Monthly Archives: May 2022

Buyers Waiving Appraisals? Tread Carefully

What happens when “Buyers waive appraisal contingency” is added into the sales contract? For a lot of Legal Hotline callers, the provision doesn’t do what they think.

ORLANDO, Fla. – We’ve already done a three-part series of articles in previous Legal Newsletters on the risks of waiving certain contract contingencies, but I wanted to write about something we hear far too often on Florida Realtors’ Legal Hotline.

Let me share with you a discussion I had on the Legal Hotline recently: A buyers’ agent called in about a transaction and said that the parties had the following line in the additional terms: “Buyers waive appraisal contingency.” The parties were using the Florida Realtors/Florida Bar AS IS Residential Contract for Sale and Purchase (“AS IS” Contract”) so this article will refer to the language in the Florida Realtors/Florida Bar contracts (“FR/Bar Contracts”).

It’s a short sentence, isn’t it? “Buyers waive appraisal contingency.” But it’s not short of being anything other than problematic in most situations.

First, the above language presumes that the contract has an appraisal contingency that can be waived. Let’s be very clear on something: the FR/Bar Contracts do not contain a built-in appraisal-to-the-purchase-price contingency. As a result, adding language like the above to the additional terms sections effectively waives something that didn’t exist in the first place.

If a buyer wants to ensure that the appraisal of the property matches the purchase price – and if not, they can cancel – they need to add the appraisal rider to the contract. Only the appraisal rider that goes with the FR/Bar contracts gives buyers the right to terminate the contract if the appraisal is less than whatever value they’ve put in the blank on the form. On the other hand, If buyers want to waive their ability to cancel the contract if the property appraisal doesn’t equal the purchase price, they simply don’t add that rider to their offer.

Wait, what? “But there’s appraisal language in the financing paragraph,” you’re saying.

You are correct, there is. But based on calls to the Legal Hotline, many callers don’t understand what the financing paragraph actually says. But I will get to that in a minute.

Second, adding “Buyers waive appraisal contingency” also assumes that buyers have the authority to waive the appraisal. While it’s possible for buyers to obtain their own appraisal, a majority of the time the appraisal is really the lender’s appraisal (or other valuation) of the property. So when buyers add this language to the contract, they’re effectively saying that the buyers are waiving the lender’s appraisal and, seemingly, the lender’s ability to refuse a loan based on the results of the appraisal.

While I personally haven’t conducted polls on this, I have yet to hear of any mortgage company that will lend funds without some sort of property valuation. This is typically a part of their lending process. To me, adding something like the above verbiage is as if the buyers are saying, “We are waiving our lender’s loan approval process to the extent it involves any appraisal of the property.”

Yet, in reality, the lender will still be going out and obtaining whatever type of property valuation they need to process and evaluate the loan. And the results of that valuation process will be a factor in the lender’s willingness to lend the funds to the buyers. (Note: Each lender has its own processes.)

Let’s address the financing language. What we’re hearing on the Legal Hotline is that many callers believe that buyers can cancel if an appraisal doesn’t meet the purchase price. As I said earlier, this is just not the case.

In fact, if you read paragraph 8(b), you will see that the term “purchase price” appears nowhere in that paragraph. But let’s nail down what 8(b) does say about appraisals.

When the most recent FR/Bar contracts were revised, the definition of Loan Approval was amended to include an appraisal. Buyers with a financing contingency are attempting to get a Loan Approval, which is not only obtaining a mortgage loan covering the terms as laid out in the contract, but also – and here is the actual language – “Buyer’s mortgage broker or lender having received an appraisal or alternative valuation of the Property satisfactory to lender, if either is required by lender, which is sufficient to meet the terms required for lender to provide Financing for Buyer and proceed to Closing (“Appraisal”).

Let’s break that down a bit in hopefully some plain language.

If the lender requires an appraisal/valuation of the property as part of the lender’s process in order to provide buyer financing, then that appraisal/valuation has to be satisfactory to the lender. And note that it doesn’t say the appraisal/valuation has to be equal to the purchase price! The appraisal/valuation only has to be sufficient to meet the terms required for the lender.

I emphasized the word “lender” because I want you, the reader, to note that we are not talking about any sort of appraisal/valuation that is satisfactory to buyers. Again, if buyers want an option to get out of the deal when there’s a difference in the property purchase price vs. the property’s appraisal, they’ve got to use the rider I mentioned earlier.

In emphasizing the word “lender,” I also hope readers can see why writing “Buyers waive appraisal contingency” in the additional terms doesn’t really work or likely doesn’t have the intended effect.

Bottom line: Lenders aren’t parties in the sales contract. Buyers can waive whatever they want, but when it comes to the waiver of appraisals/property valuations, they can’t force a lender to comply with contract language, including any reference to the lender’s appraisal part of the loan process.

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

© 2022 Florida Realtors®


‘Hometown Hero’ Program Starts June 1

50-plus careers qualify for home-buying help up to $25K – over 3M Floridians. Income limits start at $120K, home prices at $420K. Webinar training this week.

ORLANDO, Fla. – An estimated 3,089,310 Floridians qualify for home-buying help from the state’s new Hometown Heroes Program (HTH), a program strongly backed by Florida Realtors® during this year’s session of the Florida Legislature.

The Florida Housing Finance Corporation (FHFC) – or just “Florida Housing” – oversees the program. Florida Housing has scheduled webinar training sessions for Realtors this week, at 10 a.m. and 2 p.m. each day. Members can choose their course time and sign up online.

Florida Housing also produced a downloadable flyer that provides a program overview.

Who can apply?

The flyer has a complete list of current occupations, though the webinar speaker, Mark T. Pease, Florida Housing’s homebuyers’ business development manager, says Gov. Ron DeSantis has some flexibility in deciding occupation qualifications. He encouraged Realtors to contact the governor if they feel another occupation should be included.

The program applies to first-time homebuyers as defined by the IRS, which says “first-time” means “someone who has not owned a home in at least the past three years.” Homeowners must also actually live in a home to be disqualified. A renter who inherited a home in North Carolina, for example – one they never actually lived in – still qualifies. Renters who own an investment property also may qualify, providing they only own one.

In addition to Hometown Heroes, a program called “Salute our Soldiers” is for veterans. Rules are similar, but they don’t have to qualify as first-time buyers.

The program applies statewide, though income limits vary by county. The flyer explains the documentation borrowers must submit to prove they qualify for the program. Low-end income limits start around $120,000. Home loan limits start around $420,000 in many counties but go as high as $647,000 in some counties, such as Miami-Dade.

How much money?

The program is funded with $100 million. They money isn’t a gift, it’s a loan – but a loan that carries no interest and does not have to be paid back until the homeowners satisfies the mortgage, sells the house, vacates the house or refinances. Paid-off Hometown Hero loan money then gets rolled back into the program to help more potential Florida homeowners.

Buyers can receive a loan for up to 5% of the total process up to a maximum for $25,000.

According to Pease, the program’s income limits are “the highest FHFC has ever had” – up to 150% of a county’s median income. Lenders even have some flexibility to remove one co-borrower from an application if it helps a couple qualify for the program. In most cases, a copy of the buyer’s license must be submitted. If an occupation does not require a license, however, they must submit a copy of the business’s license where they work.

Only lenders approved by Florida Housing can participate – about 240 in the state. However, Pease said the lender training is online and can be done “in a day or so” if a preferred lender wants to join the program.

Realtor involvement

Any Florida licensee can work with Florida Housing, but their website also includes a “Find a Realtor” link. The results include Realtors who have completed a 3-hour CE class offered free by Florida Housing. The website also has a schedule of upcoming CE classes held throughout the state.

Online aids issued by Florida Housing:

© 2022 Florida Realtors®


Case-Shiller: May Home Prices Up More than 20%

Tampa (34.8%) and Miami (32.0%) showed large increases among the 20-city index. Those waiting for slowing prices “will have to wait at least a month longer.”

NEW YORK – Home prices in the United States continue to see significant increases, with an industry report Tuesday saying that they were up more than 20% over the past 12 months.

The S&P CoreLogic Case-Shiller Home Price Index said home prices were up 20.6% over the past 12 months that ended in March – the highest rate in more than three decades. The year-over-year average is slightly above the 20% gain in February, the index said.

The annual increase for the index’s national 10-city composite was 19.5% in March, which was up from 18.7% in February – and the 20-city composite showed a 21.2% year-to-year increase, up from 20.3% the month before.

Tampa (34.8%), Phoenix (32.4%) and Miami (32.0%) showed large annual increases among the 20-city index.

“Those of us who have been anticipating a deceleration in the growth rate of U.S. home prices will have to wait at least a month longer,” Craig Lazzara, managing director of the S&P Dow Jones Indices, said in a statement. “For both national and 20-city composites, March’s reading was the highest year-over-year price change in more than 35 years of data, with the 10-city growth rate at the 99th percentile of its own history.”

Lazzara said 17 cities in the 20-city index showed increases, a signal that the housing market has not yet been affected by the Federal Reserve’s boosting key interest rates.

“Mortgages are becoming more expensive as the Federal Reserve has begun to ratchet up interest rates, suggesting that the macroeconomic environment may not support extraordinary home price growth for much longer,” Lazzara added.

“Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call.”

Copyright 2022 United Press International, Inc. (UPI). Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI’s prior written consent.


Lower Fla. Confidence Tracks Rising Inflation Rates

Consumer confidence in Fla. dropped a bit again in May, only slightly higher than the June 2008 reading. Regular monthly drops seem to track inflation’s rise.

GAINESVILLE, Fla. – Florida consumer sentiment deteriorated for a second month in a row in May, dropping to 61.5 from a revised figure of 63.5 in April. May’s reading is now only 2.7 points above a record low of 58.8 set in June 2008.

“Consumer sentiment among Floridians has not improved since the beginning of the year,” says Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research. “In fact, consumer sentiment has been on a downward trajectory since July 2021, one month after the annual rate of inflation first indicated signs of soaring prices across the board with annual rates exceeding 5%.”

Among the five components that make up the index, one increased and four decreased.

Current conditions: Floridians’ opinions about their personal finances now compared with a year ago dropped 3.9 points from 58.8 to 54.9, the largest decline in May’s reading. Similarly, opinions as to whether this is a good time to buy a major household item like an appliance decreased 1.1 points from 51.7 to 50.6.

