Monthly Archives: April 2022

Demand Doubles for ARMs

Lower intro rates from adjustable-rate mortgages may entice more buyers now. The increase coincides with a 1.5 percentage point rise in the 30-year fixed rate.

WASHINGTON – The share of mortgage applications with adjustable-rate mortgages doubled last week when compared to three months ago, the Mortgage Bankers Association reported Wednesday. ARMs, which start at one rate and then fluctuate after a set period, comprised more than 9% of loans and 17% of the dollar volume.

ARMs were blamed for contributing to the housing bubble of the mid-2000s, offering teaser low rates to borrowers that, once they reset, led to some homeowners no longer being able to afford their mortgage. Lenders say they’re stricter about who qualifies for ARMs nowadays.

The latest lower introductory rates from ARMs may grow more enticing as home buyers watch other rates quickly climb. The average contract interest rate for the 30-year fixed-rate mortgage with conforming loan balances ($647,200 or less) rose to 5.37% last week. That is up from 3.17% just a year ago, the Mortgage Bankers Association reports. The average rate on a 5-year ARM, however, was 4.28% last week.

The doubled share of ARM applications compared to three months ago coincides with the 1.5 percentage point increase in the 30-year fixed rate, says Joel Kan, an MBA economist.

“As buyers continue to navigate today’s housing market and rising interest rates, many are considering adjustable-rate mortgages,” says Glenn Brunker, president of Ally Home. “ARMs can help buyers save money over a fixed rate because they often offer a lower monthly mortgage payment for the initial period of the loan, typically five, seven or 10 years.”

When determining whether to choose a fixed or ARM mortgage, borrowers likely will want to make two main considerations, Brunker says: How long they’ll be in the home and their personal finances and affordability.

“The interest rate on a fixed-rate mortgage is locked in for the life of the loan – whether it’s 15, 20 or 30 years,” he says. “So if a buyer is planning to stay in their home for an extended period of time, the peace of mind that comes with a fixed-rate mortgage is beneficial.”

Also, he notes that ARM loans may increase if interest rates rise further when they do reach that adjustable reset period. But there is some protection offered on ARMs based on periodic and lifetime caps on interest rate increases, which borrowers can look into before they commit.

Source: “Adjustable-Rate Mortgage Demand Doubles as Interest Rates Hit the Highest Since 2009,” CNBC (April 27, 2022) and Ally Home

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


U.S. Economy Contracts for 1st Time Since 2020

McLEAN, Va. – After a blockbuster 2021, the U.S. economy decidedly came back to earth early this year, contracting for the first time since the second quarter of 2020.

The trade deficit widened and companies pulled back stockpiling, more than offsetting solid consumer spending and business investment.

The nation’s gross domestic product, the value of all goods and services produced in the U.S., shrank at a seasonally adjusted annual rate of 1.4% in the January-March period, the Commerce Department said Thursday. Economists surveyed by Bloomberg had forecast a 1% rise in GDP.

It marks the economy’s worst quarterly showing since the depths of the health crisis in spring 2020 and follows sizzling gains of 6.9% in the fourth quarter and 5.7% for all of last year. That was the strongest annual rise since 1984.

But it doesn’t mean the economy is in a recession, though the odds of a slump already had risen to 20% to 30% over the next 12 months from 15% in 2021, top economists say.

A drop in quarterly output – or even two in a row – doesn’t equate to a downturn. Rather, the National Bureau of Economic Research defines a recession based on a significant decline in economic activity, including employment, retail sales and industrial production.

U.S. consumers and businesses – the core of the economy – remain healthy.

“While the possibility of a 2023 recession can’t be ruled out, current economic momentum in the economy remains too strong for things to suddenly sputter out,” economist Thomas Feltmate of TD Economics wrote in a note to clients.

Inflation eases but remains high

Growth should still be sturdy, if markedly slower, in 2022. But Thursday’s report kicks off an uncertain year for the economy as inflation eases but remains elevated and the Federal Reserve wages an aggressive campaign to fight it with interest rate hikes that could risk a downturn.

In the first quarter, trade accounted for the dismal performance, subtracting more than 3 percentage points from growth.

Exports fell 5.9% as U.S. manufacturers continued to grapple with supply snarls, and foreign countries struggled with COVID-19 flare-ups.

Meanwhile, imports surged 17.7% as a result of American consumers who continued to snap up goods. The combination widened the trade gap.

Firms added to inventories more slowly

Companies bulked up their inventories late last year after drawing them down earlier in response to late deliveries. But they replenished stockpiles so aggressively – adding more than 5 percentage points to GDP growth – that there was bound to be a pullback in the first quarter, says economist Ian Shepherdson of Pantheon Macroeconomics.

Consumer spending, which makes up 70% of economic activity, grew 2.7% following a 2.5% rise late last year. Those are decent numbers, but they pale next to the double-digit advances of early 2021 when the economy was re-opening and federal stimulus checks juiced purchases.

On the one hand, the nation continued to heal from COVID-19 in recent months as cases tumbled after January’s omicron surge, leading many Americans to resume shopping, traveling and dining out. That has partly made up for a cutback in consumers’ spending binges on sofas, TVs and other goods while they hunkered down during the pandemic.

Households also have been bolstered by robust job and wage growth as employers struggle to fill a near-record number of openings. Many people are still out of the labor force – meaning they’re not working or looking for jobs – for COVID-19-related reasons.

But inflation hit a 40-year high of 8.6% in March and the spike in gasoline, food and rent costs has led many households to curtail their discretionary purchases, says Wells Fargo economist Sam Bullard.

Supply chain untangles, but Ukraine, China pose challenges

The supply chain bottlenecks that helped fuel the soaring prices are starting to ease and many economists believe inflation has peaked. But Russia’s war in Ukraine and COVID-19-related lockdowns in China pose new threats to the shipment of goods across the globe.

Bullard expects the economy to grow 2.8% this year, a healthy showing in relation to the pre-pandemic era, but a big downshift from last year’s leap in output.

And the Fed has vowed to bring down inflation with sharp interest rate hikes, raising concerns about whether the central bank can slow the price increases without triggering a recession. Pearce predicted the first-quarter drop in GDP would not keep the Fed from hiking rates by half a percentage point at a meeting next week.

How other parts of the economy performed:

Business investment rebounds

Business capital spending grew a healthy 9.2% after a 2.9% gain in the fourth quarter.

Outlays for computers, delivery trucks, factory machines and other equipment jumped 15.3%. Supply chain snags are easing, spurring businesses to order more vehicles and other equipment that had been in short supply. And persistent w shortages are leading companies to buy more labor-saving technology, says economist Michael Pearce of Capital Economics.

But spending on buildings, oil rigs and other structures edged down 0.9% after an 8.3% decline late last year. Intellectual property spending rose 8.1%, notching strong results for the seventh straight quarter.

Residential investment rises

Housing construction and renovation rose a modest 2.1% following a 2.2% gain the previous quarter.

The industry is facing hurdles such as rising prices and interest rates, along with supply chain problems that have slowed deliveries of materials and pushed up prices.

But low housing inventories mean builders need to put up more homes, and the improving health crisis is coaxing construction workers back to job sites, says economist Shernette McLeod of TD Economics.

Government spending falls

Government spending slid 2.7% after a 2.6% drop the prior quarter. Federal spending declined 5.9% while state and local spending dipped 0.8%.

Copyright © 2022, USATODAY.com, USA TODAY


Report: Seller Profit Margins Dip Slightly

ATTOM: Though still at historical highs, profit margins on median-priced single-family home sales fell to 47.2% in 1Q 2022; it was 51.6% in 4Q 2021.

IRVINE, Calif. – Home prices are still rising, but sellers’ profits may be slowing from their recent highs. However, most sellers continue to see huge gains and profits still remain at historical highs.

The profit margins on median-priced single-family home sales across the U.S. fell to 47.2% in the first quarter. It was the first quarterly decline since late 2019 and the largest in a decade, according to a new report released by ATTOM Data Solutions. The first-quarter profit margin was down from 51.6% in the fourth quarter of 2021.

That said, profit margins – the percent change between median purchase and resale prices – often decrease during the slower winter homebuying seasons. But the latest dip of more than four percentage points was larger than typically seen at that time of year, researchers say.

The typical return on investment remains historically high. Gross profits are near record highs.

The typical single-family home sale nationwide had a median gross profit of $103,000 in the first quarter. That is down from $107,187 in the fourth quarter of 2021. But the first-quarter median is significantly above the profit of $75,001 from a year earlier.

“Home prices simply can’t continue to go up as rapidly as they have for the past few years,” says Rick Sharga, executive vice president of market intelligence for ATTOM. “The combination of higher prices, rising mortgage rates, and the highest rates of inflation in 40 years may be pricing some prospective buyers out of the market, which means we may begin to see lower sales numbers. Ultimately, as affordability worsens, price appreciation should slow down.”

The largest quarterly decreases in profit margins by metro area in the first quarter were: Santa Barbara, Calif. (margin down from 72.9% in the fourth quarter of 2021 to 45.8% in the first quarter of 2022); Boise, Idaho (down from 110.4% to 88.8%); Brownsville, Texas (down from 54.3% to 38.1%); St. Louis (down from 37.6% to 23.9%); and Des Moines, Iowa (down from 48.1% to 35.2%).

The housing market has been showing other early signs of normalizing. Contract signings dropped in March, the fifth consecutive month that pending home sales have fallen, the National Association of Realtors® reported Wednesday.

Source: “Home Sales, Seller Profits Dip Across U.S. in First Quarter of 2022 as Price Increases Slow,” ATTOM Data Solutions (April 27, 2022)

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


The Home Renovation Boom Continues

Houzz: Renovation activity and spending hit their highest rate since 2018. Homeowners report a 20% increase in the median renovation spend, reaching $18K.

PALO ALTO, Calif. – Home renovation activity and spending reached its highest rate since 2018, according to the Houzz & Home survey, conducted by the home remodeling site Houzz and reflecting the opinions of nearly 70,000 respondents.

Homeowners are reporting a 20% increase in the median renovation spend, reaching $18,000. Houzz researchers note a big part of that growth is from homeowners with higher budget projects who increased their budgets from $85,000 in 2020 to $100,000 in 2021.

