If renters paid their landlord on time for a year, they can share that info with Freddie Mac to improve their chance for mortgage approval or a lower interest rate.

MCLEAN, Va. – Freddie Mac will consider on-time rent payments as part of their loan-purchase decisions starting on July 10, 2022.

After that date, mortgage lenders that plan to sell loans to Freddie Mac can add an applicant’s rent-payment history automatically through Freddie Mac Loan Product Advisor (LPA), the company’s automated underwriting system.

“This extremely important initiative will help many renters move closer to achieving the dream of homeownership,” says Michael DeVito, CEO of Freddie Mac. “Millions of American adults lack a credit score or have limited credit history. By factoring in a borrower’s responsible rent payment history … we can help make home possible for more qualified renters, particularly in underserved communities.”

Lenders won’t automatically see whether a borrower has paid their rent on time. To gain this advantage, borrowers must give their lender permission to submit bank account data that verifies  on-time rent payments for 12 months.

Designated third-party service providers who already verify assets, such as income and employment information, will use that same automated process to verify the rent payments. Eligible rent payment data includes check, electronic transactions or digital payments made through Zelle, Venmo or PayPal.

“One of the first steps to purchasing a home is a positive credit history, and Freddie Mac is committed to helping consumers achieve that goal,” says Freddie Mac President Mike Hutchins. “Factoring on-time rent payments into our automated underwriting system will help create even more opportunity for families across the nation.”

Last year, Freddie Mac announced an initiative to help renters build credit by encouraging operators of its multifamily properties to report on-time rental payments to the three major credit-reporting bureaus. Since then, it says 70,000 households in more than 816 multifamily properties have been enrolled, more than 15,000 new credit scores have been established, and 67% of renters with an existing credit score saw their scores increase.

© 2022 Florida Realtors®

Every buyer in every real estate cycle faces challenges. Buyers who can keep things in perspective still qualify for mortgages and sign contracts for homes.

NEW YORK – The housing market has been crazy for the past several years, and the recent spike in interest rates has only exacerbated the situation for clients who are looking to buy – and thinking about borrowing to do so.

Here are some ways they can stay in the game and not let the pursuit of their American Dream turn into a nightmare.

Plunge ahead

It’s understandable if concerned clients look at the high housing prices, rising rates and low housing supply and decide to hold off on buying a new home for a while, or for forever. But there is no guarantee that any of those variables are going to become more buyer-friendly any time soon. And in the meantime, clients are spending time in a house, neighborhood or city other than where they would rather be – or worse yet, spending money on rent that they’ll never get back.

The obvious initial solution is for clients to look for a home that is smaller than they originally intended, or perhaps located in a neighborhood in which demand is not so high. They could also buy a home that needs significant updating or remodeling, and endure those conditions until they can afford to make the improvements.

What about the rates?

Clients may also balk at buying a house when they learn that rates on the 30-year mortgage have jumped from 3% last year up to over 5% now. That’s certainly a negative development, but it’s not as dire as would-be borrowers would believe.

Let’s say your clients were planning on purchasing a $500,000 home a year ago, had $100,000 for their down payment, and were going to finance the remaining $400,000 on a 30-year mortgage at 3%. Their monthly payment would have been about $1,686. With the same figures but the rate now at 5%, that new monthly payment would be about $2,147, an increase of about $461 per month – an unfortunate extra cost, but hopefully not enough to make the home purchase beyond your clients’ reach.

But even if that’s an insurmountable figure for your clients’ current situation, they shouldn’t give up just yet.

Pivoting with reality

If the clients’ maximum monthly payment is the aforementioned $1,686, with a 5% 30-year mortgage they could still afford to purchase a $400,000 home with the $100,000 down payment. Or they could purchase the same $500,000 home, and (if they have the funds) put $200,000 down to keep the mortgage payment at $1,686.

They could also consider a mortgage with a shorter term, which would involve a lower interest rate (the 15-year mortgage rate is currently around 100 basis points lower than the interest rate of a comparable 30-year mortgage). However, even with a lower rate of the 15-year loan, the payments would be considerably higher: $400,000 borrowed at 4% on a 15-year loan has a monthly payment of about $3,163 – about a $1,000 more per month than the payment for a 5% 30-year mortgage.

Finally, they could talk with the lender about getting an adjustable-rate mortgage (ARM). The current rate for a 5/1 ARM (fixed for the first five years, then potentially adjustable annually afterwards) is currently slightly less than 4%.

But adjustable-rate mortgages can be harder to obtain than traditional fixed-rate loans. And after five years, the interest rate may actually rise. Therefore, an ARM is best for homeowners who think/hope they will be able to refinance with a lower fixed-rate mortgage some time in the next few years, or are only going to be staying in the home for the next five years or so.

Points: An end-around strategy

There is a potential solution for those clients who are likely to stay in their prospective home for the foreseeable future but can’t afford (or stomach) the higher payments of the new 30-year rate or a 15-year mortgage and don’t want to take the interest rate risk of an ARM.

First, they should talk with their lender to see how much it would cost in initial “points” (an upfront fee paid by the borrower) to reduce the interest rate on the new 30-year mortgage so that the clients can afford the monthly payment.

According to Bankrate.com, depending on the lender, the points usually cost about 1% of the total mortgage amount for each 0.25% by which the rate is lowered. Therefore (in theory) on a $400,000 mortgage, the clients could pay $32,000 to reduce their interest rate from 5% down to 3%. They would have to stay in that house for a little less than six years before the lower monthly payment on the 3% mortgage would make up for the $32,000 worth of points paid initially.

Private mortgage insurance (PMI)

That extra cost of the points could eat into their potential down payment, which may eliminate the buyers’ ability to make a down payment of at least 20% of the purchase price (therefore requiring the homebuyers to obtain “private mortgage insurance”).

The cost of PMI depends on several factors, including the size of the down payment and the borrowers credit history. But somewhere in the range of an annual cost of 0.5% of the original mortgage amount is a reasonable place to start for our hypothetical client buyers. That means that these borrowers would have to pay an additional $166 per month in PMI on their $400,000 mortgage.

And that PMI cost is not likely to last forever – it could be cancelled as soon as the homeowners’ equity exceeds 20% of the home’s value, whether that’s due to an increase in price, or paying down the mortgage, or both. Under the Homeowners Protection Act of 1998, the lender is generally required to cancel PMI once the borrower’s equity in the home reaches 22% of the original purchase price. In the meantime, the clients will still be able to (hopefully) enjoy the home of their dreams, and a low mortgage rate that they may never be seen again.

© 2022 Penton Media. Kevin McKinley is principal/owner of McKinley Money LLC, an independent registered investment advisor. He is also the author of Make Your Kid a Millionaire (Simon & Schuster).

Stock market and inflation fears hurt the economy, but increased economic pain can often lower mortgage rates if investors flock to mid-term bonds.

WASHINGTON (AP) – Average long-term U.S. mortgage rates eased back this week after shooting up nearly three-quarters of a point in recent weeks. Mortgage buyer Freddie Mac reported Thursday that the 30-year rate fell to 5.70% this week from 5.81% last week. One year ago, however, the average 30-year rate was 2.98%.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, fell to 4.83% from 4.92% last week. A year ago, the rate was 2.26%.

