Real estate groups also are urging Congress to extend the credit beyond its current deadline and expand the tax credit to up to $15,000. Now, buyers must close on their purchase by Nov. 30 to be eligible for the credit.

Home builders and real estate organizations are concerned that letting the tax credit expire could knock the wind out of the current housing recovery. And failing to expand the credit could imperil efforts to get more move-up buyers into the market.

“Right now, the recovery is in the first stage and getting entry-level buyers in, but it’s having no impact on the move-up buyer,” says Richard Smith, CEO of Realogy, the parent company of Century 21, Coldwell Banker and others. “If we can expand the credit to go after that move-up buyer, we’ll be home free.”

The tax credit available to first-time homebuyers is already linked with an uptick in sales. For the first time in five years, existing home sales have increased for four months in a row, according to an August report by the National Association of Realtors (NAR).

Sales rose 7.2 percent in July from June, and pending sales are 5 percent above the pace seen in July of 2008

Many of those using the tax credit, however, are buying up foreclosed homes that are vacant. That does little to stimulate sales by homeowners looking to move up to more expensive properties. Getting more move-up buyers into the market is considered the second stage of the housing recovery.

And even though the tax credit doesn’t expire until Nov. 30, today’s home purchases take 45-60 days to close as the underwriting and appraisal process is taking longer because lenders are being more cautious. That means offers that will benefit from the tax credit really need to be in this month or early next month.

“Buyers have more of a sense of urgency,” says Tony Middleton, a Realtor in Los Angeles with ZipRealty, of the expiring tax credit. “They’re serious about shopping for a home.”

There is legislation in both the Senate and the House that would expand the tax credit. A proposal by Sen. Johnny Isakson, R-Ga., would raise the credit amount to a maximum of $15,000 for any buyer of any home over the next year. It would remove the income caps that currently apply (those limits are now $75,000 for an individual and $150,000 on couples).

“I think we’ve got a realistic chance of doing this,” Isakson says. “Our problem is not with the first-time home buyer, it’s the move-up buyer.”

Lawrence Yun, chief economist at NAR, says extending or raising the tax credit would spur the housing recovery, which in turn would help bolster the economy.

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It’s a painful scene playing out all over the Tampa Bay area.

In Riverview, a homebuyer agreed to pay $162,000, but the appraisal came back at $150,000. A Trinity homeowner had a contract to sell for $207,000 – 6 percent more than the appraisal of $195,000.

All of these homes appraised for less than the amount a buyer was willing to pay because of one thing: too many foreclosures and distressed sales in the neighborhood, said David Teacher, who was hired to appraise the homes by the buyers’ lenders.

“When there are bank-owned homes in basically the same condition that have sold or are listed for sale for cheaper, an appraiser has to consider them,” Teacher said.

In this fragile real estate market, what your neighbor does has never mattered more. Sellers have to compete with distressed sellers, even if they’re not distressed themselves.

Every time a home in your neighborhood, or especially on your street, sells at a fire-sale price, your home’s value is likely to drop, too.

The issue has, at times, pitted real estate professionals, such as appraisers, builders and real estate agents, against one another.

Appraisers determine value, in part, by looking at comparable sales in the area. Teacher said he tries to find “regular” sales to use as comparables, but that’s not possible in some neighborhoods with a large supply of distressed sales.

That said, he says some appraisers use the closest distressed sales and ignore comparable sales that would have rendered a higher value.

For example, he recently appraised a Palm Harbor home for 6 percent more than the bank ended up accepting. That sale will now affect other appraisals in the neighborhood, even though the appraisal was low.

Appraisals aren’t just affecting regular Joes trying to sell their homes. Builders are increasingly being told by lenders that new homes drop in value so much during the construction process that they can’t fund loans.

Jennifer Doerfel, executive vice president of the Tampa Bay Builders Association, said one of the reasons the values are dropping is because distressed sales nearby drag down the values.

The problem is, she said, foreclosed homes aren’t worth as much as new homes.

“In most cases, these foreclosures and short sales aren’t comparable at all,” Doerfel said. “There’s likely mold or other damage in the distressed home. The home that’s in better condition should be worth more.”

This year’s showcase home for the builders association was expected to have a value of $1.3 million, she said. But now that it’s completed, the appraised value is less than it cost the builder to construct it.

So what can you do if you disagree with a low-ball appraisal on your home?

Some homeowners have had success by asking their real estate agents to fight it, Teacher said. If the appraiser overlooked higher comparable sales, you can point those out to the lender and buyer.

