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How Will the New Tax Changes Affect You?

Tax Changes

The first change you need to be aware of is the requirements of the sale of your principal property. The second is the reduction of the limit on mortgage interest. The third is the elimination of state and local taxes.

Regarding the requirements of the sale of your principal property, the original proposal was that if the property was a homestead property, you would have to live in it for five out of the last eight years in order to avoid paying any capital gains taxes when selling it. That’s been changed so you only have to stay in the home for two out of the previous five years to sell the property without having to pay any capital gains taxes.

This change doesn’t impact you very much if you’re looking to sell your home. If you’re living in the property as part of a married couple, then you have up to $500,000 in gains that you don’t have to pay taxes on. If you’re single, you have up to $250,000 in gains that you don’t have to pay taxes on.

Regarding the reduction of the limit on mortgage interest, previously you could buy a home for up to $1 million and get the mortgage deduction when doing your taxes. They were proposing reducing that sum from $1 million to $500,000, but they agreed that you could reduce the itemized deduction on your mortgage for up to $750,000.

This change will only affect people who are buying homes in a higher price range—primarily those buying over the $750,000 range. However, if you’re buying a home for $1 million and you’re putting down 20% or more, it may not affect you that much. If you’re buying a home that’s more expensive than that, there will probably be tax implications.

Lastly, regarding the deduction of local and state taxes in relation to your property, the original law was to take that away completely so you weren’t allowed to claim that on your taxes. The new change allows you to do so for up to $10,000. Basically, if your taxes are more than that, it will have an effect on you whether you’re buying or selling.

If you have any other questions about these new tax rules and how they affect the real estate market, don’t hesitate to reach out to us. We’d be happy to help you.

7 things to know today and Orlando housing market

 

Good morning, Orlando!

It was a good year for Orlando-area Home Sales, says Allyn Maycumber of WeKnowNona, as both home sales and the median price showed increases over the year-ago period, the Orlando Regional Realtor Association reports.

Home sales last year totaled 37,198, an uptick of 3.8% above 2016’s 35,829. In addition, Orlando’s annual median home price of $220,000 is 10% higher than the 2016 annual median price of $200,000.

ORRA President Lou Nimkoff said the median price was driven during 2017 primarily by a combination of strong buyer demand and very low inventory levels, and “Realtors expect prices to continue their upward trend in 2018, albeit at a slower rate.”

“We also expect low inventory to continue to exert its influence on the market in 2018, especially in the highly desired lower-priced categories,” said Nimkoff. “In fact, the lack of affordable housing in Orlando is a concern that Realtors anticipate will be at the forefront of community discussion in 2018.”

Meanwhile, a look at sales county by county shows Lake County was 7.2% above 2016; Orange County, 2.8%; Osceola County, 7.9%; and Seminole County, 3.8% below 2016.

And be sure to check out these other Tuesday headlines:

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Rumor: A new Orlando theme park to be announced in 2018 

Disney Springs lands among New York Times’ top places to visit in 2018

Lucky’s Market to open its 2nd C. Fla. store, hire 150 people

Lucky’s Market, a natural foods grocer, plans to open its second Central Florida store this spring in a 30,000-square-foot space at 1720 E. Highway 50 in Clermont that formerly was occupied by Sweetbay Supermarket. More here.

Here’s what ULA is shooting to space in January from Florida’s Space Coast

United Launch Alliance’s Atlas 5 rocket will launch from Cape Canaveral on Jan. 18,between 7:40-8:20 p.m., carrying a missile detection satellite to orbit. Click here to see photos of what ULA is shooting into space.

Orlando International Airport food vendor to hire 145 new workers

Beverage and food provider for traveler HMS Host, the Orlando International Airport’s primary food concessionaire, will host a job fair this week to hire 145 people. The in-person hiring event will be on Thursday, Jan. 18 at the Hyatt Regency Orlando International Airport. More here.

Orlando gas prices face upward pressure

Area gas prices are holding steady, but there is upward pressure on prices at the pump due to rising oil prices, AAA said. The most expensive gas in Florida is in West Palm Beach-Boca Raton ($2.58) and Miami ($2.53). The least expensive gas price averages in Florida are in Orlando ($2.39), Jacksonville ($2.39) and Tampa-St. Petersburg-Clearwater ($2.39).