The Federal Reserve raised its benchmark rate this month by three-quarters of a point, the biggest single hike since 1994.

The Fed’s unusually large rate hike came after government data showed U.S. inflation rose in May to a four-decade high of 8.6%. The Fed’s benchmark short-term rate, which affects many consumer and business loans, will now be pegged to a range of 1.5% to 1.75% – and Fed policymakers forecast a doubling of that range by year’s end.

Higher borrowing rates have pumped the brakes on the housing market, one of the most important sectors of the economy. Sales of previously occupied U.S. homes slowed for the fourth consecutive month in May as climbing mortgage rates and record high prices discouraged house hunters. Existing home sales fell 3.4% last month from April, the National Association of Realtors® (NAR) reported earlier in June.

Home prices kept climbing in May, even as sales slowed. The national median home price jumped 14.8% in May from a year earlier to $407,600 – an all-time high according to NAR data going back to 1999.

The brisk jump in rates and sharp increase in home prices have forced potential homebuyers to the sidelines. Mortgage applications have declined 20% from last year and refinancings are down 80%, according to the Mortgage Bankers Association.

Those figures aren’t likely to improve with more Fed rate increases a near certainty.

Layoffs in the housing sector have already begun. Just this month, the online real estate broker Redfin said it was laying off 8% of its workers and Compass said it was letting go of 450 employees. The nation’s largest bank by assets, JPMorgan Chase, is laying off hundreds from its mortgage unit and has reassigned hundreds of others to jobs elsewhere in the firm. A bank spokesperson cited “cyclical changes in the mortgage market” as the impetus for the cuts.

Higher rates are hitting retailers that thrived during the low mortgage era. Luxury furniture store chain RH, formerly known as Restoration Hardware, cut its sales expectations, blaming rising mortgage rates and worsening macro-economic conditions.

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

A study by FAU and two other universities compared current rents with “historical trends.” It found Miami No. 1 in U.S., with rents 22.7% higher than historically expected.

BOCA RATON, Fla. – High rent increases remain the norm across Florida and beyond, and the Federal Reserve’s recent interest rate hike is unlikely to improve the landscape for cash-strapped renters, according to researchers at Florida Atlantic University (FAU) and two other schools.

The Waller Weeks & Johnson Rental Index, a collaboration started this year by FAU, The University of Alabama and Florida Gulf Coast University, finds that renters pay significantly more than expected based on historical trends in individual markets.

Metro Miami was the nation’s most overvalued rental market in May for the third consecutive month, according to the index. In Miami, renters were paying a premium of 22.70%.

Florida markets in the top 10

• No. 1 Miami (22.70%)
• No. 2 Fort Myers (20.41%)
• No. 4 Bradenton/Sarasota (17.86%)
• No. 5 Tampa (17.52%)
• No. 7 Port St. Lucie (15.89%)
• No. 9 Lakeland (15.36%)

Markets outside Florida in the top 20

• No. 6 Knoxville, Tennessee (16.92%)
• No. 10 Bakersfield, California (15.33%)
• No. 16 Phoenix (13.76%)
• No. 19 Las Vegas (13.20%)
• No. 20 Austin, Texas (13.02%)

May’s average monthly rental rate in the U.S. was $1,979 – 9.85% higher than what researchers estimate renters would be paying based on past market trends.

Fort Myers had the nation’s largest year-over-year rent increase in May at 33.10%, followed by Miami at 31.04%. The U.S. average was 15.87%. Rents traditionally rise by only 2 or 3% a year. The full rankings of 107 metros can be found here.

“Florida’s rising rents only serve to exacerbate the ongoing housing crisis in the state,” says Ken H. Johnson, Ph.D., an economist in FAU’s College of Business. “The Fed’s interest rate increase will price more people out of the housing market and keep them as renters – and as long as the demand for renting remains high, rental rates almost certainly will stay elevated as well.”

The researchers use past leasing data from Zillow’s Observed Rental Index to statistically model historical trends from 2014 and determine where rents should be now. They then compare those to existing rents. The difference between the two is the premium renters are paying. The higher the premium, the more “overvalued” a market is. The analysis covers the entire rental stock of homes and apartments.

Bennie Waller, Ph.D., an incoming faculty member at UA’s Culverhouse College of Business, says year-over-year rent increases in Florida and across the country clearly are being driven by persistent inventory shortages in multifamily housing.

“Until we can build units faster, the nation’s rental crisis will continue,” he said.

But building faster is difficult, says Shelton Weeks, Ph.D., of FGCU’s Lucas Institute for Real Estate Development & Finance.

“In addition to the lengthy approval process faced by apartment development projects, a primary culprit here is the resistance within many communities to new projects with higher levels of density,” he says. “In order for markets to function properly and add supply where needed, it is critical for municipalities to streamline the approval process for these projects and for density to be increased to a point where the new units can be offered at reasonable rental rates.”

The researchers say rent relief is possible, but it won’t be immediate.

The latest figures suggest that the vast majority of the 107 markets is on pace for much smaller annual increases in the coming months, though the timing is uncertain.

Meanwhile, a large pool of seasonal homes being managed as short-term vacation rentals is likely to become traditional rentals because owners want to cash in on the strong market. In addition, many temporary Florida transplants who were working remotely may soon return home as more offices in other parts of the nation reopen.

“These two elements could come together to produce a better balance between supply and demand of rental units and give burdened renters a break,” Johnson says. “But until then, renters may have to cut back on discretionary spending to make ends meet.”

© 2022 Florida Realtors®

The Fed’s interest rate hikes will cause the “pendulum to swing back down” some places, but no crash if vacancies stay low and underwriting standards remain high.

NEW YORK – Moody’s Analytics Chief Economist Mark Zandi predicts that the latest Federal Reserve interest rate hike will cause a housing correction across the United States – but there won’t be a housing crash.

He suggests that the Southeast and Mountain West are the most overvalued housing markets, and the pendulum will swing back down. Cities and states due for a correction include Phoenix and Tucson in Arizona, the Carolinas, northeast Florida, and above all, Boise – “the most overvalued market in the country,” according to Moody’s analysis.

While a reduction in housing prices is likely, however, renters won’t see any immediate relief because homebuyers have few options even if values fall.

Zandi says the market likely won’t crash but the fundamentals remain strong: Vacancy rates are at an all-time low, mortgage underwriting quality is high, and most loans are “plain vanilla” 30-year or 15-year fixed-rate products. There’s no sign of subprime or negative amortization activity that precipitated the foreclosure crisis during the Great Recession.

“I just don’t see the kind of mortgage defaults and distressed sales that would be necessary for big declines in housing values,” Zandi says. “That’s when you get crashes, when you have lots of foreclosures and a lot of distressed sales. That’s just not going to happen.”

Source: Bloomberg CityLab (06/23/22) Capps, Kriston

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

Home prices took a dive during the Great Recession and some homeowners think that will happen again, so they’re selling now and waiting for bargains to arrive.

NEW YORK – Under the “buy low, sell high” theory of investing, some homeowners think the current housing market will collapse the way it did during the Great Recession, so they’re selling now and renting temporarily as they await plummeting prices.

