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Monthly Archives: August 2022

Struggling Americans Will Decide if It’s a Recession

Bank of America’s CEO says it doesn’t matter if the U.S. is officially in a recession because most consumers are in good shape and can withstand economic turbulence.

NEW YORK (AP) – The CEO of Bank of America said the recent debate over whether the U.S. economy is technically in a recession or not is missing the point. What matters is that current economic conditions are negatively impacting those who are most vulnerable.

“Recession is a word. Whether we are in a recession or not is really not the important thing. It’s what it feels like for the people going through this,” Brian Moynihan told The Associated Press during an interview at the Bank of America Tower in midtown Manhattan, where he talked about inflation and the current state of the economy, as well as the health of the U.S. consumer.

The issue of whether the U.S. economy is in recession has become politicized heading into the 2022 mid-term elections. While inflation is at a level not seen since the early 1980s and U.S. consumer confidence is falling, other measures of the economy, such as the monthly jobs report, are still strong. In response to high consumer and wholesale prices, the Federal Reserve has been raising interest rates aggressively in hopes of taming inflation while not causing too much economic damage.

Moynihan, who has been BofA’s CEO since 2010, would not say the U.S. economy is in recession, saying that declaration will have to come from “a bunch of people in Cambridge, Massachusetts,” a reference to the National Bureau of Economic Research, the nonpartisan organization that determines when recessions begin and end.

However, Moynihan cited two major issues negatively impacting average Americans – gas prices and rent – as reasons to be concerned. The national average for a gallon of gasoline ballooned to just over $5 in June before falling back below $4 last week. Moynihan appeared more concerned about the rising cost of rents, which tend not to fluctuate like gas prices.

“Gas prices are coming back down, but rents are going up 10%, 12%, 15%. And rent can end up taking 40% of these households’ income,” Moynihan said. Rent accounts for about one-third of the government’s Consumer Price Index, which showed a year-over-year increase of 8.5% in July.

“We are worried about, for the U.S. broad-based consumer, the increased rents as we go into the natural turn of rents (typically in the fall with school year),” he added.

The average U.S. consumer entered this period of high inflation and economic turbulence in healthy financial shape. The U.S. government spent trillions of dollars to extend unemployment benefits and other forms of pandemic relief. In response, Americans were paying down debts faster than historic norms and had higher than normal levels of savings. Those economic programs largely ended last year.

Moynihan said he still believes, as he’s said in previous interviews, that overall the American consumer is still in good shape and able withstand the economic turbulence. He says Americans who have a fixed-rate mortgage largely have locked in low borrowing costs and that credit card balances, while climbing, are still lower as a percentage of household income.

“We see no deterioration in consumer behavior from the beginning of the year until now,” he said. He did say there’s been some slowdown in the amount of money Americans are saving, which is likely due to rising costs.

Moynihan said companies are still raising wages as well, which is helping Americans cope. Bank of America itself has raised wages to help its 200,000-plus employees counter rising costs. The company gave raises to employees making less than $100,000 as much as 7%, depending on longevity. That does not include the company’s typical merit raise cycle as well.

“(The raises) are helping people deal with this,” he said.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. AP Financial Literacy Writer Adriana Morga contributed to this report from New York.

https://www.floridarealtors.org/news-media/news-articles/2022/08/struggling-americans-will-decide-if-its-recession

Fannie Mae Lowers 2022 Home Sales Projection

Fannie Mae expects a 16.2% drop in home sales year-to-year in 2022; one month earlier it predicted 15.6%, but “housing remains clearly on the downtrend.”

WASHINGTON – According to the latest projections from Fannie Mae’s Economic and Strategic Research Group, home sales are expected to total 5.78 million this year, down 16.2% from a year ago.

In July, one month earlier, Fannie Mae forecast a 15.6% decline.

“Housing remains clearly on the downtrend – and has been for several months now – due to the combined effects of outsized home price increases and the significant and rapid run-up in mortgage rates,” says Fannie Mae chief economist Doug Duncan. “Despite a pullback in mortgage rates over the past month, recent incoming data point to a faster near-term slowdown in sales than we had expected, especially for new homes.”

