THE CLOCK IS TICKING AND I TOLD YOU SO!

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U.S. mortgage rates rose in the latest week for a fourth straight week and hit the highest level since August, a closely watched mortgage survey showed on Thursday.

Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 5.14 percent for the week ended Dec. 31, the highest since the week ending Aug. 27 and up from the previous week's 5.05 percent, according to a survey released by Freddie Mac, the second-largest U.S. mortgage finance company.

"Although long-term mortgage rates rose for the fourth week in a row, they still remain affordable by historical standards," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Based on today's median loan amount of $138,000, monthly principal and interest payments for a 30-year fixed-rate mortgage are close to one-third less than a decade ago when rates peaked at 8.6 percent in May 2000, Nothaft said .

"This translates into almost 50 percent less in interest payments over the full 30-year term," he said.

The rate of the latest week tops that of the year-ago period when the 30-year mortgage rates averaged 5.10 percent.

The 30-year rate had fallen to 4.71 percent four weeks ago, the lowest since Freddie Mac started the survey in 1971.

Mortgage rates are linked to yields on Treasuries and yields on mortgage-backed securities.

Freddie Mac said the 15-year fixed-rate mortgage averaged 4.54 percent in the latest week, up from 4.45 percent the prior week.

The Mortgage Bankers Association last week said U.S. mortgage applications fell in its most recent survey.

One-year adjustable-rate mortgages (ARMs) were 4.33 percent in the latest week, down from 4.38 percent the prior week. The rate on the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, was 4.44 percent, compared with 4.40 percent a week earlier.

HOUSING RECOVERY CONTINUES

South Florida home sales continue to register strong gains!  roughly 3/4 of the properties being sold are priced at less than $300,000.

Sales of existing homes were up  26 percent in Miami Dade County and 32 percent in Broward from a  year ago.  Condo sales exceeded single family home sales in October.    In Miami Dade, sales were up 47 percent from a year ago and in Broward, they were up 68 percent.  Dade rose 5 percent in month to month sales from last month.  The national increase in home sales rose 10 percent  from September to October.

Here is a break down of the current inventory of homes and condos in Miami Dade

• Under $100,000   Four Month Supply
• Under $300,000   Eight Month Supply
• $300,00 to $1 M   21 Month Supply
• $1M and over      Four year Supply

One of the reasons for these gains is the extension of the one time home buyer credit of $8000. In addtion,  interest rates are at the their lowest level on record.  This last month the Treasury sold  $30 Billion in T bills at a rate of .040 percent.  That is the lowest level ever.  That translates into a 30 year fixed home loan rate of about 4.74 percent!!!!!!

This is bad news for savings accounts, but good news for home borrowers.  But this will NOT last.  This is the lull before a major storm.  The Fed is spending TRILLIONS that it does not have.  The are borrowing and PRINTING money.  That WILL come home to roost in the form of high inflation and of course HIGH interest rates to try to control it.   Real Estate is traditionally a good investment hedge against inflation. If you dont have a fixed rate low interest rate loan yet.  DO IT NOW. DONT WAIT!!  or you will be sorry!

For Americans,  This is a two edge sword.   Foreign buyers are snapping up the best deals right now with stronger currencies.  Americans are still facing decreased equity,  lost jobs, high unemployment and a government out of control with spending.  That is the current model.. In an inflationary model,  our home prices WILL rise for sure,, but so will our borrowing costs.  Foreigners will be still be able to walk in with more valuable currency exchange rates and purchase.  If you can purchase now,  I would.  There are GREAT deals out there right now.. AND  the rental market is starting to improve.  Hold and Lease if necessary.

RECOVERY ON THE HORIZON

A housing recovery is fulling in the works. The average price of a home in Miami Dade County has risen by an average of 1.5% each month for the last three months. This includes Condominiums, which have suffered the largest declines in value due to overbuilding.