However, real estate market conditions are very different now, and while prices in some markets could fall a bit, a major price drop isn’t likely unless it stems from some unforeseen event.

“What you’re risking is essentially investing in a rental for a period of time until the market does what you hope it will,” says Jonathan J. Miller, president of Miller Samuel Real Estate Appraisers and Consultants. “That seems fraught with problems.”

However, if home prices do drop and real estate sees the return of a buyer’s market, these sellers could stretch their money further than they can today.

Source: New York Times (06/24/22) Kaysen, Ronda

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

Miya’s Law creates new rules, some of which impact landlords. Highest profile one is that a maintenance and repair “reasonable notice” rises from 12 to 24 hours.

TALLAHASSEE, Fla. – Gov. Ron DeSantis signed Senate Bill (SB 898) this week, also called “Miya’s Law” for Miya Marcano, a young Orlando student killed in her apartment by a maintenance worker who entered using an apartment key fob.

The law strengthens residential tenant safety measures, some of which may impact Florida landlords and property managers. The highest profile change that could affect day-to-day operations refers to the “reasonable notice” requirement to enter a unit to perform maintenance or make repairs. The reasonable notice is now 24 hours; before Miya’s Law, it was 12 hours.

Florida Realtors® is updating all contracts and forms that include a mandatory “reasonable notice” timeline that goes into effect July 1, 2022. However, existing rental contracts that may contain the 12-hour notice must also follow the new 24-hour notice changed through Miya’s Law.

“By signing this legislation, we’re making it safer to live in a rental unit and giving renters more peace of mind in their homes,” DeSantis said in a release. “Miya’s death was a tragedy, and our prayers continue to be with the Marcano family. I am proud to act on their behalf to help prevent a tragedy like that from happening to another Florida tenant.”

In addition to the “reasonable notice” change, SB 898 prohibits operators of public lodging establishments from offering hourly rates for an accommodation. SB 898 also directs applicable apartment landlords to perform a background screening check on all employees as a condition of employment, and disqualify certain applicants from employment if they’re found guilty of certain offenses that involve violence and/or a disregard for safety.

Apartments subject to the new law must also now maintain a log accounting for the issuance and return of all keys, and they must create policies for keys’ issuance, return and storage. The apartment key log and background screenings must be made available to the Florida Department of Business and Professional Regulation (DBPR) during its annual inspection of apartments.

© 2022 Florida Realtors®

A number of real-estate-related bills passed in the 2022 Florida Legislature and were signed by Gov. Ron DeSantis, including the Hometown Heroes program.

TALLAHASSEE, Fla. – From the environment to mortgage aid, septic tanks to licensing, a roster of new Florida laws passed by the 2022 Florida Legislature and signed by Gov. Ron DeSantis go into effect Friday. They include:

Hometown Heroes – The 2022-2023 fiscal year budget (HB 5001) include $100 million to fund the Hometown Hero Housing Program backed strongly by Florida Realtors®. The revolving loan program provides some upfront homeownership costs to help qualified firefighters, law enforcement officers, teachers, nurses and other hometown hero professions become homeowners. It provides zero-interest loans to help with down payment and closing costs. The loan is repaid once the home is sold, rented or refinanced, creating a continuous cycle of homeownership for some of Florida’s essential workers.

Home hardening and other tax breaks for Floridians – HB 7071 includes the “home hardening” initiative, a 2022 Florida Realtors’ legislative priority that provides sales tax relief to homeowners who harden their homes from storms. The bill also includes an abatement of all property taxes for owners of the condos that collapsed in Surfside, pro-rated refunds of property taxes on residential properties rendered uninhabitable by a catastrophic event for at least 30 days, a sales tax reduction on new mobile homes and several sales tax holidays

Flooding and sea level rise resilience – HB 7053 establishes the Statewide Office of Resilience within the Governor’s Office, with the governor appointing the Chief Resiliency Officer. It sets a minimum of $100 million in funding to be identified annually in a comprehensive and ranked list of resilience projects.

Private property rights – SB 518 helps property owners who wish to prune, trim and remove trees that present a danger to their property by strengthening a 2019 law passed that prohibits local governments from requiring permits for the removal of “dangerous” trees on residential property.

Water quality – HB 965 creates a public/private partnership-oriented approach to improving water quality by authorizing the creation of water quality enhancement areas – natural systems constructed, operated, managed and maintained to provide offsite regional treatment through enhancement credits.

Preventing unlicensed real estate activity – The Legislature allocated up to $500,000 in the 2022-2023 fiscal year budget (HB 5001) to combat unlicensed real estate activity.

Everglades –The 2022-2023 fiscal year budget (HB 5001) that goes into effect July 1 includes money for Everglades Restoration ($425 million), Lake Okeechobee Watershed Restoration ($450 million), springs restoration ($75 million), beaches ($50 million), Biscayne Bay ($20 million), the Wastewater Grant Program ($125 million) and the Resilient Florida Grant Program ($470 million).

Septic system inspections – SB 856 makes private inspections an option for onsite sewage treatment and disposal systems, also known as septic systems. Cities and counties have dealt with a backlog of septic inspections for years, partially because of the number of inspectors and workload. This bill allows an authorized contractor to hire a private provider to inspect the system in addition to the inspections performed by public inspectors.

Landfills – HB 1419 creates a Municipal Solid Waste-to-Energy program to address the amount of municipal solid waste created in Florida, particularly in highly populated areas that don’t have the space or ability to permit new landfills.

© 2022 Florida Realtors®

The cost of lumber is falling and new-home demand softening thanks to current housing prices and rising interest rates. Could a supply-demand balance be here soon?

CHICAGO – The National Association of Home Builders (NAHB) speculates that price increases in construction materials will cool down as housing demand slows amid climbing interest rates.

It cites the “mercurial fall” in framing lumber prices as a possible sign, although NAHB chief economist Robert Dietz says broader and more significant price drops for building materials cannot wholly rely on rising interest rates.

“While the [U.S. Federal Reserve] can cool the demand-side of the economy [reducing inflation and growth], additional output on the supply-side is required in order to tame the growth in costs that we see in housing and other sectors of the economy,” he says.

However, indicators don’t signal a price drop in the cost of other residential materials. Procopio Companies CEO Michael Procopio expects continued long-term appreciation, with drywall, steel, concrete and trusses still on the rise.

“It’s likely that with the current housing shortage, continued demand for materials, inflation and supply-chain issues, we will not see a substantial decrease in pricing, if any, in the coming weeks and months,” Procopio says.

Meanwhile, BrightView Landscape Development President Tom Donnelly says sitework-related inputs like asphalt and concrete prices aren’t softening, with a minimum 8% to 10% year-over-year increase in PVC pipe and related components pricing anticipated.

Northwind Group founder Ran Eliasaf says price falls in lumber and certain other materials are offset by record hikes for cement and concrete product manufacturing, steel and aluminum.

“Ultimately, the best way to mitigate the effects of rising material prices long term is to put an increased emphasis on domestic manufacturing and production,” he concludes.

Source: GlobeSt.com (06/28/22) Bergeron, Paul

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

Many Fla. residents may celebrate July 4th away from home. Florida Realtors: Share home safety tips with owners like setting timers on lights in some rooms.

