Florida Real Estate Blog - FloridaBits.com

Trump's Fortune Without Fear, Real Estate Riches in an Uncertain Market

2008-07-25T14:09:00.002-04:00

Cramer: How Hedge Funds Make Their Money, The Old Fashioned Way...

2008-06-26T11:37:00.005-04:00

Watch straight-talking Jim Cramer in an interview where he explained how Wall Street controls the media and the market to manipulate retail investors and profit from their own concoctions. CNBC has been trying to remove this clip from the web.

This is the famous 2006 interview from TheStreet.com's "Wall Street Confidential" webcast which stirred controversy after it appeared on YouTube.com. In the video, Cramer described activities used by hedge fund managers to manipulate stock prices; some illegal and some debatably legal. He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund.

Cramer said, "A lot of times when I was short, I would create a level of activity beforehand that would drive the futures." He also encouraged hedge funds to engage in this type of activity because it is "a very quick way to make money." Cramer claimed that everything he did was legal, but that illegal activity is common in the hedge fund industry. He also stated that some hedge fund managers spread false rumors to drive a stock down: " ...it's important to create a new truth, to develop a fiction."

Cramer said one strategy to keep a stock price down is to spread negative rumors to reporters he described as "the Pisanis of the world". "You have to use these guys," said Cramer. He also discussed getting "the bozo reporter from The Wall Street Journal" to publish a negative article. Cramer said this practice, although illegal, is easy to do "because the SEC doesn't understand it."

James J. "Jim" Cramer is an American television personality, former hedge fund manager, and best-selling author. He is the host of CNBC's "Mad Money" and co-founder of TheStreet.com. Cramer has also been a contributor to New York magazine, and an occasional contributor to Time magazine.

Cramer graduated magna cum laude from Harvard College in 1977 where he was also president of the Harvard Crimson. He later earned a Juris Doctor degree from Harvard Law School.

Foreclosures: Affecting not just us humans...

2008-06-18T16:49:00.003-04:00

The housing crisis is literally splitting families apart. Its effects are being felt by not just humans but their pets as well. When a family faces foreclosure they’re often forced to move into an apartment or with other family members, and often it’s impossible to keep their beloved pets. They are forced to do the unthinkable and place their loyal friends for adoption at shelters, or worse...

FIAT EMPIRE - Why the Federal Reserve Violates the U.S. Constitution

2008-06-04T17:12:00.004-04:00

This Award-winning documentary, featuring presidential candidate RON PAUL, was inspired by the book, "The Creature From Jekyll Island" by author and FREEDOM FORCE founder, G. Edward Griffin. Find out why some feel the Federal Reserve's practices are a violation of the U.S. Constitution and others feel it's simply "a bunch of organized crooks."

Discover why experts agree the Fed is a banking cartel that benefits mainly bankers and their corporate clients as well as power-hungry politicians in Congress. Find out how the corporate media facilitates the partnership between the Fed and Congress and why it fails to disclose what's going on. Lastly, find out how the Federal Reserve-member banks are owned and controlled by an elite group of insiders.

All the perplexities, confusion and distress in America arise, not from... want of honor or virtue, but for the downright ignorance of the nature of coin, credit and circulation.
John Adams

When you give men the power
to create money out of nothing...
Don't be surprised
if they create money out of nothing.

House prices: Through the floor ...Time to Buy yet?

2008-06-04T14:16:00.002-04:00

America's house prices are falling even faster than during the Great Depression
From Economist.com

AS HOUSE prices in America continue their rapid descent, market-watchers are having to cast back ever further for gloomy comparisons. The latest S&P/Case-Shiller national house-price index, published this week, showed a slump of 14.1% in the year to the first quarter, the worst since the index began 20 years ago.

Now Robert Shiller, an economist at Yale University and co-inventor of the index, has compiled a version that stretches back over a century. This shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression. And things are even worse than they look. In the deflationary 1930s house prices declined less in real terms. Today inflation is running at a brisk pace, so property prices have fallen by a staggering 18% in real terms over the past year.

Florida: On The Brink

2008-05-30T17:18:00.003-04:00

While people around the United States may be debating whether a recession is in full swing or not, the people of Florida would say it is. Florida has long relied on tourism as one of its chiefest industries, and that included the sale of vacation homes. Florida was one of the hottest areas during the housing bubble and many investors bought property there with subprime loans that came with high interest rates. When they reset, the home went into foreclosure.

Now, many houses are empty and inflation has caused other homeowners to have to stop paying maintenance fees to homeowners associations and condo organizations. With gas at nearly $4/gallon and climbing, many people are choosing “staycations” (where they stay put) instead of vacations, directly impacting the revenues going into the Florida economy. On top of that unemployment is up in the state. The increase in inflation and the loss of some income is resulting in people relying on credit or a cash advance to help make their monthly expenses.

Is There No End In Sight?

For the housing market, experts predict it will be several years before the backlog of available homes declines enough to bring prices back up. While this is a tremendous opportunity to buy a foreclosed home in Florida right now, there are still too many people struggling with the local economy to be able to do so at this time. One of the positive signs of a possible recovery that can later affect the sales of homes is that Florida's exports are rising very quickly. Even though there may be fewer people going to Florida during times when the price of gas is high, Florida started out the year 2008 with 3.4 percent increase in tourism during the off months even though unemployment was higher due to the loss of agricultural jobs. So, while the national trend is towards staying home and conserving gas, Florida's appeal still remains strong in the tourism market. If the trend continues during the coming summer months, it may be just what Florida needs to start bringing in more business and, thus, provide more seasonal employment for people living there in the food and entertainment industries.

Toll's Take on Florida Real Estate

2008-05-21T11:22:00.003-04:00

Bob Toll was recently interviewed by Florida Trend and provided his candid view of the Florida Real Estate Market for luxury homes. Toll is the chairman of Pennsylvania-based home builder Toll Brothers, a Fortune 500 company and the leading builder of luxury homes in the United States. Toll was named one of Barron’s Top 30 CEOs worldwide in 2005, when the publication recognized him as the “the undisputed king of high-end housing.”