Future expectations: Floridians’ expectations about future economic conditions were mixed. On the one hand, expectations of personal finances a year from now increased slightly from 74.4 to 74.8. On the other hand, expectations about U.S. economic conditions over the next year dropped 3.1 points from 63 to 59.9.

Similarly, outlooks of U.S. economic conditions over the next five years decreased 1.9 points from 69.4 to 67.5. Notably, all Floridian demographic groups shared the more pessimistic outlooks.

“While Floridians expressed more optimism regarding their future personal financial situation, their views concerning the outlook of U.S. economic conditions reflect uncertainty as the Fed attempts to deliver a soft landing while combating the highest inflation in 40 years,” says Sandoval. “Although widely anticipated, as the Fed’s rise in interest rates ripples through the economy, it will make it more expensive to purchase a car or a home or carry a credit card balance. Additionally, higher interest rates also raise the possibility of increased unemployment, reduced economic activity and a recession.”

Sandoval expects consumer sentiment numbers to remain week at least for a few months “as the effects of higher interest rates are yet to be felt throughout the economy, and as global challenges including rising food and energy prices, the war in Ukraine and COVID-induced lockdowns in China remain a concern.”

The index UF researchers use is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2, the highest is 150.

© 2022 Florida Realtors®


Sellers Waiting for Market Peak Think It’s Here

Some owners were waiting to list, hoping to maximize their potential profit; some may fear they have to act now. New listings are rising twice as fast as a year ago.

NEW YORK – Some homeowners with a yen to sell have a growing concern that they may miss out on the buyer frenzy. Signs of a slowing real estate market are growing across the country – existing-home sales and new-home sales are falling as well as pending home sales.

The inventory of homes for sale rose 9% last week compared to a year ago, according to realtor.com®. New listings are rising nearly twice as fast in the past four weeks as they did a year ago.

“Rising mortgage rates have caused the housing market to shift, and now home sellers are in a hurry to find a buyer before demand weakens further,” says Daryl Fairweather, Redfin’s chief economist.

Pending home sales fell for the sixth consecutive month in April and are now at the slowest pace in nearly 10 years, the National Association of Realtors® reported Thursday.

Home sellers also see less competition from buyers. An index that measures buyer demand based on Redfin requests for home tours and home buying services was down 8% annually for the week ending May 15 – the largest decline since April 2020, when the pandemic put everything on pause.

Further, nearly one in five sellers has dropped their asking price, the highest rate since October 2019, Redfin reports.

“We used to get 10 to 15 offers on most houses. Now I’m seeing between two and six offers on a house, a good house,” Lindsay Katz, a real estate broker at Redfin in the Los Angeles area, told CNBC.

Source: “Home Listings Suddenly Jump as Sellers Worry They May Miss Out on the Red-Hot Housing Market,” CNBC (May 26, 2022)

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


Owners Weigh Options – Decide ‘Stay’ Is Best

Americans like to sell homes and move, but current owners look at today’s frustrated buyers and their low interest rate and think, “I’m fine right here for now.”

NEW YORK – U.S. homeowners are sitting on the lowest mortgage rates in modern history as renters face steep inflation. The result: Both groups find “looking for a new home” discouraging.

“All of this is suggesting that America may be stuck in place,” says National Association of Realtors® Chief Economist Lawrence Yun.

With rents seeing unprecedented growth, tenants usually face smaller price increases keeping with their current lease rather than signing a new one, largely because landlords want to avoid the costs of finding new tenants and property turnover.

However, RealPage Chief Economist Jay Parsons says higher moving costs are not the only inhibiting factor – buildings with the most unfilled units are currently the most expensive ones.

Meanwhile, with 4 in 5 mortgage-holders having an interest rate under 5% and half with a 4% or lower rate, many cannot afford to move if current mortgage rates remain at higher levels. Moreover, the most prosperous regions also have the costliest housing, which discourages people from moving to places with better jobs and limits economic growth.

Source: New York Times (05/27/22) Badger, Emily

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


U.S. Consumer Confidence Drops a Bit in May

The feature measuring current attitudes dropped slightly, but Americans’ future expectations lowered in the face of inflation and interest rates.

BOSTON – The Conference Board Consumer Confidence Index decreased slightly in May, on the heels of a small increase in April. The Index now stands at 106.4, down from 108.6 in April (after an upward revision).

The Present Situation Index – consumers’ assessment of current business and labor market conditions – declined to 149.6 from 152.9 last month. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – declined to 77.5 from 79.0.

“The decline in the Present Situation Index was driven solely by a perceived softening in labor market conditions,” says Lynn Franco, senior director of economic indicators at The Conference Board.” By contrast, views of current business conditions – which tend to move ahead of trends in jobs – improved. Overall, the Present Situation Index remains at strong levels, suggesting growth did not contract further in Q2.”

Present situation

  • 21.1% of consumers said business conditions were “good,” up from 20.8%
  • 20.7% said business conditions were “bad,” down from 22.2%

Consumers’ assessment of the labor market was less positive:

  • 51.8% said jobs were “plentiful,” down from 54.8%
  • 12.5% said jobs are “hard to get,” up from 10.1%

Franco says the Expectations Index suggests further weakening. “Consumers also do not foresee the economy picking up steam in the months ahead. They do expect labor market conditions to remain relatively strong, which should continue to support confidence in the short run.”

Expectations six months in the future

  • 17.7% of consumers expect business conditions to improve, down from 18.6%
  • 24.9% expect business conditions to worsen, up from 21.7%

Consumers were somewhat less pessimistic about the short-term labor market outlook:

  • 18.5% expect more jobs to become available, virtually unchanged from 18.4%
  • 18.7% anticipate fewer jobs, down from 19.8%

Consumers were mixed about their short-term financial prospects:

  • 19.0% o expect their incomes to increase, up from 17.8%
  • Conversely, 14.5% expect incomes will decrease, up from 13.2%

“Purchasing intentions for cars, homes, major appliances and more all cooled – likely a reflection of rising interest rates and consumers pivoting from big-ticket items to spending on services,” says Franco. “Vacation plans have also softened due to rising prices. Indeed, inflation remains top of mind for consumers, with their inflation expectations in May virtually unchanged from April’s elevated levels. Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending this year.”

Toluna conducts the monthly Consumer Confidence Survey for The Conference Board. The cutoff date for the preliminary results was May 23.

© 2022 Florida Realtors®


Increasing Number of Sellers Drop Asking Price

How are rising mortgage rates impacting home sales? Comparing the percentage of sellers who dropped their price in April 2022 vs. April 2021 finds an increase in Fla. metros.

SEATTLE – Price drops are increasingly common, particularly in hot migration destinations, according to a new report from Redfin.

In Florida, the study found that one out of three Cape Coral sellers dropped their price this April compared to only 18.5% in April of 2021. Of the 11 Florida cities included in the study, Cape Coral topped the list for Florida. Miami came in last with 9.2% of sellers dropping their price compared to a similar percentage, 8.9%, in April 2021.

Florida: Percent of price drops, April 2022 vs. April 2021

  1. Cape Coral – 32.5% in 2022 compared to 18.5% in 2021, year-to-year price increase of 63.8%
  2. North Port – 29.6% compared to 23.8%, price increase of 53.8%
  3. Tampa – 27.8% compared to 22.2%, price increase of 48.6%
  4. Orlando – 24.4% compared to 23.3%, price increase of 41.8%
  5. Lakeland– 23.6% compared to 19.9%, price increase of 49.4%
  6. Jacksonville – 20.3% compared to 11.5%, price increase of 41.7%
  7. Deltona – 17.3% compared to 13.6%, price increase of 48.4%
  8. West Palm Beach – 14.6% compared to 12.9%, price increase of 47.5%
  9. Fort Lauderdale – 11.1% compared to 10.9%, price increase of 29.3%
  10. Palm Bay – 10.1% compared to 7.6%, price increase of 42.9%
  11. Miami – 9.2% compared to 8.9%, price increase of 43.9%

In Boise, Idaho, 41% of home sellers dropped their price in April, the largest share among the 108 metropolitan divisions included in Redfin’s analysis. That’s up from 10% a year ago. Cape Coral, FL (33%), New Orleans (32%), Baton Rouge, LA (31%) and Sacramento (30%) rounded out the top five markets driving the national rate increase of price drops to its highest level since October 2019.

“Many places like Boise or Sacramento that saw a surge in migration and a sharp increase in home prices over the past two years have now seen an abrupt drop-off in demand, leading sellers to drop their prices with increasing frequency,” says Redfin Chief Economist Daryl Fairweather. “When mortgage rates were at or below 3%, both local and out-of-town homebuyers were more willing and able to tolerate high prices; but at 5%, many are now priced out.”

More than 20% of home sellers dropped their price in April in seven of the 10 most popular April migration destinations (Cape Coral, Sacramento; North Port, Tampa; Atlanta, San Antonio and Phoenix).

“Conversations with prospective sellers are longer and more emotional now than they were just a few months ago,” says Boise Redfin real estate agent Shauna Pendleton. “If your home has been listed for several days with little or no interest from buyers, it’s time to consider dropping the price. If you do have to drop the price, you are far better off doing one large price drop instead of a series of smaller price drops. A larger number of drops is often interpreted as desperation and encourages buyers to wait even longer or make a lower offer.”

In six metro areas, the share of homes with a price drop decreased significantly (5 percentage points or more) from a year ago. All six had a median sale price in April below the national median of $424,400.

The full report of seller price drops by metro area is posted online.

© 2022 Florida Realtors®


Census Finds Big City Losses, Sunbelt Gains

NEW YORK – Ko Im always thought she would live in New York forever. She knew every corner of Manhattan and had worked hard to build a community of friends. Living in a small apartment, she found her attitude shifting early in the pandemic. After her brother accepted a job in Seattle in the summer of 2020, she decided to move there too.

“It was fine until it wasn’t,” said Im, 36. “The pandemic really changed my mindset about how I wanted to live or how I needed to live.”

Eight of the 10 largest cities in the U.S. lost population during the first year of the pandemic, with New York, Los Angeles and Chicago leading the way. Between July 2020 and July 2021, New York lost more than 305,000 people, while Chicago and Los Angeles contracted by 45,000 residents and 40,000 people, respectively.

The population estimates released Thursday by the U.S. Census Bureau capture a time early in the pandemic and don’t reflect changes since last summer. Whether the virus has permanently changed the urban landscape of America remains an open question.

San Francisco suffered the largest rate of decline, losing almost 55,000 residents, or 6.3% of its 2020 population, the highest percentage of any U.S. city.