The remodeling surge doesn’t appear to be letting up either. More than half of homeowners surveyed say they plan to renovate in 2022, and 46% plan to decorate their home. Their planned budget has increased to $15,000 for 2022 versus the $10,000 amount it had been for the past three years, Houzz notes in its study.

“Renovation activity remains strong due to market fundamentals, including limited and aging housing stock, despite heightened product and material costs driven by supply chain disruptions,” says Marine Sargsyan, Houzz staff economist. “Homeowners are clearly committed to investing in their homes and are exploring diverse funding sources. This is especially pronounced among recent homebuyers, who rely heavily on cash from previous home sales to fund their projects and spend significantly more than the national median.”

Indeed, recent home buyers spent nearly double the national median ($30,000), according to the survey. Long-term homeowners – those who moved into their home six or more years ago – spent a median of $15,000. Short-term homeowners – those who moved into their home between one and five years ago – spent a median of $19,000 on home renovations.

What they’re renovating

Investments in home remodeling rose for interior rooms, the Houzz survey finds. Kitchens saw an increase of 25% in 2021 compared to 2020, or $15,000 versus $12,000, respectively. Kitchens remain the most popular interior room for home updates and also the most expensive to complete.

Other interior rooms in a home that posted an increase in remodeling included guest bathrooms, laundry rooms, living rooms and guest bedrooms, according to the survey.

Homeowners also are spending more on security systems. Outdoor security systems are the second most frequently installed outdoor upgrade behind lighting.

Financing the home renovation

More homeowners are starting to finance their house projects. The number of homeowners who are relying on cash from savings to fund their renovation projects fell by seven percentage points in 2021 to 76%. Homeowners financing renovation projects with credit cards increased six percentage points to 35%. Recent home buyers and short-term homeowners were more likely to rely on cash from a previous home sale (42% and 19%, respectively) to fund their house projects. On the other hand, long-term homeowners were the most likely to use secured home loans at 17%.

As homeowners spruce up their homes, they may find benefits of those upgrades at resale. The National Association of Realtors®, along with the National Association of the Remodeling Industry, recently released a report that highlights the home remodeling projects that offer potentially the biggest boost at resale.

In the 2022 Remodeling Impact Report, they found that refinishing hardwood floors is the remodeling project that pays back the most.

Source: “The Houzz & Home Survey,” Houzz (April 27, 2022)

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


Tools to Run a Real Estate Business on the Cloud

Cloud-based options and software like Dropbox or Microsoft365 offer automatic backup and recovery – files are available even if a device is lost or damaged.

NORWALK, Conn. – Real estate professionals are increasingly turning to cloud computing to enhance their business strategies. With cloud-based storage options and software, all agents need is an internet connection and a smartphone or other mobile device to access and share documents.

Cloud solutions offer automatic backup and recovery so agents never lose their files, even if their device is lost, stolen or damaged. In most instances, agents just drag and drop files into a cloud-based application.

Popular cloud storage options to consider include Dropbox, which lets users store content securely and send a link to others for easy sharing. Google Drive offers up to 15GB of free storage space, making it ideal for Android users, while iCloud is ideal for people who use Apple’s iOS devices.

Meanwhile, the Box app facilitates collaboration and integrates with Outlook, Google Docs and Microsoft Office365.

Microsoft365 is another popular option for real estate cloud software. It comes with 1TB of OneDrive storage, and users can purchase additional storage.

With SpiderOak, users can easily drag and drop content into their SpiderOak Hive folder to sync data and share it with others.

And, compliant with government security requirements, Huddle offers cutting edge security features. This makes it an ideal real estate cloud software option for many agents and their clients.

Source: RISMedia (04/25/22)

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


Long-term U.S. Mortgage Rates Edge Down to 5.1%

After 7 weeks of increases, the average rate on a 30-year mortgage dipped to 5.1%; a year ago, it was 2.98%. Last week, it was 5.11% – highest since April 2010.

WASHINGTON (AP) — The average long-term U.S. mortgage rate edged down for the first time in two months following a swift ascent to levels that have not been seen in more than a decade.

After seven weeks of increases, the average rate on a 30-year mortgage inched down to 5.1% from 5.11% last week, mortgage buyer Freddie Mac reported Thursday. Last week’s average rate was the highest since April of 2010. One year ago, the 30-year rate stood at 2.98%.

Federal Reserve officials have signaled that they will take an aggressive approach to fighting high inflation, saying that half-point interest rate hikes, rather than traditional quarter-point increases, “could be appropriate” multiple times this year. The Fed raised its main borrowing rate by a quarter-point in March, its first increase since late in 2018.

Last week, the National Association of Realtors reported that sales of previously occupied U.S. homes fell in March to the slowest pace in nearly two years with surging mortgage rates and record-high prices sidelining would-be homebuyers just as the spring buying season begins.

Median home prices in March jumped 15% from a year ago at this time to $375,300. That’s an all-time high on data going back to 1999, NAR said.

With inflation at a four-decade high, rising mortgage rates, elevated home prices and tight supply of homes for sale, homeownership has become less attainable, particularly for first-time buyers.

“The combination of swift home price growth and the fastest mortgage rate increase in over forty years is finally affecting purchase demand,” said Freddie Mac’s Chief Economist Sam Khater.

Some economists suggest that home sales this year could decline as much as 10% from 2021 levels.

Freddie Mac reported that the average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, rose to 4.4% from 4.38% last week. One year ago, it stood at 2.31%.

Copyright © 2022 Associated Press, Matt Ott, AP business writer. All rights reserved.


NAR: Pending Home Sales Down 1.2% in March

The index has dropped for 5 straight months; it fell 8.2% year-over-year. Chief Economist Yun: It may signal “calmer and normalized market conditions” soon.

WASHINGTON – Pending home sales dropped in March, signifying five straight months that contract activity has declined, according to the National Association of Realtors®. Month-over-month, only the Northeast saw an increase in contract signings, while the three other major U.S. regions experienced declines in transactions. All four regions reported decreases in year-over-year contract activity.

The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, fell 1.2% to 103.7 in March. Year-over-year, transactions dropped 8.2%. An index of 100 is equal to the level of contract activity in 2001.

“The falling contract signings are implying that multiple offers will soon dissipate and be replaced by much calmer and normalized market conditions,” said Lawrence Yun, NAR’s chief economist. “As it stands, the sudden large gains in mortgage rates have reduced the pool of eligible homebuyers, and that has consequently lowered buying activity.

“The aspiration to purchase a home remains, but the financial capacity has become a major limiting factor.”

Yun expects the 30-year fixed mortgage rate to reach 5.3% by the fourth quarter, mortgage rates to average 4.9% in 2022, and to hit 5.4% by 2023.

He forecasts inflation to average 8.2% in 2022, although it will start to moderate to 5.5% in the second half of this year.

As of March 2022, higher mortgage rates and sustained price appreciation has led to a year-over-year increase of 31% in mortgage payments.

“Overall existing-home sales this year look to be down 9% from the heated pace of last year,” said Yun. “Home prices are in no danger of decline on a nationwide basis, but the price gains will steadily decelerate such that the median home price in 2022 will likely be up 8% from last year.”

While costs have soared for existing and new homes, rental properties have seen monthly payments jump, too, a turn that Yun says will lead to more renters exploring ownership.

“Fast-rising rents will encourage renters to consider buying a home, though higher mortgage rates will present challenges,” Yun said. “Strong rent growth nonetheless will lead to a boom in multifamily housing starts, with more than 20% growth this year.”

He predicts the unemployment rate will average 3.7% in 2022 and estimates gross domestic product to expand 2.8%.

With rising mortgage rates, Yun added that single-family homebuilders will be more cautious, despite the current tight inventory conditions, saying “I expect that to result in a boost to construction of less than 5%.”

March pending home sales regional breakdown

Month-over-month, the Northeast PHSI grew 4.0% to 89.3 in March, a 9.2% fall from a

year ago. In the Midwest, the index dropped 6.1% to 94.7 last month, down 4.8% from March 2021.

Pending home sales transactions in the South decreased 0.9% to an index of 125.8 in March, down 9.5% from March 2021. The index in the West declined 0.2% in March to 89.8, down 8.4% from a year prior.

© 2022 Florida Realtors®


New-Home Sales Fall, Buyers Face ‘Sticker Shock’

New-home sales down 8.6% in March; sales are down nearly 13% from a year ago. Only 14% of March’s new-home sales were below $300K; a year ago, it was 34%.

WASHINGTON – As mortgage rates and home prices soar higher, sales of newly built single-family homes are dropping in response. Builders say affordability issues are to blame.

New-home sales fell 8.6% in March to a seasonally adjusted annual rate of 763,000 units, the Commerce Department reported on Tuesday. Sales fell in all four major regions of the U.S. last month. Overall, sales are down nearly 13% compared to a year ago.

“Buyers are facing sticker shock due to deteriorating affordability conditions and a lack of existing home inventory,” says Danushka Nanayakkara-Skillington, assistant vice president of forecasting and analysis at the National Association of Home Builders. “Only 14% of new-home sales in March were priced below $300,000. A year ago, it was 34%.”

The median sales price in March for a new home was $436,700, up more than 21% compared to a year ago. Builders cited higher development costs and materials for the price jumps.

Home prices are expected to remain high. Strong new-home price growth will likely continue through this year and into 2023, builders note.

Mixed with the higher prices, buyers are facing higher mortgage rates too. The 30-year fixed-rate mortgage averaged 5.11% during the week ending April 21, the highest in more than a decade, according to Freddie Mac.

“Growing affordability challenges are slowing new-home sales and taking a toll on the housing market,” says Jerry Konter, the NAHB’s chairman. “Mortgage rates jumped nearly a full percentage point between the end of February and March, and builders continue to face escalating construction and development costs, which are putting upward pressure on new-home prices.”

New single-family home inventory was up 52.4% in March compared to a year ago. However, just 35,000 of the homes are completed and ready to occupy. Homes under construction made up 65.5% of the inventory, with homes yet to be built comprising about 26% of that.

A backlog of homes approved for construction and yet to be started is at an all-time high, Reuters reports. Builders continue to grapple with shortages and higher prices for common material items like lumber for framing, garage doors, countertops, appliances, and more.