Sometimes, he said, it makes a difference.

But if you live in a neighborhood hit hard by foreclosures, you’re likely going to have to live with it.

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Amy Baker, coordinator of economic and demographic research, laid out that scenario for the Legislative Budget Commission. It’ll be part of a three-year financial outlook the panel will finalize when it meets again Sept. 15.

Baker said the state has sufficient reserves to cover $285.9 million in unbudgeted needs that now are expected during the current budget year, which runs through June 30.

But lawmakers are facing a potential deficit of $923 million to pay for critical needs, such as expenditures required by the Florida Constitution, court orders and federal law in the next budget year. The gap jumps to $2.6 billion if other high priority needs – those the Legislature has historically funded – are added.

For 2011-12, the budget gap could range from $2.3 billion for critical needs to $5 billion including priority needs. In 2012-13 it could be at least $1.1 billion and as much as $5.2 billion.

“This tells you that it would be a significant stretch to try to get to a budget level that we’re probably more used to seeing,” Baker said.

Florida’s current budget of $66.5 billion is about $5 billion less than the one Gov. Charlie Crist signed into law two years ago. That’s even though it’s fortified with $5.3 billion in federal stimulus money.

The state expects to have a similar amount of stimulus in next year’s budget, but it won’t be there the following year. That’s one reason why Baker is projecting budget gaps even though state revenues are expected to begin growing again next year. That’s after they have fallen for three straight years.

Most of the current-year, over-budget spending is in the state-federal Medicaid program — $225 million. The Voluntary Pre-kindergarten program needs $17.5 million more because enrollment has topped expectations while the Principal State School Trust Fund is facing a $38 million shortfall.

The state’s Risk Management Trust Fund also is short by $5.3 million due mainly to an unusually large settlement last month. The state agreed to pay nearly $4 million to two children for keeping them in a Hernando County home where they had been abused and starved by their foster parents.

The state can dip into reserves to cover those current-year needs and still have a $381.4 million cushion, Baker said.

Next year, though, the state is facing a $2.8 billion increase in critical needs that revenue growth will only partly offset, Baker said.

They include $515 million in additional general revenue for public schools to make up for a drop in property tax receipts and $1.6 billion for Medicaid to cover additional patients and make up for a falloff in federal stimulus money.

Baker’s forecast for other high priority needs next year totals $1.7 billion. It includes $498.5 million to increase public school spending by 2.87 percent per student and $250 million for aged, disabled and medically needy patients not covered by the basic Medicaid program.

“We always expected it was going to be a difficult and challenging budget year,” said Rep. David Rivera, a Miami Republican who chairs the commission. “You can expect the Florida Legislature to live within its means.”

In 2011-12, the state’s critical needs will include $1.2 billion for public schools to replace stimulus money they’ll be losing and another $1.1 billion for Medicaid.

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“Your own is your own,” said a satisfied Campbell, a native of Jamaica, who with his wife, Hermine, will move into their Miramar townhome in about a month. “I want something for myself. I don’t like to pay other people’s mortgages.”

After more than a year of looking with help from his daughter, Joan Grant, Campbell found the perfect home – a three-bedroom foreclosure about five minutes from family who will be able to keep closer watch on the elderly couple.

The closing price: $71,425 – minus the $8,000 first-time home buyer federal tax credit, of course.

Campbell’s monthly payments, including taxes and insurance, are about $550, an amount he can comfortably cover with Social Security, retirement savings and income from a rental property owned by his wife.

The couple will have to invest in a new air conditioner and replace the windows, but otherwise the property is in decent condition, said Campbell, who retired two years ago as a Publix clerk in Southwest Miami-Dade.

This is Campbell’s first home purchase, but his wife owned the home where the couple used to live.

As South Florida home prices continue sinking, buyers like Campbell are wading into a market offering the most affordable home prices in at least a decade.

Not since 1998 have houses been this cheap relative to family income in Miami-Dade County. In Broward, homes haven’t been as affordable since 1994, according to Moody’s Economy.com.

The new low-priced reality means many buyers can own for much less than it costs to rent, even before taking into account income tax deductions for mortgage interest, mortgage insurance and property taxes. As recent sales figures reflect, many are jumping at the opportunity.

Campbell, for one, said he didn’t think he could rent a three-bedroom, two-bathroom home in a similar subdivision for $550 a month. The home is about 1,300 square feet and has a one-car garage and a small yard.

