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Yearly Archives: 2022

Mortgage Rates Fell for 4th Straight Week to 6.33%

Recession-skittish investors moved more money into 10-year Treasury notes, pushing rates for 30-year, fixed-rate loans to move lower. In Nov., the rates hit 7.08%.

WASHINGTON (AP) – The average long-term U.S. mortgage rate fell for the fourth consecutive week and has dropped more than three-quarters of a point since hitting a 20-year high last month.

Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate dipped to 6.33% from 6.49% last week. A year ago the average rate was 3.1%.

The average long-term rate sat at 7.08% in early November, but has since had the steepest four-week decline since 2008.

“While the decline in rates has been large, homebuyer sentiment remains low with no major positive reaction in purchase demand to these lower rates,” said Sam Khater, Freddie Mac’s chief economist.

Mortgage rates are still more than double what they were a year ago, mirroring a sharp rise in the yield on the 10-year Treasury note. The yield is influenced by a variety of factors, including global demand for U.S. Treasurys and investor expectations for future inflation, which heighten the prospect of rising interest rates overall.

The Federal Reserve, which has been hiking its short-term lending rate since March in a bid to crush the highest inflation in decades, raised its rate again early this month by 0.75 percentage points, three times its usual margin, for a fourth time this year. Its key rate now stands in a range of 3.75% to 4%.

Markets rallied last week after Fed Chair Jerome Powell signaled that the Fed may increase its key interest rate by just a half-point at its December meeting. Rate increases could then fall to a more traditional quarter-point size at its February and March meetings, based on previous Fed forecasts. Powell said the Fed will likely have to keep rates elevated for longer than originally planned, as inflation has eased somewhat but remains way above the central bank’s 2% target.

The sharp rise in mortgage rates this year, combined with still-climbing home prices, have added hundreds of dollars to monthly home loan payments relative to last year, when the average rate on a 30-year mortgage barely got up above 3% much of the time.

That’s created a significant affordability hurdle for many would-be homebuyers, spurring this year’s housing market downturn. Sales of previously occupied U.S. homes fell for the ninth consecutive month in October, hitting the slowest pre-pandemic annual sales pace in more than 10 years.

The rate for a 15-year mortgage, popular with those refinancing their homes, slipped to 5.67% from 5.76% last week. It was 2.38% one year ago.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

https://www.floridarealtors.org/news-media/news-articles/2022/12/mortgage-rates-fell-4th-straight-week-633

RE Q&A: Avoid Problems Selling to a Sister

Two siblings inherited a vacation home, and one who uses it a lot wants to buy the other half. It’s an amicable agreement, so how can they avoid unexpected problems?

FORT LAUDERDALE, Fla. – Question: I own a vacation home with my sister we inherited years ago. Recently she approached me about buying out my half of the house. We get along well, and I rarely use the property while she practically lives there, so this seems fair. But I do not want to cause any problems because of the transfer. How can we protect against this turning out bad? – Raoul

Answer: I have seen many solid relationships turn bad once money became involved. This is often caused by each party understanding the deal differently than the other because of too many assumptions and poor communication. It is usually agreed to verbally and sealed with a handshake.

Unfortunately, memories fade and misunderstandings occur.

I often tell clients, “If they can say it – they can sign it.”

People are reluctant to enter a written contract when dealing with people they are close to. However, this is one of the times that a detailed document will provide the most benefit by avoiding misunderstandings and disputes that stem from them.

Other than favorable terms, you should treat this transaction like you would if selling the property to a pleasant stranger. Have a detailed written agreement drafted and use a professional to prepare the deed and other closing documents and handle your transaction’s details.

Just because your family owned the property for years, do not assume it is problem free. Unfortunately, just because you do not know about a problem does not mean problems do not exist. You may want a professional home inspection to identify any material issues.

You should also consider purchasing a title insurance policy to protect against unknown ownership issues. These problems might not be discovered until your sister tries to sell the property years later.

The easily solvable problem found now can become a giant hurdle a decade from now.

Copyright © South Florida Sun Sentinel, Gary M. Singer. Distributed by Tribune Content Agency, LLC. All rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/12/re-qa-avoid-problems-selling-sister

Florida Legislature Could Target Attorney Fees

The Fla. Legislature is expected to address attorney fees in property insurance cases – a change supported by Florida Realtors – during next week’s special session.

TALLAHASSEE, Fla. – Expect changes to attorney fees as one step in next week’s special legislative session to address Florida’s troubled property-insurance system, House Commerce Committee Chairman Bob Rommel said Wednesday.

Florida Realtors®’ has focused on attorney fees as one way to address the state’s property insurance challenges. Members previously approved initiatives to:

  1. Support legislation to repeal one-way attorney fees and reign in other litigation abuses in property insurance claim disputes, with the goal of making Florida attractive to insurance and reinsurance capital
  2. Support the retention, enforcement and/or refinement of consumer protections in the state of Florida as it pertains to property insurance and property insurance claims to ensure they achieve their intended purpose(s)

House and Senate leaders on Tuesday released an outline of topics for the session, but Rommel, R-Naples, said talks are still underway on the details of bills that will go before lawmakers. The session begins Monday.

Rommel, appearing at an annual Florida Chamber of Commerce’s insurance summit in Orlando, said one issue that will be addressed is the impact of what are known as “one-way attorney fees.” Insurers have long sought changes because they can be forced to pay the fees of plaintiffs in lawsuits over insurance claims.

“When you’re watching TV … there’s more commercials about an attorney talking about not making you whole when you’re damaged, but putting money in your pocket,” Rommel said. “And somehow in Florida, we’ve gotten to this area where it’s not about making people whole and their harm. It’s about making you rich or making an attorney rich.”

Rommel said changes during the session will be aimed at helping consumers, protecting an industry on “life support” and attracting investment capital into the Florida insurance market.

“We know we have to do some aggressive things that some people in the insurance industry aren’t going to like, some consumers aren’t going to like, some legislators aren’t going to like. But you still have to do it,” Rommel said.

But Amy Boggs, chairwoman of the Florida Justice Association’s Property Insurance Section, criticized the focus on restricting lawsuits, saying such moves would hurt consumers.

“Litigation isn’t the problem – it’s the scapegoat,” Boggs said in a statement Tuesday. “Behind every lawsuit is a homeowner or business owner who has been underpaid or wrongfully denied coverage.”

Senate President Kathleen Passidomo, R-Naples, and House Speaker Paul Renner, R-Palm Coast, released a formal session proclamation Tuesday that listed a series of hot-button insurance issues that could be considered. Those issues include trying to curb lawsuit costs; boost the availability of critical reinsurance; limit a long-controversial practice known as assignment of benefits (AOB); and bolster the financial stability of the state-backed Citizens Property Insurance Corp.

Florida’s “insurer of last resort”

Citizens was created as an insurer of last resort. With companies dumping hundreds of thousands of policies to reduce financial risks – and six insurers going insolvent since February – Citizens has seen its policy count grow from 542,739 in December 2020 to 1.13 million as of Friday.

“I know that if I were looking to put my capital to work, I probably wouldn’t want to come to Florida under the current situation,” Rommel said. “That’s why we’ve seen the growth of Citizens. You know, Citizens, we basically subsidized the rates. They’re not actuarially sound.”

During a separate Citizens Board of Governors meeting Wednesday, Citizens President and CEO Barry Gilway also said a major challenge is drawing investment capital into the market. At the same time, insurers are seeing large increases in the costs of reinsurance, backup coverage that plays a critical role in Florida.

While Gilway supports legislation to curb litigation, he said such changes would not immediately solve the industry’s problems. As a result, he said short-term state support could be needed to help with issues such as reinsurance. During a May special session, lawmakers approved spending $2 billion on reinsurance.

During a call with reporters Tuesday, House Democrats argued lawmakers need to address rate increases, push for a national catastrophic risk pool, ensure homeowners are better educated on their policies and reduce the dependence on Citizens.

Rep. Hillary Cassel, an attorney from Dania Beach who specializes in property insurance law, said the government and insurance companies need to be more accountable for their actions. She pointed to the state Office of Insurance Regulation.

“We need to review the data that OIR (Office of Insurance Regulation) receives in a commission-type basis, where stakeholders have an opportunity to review the extensive amount of data and report back to the Legislature, rather than just receiving OIR presentations of the facts,” Cassel said.

Florida Chief Financial Officer Jimmy Patronis wants lawmakers to consider a statewide prosecutor who would focus on insurance fraud. “It’s just time we do a little more focusing and get some deterrent,” Patronis said Tuesday at the Florida Chamber event.

Patronis also called for lawmakers to ban the longstanding practice known as assignment of benefits.

Assignments of benefits, which involves policyholders signing over insurance claims to contractors, has been highly controversial in recent years, particularly involving such things as water-damage claims.

Lawmakers have taken some steps to try to restrict assignment of benefits, arguing, in part, that the practice has led to costly litigation.

© 2022 The News Service of Florida. All rights reserved. News Service Executive Editor Jim Saunders contributed to this report.

https://www.floridarealtors.org/news-media/news-articles/2022/12/florida-legislature-could-target-attorney-fees

The Broken Promise of the iBuyer

The iBuyer business model wasn’t made for a slowing RE market. iBuyers still in business seem to complete fewer purchases and make less enticing offers.

CHICAGO – Tech firms offering instant cash to home sellers touted simpler, quicker transactions. But the model is floundering in the housing downturn.

When iBuyers emerged a few years ago, they made bold promises to revolutionize the homebuying and selling process with instant cash offers and a pick-your-closing-date transaction model. But many of these iBuyers are facing setbacks amid a slowing housing market. Some are pulling back and pivoting their business – or even shutting down.

Redfin shuttered its iBuying arm, RedfinNow, in November, while Opendoor, the largest iBuyer, announced $1 billion in losses in the third quarter and FlyHomes reduced its workforce by nearly 40%. Zillow Offers, another giant in the iBuyer space, closed in 2021. Redfin CEO Glenn Kelman says his company’s move was a “strategic decision” to refocus on its core real estate business.

The iBuyers that remain in the market reportedly are taking on significantly fewer purchases and making less-enticing offers to sellers.

“The iBuyer model remains unproven,” says Kurt Carlton, president and co-founder of New Western, a company that buys and sells properties for home flippers and investors. “It may return with some real utility, but I don’t think the recent overabundance of cash in the venture capital markets was a healthy dynamic for these models. They certainly didn’t seem to provide the urgency and do-or-die grit that often drives real innovation. Now the capital markets have shifted to a ‘profits over promises’ expectation, and many of the iBuyers have found themselves running out of time.”

“The purest iBuyers are essentially pivoting to become more like listing agents,” Carlton says, “showing just how challenging it is to disrupt the current industry standard.”

An instant reaction?

Despite promises to disrupt the industry, iBuyers accounted for a small number of transactions: 1% of sellers sold their home through an iBuyer in the past year, according to National Association of Realtors® data. However, some markets saw more activity than others, such as Phoenix, where iBuying accounted for nearly 10% of sales, according to data from Parcl Labs, a company that tracks iBuyer activity.

