Real estate sales this past year slowed compared to 2006.  Home sales in 2007 dropped 29%, while overall prices slipped 8%, an indication of home owner unwillingness to reduce prices, fewer purchasers in the marketplace and mortgage loan restrictions.  The number of expired and cancelled listings were very high in 2007. 

As of this post, there are currently approximately 17,231 single family residences and 23,275 condos, townhomes and villas for sale in Broward County, making this is a ‘target-rich environment’ for potential home buyers and bargain hunters. 

Many buyers may fear that prices will continue to reduce and are procrastinating in hopes that they will actually recognize a bottoming of the market.  If it were true that people can recognize a market top or bottom, then many existing owners would have bought earlier or later and we could all be stock market millionaires. 

 The problem with hindsight as opposed to foresight,  is that hindsight provides verified data with which you can blame yourself.   However, you should not blame yourself for not having good market timing, since many industry experts didn’t either… and they have many tools at their disposal.

According the Florida Association of Realtors (FAR), the word is getting around that it is time to buy.   With mortgage rates still close to two year lows and the media just beginning to announce good news instead of the usual, some buyers are getting back into the market.  Homeownership has never stopped being a dream for most of us and this market lull has only delayed things for many.

As foreclosure rates rose, potential homebuyers began to request information on short sales, pre-foreclosures and foreclosures.  If federal assistance develops to save homeowners facing foreclosure, this may mitigate the continuing problems of Adjustable Rate Mortgage (ARM) payment increases. 

As many are aware, builders are having hard times, with some in or facing bankruptcy.  If the real estate market improves, so will the outlook for builders.  Home building, real estate markets and mortgages all work together to help fulfill the dreams and needs of the American public. 

Mortgage rates may edge upward in 2008, according to most experts, but are not expected to rise enough to deter home buyers.   On December 21, 30-year fixed-rate mortgages were at 6.14%, and as stated above, close to two year lows.

Condominiums can be like musical chairs… investors buy them, sometimes at increasingly inflated prices, believing that, no matter what they paid, surely someone else will pay more.  And that did indeed happen during the price run-up.  However, when the music stopped, those left holding the condos, were stuck.  When buying stopped, owners tried to sell, but could not and then tried to rent, but rents began coming down in response to increased inventory, so rents tumble and many are losing money each month.

A couple of possibilities exist for homeowners wishing to rent.  They include accepting Section 8 renters and applying at local military installations to allow military members to rent from them.  There are rules with Section 8 and rules with the military, so it is wise to check things out beforehand, but either of these solutions may benefit all involved.

On January 29, 2008, property tax portablity is on the ballot, offering homeowners the ability to move and keep some or all of their tax advantages intact.  This would help homeowners who have felt stuck in place by the tax-penalities of moving and should also greatly benefit the market as a whole.  Lawmakers are expected to introduce other incentives to businesses and non-Homesteaded owners.  Housing affordabilty and homeowner insurance are other issues that may be positively affected.

Florida legislators got involved in the property insurance situation and boosted the state’s reinsurance fund and that reduced homeowner risk.  And then when insurance rates did not drop as much as hoped, the state began denying insurers rate-increase requests.   Citizen’s Property Insurance Corporation, the state’s insurer also froze rates and increased coverage and lately, several new companies have begun offering property insurance in the state.  Look for this trend to continue as publically-traded insurers retreat due to payouts related to hurricanes. 

Look for the IRS to extend tax deductions on private mortgage insurance (PMI) premiums to qualified borrowers on loan originations between 2007 and 2010.  Average tax breaks should be $350 per taxpayer annually.

And finally, President Bush signed into law a measure that provides a tax break to homeowners who have had mortgage debt forgiven by way of foreclosure or loan renegotiation.   No taxes will be levied on debt forgiven through these procedures.   An estimated $600 billion worth of Adjustable Rate Mortgage rates will increase from “teaser” rates in the next year or so.