“Housing affordability has increased so that the family earning the median family income can afford more than the median priced home in Miami-Dade, Broward and Palm Beach,” said Chris Lafakis, an economist with Moody’s who tracks Florida and South Florida.

Moody’s uses a proprietary index that factors in home prices, income and other financial variables like regional mortgage rates to gauge affordability.

An index value of 100 means a family of four earning the median income can afford to buy the median priced home. During the heyday of the housing boom as prices soared, the index plunged to an all-time low of 49 in Miami-Dade at the end of 2005, indicating the average family could scarcely afford half the price of a middling home.

In Broward, the record low of 63 occurred about the same time.

Since then, tumbling values have brought home ownership comfortably within reach of individuals such as Campbell.

At the end of the second quarter, the index, which excludes condominiums, hit 126 in Miami-Dade and 159 in Broward. This means a family earning the median income can afford to buy a home for 26 percent above the median price in Miami-Dade and a full 59 percent above the median price in Broward, giving them ample options.

At the end of the second quarter, the median home price was $195,000 in Miami-Dade and $195,500 in Broward, down 35 percent from the same quarter the year before, according to the Florida Association of Realtors.

There is currently a vast supply of homes listed below those prices.

Second-quarter median income statistics aren’t available yet, but at the end of March, the median income for a family of four in Miami-Dade was $50,150, and in Broward, $63,100.

While the low prices have spurred a flurry of new buying, the dramatic increase in affordability has not boosted sales to a corresponding level.

The reasons for that are tighter mortgage underwriting standards that are making it difficult for borrowers to qualify for financing. Despite his ability to put down 20 percent, Campbell said he had to jump through numerous hoops before lenders would qualify him.

Concerns that prices still have further to fall are also dampening demand.

“It’s a deflationary psychology that is self-reinforcing,” Lafakis said. “Home buyers expect house prices to fall, so they don’t buy. Then, because nobody is buying houses, prices do fall.”

Nonetheless, Marcia Pennant, Campbell’s real estate agent and a broker with Coldwell Banker’s Cooper City office, said new home buyers are motivated by the low prices, the tax credit and low interest rates.

“There are definitely more buyers at this time – the bank-owned properties are cheaper, the short-sales make them cheaper. That creates multiple offers in some situations on these homes,” Pennant said. “Some homes have more than one offer and sometimes as many as 20.”

As for Campbell, who is leaving his neighborhood of the past 17 years, he will miss visiting friends at the nearby Publix, where he worked for 17 years.

And then, there is his gardening.

“I am going to miss the ackee plants and banana trees and all those trees I planted from scratch,” Campbell said.

But he’s looking forward to his new backyard.

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The average rate for a 30-year fixed mortgage was 5.08 percent, down from 5.14 percent a week earlier, mortgage company Freddie Mac said Thursday. Rates, while above the record low of 4.78 percent hit in the spring, are still at attractive levels for people looking to buy a home or refinance.

“Low mortgage rates are helping to keep housing very affordable,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement.

To revive the economy, the Federal Reserve is spending $1.25 trillion on mortgage-backed securities, which has driven down rates on home loans. That money is set to run out by winter, though some analysts expect the central bank to gradually scale back its purchases, allowing the program to last longer.

Despite government efforts to prop up the mortgage market, qualifying for a loan is still tough. Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20 percent down payment.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

The average rate on a 15-year fixed-rate mortgage fell to 4.54 percent, from 4.58 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.59 percent, down from 4.67 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.62 percent from 4.69 percent.

The rates do not include add-on fees known as points. The nationwide fee for all loans in Freddie Mac’s survey averaged 0.7 point for 30-year loans and 0.6 point for 15-year, five-year and one-year loans.

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Copyright © 2009 The Associated Press

While the tax credit applies to “first-time homebuyers,” the term is misleading. In general, anyone who hasn’t owned a home for the past three years is considered a first-timer under the program. Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development (HUD), hopes to have additional details available within a few days, though it’s still unclear how soon homebuyers can apply for the credit.

Donovan said that the Federal Housing Administration (FHA) would allow its lenders to credit homeowners up to $8,000. He made the announcement to several thousand Realtors yesterday at a special daylong session called, The Real Estate Summit: Advancing the U.S. Economy.

“We all want to enable FHA consumers to access the homebuyer tax credit funds when they close on their home loans, so that the cash can be used as a downpayment,” Donovan said. According to Donovan, FHA approved lenders will be permitted to “monetize” the tax credit by using short-term bridge loans. Donovan also said that more will be done, and the Obama administration plans to further stabilize the housing market.