Equifax was 2017’s most-complained-about finance company

Atlanta-based Equifax Inc., which was hit with a massive hacker attack last year, not surprisingly received the most consumer complaints in 2017, a new report says. In fact, in 49 states (every one except North Dakota) Equifax (NYSE: EFX) received the most complaints.

Whirlpool, Apple partner on home appliance front

Whirlpool Corp. and Apple Inc. will now be involved in how consumers use their home appliances. Whirlpool, the Benton harbor, Mich.-based maker of consumer appliances, said Apple Watch users will be able to control various home appliances later this year. More here.

List of Central Florida’s best-performing stocks

An insulation products firm and two timeshare companies firms saw the three biggest increases in their stock prices among Central ‘s biggest publicly traded companies in 2017.

TopBuild Corp. (NYSE: BLD), Hilton Grand Vacations Inc. (NYSE: HGV) and Marriott Vacations Worldwide Corp. (NYSE: VAC) all saw their stocks rise more than 50 percent in a year when the stock market experienced record highs.

Most of Central Florida’s publicly listed companies performed well amid broader stock market gains. The Dow Jones Industrial Average increased more than 5,000 points in 2017, the first time in the index’s history, and was up more than 25 percent on yearly basis.

But despite most the gains, some of Central Florida’s largest publicly traded companies — SeaWorld Entertainment Inc. (NYSE: SEAS), Goldfield Corp. (AMEX: GV) and National Retail Properties (NYSE: NNN) — reported losses.

SeaWorld Entertainment, which is Central Florida’s seventh-largest publicly traded company based on 2016 revenue, saw its stock price decline 28 percent in 2017 after its attendance declined amid increasing competition from Walt Disney World and Universal Resort. Investors also soured on the company after it lost its focus when it came under fire for its treatment of its animals.

Miami based-Opko Health had the biggest decline of any publicly traded company in Florida that had market capitalization of more than $100 million. Run by billionaire Phillip Frost, Opko Health’s stock dropped about 47 percent after reporting disappointing earnings due to sluggish sales of its prostate cancer test product and its kidney disease drug.

Yet, most Central Florida stocks performed well. Notably, TopBuild saw its stock price jump more than 100 percent in 2017. The company expects activity to pick up even more as rebuilding begins in Florida and Texas following the busy hurricane season. Further, low interest rates and the strong are creating more demand for housing, outpacing the current supply.

7 things to know today and Orlando moves up on best-performing cities list

Good morning, !

Metro Orlando jumped up two places in an annual ranking released Wednesday by California-based Milken Institute that measures economic growth.

The City Beautiful came in at No. 7 on the institute’s list of the top 200 large U.S. metro areas — up from No. 9 last year.

The only other Florida metro to best us was North Port-Sarasota-Bradenton, which saw a huge leap from No. 26 last year to No. 6 this year.

Milken Institute’s index looks at how well the country’s metro areas create and sustain jobs as well as each’s economic growth. Published since 1999, the index looks at nine metrics to evaluate the growth of a metro area, including changes in jobs, wages and salaries in addition to technology output.

Milken Institute said its results can be used as an “objective benchmark for examining the underlying factors and identifying unique characteristics of economic growth in metropolitan areas.”

See the full rankings here.

And be sure to check out these other Thursday headlines:

$89M downtown Orlando luxury apartment tower to break ground in Q2

Another high-end apartment complex soon will dot Orlando’s skyline near Lake Eola, joining a roster of projects such as the under- Modera at Mills Creek and Aspire. More here on the 300,000-square-foot project.

Johnson & Johnson changes hiring plan for regional HQ in Lake Nona

Here are five Walt Disney World projects to follow in 2018

2018 of Sports

Jan. 19

Disney Springs lands among NY Times’ top 52 places to visit in 2018

Disney Springs is among several U.S. spots on a newly released New York Times list of the 52 Places to Go in 2018. The list was selected based on suggestions from regular contributors to the Times’ Travel section that are then narrowed down based on why 2018 is the time to visit a particular place.

12 tech firms hiring 300 Central Florida workers

Attention all job seekers: Video game, data analytics, IT and rocket firms all have high-wage, high-tech jobs available — some paying more than $77,000 a year. To see a quick lineup of which firm firms are hiring, how many positions are available and a few of the job titles, click here.

