Monthly Archives: August 2022

How to Minimize Final-Walkthrough Stress

The final walkthrough is often the ideal time for stressed buyers to get upset, and agents should prepare them for imperfections that can show up in now-empty rooms.

NEW YORK – Cara Ameer, broker associate and global luxury agent with Coldwell Banker Vanguard Realty in Ponte Vedra Beach, says the final walkthrough is a critical time when the home needs to be in presentable condition.

For the buyer, that final inspection is an ideal time to check for flaws not apparent when visiting a home full of furniture, such as flooring or other issues. If something is found, it’s the buyers’ last change to seek some kind of agreement with the seller.

Agents should explain to buyers an inspection’s limitations, notably that the inspector doesn’t move rugs or furniture, so flaws may appear after a home is vacated. Similarly, wall imperfections may appear once after removing the artwork and mirrors. Based on what is negotiated and the current contractual requirements, a buyer may ask a seller to patch holes and have those areas painted.

To minimize stress, however, agents should prepare buyers for something less than perfection during the walkthrough.

Agents should also reconfirm which items stay and which do not early in the contract period. Rather than rely on memory, it’s important to review the items with the listing agent several weeks before closing – and have a plan in case a worst-case scenario occurs.

As for cleanliness, it’s important to reexamine the terms in the purchase agreement regarding the contractual expectation, such as keeping the home in “broom swept” condition.

It might help some buyers to request that the home be professionally cleaned after the seller vacates, making it part of the initial offer.

Buyers and sellers also leave the walkthrough with a basic understanding of how things will transfer, such as keys, fobs, garage door openers and access cards.

Source: Inman (08/08/22) Ameer, Cara

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


2 Fla. Cities in Top 10 for ‘Where to Buy a Fixer-Upper?’

NEW YORK – Milwaukee. Philadelphia. Detroit. Memphis and Baltimore. These are just a handful of the top 10 cities in the U.S. with the lowest cost of “fixer-upper” homes, according to research from StorageCafe, a nationwide storage space marketplace.

What’s a fixer-upper? It’s a house that’s available to buy at a lower price because it usually requires major work. Think of it also as a labor of love – literally. Although buyers can likely still live in a fixer-upper, they will likely need to spend a lot of time and money on maintenance and upgrades.

10 best cities for fixer-upper houses

  1. Milwaukee
  2. Philadelphia
  3. Detroit
  4. Memphis, Tennessee
  5. Baltimore
  6. Jacksonville, Florida
  7. Dallas
  8. Louisville, Kentucky
  9. Miami
  10. Fresno, California

Source: StorageCafe

“Skyrocketing home prices, bidding wars, low inventories and record-high interest rates have put many prospective homebuyers on the sidelines. But there’s still more, and that’s fixer-uppers,” said Doug Ressler, a business intelligence manager for Yardi Matrix, which provides real estate analysis for investors and conducted StorageCafe’s survey.

“(Fixer-uppers) do require a consistent amount of work – and time – until they’re ready to be called ‘home,’ but they can be a real solution for budget-minded buyers.”

StorageCafe’s study analyzed 61,200 active single-family listings as the nation’s housing market is slightly cooling and as homebuyers are backing out of purchases at the highest rate since the start of the COVID-19 pandemic, according to real-estate broker Redfin.

Brad Werner, who leads construction and real-estate practices for Wipfli, a Chicago-based accounting firm, said more homebuyers will gravitate to fixer-uppers because of a “deferred demand” due to a lack of housing that experts say range between 2-4 million homes.

“Whether there is a recession or a booming economy, everybody needs a place to live and wants housing that’s affordable,” Werner said. “With not enough new housing available, buyers are looking into the older stock.”

What is the median cost of a fixer-upper home?

The median cost of a fixer-upper home in the U.S. is around $225,000; that’s about 45% cheaper than turnkey homes in cities that are the same size, according to Porch, a home-improvement site connecting homeowners and contractors. The site also said a fixer-upper home this year is about 24% lower than last year’s estimated price of $280,000.

Buyers typically invest in a fixer-upper seeking more space, or to fix and flip the property for profit.

“This is not a simple market to get in,” said Mike Hardy, managing partner for Churchill Mortgage in Los Angeles. He is an active investor who currently has six fix-and-flips going in Southern California. “One of my mottos is simple: Is there room for a 10% profit once the house is complete and satisfied after the rehab?”

How much does it cost to renovate a home?

Home renovations and remodels average $47,803, with many projects ranging between $17,903 and $78,003, according to HomeAdvisor.com. However, keep in mind that some materials are scarce due to supply-chain issues, according to the National Association of Home Builders.

Most of the homes on StorageCafe’s list are dominated by blue-collar, working-class cities, and that’s not a coincidence, Ressler said.

Mirela Mohan, a real-estate trends expert and the author of StorageCafe’s study, told USA TODAY that cities that came out on top are generally places where fixer-upper inventory (30%) and the fixer-upper discount (30%) are high – metrics that carry the most weight in the rankings.

Milwaukee ranks No. 1 in part because fixer-uppers represent 12% of the existing homes for sale, double the overall average for the cities included in StorageCafe’s study.

For example, the study said the asking price for a fixer-upper in Milwaukee is around $80,000, nearly 60% lower than prices for regular, non-fixer-upper homes of around $195,000.

In Philadelphia, the study said about 26% of active listings fall into the “needing a little TLC” category. And for an average price of about $145,000, a fixer-upper in Philadelphia would cost buyers about half the price of a home that’s move-in ready, the study said.

Mohan said another recent StorageCafe study on real-estate activity in the past decade exemplifies why Milwaukee and Philadelphia rank first and second.

“Milwaukee is the third-worst metro area in terms of new single-family permits, with barely 15,000 permits issued over the last decade,” Mohan said. “Philadelphia fares slightly better, with nearly 70,000 new single-family units permitted over the last decade, though much lower than other urban hubs.”

And in Detroit, the study said “with its large inventory of historic homes – many of them built in the late 19th and early 20th centuries – Detroit emerges as one of the best cities to find an old gem ready to be turned into a real haven.”

The study added that 22% of the available listings in Detroit are homes in need of repairs.

It was the most affordable city in the study.

“Whether you’re snagging a charming Queen Anne or Gilded Age home in Detroit, you’d end up paying $60,000 on average for a fixer-upper – almost half of the price of a turnkey listing – a very good deal by all current pricing standards,” the study said.

And, among the 50 biggest U.S. cities, StorageCafe’s study said fixer-uppers are 32% cheaper on average than standard homes, about $307,000 versus $448,000 leading to a median savings of about $155,000.

Also, 1 in 20 houses is a fixer-upper in the top most populous cities, the study said.

“Finding a home with good bones is not the easiest task, however, and it depends a lot on the location you’re looking to buy in,” Ressler said. “Some places make it much harder than others to turn your homebuying journey into a success story like those featured on the ‘Property Brothers’ or Chip and Joanna Gaines’ ‘Fixer Upper.’”

California costliest state for renovating, flipping fixer-uppers

Meanwhile, in California, the most expensive home market in the nation, cities with the highest fixer-upper prices include San Jose at nearly $1.3 million, San Francisco at $1 million, and Los Angeles at nearly $900,000.

Other California cities, such as Long Beach at $712,000 and San Diego at $600,000, are also in the top 10 with the most expensive fixer-uppers. The list also includes Boston; Seattle; New York; Washington; and Mesa, Arizona.

Hardy, the L.A.-based investor, said he averages about a dozen flips and fixes homes across the Southern California market through his investment companies. A real-estate fixture for more than 20 years, Hardy said he currently has projects in the cities of Riverside, Covina, West Covina, as well as areas of Orange County.

He said his flips take between three and four months to complete, and can prove profitable, with a return rate of 20-25%.

Hardy recalled aggressively buying about 100 properties in need of repair with two other partners during the 2008 recession and selling them. His strategy: Move quickly, buy at the right price and fix and flip fast.

“What’s important is to be as efficient and systematic as possible,” Hardy said. “From our standpoint, we look at it as, ‘how can we have our dollars at work that’s a good business model and maximize returns?’”

Copyright 2022, USATODAY.com, USA TODAY


Reverse Mortgages Became Far Less Appealing

A reverse mortgage helps older adults use equity to remain in their home, but higher interest rates, lender rebates and FHA mortgage insurance deplete tappable equity.

SAN FRANCISCO – Equity-rich but cash-and-income-poor seniors over age 62 are trying to survive the highest cost-of-living rates in more than 40 years. And the reverse mortgage – which typically provides monthly payments to the homeowners – was designed to serve as a safety net for struggling seniors, allowing them to tap into their mother lode of home equity.

But rising mortgage interest rates, monster mortgage originator rebates and expensive Federal Housing Administration (FHA) mortgage insurance can reduce or completely deplete their tappable equity. Enormous transaction costs also cut into any potential to end house payments and put cash in seniors’ pockets.

As of 2020, just 4 out of every 100,000 mortgages were reverse mortgages.

“The reverse mortgage business is teetering on collapse because there is not enough loan volume,” said Ted Tozer, Ginnie Mae president during the Barack Obama administration. Ginnie Mae is the secondary market for certain government-backed mortgage programs, including FHA-insured reverse mortgages.

There are two main types of reverse mortgages: the FHA reverse mortgage, or HECM (home equity conversion mortgage); and its so-called private label reverse, an FHA look-alike that’s available for lower ages in some cases.

These loans are effectively negatively amortizing fixed or adjustable-rate mortgages. This means the loan balance increases monthly. This is because reverse mortgages eliminate the monthly house payment.

The nonpayment gets added onto your existing loan balance. At 3.5%, the balance increase is a lot smaller than when mortgage rates jump to 6%. The greater the debt, the faster the mortgage balance increases. Think of it as compounded interest going in the wrong direction. Any existing mortgage liens must be paid off through the reverse refinance, along with the upfront FHA mortgage insurance premium and all other closing costs and points.

Loan origination fees are calculated by charging 2% for the first $200,000 in home value, plus 1% for any amount above that – up to a maximum of $6,000, said Steve Irwin, president of the National Reverse Mortgage Lenders Association.

On adjustable-rate reverse mortgages, huge rebates are offered to mortgage loan originators. One rate sheet I reviewed offered a maximum of more than 12 points. For a $750,000 loan, the rebate would be $90,000, plus a $6,000 loan origination fee.

Every charge and loan originator rebate are at the consumer’s expense. Large originator rebates translate to a smaller maximum loan and a higher mortgage note rate.

“No comment” was the response from Irwin when I asked if the rebates should be reduced.

Lastly, there’s the mortgage insurance premium. The upfront premium for an FHA reverse mortgage is 2% of the home’s appraised value or 2% of $970,800, whichever is less. That means borrowers could pay up to $19,416 upfront for mortgage insurance. On top of that, there’s a monthly mortgage insurance charge, which adds an additional half point to the note rate. Ouch.

FHA should drastically reduce the mortgage insurance premium charge.

Ginnie Mae should cap the purchase price of each closed loan at something closer to 102%, as Fannie previously did. That would get rid of loan originator gouging.

And FHA should open this up to rental properties owned by seniors with modified requirements.

“Social Security and Medicare are running out of money,” Tozer said. “All people have is their homes.”

Copyright © 2022, Daily Breeze, all rights reserved. Jeff Lazerson is a mortgage broker.


Fla.’s Insurer-of-Last-Resort Now Has 1M+ Policies

Citizens Property Insurance Corp. hasn’t had 1M policies since 2014, and the latest surge comes despite strong efforts to lower Fla.’s potential liability.

TALLAHASSEE, Fla. – The state-backed Citizens Property Insurance Corp. has surpassed 1 million policies for the first time since 2014.

Created as an insurer of last resort, Citizens has been absorbing a flood of policies as private insurers drop customers and push for large rate increases because of financial losses. The Citizens website on Thursday showed it had 1,000,624 policies as of Aug. 5, up from 937,835 policies on July 8.

Citizens President and CEO Barry Gilway said the insurer could reach 1.2 million policies by the end of the year since many private companies are not writing coverage.

“The market is probably 75% shut down,” Gilway told the Citizens Board of Governors on July 13. “(There are) very, very few companies that are really open in the marketplace.”

Citizens had 883,333 policies at the end of May. As longer-term illustrations of the growth, Citizens had 661,150 policies on June 31, 2021, and 486,773 policies on July 31, 2020, according to data on its website.

State leaders have long sought to limit the size of Citizens because of potential financial risks if Florida is hit by major hurricanes. If Citizens does not have enough money to pay claims after a disaster, it can collect additional money from policyholders throughout the state – a process known as collecting assessments.

“Citizens Insurance topping the 1 million policy mark signals a market that is teetering, putting millions of Floridians and local businesses at risk of even higher costs in the form of hurricane taxes,” Florida Chamber of Commerce President and CEO Mark Wilson said in a statement Thursday, likening assessments to taxes.

Gov. Ron DeSantis called a special legislative session in May to address the property-insurance system, but problems have persisted since changes take time to impact the market. In all, five private insurers have been declared insolvent since February, with Weston Property and Casualty Insurance the latest to be placed into receivership.

The last time Citizens topped 1 million policies occurred after the 2004-2005 hurricane seasons, in which seven storms made landfall in Florida. But Citizens hasn’t had over 1 million policies since February 2014.

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


NAHB: Affordability at Lowest Point Since Recession

Only 42.8% of Americans with a median income could afford a median-priced home in the second quarter of 2022 – a sharp drop from 56.9% in the first quarter.

WASHINGTON – In the second quarter of 2022 (2Q), rising mortgage rates, high inflation, low inventory and higher home prices pushed housing affordability to its lowest point since the Great Recession.

According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), just 42.8% of new and existing U.S. homes sold between the beginning of April and end of June were affordable for families earning the U.S. median income of $90,000 – a sharp drop from the 56.9% of homes sold in the first quarter.

“Rising housing costs stemming from increased interest rates, supply chain disruptions … and a persistent lack of construction workers are dramatically affecting home prices,” says NAHB Chairman Jerry Konter. “Taming housing costs will ultimately require building more homes, and it will be easier to increase production in more affordable smaller and mid-sized markets.”

“Declining affordability has also pushed builder sentiment down for seven consecutive months and NAHB is projecting a net decline for single-family construction in 2022 as the housing markets slows due to ongoing affordability issues stemming largely from supply side challenges,” said NAHB Chief Economist Robert Dietz.

According to the HOI, the national median home price jumped to an all-time high of $390,000 in the second quarter, surpassing the previous record-high of $365,000 set in the first quarter.

Meanwhile, average mortgage rates soared by 1.47 basis points in the second quarter to 5.33% from an average rate of 3.86% in the first quarter – the largest quarterly mortgage rate jump in the history of the HOI series, which dates back to 2012.

In the nation’s most affordable housing market with a population of at least 500,000, Lansing-East Lansing, Michigan, 85.2% of all new and existing homes sold in the second quarter were affordable to families earning the area’s median income of $89,500.

Elmira, N.Y., was the nation’s most affordable small market. In Elmira, 91.8% of homes sold in 2Q were affordable for families earning the median income of $77,900.

For the seventh straight quarter, all top five least-affordable housing markets – major and smaller – are in California.  Los Angeles-Long Beach-Glendale, California was the nation’s least affordable major housing market: Only 3.6% of homes sold during 2Q were affordable to families earning the area’s median income of $90,100.

Salinas, California led the list of unaffordable small markets, with only 5.3% of new and existing homes sold in 2Q affordable to families earning the area’s median income of $90,100.

Most affordable housing markets

Top five affordable major housing markets

  1. Lansing-East Lansing, Michigan
  2. Indianapolis-Carmel-Anderson, Indiana
  3. Toledo, Ohio
  4. Harrisburg- Carlisle, Pennsylvania
  5. Scranton-Wilkes-Barre, Pennsylvania

Top five affordable small housing markets

  1. Elmira, New York
  2. Cumberland, Maryland-West Virginia
  3. Wheeling, W.Va.-Ohio
  4. Utica-Rome, New York
  5. Davenport-Moline-Rock Island, Iowa-Illinois

Least affordable major housing markets (all California)

  1. Los Angeles-Long Beach-Glendale
  2. Anaheim-Santa Ana-Irvine
  3. San Diego-Chula Vista-Carlsbad
  4. San Francisco-San Mateo-Redwood City
  5. San Jose-Sunnyvale-Santa Clara

Least affordable small housing markets (all California)

  1. Salinas
  2. Napa
  3. San Luis Obispo-Paso Robles
  4. Santa Cruz-Watsonville
  5. Santa Maria-Santa Barbara

© 2022 Florida Realtors®


Fake Landlord Scams Orlando Renter

Renters are still being scammed by a fake “landlord” that doesn’t actually own property – but problems can get even worse if real landlords don’t find out right away.

ORLANDO, Fla. – Isaac Aviles thought he found a good deal on a rental home in Orlando: a three-bed, two-bath house in Meadow Woods for $1,200 a month.

Aviles, 19, didn’t meet the landlord but said he got “a chill vibe” over the phone. He paid a $500 deposit and his rent through apps such as Zelle and CashApp, except once when he was asked to pay in Apple gift cards.

Then one night, Aviles’ girlfriend called him at work to say a notice had been posted on the door. “It was saying the person who leased us the house wasn’t authorized to rent the house,” he said.

Now the real owners of the place have told him he had to move out by Friday. Avila is at a loss for where to go next. “I’m 19,” he said. “It’s going to take me some time to get another place.”

Aviles is a victim of rental fraud, a scam where someone poses online as the landlord for a property and tricks someone into paying them until the real owners find out.

“It’s pretty pervasive here,” said Jay Mobley, the senior housing and consumer debt attorney for the Legal Aid Society of Orange County. “If I’m talking about scams, this is always in my top three.”

Fraudulent ads are often found on sites such as Facebook or Craigslist. Aviles made his connection through a phone number on a listing on Zillow. On Zillow, any user can claim a home that has no other listed owner as theirs with minimal information. Haley Mills, a spokesperson for the website, said in a written statement that the company employs monitors to screen for possible scams and pull down fraudulent listings.

Mills also pointed users to links on the website that advise people how to identify scams and report them.

Mobley said that victims are often young, like Aviles, and not always savvy about the rental process. Other victims tend to be people with credit problems or past evictions that makes it hard to be accepted by a traditional landlord or rental agency.

The home that Aviles was in is owned by Progress Residential, a national single-family home rental company based in Arizona.

Mark Lippman, an Orlando real estate attorney who represents several property management companies but not Progress Residential, said large corporate landlords can’t always police all their properties. Lippman said he sees this at his clients’ properties “at least” five times a month. “There was a lot of this during COVID and it continues to this day,” he said.

Problem grows if renters actually move in

If the issue is caught quickly, it can often be resolved without legal proceedings. But when a victim has established mail or other services in their name, Lippman said the company has to file to remove the tenants as if they were squatters.

In a written statement, Progress spokeswoman Susan Klau said, “While we don’t comment on specific cases, it is our practice to work with individuals impacted [by such a scam] to explore the option of securing a Progress home through our process.”

Aviles said the company offered to let him rent the property legitimately, but that they wanted more than $300 just for an application. And he didn’t think he could afford the place. The house is listed on Progress’ website for $2,425 per month.

Lippman said people in this situation should immediately file a report with authorities, which Aviles did.

Orange County sheriff’s spokeswoman Michelle Guido said the report could not be immediately released because of Marcy’s Law protecting victim privacy, but she confirmed the case number that Aviles provided to the Orlando Sentinel was about rental fraud.

Lippman said it’s rare someone is caught, especially since some of the crimes involved, like mail and wire fraud, fall under federal jurisdiction.

“It’s on such a small scale that the feds rarely act on it,” he said.

Mobley said people should always ask questions of who they are renting from, and check the property appraiser’s website to see if they are listed as the owner. He also suggests asking to see the landlord’s driver’s license. Also, they should pay attention to payment arrangements in the lease for the rent, such as where and how it will be paid.

“When they’re asking you to make payments in the form of a gift card or a money order … those are red flags to me,” Mobley said.

© 2022 Orlando Sentinel. Distributed by Tribune Content Agency, LLC.


Fair Housing: Problem Ran Deeper than Redlining

CHICAGO – If Robert York was ever bone tired, he didn’t show it. After working two jobs, the father of 11 would return home to his North Lawndale two-flat greystone on Chicago’s West Side and hose down the chalk marks his kids made while playing on the porch.

The home was his prized possession. This was the early 1960s, and like most Black people in the neighborhood who were land contract buyers, York was paying dearly for it – and living in constant fear of losing his home.

Land contract buyers were on the hook for a down payment, high monthly payments and maintenance of the house while the deed remained in the seller’s name until the very last payment was made. A single missed payment was grounds for eviction.

Many working-class Black families in the 1950s and ‘60s were forced to turn to speculative sellers after the government refused to insure mortgages in redlined African American neighborhoods. Speculators often bought homes at a discount from white families as they fled racially changing neighborhoods to sell them months later to Black families at inflated prices and high interest rates.

In the 1950s and ‘60s, 85% of Black families who bought a home in Chicago did so under a land installment contract.

The same financial institutions that denied creditworthy Black buyers were happy to give mortgages to white speculators who then sold them to Black families for double or quadruple what they paid, says Beryl Satter, professor of history at Rutgers University and the author of “Family Properties: Race, Real Estate, and the Exploitation of Black Urban America.”

Discriminatory lending practices, such as land contracts, were not the only barriers Black homebuyers faced. Decades of housing segregation, systemic denial of loans or insurance in predominantly minority areas and a persistent income gap have stood in the way of Black homeownership, curtailing their ability to build generational wealth.

More than half a century after the Fair Housing Act was signed into law in 1968, not only is the homeownership gap between white and Black Americans wider than it was in 1960, the homeownership rate of Black Americans is expected to be lower (40%) in 2040 than it was in 2020 (41%), according to a study by the Urban Institute, a Washington-based research organization focused on upward mobility and equity.

Though some of the structural and systemic issues may have been alleviated after the passage of the Fair Housing Act, financial education and awareness can still limit homeownership for lower-income households (a disproportionate share of whom are Black and Hispanic) or trap them into exploitative transactions.

“The story of Black homeownership in the U.S. is a case where they get access and the access is wiped out, and then they get access and the access is wiped out,” Satter says. “So there’s a cycle where African Americans get either no loans from mainstream banks, which push them into purchasing from scavengers and outlying speculators, or the pendulum swings the other way and they get loans that are official, but they are predatory also.”

For instance, in the decade leading up to the U.S. housing crash of 2008, many banks disproportionately targeted Black and Latino homeowners for sub-prime mortgages.

In 1968 – almost a decade after the Yorks bought their home on contract – a grassroots movement led to the establishment of the Contract Buyers League. The CBL used tactics such as picketing, payment strikes and lawsuits to force many lenders to renegotiate predatory contracts.

On a recent morning, siblings Donald and Sandra York sat on the same porch where they once drew the chalk designs, reflecting on the sacrifices their parents made to become homeowners.

To make ends meet, their mother, Ruby, worked as a midwife, a babysitter and a seamstress. The family of 13 crammed into one floor of the house, renting out the other to help make the monthly installment payments.

On some nights, Ruby went hungry, they said. “Sometimes she went without so that we could have,” Sandra says. “She just made sure that all of us ate before she would even pick up a morsel, and whatever was left is what she had.”

Ruby was the first on her block to attend CBL meetings and picket against the lenders, Sandra says.

USA TODAY retrieved documents from the Cook County Clerk’s Office and the National Archives in Chicago that show the Yorks received the deed to their home in 1970 – 11 years after they “bought” the house. USA TODAY found documentation that listed the Yorks as plaintiffs in a lawsuit in 1969, along with the Contract Buyers League. The Yorks were among the contract buyers who withheld payment on their home, which was sold to them in 1959 for $23,000, according to documentation. According to Realtor.com, the house is worth $333,200.

The York siblings say they were shielded from many of the details by their parents and saw the deed document, as well as proof related to the lawsuit, for the first time.

“I can see them up there smiling,” Donald York says of his late parents. “You know, you guys can actually see now what we went through, and this is what happened to us.”

Donald, who lives in the York home, says it has served as a safety net for the siblings whenever they needed a place to get back on their feet.

Obtaining a mortgage in 1967

Marva Watkins, 81, who has owned four homes through the decades starting in 1967 on Chicago’s South Side, says Black people with a college education, good incomes and steady jobs have had access to financing at least since the 1960s.

Watkins, who grew up in Cleveland, was raised in rental homes. Her mother was an elevator operator. Her father was a barber. After graduating from the University of Chicago, where she met her husband, Watkins began working for the Social Security Administration. Her husband, four years her senior, also worked there.

In 1967, one year before the Fair Housing Act was enacted, Watkins, then 26, and her husband bought their first home in Avalon Park on Chicago’s South Side. They were the second Black family to move into the neighborhood. Today it is majority Black.

The couple bought the single-family home for $31,000 with a 20% down payment and a conventional mortgage from the First Federal Savings & Loan Association of Chicago. Their combined income was about $12,000, or about $106,000 in 2022 dollars.

“Neither of us really grew up in a house,” she says. “So one of the first things we did once we got married was just start saving to buy a home. And we were the first among our friends to buy one.”

Soon, most of her Black college friends also had bought homes.

Watkins and her husband had no problems qualifying for a mortgage, perhaps because they both had steady government jobs, she says.