New-home sales are now projected to fall 18% to 632,000 this year, and existing-home sales are expected to drop 16% to 5.143 million. Fannie Mae forecasters said existing-home sales in June “were somewhat stronger than we had anticipated,” but “recent leading indicators of July home sales, such as pending sales and mortgage applications, point to a continued slow down.”

Meanwhile, pending sales, which lead closings by approximately 30 to 45 days on average, fell 8.6% from May to June, though by a much smaller 1% in July.

However, Fannie Mae economists also believe mortgage rates have peaked and will trend downward into next year.

Source: Inman (08/22/22) Carter, Matt

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

https://www.floridarealtors.org/news-media/news-articles/2022/08/fannie-mae-lowers-2022-home-sales-projection

NAR: Pending Home Sales Slip 1.0% in July

While small, 1% is the second monthly sales drop in a row, with 8 in the past 9 months. Year-to-year, contract signings fell by double digits in all four U.S. regions.

WASHINGTON – Pending home sales declined for the second consecutive month in July, and for the eighth time in the last nine months, according to the National Association of Realtors® (NAR).

Of the four major regions included in NAR’s monthly report, three registered month-over-month decreases, while the West notched a minor gain. Year-over-year, however, all four regions saw double-digit percentage slides, with the largest also in the West.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – slid 1.0% to 89.8 in July. Year-over-year, pending transactions sank 19.9%. An index of 100 is equal to the level of contract activity in 2001.

“In terms of the current housing cycle, we may be at or close to the bottom in contract signings,” says NAR Chief Economist Lawrence Yun. “This month’s very modest decline reflects the recent retreat in mortgage rates. Inventories are growing for homes in the upper price ranges, but limited supply at lower price points is hindering transaction activity.”

In June, housing affordability plummeted to its lowest level since 1989, according to NAR. Accounting for a 30-year fixed-rate mortgage and a 20% down payment, the monthly mortgage payment on a typical home jumped to $1,944 – a year-to-year increase of 54%, or $679.

“Home prices are still rising by double-digit percentages year-over-year, but annual price appreciation should moderate to the typical rate of 5% by the end of this year and into 2023,” Yun says. “With mortgage rates expected to stabilize near 6% alongside steady job creation, home sales should start to rise by early next year.”

Pending home sales regional breakdown: The Northeast PHSI dipped 1.9% from last month to 79.3, and it’d down 15.4% from July 2021. The Midwest index retracted 2.7% to 91.2 in July, a 13.4% decline year-to-year.

The South PHSI decreased 1.1% to 106.6 in July, a pullback of 20.0% from the previous year. The West index increased 2.2% in July to 70.0, down 30.1% year-to-year.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/nar-pending-home-sales-slip-10-july

FHFA Wants Advisory Board to Oversee Policy

The agency that oversees most U.S. mortgages wants an advisory board to help FHFA achieve its goal to create affordable, equitable and sustainable housing.

WASHINGTON – The Federal Housing Finance Agency (FHFA) wants to create a new “Federal Advisory Committee on Affordable, Equitable, and Sustainable Housing” (Committee). It announced the proposed change this week in the Federal Register.

According to FHFA, the committee won’t have the power to make decisions, nor access to any non-public FHFA information. As an advisory board, however, a diverse group of about 20 members – all appointed by the FHFA Director – will create a connection with the public and offer opinions on FHFA housing decisions.

According to FHFA, the committee “will provide advice and input regarding affordable, equitable and sustainable housing needs, and any regulatory or policy changes that may be necessary or beneficial to address those matters.”

Because FHFA oversees Fannie Mae, Freddie Mac and the Federal Home Loan Banks, its decision on mortgage lending impacts over half of all U.S mortgages. The new committee will at least have some influence over the single-family and multifamily home markets.

The committee “will better position FHFA to fulfill its strategic goal of supporting access to affordable, equitable and sustainable housing,” says FHFA Director Sandra L. Thompson. It shows our “commitment to transparency, ongoing dialogue with stakeholders and the public, and thoughtful policymaking.”