“I do think we have some early signs that the market overall is stabilizing,” said Donovan. “Since January, we’ve seen both home sales moving up and down around a relatively stable number, and we are seeing the first signs that the rapid decline in home prices is starting to abate.”

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© 2009 FLORIDA ASSOCIATION OF REALTORS®

New legislation approved by the Florida Legislature more than a week ago would raise rates 10 percent for homeowners covered by Citizens, the state-run insurer. Gov. Charlie Crist is expected to sign it into law.

Privately held insurance companies can also pass on the cost of back-up reinsurance to their policyholders, up to 10 percent a year, under the legislation.

Sen. Mike Fasano, R-New Port Richey, said Friday he can’t speak for the governor but said the governor’s office has indicated to him that it feels better about the bill after changes were made in the Senate and in conference with House members.

Fasano helped amend the bill, reducing the 20 percent increase that was initially proposed for Citizens policyholders and making sure the bill didn’t contain “only provisions that were overwhelmingly in favor of the insurance industry.”

For Citizens policyholders, the increase would be a flat 10 percent of their current premium, regardless of where their homes are located and whether they have only windstorm coverage from the company or a policy that includes fire and theft protection. The increase would hit when their policies renew next year.

The 10 percent annual increases would continue until Citizens rates are actuarially sound. That means the company is accumulating enough from premiums to pay for possible future claims.

“It’s not a matter of greed. It’s necessary,” says Dulce Suarez-Resnick, a personal lines agent at Brown & Brown’s HBA Division in Miami.

“I’m encouraged the Legislature took some responsible steps to lower Florida’s hurricane insurance risk this session,” Alex Sink, Florida’s chief financial officer, said in a statement referring to provisions in the proposed insurance law.

The legislation allows Citizens to raise its rates gradually and reduces the size of the Florida Hurricane Catastrophe Fund, which sells back-up insurance to the carriers operating in Florida.

Bill aids insurers

Regulators expect private carriers to take advantage of the legislation’s provisions as soon as they put in place their reinsurance coverage for this hurricane season. So some Florida policyholders could see these increases if they renew their policies later this year.

Some lawmakers, regulators, insurers, agents and business groups argued that higher rates are needed because Citizens doesn’t have enough money to pay all the claims it might see if a massive storm were to hit the state.

Why would Citizens see a shortfall? Its rates have been frozen since the start of 2007, yet it has continued to provide insurance coverage for risky properties in coastal areas, such as older homes and condominium buildings that many private insurers prefer not to insure.

Of course, these likely insurance rate increases come as the recession has hit Florida hard. Consumers, many unemployed or taking pay cuts to keep their jobs, are hard-pressed to cover household costs, including insurance, at current levels.

Owner’s costs triple

William Ycikson, a Miami Beach homeowner, has seen his windstorm premiums nearly triple after the eight hurricanes that hit Florida in 2004 and 2005. “I can’t see paying more.”

Ycikson, who is self-employed, is toying with the possibility of dropping his windstorm coverage since he has paid off his mortgage and the coverage isn’t required. He also faces a tough decision: Help his retired father cover a higher insurance bill or advise him to forego hurricane coverage as well.

It’s a risky move, but one that many Floridians are weighing to keep their insurance costs down. Without windstorm insurance, repairing any damage to their homes caused by a hurricane would have to be covered by Ycikson or his father, who also lives in Miami Beach.

If a major hurricane hits a densely populated section of the state such as South Florida or Tampa Bay, both Citizens and the Florida Hurricane Catastrophe Fund could face substantial shortfalls.

The big concern among insurance regulators in Tallahassee and business people around the state is that such a deficit would have to be covered by all Florida policyholders through one or more surcharges.

‘Tax’ is assessed

“What this means for Floridians – those who own a home, business or auto policy – is that we will be stuck with assessed ‘hurricane taxes’ that can be tacked onto our policies for years to come,” says Barney Bishop, executive director of Associated Industries of Florida, a business lobbying group.

Several surcharges to cover deficits from the 2004 and 2005 storms are now added to almost all insurance policies in Florida, except worker compensation and medical malpractice policies, and will remain for at least another five years.

Groups backed bill

Associated Industries, the Florida Chamber of Commerce, other business groups and some nonprofit organizations lobbied hard to be sure the new insurance legislation reduced risk for the CAT Fund and allowed Citizens to raise its rates.

“It’s a vicious circle. We have more people coming for help and we have fewer donations to help them,” Sheila Hopkins, associate director for social concerns/respect life for the Florida Catholic Conference. She says surcharges on insurance that her organization must pay out of its operating budget take away funds that could be used to provide social services.