Parcl’s research finds that iBuyers in the Phoenix area currently hold about $1 billion in housing inventory, says Jason Lewris, co-founder of Parcl Labs. As the market slows, iBuyers are slashing prices by more than 2% every two weeks to unload properties quickly.

“As more pressure builds for iBuyers to exit their positions, they will likely become more aggressive in their pricing,” Lewris says. “This will continue a downward spiral until prices reach a point where demand enters to stabilize it.”

Many iBuyers also are reducing their purchases. Opendoor reportedly scaled back its homebuying activity by 45% in the third quarter compared to a year earlier and shut down its mortgage business. The company announced layoffs of 18% of its workforce this fall, and CEO and co-founder Eric Wu said this month that he plans to step down.

Offerpad, another iBuyer, said it slowed the pace of its purchases by 33% in the third quarter compared to a year prior. Nevertheless, “despite the current market volatility, I firmly believe technology-enabled solutions that simplify the homeownership experience will define the future of real estate,” Offerpad CEO and chairman Brian Bair said in a statement.

Refocus, restrategize

Still, some iBuyers are expanding into other areas while slowing or halting home purchases. Offerpad is beta testing its “My Way” program, which enables homebuyers to renovate prior to moving in and roll the costs into their mortgage.

Opendoor is investing in a new program, Opendoor Exclusives, a marketplace for buyers to view off-market homes on a first-come, first-served basis. (Opendoor skirts MLS rules for off-market listings because the company owns its listings.) Homeowners who sell with Opendoor can either request an instant offer or list on Opendoor Exclusives for 14 days to generate buyer interest. Opendoor aims for 30% of its total business to come through the Exclusives marketplace by the end of 2023.

“This is a big shift in their model,” says Mike DelPrete, a real estate technology strategist who authored The 2022 iBuyer Report. “The proposition of iBuying has always been about speed, certainty and simplicity.” But speed is at risk with Opendoor Exclusives, DelPrete notes, because it doesn’t use the instant offer model. “And it’s less simple. It’s more complex to explain and understand than just pressing a ‘sell’ button.”

Will other iBuyers choose to innovate or retreat from the market? Tech startups like New Western are focusing on niche markets, like managing fix-and-flip properties.

“When others are retreating, we’re advancing,” Carlton says, adding that there are 15 million vacant homes in the U.S. that could be rehabbed and returned to the marketplace to help address inventory shortages.

“I’m hoping this more challenging funding environment will drive real innovation to improve the homebuying and selling experience,” Carlton says. “The current market is challenging, and I think the old saying holds true that ‘necessity is the mother of invention.’ It’s hard to tell if iBuying will fade into a niche alternative or evolve into a different approach that proves viable.”

© 2022 National Association of Realtors® (NAR)

https://www.floridarealtors.org/news-media/news-articles/2022/12/broken-promise-ibuyer

Co-buying: How Platonic Partners Make It Work

Moving from city to outer exurbs? Behavioral science finds it’s a bad idea to leave friends behind. For a few buyers, the solution is buying big and sharing space.

SAN FRANCISCO – Seven years ago, Phil Levin and his girlfriend, Kristen Berman, pondered a common question: Should we move in together?

Levin assumed they’d take a predictable path and find a more affordable apartment outside of pricey San Francisco. But Berman, a behavioral scientist, shared her reservations about leaving their friend network – and some facts to back it up.

“All the behavioral science research shows that that’s one of the worst things you can do for your happiness,” Levin says.

Instead, the couple rented a Victorian-era mansion in San Francisco’s Hayes Valley neighborhood and invited nine friends to move in. Today, they co-own a multiunit property in Oakland, California, called Radish, which houses 17 adults and two infants.

It took some effort to find the right property and figure out finances. But the now-married couple couldn’t imagine designing their life – or raising their daughter – any other way.

“Being able to have this extended family of ‘aunties’ and ‘uncles’ close by has been wonderful,” Levin says.

Many co-buyers operate on a smaller scale. But no matter the size of your group, co-buying requires extra planning and paperwork. If you’re willing to get vulnerable about your finances and long-term goals, the payoff of companionship can be worth it.

Keep an open mind

In the National Association of Realtors’ 2022 Profile of Home Buyers and Sellers, a record-high 5% of first-time home buyers were “other household compositions” – that is, something different than single, married or coupled.

“It can be a great situation, and a way to enter the market that they wouldn’t be able to enter otherwise,” says Don Koonce, a real estate agent in Seattle who has helped dozens of co-buyers during his eight years in real estate. Many co-buyers Koonce has worked with are platonic friends who have been living together for years. But they’re as diverse as the types of homes they buy, which range from traditional single-family homes to condos and duplexes.

The right home depends on your group’s size and tolerance of personal versus shared space. Houses with basements work well for separate living spaces, Koonce says, or you could remodel.

Recently, Koonce helped a mother and daughter buy a split-level that they renovated into two distinct units, including separate kitchens.

“It was beautiful,” he says. “I don’t see any problem with a resale on that, because somebody could rent it out.”

Stress-test your relationship

Even for family members or experienced roommates, the financial commitment of co-buying raises the stakes.

Ashley Agnew is an investment advisor and financial therapist with Centerpoint Advisors, a wealth management firm in Needham, Massachusetts. When working with co-buyers, she role-plays worst-case scenarios to “stress test” the relationship, such as how they’d handle major home repairs or theft.

“You really do have to get a little bit financially naked with the person that you’re buying with,” she says. “There has to be a lot of transparency.”

Agnew always recommends that co-buyers seek legal counsel. An estate attorney can draft a cohabitation agreement – something that’s not just for romantic partners, she notes. That way, all parties know what to expect if someone wants out of the homeownership commitment.

“It’s almost like running a minibusiness, especially if it’s not a coupleship,” Agnew says.

An estate attorney can also help co-buyers understand options for titling the home, such as joint tenancy or tenancy in common. Each arrangement has pros, cons and legal obligations.

Find the right resources

To move your plans from dream to reality, it’s essential to find a lender that is familiar with – and supportive of – co-buyers’ unique needs. That’s often the first hurdle, Koonce noted. Some Realtors hesitate to work with co-buyers, too.

“It’s a lot more paperwork,” he says, “and a lot more coordinating and getting people to agree.”

To provide better service, Koonce earned a professional certification established by Seattle-based real estate startup CoBuy. The company offers education for real estate agents, attorneys and lenders, as well as services for co-buyers themselves.

After establishing Radish, Levin found his inbox flooded with questions about co-buying and co-living. The interest exposed an information gap: People craved trusted guidance on how to do this successfully. So in 2020, Levin teamed up with close friend Gillian Morris to co-found the Substack newsletter Supernuclear. It provides advice, templates and tools to navigate common challenges of co-buying and co-living.

“We didn’t invent this concept,” Levin says. “We’re sort of standing on the shoulders of other people, so there’s sort of a pay-it-forward element where we wanted to have other people experience the happiness and meaning that we’ve gotten through this.”

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. This article was provided to The Associated Press by the personal finance website NerdWallet. Abby Badach Doyle is a writer at NerdWallet.

https://www.floridarealtors.org/news-media/news-articles/2022/12/co-buying-how-platonic-partners-make-it-work

A Good Business Plan Helps Prevent Burnout

You can’t do it all, and the minor challenge of burnout in your 20’s can become a major challenge in your 50’s. A good business plan can help with that.

CHICAGO – As real estate professionals form their business strategy for the coming year, they should set goals that have a realistic timeframe.

It’s important to focus on the day-to-day activities that bring agents closer to their goal. These activities should be compiled in an annual business plan that serves as the agent’s guide on a daily, weekly and quarterly basis.

One element that should be included in the plan – and often is not – is burnout prevention to counter the daily pressures of working on full commission. Agents should add self-care into their business plan in order to function better. This self-care can include:

  • Physical habits, such as working out and stopping screen time 30 minutes before sleeping
  • Lifestyle habits, such as trying a new creative outlet, developing a daily routine and setting boundaries for work-life balance
  • Spiritual connections, such as meditation, prayer and relaxation techniques
  • Social support activities, such as joining a club and spending more time with friends and family
  • Mental and emotional practices, such as scheduling 20 to 30 minutes to relax while listening to a podcast

It’s not just something agents should do for themselves. When they carve out time for self-care, they help avoid burnout while also presenting their best selves to clients. Ultimately, taking breaks during the day will help the business become more efficient.

If burnout has led to health issues, though, agents should also consult their health care provider.

Source: Realtor Magazine (12/01/22) Wrenn, Brittany

© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-4688

https://www.floridarealtors.org/news-media/news-articles/2022/12/good-business-plan-helps-prevent-burnout

Study: Fla. No. 2 in U.S. for HOA Complaints

Fla. law allows HOAs to levy fines and liens, leading in part to the number of complaints. But with Calif. No. 1, complaint numbers are also a result of population.

NEW YORK – According to Florida-based real estate attorney Mitchell Nowack, Florida law allows homeowner and condo associations (HOAs) to levy fines and liens on property, particularly over issues regarding home repairs. While HOAs’ primary goal is to maintain property values, they can also be a source of stress for property owners.

“Their job is to have conformity,” Nowack says. “Their job is to make sure that you preserve your neighbors’ home value by not destroying and putting stuff all over your lot that can take away from the value of property, which is what they’re trying to control.”

Cinch Home Services, an online home warranty company, ranked Florida as No. 2 in the nation for the most HOA complaints. California ranked No. 1 and, after Florida, the top five states include Texas, North Carolina and Washington, making “number of complaints” also a result of states having larger populations.

The most common HOA citations, according to the group’s study, are over parking, lawn care and home repairs.

Nowack advises property owners facing HOA problems to try to work out a solution the first time an issued is raised in order to avoid costly disputes and fines.

Source: WPTV 5 (Fla.) (12/05/22) Sczesny, Matt

© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-4688

https://www.floridarealtors.org/news-media/news-articles/2022/12/study-fla-no-2-us-hoa-complaints

Q&A: Is Zoom Meeting an ‘Inspectable’ Record?

Fla. law, both for condos and HOAs, has some rules regarding meeting records and member sharing. But being somewhat new, Zoom meetings enter a gray area.

WEST PALM BEACH, Fla. – Question: Many associations turned to Zoom meetings due to COVID. While in-person meetings are now more prevalent, associations continue to use Zoom in conjunction with their in-person meetings.

If the public association meeting is recorded (I personally made the request) via Zoom, does the president have the right to state: “The recordings are made expressly for the president and secretary to aid them in producing the meeting minutes. The recordings are not made for general distribution.”?

As someone with a hearing disability, I find it beneficial to listen to recorded meetings in the quiet of my home even though I attend the meetings in-person. For the president to make an arbitrary decision without discussion seems improper. Continued use of Zoom meetings and their recordings might even improve the participation levels of condo associations due to the convenience of being able to replay the recording. – D.C.