Feds drop plan to allow drilling off Florida coast

Florida waters were removed Tuesday from White House plansto open previously protected parts of the Atlantic Ocean and eastern Gulf of Mexico to offshore oil and gas drilling. The move spurred questions about whether the quick decision and manner of announcement by the Trump administration were done to further Scott’s political career.

Coca-Cola launches Diet Coke ‘brand rejuvenation,’ adds 4 new ‘bold’ flavors

The Coca-Cola Co. (NYSE: KO) said Wednesday that it was re-launching the 35-year-old Diet Coke with a “bold new look, a fresh attitude” and four new flavors: Diet Coke Ginger Lime, Diet Coke Feisty Cherry, Diet Coke Zesty Blood Orange and Diet Coke Twisted Mango. The all new packaging and flavors hit store shelves this month. More here.

Sears will consider ‘all other options’ after dismal holiday season

Sears and Kmart store sales plummeted almost 17% during the holiday season as it considers “all other options” to stay in business. The company plans on renegotiating $1 billion in debt by extending due-date on some loans and altering terms on other loans. The retailer said it expects to return to profitability this year. More here.

Incentives, new jobs plan gets green light for Lake Nona’s Johnson & Johnson institute

The City Council approved the plan by Johnson & Johnson Consumer Inc. — a division of New Brunswick, N.J.-based Johnson & Johnson (NYSE: JNJ) — to create 25 positions by Dec. 31, 2020, five less than what was projected three months ago. Though it’s fewer positions, the workers will earn higher wages at an average $100,000 in annual pay, city documents showed.

The jobs are expected to be generated from the firm completing an $18 million expansion of its southeast Orlando development and training center, as previously reported by Orlando Journal. The expansion would bring the regional headquarters for the institute’s North America Leadership Development and Training Center to the booming Lake Nona community, city documents showed.

The existing 17,000-square-foot Johnson & Johnson Human Performance Institute does research and provides services for Fortune 500 companies and North American corporations related to mental, physical and spiritual health and well being. The programs and courses offered at the institute help to increase workplace morale and employee productivity, OBJ previously reported.

Meanwhile, along with the higher-wages, the average value of Johnson & Johnson workplace benefits for local employees is $25,000, which includes health insurance, pension and 401(k) contributions and employer tax, city documents showed.

Johnson & Johnson representatives were not immediately available to discuss more details.

However, the company website’s career page shows an open position for a Director of Client Experience for Premier Executive Leadership, an exclusive executive development and wellbeing program designed to prepare top global leaders. The director must have worked with C-suite executives and 20-plus years of experience working in a corporate environment, according to the job listing.

Tavistock’s Jim Zboril shares what’s ahead for innovative developer

Jim Zboril for 13 years has overseen cow pastures transformed into , offices, eateries and more in the 11,000-acre Lake Nona community.

And the president of Development Co. LLC still is leading the charge in developing one of Central Florida’s hottest communities. This year, Zboril is managing development of $3 billion worth of projects in the southeast Orlando community, including the next $300 million phase of Tavistock’s Lake Nona Town Center mixed-use complex, a fitness-oriented resort with a Crystal Lagoons recreational lake, the massive $132 million Amazon.com Inc. (Nasdaq: AMZN) fulfillment center, audit giant KPMG LLP’s $430 million training center and an expansion of the Lake Nona Golf & Country Club.

Plus, the company started site work on Sunbridge, a separate, Lake Nona-like community of 24,000 acres that straddles Orange and Osceola counties.

So what is Tavistock Development’s head honcho gunning for in 2018? Here’s what he had to say:

What’s the biggest thing you have going on next year? It’s hard to list just one. Our development pipeline is highlighted with numerous large-scale, economically significant projects. The Lake Nona Resort — the world’s first iconic performance resort and one of the largest man-made lagoons — and our 3.8 million-square-foot Lake Nona Town Center, which is poised to transform the future of retail through innovative technology. In addition, we are breaking ground on Sunbridge, our newest master-planned community. The most important thing is to continue to attract and retain the best development talent in Central Florida and to support a culture that will drive innovation throughout our projects.

