04/15/2013 Florida Realtors News

TODAY'S TOP STORIES

Some towns are stagnant or even shrinking in Fla.

PALATKA, Fla. (AP) – April 15, 2013 – Jim Melfi steered his SUV through the narrow streets of this city that he loves, raising a hand from the wheel to point toward one pretty old wood-framed house after the other.

“This house has been in foreclosure for a couple of years,” he said. “This house has been for sale forever.”

Melfi drove farther down River Street. On the right, docks poked into the St. Johns River. On the left, signs rose from the sloping lawns of more vintage houses facing the water.

“For sale! For sale! For sale!” He sighed. “These should be getting scarfed up.”

But they’re not. A University of Florida research group estimates that Palatka lost 355 residents in the two years after the 2010 census, down to 10,203 people. The city’s smaller, even, than it was more than 50 years ago: The 1960 census found 11,028 people there.

Palatka is hardly alone in that dilemma. As cities continue to grow, as suburbs and far-flung exurbs grow, the population of many small cities and towns across Florida remains stagnant.

Some are even slipping slightly. Hilliard, Macclenny, Keystone Heights, Waldo, Glen St. Mary — think of them as standing still, says UF economist David Denslow, who’s studied those figures.

He sketched out a profile of such places: They’re typically inland and rural, without many big draws for tourists or retirees. They’re often just far enough from cities with more jobs, making the commute impractical.

They probably didn’t boom during the mid-2000s, so there wasn’t a huge crash. But they’ve perhaps lost a big employer or lost mid-level jobs in offices that have been replaced by computer programs. And without new people coming in, the building trades and service industries suffer.

It all ripples down, Denslow said, and young people in particular, more mobile than their settled elders, often look elsewhere.

Bradford County lost one in 20 of its residents from 2010 to 2012, the U.S. Census Bureau estimates. At 5 percent, that was by far the biggest percentage drop in the country.

That’s a bit deceiving, said Scott Cody, a UF demographer; most of that is due to a drop in the number of prisoners at the county’s two jails. Inmates are counted in census figures.

Even so, growth is slow. In Starke, Bradford’s biggest city, Pam Whittle says she sees lots of the traffic on the streets, and there are places hiring: A new clothing store opened, another expanded. A barbecue restaurant just opened, and the China Buffet reopened under new management.

The city needs more jobs, though, something she’s working on as head of the North Florida Regional Chamber of Commerce. Whittle grew up in the area, and it’s personal. “Neither of my children live here,” she said. “They’re both in their 20s, and neither one of them can live here. Not that I’m not trying to get them back.”

It’s also professional. “That’s one of the goals, to find business in town, something for people to do, a reason to raise their families here,” she said. “We have a population that is traveling to Duval or Alachua County to work, so therefore their leisure time with their kids, at the ball field, at FFA or 4H, is cut down.”

In Baker County, which lost 177 people in the two years covered by the UF study, half the workforce travels to Jacksonville, said Jim McGauley, editor and publisher of the Baker County Press. There have been cutbacks at Northeast Florida Hospital, a big employer, he noted, and when the recession hit, growth came to a virtual halt.

The housing collapse also meant that developers dropped plans to build a 55-plus development that was expected to bring in 1,300 homes, as well as businesses to go along with them. McGauley thinks some people were happy to see that happen, since it would have changed the rural character of the area.

Others felt deflated. “Everybody on the street was thinking ‘Oh, we’re going to get a Publix now,’ “ he said.

Palatka isn’t immune to those economic realities, said Denslow, the UF economist, even with its waterfront setting and historic neighborhoods.

“That’s a tough case because it’s so beautiful,” he said. “What a gorgeous place — I almost want to build a place there myself. Especially with that waterfront. Wow.”

It is a pretty little town, Melfi acknowledges.

“I just wish it was a pretty little town with more jobs,” he said. Melfi, who moved from St. Augustine for a less crowded and small-town life, is head of Putnam County’s Habitat for Humanity office, and was once head of the United Way there.

Palatka has an unemployment rate of 10.3 percent, according to the state, higher than the statewide 7.5 percent rate.

A Georgia-Pacific plant is the city’s largest employer, but Melfi points out a furniture plant that once employed hundreds, now shuttered and empty. People will readily drive elsewhere to shopping, he said, leaving the city’s old-fashioned downtown hurting.

Vernon Myers, Palatka’s mayor, said the city’s trying to rejuvenate downtown and attract eco-tourists. It’s tough, though. “Those with money take a left and go to the beach,” he said. “Those with limited money take a right and head to inland Florida.”

Still, ESPN trucks have come twice for a big bass-fishing championship, and on a recent sunny day here was a medium-sized cruise ship stopped at a dock just off the south historic district. Myers envisions more of that for his city, especially as it continues to spruce up its prized riverfront land.

That couldn’t happen soon enough for some.

J.r. Nowhere came to Palatka in high school, when his family moved from Orlando. It was, he says, instant and lasting culture shock. His real name is Clarence Lester, though he becomes J.r. Nowhere when he plays in his band, FFN. Made up of “punks who play rock and roll,” the “N’’ in its name stands for “nowhere.”

