Mortgage implosion or an environment of change?

Over the past month there has been more change in the mortgage industry than in the previous 20 years combined!  What happened to all those lenders?  How did it happen so quickly?  Is this an implosion or just an environment of change?

The answer to most of these questions lays in the “Secondary Market” of mortgage lenders.  Each lender needs to replenish their coffers with cash to continue to lend money to homebuyers.  To achieve this, lenders package loans into large dollar amounts and “sell” them to an investor.  This is considered the “secondary market”.  Those investors then create funds that are then made available to all of us in our personal investment portfolios, thus completing the cycle of funds.  Last month several of the funds failed and now investors have no interest in buying any additional mortgages from lenders. Thus, lenders have no new funds to lend. Without lending, they have no income and suddenly these companies have no value!  Mortgage implosion!
Over the past decade hundreds of brokers and small correspondent lending groups have formed and tried to act like the major lenders. We know these as Brokers, Mortgage Lenders and even some very large names are really “Correspondent Lenders”, in other words they buy money from the wholesale divisions of major mortgage lenders, like Wells Fargo and sell them under their own name.  Click here to read more about Sarasota Property, Sarasota Real Estate articles

Higher Tax Exemptions May Cost You Money

Homeowners may find that the proposed super exemption come with a heavy catch and will result in higher taxes.By Raul Elizalde (8/07)

The Florida Legislature in Tallahassee wants to rewrite Florida’s homestead exemption laws to phase out the Save Our Homes cap that limits annual tax assessments.

Currently, every homeowner of a primary residence in Florida has the right to deduct $25,000 from the assessed value of their home and cap its increase at the lower of CPI or 3% per year. This is known as the Save our Homes amendment.

A new plan for a “super exemption” would give homeowners a choice. They will be able to keep Save our Homes, or increase the deduction from the current $25,000 to 75% of the first $200,000 plus 15% of the next $300,000, with a minimum deduction of $50,000 and a maximum of $195,000. Voters will decide on this new measure by referendum this coming January.

Although the “super exemption” may seem a better deal for homeowners, it has a “catch”: the new deduction would be calculated from the market value of their home, not from the current assessment.

Anybody who has owned a home for a few years has been able to keep taxes in check with this 3% cap. In many cases, this is much more valuable than the higher deduction proposed by lawmakers.

In fact, for the West of the Trail/Siesta Bayside universe that I explored in my previous newsletter, the new super-exemption would result in significantly higher taxes for most homeowners.

On aggregate, the combined tax burden of about 2200 homesteaded non-waterfront homes in Sarasota I have studied in this area would increase by more than $8mm. Just 10% of the homes or less would actually have a tax advantage by switching out of the current Save our Homes amendment and into the super exemption that will be proposed by referendum in January. The average homesteaded home would face a $4,000 tax increase when switching to the super-exemption.

Waterfront homes and luxury homes on the Siesta Key bayside and in the Sarasota mainland would be vastly more affected by the new plan. While a small handful of waterfront homes would see some tax savings, the increased tax burden for waterfront Sarasota homes is more than $7mm in just the area I studied of 380 homesteaded homes.

Although each homeowner would be able to take much larger deductions than the $25,000 allowed under Save our Homes, the new proposals do away with years of appreciation caps and results in a average additional tax on the homesteaded waterfront home close to $20,000.

Those who do not currently own a home or have not lived in theirs for too long are likely to benefit from the proposed super exemption when they purchase a new home. Those who have been in their homes for a relatively longer period of time and have no immediate plans to move, however, would be very negatively impacted by the new proposals. This is especially true for waterfront Sarasota real estate.

When it comes to knowing the Sarasota real estate market, Alison and Raul Elizalde have the expertise and knowledge to help you see where you stand when negotiating your real estate transaction, whether you are buying or selling a property. Our track record, added to the unsurpassed reputation of Michael Saunders & Company as the premier real estate company in Florida’s Gulf Coast, give you the peace of mind you deserve. Alison and Raul have been named Best in Customer Satisfaction by an independent research company.

Call us today at 941-350-7904 for a consultation, and visit our website, www.SarasotaProperty.info, for monthly updates on the Sarasota real estate market.

Sarasota Waterfront Values

The value of Sarasota waterfront homes has climbed steadily over time.

(By Raul Elizalde, 7/07)  

When talking about waterfront, it is often said that “they are not making any more of it”. That is intended to mean that the scarcity of waterfront properties is an important contributor to their sustained value and that because of it, they withstand the ebbs and flows of the general market than other properties. When it comes to Sarasota and Siesta waterfront homes, this is certainly the case.

Read more of Sarasota Waterfront Properties here: