For most of us, our home is our biggest investment. And we desire not any old investment but a winning investment. But recent home sales in the Tampa Bay area have turned that assumption on its head.
Close to half of us in Pinellas, Pasco, Hillsborough and Hernando counties have been selling our homes at a loss this summer. Our block-and-stucco babies have been playing us for financial fools.
Zillow, the online real estate company, says 45 percent of Tampa Bay area homeowners sold at a loss as of July. It's worse in Hillsborough, where the sold-at-a-loss rate was 50 percent. Pinellas County fared best at 40 percent.
But what a change from the previous decade, when a scant 5 percent of homeowners lost money on their sales. During the housing boom, our homes bred equity like rabbits on Viagra.
When you plow through the Tampa Bay numbers, several things become clear. If you bought a new home in the past four years, your chances of selling at a loss are higher.
Take Pasco County. Its overall sold-at-a-loss percentage is 42 percent. But when you head over to Land O'Lakes, where thousands of new homes were built during the boom, the rate is 49 percent. The new sections of Wesley Chapel have a rate approaching 70 percent.
But when it comes to older communities like Holiday, Hudson and New Port Richey, only a third of homeowners sold at a loss. In most cases they lived in their homes long enough to establish equity.
St. Petersburg seems to buck the older-is-better formula. While Dunedin and Safety Harbor had sold-at-a-loss percentages below 30 percent, St. Petersburg's rate hovered at 44 percent. That suggests that heavy real estate investor involvement, even in older homes, can also ravage a neighborhood's resale values.
Hillsborough showed the same trends. East Tampa, where cheap homes changed hands frantically during the boom, got the worst of it. So did Corey Lake Isles, a New Tampa neighborhood that registered a staggering 80 percent sold-at-loss rate.
Sixty-one percent of home sellers in Riverview, in the heart of Hillsborough's neo-suburbia, lost money on their sales. But in Lutz, where new homes are thin on the ground, 29 percent of homeowners sold at a loss.
Conclusions? If we bought a new home during the boom, we not only overpaid, but we probably borrowed too much. How else to explain the equity bleed? On the other hand, stable neighborhoods with longtime homeowners have looked like relative paragons of stability.
It could always be worse. More than two-thirds of Orlando homeowners are selling at a loss. Our kingdom has been a little more magical.
Reprint from Tampabay.com and the St. Petersburg Times September 17, 2009
Mortgage rates declined last week, triggering a dramatic jump in mortgage applications.
The Mortgage Bankers Association reported that its weekly index of mortgage application volume rose 17 percent on a seasonally adjusted basis compared to the previous week. On an unadjusted basis, the index increased 15.8 percent and was up a whopping 64.5 percent compared to the same week a year ago.
Much of the increase was in refinances, with the refinance index increasing 22.5 percent, the biggest jump since March. The purchase index rose 9.5 percent, which was the largest gain since early April.
Mortgage rates were down across the board:
Source: Mortgage Bankers Association (09/09/2009)
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About 25 percent of all new mortgages are backed by the Federal Housing Administration in what will probably be the busiest year yet for the federal agency.
Applications for FHA mortgages rose 50 percent from last October through mid-August 2009 and approvals for purchases, refinancings, and reverse mortgages rose 70 percent to 1.67 million.
FHA loans "are one of the most important sources in this market," says Mark Zandi of Moody's Economy.com. "Without FHA, the housing slide would be much more severe. We wouldn't be talking about a recovery now. We'd still be talking about a crash."
Some analysts are concerned about the risk the FHA has taken on, but others point out that borrowers with FHA-insured loans now have an average credit score of 690, compared to 630 two years ago. Borrowers with a credit score below 500 must come up with a 10 percent down payment.
If you are ready to find your next home...
Source: USA Today, Stephanie Armour (09/02/2009)
According to published reports, the Internal Revenue Service is more closely examining how taxpayers are reporting mortgage interest deductions.
The IRS is reportedly examining some returns with high deductions for mortgage interest and enforcing obscure rules that most home owners and many accountants could be unfamiliar with.
The calculations are very complex and rely on precise records that some home owners may have trouble producing
Experts advise home buyers who have borrowed more than $1 million in mortgages and home equity loans since 1987, the year deductibility limits were enacted, to consult a tax expert because the newest loan may not be tax deductible.
Source: Investment News Daily, Art Auerbach (08/25/2009)