The nexus of shrinking inventory, the extension of the home buyers credit by Congress, the continued low interest rates and spector of inflation not far on the horizon, have all combined to put a larger number of buyers in the market.

In the Beach front condo market, the largest group of investors continues to be all cash buyers from off shore. Miami is now the cheapest of the largest Latin American cities. That couldnt be said just a few short months ago. Now Miami is a bargain for buyers compared to Buenos Aires, Rio De Janerio and other destination cites.

Real Estate also continues to be a hedge against inflation. The price of gold and other precious metal commodites have truly outstripped the cost benefit ratio that still exists in Real Property. In times past, as will be in the future. Land and Property are a hedge against a falling dollar and a tax haven for write offs, especially if it a rental property.

I keep saying it, but NOW is the time to jump in. The very best of the very best deals are already gone.. But there are still great bargains to be had... DONT miss out.. The best time to make money is when the market is DOWN,, not UP... People get that wrong all the time. Band wagons in investments like stocks and yes, real estate, are usually headed over a cliff if there are to many people jumping on... The market is swinging.. All in the indicators are that the bottm has been reached and the time is now to buy in.

TAKE GUN, SHOOT AT FOOT

This week the Congress began deliberation on the CAP AND TRADE legislation even while the Health Care debate has yet to be decided and a bill passed through for the Presidents signature. If Democrats in the Senate and House Leadership get their wish, they will pass a public option which by ANY minimal estimate will add an additional $1 TRILLION dollars to the National Debt and eventually drive private insurance out of the market. Any plan that drives out the free market is doomed to inefficiency, huge losses and fraud. Keep in mind that NO government run program has EVER been cost effective.

While major industrial democracies in Europe and the Far East are running away from centralized government control, the US seems to be running in the opposite direction. But what does this have to do with REAL ESTATE you may ask? Very simply and importantly, Interest rates. The cost of money is the life blood of Real Estate. If buyers cannot afford the monthly mortgage payment, properties do not get sold.. Simple. If the government continues to spend money it does not have, then lenders require better returns on lending. That means the Federal Reserve must increase interest rates to attract bond and treasury investors to finance the US debt. That trickles down to you and I in higher interest rates on anything from Credit cards to car loans and yes, 30 year fixed mortgage rates.

The pressure is already building against the dollar because of our incredible deficit. Foreign buyers are demanding higher returns for the greater risk of holding US securities. The danger is, higher interest rates also slow business activity and the nation can ill afford that right now..

SO.... What is the government doing? They are trying to ram through this ill fated bill even though the majority of Americans oppose it. The CAP AND TAX bill is even worse and would add an additional $3,400 a year to the average americans energy expense.

All of these measure will affect the cost of money. ( Interest Rates) They WILL rise. It will also raise the cost of construction at every level. Both of these mean HIGHER PRICES for real estate and higher interest rates to borrow the money to BUY that real estate. SMART investors and home buyers know that inflation is coming. It is already on the horizon and we are seeing it beginning to creep up the cost of oil, which is pegged in US dollars. The less the value of the dollar, the higher the price of a barrel of oil.. Its simple. This is another reason why the G20 is clamoring to replace the US dollar as the medium of exchange because they no longer trust us to keep our financial house in order.

Lets put it this way. If you were to buy $1000 of a persons debt and they paid you 4% interest you would make sure that they had the ability to pay it back and also not borrow so much money from someone else that they got in a situation where they COULDNT pay it back...... The US government goes on the open world market and sells our debt.......by the trillions. Investors are now getting a little freaked out that we simply are spending more than our ability to ever pay back. They want higher interest return because of the higher risk. AND some are even saying... NO... NO MORE LOANS! So, the US is PRINTING MONEY!

REMEMBER.....the ONLY REAL investment that is not PAPER are commodities like GOLD, SILVER, COPPER, and REAL ESTATE. They are the greatest protection against inflation.

If I had to bet the bank on it. I would say that we are headed for a serious round of inflation. No one in Washington seems to have the guts to address the issue and it WILL hit us at one point or another. You cant defy gravity. Its coming.