ORLANDO, Fla. – Have big plans for July 4th? Despite still-high gas prices, many families across Florida and the nation will spend the Fourth of July holiday away from home, traveling to see relatives and a fireworks display, or maybe basking in the sunshine on the state’s beautiful beaches.

To fully enjoy those activities and other summertime pursuits spent away from home, Florida Realtors®  recommends that homeowners take precautions to protect their residences when they’re not around. Crime rates across the country often start to peak as temperatures rise during the warm weather months – the same time that many families leave their homes unoccupied and unprotected.

Homeowners can take these simple precautions to make their homes less of a target for criminals:

No “Home Alone”: Before leaving your home during the day, make it look as if someone is still at home by using timers on lights in various rooms. Even though daylight hours are longer during the summer, it may still get dark faster than you expect or you may return home later than anticipated, and taking this step ensures that your home appears occupied at all times.

No sharing on social media: Sharing your vacation plans on social media sites isn’t wise. That’s the same as announcing to the world you’ll be gone and the house will be empty – a perfect target for burglars or vandals. The same goes for phone messages.

No open-door policy: Ensure that all doors leading to the home and garage are locked, even when leaving for short periods of time. The typical burglary takes less than five minutes and unlocked doors, combined with an empty home, put out the “welcome mat” for crime. Make sure windows are locked, too.

Someone to watch over me: Be landscape smart. Shrubbery and other plants can grow very rapidly during the warm, wet summer months. Keep them trimmed so neighbors can easily see your home. Also, a burglar could see an unkempt yard as a sign of an empty home.

A key reminder: When leaving home, take your house keys along or leave a spare set with a trusted neighbor. Never leave a key under a welcome mat, in a mailbox or other hiding spots – most burglars know where to look.

Crime doesn’t take a vacation: If you’re planning to be away from home for more than a day or two, ask a neighbor pick up your mail and newspapers – or arrange to cancel the paper and hold the mail. Disable your garage door opener and manually lock it from the inside, and don’t forget to check that the door leading from the garage to the home is locked, too.

© 2022 Florida Realtors®

The short-term rental company says parties at its properties dropped 44% in one year, so a ban works – but it also suspended 6,600-plus guests who broke the rules.

SAN FRANCISCO (AP) – Airbnb is making permanent its ban on parties at homes listed on the site for short-term rentals.

The San Francisco company believes the ban has worked, saying Tuesday that reports of parties at listed properties have dropped 44% from a year ago.

More than 6,600 guests were suspended last year for related violations, Airbnb said.

Airbnb began to crack down on parties in 2019 after a fatal shooting at a house in California. At that time, the company prohibited advertising parties at Airbnb locations on social media.

The number of parties at Airbnb locations increased during the pandemic, Airbnb said, as people moved gatherings from bars and clubs to rented homes. That led to a temporary ban in 2020.

While making the ban permanent, Airbnb said it will lift a limit of 16 people at rented properties. It said the cap was prompted by health concerns before vaccines against COVID-19 were available.

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

Prices remained up 20% year-to-year in April, but the monthly rate of increase appears to be slowing as the Fed’s interest rate hikes seem to be having an impact.

NEW YORK – A leading measure of U.S. home prices, the S&P CoreLogic Case-Shiller Indices (S&P DJI), found that home prices continued to rise in April at an unsustainable rate.

The Index, which covers all nine U.S. census divisions, reported a 20.4% annual gain in April. However, that’s slightly less than the 20.6% recorded one month earlier.

Tampa, Miami, and Phoenix reported the highest year-over-year gains among the 20 cities in April. Tampa led the way with a 35.8% year-over-year price increase, followed by Miami with a 33.3% increase, and Phoenix with a 31.3% increase. Nine of the 20 cities reported higher price increases in the year ending April 2022 versus the year ending March 2022.

The 10-City Composite annual increase came in at 19.7%, up from 19.5% in the previous month. The 20-City Composite posted a 21.2% year-over-year gain, up from 21.1% in the previous month.

“April 2022 showed initial (although inconsistent) signs of a deceleration in the growth rate of U.S. home prices,” says Craig J. Lazzara, managing director at S&P DJI.

“We continue to observe very broad strength in the housing market, as all 20 cities notched double-digit price increases for the 12 months ended in April,” Lazzara adds. In contrast with the past five months, when prices in most cities accelerated, in April only nine cities saw prices rise faster than they had done in March.

Lazzara says the price rises have a regional pattern “as all five cities in our South composite (Atlanta, Charlotte, Dallas, Miami, and Tampa) are represented there.”

Tampa (up 35.8%) was the fastest growing city for the second consecutive month, with Miami (up 33.3%) and long-time leader Phoenix (up 31.3%) in second and third positions.

Prices were strongest in the South (up 30.6%) and Southeast (+30.5%), though even the comparatively weak Midwest (+13.8%) and Northeast (+14.0%) showed double-digit gains.

© 2022 Florida Realtors®

Attitudes about current conditions were relatively unchanged, but attitudes about the future fell more based on fears over inflation and the cost of gas, food, etc.

BOSTON – American consumers’ attitudes fell a bit more in June after a decline in May, the second month in a row for a decline.

The Index fell to 98.7 – down 4.5 points from 103.2 in May – and is at its lowest level since February 2021.

The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – declined marginally to 147.1 from 147.4 last month. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – decreased sharply to 66.4 from 73.7, hitting its lowest level since March 2013.

“The Expectations Index continued its recent downward trajectory – falling to its lowest point in nearly a decade,” says Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ grimmer outlook was driven by increasing concerns about inflation, in particular rising gas and food prices. Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as growing risk of recession by year-end.”

Present situation

Consumers’ appraisal of current business conditions was less favorable in June.

• 19.6% of consumers said business conditions were “good,” down slightly from 19.8%.
• 23.0% of consumers said business conditions were “bad,” up from 21.7%.

Consumers’ assessment of the labor market was mixed.

• 51.3% of consumers said jobs were “plentiful,” down from 51.9%.
• Conversely, 11.6% of consumers said jobs were “hard to get,” down from 12.4%.

Expectations six months in the future

Consumers grew more pessimistic about the short-term business conditions outlook in June.

• 14.7% of consumers expect business conditions will improve, down from 16.4%.
• 29.5% expect business conditions to worsen, up from 26.4%.

Consumers were more pessimistic about the short-term labor market outlook.

• 16.3% of consumers expect more jobs to be available, down from 17.5%.
• 22.0% anticipate fewer jobs, up from 19.5%.

Consumers were also more pessimistic about their short-term financial prospects.

• 15.9% of consumers expect their incomes to increase, down from 17.9%.
• 15.2% expect their incomes will decrease, up from 14.5%.

“Purchasing intentions for cars, homes, and major appliances held relatively steady – but intentions have cooled since the start of the year and this trend is likely to continue as the Fed aggressively raises interest rates to tame inflation,” says Franco. “Meanwhile, vacation plans softened further as rising prices took their toll. Looking ahead over the next six months, consumer spending and economic growth are likely to continue facing strong headwinds from further inflation and rate hikes.”

© 2022 Florida Realtors®

At 62.9, June’s Fla. consumer sentiment was 2.1 points higher than in May. A UF economist says it “comes as a surprise” given inflation and other challenges.