The prices of goods used in residential construction continued to rise in March and are up 8% since the start of 2022, according to a recent NAHB analysis. Year over year, building material prices have increased 20.4% and have risen 33% since the beginning of the pandemic.

Source: National Association of Home Builders and “U.S. New Home Sales Dive in March: Prices Surge,” Reuters (April 26, 2022)

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


Fair Housing Champion Award Winners Named

NAR recognized 4 winners for making a difference in their businesses and communities as they help expand homeownership to buyers of all backgrounds.

WASHINGTON –The National Association of Realtors® and Realtor.com® today honored the four inaugural winners of the first Fair Housing Champion Awards during NAR’s Fair Housing Month event, “What Will it Take to Close the Racial Homeownership Gap?” Honorees were recognized for their work to increase access to homeownership in their communities.

The Fair Housing Champion Award honors Realtors who have gone above and beyond to advance fair housing and expand homeownership in underserved communities. Sponsored by Realtor.com, each award provides a $4,000 prize that winners can dedicate to a housing-related nonprofit organization of their choice.

“NAR is committed to helping build thriving, inclusive communities in every zip code in America,” said NAR President Leslie Rouda Smith. “I am so proud of all the work our winners have done to increase access to homeownership and hope their leadership can serve as an example to inspire others into action.”

This year’s winners:

Harrison Beacher is managing partner of the Coalition Properties group, serving the D.C. metro area, and affiliated with Keller Williams Capital Properties. He currently serves as the 2022 president for the Greater Capital Area Association of Realtors and as an at-large director for the D.C. Association of Realtors. Many of his clients are first-time buyers: Beacher helps them succeed by connecting them with down payment assistance and other resources.

Sabrina Brown is a broker-owner of Brown and Brown Real Estate in Fresno, California. She is a director at her local and state associations, the Madera Association of Realtors and the California Association of Realtors. Brown regularly holds homebuyer workshops that connect first-time buyers with programs to help them achieve homeownership and invest in real estate, with an emphasis on outreach to people of color.

Bobbi Howe is a second-generation real estate professional with more than 24 years of experience as a Realtor. Currently serving as the treasurer-elect for Missouri Realtors, she is dedicated to using her platform to spread the word about systemic racism in real estate. Howe works to expand opportunities for Black real estate investors in the Kansas City area.

Rafael Perez has been a Realtor since 2012 and has extensive experience as a mortgage banker, lender and educator. He serves on NAR’s Fair Housing Policy Committee and is a member of the National Association of Hispanic Real Estate Professionals San Diego, where he is a past chapter president. He continues his eight-plus years of service as a commissioner for the City of San Diego on the Citizens’ Equal Opportunity Commission. Perez is passionate about helping families create household wealth through homeownership and created the Companion Unit Handbook for the City of San Diego to expand housing supply. He also helps people in San Diego who have been displaced by development to move back into their old neighborhoods.

“Realtor.com was inspired to help create and sponsor the Fair Housing Champion Awards based on our support of NAR’s Good Neighbor Awards,” said realtor.com Chief Marketing Officer Mickey Neuberger. “Like the Good Neighbor Award winners, the Realtors who are recognized today as fair housing champions are making a real difference in their communities as they help people overcome bias, discrimination and inequality.”

© Florida Realtors®


Managing Fla.’s Massive Growth: What’s Next

Fla.’s population may grow by 3.5M residents to reach 26M by 2030. A chamber report predicts 1.6M jobs more will be needed and 3M more cars will be on roads.

ORLANDO, Fla. – Florida’s population is predicted to reach 26 million by 2030, an increase of more than 3.5 million residents, according to the Florida Chamber of Commerce’s Florida 2030 Blueprint.

The initiative calls on local governments, businesses and private organizations to address 39 targets ranging from job training to environmental protection. The blueprint estimates that Florida will need an additional 1.6 million jobs by 2030, and roads will need to handle 3 million more cars.

Chamber CEO and President and Mark Wilson notes that Florida’s economy has increased from the 17th largest economy in the world to the 15th in the four years since the blueprint was written.

Paul Owens, president of the nonprofit 1000 Friends of Florida, backs the idea of private investment in public issues, but believes public supervision is necessary. 1000 Friends of Florida also issued an outlook with a horizon of 2070. The report sees risky consequences if development isn’t contained, such as one-third of the state becoming paved.

“That’s going to create all kinds of problems for water quality and flooding,” Owens said. “If properly planned, we could certainly reduce the impact of 3.5 million more Floridians.”

Source: Orlando Sentinel (04/12/22) Fraser, Trevor

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


U.S. Consumer Confidence Down Slightly in April

Americans were slightly less optimistic about current conditions in April, but their attitudes remain more positive about the short-term outlook.

BOSTON – Americans were slightly less optimistic in April, though it appears their confidence was shaken more by current conditions, and they were feeling more positive about the short-term outlook. The Conference Board Consumer Confidence Index dropped slightly this month, after an uptick in March.

The Index now stands at 107.3, down from 107.6 in March.

The Present Situation Index component of the broader index based on consumers’ assessment of current business and labor market conditions – fell to 152.6 from 153.8 last month. However, the Expectations Index based on consumers’ short-term outlook for income, business, and labor market conditions – ticked up to 77.2 from 76.7.

“Consumer confidence fell slightly in April, after a modest increase in March,” said Lynn Franco, senior director of Economic Indicators at The Conference Board. “The Present Situation Index declined, but remains quite high, suggesting the economy continued to expand in early Q2. Expectations, while still weak, did not deteriorate further amid high prices, especially at the gas pump and the war in Ukraine. Vacation intentions cooled but intentions to buy big-ticket items like automobiles and many appliances rose somewhat.

“Still, purchasing intentions are down overall from recent levels as interest rates have begun rising. Meanwhile, concerns about inflation retreated from an all-time high in March but remained elevated. Looking ahead, inflation and the war in Ukraine will continue to pose downside risks to confidence and may further curb consumer spending this year.”

Present situation

Consumers’ appraisal of current business conditions was mixed in April:

• 20.8% said business conditions were “good,” up from 19.6%.

• 21.9% said business conditions were “bad,” up from 21.4%.

Assessment of the labor market was less upbeat:

• 55.2% said jobs were “plentiful,” down from 56.7%.

• 10.6% said jobs are “hard to get,” up from 9.6%.

Expectations six months from now

Consumers’ optimism about the short-term business conditions:

• 18.1% expect business conditions will improve, down from 19.0%.

• 21.8% expect business conditions to worsen, down from 24.1%.

Attitudes were less optimistic about the short-term labor market outlook:

• 17.4% expect more jobs to be available in the months ahead, down from 17.6%.

• 18.9% anticipate fewer jobs, up from 18.0%.

Consumers were less pessimistic about their short-term financial prospects.

• 16.5% of consumers expect their incomes to increase, up from 15.1%.

• 13.8% expect their incomes will decrease, virtually unchanged from 13.7%.

Toluna conducts the monthly Consumer Confidence Survey. The cutoff date for the preliminary results was April 19.

© 2022 Florida Realtors®


Home Prices Continue to Rise

20-city price index: A 20.2% year-over-year gain in Feb; up from 18.9% in Jan. Tampa and Miami were in top 3 cities for highest rate of home-price growth.

NEW YORK – The S&P CoreLogic Case-Shiller 20-city price index posted a 20.2% year-over-year gain in February, up from 18.9% the previous month.

Meanwhile, the Case-Shiller national home price index increased 19.8% between February 2021 and February 2022. This represented the third-largest pace of home-price appreciation in the Case-Shiller report’s history.

As in previous months, Phoenix recorded the highest rate of home-price growth in February, with a 32.9% year-over-year increase, followed by Tampa (32.6%) and Miami (29.7%).

All 20 cities that the Case-Shiller report tracks not only recorded double-digit price growth in February but also a faster pace of growth than the month prior.

Meanwhile, the Federal Housing Finance Agency Housing Price Index found that prices rose 19.4% year over year in February and 2.1% from the previous month.

Source: MarketWatch (04/26/22) Passy, Jacob

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


DeSantis Sets May Session on Property Insurance

Reinsurance, the Office of Insurance Regulation and changes to Fla.’s Building Code to improve insurance affordability are among topics for the May 23-27 session.

TALLAHASSEE, Fla. – Florida lawmakers will return to the Capitol the week of May 23 to address problems in the property-insurance system that have led to homeowners losing coverage and facing soaring premiums.

Gov. Ron DeSantis on Tuesday called a special session from May 23 to May 27 and listed general topics such as reinsurance, the Office of Insurance Regulation and changes to the Florida Building Code to improve the affordability of property insurance.

In the proclamation, DeSantis said insurers in the state have experienced “two straight years of net underwriting losses exceeding $1 billion each year,” while pointing to issues such as large numbers of lawsuits over claims.

House Speaker Chris Sprowls, R-Palm Harbor, has favored waiting to make additional changes until a 2021 property-insurance law has more time to take hold. He issued a statement Tuesday saying the House will see if more can be done.

“The Legislature made great strides on meaningful property insurance reforms in 2021, and we are already seeing the positive impacts of that work,” Sprowls said in the statement. “We look forward to working with our partners to evaluate whether there is more we can do to address the availability and affordability of property insurance. The Florida House will remain primarily focused on addressing the needs of the policyholders of Florida.”

In 2021, lawmakers approved changes that included a new formula to limit fees of attorneys who represent homeowners in lawsuits against insurers and a reduction from three years to two years in the time to file claims. They also passed a proposal aimed at preventing roofing contractors from advertising to spur homeowners to file insurance claims, though a federal court has blocked that part of the law on free-speech grounds.

The law also allowed larger rate increases for customers of the state-backed Citizens Property Insurance Corp., which is often able to charge less than private carriers.

While DeSantis’ proclamation did not provide detailed proposals, one potential issue could be to help insurers address problems with costs and availability of reinsurance, which is essentially backup coverage that plays a critical role in the Florida market. The special session will be held shortly before the renewal of reinsurance contracts in June.

During a meeting last week of the Florida Insurance Guaranty Association, Tim Meenan, the agency’s general counsel, said one possibility could involve temporarily making additional reinsurance coverage available through the Florida Hurricane Catastrophe Fund, which provides relatively low-cost reinsurance. The Florida Insurance Guaranty Association is closely watching the market problems because it pays claims if insurers become insolvent.