Dear D.C. – I love Zoom meetings. I have found that since COVID began, the prevalence of Zoom meetings has resulted in greater board member participation and unit owner participation. I think it’s a win all around, and I am hopeful that the laws eventually recognize Zoom-only meetings as a clear legal option for community associations. (Right now this is a little bit of a gray area. While it’s clear that board members can participate via Zoom, it’s not clear that associations can mandate that be the only option for owners – although I think there are very good arguments that’s the case.)

You are effectively asking whether recordings of the Zoom meeting are inspectable association records. The answer to this question is no different than recordings of in-person meetings. The association has no obligation whatsoever to record Zoom meetings (or in-person meetings), but if it chooses to do so, whether the recording is an inspectable record may come down to whether it is kept long-term.

If you are in a condominium, the Florida Administrative Code, at Section 61B-23.002, states that audio and video recordings made by the board at its direction must be kept until at least the minutes of the meeting have been approved. At that point they may be discarded; however, if the board elects to preserve them, they are an official association record.

What this section does not say, however, is if such recordings are inspectable records between the time they are made and the time the minutes are approved, even if the board does not intend to keep them. The rule implies that they are not official records until and unless they are kept past the time the minutes are approved, but it does not say that explicitly – and so this is an area that may be the subject of litigation at some point in the future.

If you are instead in a homeowners association (HOA), then it really is a totally open question.

While the statute does not expressly say that meeting recordings are official records, it does say that the official records include “all other written records of the association not specifically included in this subsection which are related to the operation of the association.”

Does that include recordings of meetings? Are recordings “written” because they are electronically written into a digital file (probably yes)? Are they official records that must be kept, even if the only purpose is to keep them to assist with the preparation of minutes? (It’s not really clear if that’s the case – which is exactly why the Division of Condominiums addressed this issue in the administrative code.)

Ultimately, someone would have to litigate this issue to know for sure and, given that owners have an express right to record board meetings, that lawsuit seems extremely unlikely to ever occur.

When it comes down to it, that’s really the answer to your question. You have the right to record these Zoom meetings on your own, so really this is a moot point.

Yes, it may be easier and clearer to get a digital copy directly from Zoom; but if you watch the meeting on your iPad or iPhone, for example, you can simply use the screen record function and record the entire meeting for yourself. (If you’re not sure how to do this there are numerous guides online.) You don’t need the association’s recording and so, ultimately, it’s not worth fighting over.

© Copyright © 2022 The Palm Beach Post. Ryan Poliakoff, a partner at Backer Aboud Poliakoff & Foelster, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. Ryan Poliakoff and Gary Poliakoff are co-authors of “New Neighborhoods – The Consumer’s Guide to Condominium, Co-Op and HOA Living.”

https://www.floridarealtors.org/news-media/news-articles/2022/12/qa-zoom-meeting-inspectable-record

Realtor.com Forecast: Top 2023 Housing Markets

What U.S. cities will see home prices and/or sales rise? Realtor.com feels optimistic about smaller fringe metros, with few Fla. cities near the top of its ranking.

SANTA CLARA, Calif. – Mid-sized markets with local industries tied to manufacturing, education, healthcare and government with do best in 2023 for home prices and sales, according to Realtor.com’s 2023 Top Housing Markets forecast.

They’re poised to grow in homes sales and listing prices, and “up to this point have seen lower price increases (and) a relatively smaller affordability crunch than other markets across the U.S.”

In the list of top 100 markets, many Florida cities fall below the 50% mark, and none made the top 10 for an expected robust real estate market next year.

The top 10 2023 U.S. real estate markets

Mainly concentrated in mid-size markets east of the Mississippi are

  • Hartford-West Hartford, Conn.
  • El Paso, Texas
  • Louisville, Ky.
  • Worcester, Mass.
  • Buffalo-Cheektowaga N.Y.
  • Augusta-Richmond County, Ga.
  • Grand Rapids-Wyoming, Mich.
  • Columbia, S.C.
  • Chattanooga, Tenn.
  • Toledo, Ohio

“As many households keep a close watch on their spending, we expect these top housing markets to be in relatively high demand,” says Realtor.com Chief Economist Danielle Hale. “We’ve seen lower price increases, more general affordability and more use of government-backed mortgage products for veterans, first-time and minority buyers in these top markets, providing opportunities for all homebuyers to stretch their homebuying dollars. Many of these areas flew under the radar in the pandemic frenzy, and are now well-positioned to bubble up with solid job prospects without the big-city price tag.”

Realtor.com’s Florida market projections for 2023

Hartford-West Hartford, Conn, topped the list with a projected 6.5% increase in home sales and a price increase of 8.5%. At No. 100 and the bottom of the list, Oxnard-Thousand Oaks-Ventura, Calif. is projected to see a 29.1% drop in home sales and a 1.7% rise in home prices.

  • 67. Jacksonville: Sales down 3.0%, prices up 4.6%
  • 70. Miami-Fort Lauderdale-West Palm Beach: Sales down 2.0%, prices up 3.4%
  • 77. Deltona-Daytona Beach-Ormond Beach: Sales down 7.9%, prices up 4.8%
  • 78. Lakeland-Winter Haven: Sales down 5.0%, prices up 1.6%
  • 84. Orlando-Kissimmee-Sanford: Sales down 8.5%, prices up 2.9%
  • 86. Cape Coral-Fort Myers: Sales down 5.9%, prices up 0.1%
  • 93. Tampa-St. Petersburg-Clearwater: Sales down 15.6%, prices up 3.9%
  • 95. Palm Bay-Melbourne-Titusville: Sales down 18.3%, prices up 2.8%
  • 98. North Port-Sarasota-Bradenton: Sales down 28.7%, prices up 3.2%

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/12/realtorcom-forecast-top-2023-housing-markets

Will Underwater Loans Make a Comeback?

Most homeowners have lots of equity thanks to price increases, but a few buyers and refinancers in 2022 currently owe more than their home’s worth.

NEW YORK – Black Knight estimates that about 450,000 U.S. homeowners were underwater as of Sept. 30 because of home price declines – with 60% of those homeowners having bought or refinanced their homes this year.

Although negative equity rates are “far below historical averages, a clear bifurcation of risk has emerged between mortgaged homes purchased relatively recently versus those bought early in or before the COVID-19 pandemic,” says Black Knight Data & Analytics President Ben Graboske. “For earlier purchases, risk is essentially nonexistent given large equity cushions those mortgage holders are sitting on. More recent homebuyers don’t fare as well.”

More than half of the underwater homes were owned by borrowers who purchased in 2022, with about 5% of homes purchased or refinanced this year underwater and another 19% with less than 10% equity.

For homes bought or purchased in 2021, just 1% are underwater, and 3% have less than 10% equity.

Overall, Black Knight estimates about 1 million homeowners have limited equity in their homes or less than 10%.

“Low or negative equity may have a marginal effect on mortgage performance in the near term, but these borrowers tend to be more susceptible to financial stress and may face additional challenges under a prolonged economic downturn,” according to the data and analytics provider.

Source: Inman (12/05/22) Carter, Matt

© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-4688

https://www.floridarealtors.org/news-media/news-articles/2022/12/will-underwater-loans-make-comeback

Do Institutional Investors Threaten Homeowners?

HUD says large investors are “impossible to compete with” and sees them as a threat to homeownership – a “much bigger problem” that needs to be addressed.

WASHINGTON – On Tuesday, the U.S. Department of Housing and Urban Development (HUD) Office of Policy Development & Research (PD&R) held its quarterly update meeting to discuss issues around institutional investors – specifically their impact on housing markets across the United States.

“Institutional investors have access to resources that make them impossible to compete with,” says HUD Secretary Marcia L. Fudge. “This is especially true for minority first-time homebuyers, who already face institutional barriers.”

Fudge says that HUD has already taken steps to ensure that our defaulted assets land in the hands of non-profits or individual owners – such as extending the amount of time an FHA foreclosure home is available only to buyers who plan to live within the property – but “this is a much bigger problem that will take everyone coming together to figure out how to sustain housing that people can afford.”

During Tuesday’s meeting, a group of experts and stakeholders shared research and data focused on things that communities have done to preserve affordable housing.

However, since the start of the pandemic, the housing market witnessed an increase in activity by large investors who often oversee more than 1,000 properties in their portfolio. The rise of institutional investors largely started after the Great Recession when many homes went into foreclosure, and institutional investors created a relatively new business model where they handled single-family renters in the same way as renters in a single-location high-rise.

However, since the new business model often buys lower-cost single-family homes, it also removes housing stock. HUD says that “produced a strain on the already limited prospects of first-time homebuyers and has deepened the gaps in racial wealthy and homeownership.”

“This PD&R Quarterly will profile the impact of institutional investors in the housing market and provide examples of how various levels of governments, along with nonprofits, can drive housing supply to owner-occupants and mission-driven entities,” says Solomon Greene, PD&R’s Principal Deputy Assistant Secretary.

A list of the HUD panelists is posted online.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/12/do-institutional-investors-threaten-homeowners

Servicemembers Missing Out on Lower Interest Rates

Reserves and National Guard called to active duty can get interest rate reductions, including for their mortgage. But a CFPB study found that few request it.

WASHINGTON – U.S. Reserve and National Guard members called to active duty are missing out on $9 million in interest savings every year because they aren’t getting interest rate reductions – their right under the Servicemembers Civil Relief Act (SCRA).

According to a study released by the Consumer Financial Protection Bureau (CFPB), the SCRA gives servicemembers on active duty the right to request interest rate reductions on outstanding loans during the time they’re activated – and to request an additional year in the case of mortgages.

But CFPB finds that only a small fraction of activated Guard and Reserve servicemembers actually receive interest rate reductions, saying financial institutions can take steps to ensure these individuals can more easily assert their rights.

The report – Protecting Those Who Protect Us: Evidence of activated Guard and Reserve servicemembers’ usage of credit protections under the Servicemembers Civil Relief Act – is posted online.

“Our analysis suggests that members of the Reserves and the National Guard who serve in active-duty status are not receiving interest rate reductions on their loans pursuant to the law,” says CFPB Director Rohit Chopra in a statement. “Given rising interest rates, financial companies should take steps to ensure military family financial rights are respected.”

Congress enacted SCRA to provide legal and financial protections so servicemembers on active duty can focus on their mission. The protections include the right to a reduced interest rate on any pre-service obligation to a maximum of 6%.

The Act also includes protections against repossession of certain property without a court order, protections against default judgments in civil cases, and protections against home foreclosure without a court order. Eligible servicemembers can also terminate certain residential housing and automobile leases early without penalty.

The right to an interest-rate reduction can be a significant financial benefit, but even more so now that interest rates are rising. It’s an even bigger benefit for servicemembers who took out larger loans or remain on active duty for a substantial period of time.

CFPB looked at data from 2007 to 2018 and found $100 million of foregone interest rate benefits on auto and personal loans.

The challenge for servicemembers? Many creditors require proactive notifications about a shift to active-duty status. And a servicemember with multiple accounts – credit cards, a mortgage, etc. – must often notify each one individually. In addition, that notification often includes a copy of their orders to active-duty service or other appropriate indicator, including a certified letter from a commanding officer, that shows the date they began active-duty service.