That would be Palatka.

“Sadly, this place is a trap,” he said. “If it’s not drugs that screw up someone’s life, it’s the old ‘My husband got a job at Georgia-Pacific and I have 11 kids.’ But some get out, go to college, progress on with their lives.”

He’s 30 now and still in Palatka. Why stay? Well, he met his wife, Stephanie Miller, there. As Stephanie Nowhere, she plays bass in the band. They have family there who can take care of their 9-year-old son. Then there’s the band, based in Palatka as it travels to gigs in Florida and beyond.

“FFN being in existence keeps up here. I honestly don’t have too many ties to my city. I just try to be faithful to my band,” he said.

It’s all not all bad, he says: The riverfront’s pretty, the festivals are nice, and it’s within reasonable distance of a lot of other places. That only goes so far, though.

“It’s the same thing over and over,” Lester said. “It never changes. If anybody tries anything new it usually fails.”

6 key considerations when applying for a mortgage

NEW YORK – April 15, 2013 – For most would-be homebuyers, making a run at homeownership is going to mean getting approved for a home loan.

It’s a process that, at best, can be stressful and confusing. Borrowers can be better prepared by taking steps to study their options and learn what to expect from a lender.

“It’s surprising to me that people tend to spend more time in pre-purchase research for a car than they do for a home mortgage,” says Chris George, president of home mortgage lender CMG Financial.

Keeping up to date on changes in the mortgage market is necessary, because the government, which essentially backs 90 percent of new home mortgages, keeps tweaking the guidelines for the loans it will guarantee.

Just this week, the Federal Housing Administration put into effect several new mortgage rules, including one that raises the cost of mortgage insurance for borrowers who take on FHA-backed loans, among other changes.

Here are six tips for improving the chances that the mortgage math will add up in your favor:

1. Build a strong credit score
One of the main factors that lenders look at to determine a borrower’s creditworthiness is, aptly, their credit score.

Bad borrower behavior, like late credit card or other loan payments, having a foreclosure or bankruptcy in one’s credit report and carrying high balances will weigh down your credit score.

Most banks sell the home loans that they make to government-owned mortgage companies such as Fannie Mae and Freddie Mac. To do that, those lenders must adhere to certain lending criteria.

Loans backed by the Federal Housing Administration (FHA) will accept FICO scores below 600, but expect to pay a significantly higher interest rate the lower your score. A stellar score ranges from 760 to 850 and can give you greater negotiating power over the terms of the mortgage and ultimately, the total cost of the loan.

One way to mitigate the impact of a low score: Make a higher down payment, George says.

If your credit is less-than-stellar, make sure you give yourself time to rack up good credit history well before you attempt to apply for a home loan. This starts by checking your credit.

Consumers are entitled to a free credit report every 12 months from each of the credit bureaus: Experian, TransUnion and Equifax. You can get copies at

2. Know your loan options
Apart from increasing the chances of qualifying for a loan, making a down payment of at least 20 percent of the sales price or appraised value of the home will spare you from having to pay private mortgage insurance.

If you can’t afford that, you might qualify for financing on an FHA-backed loan. Those loans allow borrowers to make a down payment of as little as 3.5 percent of the purchase price. That’s great if you’re a first-time buyer and haven’t saved up for a bigger down payment. But to protect itself from potential loan defaults, the FHA requires lenders to charge extra fees to cover monthly mortgage insurance payments.

Until this week, the FHA had dropped the mortgage insurance requirement for homeowners with 30-year loans who made payments for five years and managed to bring their loan-to-value ratio to 78 percent. Now, borrowers with a loan-to-value ratio between 78 and 90 percent will be able to stop making mortgage insurance payments after 11 years. But those borrowers who still have a loan-to-value ratio greater than 90 percent will be required to pay mortgage insurance for the life of the loan.

“No matter how much of your loan you pay down, you’ll always have to pay that insurance premium, and that’s pretty significant change,” says Rick Sharga, senior vice president at mortgage lender and servicer Carrington Mortgage Holdings.

Another change that went into effect: The FHA is requiring that borrowers put down at least 5 percent on home loans of $625,000 or more. That’s up from 3.5 percent, but actually less than the 10 percent down that most lenders require.

3. Consider making a larger down payment
Given the prospect of not being able to get out of paying private mortgage insurance, some experts say borrowers who can afford to put down more than 3.5 percent on a home should consider getting a loan that’s not backed by the FHA, sometimes known as a conforming loan.

Such a loan typically only requires that the borrower make a 5 percent down payment. Although that means you still would have to pay private mortgage insurance, at least you’re not locked in, notes Jack Guttentag, Wharton School professor of finance emeritus and founder of www.mtgprofessor.com, which offers advice and online calculators for weighing different mortgage scenarios.

That mortgage insurance can be cancelled automatically when the loan-to-value hits 78 percent. “You’re generally better off getting a conforming loan,” Guttentag says.