Toll says the luxury home market is still looking for a floor in most regions of the state, with Naples the only bright spot. “I think the market has already bottomed in Naples but not on the southeastern Gold Coast, Orlando or Jacksonville,” Toll says.

In the Orlando market, it takes a real bargain to interest buyers, he says. Many buyers are walking away from deposits — a trend that’s prompted the company to require additional funds as its new homes move toward completion.

“In the Naples-Fort Myers market, sales activity is definitely up for new homes on the market at reduced prices. That’s a definite contrast to late 2007, when you couldn’t give away a home regardless of price.”

The luxury Jacksonville market “is in the doldrums in a serious way,” largely because it’s a primary home market where potential buyers are sitting back until the national economy perks up.

What’s killing housing today is a lack of consumer confidence

While the demographics are different in Palm Beach County and the Treasure Coast — far more snowbirds and pre-retirees — the sales pace is also slow. One reason, Toll says, is that buyers are having a hard time selling their current properties to move up to a luxury home in Florida.

He does provide a hint of a successfully strategy that has consistently served him well through previous downturns:

You move from an expansion mode to protecting your balance sheet immediately,

Then you hunker down, build up your cash, wait for the blood in the streets and take advantage of the opportunities.

The resolution of Florida's Property Tax crisis is a critical element in the recovery of the state's real estate market. The taxpayer's burden has reached untenable proportions and has prompted various citizen-led measures to cut Florida property taxes and rein in wasteful spending of municipalities and counties. Local public officials had engaged in a massive spending extravaganza during the bountiful years of ever rising property values instead of saving for a rainy day. The spending was more related to availability of funds for pet projects that actual demand for services.

The rainy day is here, however.

On the bright side, as Toll and many other successful real estate investors have shrewdly found out, is that the opportunities presented for the astute buyer during these times will not present themselves again for a long while. Foreign investors have also realized this. Currently they account for 18% of Florida buyers, a number that's growing daily.

Oh... About Jacksonville, Watch this video of what it has come to...

Housing Starts Plunge 30.6%... A GOOD Thing for the Market!

2008-05-19T20:04:00.003-04:00

The Commerce Department recently released the latest Housing Starts data. It was not pretty (for builders), but it reflects a glimmer of hope for the real estate market recovery.

Construction of single-family houses in April dropped to the lowest level in 17 years. Builders broke ground on 692,000 single units at an annual rate, the fewest since January 1991.

Multifamily units -- Condos, townhouses, and apartments -- rebounded for the month. Total housing starts were up 8.2% since last month, but plummeted 30.6% below the level of construction in April 2007.

The Wall Street Journal reported:

Builders have been reluctant to build because demand for new homes has plunged and the supply of unsold property remained high. The latest data show new-home sales, for March, were down 36.6% from a year earlier. On Thursday, the National Association of Home Builders reported its index for sales of new, single-family homes slipped to 19 in May from 20. The gauge is based on a survey of builders asked about prospects for sales.

Given the huge inventory overhang, weak housing starts is (perversely) a positive for the housing market. As the unsold inventories start to shrink, prices will stabilize as demand catches up.

Tracking Realtor Spin...

2008-05-19T19:30:00.016-04:00

Beware of Realtors bearing gifts... goes the saying, updated to today's realities. As the chart shows, the NAR has a long history of pollyannish calls for a bottom in Real Estate, going on now for about two years. Still wonder about why the lack of credibility?

The numbers correspond to the milestones in the above chart:

"There's no question there is a strong demand for housing from a growing population." -David Lereah, NAR Chief Economist

"For the foreseeable future, the demand for homes will continue to outstrip supply" -Al Mansell, NAR President

"We've been expecting sales to remain at historically high levels, but this performance underscores the value of housing as an investment and the importance of homeownership in fulfilling the American dream." -David Lereah, NAR Chief Economist

"We are returning to more balanced markets between home buyers and sellers… We feel confident that housing is landing softly as rates continue to rise." -David Lereah, NAR Chief Economist

"This is part of the market adjustment we've been discussing, with a soft landing in sight for the housing sector. The level of home sales activity is now at a sustainable level. Overall fundamentals remain solid…" -David Lereah, NAR Chief Economist

"Higher interest rates are slowing home sales, but we see this as another sign of a soft landing for the housing sector which remains at historically high levels." -David Lereah, NAR Chief Economist

"After five years of booming sales, we are now experiencing normal market conditions across most of the country… most owners can expect steadier gains in home values for the foreseeable future." -Thomas M. Stevens, NAR President

"Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projection, which tells us the market is stabilizing" -David Lereah, NAR Chief Economist

"Now sellers in many areas of the country are pricing to reflect current market realities. As a result, there could be some lift to home sales, but it'll likely take some months for price appreciation to rise." -David Lereah, NAR Chief Economist

Existing-home sales stabilized at a sustainable pace in August -NAR

"…the worst is behind us as far as a market correction — this is likely the trough for sales. When consumers recognize that home sales are stabilizing, we'll see the buyers who've been on the sidelines get back into the market" -David Lereah, NAR Chief Economist

"It looks like we're moving beyond the low for the housing cycle last fall, and buyers are responding to historically low interest rates and competitive pricing by home sellers. In addition, a tightening inventory of homes on the market is supporting prices." -David Lereah, NAR Chief Economist

"Fundamentals have improved in the housing market and buyers see a window now with historically-low mortgage interest rates and competitive pricing by sellers," -David Lereah, NAR Chief Economist

"We also may be seeing some losses as a result of the subprime fallout. However, this is masking improved fundamentals in the housing market, with lower mortgage interest rates and motivated sellers." -David Lereah, NAR Chief Economist

"Buyers who've been on the sidelines may want to take a closer look at current conditions in their area – if they wait for sales to rise, their choices and negotiating position won't be as good as they are now." -Pat V. Combs, NAR President

"The rise in sales and prices in the Northeast region on a fairly consistent basis in recent months is promising because this was the first region that underwent sales and price weakness after the boom. Now, it appears that it will be the first region to climb back, indicating that other regions could follow a similar path." -Lawrence Yun, NAR Chief Economist

"The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales…Once we get through these disruptions, we'll get a better sense of where the actual market is in late fall as conditions begin to normalize," -Lawrence Yun, NAR Chief Economist

"Existing-Home Sales Rise in November, Market Likely Stabilizing" -NAR

"Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate," -Lawrence Yun, NAR Chief Economist

Existing-Home Sales to Stablize Before Upturn in Second Half of 2008 -NAR

Source:
Tracking Realtor Spin
James Bednar
New Jersey Real Estate Report

Some Trade Associations, like the American Trucking Association (ATA Tonnage Index), or the National Association of Home Builders (Home Builders Index), simply put out the straight dope - an unvarnished, unblinking look at their industries, so their members can better make informed business decisions with the available data.