GAINESVILLE, Fla. – Consumer sentiment among Floridians ticked up for the first time in 2022, rising 2.1 points in June to 62.9 from a revised figure of 60.8 in May.

In contrast, national consumer sentiment sank to its lowest level on record.

“The increase in June’s consumer confidence in Florida comes as a surprise, considering the persistently high inflation,” says Hector H. Sandoval, director of the Economic Analysis Program at the University of Florida’s (UF) Bureau of Economic and Business Research. “In almost every consumer category, prices are rising, but energy prices are particularly high, squeezing consumers at the pump. Statewide, gasoline prices have reached record levels in recent weeks.”

Sandoval also noted that May’s numbers were revised downward to 60.8, so June’s improvement is coming back from the second-lowest index number ever recorded in Florida.

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

Current conditions: Floridians’ opinions about current economic conditions were mixed. Views of personal financial situations now compared with a year ago decreased by one-tenth of a point, from 54.8 to 54.7.

On the other hand, opinions as to whether it’s a good time to buy a major household item like an appliance increased 3.2 points from 50.2 to 53.4 – a view shared by Floridians across all sociodemographic groups.

Future expectations: The three components corresponding to Floridians’ expectations about future economic conditions were more optimistic in June. Expectations of personal finances a year from now showed the greatest increase in this month’s reading, up 3.9 points from 74.1 to 78.

Expectations about U.S. economic conditions over the next year rose 1.9 points from 58.6 to 60.5, while the outlook of U.S. economic conditions over the next five years increased 1.2 points from 66.4 to 67.6.

“Overall, Floridians are more optimistic in June,” says Sandoval. “The increase in consumer confidence is fueled by improvements in Floridians’ expectations about their personal financial situation one year from now, and their opinions about whether now is a good time to buy a big-ticket item.”

But Sandoval says those “views contrast with the current economic outlook. As inflation is running at a four-decade high, the Fed has approved the largest interest rate increase since 1994 and has indicated that it expects to raise it further this year, increasing the risk of recession. Even though the labor market has remained strong, higher interest rates will increase the cost of borrowing and slow business growth, which will weaken the job market. Looking ahead, the outlook for consumer sentiment in the near future is pessimistic.”

The index used by UF researchers 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®

The bill allowed Fla. businesses to sue local governments over lost profits. DeSantis generally agreed with that, but he found the bill “broad and ambiguous.”

TALLAHASSEE, Fla. – A measure that would have given businesses the power to sue cities and counties to recoup lost profits was vetoed by Gov. Ron DeSantis on Friday.

While the veto of the business measure (SB 620) drew praise from local-government and environmental groups, DeSantis left open the door for lawmakers to consider similar but more targeted legislation in the future.

Senate leaders made a priority of the business bill, which would have allowed businesses to sue cities and counties if ordinances caused at least 15% losses of profits. In a veto letter, DeSantis suggested lawmakers take a different approach in the future to assist businesses.

DeSantis said local governments sometimes “unreasonably burden businesses through policies that range from the merely misguided to the politically motivated.”

“Indeed, this was illustrated by the bizarre and draconian measures adopted by some local governments during COVID-19, necessitating the state to overrule these edicts to protect freedom and opportunity for Floridians,” DeSantis wrote.

But DeSantis took issue with the bill being “broad and ambiguous,” which he said could result in “unintended and unforeseen consequences and costly litigation.” He suggested lawmakers pursue “targeted preemption legislation when local governments act in a way that frustrates state policy and/or undermines the rights of Floridians.”

Generally, preemption bills give the state control over issues that otherwise might be decided by local governments.

In supporting the veto, Dominic Calabro, president and CEO of Tallahassee-based Florida TaxWatch, echoed that the legislation could have had “many unintended, yet significant, consequences.”

“In an already exceptionally litigious state like Florida, it would have resulted in an influx of financially motivated and malicious lawsuits, costing local governments more than $900 million annually,” Calabro said in a statement. “Local government’s only response would have been to either increase taxes or reduce services, and in both cases, this bill would have hurt hard-working taxpayers across the state.”

Paul Owens, president of the growth-management group 1000 Friends of Florida, called the veto a “clear victory for local leaders and their constituents.”

1000 Friends previously argued the measure “would have a chilling effect on the ability of local governments to regulate noise ordinances, parking, puppy mills, bar hours and more, and to address sea level rise and other critical issues facing our communities.”

The bill would have applied to businesses that have been in operation for at least three years and would have allowed them to file lawsuits seeking lost profits for seven years or the number of years the businesses had been in operation, whichever was less.

Before the bill passed in March, House sponsor Lawrence McClure, R-Dover, said it would cause local governments to “pause” before they enact ordinances that would hurt businesses.

City and county governments argued it would tie the hands of local governments from making changes sought by residents and even a majority of businesses.

Local governments from Escambia County to Palm Beach County requested DeSantis veto the measure.

Source: The News Service of Florida

Recreational things like tents, sunglasses and concerts are sales-tax free July 1 through July 7, with longer sales-tax breaks for some home appliances and windows.

TALLAHASSEE, Fla. – Floridians facing economic pressure from inflation get a second crack to save on “freedom” starting Friday.

Wrapped around the Fourth of July for the second consecutive year, a sales-tax “holiday” dubbed “Freedom Week” will provide tax breaks on a wide range of recreational activities and outdoor gear.

In addition to freedom week, other tax breaks will take effect Friday. For the next year, sales taxes will be lifted on children’s diapers and Energy Star washing machines, clothes dryers, water heaters and refrigerators.

Also starting Friday, a two-year tax break will start on impact-resistant windows, doors and garage doors.

Lawmakers included freedom week in an annual tax package (HB 7071) that also offers other tax holidays and sales-tax exemptions. The state has already held a disaster-preparedness tax holiday around the June 1 start of hurricane season and will hold a back-to-school tax holiday later in the summer.

“With the pressures of inflation and the concerns that are out there, we want to see people continue to support our local retailers,” says Scott Shalley, president and CEO of the Florida Retail Federation, which has long lobbied for tax holidays.

Before signing the tax package May 6 at a Sam’s Club in Ocala, Gov. Ron DeSantis pointed to the impacts of inflation and described freedom week as a way that “families can afford a fun summer.”

Not everyone is so enamored with tax holidays. The Washington, D.C.-based Center for State Tax Policy at the Tax Foundation questions the economic benefits of tax holidays, pointing to studies showing consumers shift the timing of purchases, and that in some cases retailers have raised prices during the discount periods.

“States are sitting on surpluses at the same time many taxpayers are struggling under the burden of high inflation,” Jared Walczak, the foundation’s vice president of state projects, told The New York Times this month. “State tax holidays tend to be political gimmicks.”

During freedom week, which will last through July 7, people will get sales-tax breaks on such things as tickets for concerts, movies, ballgames and museum visits, as well as on supplies and gear for outdoor activities ranging from fishing rods and bicycle helmets to grills and kayaks.

Lawmakers approved the first freedom week in 2021, in part to entice people who were holding back on going out because of the COVID-19 pandemic.

State economists and the Florida Retail Federation anticipate more people will take advantage of the holiday this year.