In October 1981, they bought a second home for $180,000 in the South Shore community, borrowing $125,000 at an adjustable interest rate of 14.5%. A 30-year fixed mortgage rate in October 1981 was 18.2%, according to data from Freddie Mac.

By 1990, Watkins sold the house for $325,000. Building equity in each home helped with the next purchase, she says. In 2008, she bought her fourth home, a condominium on the South Shore, for $340,000 in cash.

“The cost of living for me right now is low, I have no debt, and I’m still able to save money each month, which will benefit my children,” she says.

Several people in her extended family have had positive experiences with homebuying over the years, she says. USA TODAY spoke to three of them, all of whose older family members were part of the Great Migration from the South: Sidney Craddock from Philadelphia, Dorita Taylor of Peekskill, New York, and Nancy Hite-Norde, a real estate agent from New York.

With a little help from the FHA

Federal Housing Administration-backed loans and down-payment assistance programs have played an important role in assisting “creditworthy” borrowers who struggle to put down a 20% down payment, such as first-time homebuyers and homebuyers of color.

Sidney Craddock bought his first home in 2005 at age 53. It was an $85,000 townhouse in the Germantown section of Philadelphia. As a first-time homebuyer, he qualified for an FHA loan through the Bank of America with a 30-year mortgage and a $5,000 down payment.

The sub-prime mortgage crisis was brewing, he says, and mortgage brokers tried to convince him to buy a more expensive home than he could afford. “There are some crooked people out there. But I didn’t fall for that,” he says.

Because he thought he was late to the homebuying game, Craddock, who worked in janitorial service at a hospital, made higher monthly payments and paid off his loan in 13 years. The home has more than doubled in value, he says.

Three years ago, at age 66, he bought a second town house as an investment property for $180,000. He says maintaining a good credit score was key: As a first-time homebuyer, his credit score was 720. It is now 824, a nearly perfect score.

Buying that first home was “the best decision I made,” he says.

Dorita and Willie Taylor of Peekskill, New York, bought their first home in 1983 when they were in their early 30s. She was a nurse, and he worked in medical records. They bought a town house for $64,000 with an FHA loan in a “mostly white enclave.”

“We easily qualified because we were both working,” Dorita says.

The town house was to be a starter home, but they stayed and raised three children. The house is worth more than four times what they paid, the couple estimate. “It meant stability and a way of achieving the American dream,” she says. “We could also build some equity.” She hopes to pass down the house to her kids.

Benefits of generational wealth

Economists consider homeownership an effective way to build generational wealth, especially for low-income households. In 2016, the median wealth of white families was $171,000, or 10 times that of Black households, whose median family wealth is $17,600, according to Pew Research.

Nancy Hite-Norde, 66, a real estate agent with Coldwell Banker in Westchester County, says the low homeownership rate among Black families is a good barometer of the treatment of Black people. Although those with strong credit scores and steady work history can buy a home regardless of race, it takes Black families longer to assemble those financial building blocks because of historical discrimination in employment, financing, greater college debt and disinvestment in majority-Black neighborhoods, she says.

“The desire to own a home is very strong in the Black community, but it takes them longer to build up the resources,” she says.

Falling homeownership rates will make it harder for Black families to pass on wealth to future generations, says Janneke Ratcliffe, vice president of the Housing Finance Policy Center at the Urban Institute. “It (homeownership) is a channel to funnel economic privilege and benefits to you through tax breaks and through appreciation,” Ratcliffe says. “Imagine the wealth generated simply by having a 2.5% mortgage for 30 years instead of a 5% or 6% mortgage over a lifetime.”

‘The Plunder of Black Wealth’

Chicago played a central role in shaping federal policy in the 1930s, which contributed to redlining, says Bruce Orenstein, artist in residence at Duke University’s Samuel DuBois Cook Center on Social Equity. “The restrictive covenant template was developed here and was then exported around the country,” says Orenstein, who is working on a history of housing segregation in Chicago.

From 1950-1970, Chicago’s Black community lost $3.2 billion to $4 billion because of racist policies and predatory housing contracts, according to a Duke University report in 2019 led by Orenstein. The report, “The Plunder of Black Wealth in Chicago,” calculated that African Americans purchasing on contract paid, on average, $587 more each month (in April 2019 dollars) than they would have had they paid the fair price for their home and had a conventional or FHA- backed mortgage. The report found that, on average, sellers marked up the cost of contract homes by 84%.

Orenstein says knowing this history is foundational to understanding how to remedy the damage done by racialized housing policy.

Based on the Yorks’ contract information, Amber Hendley, one of the researchers on the report, created a Race Tax Model (buyer’s payment minus seller’s payment) for USA TODAY to show the premium paid by the Yorks, calculated using the price of the home, down payment and interest rates over a 25-year mortgage term, the most common term at the time.

The difference between what the Yorks agreed to pay over 25 years for a home they bought for $23,000 in 1959 and the seller’s purchase price of $15,000 (obtained by the data set collected by the researchers) is $22,150 in 1959 or $157,814 in 2022 inflation-adjusted dollars.

The past decade saw a resurgence in land installment contracts nationwide in the wake of the foreclosure crisis. A high percentage of these properties are in African American neighborhoods, according to a paper by the Federal Reserve Bank of Atlanta.

Investors bought foreclosed homes when Fannie Mae and Freddie Mac began selling houses for as little as $10,000 each, often bundling them, says Sarah Bolling Mancini, a staff attorney focusing on foreclosures at the National Consumer Law Center.

“So investors were buying them in bulk, and they decided to sell them, quote-unquote, using a contract for deed or land contract,” says Mancini who co-wrote an NCLC paper titled “Toxic Transactions.” “In part, because that was the most advantageous way for that investor to sell that involved a very easy way of taking back the property if someone defaulted.”

About a dozen states require that land contracts be publicly recorded, an important provision that protects all parties involved by documenting the buyer’s homeownership, according to a study by the Pew Charitable Trusts.

Though it is difficult to determine its prevalence nationally, as most states don’t require these transactions to be recorded, about 36 million Americans have used some form of alternative financing, a survey by Pew found.

‘Devastating’ contract in Detroit

Sonja Bonnett, a Detroit resident, has lived that reality. After years of renting homes in not-so-great neighborhoods, the married mother of seven decided in 2011 to buy a home. Bonnett, who worked as a waitress while her husband worked construction jobs, says they were never financially secure. Her credit score was low, and she doubted she would qualify for a mortgage.

Most homes she saw needed extensive repairs, but she kept looking until she found one she thought she could work with. The house, owned by an out-of-state investment company, was $50,000. The couple made a $2,500 down payment and had a monthly installment payment of about $600.

Things seemed to be going fine until two years later when a yellow bag was hung on her front door with a letter inside: “The letter said that the house was $5,000 behind in property taxes.” When she contacted the investment company, she found that it had not paid property taxes for years. The company sent her the deed.

“It was devastating. It might as well have been $5 million because we didn’t have $5,000 in the bank or laying around,” she says. “We were living paycheck to paycheck.”

She found out that the investment company paid $1,100 for the property.

“I think I was willfully ignorant about the process, willfully ignorant about how predatory it was,” she says.

She continued living in the house during the foreclosure proceedings.

Bonnett approached a housing nonprofit for assistance but was not eligible because she was a land contract buyer. The nonprofit referred her to Bernadette Atuahene, a professor at Chicago-Kent College of Law.

“She ended up educating me on the fact that not only was I losing my home illegally, essentially because the city had over-assessed my house at that time, the house was worth $5,000, maybe,” Bonnett says. “And the city had assessed it as something like $25,000.”

Bonnett says she decided to partner with a nonprofit to spread awareness among other Black homeowners in Detroit. The community organization bought three homes for residents who had illegally lost their homes.

The timing worked out for Bonnett. The nonprofit helped her move into one of the homes before her foreclosure was complete.

She serves as a community legal advocate for the Detroit Justice Center.

“My first mission is to educate the community about the programs that are available and about how people can be proactive about the appeal process in Detroit,” she says.

A ‘bucket list’ item

The York family achieved the American dream of homeownership, and Sandra and Donald have owned multiple homes.

“It’s part of your bucket list,” Donald says.

Neither encountered any barriers to homeownership when they bought homes in the 1990s and early 2000s. “My wife was a teacher, and I was in the fire department, and it was like, ‘Come on down,’” Donald says.

Asked why they think the Black homeownership gap persists, Sandra says: “There’s no sugar-coating it. We are a broken people because we’ve been on the ground with knees on our necks for generations and to try and come back from that. When you’re pounded on and you’re pounded on and you’re pounded on, somewhere along the line, you lose a little bit of faith and a little bit of hope.”

Copyright 2022, USATODAY.com, USA TODAY


Fla. Town Considers End to Single-Family Zoning

GAINESVILLE, Fla. – A split vote during the Gainesville City Commission meeting on Thursday has put the city on pace to become the first in the state to eliminate single-family zoning. It was the first of two needed votes that came in around midnight after a crowd of nearly 100 people showed up to oppose the zoning change, while only about a dozen supported it.

The 4-3 vote calls for small-scale, multi-family housing throughout the city, affecting up to 63% of Gainesville’s residential properties. The proposal replaces the single-family exclusionary zoning with a new “neighborhood residential” category that would allow residential structures of up to four units per parcel depending on the size of the lot.

Buildings can’t be more than two stories tall.

The motion to approve the change included a recommendation by commissioner Reina Saco that staff come back with the pros and cons of sunsetting the laws in three to five years to give the city time to study how the zoning change works in the real world.

A vote to postpone the vote until after the Nov. 8 election failed.

“My concern has been that we don’t have data,” said city commissioner Desmon Duncan-Walker, who proposed the delay. “My bigger concern is that we don’t have the will of the people. And I think we need that.”

Saco, Mayor Lauren Poe, and commissioners Adrian Hayes-Santos and David Arreola voted in support of the first of two required votes on the zoning and plan change. Commissioners Cynthia Chestnut, Duncan-Walker and Harvey Ward voted in dissent.

“The best time to plant a tree is 20 years ago,” Poe said. “The second best time to plant a tree is today. The same is true for housing. The best time to build adequate housing, and abundant housing, was 20 years ago. The second best time is today.”

Poe said he wants people to be able to choose where they want to live and not be forced out of their neighborhoods. But he added that when there is a shortage of homes, wealthy people will gobble up those in more desirable neighborhoods.

“That is how displacement and gentrification works in every single city and town. It’s not unique to Gainesville,” he said.

The emotionally charged meeting at the packed City Hall lasted more than six and a half hours, with a crowd flowing into a conference room and out into the parking lot, where some elderly people complained about standing for hours in 90-degree heat.

Commissioners who support the zoning and plan change have said that allowing the slight increase in density in single-family neighborhoods could create more housing units and help with the affordable housing problem over time. They attribute the origins of the city’s zoning laws to racist policies set during the desegregation era.

But the vast majority of Black people who have spoken out are opposed to eliminating exclusionary zoning. Commissioner Chestnut said the situation was odd and had emboldened Gainesville’s Black community like never before.

“I have never in my life been in a situation where you have white people calling an issue ‘racist,’ and Black people saying, ‘No, it’s not racist,’” said Chestnut, adding that the issue should not be about race.

But some historically Black neighborhoods, like Porters and Fifth Avenue, won’t be directly affected by the zoning change, as those areas already allow multi-family units. If anything, some argue, the zoning change would alleviate pressure in neighborhoods by expanding similar multi-family homes around town, mostly in the northwest part of the city.

Pushback from community leaders

Local state legislators are trying to get the plan change held up at the state level.

State Rep. Chuck Clemons, R-Newberry, and Sen. Keith Perry, R-Gainesville, recently sent a letter to the Florida Department of Economic Opportunity, asking it to intervene and hold up the process until the Legislature meets next spring to possibly address the issue. That agency is now the one that must sign off on the comprehensive plan.

The commission made the decision over not only residents’ objections, but all of its advisory boards.

Earlier this week, the Alachua County Commission voted to recommend that the city not approve the change. The city’s Affordable Housing Advisory Committee on July 12 unanimously urged the commission not to move ahead with the zoning change. And the city’s Plan Board was not opposed to the new multi-family zoning category but recommended it not be implemented citywide.

Community feedback

Several speakers urged the commission to put the proposal on a ballot for voters to decide. Petitions were presented with more than a thousand signatures of residents opposed to the change.

Harry Shaw, a Suburban Heights resident, said the rezoning is “unproven radicalness,” adding that it would result in a “costly ill-conceived boondoggle for Gainesville” but a windfall for developers.

Some residents also said they fear allowing multi-family units in single-family neighborhoods would lower property values and encourage student rentals that are not affordable. They said the multi-family units would result in more noise and parking issues.

Several UF students were among those in the minority who urged the commission to get rid of the exclusionary single-family zoning, saying it is keeping home prices high.

“This is just allowing people the flexibility to build housing that meets their needs,” Joshua Ney said.