Other groups massage the data, spin the message, and try to present their information in the most positive light - regardless of the underlying data. They seem to believe that if only the public believes things are okay, it will become a self-fulfilling prophecy. While there is nothing wrong about being optimistic, distorting data with a sugar-coated spin brings unintended consequences.

The National Association of Realtors falls into this latter category. They have been calling the bottom in Housing, ever since the market top 2 1/2 years ago; Their consistent claims of stabilization and price improvements later in the year - as prices have continued to slide - have earned them the title of Worst Forecasters Ever. What is more damning is that they are not just wrong, but purposefully misleading for commercial purposes.

Many Realtors in the field are finding the NAR tactics frustratingly counter-productive. Why? It seems that Realtors were having a hard have time convincing home sellers to price their houses more realistically. Even as home builders were slashing new-home prices to move bloated inventories, many home sellers are still holding off, hoping - along with FAR and NAR - that prices will start moving back up soon. Hence, the impact of today's successful deception may ultimately be less flexible pricing of homes, negatively impacting sales.

My advice to residential clients has been to hold off selling into a panic-mode market if they possibly can. As all bad times, this will also come to pass. If they absolutely must sell, however, then price according to the market. On the other hand, opportunities do abound indeed for the astute buyer.

Florida's Homestead Exemption, the Save our Homes Amendment of 1995 and how property taxes may change on a transfer of title.

2008-05-18T13:32:00.025-04:00

The Save our Homes Amendment Property Tax Cap

The Florida Constitution was amended effective January 1, 1995, to limit annual increases in assessed value of property with Homestead Exemption to three percent or the change in the Consumer Price Index, whichever is lower (see CPI history). This amendment is generally known as the "Save our Homes Amendment". No assessment, though, shall exceed current fair market value. This limitation applies only to property assessed value, not property taxes.

When a house is sold, the cap and exemption are removed at the end of the calendar year, and taxes are calculated on the full market value, also called the Just/Market Value. The property will fall under the limitations of the Save Our Homes Cap the second year of the new owner's Homestead Exemption. (Therefore, if a property owner applies for and receives Homestead Exemption for 2007, the Assessed Value will be capped in 2008). To determine taxable value, any exemptions are subtracted from the Assessed Value to reach a Taxable Value, which is then multiplied by the yearly Millage Rate set by the taxing authorities to reach the amount of tax due.

Because a change in property ownership will effectively "reset" the Capped Value, it is important to be aware when purchasing a new home that is benefiting from the cap, it can be expected that property taxes will increase the next year because the assessed value must be adjusted to equal current market value.

The increase due to the removal of the Cap may double or even triple taxes, depending on how long the previous owner had homestead exemption. The table below illustrates this. (For example, if the Millage rate for this fictitious property was 23.000 mills, then the previous owner would have paid $736, whereas one year later the new owner would pay $1,725 - a substantial increase.)

How the Cap Works when a Property Sells:

	Previous Owner's CAP	1st Year of New SOH:	2nd Year of SOH:
Just/Value (Increases with Market):	$150,000	$160,000	$170,000
Assessed (Capped) Value:	$97,000*	$160,000	$164,800**
Less Exemptions:	-$50,000	-$50,000	-$50,000
Taxable Value	$47,000	$110,000	$114,800

*(For this example, the previous owner's Assessed Value has been capped for several years and is therefore significantly lower than the current Just/Market Value.)

**(For this example, Property is Capped at 3% , Cap Rate for 2008 - actual cap rate will vary yearly.)

If additions or improvements are made to the property, the value of those improvements will be added to the roll regardless of the cap. For example, if a pool is added to a property, the value can increase no more than the cap rate, plus the value of the pool. If the Assessor corrects such items as size, number of bathroom fixtures, installation of heat and/or air conditioning, the value of those corrections will also be added to the roll above the cap.

The fine print...

The cap does not apply to properties that are not homesteaded or are rented. Multi-family properties may qualify based on percentage of use. For example, if you own a duplex, live in one half and rent the other half to a tenant, only 1/2 of your property value will be capped.

The cap remains in effect upon the change of title due to divorce or death of a spouse as long as the remaining owner continues to live on the property as their permanent address.

NOTICE

On January 29, 2008, Florida citizens voted to pass Amendment 1. One of the provisions of Amendment 1 allows qualified property owners to "port" their Save Our Homes Cap when they move from their homesteaded property to another Florida property. Another provision increased the homestead exemption. For the November 2008 Florida Ballot there is yet another measure that will, if passed, enact an across the board property tax cut of about 25%.

The Recapture Rule

In September 1995, Florida's Governor and Cabinet approved a rule directing property appraisers to raise the assessed value of a qualifying homestead property by the maximum of 3% or the annual change in the Consumer Price Index, whichever is less, on all properties assessed at less than full market value whether or not that property's value increased during that calendar year.

Frequently Asked Questions About Adding Owners to your Homestead Property

Will I Lose My Homestead Exemption if I add someone to my deed?

Adding names to the ownership of your home normally does not change your $25,000 Homestead Exemption, BUT you may lose all or part of the protection your property receives from the Save Our Homes (SOH) assessment limitation or "cap". The SOH cap keeps the assessed value of your home from increasing more than 3% per year as long as you maintain your Homestead Exemption. A loss of protection from the SOH cap will increase the amount of property taxes you pay.

Will I lose my Save Our Homes Cap if I add someone to my deed?