Among the 10 largest U.S. cities, only San Antonio and Phoenix gained new residents, but they added only about 13,000 people each, or less than 1% of their populations, according to the bureau’s 2021 vintage population estimates.

Justin Jordan’s move to Phoenix a year ago was motivated by a job offer paying him more money than the one in Moundsville, West Virginia, where he had been living. He has had to adjust to 110 degree Fahrenheit (43.3 degree Celsius) temperatures and unwieldly traffic.

“I love the weather, the atmosphere, and all the stuff to do,” said Jordan, 33, a senior operations manager for a business services firm.

Among the largest U.S. cities, Austin and Fort Worth in Texas; Jacksonville, Florida; Charlotte, North Carolina; and Columbus, Ohio also registered modest population gains.

In March, the Census Bureau released estimates for metro areas and counties showing changes from mid-2020 to mid-2021. The estimates released Thursday offer a more granular perspective. For instance, the March data showed metro Dallas had the largest population gain of any metro area in the U.S., adding more than 97,000 residents, but Thursday’s estimates show the city of Dallas lost almost 15,000 residents. The growth occurred in Dallas suburbs like Frisco, McKinney and Plano.

Reasons for population changes vary from city to city, driven by housing costs, jobs, births and deaths. The pandemic and the lockdown that followed in spring 2020 made living in a crowded city less appealing for a time, and those who could leave – workers who could do their jobs remotely, for example – sometimes did.

Brookings Institution demographer William Frey said he believes the population declines in most of the largest U.S. cities from 2020 to 2021 have been “short-lived and pandemic-related.”

Daniel Akerman, a New York real estate agent, said the Census Bureau data, which doesn’t go past July 2021, fail to capture how people have returned to the city in the past year. He said real estate transactions have skyrocketed and available rental apartments have dropped.

“People have definitely returned to the city. There are a lot more people on the streets,” Akerman said. “In July 2021, people were still guarded about COVID and a lot of that has gone away. People are a lot more free. They are out and about, going to restaurants.”

When it came to growth rates, as opposed to raw numbers, the fastest-growing cities with populations of at least 50,000 residents were in the suburbs of booming Sunbelt metro areas. They included Georgetown and Leander outside Austin; the town of Queen Creek and the cities of Buckeye, Casa Grande and Maricopa, outside Phoenix; the city of New Braunfels, outside San Antonio; and Fort Myers, Florida. They had growth rates of between 6.1% and 10.5%.

As metro Austin has grown by leaps and bounds, so has Georgetown, located more than 25 miles (40 kilometers) north of the Texas capital, said Keith Hutchinson, the city’s communications manager. The city grew by 10.5%, the most in the nation last year, and now has 75,000 residents.

“It’s not really a surprise,” Hutchinson said. “People are moving here for jobs.”

The estimates also showed population declines of 3% to 3.5% in New Jersey cities outside New York, such as Union City, Hoboken and Bayonne. Similar declines occurred outside San Francisco in Daly City, Redwood City and San Mateo, as well as Cupertino in Silicon Valley.

Lake Charles, Louisiana, which was devastated by Hurricane Laura in 2020, lost almost 5% of its residents, the second-highest rate in the U.S. behind San Francisco.

Though the Category 4 storm was the driver there, elsewhere, the pandemic created opportunities to move. Andrew Mazur, 31, had been wanting for some time to leave Philadelphia for South Florida where he grew up, and the chance to work remotely in his job at a large professional services firm arrived in November 2020. He joined almost 25,000 residents who left Philadelphia between 2020 and 2021.

Although he now needs a car to get around, Mazur loves golfing every weekend and going to the beach. He recently moved out of his parents’ home, getting his own apartment in Fort Lauderdale. He made the move official three weeks ago by obtaining a Florida driver’s license.

“I’m not going back. It has been great,” Mazur said. “Philly, New York, Chicago – tons of people from there are moving down here.”

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


Fannie Mae: Housing Crisis Will Last a Decade

Recession or not, the U.S. doesn’t have enough entry-level homes for everyone who needs one, and it will take at least 10 years for supply to catch up with demand.

WASHINGTON – Fannie Mae has issued a new analysis of the residential single-family home market, where it stated that: “the demand for entry-level single-family homes should remain high for the rest of the decade.”

The government-owned mortgage firm found that between 2018 and 2020, the shortage in homes increased nationally from 2.5 units to 3.8 units. The declining supply of entry-level (or starter) homes is driving the home shortage.

Fannie Mae defines a starter home as having less than 1,400 square feet. In the 1980s, 40% of all homes built were starter homes. By comparison, in 2019, only 7% of homes built were starter homes.

The influx of 27 million millennials into the housing market has pushed this shortage even further. In the period from 2018 through 2020, the COVID-19 pandemic and systemic housing trends caused a 52% decreasing in the supply of homes. The combination of low supply and high demand resulted in a 12% increase in home prices.

As younger workers continue to enter the market, the demand for starter homes will continue to rise. Fannie Mae anticipates that affordability will remain an issue for the next decade, “especially when it comes to down payments.”

Copyright © 2022 BridgeTower Media. All Rights Reserved. © Copyright, 2022, Idaho Business Review (Boise, ID)


Lenders Can’t Deny Loans and Blame Technology

CFPB: Lenders are obligated to tell buyers why their loan application was turned down. They can’t plead ignorance and say an algorithm made the determination.

WASHINGTON – According to an announcement by the Consumer Financial Protection Bureau (CFPB), federal anti-discrimination law requires lenders to give applicants specific reasons for denying an application for credit. CFPB says it’s required “even if the creditor is relying on credit models using complex algorithms.”

CFPB published a Consumer Financial Protection Circular to remind borrowers of creditors’ adverse action notice requirements under the Equal Credit Opportunity Act (ECOA).

“Companies are not absolved of their legal responsibilities when they let a black-box model make lending decisions,” says CFPB Director Rohit Chopra. “The law gives every applicant the right to a specific explanation if their application for credit was denied, and that right is not diminished simply because a company uses a complex algorithm that it doesn’t understand.”

Thanks to data harvesting – a broad collection of diverse data culled from browsers, websites, stores and more – lenders often have highly detailed customer information before they ever interact with someone. Many firms today rely on these detailed datasets to power algorithmic decision-making, which is sometimes marketed as artificial intelligence or AI. Data harvesting has a broad range of commercial uses, such as targeted advertising and in making credit decisions.

Some financial companies have long used advanced computations to help make credit decisions, but they still gave borrowers an explanation if their loan was denied.

However, some creditors today may make credit decisions based on complex algorithm outputs, sometimes called “black-box” models. The reasoning behind some of these models’ outputs –  the basis for accepting or denying a loan – may be unknown to the model’s users and sometimes even the model’s developers.

“With such models, adverse action notices that meet ECOA’s requirements may not be possible,” CFPB said in a statement. … To help ensure a creditor does not discriminate, ECOA requires that a creditor provide a notice when it takes an adverse action against an applicant, which must contain the specific and accurate reasons for that adverse action. Creditors cannot lawfully use technologies in their decision-making processes if using them means that they are unable to provide these required explanations.”

CFPB credits whistleblowers for complaining about companies that use tech in a way that violates ECOA and other federal consumer financial protection laws. It encourages anyone who believes their rights have been denied to contact the bureau through the CFPB Whistleblower Program webpage.

© 2022 Florida Realtors®


Check Email: FREC May Have Important Request

FREC didn’t receive course completion reports from some Fla. licensees who took the real estate salesman or broker’s test online between Jan. 2020 and June 2022.

ORLANDO, Fla. – The Florida Real Estate Commission (FREC) has started prosecuting new licensees who didn’t submit their pre-licensing course completion report. In a worst-case scenario, a real estate license could be revoked.

These licensees may now receive emails or calls seeking the missing paperwork.

The problem: During COVID lockdowns, FREC expanded from in-person testing only to a new option: Applicants could, if they wished, take the real estate test online.

The result: Some of today’s current licensees who did online testing in 2020, 2021 and the first half of 2022 (January to June) failed to submit their pre-licensing course completion report. When FREC identified the problem, investigators started calling these licensees to obtain the paperwork, or, in some cases, the Department of Business and Professional Regulation (DBPR) started contacting these licensees by email and requesting the missing paperwork.

However, not all licensees responded to the calls or emails, possibly due to concerns about their legitimacy – but they are legitimate in this case.

If agents fail to respond or submit documentation, FREC says they can be prosecuted and have their real estate license revoked. Those who do submit documentation now may be subject to a fine, investigation costs and reprimand – but not a revocation of their real estate license.

Options: If you are contacted by phone or email for this information, don’t ignore the request.

If you haven’t been contacted by DBPR but fit this profile – i.e., you took a test online during the time period noted above – and want to preemptively submit your pre-licensing course completion certificate, you can submit it to DBPR.

Fax it to FREC at (850) 487-9529 with a brief cover letter explaining that it’s proof of your pre-licensing course completion certificate – and retain a copy of the fax.

Unsure if your pre-licensing certificate was submitted? Send a copy in anyway. There is no penalty for duplicating document submission.

Don’t have a copy of your pre-licensing certificate? Contact the provider of the course you attended and ask them for it.

Note: There is currently no way for a real estate licensee to check their DBPR account to verify whether or not they submitted the required certificate.

Also, be aware: Real estate schools do not submit the certificate to DBPR for you. Applicants who took in-person tests at a testing center submitted their certificates there; licensees who took their test online did not. They must now send the required certificate to DBPR if they have not already done so.

Going forward, the documentation issue shouldn’t be a problem for licensees who take tests online. Under a new contract with the vendor who administers FREC’s online tests, the vendor will submit the certificates directly into DBPR’s system. However, this protection is not retroactive for previous licensees who took their tests online.

The short bit of advice? Don’t ignore a call or email from FREC or DBPR. And if you never submitted your pre-licensing course completion report, do so now.

© 2022 Florida Realtors®


Rainy Days Best for Home Showings?

A house can feel more like a home when it’s raining outside, but it’s also the best time to check for roof leaks, note outside drainage issues and detect any odor from mold.

CHICAGO – Prospective buyers may want to cancel a home tour if the weather is bad, but real estate professionals say those rainy days are actually optimal for showing homes.

Gail Hardy, a real estate professional in Knoxville, says a rainy day lets potential homebuyers look for external water-related issues by noting how water moves around a house. In a TikTok video, she shows a pool of water building up next to a home’s foundation and even suggests a cause, saying a gutter filled with rocks likely prevents water from draining away from the house.