The new legislation reverses changes made in early 2007 after a special legislative session expanded the CAT Fund. Urged on by newly elected Gov. Crist, lawmakers hoped the savings from additional, less-expensive reinsurance companies could buy from the CAT Fund would be passed on to policyholders as lower rates.

Many homeowners did see at least a small drop in rates. Also, a requirement that insurers double the mitigation credits given to homeowners who add hurricane shutters or reinforce garage doors also provided savings on insurance premiums.

Meltdown has impact

But the meltdown of the financial markets has reduced the ability of the CAT Fund and Citizens to sell bonds to provide the cash needed to pay claims after a massive storm.

The new Florida legislation reduces the amount of reinsurance the CAT Fund can sell by $2 billion a year through 2013, thus reducing the risk the fund faces. The legislation would require insurers to pay additional premiums over the next five years to build reserves in the fund more rapidly. Citizens would be allowed to increase its rates 1 percent annually during this time to recover the cost of extra payments it will be making to the CAT Fund.

Even insurance agents aren’t immune to pain of rising costs and shrinking incomes. Suarez-Resnick says she is in the process of refinancing her mortgage because she knows that her homeowners policy premiums will be going up next year. Staffing at her agency has been cut nearly 10 percent and salaries reduced in the past year.

Nestor Rivero, who owns Tropical Insurance in West Miami-Dade, says he had to cut support staff to eight employees from 11, including laying off the receptionist who had worked for him for 21 years.

“This is absolutely the worst time to have to absorb an increase,” says Suarez-Resnick.

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Copyright © 2009 The Miami Herald, Beatrice E. Garcia. Distributed by McClatchy-Tribune Information Services.

But the road to recovery will be uneven. Economists say that an uptick in business spending will lead the way, followed by federal government stimulus projects that will create some jobs. Consumers, unfortunately, are likely to be the last to see good times return, because widespread unemployment – which is now just a notch below 10 percent – won’t start to go down until after the recovery is well under way.

It has been rough, but economists say it’s always that way for Florida.

“It performs better in good times, but during bad times, in recessions, it is one of the worst performing states in the nation,” said Moody’s Economy.com economist Chris Lafakis. “And during times of expansion it is one of the best.”

Some experts say they already see the early signs of such progress.

“The negative numbers just start getting smaller or they stop falling or they fall at a slower rate,” said SunTrust Chief Economist Gregory Miller. It’s like you tumbled out of a boat a while ago and “now we’re at the stage of swimming back to the surface.”

Other economists agree that the worst may be over as soon as this summer. Consumers surely have had enough, judging by the strong jump in Floridians’ consumer confidence this month.

Here’s how economists say the state will find its way out of the slump:

Business-led recovery

Economists say the recovery will begin with an increase in business capital spending, as companies rebuild inventories or upgrade technology or send business travelers back out on the road.

At some South Florida companies, capital spending already has increased and begun to pay off. Last year, Stress Free Corporate Housing, which provides temporary living arrangements for executives, says the audio-visual equipment it installed in its new Weston office is helping to bring in new business.

The firm wanted to hold employee conferences and save on travel expenses. But it also began using the equipment for Webinars – seminars via the Internet – for its clients.

President and Chief Executive Officer Darin Karp said his firm is about to sign a deal with a Fortune 500 company to provide temporary housing for executives from Asia and the Middle East who need to come to Florida for training.

“We’re definitely seeing glimmers of hope off the first quarter and the beginning of this quarter,” Karp said. “We have some big stuff on our plate, and it’s attributed to doing the Webinars.”

Stimulus spending

An increase in government spending is expected in the fourth quarter, as states and cities pump out the $787 billion in federal stimulus money to build roads and other projects. That influx of cash will lead to more jobs, at least in construction.

Even though the stimulus law was enacted in February, government is still crafting detailed plans and regulations for the federal package, so it’s unclear precisely how many millions will be earmarked for Florida.

“We will begin to see some impact of the stimulus legislation in the last quarter of this year,” said economist Antonio Villamil, dean of the School of Business at St. Thomas University.

Confidence rises

Consumer confidence – a measure of how willing people are to spend on big-ticket items – is already rising. The University of Florida consumer confidence survey issued earlier this week showed the index jumped to 71 in April, up from 65 in March, which is close to the low reached during the last recession in 1991.

The importance of the jump is that consumer confidence is a forward-looking economic indicator, one that is often a sign that consumer spending will rise, too.