Advisory members must have expertise in at least one of the following areas:

  • Fair housing, fair lending, or civil rights
  • Single-family lending, servicing, development, mortgages, or capital markets
  • Multifamily lending, servicing, development, mortgages, capital markets, or investments (i.e. Low-Income Housing Tax Credits)
  • Consumer, tenant, or community advocacy
  • Market technology
  • State, local, or tribal government housing policies and programs
  • Academic or non-academic affiliated housing research

The Committee’s charter commences 15 days after publication in the Federal Register. FHFA says it will solicit applications and nominations for membership in a subsequent Federal Register notice.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/fhfa-wants-advisory-board-oversee-policy

Vacation Home Markets with the Highest Demand?

The U.S. has 1.1M vacation rental properties and while investors seeking top returns often focus on tourist destinations, some smaller unexpected cities also work.

NEW YORK – While the old adage about location and real estate may be changing for those who work remotely, it has never been more true for those who rent out vacation properties – a home steps from South Beach or a West Hollywood condo can bring in hundreds of thousands of dollars a year as a rental.

That is, of course, the top end of the range. There are, at the moment, over 1.1 million vacation properties being rented out across the U.S, and for many it is a steady but modest source of supplementary income.

A recent study by rental research company AirDNA found that, at the end of 2021, an average vacation home generated $56,000 a year in profit after all expenses.

But in terms of where it is best to invest, a recent round-up by LawnStarter found that Miami was by far the most profitable city to own a vacation home. Out of the 190 biggest markets in the country, it had the best ratio of ROI (return on investment), the initial investment needed to obtain a place.

Where should I buy vacation property?

Despite the fact that rentals of less than 30 days are not permitted in the city, New York still ranked as the highest most profitable place in the country to be in this business. Due to a decades-long shortage of both long-term and short-term housing, a place that’s put up for two or three months will still get snapped up very fast.

Six out of the top ten cities on the list were in the South.

“Although they aren’t your typical vacation hotspots, nightly rates are competitive here,” the study’s authors write. “Host expenses in Augusta are particularly low, putting more money back in your pocket, but Tampa and Knoxville are relatively safer for tourists.”

California, meanwhile, filled out the bottom of the list with seven of the spots. But while Los Angeles was relatively high at 24 out of 190, Fremont, Sunnyvale, and San Jose were the three worst cities to rent out a vacation home in the country.

What’s the ROI (and what will I have to spend)?

Reasons for this range from everything from being suburban and too far away from any tourist destinations to, in the case of San Jose, low safety ratings.

Many of the cities to place at the bottom of the round-up also ranked low in the number of attractions. While New York, Los Angeles, and Chicago predictably topped in that regard, California’s Modesto and San Bernardino had the lowest.

“Invest in a property within Miami, Boston, New Orleans, and Los Angeles, and you’d be almost guaranteed to see money roll in,” reads the study. “Many tourists imagine staying in a seaside (or near-water) retreat for their holidays, so it’s no surprise that these cities would haul in the biggest returns from their short-term lets.”

Texas’s Irving and California’s Lancaster had the highest average housekeeping costs, while Cleveland in Ohio and Bridgeport in Connecticut had the lowest. Rental occupancy rates were highest in Garland, Texas, and Fresno, California, while Lakewood in Colorado and Garden Grove in California had the largest number of empty vacation listings.

© Copyright 2022 Jackson Progress-Argus. All rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/08/vacation-home-markets-highest-demand

A Two-Way Street: Show Appreciation, Get Leads

Clients who feel appreciated – especially over and over again – often feel a bond and recommend their Realtor to family, friends and others.

NEW YORK – If a real estate professional consistently shows clients how much they’re appreciated, they often find that those clients recommend their services to friends, family and others.