If a problem is discovered, a home inspector should examine the structure for grading or potential water issues.

Would-be buyers may also spot any possible water-related issues inside the house. Craig McCullough, a real estate professional in Washington, D.C., told Apartment Therapy: “Leaks in a ceiling, moisture in a basement and mildew smells are heightened on a rainy day. If these are new leaks, they may not have developed water stains or dissolved drywall yet.”

Source: Realtor Magazine (05/04/22)

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


Fla. Lawmakers Pass Insurance, Condo Reforms

In a special session this week, the Florida Legislature passed a roster of bills to ease problems in the state’s insurance market, including SB 2D, which Florida Realtors heavily supported. Lawmakers also took steps to improve the safety of condo buildings.

TALLAHASSEE, Fla. – Florida lawmakers met this week in Tallahassee for a special session to help rein in rising property insurance costs throughout the state. Over the course of the three-day session, they amended their tasks to include condominium building safety, a response to the Surfside tragedy last June that killed 98 people.

“On the call of Governor DeSantis, lawmakers went to Tallahassee this week on a mission to address Florida’s ongoing property insurance crisis,” says Christina Pappas, president of Florida Realtors®. “I’m happy to report they not only made significant progress on that mission but went the extra step to help protect the safety and investments of current and future condominium residents.”

Property insurance reform

Lawmakers passed Senate Bill 2D which Florida Realtors heavily supported throughout the special session. On Thursday night, Gov. Ron DeSantis signed it into law. The bill includes a variety of reform measures designed to reduce frivolous lawsuits, crack down on roofing scams, provide reinsurance relief – a type of insurance for insurers when they face heavy claims – and empower property owners to harden their homes against storms. Some changes in the bill include:

  • Protecting Policyholders from Nonrenewal: Insurers may not refuse to write or renew policies on homes with roofs that are less than 15 years old solely because of the roof’s age. 
  • Roof Solicitations: Requires roofing solicitations to contain consumer-awareness language that the homeowner is responsible for the deductible under the insurance policy, and it is insurance fraud for the contractor to reduce or waive the deductible or file a claim with false or misleading information.
  • Roof Deductible: Allows insurance companies to offer a policy at a reduced rate to consumers that includes a roof deductible of up to 2% of the insured value or 50% of the roof replacement cost. Roof deductibles will not apply when there is a total loss to the structure, a loss caused by a hurricane, a roof loss resulting from a fallen tree or other hazard, or a loss requiring a repair of less than 50% of the roof.
  • Assignment of Benefits (AOB) Reform: Eliminates attorney fee awards where policyholder benefits have been assigned to a 3rd party.
  • Contingency Fee Multiplier: Limits attorney fee multipliers to “rare and exceptional circumstances.” 
  • Notice of Intent to Litigate: Allows insurers to collect attorney fees where a case is dismissed because plaintiff fails to provide required pre-suit notice. 
  • Civil Remedy Notice: Limits bad faith lawsuits by requiring policyholder to establish an actual breach of contract. 
  • Improving Affordability for Policyholders: Authorizes $2 billion for a new Reinsurance to Assist Policyholders (RAP) program to help insurers obtain reimbursement for hurricane losses earlier than they normally would under the Florida CAT Fund. This reinsurance is provided by the state at no cost to the insurer. Insurers that participate in RAP must reduce policyholder premiums.  
  • Home Hardening Grants: Appropriates $150 million to provide hurricane mitigation inspections and matching grants to help Floridians afford home hardening improvements to their homestead single-family residences with an insured value of $500,000 or less. The program provides $2 in grant funds for every $1 provided by the homeowner up to $10,000. 
  • Holding Insurers Accountable: Prohibits insurance companies from denying claims without communicating sufficient reason. Requires the state to analyze why an insurer failed within two months after insolvency process begins. Strengthens Office of Insurance Regulation insurer oversight.

Condominium safety reform

Florida lawmakers also addressed condominium reform by passing Senate Bill 4D, which DeSantis also signed Thursday. This bill provides an overhaul of the high-rise inspection law, requires more frequent recertification of safety standards and mandates that condo boards build up reserves so they can make needed repairs. Changes in the bill include:

  • Creates a statewide “milestone inspection” requirement for condominiums and cooperative buildings that are three stories or higher 30 years after initial occupancy, and 25 years after initial occupancy for buildings located within three miles of the coast. 
  • Requires inspections every 10 years after a building’s initial “phase 1” inspection.
  • Requires an additional, more intensive inspection, or a “phase 2” inspection, if a building’s initial inspection reveals substantial structural deterioration.
  • Beginning in 2024, condo associations are required to conduct a structural integrity reserve study at least every ten years and prevents needed reserves from being waived.

Both SB 2D and SB 4D became effective immediately after DeSantis signed them into law.

“Floridian’s have been struggling to keep up with rate increases, stay insured and find adequate coverage in their area,” says Pappas. “The measures passed by lawmakers this week will have a long-term positive effect on Florida’s insurance market. I’m proud of our members for staying engaged on this issue and continuing to demonstrate the need for these types of reforms. These policies may not immediately reduce premiums, but they do get at the heart of the problem.

Tom Butler is Florida Realtors Public Policy Communications Director

© 2022 Florida Realtors®


Broward May Make Condo Safety Records Public

It may get easier for Broward condo buyers to find building safety reports. An online resource would give owners structural reports and update the status of repairs.

FORT LAUDERDALE, Fla. – Broward County will consider requiring condos to submit building reports, with the goal of making them public so potential buyers have a better idea of whether the building is in OK condition.

The county has already created a website that would allow condo residents to easily find who is on their board of the directors, and access to condo documents that spell out the rules of how each building operates.

It comes in response to the June 2021 collapse of the 12-story Champlain Towers South in Surfside that killed 98 people. The investigation of the cause of the collapse is a process that is expected to take years. Shoddy construction techniques used in the early 1980s when Champlain Towers South was built and a possible lack of proper maintenance by its condo association over the years are among the areas being explored.

County commissioners said they are motivated to ease the process for homebuyers and homeowners who want to see documents that show structural reports – as well as information that shows structural changes have not been made.

“It can happen again,” warned County Commissioner Jared Moskowitz, the former director of Florida’s Division of Emergency Management. “That building collapsed because of poor decisions of that board. If you’re going to buy into a building … all I want is … the documents are available somewhere that show the structural integrity issues, ‘cause that is not available now.”

The county can’t confirm the accuracy of the records that will make their way online, officials warn, but said it would ease with the transparency of information.

Moskowitz called the website “tremendously helpful, makes it just an easier rubric for people to know where to go.”

The state Legislature began taking action this week: House and Senate bills would require condo buildings to undergo safety inspections and maintain reserves to fix structural problems.

The Florida Legislature reached an agreement “that will help to ensure this kind of tragedy never happens again,” House Speaker Chris Sprowls announced in a statement.

Among provisions of the bill: The plan calls for buildings within three miles of the coast to be inspected before the building reaches age 25 and every 10 years afterward. Every 10 years, condominium boards must produce studies of the reserve funds required for future repairs of structural integrity components. And structural safety inspections would be required for buildings three stories or higher by the year the building turns 30 and every 10 years afterward.

Vice Mayor Lamar Fisher said he’s concerned about accuracy of the information: “Say the president changes today at Kings Point, how are we going to know?” he asked. “How are we going to be able to really police the issue? And is the information going to become stale next week?”

Acknowledged County Attorney Andrew Meyers: “There is going to be some staleness because it only requires an annual update.” Still, he said there will be enough contact information so that a homeowner can reach somebody.

The idea of a new website (browardinfo.org) was the brainchild of Commissioner Mark Bogen, who said he wanted a “one-stop shop” for people to get information.

The County Commission will take a formal vote of whether to require condo associations to provide engineering and architectural reports to a central repository at a future meeting.

The idea, Bogen said, is for the public “to have knowledge before buying.”

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


Lots of Interest Rate Increases? Fed Seems Unsure

The Fed’s meeting notes this month suggest disagreement among the ranks, but they still plan on some rapid increases followed by time to “assess the effects.”

WASHINGTON (AP) – Federal Reserve officials agreed when they met earlier this month that they may have to raise interest rates to levels that would weaken the economy as part of their drive to curb inflation, which is near a four-decade high.

At the same time, many of the policymakers also agreed that after a rapid series of rate increases in the coming months, they could “assess the effects” of their rate hikes and, depending on the economy’s health, increase rates at a slower pace.

After their meeting this month, the policymakers raised their benchmark short-term rate by a half-point – double the usual hike. According to minutes from the May 3-4 meeting released Wednesday, most of the officials agreed that half-point hikes also “would likely be appropriate” when they next meet in June and July. Chair Jerome Powell himself had indicated after this month’s meeting that half-point increases would be “on the table” at the next two meetings.

All the officials believed that the Fed should “expeditiously” raise its key rate to a level at which it neither stimulates nor restrains growth, which officials have said is a rate of about 2.4%. Some policymakers have said they will likely reach that point by the end of this year.

The minutes suggest, though, that there may be a sharp debate among policymakers about how quickly to tighten credit after the June and July meetings. The economy has shown more signs of slowing, and stock markets have dropped sharply, since the Fed meeting.

Government reports have indicated, for example, that sales of new and existing homes have faltered sharply since this month’s Fed meeting, and there are signs that factory output is growing more slowly. Gennadiy Goldberg, senior rates strategist at TD Securities, suggested that the minutes released Wednesday might reflect a more “hawkish” Fed – that is, more focused on rate hikes to restrain inflation – than may actually be the case today.

Some officials, particularly Raphael Bostic, president of the Federal Reserve Bank of Atlanta, have indicated since this month’s meeting that the Fed could reconsider its pace of rate hikes in September.

And Loretta Mester, president of the Federal Reserve Bank of Cleveland, has said that if there’s “compelling evidence that inflation is moving down,” the Fed could slow its rate hikes, likely to a quarter-point pace.

“But if inflation has failed to moderate,” she added, “a faster pace of rate increases may be necessary.”

The minutes released Wednesday signaled a tentative acknowledgement by some Fed officials that recent inflation data “might suggest that overall price pressures may no longer be worsening.” At the same time, those officials – the minutes don’t name individual Fed policymakers – stressed that it was “too early to be confident that inflation had peaked.”

