John Mayer's Newsletter 01/16/2011

CURRENT NEWSLETTER

Hello Everyone!

Here is the latest Real Estate news from Florida and around the Nation. As always, please feel free to call or email me any time, even if it's just to keep in touch.

Remember, Real Estate is a sound investment at any stage of your life and having the right professional to help you along in the process is imperative.

30-year fixed mortgage dips to 4.71%

It's the second week for a decline, but mortgage experts generally expect little change or an increase in the short term. Read more.

Forecast: Job growth to lift housing in 2011

Housing market could emerge from doldrums this year, but industry forecast depends on a steady ramp-up in hiring. Read more.

Lenders may be not-so-fast to foreclose

After a court ruling last Friday, lenders may be more willing to help struggling homeowners with mortgage payments. Read more.

Foreclosure rate took a dive at end of year

The pace dropped significantly due, in part, to a lender slowdown as they dealt with accusations of faulty paperwork. Read more.

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TALLAHASSEE, Fla. – Jan. 13, 2011 – Newly elected Gov. Rick Scott wants to raise rates at Citizens Property Insurance Corp. to make them “actuarially sound,” but doing so would require homeowners covered by the state-run insurer of last resort to absorb a whopping 55 percent rate increase, officials said Wednesday.

That was the estimate given by Citizens Chief Financial Officer Sharon Binnun in response to questioning from members of the Florida House of Representatives’ Banking & Insurance Subcommittee on Wednesday.

Citizens is currently prohibited from raising rates by more than 10 percent a year, under restrictions lawmakers imposed in the aftermath of the 2004 and 2005 hurricane seasons, when eight storms hit the state in two years.

Citizens has ballooned into the largest insurance company in Florida since those storms, as private insurers have dropped policies and fled the state. Citizens has nearly 1.3 million policyholders, about 18 percent of the total residential exposure in the state.

The vast majority of its customers are in coastal areas; 42 percent are in Miami-Dade, Broward and Palm Beach counties.

If Citizens isn’t permitted to charge actuarially sound rates, it risks not having enough money to pay claims following a major storm or storms. And Citizens would have to make up that shortfall by taxing all of the state’s insurance policyholders – even those covered by private companies.

Binnun told lawmakers that Citizens currently has enough cash on hand and so-called “reinsurance” coverage to absorb a 1-in-10-year-sized storm (think Hurricane Wilma of 2005) or a 1-in-25-year storm without charging non-Citizens policyholders.

But if the state were to be hit by a 1-in-50-year storm (Hurricane Andrew size), Binnun estimated that private-insurance customers would be hit with assessments equal to about 10 percent of their premiums to bail out Citizens.

Copyright © 2011 The Orlando Sentinel, Fla., Jason Garcia, The Orlando Sentinel, Fla. Distributed by McClatchy-Tribune Information Services.

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Free brochure explains credit decisions

Federal Reserve: Banks must tell borrowers about credit problems that impact a decision to lend money. Read more.

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Multifamily rentals: NAHB sees rising demand, insufficient supply

ORLANDO, Fla. – Jan. 13, 2011 – Post-recession job creation is creating increased demand by new renters for apartments. However, apartment developers are not responding to demand quickly enough due to trouble accessing credit. According to the National Association of Home Builders (NAHB), that will cause rents to increase and a likely shortage of available apartments in the next few years.

“Although we are forecasting construction of 133,000 new multifamily residences in 2011, that is far short of the 250,000 to 300,000 units that would be required to keep supply and demand in balance,” says NAHB Chief Economist David Crowe. “In addition, we have yet to make up for the insufficient number of new apartments that should have been built over the last two years.”

Multifamily developer Bill McLaughlin, an executive vice president of the Avalon Bay Company, a real estate investment trust headquartered in Washington, D.C., said he sees demand for apartments increasing, but notes that the cutback in multifamily development in 2009 and 2010 has resulted in a “woefully inadequate supply” of new multifamily rentals to meet the rising demand.

Private development firms bore the brunt of the constrained supply of capital, but even affordable rental housing is feeling the pressure.

“Affordable housing, which is primarily driven by the Low-Income Housing Tax Credit program, is rebounding,” says Robert Greer, president of Michaels Development Company. “Investors are slowly coming back into the market, and deals are getting done … which is good news. But the bad news is that given the depth of the current recession, more people than ever need affordable housing, and the demand far outstrips the supply.”

© 2011 Florida Realtors®

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