“A lot of our retailers are running their own promotional deals to try to get folks out,” Shalley said. “It’s an opportunity to save money on fun stuff. We’re usually talking about disaster preparedness and back-to-school. But in this case, with freedom week, we’re talking about outdoor activities, recreational products, fishing gear and a wide range of things.”

Last year, the Legislature’s Office of Economic & Demographic Research estimated freedom week would cut state revenue by $42 million and local revenue by $12.7 million.

This year, the projections are a $54.5 million reduction in state revenue and a $16.1 million reduction in local revenue.

Here are some of the purchases exempt from sales taxes during Freedom Week:

• Tickets purchased for live music, live sports, plays, movies, fairs and festivals, for events through Dec. 31.
• Entry to museums and state parks, including annual passes.
• The first $5 on the price of fishing bait and tackle.
• The first $15 on the price of sunscreen and insect repellant.
• The first $25 on the price of swimming snorkels, goggles and masks.
• The first $30 on the price of fishing tackle boxes, water bottles, camping lanterns and flashlights.
• The first $35 on the price of recreational pool tubes, pool floats, inflatable chairs and pool toys.
• The first $50 on the price of sleeping bags, portable hammocks, camping stoves, collapsible camping chairs and bicycle helmets.
• The first $75 on the price of life jackets, coolers, paddles, oars, fishing rods and reels.
• The first $100 of the price of sunglasses.
• The first $150 on the price of water skis, wakeboards and kneeboards.
• The first $200 on the price of tents and binoculars.
• The first $250 on the price of bicycles and grills.
• The first $300 on the price of paddle boards and surfboards.
• The first $500 on the price of canoes and kayaks.

Source: The News Service of Florida

NAR says May’s increase in pending home sales ended a six-month skid of declines, but despite the gain, “the housing market is clearly undergoing a transition.”

WASHINGTON – Pending home sales crept higher in May, ending a six-month streak of declines, according to the National Association of Realtors® (NAR). Regionally, month-over-month results were mixed – the Northeast and South experienced increases, while the Midwest and West posted decreases. However, year-over-year contract activity slid in all four regions.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – inched up 0.7% to 99.9 in May. Year-over-year, transactions dropped 13.6%. An index of 100 equals the level of contract activity in 2001.

“Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,” says NAR Chief Economist Lawrence Yun. “Contract signings are down sizably from a year ago because of much higher mortgage rates.”

According to NAR, a monthly mortgage payment has increased about $800 – based on a median single-family home price with a 10% down-payment – since January because mortgage rates have climbed 2.5 percentage points.

“Trying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy,” Yun says. “The better way to balance the market is through increased supply, which also helps the broader economy.”

While the housing market remains unbalanced nationwide with demand far outpacing supply, Yun says variations in home prices and affordability contributed to regional differences in May pending sales.

“The largest decline in contract activity was observed in the West region, where homes are the most expensive,” Yun says. “This further indicates the growing need to increase supply to tame home price growth and improve the chances of ownership for potential homebuyers.”

May pending home sales regional breakdown: The Northeast PHSI jumped 15.4% compared to last month at 86.7, though its down 11.9% from May 2021. The Midwest index retreated 1.7% to 98.6 in May, a year-to-year decline of 8.8%.

The South PHSI increased 0.2% to 119.0 in May, though with a 13.8% drop from the previous year. The West index contracted 5.0% in May to 81.6, down 19.8% from May 2021.

© 2022 Florida Realtors®

TransUnion: Rents are rising faster than tenants’ income. U.S. apartment rents rose 14% from 2020 to 2021 but the median income of rental applicants is up 6%.

EASTON, Md. –Apartment rents are rising at a rate much higher than tenants wage gains as inflation and higher interest rates challenge the economy and real estate markets.

A new analysis by credit agency TransUnion (NYSE: TRU) found U.S. apartment rents rose 14% from 2020 to 2021 but the median income of rental applicants is up 6%.

The median income of apartment renters was $37,232 in February 2022 compared to $35,000 at the start of the pandemic in 2020, according to the credit agency.

Those tenants are feeling the impacts of inflation – including $5 per gallon gas prices and more expensive grocery items. The U.S. inflation rate is 8.6% – the highest since 1981.

High rental costs and the ability to work at home for office and professional workers is resulting in more tenants looking at out-of-state moves and relocations to rural and less expensive markets.

The credit agency said out-of-state applications for rental properties increased 42% from 2020 to 2021 during the coronavirus pandemic.

The same time frame found rental applicants grew by 28% in rural areas while applications in big cities rose 10%.

“With remote work firmly in the norm, we’ve seen renters actively seeking new locations that better suit their budgets and lifestyles,” said Maitri Johnson, vice president of tenant and employment screening at TransUnion. “While many are going out-of-state to sunnier environments, we’re also seeing a preference for rural areas and exurbs that have more space and a lower cost of living, but also a relative proximity to cities and airports.”

Pandemic migration trends have included residents moving out of New York and other expensive and congested cities for less expensive and less urban markets.

Areas such as Texas, Florida and Idaho have seen growth – sometimes at the expense of areas of the Midwest and Northeast. Some of those growth markets, such as Tampa, Orlando, Fort Myers, Fla., Dallas, Boise and Phoenix have seen significant jumps in apartment rents and other housing costs.

The remote work and cost dynamics could help propel more at-home workers to smaller and rural markets. Some Silicon Valley, San Francisco Bay area and Seattle tech and financial workers have already been moving to smaller markets in northern California, southern Oregon or Idaho.

Maryland’s Eastern Shore and areas of Delaware have also seen professionals and others moving from New York City, Washington, D.C. and Philadelphia. Some of those transplants from New York, California and Chicago are also relocating to Sun Belt and Western growth regions.

TransUnion reports the U.S. rental occupancy rates hit a record 98% in January 2022.

Some of that jump stems from applicants selling their homes and renting after moving to new locations and markets. TransUnion found a 37% increase in rental applicants who sold their home within the last year.

Copyright © 2022 Sunday Star, Mike Sunnucks, Chesapeake Publishing Group (Adams Publishing/APGMedia). All rights reserved.

A look at the latest trends across the U.S. show that residents in 32 states, including Florida, favor a modern style at home. Ranked at No. 2 is farmhouse chic.

NEW YORK – What’s trending and where? Confused.com, a home insurance resource, took its annual look at the latest trends for homes across the U.S.

In New Mexico, residents are loving Japanese home-inspired styles (like white walls and “zen” finishes) while Maine, Massachusetts and New Hampshire residents are showing more favor for Tuscan styles (with terracotta, iron finishes, stone and tiles).

Fourteen states show a preference for farmhouse chic, ranging from southern states like Alabama, Mississippi and Tennessee to Montana, Wyoming and Vermont. This look shows a more relaxed style – expect to see rustic furniture, natural materials and real comfort in a farmhouse home.

However, the overall favorite among the states, including Florida, is modern, defined by monochromatic color palettes, clean lines, minimalism, and natural finishes. The report found residents in 32 states prefer the modern look.

Source: Confused.com

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

Monthly mortgage payments in April took up 28% of a recent homebuyer’s monthly income, near the 30% threshold generally considered as “affordable,” says Zillow.