DeSantis on April 18 announced his intention to call a special session on property insurance. That came a day before lawmakers began a three-day special session that included passing a congressional redistricting plan and two bills targeted at Walt Disney Co.

During an appearance at UF Health Jacksonville on April 18, DeSantis said the insurance session would try to “bring some sanity and stabilize and have a functioning market.”

The House and Senate were unable to reach agreement on an insurance bill during this year’s regular legislative session, which ended March 14, with the Senate wanting to take more-aggressive steps to bolster private insurers.

As an example, the Senate proposed allowing new deductibles of up to 2 percent on roof-damage claims – an outgrowth of complaints by insurers that questionable, if not fraudulent, roof claims are driving up costs. But the House rejected the idea, which would have led to increased out-of-pocket costs for homeowners who need to replace damaged roofs.

While Sprowls stressed patience, troubles have continued in the insurance market, with companies shedding policies and seeking hefty rate increases because of what industry officials say are large financial losses.

St. Johns Property Insurance Co. and Avatar Property & Casualty Insurance Co. have recently been placed into receivership after being declared insolvent. Also this month, Tampa-based Lighthouse Property Insurance Corp., with about 27,000 customers in Florida, was placed into receivership in Louisiana.

Part of the fallout from the private-market problems has led to thousands of homeowners a week obtaining coverage from Citizens Property Insurance Corp., which was created as an insurer of last resort.

State leaders have long sought to shift policies out of Citizens into the private market, at least in part because of concerns about financial risks if the state is hammered by a major hurricane or multiple hurricanes.

Citizens saw its numbers jump from 817,926 policies on March 31 to 842,298 as of the end of last week and is expected to top 1 million by the end of the year.

During his April 18 comments, DeSantis said other unfinished issues from the regular session could be added to the insurance session.

Another of the biggest unfinished issues involved proposals to put additional requirements on condominium buildings after the deadly collapse last year of the Champlain Towers South building in Surfside. DeSantis’ proclamation Tuesday did not specifically mention condo requirements, though issues can be added to the special session.

Source: The News Service of Florida


Affordability Drives Buyer Activity

Index: North Port and Naples are in top 5 of 1Q 2022 emerging housing markets as Fla. continues to attract migration from other states. They were top 2 in 4Q 2021.

NEW YORK – In the first quarter of 2022, less expensive cities with strong local economies climbed The Wall Street Journal/Realtor.com Emerging Housing Markets Index, which could be another sign that many home buyers are giving priority to affordability.

In recent years, fast-rising housing prices have pushed buyers from expensive coastal cities into cheaper housing markets, as remote-work opportunities have expanded and people search for different lifestyles during the pandemic.

Economists say that as house prices and mortgage rates continue to increase, more people are expected to migrate. “People are chasing affordability,” said Sam Khater, chief economist at Freddie Mac.

The Rapid City, South Dakota, metro area of about 145,000 people near the Wyoming border was the top-ranked market for the quarter. It was followed by Santa Cruz, California; North Port, Florida; Santa Rosa, California; and Naples, Florida.

The top 20 cities in the ranking have an average population size of about 600,000. The top-ranked markets in the first quarter had faster home sales, higher wages and shorter commute times than the market as a whole, said George Ratiu, manager of economic research at Realtor.com.

North Port and Naples were the top two markets in the fourth quarter and held in the top five as Florida continues to attract migration from other states.

Some of the top-ranked markets are also desirable vacation destinations, including Santa Cruz, Naples, and Coeur d’Alene, Idaho.

Source: Wall Street Journal (04/26/22) Friedman, Nicole

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


Flippers Now Flopping?

SARASOTA, Fla. – From “Flip or Flop” to “Boise Boys,” home flipping shows remain popular on streaming services and network television in 2022.

But in the Sarasota area’s real estate scene, where the median home price has shot up to $500,000 amid a scarcity of homes for sale, real-life flippers have found it exceedingly difficult to stay in the profession.

When they do find a property where the numbers can work, supply chain issues have pushed the cost of building materials higher than ever – eating away at potential profit. That’s not to mention the nightmare it has become to find subcontractors amid the Sarasota building boom.

Clint Kasten moved to Sarasota in 2010 and got into home flipping, saying he bought, renovated and then sold about 60 properties in the Sarasota-Manatee market.

But at the end of 2018, Kasten said he had to throw in the towel after the number of distressed properties on the market dried up, making it difficult to do the work full-time, given that the starting costs for property were so much higher.

“I would say that is even more true today,” Kasten, now a full-time Realtor with Premier Sotheby’s International Realty, said.

Home flipping – or buying outdated properties in need of renovation, investing in those properties and then selling for a profit – has been a valid form of business for decades in Sarasota.

Coming out of the Great Recession, thousands of foreclosed properties clogged the courts, requiring years to clear – and feeding the Sarasota home flipping industry a consistent stream of properties that never hit the traditional resale market. Short sales by homeowners underwater on their mortgages also supplied properties at attractive prices.

Today, that supply has been exhausted and just a handful of distressed property sales are recorded every month, according to recent Realtor Association of Sarasota Manatee data.

While Sarasota flippers say it’s difficult to find properties locally, deals still exist and other areas have recorded record median profits. WalletHub reported last July that Sioux Falls, South Dakota, was the best city in which to flip a house, followed by other locations like Missoula, Montana, and Nampa, Idaho. The only Florida city in the top 10 was Tampa, as price increases in the Sunshine State broadly pushed down activity.

Nationwide, investors sold nearly 95,000 “home flips” in the third quarter of 2021, according to ATTOM, a website that tracks the home flipping industry.

Median profits on each flip have also increased, according to ATTOM data, to $63,500 in the third quarter of 2021.

In all, home flips made up about 5.7% of the total residential real estate market in the United States.

Alex Krumm, a past president of local Realtor association and broker/owner at NextHome Excellence, said he doesn’t believe flippers are finding many deals on the local Multiple Listing Service, a database used by real estate agents across the country, as home sellers know how hot the real estate market is in the area.

Realtors do see some homes that are being flipped on the market, but not nearly at volume as the area once had. The housing boom of the early 2000s saw a surge of home flippers in the local market, according to an investigation the Herald-Tribune published in 2009. After the housing crash, many got in trouble with upside down properties, and some were charged with fraud.

However, today’s local real estate market is vastly different from the housing crisis that led to the Great Recession. Fewer banking regulations and highly speculative investors fueled a housing bubble largely built on credit.

Real estate analysts today point to sky-high demand and a historically low number of homes on the market as drivers of the current price surge, which has dampened easy flipping opportunities.

Doug Beck, a Sarasota resident that still operates a flipping business in the New Jersey area, said the profit in a home flip is almost always made on the purchase.

This means that flippers need to find properties below market price and “that need the work” that will allow for renovation and eventual profit.

Beck said deals are more often found from motivated sellers in need cash quickly or who don’t want the invasion of privacy that can come with publicly listing property for sale.

This sometimes happens after deaths or during divorces or in times of financial stress.

Krumm said that he believes flippers play a role in the local real estate market.

“They take tired properties and make them fresh,” he said.

Craig Cerretta, managing broker at Premier Sotheby’s International Realty, said in the current market buyers know they will have to pay top dollar “and don’t mind doing so if the property is move-in ready and has been updated.”

He said that, particularly in the luxury market, opportunities exist as there are higher margins. “It’s not as easy as it used to be, and you have to be smart and efficient.”

Kasten and Beck echoed Ceretta’s thoughts on the luxury market having opportunities for home flippers.

Beck pointed to a recent sale earlier this year. His company, New Jersey-based JDL Ventures, bought a fire-damaged home for $600,000. He said they made a $500,000 investment in renovations and sold it for nearly $1.4 million.

Still, despite the recent success, Beck tells people who want to get into the business now that it may not be the best idea. He instead says home flippers may want to look into becoming landlords.

Kasten said he owns at least five properties in the area, renting out some on Siesta Key as vacation rentals.

He also said Sarasota does present some opportunities with some of the older waterfront condo buildings in prime locations where it is possible to purchase a unit for a bit above a million dollars. It’s possible to do a full renovation for about $250,000 then sell the property for near $2 million.

High price tags will push out many smaller investors from the home flipping model. “The price for poker has gone up in the flipping game,” he said.

Beck said that the hot market does help, though. If a flipper does eventually buy and renovate the property, it is easy to offload it.

“If you get it to the finish line, typically, you’re golden, as the market will sell it for you,” he said. “It’s getting it there that’s the hard part.”

Copyright © 2022, Sarasota Herald-Tribune. All rights reserved.


Homes with Green Features Gaining Popularity

NAR: Half of agents and brokers surveyed said they helped a client buy or sell a property with green features over the past 12 months, compared to 32% in 2021.

WASHINGTON – The number of Realtors® involved with buying or selling a property with green features has significantly increased in the past year, according to a recent study from the National Association of Realtors®.

The 2022 Realtors and Sustainability Report surveyed NAR members nationwide regarding sustainability issues currently facing the real estate industry.

Half of agents and brokers surveyed said they helped a client buy or sell a property with green features during the past 12 months, a notable jump compared to 32% in 2021.

Nearly two out of three respondents (63%) said that energy efficiency promotion in listings was very or somewhat valuable. Over half of agents and brokers (51%) found that their clients were somewhat or very interested in sustainability. And 35% reported that their multiple listing service features green data fields. Among those with green data fields in their MLS, the top ways they were used were to promote green features (35%), energy information (24%) and green certifications (13%).

“Sustainability continues to play a growing role in consumers’ purchasing decisions, and this is becoming even more prevalent in the real estate market,” said NAR President Leslie Rouda Smith. “With the residential property market, in particular, home buyers have expressed increased interest in eco-friendly factors like solar panels and energy efficiency.”

Roughly three out of four Realtors (77%) said that properties with rooftop solar panels were available in their market. These numbers were highest in the West (89%) and Northeast (86%). Thirty-six percent said that homes with solar panels increased the perceived property value, compared to 30% that said they had no effect.