Employment to lag

Employment rates aren’t expected to rise until recovery of other sectors is under way. Only after growth returns in the overall economy will businesses be comfortable enough to begin to create jobs again. Employment is key to consumers’ recovery. Don’t look for consumer spending to increase until after employment stabilizes, economists say.

“Every business cycle is unique, but they get going in fits and starts,” said economist Manuel Lasaga, president of Strategic Information Analysis in Miami. “This [recovery] will be weaker than normal.” Strong growth, he said, won’t appear until 2010.

And some sectors seem to be hurt so badly, their recovery is not at hand. Surely, housing remains deeply troubled. Manufacturing, too, is waiting for signs of recovery.

“We’re not seeing that [any increase in demand] yet frankly,” said Tom Kennedy, a CPA who is chairman of the South Florida Manufacturers Association. Kennedy is controller of R.L. Schreiber in Pompano Beach, which produces food products for the food service industry. The credit crunch, he said, is making the business environment even more difficult.

When will it end? The economy should begin to pull out of recession around the end of summer, according to several economists. At the latest, look for it early next year, others say.

“We are in the fourth phase of the recession,” said SunTrust’s Miller. That’s the pre-recovery phase, he said. Next is the turnaround.

It’s a little early yet, and the signs are still faint.

“You really have to look long and hard to find any signs of strength in the economy,” said Mark Vitner, Wachovia’s senior economist. “But it’s not so hard to find areas where the economy had been in a free fall and now is just merely declining.”

For those businesses looking forward to the turnaround, they’ve set their sights on year’s end.

“People are getting new budgets for purchasing at the end of the third quarter, the fourth quarter. A lot of lights are coming on,” said Joel Ledlow, chief executive officer of ScheduAll, a Hollywood firm that produces management software systems for broadcasters and media. “People are saying they have cut about as much as they can cut. Now they’re ready for some very strategic investments.”

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2009 Sun Sentinel

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, increased 3.2 percent to 84.6 from a level of 82.0 in February, and it’s 1.1 percent higher than March 2008’s 83.7.

“This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a downpayment,” says Lawrence Yun, NAR chief economist. “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.”

NAR’s Housing Affordability Index remained near record highs. The affordability index was 166.7 in March – down from an upwardly revised record of 174.4 in February due to higher home prices in March. The index remains 30.8 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income. Tracking began in 1970.

The Pending Home Sales Index in the South rose 8.5 percent to 93.2 in March and is 7.7 percent above a year ago. In the West the index increased 3.9 percent to 93.1 and is 1.7 percent higher than March 2008. The index in the Northeast fell 5.7 percent to 59.5 in March and is 24.1 percent below a year ago. In the Midwest the index slipped 1.0 percent to 82.3 but is 8.2 percent higher than March 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the increase in buying power is quite remarkable. “Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment,” he said. “For buyers who’ve been on the sidelines and have good jobs, the market has never looked more favorable. Homeownership has always offered immediate benefits and long-term value, but the advantages in today’s market are unique.”

A median-income family, earning $61,100, could afford a home costing $291,600 in March with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was notably higher than the median existing single-family home price in March, which was $174,900.

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© 2009 FLORIDA ASSOCIATION OF REALTORS®

The dispute between State Farm, Florida’s largest private property insurer, and the Office of Insurance Regulation has been referred to a judge at the state Division of Administrative Hearings.

In January, State Farm announced plans to drop all 1.2 million property insurance policies, including 700,000 homeowners, over two years. The announcement came after state regulators rejected the company’s request to raise rates 47 percent on average statewide.

The dispute centers on the way State Farm will shed those policies.

The state-approved plan requires State Farm to sell the policies to other private insurers and bars the company from dumping any policies into state-run Citizens Property Insurance Corp., Florida’s insurer of last resort.

But company policy prohibits State Farm agents from offering services to other private insurers. Agents can offer services only for State Farm and Citizens. State Farm said the practice is a major element of the company’s business model and isn’t willing to abandon it.

Allowing State Farm agents to offer services to other private insurers would impair the success of State Farm’s marketing program, the company says in its appeal of the state-approved plan.

Insurance regulation officials say the state’s plan would keep Citizens, already bloated with 1.1 million policies, from getting bigger. If Citizens gets bigger, the risk of taxpayers bearing the cost of a major hurricane would grow because all Florida policyholders can be assessed a surcharge to pay Citizens’ claims if it runs out of money.

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2009 Tampa Tribune