It’s not over

The vote does not mean the changes are law yet. It was the first of two required votes. In between each, the plan must also be approved by the state Department of Economic Opportunity.

Ward said he believes the plan will get held up for a while there, calling it “uncharted territory.”

Chestnut agreed on Friday, saying it could be delayed until new elected leaders take office in January.

If that happens, the plan and zoning change would not likely happen, she said, noting that one speaker polled commissioner candidates who overwhelmingly said they would attempt to reverse the change.

The state agency has 30 days to respond to the city’s proposed land plan change.

“They could ask for more time,” Chestnut said. “I think they could take a number of approaches … They could say, ‘You need to have more public input,’ which I fully expect them to say. And I think another very, very powerful piece here is the Black community. With the Black community unanimously saying ‘no,’ I don’t think the state is going to ignore that.”

GNVoices President Casey Fitzgerald, who heads the organization fighting the plan and zoning change, said they will first contact the state agency and point out that the city has not done enough studies to justify the plan change, which is required by law. He said this could hold the case up until the next commission is seated after January, which would likely mean the zoning and plan proposal would die.

If the state agency approves the plan, then GNVoices will file an administrative appeal to the state’s decision to allow the plan change, he said.

Copyright © 2022, Gainesville Guardian, all rights reserved.


Self-Employed? You’ve Got to Plan for Retirement

Small biz owners can live on hope – hope that future deals and success will automatically create a retirement nest egg. But they need a better plan now.

NEW YORK – Retirement can loom like a dark cloud for small-business owners. Many invest blood, sweat and tears – and every penny – into building their business but never set cash aside for the future. A huge number of entrepreneurs have reported putting aside no retirement savings at all. For some, selling the business is their only retirement plan.

That’s a risky bet, says Keith Hall, president and chief executive officer of the National Association for the Self-Employed.

“You’re putting all of your eggs in one basket. Not just your current lifestyle, but your future,” Hall says. “If something goes wrong, you sacrifice both.”

And the list of things that could go wrong is long: Your business could fail. Your health could fail. You may not find a buyer. You may have to sell for less than you need. You may not be able to retire fully.

Rather than gamble on everything going right, diversify your nest egg so it will last you well into your later years.

Make retirement planning a priority

Saving for retirement is often the last item on your budget and the first to get cut in favor of other priorities, Hall says. Instead, make it as important as paying your mortgage or running your business.

This won’t come naturally to most entrepreneurs, who are often hyper-focused on immediate needs and tend to plan in three- to five-year increments.

“It’s hard as an entrepreneur and small-business owner to think 20-plus years out,” says Mary Bell Carlson, owner of Carlson Consulting LLC. “I’m often figuring out what I need to do today for immediate cash and long-term profitability.”

But Carlson, a financial counselor and certified financial planner, makes a point to invest where she can. She and her husband contribute to his employer-provided retirement plan. They each also put money into individual retirement accounts, among other investments.

“My biggest lesson has been to start, no matter how small the amount; it’s just important to start,” she says.

Determine what you can afford, whether that’s 1%, 5% or 10% of your gross earnings, and commit to it, Hall says. Over a long enough window, even small, regular contributions will compound into something meaningful.

There are a number of retirement plans for small-business owners, each with requirements, stipulations and tax implications.

– TRADITIONAL, ROTH IRA: Individual retirement accounts are easy to open and available to virtually anyone. You can contribute up to $6,000 in 2022 (up to $7,000 if you’re 50 or older). The main difference between traditional and Roth IRAs is whether you want tax savings now or later. Traditional IRAs use pre-tax income, but you pay taxes when the money comes out. With Roths, it’s the other way around.

  • SOLO 401(K): Available to business owners with no full-time employees (exception made for a spouse). The contribution limit is up to $61,000 for 2022, though that’s broken into two parts, each with limits. Similar to an employer-sponsored 401(k), contributions are pre-tax and withdrawals are taxed as income.
  • SEP IRA: A Simplified Employee Pension IRA, or SEP IRA, operates much like a traditional IRA, except you can contribute a lot more. Annual contributions are capped at $61,000 in 2022 versus $6,000 for a standard IRA. Another key difference: If you put money into your own SEP IRA, you must contribute an equal percentage to employees. This option is best for solopreneurs or those with few employees.
  • SIMPLE IRA: This option has a lower contribution limit, up to $14,000 in 2022 (for those under age 50), but it offers employee accounts and is easier for small companies to administer than a traditional 401(k). You must offer a 3% match or a blanket 2% contribution to all employees. You can deduct contributions made to your account and those made on your employees’ behalf.

Get input from a professional

Sure, you can try to decode which retirement plan is best for your business. Or you can work with a certified financial planner or registered investment advisor to determine the best path. Doing the latter can give you confidence in your strategy, help you avoid any costly penalties and ensure you don’t leave any money on the table.

If selling is still part of your retirement plan, the help of a professional is essential, says Norm Sherman, a certified mentor with SCORE, a national volunteer organization that offers free business mentorship. First, you need to know whether your business is sellable and what you can realistically expect to net in a sale.

An investment banker or business broker can evaluate your revenue, profit margins, business structure and market to give you an honest assessment and help you better position your business for a future sale.

“It costs you nothing to get answers to these questions,” Sherman says. “Don’t operate blindly; find experts who can help you.”

The content is for educational and informational purposes and does not constitute investment advice.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. Kelsey Sheehy is a writer at NerdWallet.


80% of Metros See Double-Digit Price Gains in 2Q

NAR: Median home prices in the second quarter were up 14.2%, but Fla. saw bigger gains. Of the top 10 U.S. metros for home-price increases, Fla. had 7 ranking cities.

CHICAGO – Despite escalating mortgage rates and slumping home sales in the second quarter of 2022, more markets saw double-digit annual price gains compared to the prior quarter, according to the National Association of Realtors®’ (NAR) latest quarterly report.

Of the 185 metro areas tracked by NAR, 80% posted double-digit price gains, up from 70% in the first quarter.

Nationally, the median single-family existing-home price eclipsed $400,000 for the first time, rising 14.2% from one year ago to $413,500. However, year-over-year price appreciation still eased slightly compared to the previous quarter’s 15.4%.

In Florida, however, prices increased outpaced most of the nation. Of the top 10 metro areas with the largest year-over-year price gains, seven are in Florida:

Top 10 U.S. metro areas for prices gains in 1Q 2022

  1. Fayetteville-Springdale-Rogers, Ark.-Mo. (31.9%)
  2. Lakeland-Winter Haven, Fla. (31.4%)
  3. Naples-Immokalee-Marco Island, Fla. (28.9%)
  4. North Port-Sarasota-Bradenton, Fla. (28.8%)
  5. Myrtle Beach-Conway-North Myrtle Beach, S.C.-N.C. (28.5%)
  6. Tampa-St. Petersburg-Clearwater, Fla. (28.0%)
  7. Cape Coral-Fort Myers, Fla. (27.8%)
  8. Punta Gorda, Fla. (27.4%)
  9. Ocala, Fla. (26.7%)
  10. Ogden-Clearfield, Utah (25.5%)

“Home prices have increased at a pace that far exceeds wage gains, especially for low- and middle-income workers,” says NAR Chief Economist Lawrence Yun. “Overall, the national price deceleration inevitably followed the softening sales, providing well-positioned prospective buyers a small measure of welcomed relief.”

Regionally, the South – the section that includes Florida – accounted for 44% of single-family existing-home sales in the second quarter, and it had the largest price appreciation at 18.2%. Prices increased 12.7% in the West, 10.1% in the Northeast, and 9.7% in the Midwest.

The top 10 most expensive markets in the U.S., half of which were in California, included:

  1. San Jose-Sunnyvale-Santa Clara, Calif. ($1,900,000; 11.8%)
  2. San Francisco-Oakland-Hayward, Calif. ($1,550,000; 11.9%)
  3. Anaheim-Santa Ana-Irvine, Calif. ($1,300,000; 17.2%)
  4. Urban Honolulu, Hawaii ($1,145,000; 17.3%)
  5. San Diego-Carlsbad, Calif. ($965,900; 13.6%)
  6. Boulder, Colo. ($933,400; 11.8%)
  7. Naples-Immokalee-Marco Island, Fla. ($850,000; 28.9%)
  8. Los Angeles-Long Beach-Glendale, Calif. ($825,700; 9.2%)
  9. Seattle-Tacoma-Bellevue, Wash. ($818,900; 14.4%)
  10. Boston-Cambridge-Newton, Mass.-N.H. ($722,200; 8.9%)

“The local job market performance and supply availability are the clear distinguishing factors driving local home price growth,” Yun added. “Job growth is positive and should be applauded, but supply restraints are creating unnecessary barriers to ownership opportunities.”

Housing affordability pains

Housing affordability dramatically tumbled in the second quarter of 2022, driven by sharply rising mortgage rates and climbing home prices. The monthly mortgage payment on a typical existing single-family home with a 20% down payment jumped to $1,841. That’s an increase of $444 – or 32% – from the first quarter of this year and $612 – or 50% – from one year ago. Families typically spent 24.3% of their income on mortgage payments, up from 18.7% the prior quarter and 16.9% one year ago.

Growing unaffordability impacted first-time buyers looking to purchase a typical home during the second quarter of 2022:

  • For a typical starter home valued at $351,500 with a 10% down payment loan, the mortgage payment rose to $1,810 – a bounce of $433 (or 31%) from the prior quarter and $597 (or 49%) from one year ago.
  • First-time buyers typically spent 36.8% of their family income on mortgage payments, up from 28.7% in the previous quarter. A mortgage is considered unaffordable if the monthly payment (principal and interest) amounts to over 25% of the family’s income.
  • A family needed at least $100,000 to afford a 10% down payment mortgage in 53 markets, nearly double the 27 markets from the prior quarter. Yet, a family needed less than $50,000 to afford a home in 23 markets, down significantly from 63 markets in the previous quarter.

© 2022 Florida Realtors®


Build a Base Through YouTube Videos

Many consumers randomly watch YouTube videos, and engaging Realtors who can entertain and even be funny can build their online audience.

CALGARY, Canada – Calgary, Alberta, real estate agent Brad McCallum has been regularly uploading listing videos to YouTube for three-and-a-half years. He now has 31,000 subscribers.

By creating engaging and entertaining content that keeps viewers on the platform longer, you will be rewarded with algorithmic juice that leads to more views,” McCallum says.

His recommendations? Agents should to start their videos with a hook, such as visuals, engaging questions or something that may draw viewers’ attention, such as, “Today I’m going to show you a mega-mansion with an indoor pool.”

He also doesn’t save the best things for the end, as if making a movie. He places dramatic highlight shots of a home’s top amenities early in his videos.

“The problem is only 15% of viewers stick around until the end of most videos,” McCallum says. “If they love the highlights, then they will stick around for the other details like the number of bedrooms, square footage and types of finishes in the home.”

Many of the highlights can be shot with quick pans or clips of the highlights of the best amenities of the home.

McCallum also tries to envision the people who would be an ideal fit for a particular home and why they would want to live there.

He says several additional platforms can be used to maximize the exposure of a home. As agents shooting the full video, for example, they can also shoot a short video for TikTok and Instagram Reel, and they can create an open-house invitation video for Facebook.

Source: Inman (08/07/22) Burgess, Jimmy

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


Mortgage Rates Switch Direction, Rise to 5.22%

Last week, mortgage rates dropped below 5%; this week, they changed direction. One year ago, the average 30-year, fixed-rate mortgage averaged 2.87%.

WASHINGTON (AP) — Average long-term U.S. mortgage rates soared this week in a continued volatile market as the key 30-year loan rate jumped back over 5%.

Mortgage buyer Freddie Mac reports that the 30-year rate rose to 5.22% from 4.99% last week. By contrast, the rate stood at 2.87% a year ago.

The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, increased to 4.59% from 4.26%.

Last week the 30-year rate fell below 5% for the first time in four months, days after the Federal Reserve raised its benchmark interest rate by a hefty three-quarters of a point in its most aggressive drive in over three decades to tame record-high inflation. It was the central bank’s second such increase in less than two months.

Experts see some stability returning to the housing market as the drop in homebuyer demand moderates although supply remains fairly tight.

“Although rates continue to fluctuate, recent data suggest that the housing market is stabilizing as it transitions from the surge of activity during the pandemic to a more balanced market,” Freddie Mac chief economist Sam Khater said. “The consequence is that house prices likely will continue to rise, but at a slower pace, for the rest of the summer.”

Consumer prices jumped 8.5% in July compared with a year earlier, down from a 9.1% year-over-year increase in June, the government reported Wednesday. Falling prices for gas, airline tickets and clothes gave consumers a bit of relief last month, though overall inflation is still running at close to its highest level in four decades.

Rapidly hiking interest rates risks pushing the U.S. economy into a recession, but it is the Fed’s most powerful tool to get price increases back to its 2% annual inflation target.

