The Anna Maria Island Sun Newspaper

Vol. 13 No. 8 - December 5, 2012

REAL ESTATE

Home prices could fall over the fiscal cliff

 

The election is over, but the president doesn’t have much time to celebrate with the country’s economy still faltering. Smack dab in the middle of our fiscal problems is the challenge of a still weak housing market, which can go either way, taking the country’s financial recovery right along with it.

The fiscal cliff we’re facing on Jan. 2 could spell the end of what little housing recovery we’ve been enjoying for the past six months. According to Standard & Poor’s, the automatic tax increases and spending cuts that will take effect could result in a 20 to 25 percent chance the economy will go into a double dip recession.

If the government fails to find a compromise and avoid the fiscal cliff, economists are predicting home prices could tumble to a record low of 40 percent, below their peak in mid-2006, 9 points below the current 31 percent. Given that Congress remains divided after the election, it remains a question whether lawmakers can come to an agreement.

Along with other ways to increase revenue, the mortgage interest deduction remains in the crosshairs of legislators. The mortgage interest deduction costs the government about $90 billion a year and is targeted to be part of a broader plan to streamline the tax code by eliminating loopholes and deductions.

Two years ago the bipartisan deficit reduction commission known as Simpson-Bowles proposed changes to the mortgage interest deduction. At that time it recommended turning the deduction into a 12 percent, nonrefundable tax credit to all taxpayers, capping eligibility to mortgages worth up to $500,000, it is currently $1 million, and eliminating the deduction on interest from second homes and home equity debt.

Naturally, the National Association of Realtors was highly critical of this recommendation, claiming any changes to the mortgage interest deduction could depreciate home prices by up to 15 percent. What effect a change in the mortgage interest deduction as recommended by the commission would do on Anna Maria Island, where the real estate market depends on second home owners, is daunting to think about.

Another regulation that is set to expire at the end of the year is the Mortgage Debt Relief Act of 2007. The law exempts up to $2 million in mortgage debt forgiven by a lender in a short sale, loan modification or foreclosure from federal tax. If this regulation expires, homeowners would have less of an incentive to pursue short sales because forgiven mortgage debt could be considered taxable income throwing more foreclosures into the market.

Finally the Dodd-Frank Consumer Protection Act has faced protests from realtors, builders, banks, unions and consumer groups relative to standards established in the law regarding ability of borrowers to pay mortgages and underwriting standards which are considered excessive. The ruling on these qualifications have been postponed until Jan. 21, 2013, because of the industry protests, however, if these regulations are maintained there will be even tighter burrower qualifications and fewer buyers in the market.

Elections have consequences is something that we’ve all been hearing since Nov. 6. Unfortunately, the consequences of a bad housing market results in reduced consumer spending and continued slowing of an economic recovery. Let’s hope the wicked smart guys in Washington get it and that the fiscal cliff is nothing more than a bump in the road.

Real Estate Transactions
Real Estate Transfers from June 1 to June 30, 2012
Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

08/31/2012 379,900 348,500 211 Elm Ave # B 749 2 Br/1 Ba Condo
08/03/2012 599,000 548,000 807 Jacaranda Road 2832 62.0x100.0 2 Be/2 Ba SFR
08/10/2012 400,000 380,000 317 Magnolia Ave. 1064 52.0x120.0 3 Br/2 Ba SFR
08/15/2012 800,000 800,000 108 Beach Ave. 2722 150.0x106.04 Br/3.5 Ba SFR
08/15/2012 589,000 565,000 311 Tarpon St. 1022 75.0x110.0 2 Br/2 Ba SFR
08/27/2012 600,000 649,000 212 Palmetto Ave. 1819 52.0x110.0 3 Br/2.5 Ba SFR
08/17/2012 415,000 375,000 300 N Shore Drive 1680 78x100 2Br/2.5Ba Inc, bank owned
08/06/2012 317,000 300,000 812 Jacaranda Road 61.0x108.0 Vac.
08/29/2012 975,000 875,000 749 North Shore Drive 60x125 + Vac.

Bradenton Beach

08/10/2012 115,000 115,000 1603 Gulf N Drive # 25 380 1 Br/1 Ba Condo, bank owned 08/22/2012 125,000 125,000 1603 Gulf N Drive # 28 380 1 Br/1 Ba Condo
08/10/2012 215,000 240,000 2306 Avenue C 1674 50.0x100.0 2 Br/2 Ba Inc., bank owned
08/01/2012 169,900 150,000 2508 Avenue C 50.0x100.0 Vac.
08/01/2012 169,900 150,000 2510 Avenue C 50.0x100.0 Vac.Cortez
08/31/2012 285,000 260,000 9604 Cortez Road # 234 1800 3 Br/ Ba Condo
08/07/2012 295,000 282,000 12416 Baypointe Terr. 139x98 Vac.

Holmes Beach

08/06/2012 349,000 310,000 6400 Flotilla Drive # 46 985 2 Br/2 Ba Condo
08/13/2012 435,000 392,500 7000 Gulf Drive # 206 1259 2 Br/2 Ba Condo
08/13/2012 1,625,000 1,460,000 3302 Gulf Drive # 201 2108 3 Br/2.5 Ba Condo
08/17/2012 425,000 410,000 5200 Gulf Drive # 501 1169 2 Br/2 Ba Condo
08/17/2012 349,900 329,000 3803 E Bay Drive # 9a 1949 3 Br/3 Ba Condo
08/20/2012 279,000 265,000 741 Manatee Ave. # 31 1179 2 Br/2 Ba Condo
08/31/2012 399,900 355,000 100 73rd St. # 101a 660 1 Br/1 Ba Condo
08/01/2012 299,000 280,000 7002 Marina Drive 905 11456 Units 2 Br/1 Ba SFR
08/03/2012 700,000 695,000 513 83rd St. 2519 90.0x103.0 4 Br/3.5Ba SFR
08/13/2012 899,000 885,000 238 S Harbor Drive 1959 2 Br/2 Ba SFR
08/17/2012 269,900 269,900 2711 Gulf Drive 1350 50.0x100.0 2 Br/2 Ba SFR, bank owned
08/21/2012 1,499,000 1,365,000 8401 Marina Drive 3311 94.0x100.0 4 Br/3.5 Ba SFR
08/22/2012 489,000 460,000 504 58th St. 1540 78.0x108.0 3 Br/2 Ba SFR
08/22/2012 427,900 427,900 7001 Holmes Blvd. 1324 88x112 2Br/2Ba SFR
08/23/2012 399,000 386,000 306 72nd St. # A 2616 4 Br/4 Ba SFR, Short Sale
08/24/2012 317,000 290,000 7201 Palm Drive 1134 103x85 2 Br/2 Ba SFR
08/24/2012 498,750 400,000 517 75th St. 1806 90.0x121.0 3 Br/2 Ba SFR
08/24/2012 389,000 382,000 231 S Harbor Drive 1441 2Br/2 Ba SFR
08/29/2012 499,000 475,000 605 Baronet Lane 2000 100x117 4Br/3 Ba SFR, Short Sale
08/31/2012 399,900 315,000 402 73rd St. 1744 3 Br/2 Ba SFR
08/31/2012 389,000 369,000 3009 Avenue E # 2 751 100.0x105.0 2 Br/1 Ba Villa
08/10/2012 559,000 515,000 200 S Harbor Dr # All 2722 94.0x106.0 5 Br/4.5 Ba Inc.

Source: Manatee County Property Appraiser’s Office


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