The report also noted rising anxiety among Realtors about the effect of climate change and extreme weather events on their businesses. More than one out of three respondents (34%) said they were very or somewhat concerned about the impact of extreme weather events on the housing market.

Jessica Lautz, NAR vice president of demographics and behavioral insights, said that the increased focus on sustainability in recent years is a win-win for all homeowners.

“More sustainable homes bring benefits to homeowners like cost savings from energy efficiency, health benefits from improved indoor air quality, and increased comfort and durability from material use and construction, and may also increase resale value,” Lautz said.

Methodology: In March 2022, NAR invited a random sample of 46,452 active Realtors to fill out an online survey. A total of 2,652 useable responses were received for an overall response rate of 5.7%. At the 95% confidence level, the margin of error is plus-or-minus 1.9%.

© 2022 Florida Realtors®


Get More Referrals Without Being Annoying

Ideas: Offer superior customer service, ask for and share client testimonials, regularly express gratitude to clients and build a database to keep in contact.

NORWALK, Conn. – It is essential for real estate professionals to focus on generating referrals. To this end, agents need to be detail-oriented and regularly express gratitude to their clients.

Agents also should anticipate their clients’ needs and try to offer a superior customer service experience. Agents should train themselves to ask for referrals from clients early in the relationship, especially if clients were referred. Agents could say something like, “Thank you for letting me help you with your home search. Just as X referred you to me, if you have friends or family who need to move, please let them know I would be glad to help.”

Following clients’ closings, agents can ask them to share a testimonial on Google reviews and social business pages. Agents can then add these testimonials to their agent websites and incorporate them into marketing materials.

Another option is building a database or CRM of former clients and professionals in the business and send them a regular newsletter (print or digital). It does not have to be lengthy and can contain such things as market insights, information on upcoming community events, and local shopping resources. This helps keep the agent’s name top of mind.

In addition, clients may share the newsletter with others, helping widen the agent’s sphere of influence. There are also many software programs available that help both new and experienced agents manage, nurture and retain clients.

Source: RISMedia (04/22/22) 

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


Use Your CRM to Close More Transactions

Agents can organize their contacts in their client relationship management tool, generate quality leads and schedule, send and track multiple email campaigns.

NORWALK, Conn. – For agents, having a client relationship management (CRM) tool is essential because it provides a dependable way to stay organized and generate quality leads. A real estate CRM can be regarded as a one-stop information database.

By using a CRM, agents can organize all their contacts in one place. They should look for one that also lets them rank each person in their database based on how likely they are to use real estate services or make a referral. Agents can then track which existing or future clients should be receiving most of their attention.

A CRM also can be used to schedule, send and track multiple campaigns. Agents should select a CRM that allows them to send bulk emails and monitor what is (or isn’t) working, which enables agents to communicate more effectively with their contacts. Some CRMs even have the option of creating the marketing assets for the agent.

In addition, agents can use their CRM to makes a to-do list. The right CRM can create action steps based on the agent’s targets and current progress. Agents can receive daily reminders for action steps, view a list of priorities and see their schedule.

Finally, agents can use a CRM to set daily, weekly, monthly and yearly targets. The CRM can remind agents about their targets on daily basis as well as inform them how productive they are each day. Agents can use this information to see how much progress they have made and what they need to do to succeed.

Source: RISMedia (04/21/22) 

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


More Buyers Compromise to Find a Suitable Home

Report: 80% of buyers say they now compromise on key features; the most common centers around costs, with 48% paying more than they first expected.

SCOTSDALE, Ariz. – Over the past year, home buyers have faced steep competition, which has included fierce bidding wars. Inventory shortages and high demand have forced them to rethink their priorities when shopping for a home.

Eighty percent of buyers say they’ve had to compromise on key home features, according to the Buyer and Seller Insights Report for 2022, produced by HomeLight, a real estate referral company. The most common compromise centered on costs: Forty-eight percent of buyers say they paid more for their homes than they initially expected, the report shows. Thirty-one percent of buyers say they purchased an older home than they initially wanted, 24% bought a smaller home than they initially hoped, and 23% purchased a home that was in worse condition than they hoped.

Buyers in some markets have to compromise more than those in other areas due to varying levels of competition. For example, at least 90% of buyers in markets like San Francisco, Denver, and Sacramento, Calif., say they had to make at least one compromise on the home they purchased. By comparison, 85% of buyers in Phoenix, Los Angeles, Dallas, Houston, and Austin, Texas, say they made a compromise.

While compromises are the norm in a seller’s market, buyers also are finding obstacles while preparing to purchase a home. Affordability is the top challenge home buyers face in the current market, according to the 2022 Obstacles to Home Buying, a new study released by the National Association of Realtors® and Morning Consult.

Finding homes that fit buyers’ criteria, competing with multiple offers, and saving for a down payment also are commonly cited challenges. Homebuying obstacles, however, can vary by race and ethnicity, the study finds.

Source: “Buyer and Seller Insights Report for 2022,” HomeLight (2022)

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


Housing Shortage, Rents Squeeze College Students

BERKELEY, Calif. (AP) – UC Berkeley sophomore Terrell Thompson slept in his car for nearly two weeks at the start of the school year last fall, living out of a suitcase stashed in the trunk and texting dozens of landlords a day in a desperate search for a place to live.

The high-achieving student from a low-income household in Sacramento, California, was majoring in business administration at one of the most prestigious universities in the world. Yet, Thompson folded his 6-foot frame into the back seat of his Honda Accord at night, wondering how he would ever find a home in the exorbitantly expensive San Francisco Bay Area city.

“Academically it was hard, because I’m worried about finding housing and I’m worried about my clothes and I’m worried about getting my car broken into all the time,” said the 19-year-old Thompson, who now lives in a studio apartment he found last September. “I was anxious 24/7.”

College students across the U.S. are looking for housing for the 2022-23 school year and if 2021 was any indication, it won’t be easy. Students at colleges from California to Florida were denied on-campus housing last fall and found themselves sitting out the year at home or living in motel rooms or vehicles as surging rents and decades of failing to build sufficient student housing came to a head.

For some colleges, the housing crunch was related to increased demand by students who had been stuck at home during the pandemic. For others, including many in California, the shortage reflects a deeper conflict between the colleges and homeowners who don’t want new housing built for students who they say increase congestion and noise.

In March, the University of California, Berkeley, said it would have to cap student enrollment because of a lawsuit brought by irate neighbors over the school’s growth. State lawmakers fast-tracked a fix to allow the campus to enroll as many students as planned for the 2022 fall semester, but the legislation does nothing to produce more housing.

Nationally, 43% of students at four-year universities experienced housing insecurity in 2020, up from 35% in 2019, according to an annual survey conducted by The Hope Center for College, Community, and Justice at Temple University. Students reported being unable to pay utilities, rent or mortgage, living in overcrowded units, or moving in with others due to financial difficulties.

And for the first time since it began tracking basic needs in 2015, the survey found an equal percentage – 14% – of students at both four-year and two-year colleges who had experienced homelessness in the last year, said Mark Huelsman, the center’s director of policy and advocacy.

“This is a function of rents rising, the inability of communities and institutions to build enough housing for students and other costs of college going up that create a perfect storm for students,” he said.

For some students, the lack of affordable housing could mean the difference between going to college or not. Others take on massive debt or live so precariously they miss out on all the extracurricular benefits of higher education.

Jonathan Dena, a first-generation college student from the Sacramento area, almost rejected UC Berkeley over the lack of housing, even though it was his “dream program.” He found a studio at the heavily subsidized Rochdale Apartments for under $1,300 a month, but he might have to move because the bare-bones units may close for a seismic renovation.

Dena, 29, wants to continue living within walking distance of campus for a robust college experience.

But the urban studies major and student government housing commission officer said “it’s kind of scary” how high rents are near campus. Online listings showed a newer one-bedroom for one person at $3,700, as well as a 240-square foot (22 square-meter) bedroom for two people sharing a bathroom for nearly $1,700 per person a month.

“If I go to school in Berkeley, I would love to live in Berkeley,” he said.

Nationally, rents have increased 17% since March 2020, said Chris Salviati, senior economist with Apartment List, but the increase has been higher in some popular college towns. Chapel Hill, North Carolina, saw a 24% jump in rents and Tempe, Arizona, saw a 31% hike.

In some cases, the rental increases have been exacerbated by a lack of on-campus housing.

Last fall, demand for on-campus housing was so high that the University of Tampa offered incoming freshmen a break on tuition if they deferred until fall 2022. Rent in the Florida city has skyrocketed nearly 30% from a year ago, according to Apartment List.

Rent in Knoxville has soared 36% since March 2020, and it could get worse after the University of Tennessee announced a new lottery system for its dorms this fall, saying it needs to prioritize housing for a larger freshman class.

Even two-year community colleges, which have not traditionally provided dorms, are rethinking student needs as the cost of housing rises.

Last October, Long Beach City College launched a pilot program to provide up to 15 homeless students space in an enclosed parking garage. They sleep in their cars and have access to bathrooms and showers, electrical outlets and internet while they work with counselors to find permanent housing.

Uduak-Joe Ntuk, president of the college’s Board of Trustees, hesitated when asked if the program will be renewed.

“I want to say no, but I think we will,” he said. “We’re going to have new students come fall semester this year that are going to be in a similar situation, and for us to do nothing is untenable.”

California prides itself on its robust higher education system, but has struggled with housing at its four-year colleges. Berkeley is notoriously difficult, with cut-throat competition for the few affordable apartments within walking distance to campus.

“I definitely was not prepared to be this stressed about housing every year,” said Jennifer Lopez, 21, a UC Berkeley senior from Cudahy, in southeastern Los Angeles County, and the first in her family to attend college.

She imagined she would spend all four years on campus in dorms, but found herself in a scramble for a safe, affordable place to sleep. The urban studies major currently splits an attic space in what is technically a one-bedroom apartment shared by four undergraduates, one of whom sleeps in the dining room.

The total monthly rent is nearly $3,700 – laughably high in most U.S. cities – but she’s grateful for it.

“If I hadn’t heard about this place, I was either going to end up living in a basement, or in this other apartment I know (where) the girls are struggling with leaks and mold,” Lopez said.