Higher borrowing rates have discouraged house hunters and cooled a housing market that’s been hot for years. The National Association of Realtors reported last month that sales of previously occupied U.S. homes slowed for the fifth consecutive month in June.

Home prices have kept climbing – albeit at a slower pace than earlier this year – even as sales slowed. The national median home price jumped 13.4% in June from a year earlier to $416,000. That’s an all-time high according to data going back to 1999, NAR said.

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


Inflation Slows in July – But It’s Still High

Year-to-year, U.S. prices rose 8.5% in July compared to 9.1% in June. Most of that savings – though not all – resulted from falling gas prices.

WASHINGTON (AP) – Falling gas prices gave Americans a slight break from the pain of high inflation last month, though the surge in overall prices slowed only modestly from the four-decade high it reached in June.

Consumer prices jumped 8.5% in July compared with a year earlier, the government said Wednesday, down from a 9.1% year-over-year jump in June. On a monthly basis, prices were unchanged from June to July, the smallest such rise more than two years.

Still, prices are spiking across a wide range of goods and services, leaving most Americans worse off. Average paychecks are rising faster than they have in decades – but not fast enough to keep up with accelerating costs for such items as food, rent, autos and medical services.

President Joe Biden has pointed to declining gas prices as a sign that his policies – including large releases of oil from the nation’s strategic reserve – are helping lessen the higher costs that have strained Americans’ finances, particularly for lower-income Americans and Black and Hispanic households.

Yet Republicans are stressing the persistence of high inflation as a top issue in the midterm congressional elections, with polls showing that elevated prices have driven Biden’s approval ratings down sharply.

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


Average Cost for a One-Bed Apartment? $1,769

Rent.com: $1,769 is a 39% year-to-year increase. The nationwide average monthly cost for a two-bedroom rental in August is $2,105, a 38% increase year-to-year.

NEW YORK – How much does it cost to rent a one-bedroom or two-bedroom apartment in the United States? Nationwide rent prices have skyrocketed in the two years since the COVID-19 pandemic, and the cost for renters remains high in August.

“Rent prices are definitely up, and up pretty significantly,” Rent.com researcher Jon Leckie told FOX Television Stations this week.

The average cost of a one-bedroom in August 2022 is $1,769, a 39% increase from this time last year, according to Rent.com’s monthly report.

Meanwhile, the nationwide average monthly cost for a two-bedroom rental in August is $2,105, a 38% increase from a year ago.

Rents have increased along with rising home prices, Leckie said. As more find themselves priced out of home buying, there’s more upward pressure on the rental market.

“I think what we’re seeing is a peak in the housing market where people are saying, ‘It’s too expensive, I can’t afford it. Mortgage rates are too uncertain,’ and so they are either remaining renters, or they’re selling now and high but they decided they don’t want to buy until the market kind of stabilizes or comes down,” Leckie explained.

What are the most expensive cities for renters?

While the average nationwide rent prices are up, not all U.S. regions are divided equally when it comes to high rents. The majority of the cities with the highest rent (58%) are on the West Coast, according to a separate report from Rent.com showing the top 100 most expensive cities for renters.

Out of the top 100 U.S. cities, 41% are in California. Another 28% of the most expensive cities for renters are in the South – and a majority of the southern cities (57%) are in Florida. Several are also in or near major technology hubs, keeping rents high and apartments in low supply due to the industry’s high salaries and consistent growth during the pandemic, according to the report.

The Northeast had just 13% of the 100 cities with the highest rent in the U.S., including Bayonne in New Jersey, Boston, Cambridge, and Quincy, Massachusetts.

Only one Midwest city made the top 100 list for expensive rent: Chicago (No. 46 – $2,904 on average).

Jersey City, New Jersey, which is located across the Hudson River from Manhattan, ranked as the No. 1 city for the highest rent in the United States during the survey period (Manhattan was excluded from Rent.com’s ranking). The average monthly rent in Jersey City increased from $3,308 in 2021 to $5,500 in 2022, according to the report – which is an increase of 66.25%.

Boston ranked second with the average rental rate jumping from $4,164 in 2021 to $4,878 in 2022 – a 17.14% annual rent increase.

The California cities of Palo Alto ($4,672), Glendale ($4,472), and Santa Monica ($4,357) rounded out the top five.

Most expensive “top 100” rental cities located in Florida

6. Coral Gables

20. Fort Lauderdale

33. Miami

37. Doral

49. Boca Raton

57. West Palm Beach

58. Palm Beach

63. Hialeah

74. Boynton Beach


78. Fort Myers

79. Orlando

81. Margate

97. Tampa

95. Hollywood

© Copyright 2022 local TV LLC, all rights reserved.


The Simplest Path to a 6-Figure Income?

It’s not this simple, but the core advice? Regularly repeat behaviors that work – and stop doing the things that don’t.

MIAMI – The vast majority of real estate agents sell 24 or fewer homes per year, yet most hope to earn six figures annually, says Jake Dixon, founder and CEO of The Locker Room Real Estate Coaching and Training.

To be successful, agents need to break things down into manageable segments and take a long-term view. It takes 90 days to lose or create momentum in business, so what a person does today may show up three months later.

Agents should focus on the following question: “What are the simple things I need to do repeatedly to produce the fruits I am seeking?”

It’s important to note that flaws in judgment, when repeated over time, compound into failure and disappointment. But disciplines that are adopted and repeated over time will yield good results.

Every 50 real estate conversations ultimately yield one new piece of business. Knowing this to be consistently true over time, there is a formula to building a sustainable, predictable real estate business that earns six figures per year. If an agent were to speak with just five people per day about real estate, while working five days a week for 50 weeks out of the year, the compound effect totals 1,250 real estate conversations over the course of the year.

When the 50:1 ratio is applied, that yields 25 sales, likely resulting in a six-figure income.

Source: South Florida Agent (08/01/22) Dixon, Jake

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


More Listings Gives RE Market Time to Breathe

WEST PALM BEACH, Fla. – A lusty real estate market that saw cutthroat bidding wars jack up prices by tens of thousands of dollars swiftly deflated this summer with 30% of single-family homes for sale in Palm Beach County slashing listing prices in June.

That’s the highest percent of price drops countywide since at least 2013 when the national brokerage firm Redfin began tracking the measure of market health. It’s also up from a low of 10% of homes that cut their rates in February of this year.

Realtors confirmed the breakneck days of 40-plus attendees jostling into open houses and multiple blind offers waned in the face of higher mortgage interest rates, record-high inflation, an ailing stock market, a potential recession and a summer travel season free of pandemic restrictions.

“It’s our first time to exhale in two years,” said Lisa Wilkinson, a senior director of luxury sales for Douglas Elliman. “We may not have 30 showings the first day, but we will still achieve a seller’s goal. It will just be in a more controlled manner.”

And it may be a difficult conversation to have with sellers who watched neighbors during the pandemic spending spree get gluttonous prices for their homes.

Keyes Company Realtor John Sholar is representing a seller in the popular Flamingo Park historic district in West Palm Beach who listed his home at $1.55 million. The owner was hoping to get close to the $1.9 million listing price that was on the house next door. After a few weeks with no offers, Sholar texted his client to explain that the market was changing and that it may be time to lower the price. The seller was hesitant to agree.

“I said ‘do you want to sell your house or not?’ “ Sholar said. “It took a day or two for him to get back with me. He had to digest it.”

Sholar’s listing at 833 Biscayne Drive is now at $1.295 million. The home next door was down to $1.49 million in June. In July, it was listed for rent at $10,500-a-month, according to Realtor.com.

The dearth of homes for sale in Palm Beach County also led to increased prices, but supply began to creep up in June with a 77% hike over the previous year. Still, there were just 2.3 months’ worth of homes for sale. A balanced market is considered 5.5 months, according to the Broward, Palm Beaches and St. Lucie Realtors Group.

“Right now, there are more must-sellers than there are must-buyers but we’re not in a buyers’ market yet,” said Jeff Lichtenstein, president of Echo Fine Properties.

Echo’s agents are going through their listings now to make sure they are priced for the current environment. That includes knowing what people are searching for online. For example, it’s more likely someone would look for a home in the $250,000 price range than something priced precisely at $268,000.

Lichtenstein said he goes through a checklist of questions before lowering the price on a house. Those include how long has it been on the market, are the furnishings and décor attractive, how accessible were the showings, and what do the closets look like?

“You can’t have a peach hanger and a green hanger and a wire hanger. You need to coordinate, and you probably need to get rid of half of the stuff,” he said about making a closet more appealing.

In Palm Beach County, Jupiter had the highest percent of homes for sale that dropped their prices in June at about 44%. That’s up from a pandemic-era low of 10.7% in June 2021.

West Palm Beach had 28% of homes for sale drop prices, up from a low of 8.5% in February. Other June priced drops included 31% of Boynton Beach’s listings, Wellington’s 29%, Boca Raton’s 32% and Delray Beach’s 30%.

Statewide, 34.5% of active listings in June had price drops.

Realtor Cibie Cahur said the housing frenzy of the past year meant managing open houses like a bouncer manning the red velvet rope at a bar. At an open house in Abacoa, the seller required buyers to take their shoes off. The pile of shoes was so large that two people left wearing the wrong shoes. They were the same style, but different sizes. At another open house in Lake Worth, where the home was listed for $225,000 and needed a complete renovation, she got 21 offers including 11 cash buyers.

“It was incredible,” said Cahur, who is with the Cahur Group at Keller Williams Realty. “But I’m not seeing that kind of activity right now.”

A recent report from Redfin found the percent of homes for sale in June that saw multiple bids dipped below 50% for the first time since May 2020. The height of the bidding wars nationally was in January of this year when nearly 70% of homes nationwide were selling amid multiple offers.

Tampa had the lowest bidding-war rate nationwide in June at 28.9%. The Miami market, which includes Palm Beach, Broward and Miami-Dade counties was the only other Florida area in the top 10 for the lowest percentage of bidding wars in June at 45.9%.

Providence, Rhode Island, had the highest percentage of sales that faced competition at 77.6%.

“Florida has always had a more volatile housing market,” said Redfin Chief Economist Daryl Fairweather. “The fall is a bit dramatic because you are coming from such high heights.”

But there are still hot spots in Florida, including the luxury market.

In the Town of Palm Beach, just 11% of homes for sale had price drops in June. That’s up from a pandemic low of 3.6% in August 2021. Because high-end sales are often cash deals, they have been less likely to succumb to interest rate increases.

“I’ve seen it steady through the summer,” said Margit Brandt, senior real estate advisory at Premier Estate Properties, who specializes in multi-million-dollar homes. “Buyers are still coming to Florida. They are moving their businesses here, their families here, and they are moving here full time.”

Brandt acknowledged full time for her high-end clients may mean 10 months in Florida with summers in cooler climes.

© Copyright 2022 Palm Beach Newspapers, Inc. Kimberly Miller is a veteran journalist for The Palm Beach Post, part of the USA Today Network of Florida.


Fla. Woman Sues Equifax Over Loan Costs

From mid-March to early April, credit-scorer Equifax gave faulty info to lenders, and some borrowers may now be paying higher monthly payments than they deserve.

ORLANDO, Fla. (AP) – A Florida woman has sued Equifax claiming she was denied a car loan because of a 130-point mistake in her credit report that she says was part of a larger group of credit score errors the ratings agency made this spring due to a coding problem.

The class action lawsuit was filed in federal court in Atlanta on behalf of Nydia Jenkins and potentially millions of others who applied for credit during a three-week period earlier this year. The Jacksonville, Florida, woman was forced to accept another, less favorable loan that was $150 per month more than the one she was turned down for because of the error, according to the lawsuit.

Credit scores provide lenders with a picture of how a big a risk a borrower is, and they typically range from 300 to 850 points, with a higher score usually resulting in better terms for people applying for mortgages, auto loans or mortgages. The lawsuit says the errors violated federal law that governs credit reporting agencies.

“In the modern economy, millions of Americans rely on credit to make the most important purchases of their lives, from homes to cars to appliances and everything in between,” John Morgan and John Yanchunis, the attorneys representing Jenkins, said in a statement. “We believe that many of the people impacted – some of whom may still be unaware of what happened – suffered severe financial consequences.”

The errors occurred over three weeks from mid-March to early April. An analysis Equifax conducted shows that there was no shift in a majority of credit scores, and for those who did experience a change, only a small number would have received a different credit decision, Equifax said in an emailed statement on Thursday.

“While the score may have shifted, a score shift does not necessarily mean that a consumer’s credit decision was negatively impacted,” the Equifax statement said.

Equifax said in another statement earlier this week that the problems stemmed from a coding issue that “resulted in the potential miscalculation of certain attributes used in model calculations.” In that statement, the firm said less than 300,000 consumers had a score shift of 25 points or more.