Maybe, depending on how you own the property (the "tenancy"), and if the new owner files for Homestead Exemption on your property. "Tenancy" is the term used to describe the way property is owned, the relationship between the owners, and what happens to the property when an owner dies. The most common forms of tenancy are: tenancy by the entireties, joint tenants with right of survivorship, and tenants in common. If two or more people own property with a homestead exemption, the type of tenancy that appears on the deed can have an effect on the "Save Our Homes" provision, and ultimately the amount of taxes that are owed.

If the new owner is your spouse,or someone who is legally or naturally dependent on you, he or she must apply for homestead exemption. Your current Save Our Homes cap will not be adjusted.

Joint Tenants with Right of Survivorship:
If the new owner is a joint tenant with right of survivorship, and he or she DOES NOT apply for Homestead Exemption, your SOH cap WILL NOT be adjusted.
If the new owner is a joint tenant with right of survivorship and DOES apply for Homestead Exemption, your SOH cap WILL be adjusted to market value and start anew the following year. In future years, the SOH Cap will protect 100% of the property.
One Important Note! If the new owner is living with you and intends to make the property his or her permanent residence, it may make more sense to apply for the new Homestead Exemption now rather than waiting until a later date. Your Homestead Exemption and SOH cap protects only you, and not the new owner. In the future if you no longer reside in this home, the new owner will have to apply at that time, and the property value and taxes will most certainly be much higher than they are now.

Tenants in Common
If the new owner is a tenant in common and DOES NOT apply for homestead exemption, your SOH cap WILL BE adjusted to protect only your proportionate or "percent" interest in the property. The "percent" interest of any owner who does not have homestead exemption will be assessed at market value each year.
If the new owner DOES apply for Homestead Exemption, your SOH cap WILL BE adjusted to market value and start anew the following year.

Can I "undo" or cancel a deed that is already recorded?

If the wording of your current deed has consequences that you did not intend, you may want to consider a corrective deed. Please consult an attorney, title company or other real estate professional to help you prepare your corrective deed. The Property Appraiser's office cannot advise you, since there are many serious considerations that go beyond how homestead exemption is calculated, including income and estate tax consequences. It is recommended that you never attempt to change your deed without the help of a professional.

Are there other ways of transferring my property for estate planning that will not disturb my Homestead Exemption or SOH Cap?

Two methods of transferring your property will, in most cases, keep your Homestead Exemption and SOH intact: reserve a Life Estate for yourself or transfer your property to your trust. Please consult your attorney or estate planning professional before attempting either option.

If you transfer your property to a trust, your attorney should know that three criteria are required in order for your Homestead Exemption and SOH cap to remain intact:

You as the homestead owner must have beneficial or equitable title to real property. In other words you must be the trustee or beneficiary of the trust. If you are the beneficiary but not the trustee, your interest must be in REAL property, not PERSONAL property.
You must have the present possessory interest in the property. Simply, you must have the right to live there.
The deed that transfers the property into the trust must be recorded.

PLEASE CONSULT YOUR ATTORNEY OR ESTATE PLANNING PROFESSIONAL. THIS INFORMATION IS PROVIDED ONLY TO HELP YOU UNDERSTAND HOMESTEAD EXEMPTION AND DOES NOT CONSTITUTE LEGAL ADVICE.

Save Our Homes Annual Increase

YEAR	CPI	CAP
2008	4.1%	3.0%
2007	2.5%	2.5%
2006	3.4%	3.0%
2005	3.3%	3.0%
2004	1.9%	1.9%
2003	2.4%	2.4%
2002	1.6%	1.6%
2001	3.4%	3.0%
2000	2.7%	2.7%
1999	1.6%	1.6%
1998	1.7%	1.7%
1997	3.3%	3.0%
1996	2.5%	2.5%
1995	2.7%	2.7%

Explaining the Economic Stimulus Payments and how it will help the Real Estate Market...

2008-05-09T16:33:00.006-04:00

Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers.

Q. Where will the government get this money?
A. From taxpayers.

Q. So the government is giving me back my own money?
A: Only a smidgen.

Q. What is the purpose of this payment?
A. The plan is that you will use the money, for example, to purchase a high-definition TV, thus stimulating the economy.

Q. But isn't that stimulating the economy of China?
A. Shut up...

Huckabee's view, too bad he's out of the race...

And finally, the always accurate, Jib-Jab view...

Learn more about the 2008 Economic Stimulus Package and how it helps solve Florida's Real Estate Crisis (hint: it does not do a darned thing...)

Biggest downturn since the Great Depression

2008-04-30T20:45:00.005-04:00

Watch Mort Zuckerman explain why he thinks that the US is facing an economic crisis the likes of which we have not seen in decades. He explains how the securitization of mortgage loans led even the smartest people in Wall Street to fall for what turned out to be garbage paper.

Mort certainly knows what he's talking about. He is a billionaire real estate developer and investor turned media mogul as owner and publisher of several newspapers and magazines as well as Editor-in-Chief of U.S. News & World Report…

The Great Greenspan Depression of the Millennium

2008-04-21T18:04:00.013-04:00

Alan Greenspan’s spirited defense of late about his legacy has more in common with revisionist history and self-serving grandstanding than the actual truth: He is largely blamed for creating the chaos that we now know as the “dot com bubble”, the following 2001 deep recession that destroyed trillions of dollars in economic value as well as millions of jobs, and the current economic catastrophe whose effects we have not yet been able to quantify but which already has left millions of hard working families literally on the streets, not only from losing their homes but also from losing their jobs as companies close down due to the credit crunch.

Mr. Greenspan caused the 2001 recession by consistently underestimating the ability of technological change and increased productivity to dampen inflationary pressures. Refusing to accept that the American economy was capable of growing at 3.5% to 4% annual rate without generating inflation, his Fed started hiking interest rates in 1999 and went on too fast and too far. The infamous 50 basis-point hike in May 2000 triggered the stock market’s collapse, evaporated millions of jobs, obliterated the life savings of over thirty million Americans and created the ensuing recession.

Mr. Greenspan then gave birth to the housing bubble in the wake of 9/11 by consistently overestimating the threat of deflation. The result was historically low interest rates that provided crucial air for the resultant housing bubble. The low rates that normally would fuel investment and growth were exploited by irresponsible banks and mortgage companies and their brokers greedily looking to increase their returns. The over-leveraging and securitization of these loans coupled with the lack of oversight by the federal government led to the credit mess whose final consequences are yet unknown. (see A Primer on Sub-Prime Mortgages ).