WHAT TO DO?

1) Lock in to a long term low interest fixed loan on your current real estate. If you cant. SELL!

2) Pick up the great deals from Short Sales and REO foreclosures NOW while there are loan programs and interest rates low enough for you to afford or to keep your expenses low and lease or rent out your investment.

* Keep in mind that in inflationary times, when you are paying a fixed loan amount. You are paying yesterdays dollars with todays inflated value. Its a good deal for the savvy investor. As rents and rates rise, your base cost remains the same.

3) Dont be AWOL on your real estate investments. In a volatile market like this, your attention is important. Watch the markets. Make sure that you have the BEST loan, Make sure you have taken all tax advantages or property tax savings you are allowed. If you are a Florida resident or have Florida property, make sure you HOMESTEAD your property or look at making Florida your primary residence. Planes and the internet can make it possible for many. Also, Florida is only one of 4 states that have NO income tax! That is a huge savings for most.

4) Look at diversifying your investment portfolio that includes CD's, growth stocks, commodities, and of course real estate. Real estate offers tremendous tax benefits by sheltering income as well as giving an annual deduction for depreciation that few other investments can offer. You can shelter your real estate rental income by deducting expenses, management fees, cost of maintenance as well as depreciating the asset, even though it is likely GAINING in value! Dont you love the US TAX CODE! God Bless it and its 12,000 pages!

5) Real Estate offers a simpler way to plan your retirement and give you equity value while receiving monthly income.Its also usually easier to transfer ownership.

When you make these decisions.,, ALWAYS use a professional! My grandfather, a successful businessman, always said that he hired people that knew things he didn't so that their knowledge went to work for HIM! Smart man. You can't be an expert at everything. Todays world is to complicated.. Dont think so? Open the hood of your car and try to fix that engine yourself.

Geoff and I stand here ready to help you with your real estate needs. We have over 25 years of proven successful experience in real estate, both commercial and luxury beach front properties.. Our commitment is to make sure you get the BEST DEAL at the RIGHT PRICE, for the RIGHT REASONS that fit YOUR NEEDS! Give us a call today. Your piece of paradise awaits you and for the time being, its more affordable than you think.

MARKET HITS BOTTOM

The front page of the Miami Herald announces that the Real Estate Market as truly reached its bottom and the buyers have begun a FEEDING FRENZY of purchases.

As a Realtor, I can tell you.. that is the case. I closed escrow yesterday on an incredibly beautiful Ocean Front residence in Sunny Isles Beach, The Riviera of America. It had a bank value on it in 2007 for 1.25 million. It sold with THREE back up offers,, ALL CASH for $650,000 WOW. THAT is a bargain.. And those types of bargains are being snatched up by the savy investors. They realize that the market forces in play right now are stabilizing real estate in South Florida. The very best deals will be gone within 9 to 12 months and less desirable properties will be what is left. A deal for sure, but NOT the incredible properties that are being sold at 2002-3 levels right now.

The inventory is shrinking quickly. DONT COMPLAIN that you missed the bubble if you dont do what is necessary to get in right now. MONEY IS MADE on the DOWN CYCLE friends,, NOT on the up cycle. UNDERSTAND that and get it in your head. If you jump on a band wagon.. you will be playing second fiddle......always.....

Smart investors LEAD the pack both in selling and in buying. If you are running with the mob, you have already lost the best opportunities.

IMPORTANT LEGISLATION MOVES FOWARD

VERY IMPORTANT legislation is making its way through the US Senate with support in the US House. This bill would establish a non-profit agency to promote tourism in the US.,

Many international governments aggresively help tourism in their countries subsidizing promotional campaigns and programs. The United States leaves that work up to travel agencies, individual hotels, resorts and attractions as well as some State governments.