Some creditors require even more. In some cases, they continue to require that written requests or documentation be submitted by mail or fax instead of using an online process.

However, creditors don’t need much of that information. According to CFPB, they could just as easily access a Department of Defense system that checks any borrower for active-duty status. By using the Defense Manpower Data Center SCRA website, creditors would help ensure servicemembers benefit from their right to interest rate reductions.

Servicemembers’ challenges negatively affect the financial strength of military households, CFPB claims.

CFPB study results

  • Between 2007 and 2018, fewer than 10% of auto loans and 6% of personal loans received a reduced interest rate: CFPB finds evidence that interest rates on some loans are being reduced, but its low use means few loans actually receive interest rate reductions.
  • In addition to the $100 million of foregone benefits on auto and personal loans, members of the reserve component also infrequently benefit from interest rate reductions for credit cards and mortgage loans: CFPB estimates that a mortgage loan with an interest rate between 6.5% and 7.5% could accumulate savings of between $1,890 and $5,670 per activation. By comparison, the per activation numbers for auto and personal loans are $331 and $249, respectively.
  • While reserve component servicemembers are more likely to obtain a reduced interest rate during longer periods of activation, even among activations of a year or more, the likelihood of an interest rate reduction remains under 16% for auto and personal loans.

Consumers can submit complaints about financial products or services by visiting the CFPB’s website or calling (855) 411-CFPB (2372).

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/12/servicemembers-missing-out-lower-interest-rates

2023 Goal: Create a Team Business-Planning Event

“Are we all on the same page?” If you have to ask, start scheduling, at least once per year, a no-cellphone, must-attend event to catch up, make plans and build bonds.

NEW YORK – Team leaders and brokers should schedule a Team Business Planning event at least once per year to highlight team goals, says Sherri Johnson, CEO and founder of Sherri Johnson Coaching & Consulting.

The event should be separated from day-to-day tasks and be held off-site. It should last at least four hours and no calls should be allowed or business conducted unless necessary.

During the event, leaders should provide last year’s numbers and individual statistics for each agent to identify where their business came from – the primary sources of lead generation, and the return on investment on their time and financial expenses.

The event can include sponsored lenders, title partners and insurance partners, and they can attend to provide education and presentations that help the team gain perspective on the current market and how to discuss it with clients. The goal is to maximize loan products and related services.

Next, leaders should help agents set goals for the coming year, using tools like a template business plan and goal setting documents. Team members should also learn about things like “activities that generate 10-fold results,” and get advice on their desired work/life balance.

It’s also a good time for agents to submit their business plans to leaders who can expect them to be accountable for reaching their goals. After the event, agents should also submit weekly reports on their actions.

It’s a good time for some one-on-one training, and leaders can set up meetings with team members and use their plans to guide them and keep them intensely focused.

Finally, after the event has ended, participants should be asked to email the entire group with a list of their top 10 event takeaways and the strategies they intend to put into practice.

Source: RISMedia (11/22/22) Johnson, Sherri

© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-4688

https://www.floridarealtors.org/news-media/news-articles/2022/12/2023-goal-create-team-business-planning-event

Property Insurance Issues Teed Up for Special Session

A special session of the Florida Legislature meets next week, and lawmakers issued a formal proclamation saying they will consider hot-button insurance issues.

TALLAHASSEE, Fla. – With Florida’s property-insurance system in turmoil, state lawmakers could be poised to take major steps to try to stabilize the market during a special legislative session next week.

Senate President Kathleen Passidomo, R-Naples, and House Speaker Paul Renner, R-Palm Coast, released a formal session proclamation Tuesday that indicated lawmakers will consider a series of hot-button insurance issues.

According to information from Florida Realtors’ Public Policy office, those goals include:

  • Reducing the cost of litigation regarding property insurance claims.
  • Fostering the availability of reinsurance for property insurance.
  • Improving the claims handling practices in property insurance.
  • Modifying deadlines for notices of property insurance losses and limiting the assignment of benefits (AOB) under property insurance policies.
  • Updating property insurance requirements regarding alternative dispute processes, coverage options and agent practices.
  • Increasing oversight of property insurance market participants.
  • Improving the financial stability of Citizens Property Insurance Corporation – the Florida-owner “insurer of last resort”– reducing potential assessments related to the Citizens Property Insurance Corporation, and fostering the transition of Citizens Property Insurance Corporation policies to the private property insurance market.
  • Providing tax relief and other financial assistance related to damages resulting from Hurricanes Ian and Nicole.
  • Providing additional mechanisms to support the Division of Emergency Management for natural disaster response, recovery and relief efforts.
  • Establishing a statewide toll-credit program for frequent Florida commuters.

Detailed bills have not been released for the special session, which starts Monday.

During a news conference last month, Renner said lawmakers will look at a “kitchen sink of options” to try to stabilize the market and expand private coverage. But he also cautioned that whatever changes the Legislature makes during the special session will not lead to immediate rate reductions for consumers.

“As outlined in the proclamation, we will consider further reforms to ensure Floridians have access to reliable and affordable property insurance, legislation that provides property tax relief to Floridians whose homes are uninhabitable due to recent hurricanes, and legislation that establishes a statewide toll credit program for frequent Florida commuters,” Passidomo wrote Tuesday in a memo to senators. The toll-credit program is a priority of Gov. Ron DeSantis.

Private insurers have shed hundreds of thousands of policies and sought large rate increases during the past two years because of financial problems. Six insurers were declared insolvent this year.

Meanwhile, Citizens has seen its number of policies soar to more than 1.13 million as of Friday. State leaders have long sought to keep policies in the private market, at least in part because of financial risks to Citizens from major hurricanes.

Lawmakers held a special session in May to try to stabilize the market, but problems have persisted. Among the steps that lawmakers took during the May session was to provide $2 billion for reinsurance, which is essentially backup coverage that insurers need to handle large amounts of claims.

During the news conference last month, Renner indicated lawmakers could consider tapping state reserves to help with reinsurance. Renner, however, said he did not want to make a “long-term commitment to underwrite insurance.”

A day after Renner’s Nov. 22 news conference, Fitch Ratings released an analysis that said overall reinsurance prices are expected to increase by more than 10 percent in 2023, pointing to losses from disasters such as Hurricane Ian and “increasing frequency and severity of natural catastrophe claims.”

Fitch also said it expects tighter restrictions when reinsurance policies are renewed in 2023, while raising the possibility that Florida property insurers will not be able to buy all of the reinsurance they need.

“Nevertheless, we believe demand for property catastrophe reinsurance during the 2023 renewals season will be broadly met, except for Florida,” the analysis said.

Perhaps the noisiest issue of the special session will focus on limiting litigation costs and, particularly, whether to change a law that often leads to insurers paying the fees of plaintiffs’ attorneys. The insurance industry blames lawsuits for many of its problems, while plaintiffs’ attorneys argue litigation helps hold insurers accountable for properly paying customer claims.

A related issue is assignment of benefits, which is a practice that involves policyholders signing over claims to contractors, who then pursue payments from insurers. The industry argues that assignment of benefits leads to costly litigation.

© 2022 The News Service of Florida. All rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/12/property-insurance-issues-teed-special-session

Single-Family Construction Slows Post-Covid

The single-family boom in hot markets’ exurbs is waning as the pandemic fades, though there’s also an industry-wide slowdown, according to NAHB’s quarterly analysis.

WASHINGTON – The big jump in single-family home building activity in exurbs and outer suburbs sparked by the pandemic shutdowns has shown a marked decline over the past 12 months, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the third quarter of 2022.

“The single-family construction slowdown is not just limited to regions of the country that experienced the fastest production growth over the past year,” says NAHB Chairman Jerry Konter. “Home building activity has slowed in nearly all regions and large and small metro markets as high mortgage rates, elevated inflation and stubbornly high construction costs act as a drag on consumer demand and housing affordability.”

“While the bulk of single-family construction continues to occur in the South and lower density markets where job conditions are more favorable and housing costs lower, the data clearly show these areas are acting as a leading indicator for the entire housing market,” says NAHB Chief Economist Robert Dietz. “They are registering the largest production declines, even as other regions – including large metro core and suburban counties – are displaying weakness.”

The HBGI is a quarterly measurement of building conditions across the country and uses county-level information about single- and multifamily permits to gauge housing construction growth in various urban and rural geographies.

The index shows that large-metro outlying counties (exurban areas) registered the largest 12-month decline in single-family production, falling from a 31.9% growth rate in the third quarter of 2021 to a minus 4.4% rate in the third quarter of 2022.

Smaller metro outlying counties also saw significant deceleration, registering a 30.6% percentage point drop in growth rate during the same period. Urban core areas in both large and small metro areas also posted negative growth rates during this timeframe.

Rural counties, including micro counties and non-metro/micro counties, were the only counties to post a positive year-over-year growth rate.

However, the multifamily market tells a different story, as the HBGI’s submarkets in multifamily home building showed increased growth year-to-year in 3Q for both large and small markets as metro area economies reopened following COVID-era restrictions:

  • Multifamily construction in large metro suburban counties increased from an 18% growth rate to a 27.5% rate, and large metro core counties experienced a 7.1 percentage point increase.
  • Large metro outlying counties decreased from a 44.1% growth rate to a 31% rate.

Other key findings from the third quarter HBGI show that building activity continued to shift away from centralized markets toward more outer, smaller areas: 

  • Looking back over almost three years – from the first quarter of 2020 to the third quarter of 2022 – the market share for single-family home building in large metro core and inner suburbs fell from 44% to 41.3%.
  • In contrast, single-family home building in outer suburbs and exurban areas in large and medium sized metros increased from 18% to 19% during the same timeframe.
  • Despite the recent uptick, high density multifamily construction in large metro core areas registered a similar decline during this two-and-a-half-year period, falling from 41% to 38.4%.

 © 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/12/single-family-construction-slows-post-covid

Miami: ‘Climate Gentrification’ Isn’t a Sea-Level Fear

Few Miami residents buy inland to avoid coastal climate change risks. The reason for gentrification is the same: A chance to maximize profit on RE investments.

MIAMI – Miami’s Little Haiti has been an immigrant community for decades. Its streets are lined with small homes and colorful shops that cater to the neighborhood, a predominantly Afro-Caribbean population with a median household income well below Miami’s.

But Little Haiti’s character may be changing.

A $1 billion real estate development called the Magic City Innovation District is planned in the neighborhood, with luxury high-rise apartments, high-end shops and glass office towers.

The developers emphasize their commitment to sustainability. But high-end real estate investments like this raise property values, pushing up property taxes and the cost of living for surrounding neighborhoods.

The potential effect on shops and homeowners and on the culture of the community has stoked controversy and protests. Nearby strip malls have been bought up for new development, leaving long-time businesses with fewer affordable options. Other big developments are now being planned.

Some media and urban scholars have labeled what’s happening here “climate gentrification.”

It’s the idea that investors and homebuyers are changing their behavior and moving from coastal areas into poorer, higher-elevation neighborhoods like Little Haiti, which sits on a ridge less than a mile from the bay, in anticipation of worsening climate change risks, such as sea-level rise. Miami is often held up as an example.