We must not forget, however, the fact that even the ugliest sub-prime loans were getting paid as scheduled. It was not until the rates jumped so violently that they became delinquent in droves. No matter how solid a country’s economy is, the instability created by a bad policy decision is enough to turn a boom into a bust. Stability is the catalyst that fosters investment, growth and long term prosperity.

Today, without official duties and no longer involved with the Fed, Mr. Greenspan continues to create havoc, unnecessary panic and above all, destruction of value. His public musings about the stock market and the economy only add volatility to the current crisis while undermining the already tenuous position of current Fed Chairman, Ben Bernanke, Greenspan’s own boy. For the public good, it would be best if he let his defense rest and simply zipped his lips and go home with his millions in earnings. But Greenspan has shrewdly figured that keeping himself on the limelight does help him sell more books and book more lectures and consulting gigs which have made him a very wealthy man.

The chart at the right graphically illustrates the stock market carnage. This chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. When priced in that universal world currency (gold), the Dow is in the midst of a massive eight year bear market!

In its own words, the official top objectives of the Federal Reserve are:

1) Conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.

2) Supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers.

3) Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.

In simpler terms, what this means is that the Federal Reserve's main goals are to foster economic stability and prosperity. In this regard, Greenspan’s record is dismal. Since 1999, the destruction of value that Greenspan has caused is estimated at over 7 Trillion Dollars. That is a very large number. To put this figure in perspective: the entire U.S. economy generated only about $13.8 trillion in 2007, and total household wealth is currently only about $45 trillion.

In the history of the United States no enemy has ever been able to inflict upon us more harm. In this regard, Greenspan’s legacy of financial destruction will be remembered as “The Great Greenspan Depression of the Millennium”.

HOW Money is Created

2008-04-09T15:19:00.008-04:00

In our economic system, the presence of money is felt everywhere; indeed, a world without money would be quite difficult to even imagine. Practically all of our daily transactions, from the most menial trip to the supermarket to the purchase of office buildings and the financing or whole armies are exchanges between money and goods or services. In ancient times, the total supply of money was essentially equal to the total supply of goods to be traded. Over time, new structures were devised to improve on the barter-based economy. Long time ago, most economies in the world were under the “Gold Standard”, basically tying the supply of money to the amount of gold the country owned. Under the gold standard, currency issuers guarantee to redeem notes, upon demand, in that amount of gold.

Today’s standard is called in economics, “fiat currency”. Fiat money is money that has value primarily because a government demands it in payment of taxes, and that government has credible enforcement of its demand. It basically has value because the public has a collective belief in the credibility of the entity printing the currency.

Former US Federal Reserve Chairman Alan Greenspan once argued, before the advent of monetarism, that:

"Under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth... The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit... In the absence of the gold standard, there is no way to protect savings from confiscation through inflation”

Banking and Finance are fascinating yet complex subjects. This documentary presents in layman’s terms how money is actually created out of literally nothing, and how our whole financial system is so dependent on the public’s confidence in our currency and nothing more.

PART 1 - THE ORIGINS OF MONEY

PART 2 - HOW MONEY IS CREATED

PART 3 - MONEY IS DEBT

OUR BANKING SYSTEM AND MONETARY REFORM

WARNING ABOUT THE N.W.O.

A Primer on Sub-Prime Mortgages

2008-04-07T21:55:00.019-04:00

The sub-prime mortgage infection has already spread to affect most areas of the U.S. economy and the world. What started as one of the after-effects of the "Great Greenspan Depression of the Millennium", it has recently threatened to destabilize the very financial system of the most powerful economy in the world.

This presentation called "A primer on Sub-Prime Mortgages" is entertaining while at the same time very educational. It describes in simple terms some of the reasons that got us into this mess.

Many AAA mortgage bonds are actually extremely high risk because of little-considered nuances in the hundreds of pages of trust indentures and servicing agreements. In addition to the widely understood mortgage default risks and other concerns, these contracts actually permit the loan servicers to advance payments on behalf of defaulted homeowners for years and years at interest rates of 12% and more. These advances put funds back into the trust to be paid to junior security holders and are subsequently repaid first from foreclosed home sales. The net effect is that foreclosed home sales may result in little or no proceeds, or even a liability to the AAA bonds which are supposed to be the senior securities. This is not widely understood even now.

The large amount of "First Mortgage Syndicated Bank Loans" issued since 2004 are, for the most part, garbage. Most of these loans permit the borrowers to sell the collateral, keep the money, and reinvest in almost anything they want to, including stocks junk bonds, defaulted loans, or even Al Gore's ventures.

Roger Lowenstein in his recent New York Times article Triple-A Failure puts it most succincly:

Mortgage volume surged; in 2006, it topped $2.5 trillion. Also, many more mortgages were issued to risky subprime borrowers. Almost all of those subprime loans ended up in securitized pools; indeed, the reason banks were willing to issue so many risky loans is that they could fob them off on Wall Street.

But who was evaluating these securities? Who was passing judgment on the quality of the mortgages, on the equity behind them and on myriad other investment considerations? Certainly not the investors. They relied on a credit rating.

Thus the agencies became the de facto watchdog over the mortgage industry. In a practical sense, it was Moody’s and Standard & Poor’s that set the credit standards that determined which loans Wall Street could repackage and, ultimately, which borrowers would qualify. Effectively, they did the job that was expected of banks and government regulators. And today, they are a central culprit in the mortgage bust, in which the total loss has been projected at $250 billion and possibly much more.

The Fed is now stepping up to guarantee these loans which is effectively shifting them into the Federal Reserve's Balance Sheet. And, you may ask, who "balances" the Balance Sheet?...

The taxpayers - You, me, and our kids...

Volusia County ORDINANCE WATCH

2008-04-06T09:54:00.006-04:00

Keep track of what your local municipalities new ordinances will be and what your elected officials are proposing in the near future. Exclusive for Volusia County and the local municipalities of Daytona Beach, Deltona, New Smyrna Beach, Holly Hill and Ormond Beach, the Volusia County Ordinance Watch provides a system to monitor upcoming ordinances related to real estate of all the municipalities in Volusia County.