Fed officials unanimously agreed that the “U.S. economy was very strong, the labor market was extremely tight, and inflation was very high and well above” the Fed’s target of 2%. Powell had expressed similar sentiments at his May 4 news conference.

Fed officials are betting that the economy’s broad strength will enable it to withstand sharply higher borrowing rates without leading to extended layoffs or a recession.

When Fed officials decided this month to raise their benchmark rate by a half-point to a range of 0.75% to 1%, it was their first increase of that size since 2000. The officials also announced that they would start to shrink their huge $9 trillion balance sheet, which has more than doubled since the pandemic.

The balance sheet swelled as the Fed bought about $4.5 trillion in Treasury and mortgage bonds after the pandemic recession struck to try to hold down longer-term rates. On June 1, the Fed plans to let those securities start to mature, without replacing them. That should also heighten the cost of long-term borrowing.

Powell has said the Fed is determined to raise rates high enough to restrain inflation, leading many economists to expect the sharpest pace of rate hikes in three decades this year. Powell says the central bank is aiming for a “soft landing,” in which higher interest rates cool borrowing and spending enough to slow the economy and inflation. But most economists are skeptical that the Fed can achieve such a narrow outcome without causing an economic downturn.

Stock prices have plunged on fears that the Fed’s rate hikes will send the economy into recession. The S&P 500 has fallen for seven straight weeks, the longest such stretch since the aftermath of the dot-com bubble in 2001. The stock index nearly fell into bear-market territory last week – defined as a 20% drop from its peak – but rallied Wednesday.

The minutes also showed that some policymakers decided it was appropriate to consider selling some of its holdings of mortgage-backed securities, rather than simply letting them mature. Sales would make it easier for the Fed to transition to a portfolio composed mainly of Treasurys, the minutes said.

The Fed has said that by September it would allow up to $30 billion of mortgage-backed securities to mature each month, along with $60 billion in Treasurys. Many analysts doubt that the cap will be reached for mortgage-backed bonds, because mortgage rates have jumped more than 2 percentage points since the start of the year. That means that fewer homeowners will refinance their mortgages because their current loan rates are lower than the rates now available in the mortgage market.

Fewer refinancings would force the Fed to sell mortgage-backed securities to maintain its plans to reduce its balance sheet.

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


Does Reality TV Skew Buyers’ Perceptions?

Reality home shows capture the real estate business’s glitz and glamour, but not so much the minutiae and stress. One agent calls them “horrible” for the industry.

NEW YORK – Reality TV shows try to capture the glitz and glamor of the real estate market and what it takes to work in the profession. But Bess Freedman, CEO of Brown Harris Stevens, called the rise of reality TV shows featuring real estate “horrible” for the industry and alarming because of the image it portrays of brokers.

Freedman took aim at shows like Netflix’s “Selling Sunset” and Bravo’s “Million Dollar Listing” for their portrayal of the real estate industry. The hit TV series document personal dramas involved in high-end real estate transactions.

“This is not who we are,” Freedman said in remarks at The Real Deal’s NYC Showcase + Forum last week. “We want to make sure that we maintain the integrity of our business.”

Freedman says some of the reality shows make it look like female agents show up in “gala gowns to open houses.”

Reality stars fired back at the comments. Ryan Serhant, who stars in “Million Dollar Listing New York,” said traditional real estate agents need to embrace the media and technology. “The old way of selling real estate has completely changed,” Serhant said on stage in response, as according to CNBC.

Serhant, founder of the Serhant brokerage in New York City, trains agents to produce videos, boost their social media followers and grow their personal brands. His brokerage netted more than $2 billion in sales in 2021.

Source: CNBC.com.

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


30-Year Mortgage Rate Drops to 5.1%

The average rate on a 30-year, fixed-rate loan fell for the second week in a row but still hovered just over 5%. One year ago, a 30-year FRM averaged 2.95%.

WASHINGTON (AP) – Average long-term U.S. mortgage rates fell this week for the second week in a row, though interest rates on the key 30-year home loan remain at decade-high levels.

Economic uncertainty and weakened homebuyer demand continue to loom over mortgage rates. Mortgage buyer Freddie Mac reported Thursday that the 30-year rate declined to 5.1% from 5.25% last week. By contrast, the average rate stood at 2.95% a year ago.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, dipped to 4.31% from 4.43% last week.

Earlier this month, the Federal Reserve intensified its fight against the worst inflation in 40 years by raising its benchmark interest rate by a half-percentage point and signaling more big rate hikes to come. The Fed’s move, its most aggressive since 2000, means higher costs for mortgages as well as credit cards, auto loans and other borrowing for individuals and businesses.

Higher borrowing rates appear to be slowing the housing market, a crucial sector of the economy. Last month, sales of both existing homes and new homes showed signs of faltering, worsened by sharply higher home prices and a shrunken supply of available properties. Homeownership has become an increasingly difficult aspiration, especially for first-time buyers. Besides staggering inflation, rising mortgage rates and soaring home prices, the supply of homes for sale continues to be scarce.

The government reported Thursday that the U.S. economy shrank in the first three months of the year even though consumers and businesses kept spending at a solid pace. Last quarter’s drop in the U.S. gross domestic product – the broadest gauge of economic output – likely does not signal the start of a recession.

Analysts say the economy has likely resumed growing in the current April-June quarter.

The U.S. remains stuck in the painful grip of high inflation, which has caused particularly severe hardships for lower-income households, many of them people of color. Though many U.S. workers have been receiving sizable pay raises, their wages in most cases haven’t kept pace with inflation. In April, consumer prices jumped 8.3% from a year earlier, just below the fastest such rise in four decades, set one month earlier.

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


NAR: April Pending Sales Down 3.9%

It marks “six consecutive months of declines and the slowest pace in nearly a decade,” says NAR’s chief economist. Year-to-year, pending sales were down 9.1%.

WASHINGTON – Pending home sales slipped in April, as contract activity decreased for the sixth consecutive month, according to the National Association of Realtors® (NAR).

Of the four U.S. regions in NAR’s study, only the Midwest region saw signings increase month-over-month as the other three m reported declines. Year-to-year, all four regions’ pending sales declined.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – slid 3.9% to 99.3 in April. Year-over-year, transactions fell 9.1%. An index of 100 is equal to the level of contract activity in 2001.

“Pending contracts are telling, as they better reflect the timelier impact from higher mortgage rates than do closings,” says Lawrence Yun, NAR’s chief economist. “The latest contract signings mark six consecutive months of declines and are at the slowest pace in nearly a decade.”

With mortgage rates rising, Yun forecasts existing-home sales to wane by 9% in 2022 and home price appreciation to moderate to 5% by year’s end.

“The escalating mortgage rates have bumped up the cost of purchasing a home by more than 25% from a year ago, while steeper home prices are adding another 15% to that figure.”

In some cases, the higher rates increase mortgage payments by as much as $500 per month. Yun says that the level of price hikes is already a burden, but it becomes even more problematic to families on a budget already contending with rapid inflation, including surging fuel and food costs.

“The vast majority of homeowners are enjoying huge wealth gains and are not under financial stress with their home as a result of having locked into historically low interest rates, or because they are not carrying a mortgage,” Yun says. “However – in this present market – potential homebuyers are challenged and thus may attempt to mitigate the rising cost of ownership by opting for a 5-year adjustable-rate mortgage or by widening their geographic search area to more affordable regions.”

Yun notes that more work-from-home opportunities have allowed would-be buyers to expand their home search.

It’s possible, however, that the market will soon start to improve for buyers, Yun says.

“If mortgage rates stabilize roughly at the current level of 5.3% and job gains continue, home sales could also stabilize in the coming months,” Yun says. “Home sales in 2022 are expected to be down about 9%, and if mortgage rates climb to 6%, then the sales activity could fall by 15%.

“Home prices in the meantime appear in no danger of any meaningful decline,” he continued. “There is an ongoing housing shortage, and properly listed homes are still selling swiftly – generally seeing a contract signed within a month.”

Regional breakdown: Month-over-month, the Northeast PHSI fell 16.20% to 74.8 in April, a 14.3% drop from a year ago. In the Midwest, the index rose 6.6% to 100.7 last month, down 2.8% from April 2021.

Pending home sales transactions in the South dipped 4.7% to an index of 119.0 in April, down 10.3% from April 2021; and the index in the West slipped 4.3% in April to 85.9, a 10.5% decrease year-to-year.

© 2022 Florida Realtors®


Hurricane Prediction: Up to 21 Named Storms

Of those 21 storms, 10 will be hurricanes, experts said, calling it “really a strange thing that we’ve had six consecutive seasons be so active.”

MIAMI – Federal forecasters expect yet another busy Atlantic hurricane season in 2022: As many as 10 hurricanes could form, meteorologists said Tuesday.

The season begins June 1 and runs through Nov. 30. An average season typically spawns seven hurricanes and peaks in August and September. If predictions hold true, it will be a record seventh consecutive year of above-normal activity.

“It’s really a strange thing that we’ve had six consecutive seasons be so active,” University of Miami hurricane researcher Brian McNoldy said.

The National Oceanic and Atmospheric Administration (NOAA) said 14 to 21 named storms will develop. These numbers include tropical storms, which contain wind speeds of 39 mph or higher. Storms become hurricanes when winds reach 74 mph.

Of the predicted hurricanes, three to six could be major hurricanes, packing wind speeds of 111 mph or higher.

The National Hurricane Center ran out of names for Atlantic storms in the past two years; there were a record-setting 30 named storms in 2020 and 21 last year. In the past five years there have been more Category 4 and 5 hurricane landfalls in the United States than in the previous 50 years combined.

The predicted active season is a result of several climate factors, including the ongoing La Niña, warmer-than-average sea surface temperatures in the Atlantic Ocean and Caribbean Sea, weaker tropical Atlantic trade winds and an enhanced west African monsoon.

El Niño, a natural warming of ocean water in the tropical Pacific Ocean, tends to suppress Atlantic hurricane activity. Its opposite, La Niña, a cooling of that same water, usually boosts the number of hurricanes in the Atlantic.

NOAA’s forecast follows others this spring that called for a more active hurricane season.

Last month, meteorologists at Colorado State University predicted 19 tropical storms will form, nine of which will become hurricanes.

Several other hurricane experts agree with NOAA that the Atlantic conditions are ripe for yet another active hurricane season.

“We’re seeing these storms happen more frequently. They’re lasting longer,” FEMA Director Deanne Criswell said in a New York City news conference.