But are Miami’s investors and homebuyers really motivated by climate change?

A different kind of gentrification

The story goes that Miami homebuyers are abandoning the coasts – where high tides can already bring street flooding in some areas – and are looking for higher-elevation areas because they want to escape climate change.

That isn’t what we’re finding, though.

In Yale’s Climate Opinion Survey of Miami-Dade County in 2021, only half of Miami residents said they believe global warming will harm them personally – far lower than the 70% who said that in Delaware and the 90% in Canada, Western Europe and Japan. Another survey found 40% of Miami-Dade residents weren’t concerned about the impact climate change might have on the market.

In a new study, our team at the University of Miami found a more nuanced picture of what is actually pushing homeowners to higher ground.

For the most part, we found that the shift away from the coasts is fueled by costs. Flood risk plays a role through the rising cost of flood insurance, but much of the shift is plain old gentrification – developers looking for cheaper land and spinning it as a more sustainable choice to win over public officials and future residents.

Rather than bottom-up pressure built on residents’ alarm about sea-level rise, we found a continuation of the usual rational investment decisions.

Developers driving the process

Present-day “climate gentrification” in Miami is largely determined and driven by capitalist investment opportunities – relatively lower prices and greater expected returns – which are the characteristics of the traditional gentrification process.

We found that neither homebuyers nor real estate agents are driving this process today in Miami. Rather, developers are using the concept of climate risk to market properties in more elevated areas and are working in tandem with policymakers to facilitate urban redevelopment.

Miami is very different from other global cities, in that its wealthy homebuyers and second-home buyers exhibit fewer concerns about rising sea levels and climate change. A large percentage of Miami homebuyers – about 13% in 2021 – don’t live in the U.S. and may evaluate risk differently, seeing Miami properties as safer investments than they have at home or as future second homes.

Miami’s gentrification also isn’t limited to higher-elevation neighborhoods. In coastal areas such as Miami Beach, taxes and housing and rental prices are rising, and poorer people are being pushed out of neighborhoods. Miami’s average rent is now over $2,800 a month, up 16% from October 2021 to October 2022. That’s about $800 higher than the U.S. average, and it rose at nearly twice the national rate over the past year.

Coastal homebuyers should be more concerned

Climate change is without question a risk for Miami. The insurance industry warns that sea-level rise and moderate flooding of up to 1 foot will affect 48% of total properties in oceanfront Miami-Dade County by 2050.

Homebuyers should be more concerned than they are.

We believe “climate gentrification” is a meaningful concept for exploring how the impacts and costs of climate change will shift housing and urban inequalities in the future. But so far, the idea that gentrification is fueled by climate change in Miami doesn’t match reality.

The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

© 2022, The Conversation US, Inc. Provided by SyndiGate Media Inc. (Syndigate.info).

https://www.floridarealtors.org/news-media/news-articles/2022/12/miami-climate-gentrification-isnt-sea-level-fear

Commercial Banks Tighten Credit as Economy Slows

It can be a Catch-22: Wary of a recession, lenders make it harder for businesses to borrow money. But business funding problems can push a recession.

NEW YORK –The Federal Reserve isn’t the only one tightening credit. Commercial banks are too.

And that spells trouble for the U.S. economy.

The proportion of U.S. banks tightening terms on loans for medium and large businesses and for commercial real estate rose last quarter to levels usually seen during recessions, according to a Fed survey of lending officers released earlier this month.

Lending standards for credit cards and other consumer loans also became more restrictive, as the Fed raised interest rates and the economic outlook darkened.

“The tightening in standards by senior loan officers goes part-and-parcel with significantly higher rates and a shrinking balance sheet by the Fed,” said Joseph Lavorgna, chief U.S. economist for SMBC Nikko Securities America Inc. “They’re basically self-reinforcing.”

The increased stringency by the commercial banks will likely affect the economy with a lag, as business and household borrowers find it more difficult to obtain credit and eventually scale back their spending.

So while growth in the closing months of 2022 looks pretty solid, “there’s a really high probability of a recession over the coming quarters,” of around 75%, said Matthew Luzzetti, chief U.S. economist for Deutsche Bank Securities. He sees a downturn beginning in the third quarter of 2023 that ends up raising the unemployment rate to 5.6%, from October’s level of 3.7%.

Luzzetti said the tightening of lending standards by the banks – and the impact that will have on the economy – means the Fed might not have to raise rates as much as feared to restrain demand and rein in elevated inflation. He expects the central bank to eventually increase rates to about 5%, from its current target range of 3.75% to 4%.

Banks told the Fed they had tightened lending standards on commercial and industrial loans for a variety of reasons, including a more uncertain or a less favorable economic outlook and a reduced tolerance for risk. A significant number also cited decreased liquidity in the secondary market for such loans and less aggressive competition from other banks or nonbank lenders.

The industry set aside $13.05 billion in the third quarter for expected credit losses, up from $10.95 billion in the second quarter, according to S&P Global Market Intelligence data. It was the sixth straight quarter that provisions for loan losses were increased, S&P said.

© 2022 Bloomberg L.P.; © 2022 Penton Media

https://www.floridarealtors.org/news-media/news-articles/2022/12/commercial-banks-tighten-credit-economy-slows

Airbnb Has a Plan to Fix Cleaning Fees

NEW YORK – Pretty much everyone hates Airbnb cleaning fees – those pesky charges tacked on to your vacation rental bill that supposedly cover the costs to get the place ready for the next visitors. Travelers don’t like the expense, and hosts don’t like charging them, either.

Dennis Shirshikov, an Airbnb host who owns a rental property in upstate New York, says cleaning fees are the most common complaint he gets from customers.

“We are strongly considering cutting them off,” he says.

And Shirshikov might get his way. Airbnb is set to roll out big changes that won’t end cleaning fees but could make them more transparent for customers and incentivize hosts to reduce or forgo them altogether.

What Airbnb cleaning fees are and what they cost

Airbnb cleaning fees are a one-time charge pocketed by hosts to cover costs such as doing laundry or scrubbing toilets between guest stays. They’re separate from the base price and are in addition to service fees or charges for optional add-ons.

A June 2022 NerdWallet analysis of 1,000 U.S. Airbnb reservations with check-in dates in 2022 or 2023 found that the median cleaning fee per listing for a one-night stay was $75.

But cleaning fees vary widely. An Airbnb spokesperson told NerdWallet that cleaning fees are on average less than 10% of the total reservation cost at properties that charge them. Meanwhile, NerdWallet’s analysis found that cleaning fees amounted to about 25% of the total price paid. In fact, almost 40% of listings had cleaning fees from 20% to 29.9% of list price.

And on a few listings, cleaning fees were higher than the nightly rate.

Why Airbnb cleaning fees are so irritating – and how to fix it

Besides the cost, Airbnb cleaning fees can feel especially brutal simply given their presentation. Airbnb’s search page displays the nightly rate on most interfaces in big, bold lettering, masking the total price. So the total price, presented in lightly colored lettering, can be easy to overlook.

To add to the confusion, nightly rates often don’t correlate with total price anyway. One listing with a $40 nightly rate could total $90 because of a $40 cleaning fee and $10 service fee. Another listing with a $60 nightly rate could turn out cheaper – $73 total – if it has a $13 service fee and no cleaning fee. A traveler with a $50 budget might be seduced by the $40 listing, only to owe more than if they had booked the $60 listing.

But that’s set to change in December as Airbnb plans to roll out a toggle so travelers can opt for search results to display total price, including all fees. Users who don’t toggle the total price display will still see nightly rates only.

The company in November 2022 also adjusted its search algorithm to rank listings by the best total price rather than simply accounting for the nightly rate, which may sway hosts to lower or remove cleaning fees.

What if there were no cleaning fees?

A minority of listings don’t charge cleaning fees. Airbnb says 45% of listings worldwide don’t charge those fees. Yet only 15% of the available listings in NerdWallet’s analysis didn’t have a cleaning fee. The disparity is partly because NerdWallet looked at only U.S. listings, while Airbnb’s number is based on listings worldwide, where the fees are less common.

Shirshikov says he’d prefer to list a final price that includes the cleaning fee for two reasons. First, he suspects guest satisfaction would increase, and second, he thinks guests would leave the place cleaner.

Airbnb has warned hosts that cleaning fees can backfire by creating unrealistic expectations of how much guests will offer to help at checkout.

“With a higher (cleaning) fee, guests may expect to just walk away from your space at checkout as they would a hotel room,” according to a memo posted to Airbnb’s website before the cleaning changes kicked in.

That’s exactly what Shirshikov has experienced.

“If they pay a cleaning fee, they sometimes leave the place looking like it’s been lived in and uncleaned for months,” he says, adding that he has returned to find food all over the floor and drinks spilled on the beds.

If everyone hates Airbnb cleaning fees, why still charge them?

For hosts who clean the rentals themselves, the money might cover the cost of cleaning supplies. Often, that money is simply passed on to professional housekeeping services who handle the cleaning.

Sébastien Long , the founder and CEO of Texas-based short-term rental company Lodgeur, says he believes the average cleaning fee of $75 is quite low. Considering staff wages, supplies and replacement items, Long says he estimates it costs roughly $22 to turn over a hotel room. If Airbnb hosts outsource the work, Long estimates, it could cost $175 to clean a two-bedroom apartment, including $100 for the cleaning company, $50 for laundry services and $25 for supplies, such as coffee or mini toiletry bottles.

The cleaning costs for Airbnb hosts are often higher than those for hotels because they likely can’t take advantage of economies of scale. For example, hotels have commercial-size laundry machines. Plus, listings are typically spread out geographically, so there’s the inefficiency of traveling miles between properties. And short-term rentals typically are much larger and have more space to clean (such as kitchens) than hotel rooms.

But other hosts use the fees simply as a way to squeeze more money out of travelers, clearly overcharging for cleaning fees, which is a practice Airbnb warns against.

“Aim to use the cleaning fee to cover the expense of cleaning – not to make additional money,” according to a 2021 memo from Airbnb to hosts.

And then there are the hosts who charge cleaning fees and still ask guests to clean up after themselves. That, too, will likely end soon. Along with more transparent cleaning fees, Airbnb said it also plans to require hosts to post the cleaning requirements on the listing before guests book. Guests will also be able to leave feedback on the checkout process.

Airbnb also clarified that checkout requests should be reasonable. At your next Airbnb stay, if the host is amenable to the changes, you might not have to vacuum or strip the beds. The only things you’ll have to do are turn off the lights, throw away the trash and lock the door.

For now, though, Shirshikov says he’s sticking with charging cleaning fees because he’s uncertain whether users will turn on the toggle.

“I’d want to see how many people actively turn on the full price display,” he says. “Unless guests use it, it won’t mean much for how we do pricing.”

Methodology

NerdWallet conducted an analysis of 1,000 Airbnb listings (including taxes and fees) with check-in dates in 2022 or 2023. The analysis looked at base prices as well as other fees like cleaning fees for one-, seven- and 30-night stays, also broken down by bookings made three days, four weeks and 47 weeks in advance. Data was gathered for 10 regions around the U.S., and it covered properties with a maximum capacity of two guests versus six guests.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. This article was provided to The Associated Press by the personal finance website NerdWallet.

https://www.floridarealtors.org/news-media/news-articles/2022/12/airbnb-has-plan-fix-cleaning-fees

What Could Make Home Prices Drop in 2023?