The Basic Needs Center at UC Berkeley, which operates a food pantry for students and faculty, found in a snapshot survey that a quarter of undergraduates reported they “lacked a safe, regular and adequate nighttime place to stay and sleep” at some point since October.

“That’s huge,” said Ruben Canedo, co-chair of UC’s systemwide Basic Needs Committee. “This generation of students is navigating the most expensive cost-of-living market while at the same time having the least amount of financial support accessible to them.”

Thompson, the business administration major, started looking for an apartment last May, after spending his first year at home taking classes remotely to save money. He quickly realized that his rental budget of $750 was wildly inadequate and as a second-year student, he no longer qualified for priority in the dorms.

By the time classes began in late August, he was in a panic. He tried commuting from his home in Sacramento, leaving before 6 a.m. for the 80-mile (130-kilometer) drive to Berkeley and returning home around midnight to avoid traffic.

But that was grueling so he took to sleeping in his car. Initially he parked far away in a spot without parking limits. Then he parked at a lot between two student dorm complexes closer to campus, where exuberant partying kept him up at night.

He attended classes, studied and ate sparingly to save on ballooning food costs. He looked at apartments where five people were squeezed into two bedrooms with pared-down belongings stored under beds.

He slept in his car for almost two weeks until a sympathetic landlord who had also grown up in a low-income home reached out, offering a studio within walking distance of campus. The rent is $1,000 a month, and he hopes to stay until he graduates.

“I think I have a little bit of a PTSD factor,” he said.

Most students have no idea of the housing situation when they choose to attend UC Berkeley, said 19-year-old freshman Sanaa Sodhi, and the university needs to do more to prepare students and support them in their search.

The political science major is excited to move out of the dorms and into a two-bedroom apartment where she and three friends are taking over the lease. The unit is older but a bargain at $3,000 a month, she said. The housemates were prepared to pay up to $5,200 for a safe place close to campus.

“You don’t honestly know the severity of the situation before you’re in it,” she said, adding that landlords hold all the cards. “They know that whatever price they charge, we’ll inevitably have to pay it because we don’t really have a choice except maybe to live out of our cars.”

AP journalist Terence Chea contributed from Berkeley, California.

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


Smart-Home Devices May Save on Home Insurance

Many insurers offer discounts – some up to 13% – to homeowners with smart-home devices designed to prevent water damage, fire or theft.

SAN FRANCISCO (AP) – A smart thermostat can turn up the heat in your home before you roll out of bed. A smart speaker can play your favorite podcasts with a voice command. A smart lightbulb can be turned on or off from across the room.

But smart-home devices aren’t just about convenience. Because some of them can help keep your home safe and secure, they could also earn you a discount on your homeowners’ insurance.

Discounts for smart-home devices

NerdWallet reached out to a dozen insurance companies and found that most of them offer discounts to homeowners with smart-home devices designed to prevent water damage, fire or theft. In our research, we found companies advertising homeowners insurance discounts up to 13%, depending on the device and where you live.

Among the companies we surveyed, the smart devices most commonly eligible for discounts were water leak sensors, security cameras and smoke detectors. However, insurers like Farmers and Lemonade also offer savings for smart locks, while Amica and Farmers give discounts for motion sensors.

If you already own a smart-home device, ask your carrier whether you’re eligible for a discount.

Some insurers have partnered with smart-home technology companies to make the devices more affordable — or even provide them for free. For example, State Farm policyholders in most states can sign up for three years of free Ting service. Ting provides a plug-in that monitors your home for electrical problems that could cause fires.

Hippo, a homeowners insurance startup, gives policyholders in eligible states free smart home-monitoring kits from partners such as Kangaroo and SimpliSafe. As long as the policyholder installs the devices and keeps them active, they can save up to 13% on their homeowners insurance.

Amica policyholders can save when buying select smart-home devices from Moen, Guardian or Kangaroo, while Nationwide offers nearly 50% off the purchase of Notion smart sensors. These savings are in addition to the homeowners’ insurance discounts the companies will give you once you install the devices.

Why the discounts?

Insurance companies offer discounts for smart-home devices because the technology can help catch problems early, potentially preventing expensive claims.

Say you have a smart water sensor next to your water heater, and the appliance springs a leak. The device could sound an audible alarm and send an alert to your phone, enabling you to take immediate action. (Some devices even have an automatic water shut-off feature.)

Without the sensor, you could end up filing a claim, paying a big deductible and having contractors in your basement cleaning up damage, says Brett Sobol, senior growth initiatives lead at Hippo. But with the sensor, the damage might be so limited that you wouldn’t need to make a claim at all.

“The best experience is one where there’s no claim,” says Sobol.

Should you buy?

The cost of smart-home technology can add up quickly. If you want to invest in a protective device but aren’t sure which ones are worth the money, consider your home’s unique risks, says Karen Collins, assistant vice president of personal lines at the American Property Casualty Insurance Association.

For instance, if your home has older plumbing, water sensors might be worth buying, Collins says. But if you live in a neighborhood with high crime rates, your money might be better spent on a home security system.

For many homeowners, water sensors are a good bet, according to Sobol.

“Water damage is by far the most common claim that smart-home devices can help prevent,” he says. “Putting sensors in bathrooms, in basements and under appliances “can (keep) small claims from turning into big ones.”

Ask your insurer whether the devices you’re considering would qualify you for a homeowners insurance discount. Depending on the amount of the discount and the cost of the devices, they might pay for themselves within a few years.

Keep in mind that the benefits of smart-home technology could go beyond insurance savings. “Investing in smart-home technology can offer customers peace of mind,” Sobol says, “knowing that their home is better protected.”

This article was provided to The Associated Press by the personal finance website NerdWallet. Sarah Schlichter is a writer at NerdWallet.

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


Must I Push and Probe for Representation Info?

Dear Shannon: A listing Realtor told a buyer at their open house about another one of their listings that sounded ideal for them – and the Realtor honestly informed the buyer that waiting to tell their current Realtor might lose them the home. Why is that wrong?

ORLANDO, Fla. – Dear Shannon: I’m a listing agent. A buyer came to my open house and said they’re looking for more of a fixer-upper because they really enjoyed “fixing up” their last home. I told the buyer I had a listing on just such a property and thought it sounded perfect for them. The buyer asked if they should tell their Realtor® about this property so their Realtor could make showing arrangements.

I told the buyer I had just taken the listing that morning and it would likely sell before any other Realtors had a chance to show it. It was important that I be honest with the buyer, and I explained that timing and opportunity are crucial in this market. I mentioned that it would be a shame if the buyer missed out on this opportunity and encouraged them to let me show them this perfect property because it was just around the corner.

The buyer agreed I was right – the other property was perfect, just as I suspected. They closed quickly and everyone is happy. Well, almost everyone.

Now there is a ridiculous complaint filed against me claiming that I somehow interfered with another Realtor’s exclusive relationship. Really? I heard the buyer when they asked if they should tell their Realtor to show them the other property. If the buyer said they had an exclusive relationship with their Realtor, of course, I would have backed off.

Don’t tell me it’s my job to question the buyer about their relationship with their Realtor. – Not My Job

Dear Not My Job: Okay, so, of course, you want to service the real estate needs of both buyers and sellers. Being honest with buyers is important, and I love that you shared your expertise by explaining that timing and opportunity are critical in this market.

However, as a Realtor, you have agreed to abide by the Realtor Code of Ethics. And when the buyer said they were working with another Realtor, that was your signal to think through what the Code says about this. Why? Because not asking the buyer for more specific Realtor-relationship information could be an issue under Article 16 of the Code of Ethics.

You say if the buyer told you they had an exclusive relationship with their Realtor you would have backed off. Okay, good. This sounds like you understand the basic concepts under Article 16 – that Realtors shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other Realtors have with clients.

However, you say it’s not your job to question the buyer about their relationship with their Realtor. Not true. Remember, Standard of Practice 16-9 says Realtors, prior to entering into a representation agreement, have an affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid, exclusive agreement to provide the same type of real estate service.

In this case, the buyer told you they were working with another Realtor. It is your job to make reasonable efforts to determine whether the buyer had an exclusive relationship with the other Realtor. Here, you made no efforts at all to make such determination. This is a potential issue under Article 16 as interpreted by Standard of Practice 16-9.

Shannon Allen is a lawyer and Director of Local Association Services for Florida Realtors®
Note: Advice deemed accurate on date of publication

© 2022 Florida Realtors®


Multiple Offers Remain Prevalent This Spring

Survey: Buyer traffic continues to outpace supply. Realtors report about 5 offers were made on each home sold in March; 57% of buyers offered above list price.

CHICAGO – Home sellers are still fetching multiple offers on their properties and buyers continue to face competition, even as the housing market has shown some signs of slowing.

Realtors® reported an average of nearly five offers on each home that sold in March, according to the March Realtors Confidence Index survey.

On average, half of buyers made two offers before being successful in their purchase by the third try, the survey shows.

Buyers are paying more than list price, too. Fifty-seven percent of buyers offered above the list price, which is up from 48% in February.

“Multi-offers on a home are still prevalent because even if buyer traffic is weakening it is still outpacing supply,” Gay Cororaton, NAR research economist, writes on the association’s Economists’ Outlook blog. “With homebuying demand still outpacing supply, properties typically stayed on the market for a shorter time compared to one year ago, at 17 days on the market.”

Eighty-seven percent of listings were on the market for less than one month.

Cash buyers still continue to hold the upper hand in bidding wars, accounting for 28% of sales in March. Buyers who offered an all-cash transaction were four times more likely to win in a competitive offer situation than those who didn’t in 2021, according to a recent Redfin report.

All-cash offers were found to be significantly more successful than other strategies, such as waiving financing contingencies or pre-inspections.

Source: “Multioffer Bidding Still Prevalent Despite Slowing Demand,” National Association of Realtors® Economists’ Outlook blog (April 22, 2022)

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


Condo Q&A: Does Fla. Law Require Competitive Bids?

Short answer: It does under some circumstances. Also: If an unexpected big expense comes up, can a condo board pay using money from its capital reserve and replace the funds later?