Forecasters also released their prediction for the eastern Pacific basin, where 10 to 17 named storms are forecast. An average eastern Pacific hurricane season produces 15 named storms. Eastern Pacific storms primarily stay out to sea and seldom affect the U.S. mainland.

Contributing: The Associated Press


Condo Q&A: Can HOAs Ban Political Signs?

The short answer: Yes. The longer answer: The process to do so depends on governing docs, and it might not be as simple as it sounds.

BOCA RATON, Fla. – Question: With the midterms right around the corner, our HOA board of directors is considering banning political signs in the community. We had a lot of community fights two years ago that seemed to divide the community and the board wants to prevent that from happening again. Can the board ban political signs by adopting a rule or will we need to amend our governing documents? – K.D., Boca Raton

Answer: Yes, your homeowners association can ban political signs – but it may be more difficult than your board of directors is anticipating. Without reviewing your governing documents, I cannot state if an amendment will be necessary or if a rule can be adopted.

That being said, I would recommend an amendment be adopted if the board attempts to ban political signs, as an association’s restrictive covenants carry more legal authority and are more likely to withstand judicial scrutiny than a rule adopted by the board of directors.

Assuming the association moves forward amending the governing documents, the amendment will need to be adopted by the members of your association. The proposed amendment must pass by the required voting percentage of the association’s members as stated in the governing documents.

Section 720.306(1)(b), Florida Statutes, states that unless otherwise provided in the governing documents or required by law, any governing document of the association may be amended by the affirmative vote of two-thirds of the voting interests of the association. The members meeting to adopt the proposed amendment would need to be properly noticed as required, at least 14 days advanced notice, and the amendment must be mailed with the meeting notice and proxy. Assuming the proposed amendment is adopted by the members at the members’ meeting, the amendment will need to be recorded in the official records of the county before it can become enforceable.

There are several factors that should be considered by the board of directors when preparing the proposed amendment to ban political signs in the community.

First, the amendment needs to provide what type of signs are prohibited. Often, the governing documents will restrict the use of signs in the community but will be silent as to flags, banners, pendants, and stickers.

If the governing documents are silent as to these other items, then the sign restrictions do not include references to these other display items, the association may have issues when attempting to apply the sign restrictions to these alternative display items. It should be noted that Section 720.304(2), Florida Statutes, states that all owners are allowed to display one portable flag no larger than four and-a-half feet by six feet, removable United States flag or official flag of the State of Florida in a respectful manner, and one additional flag that represents the United States Army, Navy, Air Force, Marine Corps, or Coast Guard, or a POW-MIA, regardless of any covenants, restrictions, or rules of the association. Additionally, Section 720.304(6), Florida Statutes, provides that any parcel owner may display a sign of reasonable size provided by a security services company within ten feet of any entrance to the home.

Second, trying to specify the type of content that is restricted to “political” may be problematic. While some statements and symbols are closely associated with politics, other statements and symbols may not be as universally agreed upon as being political. Attempting to define what is political may be difficult and likely fall short of being able to capture every sign the association may ultimately want to prevent.

Additionally, even if the association states that it will be the sole arbitrator on what is considered political, this may be an issue under Section 720.303(1), Florida Statutes, which has generally been cited by courts to prevent uncodified standards from being applied due to their subjective nature.

Therefore, the best option would be to restrict all signs, regardless of content. While a potentially unpopular approach, this provides the strongest legal authority when it comes to enforcing the sign restriction as the association has made it clear to all residents that signs, other than those specifically enumerated as permissible under Florida law, are not permitted on the lots.

Alternatively, allowing political signs for a limited period of time prior to the election and requiring all political signs to be removed within a limited time frame after election day might be an easier alternative than attempting to ban political signs altogether.

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


Rising Home Prices Hurting Rental Returns

Attom study: Between 2021 and 2022, rental returns on a three-bedroom house declined in three out of four counties – largely because home prices rose 15%.

RVINE, Calif. – A new Attom Data Solutions report finds that profits on three-bedroom rentals decreased between 2021 and 2022 in 72% of the 212 counties analyzed.

Most declines were modest – less than one percentage point over the past year – but three-quarters of the counties where median home prices exceeded $250,000 saw declines in rental yields. The report also found returns decreasing in counties where median home prices are below $250,000, but returns remain above 8% on average in those counties.

The declines in returns come as home prices rise along with rents, which increases the amount landlords must pay for rental properties. Median prices for three-bedroom houses increased at least 15% between 2021 and 2022 in half of the counties analyzed, but only one-third of markets saw rents increase that much, according to the report.

The largest returns on single-family rentals were seen in lower-priced counties, which also recorded fewer declines in profits. The affordable counties with the highest yields on average were Atlantic County, New Jersey (12.2% yields); Wayne County, Michigan (10.7%); and Jefferson County, Texas (10.1%).

The smallest returns were found in counties where median home prices were at least $500,000, including Santa Clara County, California (3.1%); San Mateo County, California (3.2%); Williamson County, Tennessee (3.9%); and Kings County (Brooklyn), New York (4%).

Of the 212 counties in the study, 27% saw wages growing faster, including Cook County, Illinois; Orange County, California; Kings County, New York; and Miami-Dade County, Florida.

Large cities like New York and Miami have seen rents increase to historic highs as the cities have emerged from the pandemic, but those markets may still be in a recovery phase, according to analysts.

Source: Inman (05/23/22) Verde, Ben

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


Condo Issues Emerge During Special Session

The Florida Legislature put condo safety on this week’s agenda by adding inspections and new financial requirements into a bill by way of an amendment.

TALLAHASSEE, Fla. – Nearly a year after 98 people died in the collapse of the Champlain Towers South building in Surfside, Florida lawmakers rushed Tuesday to approve a proposal that would lead to new condominium inspection and financial requirements.

The House and Senate added the issue to a special legislative session that Gov. Ron DeSantis called to address problems in the property-insurance market. Lawmakers could not reach agreement during this year’s regular session on the condominium issue, despite pressure after the June collapse of the Surfside building.

The Senate tacked the condominium changes onto a property-insurance bill (SB 4-D), which it then passed in a 38-0 vote. The House is expected to give final approval Wednesday.

House Speaker Chris Sprowls, R-Palm Harbor, acknowledged “a lot of criticism” about lawmakers not passing a condominium bill during the regular session. But he said the new proposal is an improvement over what was considered earlier.

“Doing the right thing sometimes is hard and it’s complicated, but I do think that the bill that we have today is significantly better than the bill we could have agreed on a couple months ago,” Sprowls said.

The proposal, in part, would set up a system of required inspections for condominium buildings three stories or higher. Inspections would be required for buildings that have been occupied for 30 years – or 25 years if the buildings are within three miles of a coastline. After initial inspections, the buildings would have to go through the process every 10 years.

If engineers or architects see “any substantial structural deterioration” in initial inspections, the proposal would require additional inspections. Those inspections “may be as extensive or as limited as necessary to fully assess areas of structural distress in order to confirm that the building is structurally sound and safe for its intended use, and to recommend a program for fully assessing and repairing distressed and damaged portions of the building,” the proposal said.

Inspection reports would have to be provided to condominium associations and local building officials. Summaries of the reports would have to be distributed to condominium unit owners.

Also, under the proposal, county commissions “may” pass ordinances that would require condominium associations to move forward with repairs for structural deterioration.

A key issue during the regular legislative session involved condominium-association reserve funds to make repairs to buildings. The issue is difficult, at least in part, because it can require condominium residents to pay extra money to bolster reserves.

The new proposal would require what are described as “structural integrity reserve” studies that would help determine how much money would need to be set aside.

Sprowls said the issue has been crucial to the House.

“It was important to the House that if there’s a structural integrity issue for a building, that people do what’s necessary to defend the people who live there, to protect (them) by making sure they fix it, put the dollars aside to fix it,” he said.

Senate Community Affairs Chairwoman Jennifer Bradley, a Fleming Island Republican who has spearheaded the condominium issue in the Senate, pointed toward trying to strike a balance.

“As we have continued to work on this important issue, I believe we have found the right balance between requiring critical protections to ensure the structural integrity of condo buildings and allowing for the (association) boards to manage funds paid by homeowners,” Bradley said in a prepared statement.

Source: News Service of Florida


Judge Increases Surfside Collapse Money to $96M

A previous property settlement of $83 million – which doesn’t include a separate loss-of-life case – was increased to $96 million on Tuesday.

SURFSIDE, Fla. – Homeowners with condos in the Florida building that collapsed and killed 98 people nearly a year ago but whose families suffered no loss of life will share at least $96 million from a court settlement, a judge said Tuesday.

That is in addition to the payout of about $1 billion to be shared by families of the victims of the June 24 collapse of the Champlain Towers South building in Surfside. Additional fees for lawyers will be settled later.

The initial amount for property owners was previously set at $83 million, but Circuit Judge Michael Hanzman in Miami agreed at a hearing Tuesday that the higher amount was proper for 136 condo owners in the 12-story building.

“What I care about now is finishing this case and getting money into the hands of victims,” Hanzman said, noting that under Florida law, the condo owners could have been assessed a lot of money to pay for the loss of the building.

“This is an outstanding result for the property owners,” the judge said.

Meanwhile, lawmakers in Tallahassee introduced legislation Tuesday in response to the tragedy that would tighten building safety rules by requiring all condominiums higher than three stories statewide to have periodic inspections of their structural integrity. The issue was added to a special legislative session called to address rising property insurance rates.

Legislative leaders were in agreement over requiring inspections and recertification of the buildings after 30 years, or 25 years if the building is within 3 miles (5 kilometers) of the coast, and every 10 years thereafter.

When the Champlain Towers South collapsed last June, it was 40 years old and undergoing what was then a 40-year-recertification process required by Miami-Dade County.

The exact details of the lawsuit settlement over loss of life are to be done by Friday, followed by a hearing for any objections. A billionaire developer from Dubai is set to purchase the 1.8-acre (1-hectare) beachside site for $120 million.

An auction for the property initially was set for Tuesday, but no other parties countered the bid by Hussain Sajwani, of DAMAC Properties, before a deadline last Friday.

Attorney Harley Tropin, who represents plaintiffs in the case, said the final settlement for deaths in the condo building’s collapse has grown to more than $1 billion, an increase from the $997 million announced in court earlier.