Buyer demand has dropped due to rising rates, and seller supply slowed too, creating an uneasy balance. But if buyers drop or sellers expand more, it will impact prices.

NEW YORK – The U.S. housing market is in an uneasy state of equilibrium. Demand has plummeted as mortgage rates hit a two-decade high, but prices haven’t declined much in part because supply remains correspondingly low. If borrowing costs don’t start to normalize by early next year though, the scales may finally tip.

The start of the year, of course, is when homeowners and real estate agents start to bring new inventory to market. It’s a time-honored tradition that draws on some smart strategy and a bit of industry lore. As the thinking goes, buyers and sellers often want to get their transactions closed by summer, especially if they have children starting at new schools in September. Agents also contend that homes look their best in spring, surrounded by lush landscaping and emerald-green lawns. Even if sellers don’t come out in quite their usual numbers this year, there may still be enough additional inventory to push home prices down.

Clearly, the amount of supply on the market is still extraordinarily low relative to demand. It would take just 3.3 months to work through the market’s existing home inventory, based on non-seasonally adjusted data for the most recent month. The metric had already been declining consistently for a decade through 2019, but the pandemic brought it to unthinkable lows. It’s no wonder that the S&P CoreLogic Case-Shiller 20-City Composite Home Price Index is down only about 2% from its peak despite mortgage rates surging to 7% from 3% in 10 months.

But every year, the inventory-to-sales ratio spikes in January and February as transactions crater and the first new listings start to come online in anticipation of the spring open house season, which can set bad things in motion in times of stress. In January 2008, supply jumped by four months’ worth of housing to 15 months, and there was a similar spike during every January of the housing bust. The last two years have experienced unusually muted spikes in the ratio, but that won’t repeat again this winter. If you zoom in, it’s already clear that the number of months of supply has been climbing in a seasonally unusual manner. The trend line will start to look concerning if it breaks through seasonal norms from 2018 and 2019 in the months ahead.

Consider the various countervailing forces in the market heading into the 2023 inventory surge. On the one hand, some would-be sellers will decide to forgo transactions this year and hunker down in their existing homes, many financed with below-3% mortgages that they’d forfeit if they bought a new property. On the other hand, more than 30 million single-family homes and condominiums in the U.S. – 34% of the total – are mortgage free, according to data compiled by real estate analytics firm Attom. And many more homeowners simply won’t have the luxury of waiting for the next open house season to roll around. They include but are not limited to:

  • People with growing families who need to buy a bigger house
  • Seniors who need to move for health-related reasons
  • People required to move for work

On the latter point, housing bulls will often emphasize what they see as the cosmic shift that’s come from increased working from home. But that doesn’t imply that Americans will no longer move for their jobs. Hybrid work in knowledge-based industries certainly looks poised to endure, yet many companies no longer allow working full time from whatever palm-tree-lined destination their employees choose. As of June, only about 15% of full-time employees are fully remote, according to data from the Survey of Working Arrangements and Attitudes, an online survey of U.S. residents. That’s much higher than anyone ever imagined before the pandemic, but it still leaves 85% who may have to sell their homes if they get fired or leave their job for a new one in another part of the country.

All told, the early 2023 inventory spike looks unavoidable, and the real question is where mortgage rates will be when the listings hit the market. If inflation continues to moderate, that could lead financial markets to anticipate a change in monetary policy later next year. That would set the stage for Treasury bonds to rally and a corresponding drop in mortgage rates.

It’s a race against the clock, though, and you’d have to hope for a near-perfect run of inflation data to assuage jittery policymakers and financial market participants and bring 30-year mortgages back down below, say, 6%. Even then, it’s unlikely that rates will look anywhere near as attractive as the loans that prevailed for most of the past decade, and they might not be enough to keep the market’s delicate equilibrium intact and prices afloat.

© 2022 Bloomberg L.P.; © 2022 Penton Media. Based on research of Jose Maria Barrero of the Instituto Tecnologico Autonomo de Mexico; Nicholas Bloom of Stanford University; and Steven J. Davis of the University of Chicago’s Booth School of Business.

https://www.floridarealtors.org/news-media/news-articles/2022/12/what-could-make-home-prices-drop-2023

Does Adding an In-Law Suite Pay Off?

If you can legally add an accessory dwelling unit (ADU), should you? It could increase a home’s value or bring in rent – or be more trouble than it’s worth.

NEW YORK – Accessory dwelling units are known by many names: in-law suites, guest houses, backyard cottages, or basement or garage conversions, among others. What all ADUs have in common is that they’re a separate living space typically added to a single-family residential lot, and they’re having a moment. Constructing an ADU could increase your property value while providing rental income or extra living space for a family member.

Then again, adding an ADU could be an expensive hassle you live to regret.

If you’re thinking about an ADU, here’s what to consider before you commit.

Why ADUs are increasingly popular

In recent years, several cities and some states – including California, Oregon and New Hampshire – have passed laws making it easier for homeowners to create ADUs, in part to address housing shortages and rising costs that have led to an affordability crisis in many communities. ADUs are seen as a relatively inexpensive way to increase the supply of more affordable housing without drastically changing the character of residential neighborhoods.

Demand is also being fueled by the aging of the U.S. population, says Rodney Harrell, vice president of family, home and community for AARP, which publishes a guide called “The ABCs of ADUs.” People are considering adding space for older family members or caretakers. The pandemic may have accelerated that trend, as people looked for alternatives to the nursing homes where at least 175,000 Americans died from COVID-19, Harrell says. ADUs also can provide independent living spaces for families’ young adult members, who might not be able to afford their own apartments.

“It’s a housing solution that doesn’t solve every problem, but it helps address several problems at one time,” Harrell says.

Costs – and acceptance – vary widely

Converting existing space, such as a garage, attic or basement, into an ADU can cost about $50,000, while a new detached ADU often exceeds $150,000, Harrell says. And depending on where you live, getting permits to create your ADU can be a relative breeze, an extended fight or flat-out impossible.

In California, homeowners have a legal right to build ADUs, and local governments aren’t supposed to create barriers to getting permits. Some cities have streamlined the permitting process, and a few, including Los Angeles and San Jose , have preapproved building plans that can further reduce delays.

Some California cities are fighting the trend, however, by delaying or denying permits. Most U.S. cities either do not allow ADUs or have strict regulations that inhibit their development, says Kol Peterson, an ADU consultant and the author of “Backdoor Revolution: The Definitive Guide to ADU Development.” Even where ADUs are legal, cities may require zoning exceptions called variances, demand expensive upgrades or impose fees that can add substantially to the cost, Peterson says.

Tempted to skip the permits? That’s probably not smart. Unpermitted construction could make your home tough to sell or refinance and leave you vulnerable to enforcement actions from your area’s zoning department, says real estate appraiser Jody Bishop , president of the Appraisal Institute, a trade group. All it takes is one disgruntled neighbor to turn you in.

How ADUs are like swimming pools

If you’re building an ADU primarily for the extra income, recognize that any rent you charge could be at least partially offset by increased costs, such as higher property taxes , larger homeowners insurance premiums and payments on loans used to construct the unit, among other expenses.

As with any home improvement project, there’s no guarantee you’ll get your money back from an ADU when you’re ready to sell the home, Bishop says.

ADUs have a lot in common with swimming pools, he adds. In-ground pools are an accepted and even expected feature in some neighborhoods, so you may recoup at least some of the cost of building one when you sell your home. In other areas, pools are uncommon and could detract from a home’s value if buyers are concerned about maintenance hassles or drowning risks, Bishop says.

Similarly, ADUs may not add much value in areas where they’re unusual, he points out. Some people may prize the ability to rent out the ADU for extra income, while others won’t want to be landlords. And converting an existing attic, basement or garage might deter buyers who would rather have those spaces untouched.

Perhaps the best indication an ADU will add value is if your neighbors are building them, Bishop says. And if that’s the case, a properly permitted and thoughtfully designed ADU could be worth the investment.

“If it’s well done, it’s well thought out and functional, then you probably got something that the market would embrace and not mind paying for,” Bishop says.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. This column was provided to The Associated Press by the personal finance website NerdWallet. Liz Weston is a columnist at NerdWallet, a certified financial planner and author of “Your Credit Score.”

https://www.floridarealtors.org/news-media/news-articles/2022/12/does-adding-law-suite-pay

Home Investors Buying into Black Neighborhoods

Study: RE investors lean toward less-expensive, single-family homes, and that’s having an outsized impact on Black communities, turning residents into renters.

NEW YORK – Florida homeowner Shaniqua Rose is used to fielding offers to sell her home in the historically Black community of Parramore in Orlando.

“I actually got text messages three times in the last month, from the same phone number, asking to purchase my home,” says Rose, who grew up in the area and returned to purchase her own home in 2018.

As a homeowner, Rose is in the minority among her neighbors. “Only 10% are owners,” she says. “I would say at least 80% of the homes that are here are an investor property.”

The housing situation in Parramore isn’t unique. It’s being repeated in major U.S. cities across the country. More than 13% of all homes sold in 2021 were sold to investors, according to the National Association of Realtors® (NAR). First-time homebuyers are 30% of the market right now. In a healthy market, 40% of buyers are first-time homebuyers, NAR says.

“It’s been very difficult for homebuyers to find affordable or starter homes. And when they’re buying lower cost homes, they’re competing with investors who are coming in with cash offers, and that’s difficult to compete with,” says Anne Ray, a researcher at the Shimberg Center for Housing Studies at the University of Florida.

It’s a trend that accelerated during the pandemic, according to NAR.

“We have seen, during the pandemic especially, that investors, whether it’s a mom-and-pop investor or an institutional investor, are coming into the marketplace for rental properties,” says Jessica Lautz, NAR’s vice president of demographics and behavioral insights. “Investors are jumping into the market understanding there’s demand for rental properties, and this allows them to actually increase rents and to have this as an investment property that can be income generating.”

And technology is making it easier for investors to buy affordable homes on a large scale.

“I think what’s relatively new is these large investors picking up lots of properties and using a lot of automated tools and working at scale to acquire properties,” Ray says. “That used to be harder to do.”

When prospective buyers can’t afford to buy, the ripple effect can extend to the rental market.

“It also makes it more difficult for other people to find affordable rental housing,” Ray says, “because people who would have moved on from a rental to an ownership unit are staying in the rental unit.”

Among the homes most desired by investors are those in mainly Black zip codes, like Rose’s property. The Washington Post analyzed 40 major U.S. metropolitan areas and found that Black neighborhoods have been “heavily targeted.”

“Investors are more likely to be purchasing more affordable properties, ones that are 26% below the median home price,” says Lautz. “The higher concentration of institutional investors is seen in lower-income and racially diverse, especially predominantly Black, household areas.”