To show appreciation, agents and brokers can:

  • Donate to clients’ favorite charities
  • Have a personalized tumbler or coffee mug made
  • Create a personalized jigsaw puzzle that features the clients’ new home
  • Host a house-warming party for buyers or a going-away party for sellers
  • Commission a painting of the client’s home
  • Recognize a child’s achievement
  • Provide a handyman, landscaper or house cleaner for one day
  • Create a personalized wood cutting board
  • Deliver a cake on their new home’s anniversary
  • Hold a family or pet photography event
  • Host a pre-Thanksgiving pie day
  • Send fresh-cut flowers on special occasions
  • Host a personal chef dinner for clients and their friends
  • Send follow-up cards and gifts, including thank you notes
  • Give tickets to movies or local events
  • Send local gift baskets
  • Gift local memberships to the gym, art gallery or a club.
  • Hire a babysitter so parents can have a date night

Source: Inman (08/15/22) Burgess, Jimmy

© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-46

https://www.floridarealtors.org/news-media/news-articles/2022/08/two-way-street-show-appreciation-get-leads

Is Homeownership Via a Land Contract Worth It?

NEW YORK – The pandemic housing market has been especially tough for homebuyers looking at the lower end of the price spectrum.

In June, homes sold under $100,000 fell by 27% compared with a year before, where homes sold between $750,000 and $1 million went up by 6%, according to data from the National Association of Realtors.

Apart from a dearth of starter home construction, financing has been a major barrier. In 2019, only 23% of homes priced below $100,000 were purchased with a mortgage, compared with 74% of homes priced at or above $100,000, according to the Urban Institute.

Lenders shy away from small mortgages because of high fixed origination and servicing costs, regardless of the loan size, say experts.

The shortage is leading millions of prospective homeowners to turn to alternative arrangements to finance their home purchases. One of the most common forms of alternative home financing, land contracts – also known as “contracts-for-deed” or “installment sales contracts” – can be particularly predatory, say consumer watchdogs.

What is a land contract?

Land installment contracts, also known as “contracts for deed,” are seller-financed home sales in which a homebuyer makes regular payments to the seller over a period of 30 or 40 years, but the deed does not transfer until the last payment is made. A single missed payment can be a cause for eviction.

Buyers who use land contracts are typically households who couldn’t qualify for a conventional mortgage or couldn’t pass a credit check to get into a conventional rental property.

Is it a new way of financing?

Land contracts are not new. Many working-class Black families in the 1950s and ‘60s were forced to turn to speculative sellers after the federal government refused to insure mortgages in redlined minority 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.

Since the Great Recession, however, land contracts have made a comeback, with large investment companies having bought up foreclosed properties from Fannie Mae. And a high percentage of these properties are in Black neighborhoods, according to a paper by the Federal Reserve Bank of Atlanta.

Are land contracts a potential path toward homeownership?

Proponents of land contracts say these arrangements provide a viable means for low-income and credit-challenged families to access homeownership, especially when they can’t obtain a traditional mortgage loan from a bank or other financial institution.

For sellers, a contract for deed instead of a mortgage could be attractive since they can charge higher interest, a belief that the transaction can be completed without a lawyer and, in the case of a buyer default, they can skip foreclosure and go through a forfeiture, which is fast, easy and inexpensive.

What are the downsides?

From the buyer’s perspective, purchasing a property on land contract combines the worst of buying and renting, say experts. It is marketed disproportionately to low-income families of color as an alternative path to homeownership, but instead allows investors to avoid responsibility for property upkeep while churning successive would-be homeowners through a property they could not legally rent, says Sarah Bolling Mancini, a staff attorney at the National Consumer Law Center.

Eric Seymour, an assistant professor at the Bloustein School of Planning and Public Policy at Rutgers, has focused his research on contract sellers, both the big actors such as Harbor Portfolio as well as smaller “slumlord speculators.”

Seymour says land contracts are particularly attractive for unscrupulous property dealers looking to make money because rather than offering them as a rental – which ostensibly puts the property owner on the hook for property maintenance and repairs – a land contract gives all the responsibilities to the buyer, he says.

“The down payment on these properties could be as much or more than what these investors paid for these properties in the first place,” he says.