Click on the Ordinance's summary description and the details about the proposed ordinance will appear in the window. Links are provided for any background material as well, including the actual ordinance and the agenda for the meeting or hearing in which the ordinance will be presented.

To view the ordinances, click HERE

Commercial Real Estate Remains Strong

2008-03-28T21:52:00.004-04:00

Driven by fundamentals rather than emotion, the commercial real estate market hasn’t enjoyed the fantastic hyper-growth of the residential real estate in the past few years. Neither has it suffered though the hangover effects of the wild party it missed. It fared well, slow and steady, thanks to solid fundamentals and investor discipline.

Commercial real estate hasn’t had to deal with subprime mortgages, home loan, adjustable rate mortgages, and interest only mortgages. Also, the commercial market hasn’t had the concerns regarding unrestrained mortgage lending by mortgage lenders and mortgage brokers.

As a result, the commercial sector has been able escape the residual effects of the housing market excesses that led to the bubble burst in the housing boom. Quite the contrary, commercial real estate did well in 2007 and is quite upbeat about future prospects.

This momentum is sustainable; there haven’t been comparable foreclosures or mortgage defaults as in the housing market. Experts believe the reasons commercial real estate hasn’t seen the effect as the residential counterpart is because buyers and sellers are more sophisticated and they have the financial resources to weather any corrections in the market. Unlike the housing market, commercial real estate development has deep ingrained direct relationships with banks. However, that doesn’t mean that the commercial market can stay unaffected by the residential market.

While the fundamentals in the commercial market remain strong it is still unclear the extent of, if any, residential housing will have on it. If the broader market is able to sustain itself, experts don’t foresee an issue with commercial real estate. But a sharp economic correction could make the market vulnerable, a situation which it has been able to avoid thus far.

As it happened to the mortgage market, the recent credit crunch has spread to other markets, in some respects to the commercial real estate arena. Some sellers have now started requesting more upfront capital if mortgage-backed assets are financing a deal. In the meantime, the housing market attempts to get back on track, while the outlook for commercial real estate is mainly positive.

In Florida for 2008, the prospect of lower interest rates (read: cheap money), increased foreign investment as a result of the weaker dollar, stabilizing rents, and, best of all, lower property taxes should ensure higher values and smooth sailing for commercial property investors.

RENTAL RIGHTS UPHELD, Municipality Liable For Unduly Restrictive Zoning Determination

2008-03-21T18:10:00.008-04:00

VENICE, FL - This week, Florida's 12th Judicial Circuit Court issued an important pro-property rights ruling overturning a municipal zoning determination that limited short-term rentals to three times per year. Judge Robert Bennett's order in Stephen E. Milo, et al. vs. the City of Venice, stated the City's decision was "clearly erroneous."

In August 2006, the City's planning and zoning director declared that houses in single-family residential neighborhoods could not be rented for 30 days or less in excess of three times per year. Property owner Stephen Milo joined with a group of owners in appealing this decision to the Planning & Zoning Commission. The P&Z Commission sided unanimously with Milo. In December 2007, the City Council overturned the P&Z and supported the zoning director's decision to limit rentals. With deplorable arrogance, Mayor Ed Martin remarked, "The owners can accept that fact or go to court." Which the owners did.

Judge Bennett's ruling invalidates the City Council decision and clarifies that temporary residences are expressly allowed under City Code, without limitations.

This ruling has statewide implications as it sends a clear message to municipalities that they will be liable to property owners for unduly restrictive ordinances that prevent them from pursuing their constitutionally-guaranteed rights of deriving income from their property investment. This issue has become more important now than ever in light of Florida's current property tax and insurance crises ; denying non-homestead property owners the ability to derive income from their property may effectively force some owners to relinquish ownership. Regulations which diminish usage rights and openly discourage property investment are not healthy for property rights or Florida's economy.

Municipalities across Florida may now be forced to reconsider their policies and could be liable for financial damages inflicted by ordinances restricting short term rentals. The ruling may impact municipalities inappropriately limiting rentals on the basis of duration or frequency of use and may apply to the enactment of rental restrictions where owners are not compensated for the impact of these regulations.

"This is a clear victory for property owners," said Valerie Fernandez, managing attorney with the Pacific Legal Foundation, a non-profit, public-interest legal organization which assisted in the case. "The court ruled unambiguously that, when governments seek to take property or even a portion of someone's property, the owners must be justly compensated under the 5th Amendment."

Read the Coalition for Property Rights Article

Florida will get some tax relief after all - 25 percent property tax cut on Florida’s November ballot

2008-03-18T10:41:00.015-04:00

TALLAHASSEE, FL - The Florida Taxation and Budget Reform Commission voted to put a significant tax savings plan before Florida voters in November. By a 21-4 vote the independent panel decided to approve the proposal of a state constitutional amendment for an across-the-board property tax cut averaging 25 percent. The amendment would dwarf two other tax relief measures enacted over the past year by the Florida legislature. The previous efforts of the Legislature were widely considered to be ineffective and failed to address the underlying problem plaguing the State: irresponsible spending, widespread waste at local levels, and inequities in tax allocation.

If the measure passes as expected, some Florida property owners could realize savings of over 33% of what they were paying before. The bulk of the savings are a result of eliminating property taxes that the legislature requires school districts to levy in order to qualify for state aid. At the ballot, the proposal will need 60% of voters’ approval.

The state will recoup some of the expected eight billion dollars in taxpayer relief by hiking the sales tax by one cent. Critics of the plan complained that the expected revenues as a result of the sales tax hike might not be realized due to the severe recession we are currently suffering. The recession and financial market turmoil is already causing people to reduce spending. House Speaker and taxpayer rights supporter, Marco Rubio disagreed, saying that if people have more money in their pocket, as this plan will certainly allow, they will go to the stores to spend it. The specific language of the plan will still need to be worked out, but the basic intent should remain unmodified.

Last year, The Legislature had ordered local governments to roll back property taxes, but many avoided the cuts by taking advantage of a loophole that let them override the requirement through votes of more than a simple majority. Others passed new fees to make up at least some of the lost property taxes. In the end, the irresponsible spending continued at the local levels. The new plan will certainly help curtail those abuses.