“Again, we do not take this issue lightly,” Equifax said.

Besides seeking an undisclosed amount of damages “to the fullest extent allowable by law,” the lawsuit is asking for an audit to identify which customers’ credit scores were affected; money for credit repair services; and the establishment of a fund to reimburse customers for any out-of-pocket expenses they incurred from the errors.

In 2017, hackers broke into Equifax in a breach that exposed the financial information of 147 million Americans. A federal court in 2020 approved a $380 million settlement of class actions lawsuits, with no finding or judgment of wrongdoing made. The settlement required Equifax to invest a minimum $1 billion over five years on data security.

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


HUD Wants to Help Renters Build Assets

Through the “Bridging the Gap” program, HUD hopes to give historically left-out people help to improve their credit, save resources for homeownership and build wealth.

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) released an agenda for “economic justice.”

HUD’s agenda, Bridging the Wealth Gap: An Agenda for Economic Justice and Asset Building for Renters, describes actions the department will take to help low-income renters build assets through savings, access to mainstream banking and credit score improvement.

In addition to the program, HUD Secretary Marcia L. Fudge also announced  $113 million in funding.

“We’re looking at everything through a lens of equity and how we address systemic racism,” says Fudge. “We’re giving people who have historically been left out and underserved the resources to take a chance on their futures – to improve their credit, save resources for homeownership and other needs, and build wealth. That’s what this is all about.”

Unequal access to savings and banking especially impacts renters and contributes to a racial wealth gap. Most renters have a minimal financial safety net when things arise, such as unemployment or unanticipated expenses, such as car repairs or medical emergencies.

Less than half of American households have three months of savings, according to HUD. And in 2019, the median cash savings of renter households was $1,400 compared to homeowner cash savings of $10,100.

HUD says Bridging the Wealth Gap expands its work to build a connection between federal rental assistance and homeownership programs. It gives renters in HUD programs the necessary first steps toward financial well-being and potential homeownership through saving, credit building and banking.

Specifically, Bridging the Wealth Gap announces the following current and future actions HUD is taking to promote asset building:

Current asset building actions

  • Launch the asset building moving to work (MTW) demonstration
  • Expand asset building programs like the family self-sufficiency program
  • Move from annual to triennial income recertification
  • Support renters with credit and financial counseling
  • Help HUD-assisted young adults save
  • Partner with other federal agencies and stakeholders

Future asset building actions

  • Build credit history through rent reporting
  • Integrate financial well-being and supportive services into PHA standard practice
  • Improve homeownership programs and supports for HUD-assisted renters

The $113 million-dollar Family Self-Sufficiency (FSS) program is the nation’s largest asset-building program for low-income families and currently serves around 65,000 participants at over 700 Public Housing Authorities (PHAs).

FSS is a voluntary program. Working with community partners, it coordinates services to create an escrow savings account that helps participants grow their earned income and savings. Upon graduation, the average family in FSS in 2021 had about $9,500 in savings.

© 2022 Florida Realtors®


7 States Still Haven’t Approved Virtual RE Closing

California, Connecticut, Georgia, Mississippi and South Carolina haven’t passed legislation, but Delaware, Massachusetts and Washington, D.C. are close to doing so.

NEW YORK – Currently, 43 U.S. states have laws permanently allowing remote online notarization, which underlies virtual closings, up from 22 when the pandemic began, according to the National Notary Association.

The seven holdouts have yet to pass such legislation. California, Connecticut, Georgia, Mississippi and South Carolina don’t appear close to offering the digital closings, but bills in Delaware, Massachusetts and Washington, D.C., are close to becoming law.

In a virtual closing, homebuyers videoconference with lenders, lawyers and notaries who verify identities, while documents are signed electronically.

As the market cools, mortgage lenders say they’re prioritizing virtual closings and other new tech-enabled processes.

“It’s really not a technology limitation; we’ve got all the tech now where you can do a fully digital close. It’s really the legal innovation that needs to happen,” says Brian Woodring, chief information officer of Detroit-based Rocket Mortgage LLC.

At the federal level, the U.S. House in late July approved the Secure Notarization Act, allowing notaries nationwide to conduct remote online notarizations. The U.S. Senate must still pass the bill.

Source: Wall Street Journal (08/08/22) Bousquette, Isabelle

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


Foreclosure Activity Dropped 4% in July

We’ll see a slow uptick in foreclosures? Not in July. While unexpected, Attom’s EVP says the drop might be normal seasonal changes rather than an overall decline.

IRVINE, Calif. – Attom’s July 2022 U.S. Foreclosure Market Report found 30,358 U.S. properties with foreclosure filings – default notices, scheduled auctions or bank repossessions – a drop of 4% from a month earlier.

While the number is up 143% year-to-year, pandemic foreclosure bans and pandemic-era programs to help owners stay in their homes skewed the foreclosure numbers for most of 2021.

“While it’s encouraging to see both foreclosure starts and completions drop off a bit in July, it’s also worth noting that there may be some seasonality impacting the numbers,” says Rick Sharga, executive vice president of market intelligence at Attom. “In eight of the last 10 years, third quarter foreclosure activity has been lower than the previous quarter, so we might just be seeing a return to a more normal seasonal pattern of delinquencies and defaults.”

Florida not feeling as much pain

The Sunshine State has, historically, been at the top of the foreclosure list if not in second or third place. But only Miami even earned a mention in Attom’s latest report as one of the top five metros for foreclosure starts (the number of homes just entering the foreclosure process).

Still, even there, Miami was No. 4 with 666 starts, preceded by New York (1,380 foreclosure starts), Chicago (1,247 foreclosure starts) and Los Angeles (678 foreclosure starts).

In a state comparison, Delaware had the highest foreclosure rate (one in every 2,127 housing units with a foreclosure filing), which includes homes in every phase of the process. It was followed by: 

  • Illinois (one in every 2,334 housing units)
  • New Jersey (one in every 2,564 housing units)
  • Nevada (one in every 2,609 housing units)
  • South Carolina (one in every 2,976 housing units)

© 2022 Florida Realtors®


Brokers: Incentivize Teams for Sales Success

Salespeople usually thrive on competition, and rewards for success can include anything from tech tools or marketing help to company-paid vacations.

NEW YORK – The drive for sales pushes broker/owners and team leaders, but many don’t use incentives, even though they play to real estate agents’ strengths. Salespeople are naturally competitive and many really enjoy the challenge of a competition.

Companies can, for example, create a monthly or 6-8 week listing contest to motivate agents to set listing appointments and expand listing inventory. Leaders can direct agents’ efforts by having in-office coaching and training sessions on ways to create listing appointments and how to properly price and close them.

Prizes can include cash, a technology tool or marketing resources, and can be based on how each agent increases listings month-over-month or year-over-year.

In addition, companies can host team-based contests with weekly listings and sales goals. Prizes can include a spa day or night out for the team. Companies could also offer sales-incentive trips to agents who qualify, perhaps by increasing their income sufficiently to cover the cost while also increasing market share and revenue. First-tier qualifications may include an all-inclusive resort, the next tier could comprise airfare, and the next a plus-one guest.

The trip idea also benefits the brokerage. Since everyone takes the trip together, participants experience more team bonding and culture reinforcement.

Source: RISMedia (08/02/22) Johnson, Sherri

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


Grants Inspire Real Estate’s Female Leaders

60% of Realtors are women but they hold fewer leadership positions. To change that, the Women’s Council of Realtors offers grants for “new and innovative” programs.

WASHINGTON – The Women’s Council of Realtors® (WCR) wants to inspire more women to take on leadership roles in the real estate industry, and it’s doing so through its Supporting Women of Real Estate grants, which provide funding to local and state Realtor® associations for programs aimed at advancing women.

While women make up more than 60% of the real estate profession, they don’t hold nearly that same level of representation in leadership positions. WCR’s grants hope to change that.

WCR recently announced 10 recipients of its 2022 Supporting Women of Real Estate grants, which provide $2,500 per recipient to help organize one-day conferences that focus on encouraging more women leaders.

“We are pleased to have worked with the National Association of Realtors® over the past few years to provide over 30 Realtor associations grants that provide new and innovative programs focused on advancing women in the real estate industry,” says 2022 WCR President Sylvia Seabolt. “The program goals include inspiring women professionals to take on greater leadership roles in both business and organized real estate.”

This grant recipients have numerous events planned to spark a greater interest among women for leadership positions. Here’s what’s on tap for a few:

  • The Placer County Association of Realtors in California plans to host a one-day event that features a panel of women industry leaders sharing topics like building a team, becoming a broker, running an office and creating a powerful support network of other Realtors for career advancement.
  • The Prescott Area Association of Realtors in Arizona will host a one-day conference to celebrate the successes of its women leaders throughout the state and to inspire others by providing the opportunity to build greater professional relationships, including a “speed networking” activity.
  • The South Shore Realtors in Massachusetts will use its grant to host an event called “Women’s Leadership Symposium: Accelerate. Advance. Achieve.” The one-day event will offer sessions featuring successful women in real estate who will speak on the challenges, pitfalls and successes that have impacted their diverse career journeys. The sessions also will cover topics on leadership, public speaking, advocacy, showing value in negotiations, work-life balance and discrediting the superwoman “I-can-do-it-all” myth.

Supporting Women of Real Estate grant recipients for 2022

  • Madera Association of Realtors (California)
  • Oregon Realtors
  • Pikes Peak Association of Realtors (Colorado)
  • Placer County Association of Realtors (California)
  • Prescott Area Association of Realtors (Arizona)
  • Richmond Association of Realtors (Virginia)
  • South Carolina Realtors
  • South Shore Realtors (Massachusetts)
  • Spokane Association of Realtors (Washington)
  • Tacoma-Pierce County Association of Realtors (Washington)

© 2022 Florida Realtors®


Growing Share of Listings on Market 30+ Days

The six Fla. metros included in the July report had days-on-the-market averages greater than 30 days, ranging from an average 52.7% of Tampa listings to 72% in Miami.

SEATTLE –– The share of U.S. home listings that stayed on the market for at least 30 days without a contract was up 12.5% year-to-year in July, according to a Redfin study. Nationwide, 61.2% listings were on the market for at least 30 days; a year earlier, it was 54.4%.

According to report economists, it’s the first year-over-year increase in “stale” housing supply – defined as homes on the market for a minimum of 30 days – since the beginning of the pandemic and close to the biggest uptick in Redfin’s records, which go back to 2012. The only time it increased more (13.9%) was in April 2020, when the pandemic ground the housing market nearly to a halt.

In the six Florida metro areas included in the study, days-on-market ranked both higher and lower than the national average. However, one metro, Fort Lauderdale, had quicker sales in July compared to one year earlier:

  • Jacksonville: 59.3% on the market 30+ days – a 21.2% year-to-year increase
  • Tampa: 52.7% on the market 30+ days – a 18.6% year-to-year increase
  • Orlando: 55.6% on the market 30+ days – a 15% year-to-year increase
  • West Palm Beach: 65.2% on the market 30+ days – a 10.1% year-to-year increase
  • Miami: 72% on the market 30+ days – a 1.8% year-to-year increase
  • Fort Lauderdale: 63% on the market 30+ days – down 0.9% year-to-year

The change reflects a housing market that now faces 5%-plus mortgage rates and a shaky economy. In June, mortgage rates rose to 5.8% before dropping slightly during the month of the study – to 5.4% in July. The change has pushed more buyers to act quickly, but it’s also pushed more sellers to list their home before the market cools.

The total number of U.S. homes for sale was up 4% year over year in July, the biggest increase since mid-2019 – but that’s largely due to homes staying on the market longer. The number of new listings coming into the system dropped 6%.

“People want to know whether we’ve officially shifted from a seller’s market to a buyer’s market. While there’s not a clear line separating those two ideas, homes sitting on the market longer is a point in buyers’ favor,” says Redfin Deputy Chief Economist Taylor Marr. “Buyers can take their time making careful decisions about homes without worrying so much about bidding wars, offering over the asking price and waiving contingencies.”

However, it’s a different story for sellers. They’ve “spent the last two years hearing about their neighbors’ homes getting multiple offers the day they go on sale,” says Marr. “Now they need to price lower and get back to the basics of selling a home, like staging and sprucing up painting, to get buyers’ attention.”

The number of listings over 60 days old also increased, up by 6.8% year-to-year (31.4% to 33.5%). It was the first increase since the beginning of the pandemic.

The uptick in time-on-the-market can also be misleading right now since it’s a year-to-year comparison. In July 2021, the market was red hot, and a typical home went under contract in 15 days – close to the fastest on record – and demand pushed prices to surge even as the total number of home sales declined.

The share of housing supply that was stale was stable before the pandemic, with any fluctuations largely due to typical seasonal patterns.

© 2022 Florida Realtors®


Fannie Mae: Buyers Wary of the Housing Market

Buyers’ feelings about the current market hit a low not seen since 2011. Only 17% think it’s a good time to buy a home, and the “good time to sell” index also dropped.