What impact will this have on Central Florida’s The continued growth of our shops, restaurants, first-class entertainment options, hotel rooms and homes – the DNA that makes Lake Nona a great place to live, work and play – helps retain and attract new homeowners to our region. It helps our employers retain and attract top talent, adds new jobs, and brings new visitors to our hotels and Orlando International Airport. Growth is also helping our region become increasingly attractive to major companies that want to relocate here like the U.S. Tennis Association, KPMG and Amazon.

TRENDING

What’s happening in your industry right now? Construction and development are booming for many players. However, resources are stretched with so much activity. We are fortunate in Lake Nona and in this region that we offer steady continuous work for our partners, so we aren’t experiencing as many issues as some in our industry in other parts of the country.

What are your benchmarks for 2018? Commencement of construction on the Lake Nona Resort and Crystal Lagoon, and starting sales in Sunbridge’s first neighborhood

Orlando-area home prices still on the rise

Home prices in the Orlando-Kissimmee-Sanford metropolitan statistical area increased by 6.8% in November compared with the year-ago period, a new report from CoreLogic shows.

On a month-over-month basis, home prices, including distressed sales, increased by 0.8% in November compared with October.

Nationwide, home prices nationally year over year by 7% from November 2016 to November 2017, and on a month-over-month basis home prices increased by 1% in November compared with October, CoreLogic reports.

Looking ahead, the CoreLogic forecast indicates that home prices will increase by 4.2% on a year-over-year basis from November 2017 to November 2018, and on a month-over-month basis home prices are expected to decrease by 0.4% from November to December.

“Rising home prices are good news for home sellers, but add to the challenges that home buyers face,” said Frank Nothaft, chief economist for CoreLogic. “Growing numbers of first-time buyers find limited for-sale inventory for lower-priced , leading to both higher rates of price growth for ‘starter’ homes and further erosion of .”

How Much Is Your Home’s Collateral Value?

Traditional Appraisal and Automated Valuation Models Don’t Always See Eye to Eye.

Recently the two government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac announced plans to waive the requirement of a professional appraisal on qualified purchase loans with a loan-to-value ratio at or below 80 percent.  For Fannie Mae, the new waiver option extends the Property Inspection Waiver program which was initially only applicable to refinancing loans. Similarly for Freddie Mac, the move has expanded lenders’ option to use automated evaluation tools, in lieu of a traditional appraisal, on both purchase and refinancing loans when working with its Loan Advisor Suite.

The GSE announcements came amid reports of a shortage of state-certified and licensed appraisers, especially in rural areas.  Nonetheless, the announcement was not without controversy. The Appraisal Institute (AI), the country’s largest trade association of real estate appraisers, has raised safety and soundness concerns of eliminating the appraisal requirement and is seeking a legislative rollback as it regards “the requirement for the completion of full appraisals to determine the true equity position of individual properties” fundamental to prudent risk management for the mortgage finance sector.  Under the federal banking regulations for real estate transactions, automated appraisal methods are generally reserved as a due diligence tool rather than as the primary valuation.

From a market economics perspective, a clash between automated evaluations and traditional appraisal seems rather inevitable, as advanced analytics and big data technology have steadfastly pushed the boundaries of collateral evaluation capabilities. Today’s automated valuation alternatives are often powered by large databases that can capture information on a given property as well as transaction records in and around the property in consideration.

 What Title of figure 2 is

In mortgage underwriting and securitization, collateral risk is typically quantified by loan-to-value (LTV) ratios. For purchase loans, the LTV ratios at origination are valued at the lesser of purchase price and appraised value. Since traditional appraisals infrequently come in below purchase price – about 10 percent of the time among loan applications or less than 4 percent among funded loans – a loan’s collateral risk measure is typically unaffected by appraisal.

But that could change quickly using an automated valuation model (AVM). Here is a quick look at the difference between traditional appraisal and AVMs, with implications for origination LTV. This blog analyzed a sample of recently appraised single-family purchased with mortgage financing for which a CoreLogic AVM value was also available.  The sample consists of approximately 190,000 purchase-loan properties appraised between July 2016 and June 2017.

Figure 1 shows the distribution of the properties’ traditional appraisal value relative to their purchase price. A majority of the appraisals were either exactly at the contract price (31.6 percent) or slightly above it (58.6 percent), leaving about 10 percent of the properties appraised below the purchase price. With very few appraisals on the low end, the purchase price effectively determined origination LTV during loan underwriting.