Established by Florida voters in 1988, The Florida Taxation and Budget Reform Commission was formed by constitutional amendment. Its mission was stated as:

The commission shall examine the state budgetary process, the revenue needs and expenditure processes of the state, the appropriateness of the tax structure of the state, and governmental productivity and efficiency...

During the Commission’s first phase of its review of state taxation and spending policies, it reached the conclusion that:

The public has lost confidence in the state’s ability to spend money wisely. The state must reform itself before it can ask more of its citizens.

The Florida Constitution (Art. XI, § 6 Fla. Const.) and Florida Statutes (Fla. Stat. § 286.036) empower the Commission to make recommendations to the Legislature and to put constitutional issues directly before the people.

Read more here.

Video News of the Tax Cut Proposal:

Despite the Growth Management Act, Corruption and Favoritism still alive in zoning and land use decisions in Florida

2008-02-23T16:08:00.006-05:00

The GMA (Florida Growth Management Act, Fla. Stat. ch. 163.3161) establishes procedures for any changes that affect land uses in our State. These procedures establish proper-noticed public hearings whether it’s for a Comprehensive Plan amendment or a change in the Land Development Regulations (LDR’s) such as zoning. During these hearings, affected parties present their arguments in favor or opposition to a given project in front of the public officials presiding over the hearing (County Council, City Commission, etc.) who then decide whether to approve or deny the requested amendment.

Abuses occur when decisions are made on the basis of political influence or favoritism, on the basis of inadequate procedure, or by uninformed or corrupt government officials. The intent of the growth management system of Florida was to reduce the power of local governments over decision-making for comprehensive planning in order to maintain uniformity throughout the state and depart from the detrimental politically-charged decisions of the past.

A seminal case in Florida Land Use was the Snyder case decided by the Florida Supreme Court (Board of County Comm'rs of Brevard County v. Snyder, 627 So. 2d 469, 475 (Fla. 1993)). In Snyder, the Supreme Court elaborated quite eloquently on the intent of the GMA. Correcting abuses was one of the articulated factors driving the Snyder decision to establish quasi-judicial review in place of legislative review for certain land use transactions.

The GMA provides for judicial review of the local Board’s decisions when a party decides to challenge it. There are two broad groups of decisions: Legislative and Quasi-Judicial. As applied to land use, Legislative decisions are those that are policy setting, or that “make” laws which affect a large portion of the public. For example, the development of a municipalities’ Comprehensive Plan is a Legislative or Administrative order as it prescribes what the rule or requirement shall be with respect to transactions to be executed in the future. Quasi-Judicial actions, on the other hand, are the result of policy application rather than policy setting.

Rezoning actions are quasi-judicial since they have an impact on a limited number of persons or property owners where the decision is contingent on a fact or facts arrived at from distinct alternatives presented at a hearing.

In a quasi-judicial hearing the local board must provide certain constitutional protections such as Due Process and the admittance of relevant evidence. In addition, the evaluation of the facts presented must be arrived under the strict scrutiny standard, much similar to a normal judicial hearing in front of a Court. Strict scrutiny arises from the necessity of strict compliance with the law being applied such as the Comp. Plan. It basically means “Follow the letter of the law”.

A second significant difference between the quasi-judicial and legislative review processes is the degree of deference granted by the courts to the decision-making body. To overturn legislative decisions, the court must determine that the basis for the decision was capricious or arbitrary and not even debatable. For quasi-judicial decisions, the court still defers to the judgment of the lower tribunal, but competent substantial evidence is required to preclude reversal. Florida adopted the fairly debatable standard in 1941; Snyder, 627 So. 2d at 472 (citing City of Miami Beach v. Ocean & Inland Co., 3 So. 2d 364, 367 (Fla. 1941).

Quoting from the Snyder Supreme Court Decision is a well articulated reasoning behind the GMA and in support of a tighter judicial scrutiny of local Board’s decisions:

Inhibited only by the loose judicial scrutiny afforded by the fairly debatable rule, local zoning systems developed in a markedly inconsistent manner. Many land use experts and practitioners have been critical of the local zoning system. Richard Babcock deplored the effect of "neighborhoodism" and rank political influence on the local decision-making process. Richard F. Babcock, The Zoning Game (1966). Mandelker and Tarlock recently stated that "zoning decisions are too often ad hoc, sloppy and self-serving decisions with well-defined adverse consequences without off-setting benefits."Daniel R. Mandelker and A. Dan Tarlock, Shifting the Presumption of Constitutionality in Land-Use Law, 24 Urb. Law. 1, 2 (1992).

Unfortunately, many local elected officials do not have the education, experience or even desire to abide by the statutes codified in the GMA and allow political forces and campaign donations to rule the decisions. They simply revert to the “old Florida ways” of doing whatever their patrons ask (especially the patrons that pay) and letting the judicial system - at a very expensive price of admission - sort the mistakes for the injured parties that object.

So, in spite of Snyder and other Supreme Court decisions, the end result is exactly the opposite of the intent of the GMA: abuse, favoritism, patronage and arbitrariness reflected in haphazard zoning and land use ordinances. There is a lot of truth to the saying that “justice is available to all... who can afford it” as only the well-heeled are able to afford the lawsuits required by the judicial system in order to enforce the GMA.

This is one of the strongest arguments to make violations of the GMA fall under the criminal code instead of the civil code. When a corrupt municipal official fails to exercise her duty to obey the law and abuses the powers vested in her to act in favor of a patron and provide undue benefits at the expense of other citizens, such conduct is closer to a criminal act than a civil tort since the official is acting under color of law. While there are Federal Regulations that address such conduct (18 U.S.C. §242, 42 U.S.C. §§1981, 1982, 1983, not to mention the Fifth and Fourteenth Amendments of the US Constitution), Florida has few (such as Fla. Stat. §112.313(6) Misuse of Public Position). Under the criminal code, violators of the GMA would be prosecuted by the State’s Attorney just like any other crimes.