TALLAHASSEE, Fla. – Monthly mortgage payments in April took up 28% of a recent home buyer’s monthly income, which is near the 30% threshold generally considered an upward bound of affordability, according to a new Zillow report. That’s the highest share of income devoted to mortgage payments since at least 2007.

Zillow has dropped its forecast for home-price growth over the next 12 months as buyers grapple with the most unaffordable landscape in at least 15 years.

In the months since those numbers from April were recorded, mortgage rates and home prices have only continued to climb, even as wage growth has flattened out. As mortgage rates moved upward, the typical mortgage payment after a home purchase in early June would amount to $2,127 per month. That number has climbed 36% since the start of the year alone.

By Zillow’s count, the number of for-sale listings that went under contract last month was slightly lower than in May 2019 – before the pandemic began. Home sales activity declined 20% over the previous 12 months to pre-pandemic sales levels. Home values posted 20.9% year-over-year growth in May, down from 20.7% in April.

While prices are still expected to rise, Zillow has downgraded its forecast for the upcoming year from 10.4% growth to 8.8% growth.

Source: Inman (06/22/22) Houston, Daniel

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

Fla.’s “insurer of last resort” sought a 10.7% rate increase for homeowners with “multi-peril” policies, its most common; but the state approved an average 6.4% rise.

TALLAHASSEE, Fla. – Regulators on Friday trimmed proposed rate increases for customers of the state-backed Citizens Property Insurance Corp. The Florida Office of Insurance Regulation approved an average 6.4% rate increase for homeowners with “multi-peril” policies – by far the most-common type of policy. Citizens had requested a 10.7% increase for multi-peril policies.

Customers with other types of Citizens’ policies will see average increases ranging from 8.4% to 11%. The increases will take effect Sept. 1.

The Citizens Board of Governors decided in December to seek an across-the-board 11% rate increase. For most types of coverage, the actual requests were slightly lower than 11%.

But the Office of Insurance Regulation said Friday the requests improperly used a different rate-setting approach than in the past. Under state law, Citizens faces an 11% cap this year on rate increases. In the past, such caps applied to the maximum rate increases that individual customers could see. But Citizens this year sought across-the-board increases at or near the cap.

An order signed Friday by Insurance Commissioner David Altmaier said regulators determined that “rates should continue to be subject to a similar per policyholder capping methodology as used in prior filings.” That resulted, for example, in the average rate increase dropping to 6.4 percent for multi-peril residential policies.

Leaders of Citizens have complained that it often charges less than private insurers, though Citizens was created as an insurer of last resort. The number of policies in Citizens has skyrocketed during the past two years as private insurers have dropped customers and sought hefty rate hikes because of financial problems.

Source: The News Service of Florida

Vacation-home buyers have been hurt by economic changes and a new fee, plus higher pandemic-era demand may have resulted in less current demand.

SEATTLE  – Demand for vacation homes has fallen below the pre-pandemic baseline for the first time in two years, with mortgage-rate locks for second homes down 4% from before the pandemic in May, according to a report from Redfin. That’s down from a revised rate of 3% above pre-pandemic levels a month earlier, and 70% above pre-pandemic levels a year earlier.

Vacation-home demand declined for a number of reasons, including higher home prices, mortgage rates that rapidly rose to nearly 6% and a slumping stock market – the same factors cooling the rest of the housing market.

However, one change is unique to second-home buyers: The federal government increased loan fees for second homes in April, adding roughly $13,500 to the cost of purchasing a $400,000 home.

“Skyrocketing monthly payments, along with higher loan fees, have priced many second-home buyers out of the market,” says Redfin Deputy Chief Economist Taylor Marr. “Many would-be second-home buyers are also deterred by turmoil in the stock markets, high inflation and recession fears, and they can be quicker to pull back from the market because vacation homes aren’t a necessity the way primary homes are.”

Marr things the vacation home cool-down “is likely to continue as long as mortgage rates are elevated and the stock market is slumping.”

The drop in vacation-home demand marks a drastic change compared to the prime pandemic years, from the second half of 2020 and 2021. During lockdowns, mortgage-rate locks for second homes skyrocketed due to record-low mortgage rates, the flexibility to work from anywhere thanks to remote work and a desire by many to get out of cramped city apartments.

Vacation-home demand peaked in March 2021, when it was about 90% above pre-pandemic levels.

Interest in vacation homes started declining sharply in February of this year as mortgage rates began their ascent. The average 30-year fixed mortgage rate reached 5.81% in the week ending June 23.

© 2022 Florida Realtors®

Litigation adds to Fla.’s rising prices for property ins. Citizens Ins. – the Fla.-owned “insurer of last resort” – says it’s served with 970 lawsuits each month.

TALLAHASSEE, Fla. – The state-backed Citizens Property Insurance Corp. could be on a path to spend $100 million this year on attorneys to defend an increasing number of lawsuits.

The Citizens Board of Governors in December approved spending $50 million on outside attorneys needed to handle thousands of lawsuits in claims disputes. A Citizens committee on Thursday recommended approval of another $50 million, a proposal that the board likely will consider during a July 13 meeting.

Board member Scott Thomas, who chairs the Citizens Claims Committee, said officials had always anticipated the need for additional money to pay law firms. The board in December considered a proposal to approve spending $500 million over five years but decided to handle the issue incrementally.

“It’s because people are suing us, and we have to defend them (the lawsuits),” Thomas said.

The weight of litigation on property insurers

The amount spent on attorneys, however, highlights the volume of litigation facing Citizens. During the first four months of this year, Citizens was served with 3,881 lawsuits – or 970 a month – and had 18,455 pending cases as of April 30, according to information presented Thursday to the Claims Committee.

“Those are some pretty crazy numbers,” committee member Jon Palmquist said.

As another indication of the scale of litigation, the committee Thursday also backed spending an additional $2.5 million as part of long-term contracts for court reporters. Citizens officials expect to exhaust an initially approved $18.5 million by the end of this year, with another $2.5 million needed to get through March 2023, according to information presented to the committee.

Citizens and private insurance companies have long complained that Florida is a hotbed for lawsuits that drive up costs in the property-insurance system. But Citizens also has seen massive growth in its number of policies during the past two years, which results in needing to defend more lawsuits.

As an illustration of the growth, Citizens had 883,333 policies as of the end of May, up from 609,805 policies a year earlier and 463,247 policies two years earlier. Those numbers have climbed as private insurers have shed customers and sought large rate increases because of financial problems.

Officials also say the COVID-19 pandemic caused a backlog of court cases, which has helped drive up the number of Citizens’ pending lawsuits.

Elaina Paskalakis, vice president of claims litigation for Citizens, said about 75% of the insurer’s lawsuits this year have come from Miami-Dade, Broward and Palm Beach counties. But she said those three counties accounted for a larger percentage of lawsuits in the past and that Citizens is seeing increasing numbers of cases from areas such as the Tampa Bay region.

State lawmakers during the past few years, including during a special session last month, have taken a series of steps to try to reduce insurance litigation.

But Citizens, which has contracts with 91 outside law firms, spent about $82.3 million in 2020 and $78.8 million in 2021 on legal services, according to information provided to the committee.

Source: News Service of Florida Inc

More sellers want to stay in their home after closing, sometimes for weeks or months, and agreeing to their request gives some buyers an edge over the competition.