The money comes from several sources, ranging from insurance companies to engineering companies to the luxury condominium next door that was part of the lawsuit. None of the parties are admitting wrongdoing. The details on who is paying exactly what into the settlements have yet to be determined.

The twin settlements are still in the works but Hanzman said the case should be settled by September, so that victim families and property owners know what to expect. This would still be an unusually quick settlement for a case of this magnitude, lawyers said.

“One of the benefits of a settlement is finality,” the judge said.

Most of the building collapsed suddenly around 1:20 a.m. last June 24 as most of its residents slept. Only three people survived the initial collapse.

No other survivors were found despite the around-the-clock efforts of rescuers who dug through a 40-foot (12-meter) pile of rubble for two weeks. Another three dozen people were in the portion of the building that remained standing, but was ultimately demolished.

The National Institute of Standards and Technology is investigating the cause of the collapse, a process that is expected to take years.

In the court case, Judge Hanzman set a noon Friday deadline for a final settlement agreement to be filed. If that does not happen, the judge said he would hold a full hearing on why a final deal has not been reached.

“At some point, this plane has to come in for a landing,” Hanzman said.

The collapse drew new scrutiny to high-rise safety statewide, especially in vulnerable coastal areas. At the time, Miami Dade and neighboring Broward counties were the only ones of Florida’s 67 counties with a building recertification process. The new legislation would broaden those certifications statewide, as well as require them significantly earlier in the building’s lifespan.

Earlier legislation proposing a statewide inspection and recertification regimen failed during the regular legislative session that ended in March.

The new measure would require condominium associations to provide inspection reports to owners, and if structural repairs are needed, work must begin within a year of the report.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. Anderson reported from St. Petersburg, Florida. Brendan Farrington reported from Tallahassee, Florida.


The Perfect Song for Your Open House?

A study found that music influences diners’ food choices in a restaurant, but what works for an open house? Consider local tastes and a home’s style when choosing.

NEW YORK – A 2015 study by Australian researchers found that the type of music playing can influence the meals people select from menus and even how much money they spend.

The findings suggest that playing music – the right kind, at least – during an open house can enhance an agent’s real estate sales rate.

But what kind of music? When choosing for an open house, agents should consider the house’s tone, the local real estate market, the demographics of targeted buyers, and who might attend. Agents say instrumental tunes often create a calming atmosphere, but they should also check playlists on platforms like Spotify to see what other agents have selected for past real estate open houses.

If a home has a surround-sound system, agents may ask permission to use it during the open house. Otherwise, they can hide speakers in each room throughout the home to create the desired effect. Some agents even play different tracks in different parts of the home, though they keep the volume low enough that the different tracks don’t compete with each other or prevent people from talking.

On the other hand, any type of mood music should be loud enough that people can easily hear it without straining.

RISMedia (05/23/22)

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


April New-Home Sales Drop Unexpected 16.6%

Pundits expected a slight drop in April new-home sales. NAHB’s chair calls the drop significant and cites the higher cost of new construction and rising interest rates.

WASHINGTON – New home sales posted a double-digit percentage decline in April, down 16.6%. It’s the weakest pace in two years, with the National Association of Home Builders (NAHB) citing rising mortgage rates and worsening affordability conditions for the drop.

Sales of newly built, single-family homes in April fell 16.6% to a 591,000 seasonally adjusted annual rate from a downwardly revised reading in March, according to data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

Year-to-year, new home sales are down 26.9%.

“The volume of signed sales contracts significantly declined in April as the cost of purchasing a home increased in 2022 as interest rates surged higher,” says Jerry Konter, chairman of the National Association of Home Builders (NAHB). “Higher construction costs fueled by rising material prices and supply-side constraints along with limited existing home inventory are pricing many potential homebuyers out of the market.”

NAHB cites another indicator of deteriorating affordability conditions, particularly for the entry-level market: A year ago, 25% of new home sales were priced below $300,000; in April that share fell to 10%.

“The April drop for new home sales is a clear recession warning,” says NAHB Chief Economist Robert Dietz. “The median price of a newly-built single-family home increased 19.7% year-over-year. While the nation needs additional housing, home sales are slackening as tightening monetary policy continues to put upward pressure on mortgage rates and supply chain disruptions raise construction costs.”

A new home sale occurs when a sales contract is signed or a deposit accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the April reading of 591,000 units is the number of homes that would sell if April’s pace continued for the next 12 months.

In an indication that builders will be slowing construction, new single-family home inventory jumped to a 9-months’ supply – up 40% over last year. NAHB says 444,000 new homes are available for sale, though only 38,000 of those are completed and ready to occupy.

The median sales price for a new home rose to $450,600 in April from $435,000 in March, up more than 19% compared to a year ago, primarily due to higher development costs, including materials, according to NAHB.

Regionally, on a year-to-date basis, new home sales fell in three regions, down 16.8% in the Midwest, 19.3% in the South and 0.6% in the West. New home sales rose 6.5% in the Northeast.

© 2022 Florida Realtors®


Hurricane Tax ‘Holiday’ Adds Pet Supplies

Fla.’s sales-tax “holiday” on hurricane supplies starts this Saturday, and for the first time it includes pet supplies, including some bags of pet food and cat litter.

TALLAHASSEE, Fla. – With a sales-tax “holiday” starting this weekend, Floridians can save a few dollars on pet supplies as they stockpile other needs for the upcoming hurricane season.

The state’s two-week disaster-preparedness tax holiday begins Saturday and, for the first time, shoppers can avoid paying sales taxes on numerous types of pet supplies. The holiday was part of a broad tax package (HB 7071) that lawmakers passed in March and Gov. Ron DeSantis signed on May 6.

At the request of a Girl Scout Troop 60601 in Palm Harbor, lawmakers agreed to lift sales taxes during the holiday on pet carriers that cost $100 or less; pet beds that cost $40 or less; bags of pet food that cost $30 or less; bags of cat litter that cost $25 or less; leashes, collars and muzzles that sell for $20 or less; packages of pet-waste disposable bags that cost $15 or less; and cans of pet food that cost $2 or less.

The troop proposed including pet supplies as part of work toward what is known as a “Silver Award.”

“By adding these items to the tax holiday, we will help citizens to be ready when an emergency happens,” one member of the troop told the House Ways & Means Committee in February. They will be able to take their pets to a local shelter and have the mandatory supplies for their pets to stay there.”

The overall tax holiday, which will last through June 10, is geared toward the June 1 start of hurricane season. It has become a regular tax break for Floridians, similar to a back-to-school tax holiday held around the start of the school year.

Pet supplies aren’t the only new items included in this year’s disaster-preparedness holiday. Lawmakers added smoke detectors, fire extinguishers and carbon-monoxide detectors that cost $70 or less amid calls for residents to safely use generators. Also, people can avoid paying sales taxes on generators that cost $1,000 or less.

“We have now had more deaths over the last several years from generator carbon-monoxide poisoning than we have from storm surge itself,” Florida Division of Emergency Management Director Kevin Guthrie said.

Guthrie added that the state has had “more indirect fatalities with disasters over the last several seasons than we have with direct fatalities. That’s obviously something that we want to make sure we tell people to be safe on, generator function and how to make sure that people are setting their generators up properly, which is not outside of a window, not inside of their closed garage”.

Florida Retail Federation President Scott Shalley encouraged people to take advantage of the discount period, as inflation is at a four-decade high and experts predict an active hurricane season.

“At a time when people are feeling the crunch of inflation, this is a really great opportunity to get out and prepare for hurricane season and save a little money while doing so,” Shalley said.

Other discounted items this year include tarpaulins, waterproof sheeting and tie-down kits that sell for $100 or less; coolers and portable power banks that sell for $60 or less; portable lights that cost $40 or less; reusable ice packs that cost $20 or less; and gas tanks, portable radios, two-way radios, weather-band radios and packs of AA-cell, AAA-cell, C-cell, D-cell, 6-volt, or 9-volt batteries that cost $50 or less.

Source: News Service of Florida


Economic Survey: Mild Recession, Much Disagreement

WASHINGTON – Despite a solid economy and booming job growth, the specter of recession is looming ever larger as a growing number of economists raise their odds for a downturn and the stock market takes a historic drubbing.

Here’s the good news: If there is a slump, top economists say, it probably will be relatively mild.

Think early 1990s and 2001 slides, not the job-killing collapses of 2007-09 and 2020 that were triggered by the housing crisis and COVID-19 pandemic.

“If it were to happen, it wouldn’t last long, it would not be severe, and we’ll be on the other side of it quickly,” says Mark Zandi, chief economist of Moody’s Analytics.

That’s largely because U.S. consumers and the economy are in good financial shape, with few signs of the kind of excesses that have triggered past downturns, Zandi says.

Factors dragging on the economy

Fueling the growing recession chatter is a confluence of shocks to the economy. Inflation is at a 40-year high of 8.3%, and the Federal Reserve is raising interest rates aggressively to fight it, both of which are burdening consumers with higher costs and starting to squeeze corporate earnings.

As a result, the Standard & Poor’s 500 index is down nearly 20% from its peak early this year, pushing it close to bear market territory on Friday.

Although the health crisis largely has eased and Americans are resuming activities like traveling and going to sporting events, it hasn’t gone away. COVID-19 cases have recently spiked from low levels.

Meanwhile, Russia’s war in Ukraine and China’s new COVID-19-sparked lockdowns pose new hurdles to unwinding the global supply chain bottlenecks that have kept inflation elevated.

What are the odds of a recession?

Here’s one plausible recession scenario: As prices and interest rates climb and the battered stock market makes investors feel less wealthy, consumers will pull back spending. Businesses will rein in investment and hiring while expanding layoffs. Economic activity will start to slow and job losses will mount.

Zandi puts the chances of a recession at 33% within the next 12 months and 50% within two years but believes the nation will probably sidestep it. More than half of economists and other experts surveyed by the National Association of Business Economics say the risk of a downturn within 12 months is greater than 25%, according to a report out Monday.

What would a recession mean?

Although both retail sales and job growth were robust in April, there are early signs of a slowdown, says Paul Christopher, head of global market strategy for Wells Fargo Investment Institute. Initial jobless claims – a gauge of layoffs – were historically low last week at 218,000 but marked a four-month high. Mortgage applications and existing home sales have been tumbling amid rising interest rates. And credit card spending has declined.

If there is slump, Zandi reckons it will start at the end of the year and last five or six months. Economic output, he says, probably would fall 2%, 3 million jobs would be lost, and the unemployment rate would rise from April’s 3.6% to about 5%.