WASHINGTON – Consumers don’t have a good feeling about the current market.

The Fannie Mae Home Purchase Sentiment Index (HPSI) decreased 2.0 points in July to 62.8, its lowest level since 2011 and well below the all-time high set in 2019.

Only 17% of respondents say it’s a good time to buy a home, and the percentage of who believe it’s a good time to sell has also been ticking downward. In July it fell to 67% from a 76% reading in May.

Overall, four of the index’s six components decreased month over month, including the component associated with home price growth expectations, which has fallen meaningfully over the past few months though remains positive. Year over year, the full index is down 13.0 points.

“The HPSI has declined steadily for much of the year, as higher mortgage rates continue to take a toll on housing affordability,” says Doug Duncan, Fannie Mae senior vice president and chief economist. “Unfavorable mortgage rates have been increasingly cited by consumers as a top reason behind the growing perception that it’s a bad time to buy, as well as sell, a home.

“Some homeowners may opt to list their homes sooner to take advantage of perceived high prices, while some potential homebuyers may choose to postpone their purchase decision believing that home prices may drop. Overall, this month’s HPSI results appear to confirm our forecast for moderating home sales over the coming year.”

© 2022 Florida Realtors®


Short-Term Rentals Boomed – That’s Good and Bad

FORT LAUDERDALE, Fla. – Needing places to either work from temporarily or vacation as they escaped pandemic restrictions, COVID fleers made South Florida one of their top destinations.

And with them came an increased need for short-term housing, or vacation rentals.

“It appears mostly in the Sunbelt states, particularly in Florida, in South Carolina, where we have beachfronts and parts of Texas,” says Ken H. Johnson, real estate economist at Florida Atlantic University. “If you were going to work from home and you were in the north or in the Midwest, and you wanted to get away from home or even work for a short while, you could do it from West Palm Beach or Miami.”

At the same time, investments in short-term rentals in South Florida took off as investors sought to cash in on the soaring real estate market, according to real estate agents in South Florida.

It’s a nice way for homeowners to earn some extra cash, but how does the proliferation of short-term rentals affect a community?

The business end

Agents witnessed the trend first-hand, and reported an uptick in people looking to buy these investment properties.

“A lot of people came to the Airbnb market,” said Benjamin Gene, president of Keyes Property Management in Pompano Beach. “They saw the market and they saw that they could make almost three times the income in a vacation rental. They also saw the demand as compared to a hotel because people were scared [of public spaces.]”

According to Gene, they saw an approximate 200% increase in their portfolio of vacation rentals over the course of the pandemic.

Shannon Nowden, with the Nowden Group in Fort Lauderdale, has seen a similar trend over the past three years, as interest in acquiring such properties has only risen. In 2019, he said, about 10% of his clients were interested in buying a short-term rental property, while in 2020, the number jumped to 25%. By 2021, 60% of his clients were looking to get into the market.

Investors in these properties are a mixed group: some are international buyers, some are people who were typically in the single-family rental market and were trying to break into the vacation rental space after seeing how profitable it was, and some are families that own a second home and want it to make money when they are not using it, agents said.

“Most of these buyers that we’re seeing are coming from out of state. They are typically savvy investors who have experience in other investments like cryptocurrency and want to get in on the real estate market as well,” said Brian Peal with the Pearl Antonacci Group in Boca Raton.

Recently, the market has begun to change as interest rates and home prices have both risen.

“We’re still adding new investors every month. It is the slow season but we are seeing people hesitating a little bit more because the profitability is not where it was a year ago or two years ago,” Gene said, adding that while the market might be in a small flux, it will not take away from its longevity.

Some cities are more conducive to short-term vacation rentals than others, with Fort Lauderdale being a big draw due to its vibrant downtown and beach access. Delray Beach is similar, with its proximity to the beach.

Properties range from condos to single-family homes outside of the city to large waterfront mansions.

Some real estate agents have even made short-term rental homes a specialty. The Nowden Group teaches short-term rental owners the ins and out of the business, how to upkeep their property and also serves as a property management company for these units.

One of Nowden’s pitches to potential buyers is that there’s a steady flow of customers – South Florida is a vacation wonderland, and a short-term rental offers a good option for families that want to travel and not have to rent multiple hotel rooms to accommodate them, which brings shopping and spending to the local economy.

The effects of the rental boom on neighborhoods, housing

Though the trend may be a boon to some, various neighborhood associations in Broward aren’t happy with the uptick of short-term vacation rentals in their communities, as they say the influx of these properties bring with them a host of problems.

Ric Buchanan, president of the Coral Ridge Isles Civic Association says that in the past six months in one of the quadrants of the Coral Ridge Isles neighborhood, three properties listed on Airbnb have popped up, and with it has come a host of trouble: large parties that violate the noise ordinance and improper parking on the side of the streets.

“I’m concerned that it’s going to make it difficult for the average homeowner to buy something,” said Buchanan. “It’s going to make it hard for long-term residents to want to stay because their community is being eroded.”

Hollywood Lakes Civic Association president Terry Cantrell said that 30% of the homes in their neighborhood are owned by an LLC, an issue that has been only growing over the years.

“It’s a total disruption to a quiet neighborhood,” said Cantrell. “Nobody wants to live next door to a commercial operation. When we bought our homes here in Hollywood Lakes, we were buying in a purely residential neighborhood.”

Airbnb, for its part, says on its website that guests who are reported for “throwing a disruptive party or violating our rules on gatherings of more than 16 people are subject to suspension or removal from Airbnb’s platform.”

Another concern is that while South Florida suffers from a lack of housing, these properties – potential places for people to live full-time – are now essentially part of the hospitality industry. That might bring fresh customers to local shops and restaurants, but it could be exacerbating the housing shortage.

“There is nobody living there year-round, so that unit is effectively off the market when we need them,” Johnson said.

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


Condo Safety Checks May Face Difficulties

SARASOTA, Fla. – An estimated 2 million Florida residents live in buildings that, under new regulations adopted after last year’s Surfside tragedy, mandate detailed building safety inspections under tight deadlines, with a limited number of experts available to conduct them.

State figures show a minimum of 912,000 condo units meet the criteria for a required inspection, compared with about 50,000 engineers and architects, the only professionals authorized by the new law to do the reviews.

The deadline for condo associations to finish the inspections is at the end of 2024, but the reports can take two months to complete – and if issues are discovered, a second more time-consuming and costly study will be required. That one would have to start within a year.

Meanwhile, competition is tight for the professionals available for the work, as engineers and architects are in high demand from the construction industry; many of the professionals don’t specialize in inspecting condo properties. For example, several Sarasota engineering firms contacted by the Herald-Tribune said they do not perform condo inspections.

State Rep. Jason Pizzo, the South Florida Democrat who represents the area where the Surfside high-rise condo collapsed last year, has said the state doesn’t have enough engineers to handle the workload.

“Tell your nieces and daughters and sons to go study engineering,” Pizzo told the Associated Press after the bill became law in May.

But not everyone believes the task is impossible.

Some say engineers will move to Florida after seeing a business opportunity, while others point out that the more than two-year window provides time for state legislators to move the deadline back if it appears condo associations can’t meet the requirements.

Safety requirement

Inside the Sarasota city limits alone, officials estimate there are 190 condo properties that will need to complete a “phase one milestone inspection” by Dec. 31, 2024, under the new state law. In Venice, city officials estimate at least 100 properties and Sarasota County officials said they have identified 260 condos that will need to be inspected by the deadline.

The new law also allows county and municipal officials to fine condo associations that do not meet the deadlines.

Before the Miami-area condominium collapsed last summer, killing 98 people, only two counties in Florida required a structural inspection for the thousands of aging condo buildings in the Sunshine State. But after state legislators passed sweeping legislation in May, every condo that is three stories or taller will need to be evaluated for signs of “substantial structural deterioration” once the building reaches 30 years old – or 25 years if the building is within three miles of a coastline.

Those buildings will then also be required to be inspected again every 10 years.

Dan Lobeck, a Sarasota-area condo association lawyer who has represented hundreds of associations, said state lawmakers created an “impossible task with an impossible deadline.”

He compared it to fire sprinkler mandates passed in 2004. The state law that requires high-rise condo buildings to have the lifesaving equipment installed in older buildings has been delayed twice since it passed, with the new deadline to comply set for January 2024.

Lobeck said that after Surfside some appropriate requirement for structural integrity review of aging buildings may have been needed, “but they took that bill and ran with it and created this monster of a law.”

But others say the safety inspections are manageable. Steven J. Mainardi, a licensed professional engineer and principal at Delta Engineering, said that, while he’s seen two spikes in business – one after the Surfside condo collapse and another after the condo law was signed by the governor in May – he believes associations can meet the deadline if they start soon.

A typical inspection that would meet the new requirements takes between 30 to 60 days to complete and consists of a visual survey of both the habitable and inhabitable spaces, he said.

Each structure on the property that’s more than three stories will need its own report, he said. An engineer or architect will note any signs of deterioration like spalling of concrete, walls that could be buckling or other signs of significant distress, he said. If significant structural deterioration is discovered, they will note it in the report and the condo association will be required to complete a more rigorous inspection.

He said that he has a backlog of work and emphasized it would be important for condo associations to schedule the inspections sooner rather than later.

“We are actively looking for engineers and have been before the law was signed,” Mainardi said. “We have stepped up efforts.”

In one sign of the potential urgency, in October, the Downtown Sarasota Condominium Association plans to host a workshop titled “Are fines coming to your condo?” to raise awareness about some of the challenges that condo owners face as the deadline approaches.

Money issues

In addition, there are requirements to fully fund some building potential maintenance associated with the structural components of condo buildings, including paying for the replacement of big ticket items that could spell drastically higher fees for unit owners, especially if condo associations had been waiving reserve requirements.

Waiving reserve requirements had been allowed under the previous condo regulations, but the new legislation mandates keeping money on hand for potential repairs, and for accounting reviews to ensure the money is available.

Previously, these reviews were mainly checked to see if all of a condo association’s savings for various repairs was considered adequate. But the new law mandates adequate reserves be kept on hand to cover potential repairs in each specific category of work, or component, by the end of 2024, said Patricia Staebler, a Sarasota-area appraiser with more than 20 years of experience in completing reserve fund studies for condos.

Those funds also could not be used for any other purpose.

“We don’t do this in real life,” she said of approaches to repairs. “Our household budgets are pooled and we pull out what we need.”

She said the requirements could require much higher condo association fees, perhaps four times as much, to get enough money in reserve. “It will be devastating for condo owners in the state of Florida,” Staebler said.

More fiscal reviews will be required to ensure the funds are being handled properly. To improve assurances of condos’ integrity, the studies will cover components like the roof, load-bearing walls and other primary structural aspects, floors, foundation, fireproofing and fire protection systems, plumbing, electrical systems, waterproofing and exterior painting, windows and any other item that would cost more than $10,000 to replace.

The requirement could be hard for lower income condo associations that have waived reserve funding requirements for years.

“If it’s not a well-funded association, it will be dramatic,” she said.

Making the grade

John Mercer, president of the Francis Carlton Condominium condo association, said his condo board anticipated new legislation after Surfside and contacted an engineer in 2021.

“It was obvious there was going to be something,” he said of the prospect of inspections.

The Francis Carlton Condominium has 21 units in three-stories at 1221 N. Palm Ave. in Sarasota, built in 1924. It may be the first in the state to have met the inspection requirement.

Mercer said the condominium benefitted from coincidental timing and foresight.

The association began the search for an engineering firm in August 2021, as the condo board worried it might be hard to get an engineer. There was some concern that the smaller complex might have trouble getting the work done if it had to compete with larger condos for an engineer once new legislation passed.

The condo board felt “there would be a scramble by all affected condominiums to hire structural engineering firms – and that we might well have difficulty in finding one to work with us,” Mercer wrote in an email. “So we jumped the gun, and started looking in August last year – and were very fortunate to sign up a major, highly-regarded structural engineering firm, Karins Engineering Group.”

The engineering report that’s dated June 3 says the “Frances Carlton does not appear to have any substantial structural deterioration,” and that the report met the state inspection requirement.

While he and others in the Frances Carlton can breathe a sigh of relief, other condo residents may just be coming to grips with the challenges ahead.

“It’s a new world now in Florida for condominium maintenance funding,” Mercer said.

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


Foreclosures Still Low – but Will Probably Grow

While experts don’t expect a recession-style foreclosure surge, the numbers should keep rising as the U.S. housing economy returns to “normal.”

SARASOTA, Fla. – Experts say that a 2008-style housing crash is unlikely to happen now, if only because lending standards are much tighter than they were prior to the Great Recession. Still, foreclosures are starting to tick upward.