SARASOTA, Fla. – It might once have been a given that a buyer would move in shortly after their house closing.

But nowadays, in what at least one Realtor® says is the best seller’s market of her entire career, sellers have an additional demand: They want to stay in their house days or months past closing. In many cases, they want to do it for a fraction of the fair market rent or even for free.

It’s a process called a leaseback: the house now belongs to the buyer but the seller leases it back from them for a period of time. While this agreement is more traditional for custom home builders, who often sell their models and lease them back from buyers for at least six to nine months, leasebacks are becoming increasingly common among private individuals selling their homes to others.

A ‘significant uptick’ in the number of leaseback agreements

Sarasota real estate attorney Natasha Selvaraj, who works at firm Berlin Patten Ebling, has noticed a “significant uptick” in the number of leaseback agreements she’s put together in the last few years.

“We used to probably see them few and far between,” she said. “People would just adjust their closing date so that they would close when they were ready. But with the way the market is now, it’s definitely a lot more buyers who want to accommodate the seller.”

Selvaraj tends to see leases that go for a short period of time, from between 30 to 90 days, ideally giving the seller a chance to find another place to live. Sometimes they’re awaiting the completion of a new construction or a move-in date to a retirement home, but they want to take advantage of the current market. Sometimes it’s just sentimental – it’s October, but they want one last Christmas in their home.

Are there any leaseback issues?

A leaseback isn’t inherently problematic. But there are certain issues that need to be addressed before – not after – a seller is living in their former house as a tenant.

“I find that people just assume it’s something that magically happens – what can go wrong?” Selvaraj said.

The short answer is plenty. How long will the seller stay? How much will they pay or will they pay at all? Who is responsible for utilities? If they want to extend the lease, is that possible?

These are questions prospective buyers may have to answer more and more, because leasebacks can be an important way to sweeten the deal for sellers choosing between multiple offers.

The problem with leasebacks is that they’re not always advertised, says Pam Charron, an associate broker for Compass. Often, it’s something a buyer’s Realtor has to unearth from the listing agent.

“A lot of it is being creative as a Realtor on the buyer’s side,” Charron said. “Many times, the listing agent says, ‘The sellers would like to stay here and have time to pack or move or find a place.’ Whatever those reasons are, it has substantially increased.”

Charron has even seen a leaseback be the winning factor between a higher offer and a lower one that offered the seller the chance to stay in their home after closing. She represented a prospective buyer for a high-end multimillion-dollar property with multiple offers. When the listing agent told her that the seller wanted to remain in the home for “several months” free of charge, she took it to her buyers. They weren’t comfortable with those terms and the house went to someone else. When the property did close, Charron saw it went for lower than her buyers’ offer.

Sarasota Realtor Judy Limekiller of Coldwell Banker Realty puts it more succinctly: In this market, sellers get what they want.

“It’s whatever makes the seller really, really happy,” she said. “They’re like, ‘We want this,’ and they get it. It’s just that strong of a seller’s market.”

Roger Gibboni is one of those sellers. More than two years ago, he and his wife purchased a three-bedroom, two-bathroom condo in Vamo’s Pelican Cove for $280,000, according to Sarasota County property records. They live most of the year in the Berkshires in Massachusetts, but they wanted to try their hand at the Florida lifestyle.

While they loved it, they shortly after realized they wanted something a little different – a condo on the water. So when such a condo came on the market, they jumped on it almost sight unseen, Gibboni said. Records show they purchased the three-bedroom, two-bathroom condo for $466,000 in October 2021. It was in dire need of renovation.

They weren’t intending to sell their current condo until the waterfront unit was ready for them to move in. But as the instability of the market bore out, Gibboni started to get nervous. He wondered if it was better to sell now and lease their current condo until the waterfront place was ready.

It turned out to be the right choice. The condo was barely on the market before the couple got an offer they almost couldn’t turn down.

“This was a savvy buyer – they knew what they needed to do to get the place,” Gibboni said. “They came in with a leaseback, above the asking price and no contingencies.”

The condo recently sold for $475,000, according to Gibboni. But the couple will be living there until the end of August – at no cost.

When it comes to leasebacks, Selvaraj has an important piece of advice: Anything over 24 hours requires something in writing.

“I’ve had people who say, ‘They seem like really nice people,’ and I’ll say, ‘Okay, then you just have strangers in your house,’” Selvaraj said. “You don’t need legal documents until you need legal documents, and usually by then, it’s too late to get one signed.”

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

The core of every real estate business? The agent who owns it. And if the agent isn’t relaxed and focused, the business will struggle to survive.

NEW YORK – Mindfulness and self-care help real estate agents focus on their own well-being, says HomeSmart broker Nishika Green.

Mindfulness implies that an agent focuses on the present moment, which helps reduce stress and decrease burnout. Being mindful enables agents to strengthen their emotional reserves so they can approach transactions with empathy and understanding.

Mindfulness and self-care help agents improve their work-life balance – but they also support professional development.

Being upfront in a positive way also benefits clients, as is understanding that customers’ emotional responses are not an attack on their agent’s abilities.

Mindfulness meditation can improve cognitive function in as little as two weeks, according to some studies, and agents searching for a new professional development resource may consider adding mindfulness or self-care practices to their list. By using these practices, they can carve a path toward the business they want and deserve.

Source: RISMedia (06/17/22) Green, Nishika

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

New-home sales made up lost ground after four consecutive monthly declines, perhaps because some buyers rushed to lock in a mortgage before rates went up again.

WASHINGTON – After four consecutive monthly declines, new home sales posted a solid gain in May as some buyers rushed into the market before the Federal Reserve’s anticipated June interest rate hike.

Sales of newly built, single-family homes in May increased 10.7% from an upwardly revised reading in April, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

“While sales were up in May, the 696,000 pace was 5.9% lower than a year ago – and new home sales on a year-to-date basis are down 10.6% thus far in 2022,” says National Association of Home Builders (NAHB) Chief Economist Robert Dietz. “Moreover, the months’ supply measure is elevated at 7.7, but existing home inventory remains very tight, and this supports demand for new construction.”

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. The May reading is the number of homes that would sell if that one month’s pace continued for the next 12 months.

New single-family home inventory remained elevated at a 7.7 months’ supply, up 42.6% over last year, with 444,000 available for sale. However, only 8.3% of new home inventory is completed and ready to occupy. The remaining have not started construction (25.9%) or are currently under construction.

The median sales price for a newly constructed home actually declined in May, however, – down $449,000 from $454,700 in April. Year-to-year, the price is up 15%, due primarily to higher construction and development costs, including materials.

Regionally, on a year-to-date basis, new home sales fell in all four regions, down 3.8% in the Northeast, 21.7% in the Midwest, 12.3% in the South and 2.2% in the West.

“Though new home sales registered a solid increase in May, we expect sales to decline in June following the Fed’s action to significantly raise interest rates in an effort to cool the economy and ease inflation,” says Jerry Konter, chairman of the National Association of Home Builders (NAHB).

“High construction costs and rising mortgage rates are pricing many buyers out of the market,” adds Konter. “Only 10% of new homes were priced below $300,000 in May compared to 23% a year ago.”

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