The August 3rd Sun Sentinel lead article, "New wave of Baby Boomers ready to descend on Florida," offers plenty of hope for the state's depressed housing market of the past two years.

According to the article, "Between 2010 and 2030, Baby Boomers, born between 1946 and 1964, are expected to descend on Florida in even larger numbers and will increase their standing as the state's largest age group. The reason: They are nearing retirement age, the state's housing prices have become more affordable and Florida's tropical climate remains a draw."

Posted on newconsearch.com June 15, 2008 by Connie Talcott Smith

This week's FORTUNE Magazine, dated June 23, 2008, specifically cites Miami (NOT the Beach) and Tampa may be among the six best US markets for investment in a feature article entitled "Real Estate: Where The Deals Are." Prices have fallen 21.7% and 17.5% in a year according to the S&P/Case Shiller home price index. (See our last ALERT on The State of Real Estate for a discussion of these indices).

The FORTUNE article gives hints as to where to find the best deals within these areas and strongly points out what we have been saying all along... look to new construction deals first. Shopping foreclosures and depressed neighborhoods are likely to bring the investor more problems... and less margin for negotiation than a developer with inventory to move quickly and deliver in new condition.

While it is difficult to determine exactly when the market has hit its lowest, we can say this much: your prospects, if seeking a mortgage, are likely to get the lowest interest rate at this time. Economic indicators show that interest rates are likely to rise, perhaps quickly, in the coming year.

Low prices and low mortgage rates suggest a good time to help that prospect find a home before interest rates spiral upward and make that desirable home unaffordable.

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This past Wednesday (July 30, 2008), President Bush signed H. R. 3221, The Foreclosure Prevention Act of 2008, which contains sweeping measures affecting residential mortgage reform, residential taxes, REIT Investment Diversification, and veterans' housing matters. Some energy measures are addressed as well.

This Act provides a good portion of the material you might expect in the next Core Law portion of Continuing Education for real estate licensees. Moreover, there are changes in the tax code which could affect all homeowners.

Inman News contributor, Matt Carter, points out that the FHA changes in the bill are a "mixed bag" with regard to stimulating new residential sales.

On the stimulus side are such measures as 1) the $7500 tax credit for first-time home buyers, 2) an increase in the FHA loan limit to $625,500 which will allow guarantees in high cost markets, and 3) a moratorium on risk-based insurance premium pricing for FHA guaranteed loans.

On the repressent side are measures designed to reduce risks and protect the economy. These include 1) an increase in the FHA downpayment from 3.0% to 3.5%, 2) elimination of seller funded downpayments through third party non-profit assistance programs, and 3) a likely increase in mortgage insurance premiums for all mortgagors.

The downpayment assistance programs accounted for 35% of FHA sales in 2007, up from just 2% in 2000, according to the HUD source cited in the Inman article. Carter says "HUD claimed the practice artificially inflates home prices and triples the likelihood of default." On the other hand, home builders rely on these programs to assist their buyers in the lower-priced markets. The reduction in the buyer pool from the withdrawal of these assistance programs could be significant.

For a better understanding of the issues covered in this massive piece of legislation, we (at newconsearch.com) recommend that you watch for more Inman News articles on the reforms and that you glance over the Library of Congress Summary of H.R. 3221. Chances are you will be put to the test on some of its measures in the near future!

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Developers have reduced their prices significantly since mid-2006 in the South Florida market and many offer a variety of incentives for your buyers of New Construction.

Among those incentives are sizable upgrades, reduced down payments, funds back at closing for up to a year of payments, closing costs paid by the developer, one or two years of HOA fees (Home Owner Association or Maintenance), no fees for leasing an investor's unit, and generous commissions and bonuses to cooperating agents.

As a trusted real estate agent, you should help your buyers evaluate each and every incentive. Remember, these incentives come at a cost to the seller. While they may mean less money out-of-pocket for the buyer at closing, they are still part of the overall cost of the property. Ask to see the lender's "Truth-in-Lending" cost sheets and refer to title services for a preliminary HUD statement on the proposed or a similar closing before your buyer signs the developer's contract to purchase.

Evaluate incentives, line-by-line, with the buyer to determine the immediate value and the long-term cost implications. In most cases, the buyer can make a counter-offer to purchase at a lower price if some or all of the incentives are excluded. If the buyer is in a position to do so, it may be advisable to pay all the closing costs.

The lower price, if properly negotiated, will result in lower monthly payments, lower property taxes which are based on market value at closing, and possibly lower insurance premiums. This could add up to a significant savings over several years of ownership.

When considering a counteroffer to a developer, it is advisable to have it drawn up by a real estate attorney who understands the new construction process and is familiar with builders' contracts. If you cannot recommend two or more, ask your broker or other agents for referrals. The immediate out-of-pocket expense to the buyer may be modest and the attorney is likely to insist that his title services be used to conclude the transaction. This should be another benefit to your buyer, who will see you as an outstanding professional who protects their interest well beyond the closing.