4. Keep an eye on fees
In addition to a down payment, you’ll also have to set money aside for closing costs, which can run into the hundreds or sometimes thousands of dollars.

Lenders charge all manner of fees, some of which are negotiable, while others are not. They are required to itemize all fees required to close the deal, so review them carefully.

Your bank could charge you to cover items such as credit reports, appraisals, documentation and administrative costs. The total expense will vary depending on where you live and your particular situation.

Also, if you end up with mortgage insurance, that could cost $100 or more a month, depending on the type of loan.

5. Wait for a good deal
Rising home prices and warnings, usually trumpeted by lenders, that interest rates will soon rise can create a sense of urgency to purchase a home. But if your finances and credit score are not solid enough to enable you to qualify for a loan at an affordable rate, it’s best to not rush into buying.

To boost your chances of getting a good deal on a home loan, Guttentag recommends having a credit score of 740 or better, making a down payment of 20 percent.

6. Comparison shop
It’s prudent to get a feel for what different mortgage lenders will offer. After all, getting a home loan is not unlike getting financing for a car. There is some room for negotiation, says George.

He suggests borrowers approach lenders and state what kind of loan term and interest rate they want, and how much of a down payment they’re willing to make. Borrowers also should ask what can be done to accomplish this with the least amount of points, or fees that can be charged based on a percent of the loan amount.

As leverage, it’s best to have quotes from competing lenders, which can be obtained on several websites. They may be enough to sway the lender to match more favorable terms offered by the competition.

Rising costs impact homebuilder confidence

WASHINGTON (AP) – April 15, 2013 – U.S. homebuilders are concerned that limited land and rising costs for building materials and labor will slow sales in the short term.

Still, their outlook for sales over the next six months climbed to the highest level in more than six years — suggesting the obstacles could be temporary.

The National Association of Home Builders/Wells Fargo builder sentiment index released Monday fell this month to 42 from 44 in March. It was the third decline since January. Measures of customer traffic and current sales conditions both declined from March’s reading.

Readings below 50 suggest negative sentiment about the housing market. The last time the index was at 50 or higher was in April 2006.

The recent declines come after the index had been trending hiring since October 2011, when it was 17.

Steady job creation, near record-low mortgage rates and rising home values have spurred sales over most of the past year. New-home sales fell in February after climbing to the highest level in more than four years the previous month.

In response to the improving demand, builders have stepped up home construction. They broke ground on single-family homes at the highest annual rate in 4 ½ years in February.

Still, the sudden rise in home construction follows a severe and prolonged downturn. And the effects of the crisis are now crimping the recovery.

During the roughly six years since the housing bubble burst, some 1.4 million residential construction jobs vanished, while land development — when raw land is prepared for home construction — slowed sharply.

In addition, suppliers of building materials sharply reduced their stockpiles and have been slow in adjusting to the resurgent demand for lumber and other goods.

As a result, homebuilders are facing higher construction costs and heated competition for ready-to-build land. They’re also paying more for labor, because many of the subcontractor firms that builders rely on are scrambling to find experienced workers, many of which have long since moved on to other types of jobs.

Many smaller builders also are having a difficult time getting loans to buy land.

“Supply chains for building materials, developed lots and skilled workers will take some time to re-establish themselves following the recession, and in the meantime builders are feeling squeezed by higher costs and limited availability issues,” said David Crowe, the NAHB’s chief economist.

Despite the hurdles, builders have grown more optimistic about sales this year. In this month’s confidence survey, builders’ outlook for sales over the next six months rose three points to 53. That’s the highest reading since May 2006, when it was 55.

In the near term, builders’ confidence dimmed since last month. A gauge of current sales conditions fell two points to 45, the lowest level since October. A measure of traffic by prospective buyers fell four points to 30, back to where it stood in September.

The latest builder confidence index, based on responses from 322 builders, comes as the critical spring home-selling season is under way.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB statistics.

Gov't tries to unload excess properties

WASHINGTON – April 15, 2013 – The General Services Administration (GSA) is trying to unload a surplus of government buildings across the country through auctions and, most recently, by working with private developers to negotiate land swaps. The land swaps “reduce the government’s real estate portfolio while consolidating offices and saving money for taxpayers,” The New York Times reports.

The federal government owns about 14,000 excess buildings, which the GSA – described as the “federal government’s landlord” – is trying to unload. But political, technical and economic issues can bog down the process, says Dorothy Robyn, the Public Buildings Service commissioner for the GSA.

Before a federal property can be offered for sale, federal, state and local government agencies must first be given a chance to acquire it. The property must also be made available to shelter the homeless, under the 1987 McKinney-Vento Act. Federal environmental and historic preservation reviews are also required on the property. After all of this, then the properties can be sold to private entities.

The swapping strategy is being applied to the 40-year-old FBI building in Washington, D.C., which the developer will get in return for building a replacement headquarters elsewhere. The swapping strategy is also being tested with two old federal courthouses in Los Angeles and Miami.

Source: “Lots of Federal Property to Sell, but It’s Not That Easy,” The New York Times (April 9, 2013)

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688