THE BIG ISSUES:

MORTGAGE FORECLOSURE CRISIS

The triggering event of the entire economic crisis facing the nation (and the globe) today was the spike in failures of mortgages, first in sub-prime loans, then the alt-A market, and, as we go along, in class after class of mortgages (are commercial real estate mortgages next?).  While it continues, property values continue to fall.  We believe our economic woes will not be adequately addressed until the mortgage crisis is faced (and resolved) in a comprehensive manner which avoids further deflation.

REAL ESTATE TAXES

Florida faces huge challenges in making real estate taxes more fair.  The recently passed constitutional amendment which added to the homestead exemption and made the Save Our Homes tax cap portable helped, but huge disparities between homestead and non-homestead properties were made worse.  It also complicated government budgets, from the state of Florida to counties and local municipalities.  They will all be looking for alternate sources of revenue.

PROPERTY INSURANCE

Even though the last three hurricane seasons have been relatively calm, active seasons in 2004 and 2005 are still too recent for many to be sure numerous hurricanes aren’t going to be a part of our future.

POLITICAL STABILITY

An anti-growth group known as “Florida Hometown Democracy” is trying to amend Florida’s constitution to enact what will lead to building moratoriums, and ultimately, political chaos.  St. Pete Beach is the leading edge of this misconceived notion, and is suffering from the worst civic and political climate in history, along with disastrous budget repercussions.

MARKET CHALLENGES

The real estate market is vulnerable to a wide variety of forces, but whatever happens to real estate ultimately ripples throughout the rest of the economy, as was proven by the historic 2008 financial crisis.  The Obama administration has announced plans to address the home mortgage crisis, but time will tell if they take a sufficiently comprehensive approach to put falling property values behind us.  The job market is also a big factor in real estate values, as it establishes a cap on prices in most markets.