Investor activity is especially high in southernmost states, from Arizona to Florida, which comes as no surprise to Rose, who sees the change happening around her.

“Gentrification is here in Parramore. You can’t stop it,” she says. “What is not happening, in my opinion, is there’s not a concerted effort to increase financial opportunities for the individuals who live here so that they can afford to stay here. Communities have done it, where they redevelop, and they’ve been able to keep those same people there.”

One solution could be to develop more community land trusts, which are nonprofits that acquire homes and land with the purpose of keeping the housing permanently affordable. Often in these trusts, equity in the home is split between the nonprofit and the homeowner once the homeowner sells the property at an affordable price.

“They’ve (community land trusts) been particularly successful in preserving affordable homeownership in neighborhoods that are threatened with gentrification, often in traditional African-American neighborhoods that are near downtown where gentrification has taken place,” Ray says. “That preserves affordable units for the long term and allows the neighborhood to be more economically diverse.”

Rose, who founded an organization called Change for the Community shortly after buying her house in Parramore, would like to see additional homeownership opportunities for communities of color.

“If you continue to build apartments, which I find is happening in predominantly African American communities with no condos, you’re not creating generational wealth in any way, shape or form,” Rose says. “You’re continuing the cycle of renting. So I think governments, especially here locally, need to start looking at how do we create ownership opportunities?”

Copyright © 2022 Federal Information & News Dispatch, Inc.

https://www.floridarealtors.org/news-media/news-articles/2022/12/home-investors-buying-black-neighborhoods

Can an HOA Stop a Private Pickleball Court?

A community with large lots and an HOA has a buyer who wants to install pickleball courts. Other owners hope to stop them but without a specific rule to do so.

WEST PALM BEACH, Fla. – Question: I live in a 41-home neighborhood governed by an HOA (homeowner’s association). We have a home that sits on a one-acre lot that is for sale. The potential buyer would like to install two pickleball courts in the backyard that would fit and be within our setback guidelines.

Community members do not want this due to the noise and traffic it will generate. (I am assuming they want to build two courts so that they can hold public matches governed by the official local rules).

There are no rules in our covenants prohibiting this. We do have mention of noise and landscaping. Do we have recourse without setting ourselves up for a lawsuit regarding inhibiting the sale of the home? – Signed, M.S.

Answer: Pickleball is one of the hottest topics in condos and HOAs these days! I know of several communities that are converting one or more of their tennis or basketball courts to pickleball courts.

First, I think we need to separate the sale of the home from the construction of pickleball courts. They really are two separate issues unless the buyer is conditioning the sale on pre-approval of the courts. This person could reasonably buy the home and still be prohibited from building pickleball courts if that would violate your covenants or rules.

The vast majority of HOAs have language granting the board authority to govern and approve architectural modifications through published architectural controls. Are there no restrictions at all in your current architectural rules that might govern a pickleball court? Something dealing with accessory structures, perhaps, or even tennis courts or other recreational additions?

If you truly have nothing to go on, has the board considered very quickly passing architectural controls that would govern pickleball courts and their use? Rules like this typically can be passed by a board on fourteen days’ notice, and they would become enforceable almost immediately.

You are describing a prospective buyer – it’s nearly impossible that they would have both closed on their home and begun construction on a pickleball court before those rules could be implemented. There certainly could be things not contained in your letter that would complicate that approach, but I think that’s the first thing to discuss with the association’s attorney.

Without that, and based on the language that you sent, you have very little to go by.

Your covenants restrict business uses, but unless this person is charging people to use their pickleball courts, that wouldn’t apply (I don’t think holding free, voluntary tournaments would constitute a “business” use). That leaves you with only a potential nuisance claim, but of course at this point you are just assuming how this person would use their pickleball courts. It could be they love pickleball and love having a normal number of friends over to play, sometimes using two courts at a time – and that tournaments are not even in the picture.

Also, remember that board-made rules are an excellent tool for curbing unwanted behaviors. That is, even if these people build two pickleball courts, that doesn’t mean they can use them any way they like. For example, you can restrict the number of guests who can visit a single home at any given time (perhaps allowing a large gathering a certain number of times per year to accommodate ordinary family events but restricting it enough that it would preclude weekly or monthly pickleball tournaments). Or you could restrict street parking in ways that would make holding a public tournament impractical.

The board can get creative, but there are certainly ways it can restrict nuisance behavior through well-crafted rules.

Without taking those steps, you are effectively left with nothing but a rule prohibiting general nuisances, and I would hate to rely on that to curb occasional large gatherings. Yes, they create traffic, and can create large amounts of noise, but it’s transitory – eventually the guests leave, and the games stop. I think the HOA would have a difficult time establishing a nuisance claim. You would have a much stronger chance of curbing the unwanted behavior by either passing architectural controls that would prohibit or limit the construction of the pickleball courts, or instead passing rules that are directly intended to limit the feared behavior.

Ryan Poliakoff, a partner at Backer Aboud Poliakoff & Foelster, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. Ryan Poliakoff and Gary Poliakoff are co-authors of “New Neighborhoods – The Consumer’s Guide to Condominium, Co-Op and HOA Living.”

Copyright © 2022 The Palm Beach Post.

https://www.floridarealtors.org/news-media/news-articles/2022/12/can-hoa-stop-private-pickleball-court

Using AI for Photo Enhancing? It’s Legally Risky

NAR: Agents can’t misrepresent a property, but they can enhance photos to improve them. However, the dividing line between those two things is murky.

ORLANDO, Fla. – You can’t misrepresent a property, but there are ethical ways to use images generated by artificial intelligence (AI) to improve your clients’ experiences and better serve their needs.

Artificial intelligence now makes it possible for you to send a listing photo, along with commands for whatever image enhancements you want, to an algorithm – and receive the enhanced photo in seconds. This new frontier for real estate technology may open endless possibilities for marketing efforts, but it also comes with a murky legal landscape.

At the National Association of Realtors® (NAR) recent convention in Orlando, experts said there are currently more questions than answers.

AI-generated images are strikingly accurate, said Dan Weisman, director of emerging technology at NAR. He recently asked a generative AI tool to create a photo of a “transparent glass sculpture of a duck.” Weisman noted that the resulting image showed the duck with a colored background so the viewer could tell it was transparent. Weisman also generated an image of a corgi in a “house of sushi,” which proves that the algorithm understands the nuances of dog breeds and building construction.

DALL·E 2 and Google Imagen are the primary platforms for AI-generated images right now, and the technology is free (for now) to anyone who wants to try it, Weisman said. He added that within real estate, there could be three primary purposes for AI-generated images:

  1. Previewing the end result of a renovation project.
  2. Modifying listing photos to help buyers envision themselves in a home.
  3. Generating stock photos for marketing purposes.

Using these tactics, though, requires a look at the Realtor Code of Ethics for guidance, said Matthew Troiani, NAR’s director of legal affairs. He pointed out that Article 2 prohibits Realtors from exaggerating, concealing or misrepresenting pertinent facts about a property or transaction.

Still, there are ways to ethically use generative AI in real estate, Troiani said. A buyer’s agent, for example, could show their clients what a home could look like with alternative features if they’re willing to do some improvement. The could help buyers think creatively at a time when low inventory makes it difficult to be picky.

But, of course, a listing agent shouldn’t put those kinds of altered photos on the MLS without disclosure. Before using photos enhanced by AI, ask yourself whether you’re trying to improve the customer’s experience or pull a fast one, Troiani said.

“If you lead with transparency and in your client’s best interest, 99% of the time, you’ll be fine,” he says.

When it comes to who owns the legal rights to AI-generated images, “there are more questions than answers,” Troiani said, noting that U.S. copyright laws “protect original works of authorship fixed in a tangible form of expression.”

For now, he said, legal authorship is only extended to humans and not technology. But if you’re concerned about infringement, don’t share AI-generated images in a public domain, Troiani added.

Source: National Association of Realtors® (NAR)

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/12/using-ai-photo-enhancing-its-legally-risky

Fla.: Where to Live if You’re Rich? Fisher Island

The 33109 ZIP code – Miami’s Fisher Island – is No. 4 in the U.S. for most expensive homes with a median home sales price of $5.2M.

MIAMI – According to PropertyShark, the Miami Beach ZIP code of 33109 is one of the most expensive in the nation for housing. The Fisher Island ZIP code ranked fifth most-expensive in the nation with a median home sales price of $5.2 million from January through October 2022.

The top three priciest ZIP codes in the U.S. are Atherton, California (94027) with a median price of $7.9 million, Sagaponack, New York (11962) with a median price of $5.75 million, and Ross, California (94957) with a median price $5.5 million.

10 Florida ZIP codes for Most Expensive Housing

  1. 33109 – Miami Beach: $5.2 million
  2. 33149 – Key Biscayne: $1.5 million
  3. 33122 – Doral: $1.4 million
  4. 33480 – Palm Beach: $1.25 million
  5. 33133 – Miami/Coconut Grove: $1.1 million
  6. 33158 – Palmetto Bay/Coral Gables: $1.075 million
  7. 33156 – Pinecrest: $950,000
  8. 33154 – Surfside/Bal Harbour: $940,000
  9. 33330 – Southwest Ranches/Davie: $938,000
  10. 33146 – Coral Gables: $933,000

Source: South Florida Agent (11/18/22) Regan, Patrick

© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-4688

https://www.floridarealtors.org/news-media/news-articles/2022/12/fla-where-live-if-youre-rich-fisher-island

More Sellers Decide to Delist Their Homes

One agent’s take: “Some sellers are having a hard time grasping that we’re not in a housing-market frenzy anymore … that they missed the boat on getting a high price.”

SEATTLE – One out of every 50 housings listed for sales – a record 2% – were delisted each week on average during the 12 weeks ending Nov. 20 compared with 1.6% one year earlier, according to a report from Redfin. The share dropped to 1.9% for the 12 weeks ending Nov. 27, which includes the Thanksgiving holiday.

Sellers pull their listing for a variety of reasons, but many lately do so because they’re not getting the money they thought they would get as prices stagnate. Many sellers also don’t the challenges buyer have faced recently as higher mortgage rates cut into their homebuying dollar. While mortgage rates have dipped slightly since mid-November, the monthly mortgage payment on the median-asking-price home is still 40% higher than it was one year ago.

In some cases, sellers received no offers at the price they wanted, and in some cases no offers at all.

“Some sellers are having a hard time grasping that we’re not in a housing-market frenzy anymore – it’s tough for them to swallow that they missed the boat on getting a high price,” says Heather Kruayai, a Redfin real estate agent in Jacksonville. “By the time sellers realize their listing is priced too high, it has already been on the market for too long and is considered stale. I recently had two sellers take their homes off the market after 45-plus days.”

Florida metros – weekly delisting average – year-to-year change

  • Fort Lauderdale: 1.6%, up 0.2 points year-to-year
  • Jacksonville: 1.9% up 0.9 points
  • Miami: 1.9%, up 0.1 points
  • Orlando: 2.0%, up 0.4 points
  • Tampa: 1.9%, up 0.3 points
  • West Palm Beach: 1.7%, up 0.3 points

Nationally, only six metros saw a decrease in delistings year-to-year, all less than 1%: Warren, Michigan; Chicago; Newark, New Jersey; New Brunswick, New Jersey; Detroit; and Montgomery County, Pennsylvania.