ATTOM, a property data firm, says that in May, there were fewer than 31,000 houses nationwide with foreclosure filings – that is, houses with default notices, houses scheduled for the auction block or ones already repossessed by lenders. That’s up a scant 1% from April – but it’s 185% more than in May last year.

And while the share of borrowers at any stage of delinquency was at an all-time low in the first quarter, CoreLogic reports that more than a third of delinquent mortgages are six or more months past due.

Fortunately, if you are among those borrowers who cannot make their payments, there are plenty of options available: from obtaining permission from your lender to miss a few payments until you get back on your feet to selling your place before the gavel slams down.

But you have to move quickly. Waiting too long could cost you, especially since housing values may soon start to recede in some spots. Even if you think your financial problem will only last a few months, don’t hesitate.

Your first step is to call the loan servicer: the company that collects your payments, pays your taxes and insurance, and otherwise administers your mortgage. Depending on your situation, the servicer can offer you several choices. Each case is different, but usually you’ll be given one of four options:

  1. Temporarily suspend or reduce your monthly mortgage payments for a specified period of time until you believe you’ll be able to start paying again.
  2. Pay any past-due amount by adding a percentage of it to your regular payment over a specified period until your mortgage becomes current.
  3. Defer past-due amounts to the end of your loan term and keep your monthly principal and interest payment the same.
  4. Change your original loan terms, perhaps the payment amount, the loan term or even the interest rates.

Each of these alternatives has its benefits, but all allow you to remain in your home and avoid foreclosure. However, you still have to qualify. If the servicer determines there’s just no way you can dig out, no help will be forthcoming.

Another choice would be to refinance. But with loan rates blasting through the 6% level recently, that alternative is basically off the table. According to data firm Black Knight, refinancing currently makes sense for fewer than 500,000 homeowners nationwide – the lowest number in more than two decades.

All is not lost, though, because at this point, you can still sell your house – perhaps even at a profit, depending on when you bought the place. Two key points here:

  • House prices aren’t falling yet, but they also aren’t increasing at the breakneck speed of the recent past. Some anxious sellers are cutting their asking prices, but for the most part, they’re eating into their appreciation – not dropping below what they originally paid for their places.
  • Of course, if you just recently bought your house, there probably hasn’t been a lot of appreciation, and you have less paper profit to dig into.

Which takes us to the next point: Foreclosure is not an event; it’s a process. Depending on where you live, it could take a few months for the sheriff to knock on your door – or even years. That alone gives you a little more breathing room.

You can sell during the foreclosure process, right up to the point when the judge’s gavel slams down, but it’s far better to do so before the process starts. Whatever you do, don’t leak the fact that you are having trouble making your payments. Be honest with your agent, to be sure, but otherwise, keep the situation under your hat. If a would-be buyer gets wind, they’re likely to assume you’re desperate and lowball their offer.

If you manage to sell at a profit, you simply pay your lender what you owe, pocket the rest and move on. But if you sell at a loss and cannot pay your lender in full with the proceeds, you’ll have to persuade the lender to approve what’s known officially as a pre-foreclosure sale.

Gaining the servicer’s blessing for a short sale can sometimes take weeks, if not months. You have to prove you have a long-term hardship; that you have been unable to sell at a price that would cover what you owe; that you are in, or about to go into, foreclosure; and that you can no longer afford to live there. You also will have to fill out what may seem like mountains of paperwork.

If your lender agrees to your short sale, you land a buyer and the sale closes, the proceeds will go to the servicer and you will be issued a deficiency waiver that relieves you of your responsibility for any remaining balance.

Your credit score will suffer. But otherwise, you will be free to move on.

© Copyright, 2022, Sarasota Herald-Tribune, all rights reserved. Lew Sichelman is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications.


U.S. Renter Income Needed for a Modest Apartment?

Report: A worker making $10/hour in Fla. must work 86 hours to afford a one-bedroom apartment – an affordable rental goal in only 1 out 10 U.S. counties.

NEW YORK – There isn’t a single state in America where a minimum-wage worker can afford the average two-bedroom apartment, according to the latest report from the National Low Income Housing Coalition.

The NLIHC’s 2022 Out of Reach report, released last week, aims to highlight the disparity between earnings and rent for the average low-wage worker, according to the organization. This year, the report indicates that median rental costs for two-bedroom apartments in U.S. metropolitan counties had jumped 15% between the first quarters of 2021 and 2022 – or more than four times the increases observed over the last several years.

The problem isn’t limited to metro areas, either.

“In no state, metropolitan area, or county in the U.S. can a worker earning the federal or prevailing state or local minimum wage afford a modest two-bedroom rental home at fair market rent by working a standard 40-hour work week,” the report states.

One-bedroom apartments, too, were determined to be unaffordable for low-wage workers in all but 9% of U.S. counties.

Maryland town’s bold solution to its housing crisis

For the purposes of its report, the NLIHC defined “affordability” as costing no more than 30% of a tenant’s income (rent and utilities), based on the U.S Department of Housing and Urban Development’s definition of fair market rent. In dollar amounts, that means the average U.S. worker would need to earn $25.82 per hour to afford a two-bedroom apartment, or $21.25 for a single-bedroom apartment, the NLIHC determined.

But that’s just the national average; some states have significantly higher “housing wages” – i.e., the estimated full-time wage a renter must earn to afford a modest rental property by HUD standards. In Hawaii, for instance, the “housing wage” is $40.63 per hour for two-bedroom, while the housing wages in California ($39.01 per hour), Massachusetts ($37.97), New York ($37.72) and Washington, D.C. ($34.33) weren’t far behind, according to the report.

The average housing wage in the most “affordable” states, meanwhile, were determined to be in Arkansas ($14.89 per hour), where the basic minimum wage is $11, followed by West Virginia ($15.38), Mississippi ($15.67), South Dakota ($16.11) and Kentucky ($16.18). Puerto Rico was the only territory with a lower housing wage ($9.88).

The NLIHC’s report also indicated that Black and Latino workers were most likely to be affected by the wage/rental disparities, as “they are more likely at all income levels to be renters.”

Investors buying more homes; are they fueling rising prices?

“With rents rising rapidly, homelessness worsening, and millions of families struggling to stay housed, federal investments in expanding proven solutions – like Housing Choice Vouchers, the national Housing Trust Fund, and public housing – are badly needed and long overdue,” said NLIHC President and CEO Diane Yentel in a press release issued along with the 2022 Out of Reach report. “As a country, we have the data, partnerships, expertise, solutions, and means to end homelessness and housing poverty – we lack only the political will to fund solutions at the scale necessary.”

The National Low Income Housing Coalition, founded in 1974, is a non-profit organization committed to advocating for federally assisted housing resources.

Florida connection

According to the report, a worker making $10 per hour in Florida would need to work 86 hours to afford the median one-bedroom apartment. At 40 hours per week, they would need to make $26.38 per hour.

The yearly income needed for a Fla. apartment based on number of bedrooms is

  • Zero-bedroom: $40,375
  • One-bedroom: $44,872
  • Two-bedroom : $54,870
  • Three-bedroom: $72,711
  • Four-bedroom: $87,096

© 1998-2022 WNCT, Nexstar Broadcasting, Inc. All rights reserved.


4 Ways to Get Started with Facebook Live

Many Realtors dislike live presentations because “I’m nervous” or “don’t like the way I sound.” But with practice, Facebook Live is strong marketing tool.

NEW YORK – When it comes to Facebook Live, agents should start by ensuring that their Facebook applications are up to date, such as the regular app and Creator Studio, says Brian McKenna at Berkshire Hathaway HomeServices. Once the technology is in place, it’s time to go.

However, at a Tom Ferry event some years ago, only a few people said they actively use Facebook Live. Many cite obstacles such as nervousness or “I don’t like the way I sound.”

Ferry told them it was exactly how they look and sound, so they need to overcome their apprehension.

Like anything else, practice makes perfect. Agents need to regularly practice mastering the basics of a live presentation, including eye contact with the lens, appropriate lighting and effective audio levels. The sound should allow the host’s words to be heard.

Agents should launch Facebook on their phone as if they were about to post and touch the LIVE button to begin. After a short countdown, they should begin with the camera facing them in a selfie position.

Once live, agents could begin their first live presentation by talking about Facebook Live itself, sharing how and why it’s so cool or interesting, and how it will empower them to share important real estate information in the future.

Source: Inman (08/01/22) McKenna, Brian

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


3 Ways to Fight Inflation to Win the Long Game

Many investors consider real estate a hedge against inflation, and it is. Long term, stocks still have a stronger historical position – but gold does not.

NEW YORK – Inflation is scary. Groceries, gas, airfare, car purchases, utilities : In so many areas, your buying power is shrinking as prices continue to rise.

Fear can make you want to do something – anything! – to fight back. Thankfully, many of the best moves to counteract inflation align beautifully with time-tested money management practices. Here are three areas where smart strategies become even smarter when prices are rising.

Invest with the long term in mind

Advice about “inflation proofing” your investments often mentions gold, commodities and real estate. If you already have a well-diversified portfolio, though, beware of short-term strategies that could backfire, says Michelle Gessner, a certified financial planner in Houston.

“Your best bet is stocks,” Gessner says. “Investing in equities is one of the best hedges against inflation that there is.”

Gold hasn’t been a reliable inflation hedge since the 1970s, Gessner notes. Commodities – basic goods such as agricultural products, fuel and metals – can be profitable when inflation spikes, but returns over the long run have been disappointing. For the 20-year period ending April 29, for example, the S&P 500 stock index more than tripled while the Bloomberg Commodity Index was up about 30%.

Real estate has a better track record, both during inflationary periods and for the long haul. But owning property directly can be a hassle, which is why many financial planners recommend mutual funds, exchange-traded funds or real estate investment trusts (REITs) that invest in office buildings, apartments, hotels, shopping centers and other commercial property.

But even there, people shouldn’t go overboard, Gessner says. She recommends that her clients invest 3% to 4% of their portfolios in real estate.

“Everything in moderation,” Gessner says. “More is not necessarily better.”

Pay down debt the smart way

Inflation can be good for people with fixed-rate debt, such as mortgages, car loans or federal student loans. As inflation erodes a dollar’s buying power, borrowers are able to pay back debt with cheaper money than what they borrowed.

Even without inflation, though, financial planners say most people have better uses for their money than prepaying debt with low, fixed rates. Only after you’ve maxed out your retirement savings, built up an emergency fund and paid off all other, higher-rate debt should you consider making extra payments on a mortgage, for example.

“Having a mortgage at 3% is not such a bad thing if you can take that money and do something better with it,” Gessner says.

Consider targeting any credit card or other variable rate debt, since that’s likely getting more expensive as the Federal Reserve raises interest rates to combat inflation. If you can’t pay this debt off quickly, look into fixing the rate. You may be able to use a personal loan to pay off credit cards, for example, if you have good credit. If you’re struggling to pay your debt, a nonprofit credit counselor can help review your budget and discuss options. You can get referrals from the National Foundation for Credit Counseling at www.nfcc.org.

Delay Social Security

One of the best inflation hedges that retirees can have is a maxed-out Social Security benefit, says William Reichenstein, head of research for Social Security Solutions, a claiming strategy website. Social Security benefits are adjusted annually for inflation, so the larger someone’s benefit, the more money they get from each annual cost-of-living adjustment.

The Social Security Administration increased this year’s benefits by 5.9%. The Senior Citizens League , an advocacy group for older Americans, forecasted an 8.6% increase in benefits next year.

People can start Social Security as early as age 62, but their benefits are permanently reduced if they apply before their full retirement age, which is currently 66 to 67. After full retirement age, people who delay their applications get an annual 8% boost in their benefit, known as a delayed retirement credit. Benefits max out at age 70.

Your benefit gets cost-of-living increases whether you’ve started receiving it or not , so you’re not missing out on inflation adjustments when you delay your application, Reichenstein says.

Most people who make it to retirement age will live past the “break even” point where the larger benefit they get from delaying exceeds the smaller checks they pass up in the meantime, Reichenstein says. It’s particularly important for the higher earner in a married couple to delay as long as possible. The larger of a couple’s two benefits is what the survivor will get after the first spouse dies.

Also, delaying Social Security benefits could help middle-income people reduce their overall tax burden and leave them with more after-tax money to spend, Reichenstein adds.

The way Social Security benefits are taxed creates a “tax torpedo” – a sharp rise and then drop in the marginal tax rates many retirees pay on their income. (A marginal tax rate is the amount of additional tax paid for every additional dollar of income.) Delaying Social Security and tapping retirement funds instead can reduce the effects of this torpedo for middle-income people who might otherwise see their marginal tax rates double, Reichenstein says.

“Goods and services are purchased with after-tax dollars, not pretax dollars, so that’s another reason to consider delaying a Social Security benefit,” he says.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. This column was provided to The Associated Press by the personal finance website NerdWallet. The content is for educational and informational purposes and does not constitute investment advice.