NAPLES, Fla. – Question: If a condo association has an unexpected repair or expense come up that was not budgeted for, is the board allowed to use money from the capital reserve accounts to pay the expense and then replenish the money later? If so, what are the legal requirements as far as notice, holding a meeting, etc.? – K.R., Fort Myers

Answer: Section 718.112(2)(f)(3), Florida Statutes states, in relevant part, “Reserve funds and any interest accruing thereon shall remain in the reserve account or accounts, and may be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a duly called meeting of the association.”

The Board would need to call a special meeting of the members to vote on this issue, with notice provided in accordance with your governing documents for such a meeting and/or as provided in Chapter 718, Florida Statutes (mailed, delivered, or electronically transmitted to the unit owners and posted conspicuously on the condominium property at least fourteen [14] days before the meeting).

The statute further requires that the proxies used to vote for any alternative use of the reserve funds must contain the following warning in capitalized, bold letters in a font size larger than any other used on the face of the proxy ballot:


Please also note that the only voting interests eligible to vote on the issue of using existing reserve funds for purposes other than the purpose for which the reserves were intended, are the voting interests of the units subject to assessment to fund the reserves in question.

So, for example, if there are separate reserves for the roof of only one building within a condominium complex, only the owners in that building would vote on using their reserves for another purpose.

Question: Our condominium association is in the process of taking on a major plumbing project, which is going to cost the association over a million dollars. A group of owners asked the property manager if there was bid process for the project, or an RFP, produced. We were told that the manager called around to a few plumbing companies in town, and only one could handle the scale of this project, so that company gave a quote and that is what they are going with.

I know that there are requirements for bidding these types of projects for a condo association, so my question is whether what was done (making a few phone calls but only getting one quote) is good enough to satisfy the bidding requirements? – K.G., Port Charlotte, FL

Answer: Section 718.3026, Florida Statutes governs the requirement for bidding out contracts in a condominium association. The statute requires that all contracts “for the purchase, lease, or renting of materials or equipment, or for the provision of services, requires payment by the association on behalf of any condominium operated by the association in the aggregate that exceeds five percent (5%) of the total annual budget of the association, including reserves, the association shall obtain competitive bids for the materials, equipment, or services.”

Therefore, unless $1 million is less than five percent (5%) of your association’s annual budget, the plumbing project will require competitive bidding.

However, subsection (c) of said statute provides, “This section shall not apply if the business entity with which the association desires to enter into a contract is the only source of supply within the county serving the association.”

If the company that gave your association the quote is truly the only plumbing company in the county that can handle the project, then obtaining another quote is not required.

It seems from your question that the board may have made other calls, but if there is another plumbing company in the county that could handle the project, the association should obtain a bid from that company as well. Obtaining at least two (2) bids would satisfy the competitive bidding requirement of the statute.

The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

© 2022 Journal Media Group, Avi S. Tryson, Esq., is partner of the Law Firm Goede, DeBoest & Cross.


Tenant-Occupied Property: The Closing Process

Part three of a three-part series: Issues surrounding sales of property with tenancies. Part one covered taking a listing, part two the contract language. Issues can also rise regarding closing, however, including some specific concerns.

ORLANDO, Fla. – This article is the last of a three-part series regarding selling properties subject to tenancies.

The first article provided advice to assist Realtors at the onset of taking a listing. The second article focused on contract language and required steps for both parties once they arrive at an agreement.

This article covers the closing process for properties subject to a lease.

Florida Realtors Legal Hotline receives a lot of questions about tenant-occupied properties – and most arise from a failure to understand the parties’ obligations and rights.

For this article, Florida Realtors/Florida Bar (FR/Bar) residential contract language is analyzed. If you’re using the Florida Realtors Contract for Residential Sale and Purchase (CRSP) document, addendum “W. Rentals” should be attached to the contract to clarify the parties’ rental obligations.

Standard 18(D) of the FR/Bar Contract

At least ten (10) days prior to closing, the seller must furnish tenant/occupant estoppel letters that specify the nature and duration of the occupancy, including rental rates and any advanced rent or security deposit paid by the tenant/occupant.

The tenant is supposed to sign the estoppel letter to confirm the information in it. If the tenant refuses to sign, the seller must provide the buyer a seller’s affidavit to this effect, and the buyer must confirm with the tenant that the terms of that affidavit are, in fact, accurate.

The seller may wish to consult his attorney regarding the estoppel letter(s) or seller affidavit(s) required under this provision if they have questions. In addition to the right to cancel under paragraph 6, Standard 18(D) also gives the buyer a right to terminate the contract within five (5) days after receipt of the information – but no later than five (5) days before closing if any of the above information materially differs from the lease provided via paragraph 6, or in the event the tenant fails or refuses to confirm the seller’s affidavit.

What does this mean? The seller should plan ahead – far enough in advance of the closing to gather all this information that must be provided to the tenant.

Advanced Rent and Security Deposit(s)

At the closing, it’s also very important that the seller is prepared to transfer advanced rental payments and/or security deposits as well – a requirement under Florida Statutes 83.49(7). If a seller uses a property management company to hold these types of funds, it’s best for the seller to communicate early and often with the company about obtaining those funds in time for the closing.

Assignment of Lease

The seller’s final step is to deliver and assign all leases to the buyer. The buyer then assumes the seller’s obligations under the lease, aka becomes the new landlord. An assignment is a legal document that transfers the rights of one party (the landlord-seller) to another party (the buyer). The seller may need to obtain legal assistance to prepare it.

As you can see, there are additional steps required when handling a transaction if the seller’s property is subject to a tenancy. This doesn’t have to make things more complicated, as long as the parties (as well as their agents) understand their respective obligations under the contract.

Occupied property transactions can go as smoothly as any other type of transaction with advanced preparation and communication between everyone involved.

Meredith Caruso is Associate General Counsel for Florida Realtors
Note: Advice deemed accurate on date of publication

© 2022 Florida Realtors®


Condo Insurers Flee Florida

Insurers that remain are raising prices after the tragic Surfside collapse. Condo associations able to get policy renewals may face 30% to 50% premium increases.

MIAMI – Condo insurers are exiting Florida or hiking prices in the wake of the Surfside collapse, while state lawmakers have yet to address the issue. However, Gov. Ron DeSantis plans to call a May special legislative session to address problems in the property insurance system.

Condo associations are facing severe difficulty in getting their pre-Surfside policies renewed and must sort through estimates for less protective plans that cost twice as much, if not higher. Market experts say those fortunate enough to get renewed are facing 30% to 50% premium increases.

“Where the Legislature failed to provide guidance and requirements, the insurance industry and mortgage lenders have picked up the slack and ran with it,” said University of Miami School of Law Professor Bill Sklar.

Condo associations are legally required to have adequate property insurance, which covers structural damage from storms, wind, and fire. Most associations also have bylaws mandating other insurance requirements, like general liability, directors and officers, and flood insurance.

Over 1.5 million condo units are in Florida, and more than 922,000 are older than 30 years; Sklar said more than 60% are located in areas that lack maintenance or inspection standards.

Source: Miami Herald (04/25/22) Conarck, Ben

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


Back-up Contracts: Short Rider, Lots of Questions

As a seller’s market persists throughout Florida, more buyers enter into back-up contracts. Although the back-up contract rider is short, a few questions regularly drive members to call Florida Realtors Legal Hotline.

ORLANDO, Fla. – As our inventory remains thin in Florida, buyers are using back-up contracts to reserve a back-up position in case an existing contract for sale and purchase falls through.

The most common rider parties use to create a back-up contract is the Florida Realtors/Florida Bar Rider W, Back-up Contract. That’s the form we’ll analyze for this article, along with its companion contracts, the Florida Realtors Florida Bar Residential Contract for Sale and Purchase and its “AS IS” counterpart.

What makes a contract a “back-up contract”?

The parties must add a back-up rider to the contract. It’s just a short paragraph, but that paragraph is what keeps the rest of the contract in back-up, non-effective status for now. The parties are always welcome to ask an attorney to draft their own back-up contract language, although most buyers we hear about are happy to use our form rider.

Deposit deadline/effective date

The most common question we get concerns the deposit deadline. When is the initial deposit due? To find the answer, you must review both the main contract and the rider.

The first page of the contract offers two options. “The initial deposit made payable and delivered to ‘Escrow Agent’ named below (CHECK ONE): [ ] (i) accompanies offer or [ ] (ii) is to be made within         (if left blank, then 3) days after Effective Date.” Note that if the first box is checked, the buyer should make the initial deposit when the back-up offer is presented, since it “accompanies offer.”

If the second box is checked, you must figure out when the effective date is. Normally, you’d look to the bottom of the first page of the contract, where you find this definition. “The effective date of this Contract shall be the date when the last one of the Buyer and Seller has signed or initialed and delivered this offer or final counter-offer (‘Effective Date’).”

However, the Back-up Contract Rider W replaces this definition with its own, which provides that “The ‘Effective Date’ of this back-up contract shall be the date Seller delivers written notice of the termination of the prior executed contract.” Therefore, the initial deposit won’t be due if the seller never activates the back-up contract.

If the seller does activate the back-up contract by sending written notice, then the date the seller’s notice is delivered is the effective date. Therefore, when we combine the new definition of effective date with the deposit timeline, the initial deposit will be due      days (if blank, then 3) days after seller’s notice is delivered.

Inspection period and other time periods

We’ve already established that the effective date is just a future possibility when this back-up rider is in place. Therefore, none of the contractual clocks are ticking. There’s not yet an inspection period, loan approval period, or countdown towards closing, since the contract is not yet effective.

That also means the buyer isn’t yet entitled to inspect the property, although some sellers may allow a back-up buyer to take or even conduct inspections early. Note that this would be at the seller’s discretion.

How long must the buyer wait?

Another common question is whether the buyer can cancel if they want out of the back-up contract. The short answer is yes, provided they do it while still in back-up status.

The last sentence of the back-up rider provides that “Buyer may terminate this back-up Contract by delivering written notice to the Seller prior to the date Seller delivers written notice of the termination of the prior executed Contract and Buyer shall be refunded the Deposit, if any Deposit(s) have been paid, thereby releasing Buyer and Seller from all further obligations under this Contract.”

This cancellation option may give buyers peace of mind if they continue their home search while the back-up contract is in place.

