, has been prognosticating hurricane seasons since 1984. In April 2005, he and research associate Philip J. Klotzbach predicted that seven hurricanes would emerge that season (15 eventually did). The next year, they projected 17 named storms and nine hurricanes (there were actually 10 named storms and five hurricanes).

Gray and Klotzbach’s report released last week has a similar prediction for 2008: 15 named storms and eight hurricanes. This year’s forecast does include something new, however – a disclaimer. It reads: "Everyone should realize that it is impossible to precisely predict this season's hurricane activity in April.”

That hasn’t stopped some insurance companies from taking it as gospel and crying global warming – thought by many professionals to result in more hurricanes. Insurance companies are now using global warming as an excuse to raise rates and even dump clients, according to an article published last August on Scientific American.com. Florida Consumer Action Network Executive Director Bill Newton backed up the claim.

After living in Panama County for 37 years, I have concluded that I may have to be here hundreds of years, maybe thousands, to truly understand climate and weather patterns. One thing I do understand, however, is the only constant right now are raising insurance rates. That needs to change. Florida’s real estate future depends on it.

Like a Good Neighbor?

Historically, Florida has been known for a few specific things.

We are the Spring Break capital. Any college football fan can’t deny our talent for producing great players all over the State. Just this year, one of our very own was the youngest player ever to be awarded the Heisman Trophy. Ask any 4 year old where Disney World is and he can tell you.
Oh, and hurricanes. We have those, too.
Since 2005 when hurricanes ravished our State, insurance companies all over the Atlantic and Gulf Coasts have gone into panic mode. Rates for homeowners have sky-rocketed…that is, if they didn’t drop you entirely.

Enter State Farm Insurance; probably one of the most well-known insurance companies in America. Well, minus Florida.

Need car insurance, health or life insurance? Great! They’ve got you covered. But you’re left out if you own a home. Sorry.

This reminds me of a commercial that Burger King runs. People go up to the speaker at the drive-thru window and are told Burger King no longer serves the Whopper. What? Isn’t that what they’re known for? What good is a fast-food restaurant without their specialty food item?
Now, if that really happened, Burger King would probably go out of business pretty quickly. People would just stop going there if their favorite menu item was no longer available. And what would happen if Florida was the only state that Burger King no longer served the Whopper? CNN would be camped out in our back yards!

But for some reason, State Farm doesn’t seem to think it should be a big deal they’ve taken away our “Whopper.” They still believe they deserve a piece of the pie anyway, with the other types of insurances they offer us.

While I’m on a roll with these food analogies, I’ll throw in one more. Should insurance agencies be allowed to carry out business as a buffet line, where we are only allowed to choose from whatever they’ve decided to serve us?
I say no. Why should Floridians continue to give money to a company who doesn’t believe we’re deserving of the full menu?

We can all agree that businesses are in business to make money, right? But it’s my understanding that State Farm can be found in all states. Over the past ten years, Tennessee has been hit with more tornadoes than I can count. Betcha they still offer homeowners insurance there, don’t they?

In any business dealings, the day I feel like I have to beg anyone to take my money is the day I walk away from that company and never look back. And that’s what we Floridians need to do. Change car insurance companies, life insurance, etc. If State Farm is so worried about losing money on us, they don’t deserve one dime of what we work for.

Come on, State Farm. We don’t care if you go away mad…we just want you to go away. Faster than the wind speeds of those hurricanes that have your wallets so scared.

A SMALL STEP FOR FLORIDA RESIDENTS

These have been stressful times for everyone. You can’t turn on the television without hearing something about tax increases, gas prices…something that wants to suck the life out of our wallet and bank account.

When the Florida Legislation session began this month, a few more clouds over the Sunshine State floated away. Property owners all over the state let out a sigh of relief that could probably be heard all the way to South Carolina when we received a little more tax relief.

Citizens will gain the freedom to purchase a new home without huge tax penalties. Rental home owners, second home owners and businesses will benefit from limits on future tax increases. The amendment contains two provisions that we have long advocated: doubling the homestead exemption and the ability for families to take with them their Save Our Homes tax savings, or “portability."

Sound like a bunch of political mumbo-jumbo? Let’s break it all down:

1. Doubles the homestead exemption for almost all homeowners, providing an average savings of about $240 annually. The new exemption applies fully to homesteads valued over $75,000, and partially for homesteads valued between $50,000 and $75,000. This new exemption does not apply to school taxes.

2. Portability allows homeowners to transfer their Save Our Homes tax benefits from their current home to a newly purchased home within any Florida county. Portability applies to homes purchased in 2007 and later, and the benefit is capped at $500,000.

3. Provides an assessment cap of 10 percent for all properties not previously capped: While homestead properties are already capped at three percent, now all other properties, including rental properties, second homes, and business properties, will be protected from huge tax increases.

Perhaps now homeowners and future home owners won’t be scrambling around, worried to make a move – literally. Buying or selling a property should always be more exciting than stressful. Hopefully now it can be.

This was a great step in the right direction for Florida homeowners. But there is still much that can be done. More relief can come our way. I know. Politics isn’t everyone’s best friend. However, as cliché as it sounds, we all CAN make a difference. Write or call our government officials. Remember, they work for us. And when the time comes, get out there and vote! We need a real tax reduction and the 10 % cap is too high.

Whether you’re in the market to buy your first home or your tenth…or maybe you’re still on the fence in your current situation...buying a home is ALWAYS a big deal. Hopefully the good news will help all of us have a clearer picture of our real estate future.

...And wouldn’t you rather be disagreeing with your spouse over what color you should paint the new dining room?

WANT TO BECOME AN EDUCATED BUYER?

The buzzword for 2007 was “subprime.” It was said so often on the television that a seven year old could probably tell you what it means.

No matter where you receive your daily fix for news, the mortgage and housing industry has saturated a good portion of CNN, Fox and every newspaper outlet in America for the past year. Almost makes you enjoy really bad reality television, huh?

Is it over yet?

Well, not entirely, but we’re getting there. And that’s the one bright spot to hitting rock bottom…you can only go up from there!

So take a deep breath and let out a big sigh, Floridians. We ARE on our way back up. Recent numbers have showed a price stablization in condos and homes in many complexes and subdivisions in Panama City.

“But Scott, that’s not what I heard on the news last night.”

Yeah, I know…and that makes things all the more confusing for someone who is new to buying real estate. But the truth is, people are always going to buy homes…people are always going to sell them, too.

Want to become a more educated buyer? The Scott Ingraham Real Estate group prides ourselves in doing just that, with every client we work with. In today’s world, the whole process of buying a new home can be scary, especially if you read the newpaper or watch the news. But it doesn’t have to be. Our job is to make sure everyone who walks thru our door feels informed of all the facts before they sign on any dotted line. If you have questions, we have answers!