" This is SO important to us," says William Talbert III, president of the Greater Miami Convention and Visitors Bureau. It has taken 7 years for South Florida to see international tourism to rebound to pre- 9-11 terrorist attack numbers. Why is this important? Miami is the ONLY major tourist destination in the United States that relies on foreigners for over half of its overnight visitors. Miami is truly one of the worlds top International destinations. Numerous studies have been done that support the economic reasoning behind this funding. Independent audits show that an additional 1.6 million visitors would result from this program. The average expenditure of a foreign visitor to the US is $4,500. That is about 800 million additional dollars into the economy annually. In addition, for South Florida, we find that a number of visitors return year after year and over 40% of foreign buyers of our real estate first came here as a tourist. The top four tourist destination cities in the nation are New York City, Miami, San Francsico and Los Angeles.

SO WHERE IS THIS GOING? UP OR DOWN!?

There seems to be conflicting data out there regarding just where real estate IS going in this current financial climate. First, the seemingly BAD NEWS..... New foreclosure filings rose 18 percent in Miami-Dade County and 14 percent in Broward between July and August, according to data released by RealtyTrac, a foreclosure tracking firm. Compared to a year ago, new filings were up by 11 percent in Miami-Dade and 19% in Broward.

In August, roughly one of every 109 homes in Miami-Dade and one in every 79 in Broward were in some stage of foreclosure process in August, up 19 percent and 24 percent from July respectively. Those figures include homes that have received a notice of default, have been scheduled for auction sale and were repossessed by lenders.

Banks took back 699 properties in Miami-Dade and 1,414 in Broward in August.

Now for the BIG PICTURE and the BRIGHTENING PICTURE.

1) These figures are a slight up tick in foreclosures which is typical in summer months. Especially in South Florida, real estate sales dip in summer as well as economic activity. High season and job creation take place in the winter with our number one trade, tourism.

2) Absorption of inventory and the average price of a home are the true gage of property and future values. These two indexes are linked. Its simple supply and demand.. The more units available, the lower the price. If absorption is brisk and inventory shrinking, then prices stabilize. Absorption and sale rates have been on double digit rises both in Miami-Dade and Broward for the last 7 months in a row. Inventory of Condo units in Miami Dade have shrunk from a high of about 16,700 last October to just over 11,000. That is a brisk absorption rate.

Median prices of condos and homes in Miami Dade have stabilized over the last 4 four months which is an encouraging sign. Since this stabilization is taking place in the summer months, that is a very good sign. 74% of sales have been of foreclosures, Short Sales or REO's. There have been many overseas investors with all cash deals snapping up the best properties.

I have one property that is in escrow that was appraised by the bank at 1.3 million in 2007. It is in escrow for $650,000 and is a Class A beach front 2,100 sqft condo in Sunny Isles Beach.

Truly, the deals are at their best. The market is beginning the turn... Every broker I have spoken with sees this. There are many buyers back in the market but they are picky, shopping for the best deals and usually have a heavy cash investment. What I AM seeing in the last several months is multiple offers on properties as the very best deals dry up. And yes, I have even seen buyers BIDDING against each other, driving the price up.

Interest rates are at their lowest levels in MANY years, Property values are almost at replacement values for land and materials. And of course, like all business cycles, this will not last. Inflation is already on the horizon with all the government spending. The dollar has been weakening for weeks. Watch the price of OIL and you will see where we are headed. OIL is traded and pegged to the US dollar. As the value of our currency erodes, the price of oil will go up as will REAL ESTATE and INTEREST RATES. NOW IS THE TIME! You heard it here first.

DO THESE ABC's

(A) If you are in a mortgage at more than
7% or in an ARM loan. REFI NOW!

(B) IF you are looking for a new property, get on the 8 ball NOW. It will take you months to close and if you are financing, you are running the risk of a higher interest rate on your mortgage.

(C) GET RID of all revolving debt on cards etc. Whatever you have to do to acheive this.. DO IT. Those rates are headed UP and they also affect your credit rating AS those rates go up and may hinder you in getting a home loan.