That’s not a good thing. But during the Great Recession of 2007-09, gross domestic product fell 3.8%, 8.7 million jobs were wiped out and unemployment reached 10%, according to Labor Department figures and Wells Fargo. In the COVID-19 slump in 2020, GDP fell by more than 10%, 22 million jobs were erased and unemployment reached 14.7%.

Wells Fargo’s Christopher is more sanguine than Zandi. He estimates GDP will fall 1.3% in a recession he believes will begin late this year and unemployment will rise to 4.4%. That would equate to about 2 million jobs lost.

“There’s no reason to think the bottom is going to fall out of the economy,” Christopher says.

Thomas Goldsby, a professor of supply chain management at University of Tennessee, even thinks a mild downswing would have a silver lining by giving backed-up supply chains a chance to heal, relieving inflation pressures.

“A little slowdown might tamper the chaos a bit,” he says.

Here’s why economists think any recession probably would be contained:

Consumers still have lots of cash

Americans still have $2.6 trillion in excess savings from hunkering down during the pandemic, federal stimulus checks and other aid, Zandi says. Even if inflation and higher interest rates force people to adjust spending, they’re not going to close their wallets just as summer and a resumption of traveling and other activities beckon.

Solid household, firm balance sheets – Household debt payments amounted to 9.3% of disposable income personal income in the fourth quarter, a figure that has edged up recently but is down from 9.9% in late 2019 and 13.2% in 2007 before the Great Recession.

Corporate debt is at a record high, but in line with long-term trends relative to GDP, says RBC Wealth Management.

Few excesses in economy – Severe recessions are often triggered by dramatic imbalances, Zandi notes, such as the commercial real estate crisis in the early 1990s, the dot-com meltdown in 2000 and the housing crash of the 2000s. No such crises are evident. Housing and stock prices have been overvalued but are now falling, and they’re not bubbles waiting to burst, he says.

Strong labor market – Job openings and the number of people quitting jobs reached record highs in March, Labor Department figures show. That has kept wages rising sharply. Such trends probably will ease but won’t completely reverse, giving consumers the wherewithal to keep spending, Christopher says.

COVID-19, supply chain snags should ease – The effects of the Russia-Ukraine war and COVID-19 on supply chains and the economy should ease this year, Zandi says, helping slow inflation and counter the impact of rising interest rates.

What might happen in a recession?

Some economists disagree that any recession will be tempered. Deutsche Bank’s David Folkerts-Landau is predicting a severe downturn. The Fed, he says, can raise rates to tamp down demand but can’t fix the supply snarls that have been worsened by the war and China’s lockdowns. Plus, he says, the Fed was slow to hike rates to curtail rising prices and now needs to catch up.

As a result, he believes the central bank will boost its key interest rate to about 5% – not the 3% most economists are expecting – sparking a sharp pullback in consumer and business spending.

JPMorgan Chase’s Michael Feroli notes the Fed never has been adept at measured tweaks to the economy. “Whenever the vacancy rate goes down a little (because higher rates lead businesses to cut job openings), it goes down a lot” as corporate America’s mindset broadly shifts to increased caution, Feroli says. That would mean a notable rise in unemployment, he says.

Joseph LaVorgna, chief economist of the Americas for research firm Natixis, sees another path to a mild recession. As the stock market tumbles and borrowing costs rise, the Fed will reverse course this summer and pause in its plan to raise its key rate to about 2.75% by year-end.

“It will begin to really scare the Fed and they’ll do a 180,” says LaVorgna, who was a top economic adviser to President Donald Trump.

He predicts a slump, but no more than 100,000 to 200,000 job losses.

Copyright 2022, USATODAY.com, USA TODAY


New Yorkers and Californians Flock to Florida

Fla. rents are up because demand is up, and new residents boost demand. In 2020, 167 people moved in for every 100 who left. In 2021, the inbound number was 210.

MIAMI – In Florida’s top metros, rents have risen by 24% to 32% in a year. Usually, rents swing by about 1% or 2% per year.

New Yorkers and Californians are flocking to the Sunshine State, with Florida reporting the largest year-to-year increase in net migration among all U.S. states, according to a new data report from moveBuddha. The report used a combination of U.S. Census Bureau data and moveBuddha proprietary data, as well as Zillow’s Home Value Index and Florida Housing Data.

In 2020, 167 people moved into Florida for every 100 who left. In 2021, that number surged to 210 inbound residents for every 100 who left, meaning more than twice as many people moved into the state than left it.

In 2022, the surge is so far being led by Californians and New Yorkers – each state represented, respectively, 10% of inbound moves to Florida as of early 2022, or about 20% collectively. Following New York and California, individuals from Illinois (6.8%), New Jersey (5.9%) and Pennsylvania (5.4%) also make up a large percentage of new settlers, according to the report.

So, why are people moving to Florida?

While there is not one direct answer, the report provides several reasons why individuals may be choosing Florida over other states to settle down in.

As far as expenses, California, New York and Illinois are all in the top 10 for state income tax, while Florida boasts no state income tax at all, as well as lower property taxes. This week, state legislators meet for a Special Session on property insurance in hopes of clearing policy to stabilize Florida’s skyrocketing property insurance market, another effort to decrease costs for residents.

It’s also no surprise the Sunshine State has become a hub for retirees to spend their golden years – Florida has the second-largest percentage of 65+ residents out of all the states, second only to Maine. And, families of Florida seniors also can benefit from their residency after Gov. Ron DeSantis signed into law a policy that waives out-of-state tuition at some universities for grandchildren of Floridians.

Florida also is booming in the tech industry, attracting more tech companies than any other state in 2021 – 2,715 new businesses totaling 10,522 jobs.

And then of course, there’s the pandemic.

The COVID-19 pandemic led to an influx in remote working conditions, leading some to move based on destination rather than work location.

On the more political side, some newcomers to the state may find appeal in the lack of COVID-19 restrictions. DeSantis has been a vocal critic of strict mitigation measures, staunchly opposing mask and vaccine mandates throughout the COVID-19 pandemic. COVID-19 struck Florida in March 2020 as lawmakers were wrapping the final weeks of that year’s Legislative Session.

However, his response to the pandemic has been criticized by others, who saw the Governor’s position as too lax during the pandemic’s peak. More than 74,000 individuals have died from COVID-19 in Florida.

Outside of money and politics, there is of course the reason the peninsula earned its nickname “The Sunshine State” – the coastal climate of Florida, while hot in the summer, cannot be beat. The tropical weather, year-round sunshine and mild winters make the state a haven for those used to harsh snows up North. It’s also the reason many Floridians taunt: “We live where you vacation.”

Impact of newcomers

The influx of out-of-state newcomers is prompting some major shifts.

Perhaps one of the most noticeable impacts the growth has caused on Floridians is the rising cost of rent. The top five Florida cities with the highest percent-increase in Zillow Home Value Index (ZHVI) from 2020-22 also show large population growth in the past decade. The top five cities each have ZHVI increases above 50% over the past two years.

For example, Cape Coral, which reported the highest ZHVI increase from 2020 to 2022 at 63%, saw its population increase by 30% between 2010 and 2020.

Rent increases have only garnered more momentum over the last year. An analysis by Florida real estate academics cited in an NBC report found in Florida’s four top metro-markets – Tampa Bay, Fort Myers, Miami and Orlando – rents have risen by 24% to 32% in a year. Usually, rents swing by about 1% or 2% per year.

The increases are hitting South Florida especially hard. When averaged among the state’s largest metros, housing values have increased about 70% from 2010 to 2020, followed by a rise of another 39% in the last two years alone, according to moveBuddha.

Where are people moving?

In the last decade, nearly 3 million new people moved to the state of Florida.

In 2022, the city of Ocala saw the highest inbound over outbound ratio – for every 596 people to move to Florida’s horse capital, only 100 left. As far as 2022 in-to-out ratios, Ocala was followed by Sarasota (311 to 100), St. Augustine (250 to 100) and Tampa (242 to 100).

Tampa was also among the top three metro areas that saw the most new residents from 2010 to 2020, along with Orlando and Miami.

So, while it doesn’t look like the mass migration to Florida is slowing down anytime soon, the affordability of the state – a critical part of its appeal – is teetering. Affordable housing and property insurance are measures legislators will have to address in the coming years, as the state continues to turn visitors into residents each day.

© Copyright 2022, Highlands News-Sun, All Rights Reserved


2 of 3 Fla. Homes on Market Less than 30 Days

Florida Realtors economist: In 1Q 2022, half of new Fla. listings went under contract in 12 days – but look beyond that one statistic to see the shift in market speed.

ORLANDO, Fla –Florida Realtors market metrics – such as closed sales, median sale price and active inventory – summarize what’s happening in your market. But sometimes, one number can’t present the entire story.

In the first quarter (1Q) of 2022, the median time to contract for all property types in Florida was down to just 12 days. The median is the “middle,” so this means half of the homes sold in 12 days or less. This compares to 24 days one year ago, in 1Q 2021.

You can find out if homes in your local area are moving off of the market faster than the state by reviewing the median time to contract on SunStats, an interactive market tool – a free service as part of Florida Realtors membership.

The median provides a great starting point, but we can slice this data to reveal additional insights into the speed between listing and contract.

A cumulative frequency graph shows the percentage of properties selling under a certain number of days. For instance, if 2% of homes sell on the day they’re listed (0 days), and 3% sell the next day, a total of 5% (or 1 in 20 homes) sold in one day or less.

At 50%, a cumulative frequency chart tells us the same thing as the median time to contract.

The bulge in the lines has shifted toward fewer days for a higher percentage of homes. How quickly are homes selling?

In Florida across all property types, 68% (2 in 3 homes) sold in under 30 days in the first quarter of 2022. One year earlier, in 1Q 2021, about 54% of homes sold in 30 days or less, while only 41% sold at that pace in 1Q 2020. We can zoom in to look at these details.

Recall that 41% of homes sold in 30 days just two years ago; now, in 1Q 2022, 41% of homes sold in a week or less!

You’ve likely experienced this market frenzy since the pandemic uncertainty eased. A home today serves more functions than it did in the past, so buyers who find one that suits their needs swoop it up quickly.

As interest rates rise, demand levels may moderate and push the curve back, however. We’ll follow up with any notable changes in the data as the year progresses.

Erica Plemmons is an economist and Director of Housing Statistics

© 2022 Florida Realtors®