Other back-up riders

Please note: There are two other back-up riders in the Florida Realtors forms database. One is designed for use with the Florida Realtors form Contract for Residential Sale and Purchase (CRSP Rider E Back-up Contract; Kick-out Clause). The other is designed for use with the Vacant Land Contract (Rider A Back-up Contract).

There are subtle but important differences among all three of these riders, so it’s always good to remind your buyers and sellers to carefully read every word of the contract and attached riders to make sure they understand their rights and obligations. Encourage them to consult an attorney with any questions.

Joel Maxson is Associate General Counsel for Florida Realtors
Note: Advice deemed accurate on date of publication

© 2022 Florida Realtors®


Report: Stalled New-Home Projects Jump 47%

Supply-chain delays and labor shortages slowed new-home builds. In the South, a recent study found a 52% increase in delays before construction starts.

CHARLOTTE, N.C. – Supply-chain delays and labor shortages slowed new-home builds. In the South, a study found a 52% increase in delays before construction starts.

New-home buyers are having a long wait for their homes to be done. Labor shortages and global supply chain bottlenecks are delaying the completion of many new-home construction projects. The number of housing units that were authorized but didn’t start construction yet rose by 47% nationwide from 2019 to 2021, according to a new analysis by LendingTree researchers. The delays were most prominent in the Northeast, where delays more than doubled.

“Though homebuilders have tried to keep up with demand for housing, numerous setbacks including rising labor and raw material costs have prevented them from actually breaking ground on many of the projects,” says Jacob Channel, LendingTree’s senior economic analyst. “This has exacerbated the lack of housing available on the market and put upward pressure on home prices.”

Building delays, high prices slow new-home construction

The headwinds are coming at a time when new-home construction has been in demand among home buyers who have been frantic to find greater housing inventory. The number of housing units authorized by building permits jumped 25% from 2019 to 2021, according to LendingTree’s data.

Authorized (permitted) housing units that didn’t start construction 2019 to 2021

  • Northeast: 103% (17.4 unused permits in 2019, 35.3 in 2021)
  • Midwest: 55% (15 in 2019, 23.2 in 2021)
  • South: 52% (95 in 2019, 144.6 in 2021)
  • West: 19% (54.3 in 2019,
  • U.S. total: 47% (181.7 in 2019, 267.7 in 2021)

“Despite these difficulties, the news isn’t all bad for homebuilders,” LendingTree researchers note in the study. “Even if rising mortgage rates weaken buyer demand and labor and supply issues persist, homebuilders will likely have plenty of opportunities to construct and sell new housing units as the year progresses. And though the road ahead may be bumpy, that doesn’t mean it won’t ultimately be rewarding for many of those in the construction business.”

Source: “Stalled Construction Projects Up 47% Nationwide Since Pre-Pandemic, Even as Home Constructions Rise,” LendingTree (April 19, 2022)

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


Can Condo Board Shut Off Elevators in Emergency?

Condo Q&A: A board may apply a disaster plan before, during or after an emergency that includes shutting off elevators, air conditioners, electricity and more.

STUART, Fla. – Question: My condominium’s Board of Directors recently started discussing hurricane preparations and steps the association would take if a hurricane were to hit our area. The board said they would shut down both the elevators and air conditioning 24 hours before the hurricane hits.

Does the Board have the right to shut off the elevators and air conditioning? What happens to the residents who choose to stay? – W.H., Naples, FL

Answer: Yes, your condominium association likely can turn off the building’s elevators and air conditioning units prior to and following a hurricane affecting our area. Section 718.1265 of the Condominium Statute authorizes condominium associations to exercise emergency powers in response to damage or injury caused by or anticipated in connection with an emergency assuming that the emergency powers are not otherwise specifically prohibited under the governing documents of the association.

Under the Emergency Powers provision, a condominium may implement a disaster plan before, during, or following the emergency event which may include shutting off elevators, electricity, water, sewer, security systems, and air conditioners. Many condominium associations suspend the operation and use of these items in an effort to protect these systems which may become damaged or compromised during an emergency event.

Additionally, directors are often concerned with the personal injury aspect of these items used during an emergency situation and take action to prevent these injuries from occurring or residents getting stuck in an elevator. Residents who decide to stay in their unit during the disaster event should be prepared to go without these services in advance of the disaster and for the next few days after the disaster.

The Condominium Statute also authorizes a condominium association to require the evacuation of the condominium property in the event of a mandatory evacuation order being issued for the association’s local area.

If residents refuse to leave, the association becomes immune from liability or injury to persons or property that may arise from the resident’s failure or refusal to evacuate. Additionally, Florida law permits a condominium association’s Board of Directors, with the advice of licensed professionals, emergency management officials or public health officials, to determine any portion of the condominium property, including units, unavailable for entry or occupancy by unit owners, their family, tenants and guests to protect their health, safety, or welfare.

The restriction of condominium property can extend well beyond the disaster as remediation efforts are often delayed due to labor and material shortages immediately following a disaster.

As the implications of implementing a disaster plan can have a substantial impact on the association’s residents, condominium boards that are considering adopting a disaster plan should consult with their association’s attorney to ensure they adopt a plan that works for their community and complies with both the governing documents and Florida law.

Additionally, I recommend all condominium associations that are considering the suspension of services during an emergency event communicate this strategy to residents so they are aware of how the association will respond to the event and determine what steps may be best for them and their family.

Christopher I. Miller, Esq., is an attorney with the law firm Goede, DeBoest & Cross, PLLC. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

© 2022 Journal Media Group, Treasure Coast Palm


Is FOMO Fueling the Real Estate Market?

FORT LAUDERDALE, Fla. – Rising interest rates and higher home prices would normally cool a hot housing market, yet the national and local real estate scenes continue to run red hot.

Researchers at the Federal Reserve Bank of Dallas are concerned that a fear of missing out, colloquially known as FOMO, is creating a buying snowball effect that may lead to a housing bubble if left unchecked.

The current market, where higher prices and other factors are not resulting in a slowdown, is moving away from market fundamentals, they found, suggesting that buyer exuberance, in the form of fear of missing out, is driving the current trend.

“The resulting fundamental-driven higher house prices may have fueled a fear-of-missing-out wave of exuberance involving new investors and more aggressive speculation among existing investors,” said researchers.

“Expectations-driven explosive appreciation (often called exuberance) in real house prices has many consequences,” they went onto write, “including the misallocation of economic resources, distorted investment patterns, individual bankruptcies and broad macroeconomic effects on growth and employment.”

The paper then described how “this self-fulfilling mechanism leads to price growth that may become exponential (or explosive),” resulting in even greater misalignment, until policymakers intervene, investors become cautious, “or even a bust occurs.”

Locally, The market’s momentum is evidenced in astronomical price growth – the median sale price of a home in the tri-county area is $450,000, a 20% increase from the previous year, according to data from Redfin.

Market fundamentals and the housing market

The biggest area of concern for researchers is how the housing market is diverging from basic market fundamentals like mortgage rates, inventory and income.

Researchers used datasets from the International Housing Observatory to find out whether buyer exuberance is playing a role in steep housing prices. From there, they marked what time periods had significant levels of buyer exuberance. Researchers warned that the last time the housing market saw such exuberance was before the crash of 2008.

When asked about the trend, Ken H. Johnson, real estate economist at Florida Atlantic University, said, “I think there are other factors, but this fear of missing out is amongst the most notable. We saw this around 2005 in Miami where people were buying and there was really no financial reason to buy.”

Consumer behavior and high prices

When it comes to consumers and their purchase decisions, emotions, either positive or negative, play one of the most important roles, said Dr. Khaled Aboulnasr at Florida Golf Coast University. Emotions can also cloud consumers’ perception when making decisions.

“Sometimes if you are unrealistically optimistic or if you have too much fear and anxiety, it may not let you weigh the true risk of the decision you are making,” added Aboulnasr.

Potential buyers have had to watch prices rise and housing availability drop, all while the rental market grew brutal. It all leads to frustration.

“At this point, they feel that it is more difficult, especially if you are applying for a mortgage, and they are at such a disadvantage to the cash buyer,” he said. “It becomes a much stronger motivator of behavior.” In other words, it’s tempting to think that if you get a chance at a house, you take it.

Additional motivations include missing out on lower mortgage rates, which can make a home more unaffordable as they rise, as well as the fear of not being able to save up for a home as rents rise.

Many buyers have watched as homes they once passed on for being too expensive have become even more expensive, leading them to fear that they may miss out on more equity gains if they wait out the housing market, added Whitney Dutton with the Dutton Group in Fort Lauderdale.

“People are less worried about finding that perfect home than they are worried about lose[ing] out,” said Dutton. “They are worried that if they don’t pay this [amount] now is it going to be more over-priced next year.”

The volatile rental market also adds to buyer fear. “There are people who have been renting for a couple years, thinking they were going to rent in the short term until prices came down. Now they think that’s not going to happen,” Dutton added. And as their buying opportunities have withered, landlords have raised rents aggressively – rents have risen upwards of 30% since last year, whereas a fixed-rate mortgage would have been relatively stable.

Will this lead to another housing bubble?

Though 2008 saw a bust, both nationally and locally, market forces are a bit different today. If any market correction should happen, Dallas researcher said, it won’t be of the magnitude of the last crash, mainly because the forces behind today’s market include low inventory, rather than excessive borrowing.

Florida Atlantic University researchers previously said that buying in the current boom could prove to be a risky decision, as homebuyers are potentially buying near the peak of the market, and it could take years before they see a return on their investment.

And it’s unlikely that a bust will happen in this current housing market for South Florida, though prices will eventually start to trend back to normal, said Ken H. Johnson, real estate economist with Florida Atlantic University.

“Some cities will fare differently,” he said. “If you live in an inventory shortage and expected population growth,” he said in describing South Florida, “I don’t think you will see a housing crash.”

Of their work indicating exuberance driving an imbalanced market, Federal Reserve Bank of Dallas economist Enrique Martinez Garcia made a medical analogy.

“The chances of providing a full remedy and minimize the impact on the patient are better when you are able to detect signs of the problem quickly and act earlier. Our base scenario would be, therefore, that greater awareness of the risk of unsustainable price growth can contribute to investors becoming more cautious about the prospects of continued price growth at the current rates.”

© 2022 South Florida Sun-Sentinel. Distributed by Tribune Content Agency, LLC.