Figure 2 shows the distribution of the AVM values relative to the purchase price: 45.4 percent of the AVM values were at or above the contract price, while 54.6 percent were below it. Compared with traditional appraisals, the AVM values were more symmetrically distributed about the purchase price but with thicker tails on both ends (that is, greater uncertainty in the valuation). For the 5-in-9 properties with an AVM value below the purchase price, the LTV ratios for these loans would be higher had the AVM valuations been used instead of a traditional appraisal.

Since the odds of an AVM coming in below the purchase price were 55-45 in this analysis, compared with 10-90 for traditional appraisals, AVM usage will increase the underwriting LTV on a much larger number of loans. And the ‘fatter tail’ of the distribution below the contract price means that the upward LTV adjustment will more often be larger than for a traditional appraisal.

While the industry may debate which valuation method is likely more accurate than the other, or more importantly, which is more useful than the other in predicting default risk and loan performance, there is one thing we can all agree on: Lenders and mortgage investors need reliable information about a loan’s and portfolio’s collateral risk to make informed underwriting and investment decisions.

[1] The property must be a single-family, primary residence or second home with a value less than $1 million; additional restrictions apply.

[2] See the Interagency Advisory on the Availability of Appraisers, issued by the federal banking regulators on May 31, 2017. https://www.occ.gov/news-issuances/news-releases/2017/nr-ia-2017-60a.pdf

[3] The Appraisal Institute press release, “Appraisal Institute Joins 35 Groups Seeking to Halt Appraisal Waivers,” September 7, 2017.

[4] See the Interagency Appraisal and Evaluation Guidelines 2010, which was originally issued in 1994 by the FDIC, OCC, FBR, and OTC, in accordance with Title XI of the 1989 FIRREA.

[5] A recent study by researchers at Fannie Mae reported less than 4 percent of the purchase loans guaranteed by the agency during 1992-2015 had an appraisal below the purchase price. The study can be accessed at http://www.fanniemae.com/resources/file/research/datanotes/pdf/working-paper-102816.pdf

[6] The AVM valuation date (or, AVM “as of” date) did not fall exactly on the appraisal date, but ranged from 15 days to about 3 ½ months after the appraisal date.

[7] Because the data set did not include the buyers’ loan amount, analysis by LTV ratio could not be performed. It remains to be seen whether the distribution of AVM valuations or appraisal is affected by leverage. However, if the valuations are unbiased, we should not expect leverage to affect the valuation outcome.

Snapshot of $172M worth of Lake Nona projects underway

The fast-growing, 13,000-resident Lake Nona community in southeast Orlando is dotted with cranes, piles of earth and the machines to push ’em around.

Among developer Development Co.’s projects underway are three valued at  $172 million combined:

Flip through Orlando Journal‘s slideshow for a closer look at these developments emerging out of former pasture land.

Lake Nona is home to several businesses, including the new $430 million KPMG training and innovation center and New York-based Drive Shack Inc. (NYSE: DS), a new global golf entertainment company opening its first location in Lake Nona in 2018.

Cities Higher at Risk for Bubble

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Are we in a housing bubble? Whenever house prices increase faster than general inflation for a year or two, we hear that question more often. Can the market sustain the new higher price, or has something artificially or temporarily inflated these prices?

Nationally, over the past five years, the increase in house prices has outpaced inflation by 34 percent cumulatively since 2012 (figure 1). Though noteworthy, the increase is less than half the pace seen between 1997 and 2006, which saw house price growth outpace inflation by 87 percent.

Locally, there are areas of concern

Of course, real estate is local, so we should also ask if there are any regional housing bubbles. We examined the same two key factors to measure the likelihood that a metropolitan statistical area (MSA) is in a bubble, and we offer a method that ranks the largest MSAs against each other based on these factors.

We began with the 37 largest MSAs and looked at the real increase in house prices since their lowest point following the crisis (the trough) and our measure. We then sum the rankings and re-rank the MSAs most likely to be in a bubble, our “bubble watch” rank.

The top 10 MSAs are ranked high on both home price growth and lack of affordability measures. But further down the list, the rank could be driven by one measure or the other.