As Hurricanes Katrina and Rita left devastatingly clear, a city doesn’t have to be part of the hardest hit area to see significant damage. For West Palm Beach homes, most of the damage came in the form of flooding, which shouldn’t come as a surprise as “more than 80 percent of South Florida is prone to flooding.” But if that’s the case, how come less than half of West Palm Beach homes are covered by flood insurance?

The problem is that many mortgage bankers don’t require flood coverage, so many owners of West Palm Beach homes don’t purchase it. This is not surprising since coverage can be quite expensive. Premiums range from $317 to more than $1,000 depending on the elevation of the West Palm Beach home in question.

However, experts recommend that homeowners in coastal areas forget the cost and purchase flood insurance. Even if the West Palm Beach homes aren’t in a designated flood zone, the chance of flooding, even in a mild storm, is very high.

As building materials continue to grow scarce and construction costs increase, the price of new West Palm Beach housing will most certainly be affected.

Cement is one of the primary worries, as it is the foundation of West Palm Beach housing construction and its prices have been rising at about 20 percent every six months. To make things worse, Florida doesn’t produce enough cement in-state to fill its 10 million ton need. Therefore, cement has to be shipped from out-of-state, meaning rocketing fuel prices will continue driving up the cost of cement and West Palm Beach housing currently under construction.

Asphalt shingles and plywood are also increasing in cost by 30 and 40 percent because they are in short supply. “The waiting period for asphalt shingles has also grown to between two and three weeks.”

As demand for West Palm Beach housing decreases, one has to wonder how a slowdown will affect the local market. One of the primary worries is the loss of jobs. As West Palm Beach housing sales slow and mortgage rates increase, construction activity and mortgage lending will soften. Since both are “big sources of employment,” it is likely that dampened demand will decrease the need for a lot of the jobs that were generated by a strong West Palm Beach housing market over the past five years.

Home price appreciation will also slow, making the owners of West Palm Beach housing far less willing to refinance and use home equity loans to pay of old debt and add to savings. This will ultimately slow consumer spending, which is what initially fuelled the now strengthening local and national economy.

West Palm Beach real estate transactions reached a standstill last year after Hurricanes Charley, Frances, Jeanne and Ivan battered Florida in August and September. However, fall 2005 saw a market fraught with movement and energy. West Palm Beach real estate sales were strong, yet the Florida Association of Realtors cautions that these “sales increases don’t reflect the true state of the market,” they are simply soaring “on the winds of hurricanes past.”

The number of existing home sales nearly doubled this September when compared to the last. Plus the median price for residential West Palm Beach real estate rose 20 percent from one fall to the next, increasing from $332,700 to $400,000.

However, if we look at the true state of the West Palm Beach real estate market, all signs suggest that it is cooling. Sales over the past four or five months have been declining, and “the number of properties on the market is up 50 percent over the last year.”

West Palm Beach’s consumer confidence hit a 12-year low in September from which it has yet to show signs of recovering. Low consumer confidence, brought by high gas prices and rising interest rates, is likely to affect the West Palm Beach real estate market negatively, as the squeeze on spending will make large expenditures scant.

“Consumer perceptions of personal finances and buying conditions” are very low. That coupled with rising interest rates is expected to let some of the air out of the West Palm Beach real estate bubble.

Up to now, many locals have been using their West Palm Beach real estate “as an investment strategy,” but experts believe that as interest rates continue to rise, “people are less likely to fund spending with home equity loans.”

As the economy strengthens and monetary policy grows stricter, mortgage rates are increasing. Economists believe that by 2006, interest rates will hit 7 percent, causing a five percent decrease in West Palm Beach housing sales by early next year.

The decrease in sales will lead to a decrease in West Palm Beach housing starts, but luckily it won’t cause prices to plunge. However, West Palm Beach housing prices won’t continue to increase either.

Realtors think that the West Palm Beach housing market “won’t soften too much” thanks to baby boomers, who continue to fuel demand, and immigrants, who “are increasingly becoming first-time home buyers.” Both of these demographics will make the coming West Palm Beach housing lull “relatively mild compared with past downturns.”

Historically low interest rates that led to a boom in Orlando real estate sales also led to an increased interest in adjustable rate Orlando mortgages.

But now, homeowners who decided to buy their houses using adjustable rate Orlando mortgages “may have new reason for anxiety as the Federal Reserve raised short term interest rates again.” If these increases continue, adjustable rate Orlando mortgages will soon be far less affordable than 15 or 30-year fixed-rate Orlando mortgages.

Every homeowner’s financial situation is unique, so it is important to seek the guidance of a mortgage expert who understands each homeowner’s particular situation and goals. But speaking generally, many financial experts think now is the best time to refinance to fixed-rate Orlando mortgages.