West Coast tops for unhappy sellers

Sacramento, California, led the U.S. in the year-to-year increase of delisted homes – 3.6% of active listings were delisted per week, on average, during the 12 weeks ending Nov. 27, up 1.6 percentage points from one year earlier. It’s followed by Austin, TX (up 1.5 points), Seattle (up 1.4 points), Phoenix (up 1.3 points) and Denver (up 1.2 points).

Sacramento not only saw the biggest year-over-year jump in delistings; it also had the highest overall share, with 3.6% of for-sale homes delisted per week on average during the 12 weeks ending Nov. 27. It was followed by San Francisco (3.4%), Oakland (3.3%), Seattle (3.2%) and San Jose (3%).

Pittsburgh had the lowest share of delistings at 1.3%, followed by Cincinnati at 1.4%,New Brunswick (1.5%), Newark (1.6%) and Virginia Beach (1.6%).

“Usually, sellers who pull their listings off the market in the fall do it with the intention of listing again in the spring,” says David Palmer, a Redfin agent in Seattle. “But with the word ‘recession’ out there, there’s not as much optimism about spring being a better market. Now people are talking about trying again in another year or two once the economy improves.”

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/12/more-sellers-decide-delist-their-homes

Fla. Developers Hold Off as Insurance Costs Grow

Risk insurance that covers construction damages is up 30%, and the rising cost of all types of needed insurance is causing some builders to reconsider new projects.

MIAMI – Building developers require risk insurance that covers damage to buildings under construction, and some have seen rates increase by 30% over the last two years. Developers also need liability insurance, which has increased fourfold over the same period for condominiums.

Although housing demand remains robust, costs for labor and materials, and hikes in inflation and interest rates are squeezing developers’ finances and limiting their ability to make a profit.

For some high-rise projects in South Florida, developers say insurance costs can exceed 8% of the project’s total cost; three years ago, insurance averaged around 2% of project costs.

As costs continue to rise, many developers are postponing or canceling projects. Fred Zutel, an insurance broker at Lockton specializing in the Florida market, said that some developers are relying on old insurance rates from two or three years ago when calculating their budgets only to later find out that things have changed.

Insurance experts say the hike in rates is tied to an increasing number of natural disaster claims from more frequent and severe natural disasters. Additionally, Florida has had a building boom, and if the same insurer provides coverage to multiple projects within a small area, it increases the riskiness of their portfolios.

Insurers and developers are seeing a rise in construction-defect litigation in Florida that has also increased costs, plus the costs primary insurers pay for reinsurance – essentially insurance for insurers – has gone up following losses after disasters.

“When you add all these factors together, it creates the single-most difficult environment to procure insurance in the country,” says Zutel.

Source: Wall Street Journal (11/29/22) Acosta, Deborah

© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-4688

https://www.floridarealtors.org/news-media/news-articles/2022/12/fla-developers-hold-insurance-costs-grow

FHA Announces 2023 Loan Floors and Ceilings

Loans for single units range from $472,030, the floor, to $1,089,300, the ceiling. For four units, it’s $907,000 to over $2M – and in some non-Fla. areas, over $3M.

WASHINGTON – The Federal Housing Administration (FHA) announced new loan limits for calendar year 2023 for its Single Family Title II forward and Home Equity Conversion Mortgage (HECM) insurance programs.

For most of the country, loan limits will increase next year due to house price appreciation during the first half of 2022, which is factored into calculations FHA uses to determine the limits each year. The yearly increase calculations for FHA loans and those backed by Fannie Mae and Freddie Mac are written into law.

“The loan limits announced today reflect steep increases in home prices throughout much of the country and will ensure continued access to FHA-insured mortgage financing despite those increases,” said Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon.

Forward mortgage loan limits

Mortgage limits for the special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Islands are adjusted by FHA to account for higher costs of construction.

In 2023 the maximum loan limits for FHA forward mortgages will rise in 3,222 counties. In 12 counties, FHA’s loan limits will remain unchanged. By statute, the median home price for a Metropolitan Statistical Area (MSA) is based on the county within the MSA that has the highest median price.

HECM loan limits

The HECM maximum claim amount will increase from $970,800 this year to $1,089,300 for FHA case numbers assigned on or after Jan. 1, 2023. This maximum claim amount is applicable to all areas, including the special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Islands.

To find a complete list of FHA loan limits, areas at the FHA ceiling, and areas between the floor and the ceiling, visit FHA’s Loan Limits Page.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/12/fha-announces-2023-loan-floors-and-ceilings

Forego Insurance? Owners with Loans Can’t Opt Out

“It’s too expensive,” isn’t a good excuse. Lenders can “force-place” insurance that owners must pay – and that coverage protects the lender more than the owner.

FORT LAUDERDALE, Fla. – Question: Our mortgage was set up so that we directly pay the property taxes and insurance. Our insurance renewal bill went way up, and we did not have the funds to pay it, so it lapsed.

Our lender must have found out because they bought an even more expensive policy and are tacking the cost onto our monthly mortgage bill. Can they do this? – Cathy

Answer: Yes, the terms of your mortgage allow this practice.

When you took out your loan, you agreed to maintain insurance on your property. You also agreed to let your lender purchase a policy if you do not and have you pay for it. This type of homeowner’s insurance policy is called “force-placed” insurance.

Your mortgage lender is not overly concerned with the cost and may even have a business relationship with the insurer, so force-placed policies can be much more expensive than a policy for which the homeowners would shop around.

Worse yet, the coverage under this policy favors the lender but provides less coverage for the homeowner. Too many homeowners only find out about this lack of coverage after something happens to their home and try to make a claim.

Because it is more expensive and protects you less, you should start shopping for a better policy.

Fortunately, you have the right to replace the force-placed insurance with a policy you find, which will lower your monthly bill and protect you better.

When you set up your loan, your lender was notified of the coverage and would have been told when you let it lapse. This can happen to people who already pay a monthly portion into escrow with their lender as part of their monthly payments. If a lender does not get a proper notice each year from the insurance carrier or misplaces it, they will notify you of the problem by mail.

In my practice, I have learned that many people do not open their mail, especially in trying times, and even when they do, they often do not recognize its importance. This is understandable with the amount of junk mail, ads, privacy policy updates, and the like that come in the post.

Always open and carefully review everything you get from your lender and other companies you deal with.

Copyright © South Florida Sun Sentinel, Gary M. Singer. All rights reserved.

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HUD Rental Survey Finds Tons of Small Investors

The U.S. has 49.5M rental units, and 46% are in buildings with four units or less. Of those, mom-and-pop investors own 70% – 1 out of 3 units nationwide.

WASHINGTON, D.C. – Out of the 49.5 million rental housing units in the U.S., nearly 46% are located in properties with one-to-four units, according to the latest Rental Housing Finance Survey (RHFS) released by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau.

Of those small rental properties, individual investors own 70% (15.9 million). And of those, more than one-third (8.1 million) have a mortgage or similar debt.

“The Rental Housing Finance Survey provides insight on the financial, managerial and physical characteristics of rental properties nationwide,” says Solomon Greene, HUD’s principal deputy assistant secretary for policy development and research. “Given that the survey was in the field during 2021, it will help the Administration to better understand how rental property owners responded to the COVID-19 pandemic.”

HUD funds the Rental Housing Finance Survey and the Census Bureau collects the information every three years. It’s a comprehensive survey of rental housing properties in the United States, covering topics such as property configuration, ownership and management, rental income and expenses, financing, and capital improvements and expenses.

The current release includes summary tables. A public-use file of microdata will be released later in December.

Below are highlights from the national level findings among the 19.3 million rental properties, which contain 49.5 million rental units.

Rental property survey highlights

  • About 86% of all rental properties contain only one unit.
  • About one-third of all investor-owned properties with one rental unit and another one-third of rental units are within properties that have 150 or more rental units.

Ownership and management

  • Individual investors own about 70% of rental properties and 38% of individual rental units. Limited liability corporations own 15% of rental properties and 40% of individual units. For properties with 150 or more units, limited liability corporations or partnerships own 67%.
  • About 22% of small rental properties (1-4 units) are managed professionally, while 84% of properties with 150 or more units are managed professionally.

Rental income and expenses

  • The median monthly rental receipt per rental unit in 2021 is $1000. Three years earlier it was $750.
  • The median monthly operating expense (not including debt service) is $380 per rental unit.

Property purchase, value, and financing

  • The median estimated market value per rental unit is $175,000.
  • The median purchase price per rental unit is $99,000 (not adjusted for inflation).
  • About 41% of all rental properties have a mortgage or similar debt, compared with 35% of all rental properties that had a mortgage or similar debt three years earlier.
  • For properties with a mortgage, the median debt per rental unit is $180,000 at mortgage origination (not adjusted for inflation), compared with $119,200 in the 2018 RHFS.

Capital Expenses and Improvements

  • About 76% of property owners reported making some type of capital improvement to their rental property in 2020.
  • Owners annually spend a median of $840 per rental unit on capital improvements.

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Fla.’s Affordable Housing Fund to Surge in 2023

The Florida Housing Coalition expects the state’s affordable housing trust fund to have $403M in it next year – a notable increase from this year’s $360M.

TALLAHASSEE, Fla. – Florida Housing Coalition CEO Jaimie Ross expects to see a major boost next year to the Sadowski Housing Trust Fund, which has been used to fund affordable housing efforts statewide since 1992.

The funds could potentially total $403 million in 2023-2024, up from $360 million in 2022-2023 – a $43 million increase – Ross said during the Nov. 17 Housing for All Lake County Forum in Clermont.

The Sadowski Affordable Housing Act directs 24.17% of collected document stamp tax money on real estate sales to be used for affordable housing, minus state administrative costs. Last year, however, the state reduced the amount of document stamp tax money allocated to affordable housing by 50%, though the state tapped the money at other times in the past, notably during economic slowdowns when general tax revenue fell.

The funds for 2023-2024 will be determined by the Florida Legislature convenes on March 7, 2023.

Due in part to a large influx of new residents during the pandemic, most Florida metro areas have an affordable housing shortage.

Among metro Orlando’s population that earns 50% or less of the area’s median income, for example, the National Low Income Housing Coalition reports an existing 78,225-unit shortage of affordable housing. Meanwhile the median monthly two-bedroom apartment rent in metro Orlando increased by 6.5% year-over-year in October to $1,652, the highest increase among all Florida metros, according to ApartmentList. The metro’s October median home sale price of $365,000 was up 12% compared to the previous year, data from the Orlando Regional Realtor Association reveals.

On the positive side, the American Rescue Plan Act distributed millions of federal dollars to Central Florida municipalities in the last two years to fund affordable housing projects and rental assistance, Florida Housing Coalition Technical Advisor Tamara West says.

“We don’t know if we’ll ever see this opportunity again,” she adds.

Source: Orlando Business Journal (11/22/22) Soderstrom, Alex

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