A number of internet sites contain thorough and helpful information about all aspects of comprehensive planning and land development regulation in Florida. One of the best is by 1000 Friends of Florida at http://www.1000friendsofflorida.org . Another important and informative website is maintained by Florida Department of Community Affairs. The Municipal Ordinances and Land Development Codes for most counties and municipalities in Florida can be obtained here. Lastly, Mary Dawson’s The Best Laid Plans: The Rise and Fall of Growth Management in Florida , published by the Journal of Land Use and Environmental Law, is a well written and informative piece on the failings of the current system.

FAQs on Florida's Property Tax Portability Amendment

2008-02-12T12:35:00.005-05:00

What is the Property Tax Portability Amendment?

What is the "Save our Homes" Benefit"?

When will the changes from Amendment 1 show up on tax bills?

How much is the portability benefit worth?

How does a person apply for portability?

Who's eligible for portability this year?

Who's eligible for portability after that?

I don’t plan to move. What happens to the 3 percent cap on property tax assessments I got every year under Save Our Homes?

Is there an application for the additional homestead exemption?

Do business owners and mobile-home owners with tangible personal property have to apply for the exemption?

When does the 10 percent cap on annual assessment increases for most non-homesteaded properties go into effect?

Does the Amendment correct or alleviate the Property Tax Crisis in Florida?

What is the Property Tax Portability Amendment?

On January 29, 2008. the citizens of Florida voted for the implementation of the 2007 Special Session D legislation (increases to the homestead exemption, homestead portability, tangible personal property tax exemption, and assessment caps on non-homestead property). In short, the "Property Tax Portability Amendment". The amendment provides in part for homeowners to transfer some or all of their savings in property taxes as a result of their homestead when they sell their home and purchase another home in Florida. Previously, the assessed value of the new home would be readjusted as a result of the new purchase to reflect the new "fair value". For more information, see the Department of Revenue's FAQ'S

What is the "Save our Homes" Benefit?

The "Save Our Homes" benefit is the difference between the assessed value and market value of a homestead property due to the annual limit on increases in assessed value. Portability means that, from now on, you can transfer some or all of your old home's "Save Our Homes" benefit to your new home.

When will the changes from Amendment 1 show up on tax bills?

Portability first becomes available for homeowners who had a 2007 homestead exemption on their old home and established a new homestead by January 1, 2008. If you moved into a new home by January 1, 2008, you have through March 1, 2008, to apply to your property appraiser for your new homestead exemption and for the transfer of the “Save Our Homes” benefit to your new homestead for 2008. If you have already applied for a homestead exemption on your new home, you must complete a separate application by March 1, 2008, to transfer the "Save Our Homes" benefit to your new homestead.

How much is the portability benefit worth?

A homesteaded property owner can transfer up to $500,000 of portability benefit to a new homestead. A person moving to a more expensive home transfers the dollar amount. A person moving to a less expensive home transfers the percentage value.

How does a person apply for portability?

The homesteaded property owner should turn in a completed application to the office of the property appraiser in the county where the new homestead is located. The application from the Department of Revenue.

Who's eligible for portability this year?

A person who establishes a new Florida homestead for 2008 and filed to give up the previous homestead sometime after Jan. 1, 2007. In other words, a person who relocated from a homestead last year and is claiming a new homestead for 2008 is eligible. The deadline for 2008 homestead and portability applications is March 1. The portability benefit would show up on the 2008 tax bill.

Who's eligible for portability after that?

Any Florida homesteaded property owner who establishes a new homestead for 2009 or any subsequent year—as long as the person had another valid homestead within two years of establishing the new one.

I don’t plan to move. What happens to the 3 percent cap on property tax assessments I got every year under Save Our Homes?

You’re still protected. Save Our Homes doesn’t go away.

Is there an application for the additional homestead exemption?

No. The additional exemption will be granted automatically to anyone qualifying for a base $25,000 homestead exemption. It applies only if a property's assessed value exceeds $50,000.

How much is the additional exemption?

The exemption is $25,000, but it does not apply to property taxes assessed for local schools. In other words, no additional exemption will be applied to a property's assessed value for the purposes of levying school taxes.

Do business owners and mobile-home owners with tangible personal property have to apply for the exemption?

To receive the exemption, they must file their 2008 returns. If the value of tangible personal property is under $25,000, they will not have to file again the following year.

When does the 10 percent cap on annual assessment increases for most non-homesteaded properties go into effect?

It goes into effect in 2009. There will also be an application. Keep checking the Department of Revenue web site for details.

Does the Amendment correct or alleviate the Property Tax Crisis in Florida?

Absolutely Not!. While the amendment provides a little bit of immediate relief (about $200 savings for the average homesteaded home), and allows the portability of savings, it does not resolve the inequalities of the system. Further, and most importantly, it fails to address the real problem that prompted this crisis: Runaway spending by Counties and Municipalities. The amendment does nothing to prevent or correct the fiscal profligacy and financial waste inflicted on the taxpayers by many public officials. See my Florida's Perfect Storm post. This amendment merely delays the inevitable "time of reckoning" decision.

The Spruce Creek Fly-in Community

2008-02-05T21:42:00.005-05:00

Nested in Northeast Florida, a few miles south of Daytona Beach and NASCAR's epicenter, the Daytona International Speedway, lies one of the most unique residential communities in the world. A community so unique that it seems has been immunized against the current real estate crash. A place where property values have held better than most parts of the country, providing a real life testimony to the old aphorism: “they just don’t make them like that anymore...”.

The Spruce Creek Fly-in Community is the world's most famous residential airpark. With a 4,000 ft lighted runway and a GPS approach, the private airport at the center of the community can accommodate anything from a Stearman to a Gulfstream II. Originally a navy airfield during WWII, it evolved into the world's largest residential fly-in community. Today, almost 5,000 residents, 1,300 homes and 700 hangars share a unique life in this private gated village. Truly a piece of pilot's heaven.

A championship golf course and Country Club and 24-hr patrolled security complements the safety, privacy and enjoyment of its residents. John Travolta and many other celebrities have enjoyed the Spruce Creek Fly-In lifestyle and privacy. Current home prices vary from a $165,000 condo to several million dollar hangar mansions. Learn more about the Spruce Creek Fly-in at www.7FL6.com.