Mancini agrees.

“Sellers profit by churning a house through one land contract buyer after another. Sellers take whatever down payment the would-be owner can afford, pull in their payments and sweat equity for as long as possible, and then evict them and cycle another buyer into the property,” Mancini writes in her National Consumer Law Center report, “Toxic Transactions: How Land Installment Contracts Once Again Threaten Communities of Color.”

What are the risks?

The transactions are typically invisible in the public deed records, which puts contract buyers at risk of having their interest jeopardized by a later transfer or encumbrance, and also puts the reliability of the public land records and ability to convey good title into question, according to research by Pew Charitable Trusts.

Land contracts generally include a forfeiture remedy that can deprive contract buyers of all of their investment in the home and any equitable interest in the home. In many states, the law requires little or no legal process or public auction of the home for the highest and best value.

Are land contracts recorded?

The terms of a contract for deed may vary, as do particular state and local laws and protections.

Only about a dozen states require that land contracts be publicly recorded, an important provision that protects all parties involved by clearly and legally documenting the buyer’s homeownership, according to research by the Pew Charitable Trusts. Only one state, Virginia, mandates that homes purchased with land contracts meet specific standards for habitability.

What are some recommendations?

The National Consumer Law Center has made the following recommendations to the Consumer Financial Protection Bureau (CFPB) for rules it could consider to govern land contracts:

  • An appraisal to establish the actual value of the property
  • An inspection to establish the true condition of the property
  • Assurances that the property taxes are paid
  • Fair application of the payments made by the buyer
  • Prohibition against contractual clauses which cost buyers their hard-earned investments in the property when there is an early termination.

Copyright 2022, USATODAY.com, USA TODAY

https://www.floridarealtors.org/news-media/news-articles/2022/08/homeownership-land-contract-worth-it

Home Affordability Hits Lowest Point since 1989

NAR: Housing affordability reached a 33-year low in June, according to NAR data – but an inventory increase and stabilizing mortgage rates may help.

WASHINGTON – The average monthly mortgage payment jumped 54% year-over-year in June, while median household income rose only 5.8%, according to the National Association of Realtors® (NAR)’ Housing Affordability Index. As home affordability weakened, the median home price shot to a record $413,800 in June, and NAR’s index fell to its lowest reading in 33 years.

“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.

Housing affordability “dramatically tumbled” in the second quarter amid rising mortgage rates and climbing home prices, NAR data shows. Monthly mortgage payments on a typical existing single-family home surged by nearly a third compared to the first quarter of 2022, and by half compared to a year earlier.

The 30-year fixed-rate mortgage has nearly doubled in the past year, though they’ve stabilized somewhat this month.

Monthly mortgage costs

The average monthly mortgage payment rose to $1,944 in June from $1,265 a year earlier – a $679 difference, NAR notes.

The annual mortgage payment as a percentage of income rose to 25.4%, and most financial experts consider housing payments that exceed 25% of income to be unaffordable.

“Monthly mortgage payments have soared compared to last year, and rising home prices are not helping affordability conditions,” Michael Hyman, a research data specialist at NAR, notes on the association’s Economists’ Outlook blog. “One good sign for the housing market is a welcome increase in the supply of inventory. Another is that rates recently have cooled, slowing the pace of growing monthly mortgage payments.”

Housing affordability posted double-digit declines in June compared to a year ago in all four major regions of the U.S. The Midwest was the most affordable region, with a median household income of $90,650 but a qualifying income of $68,496 needed to buy a median-priced home in the area.

On the other hand, the least affordable region continues to be the West, where the median family income was $98,498 but a qualifying income of $141,552 was needed to purchase a median-priced home. It’s the fourth consecutive month the Western region posted a reading on NAR’s affordability index below 100, which means a family earning the median income in the region can’t afford a median-priced home.

Source: National Association of Realtors® (NAR)

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/home-affordability-hits-lowest-point-1989

July New-Home Sales Down 12.6% Month-to-Month

The 29.6% year-to-year decline is slowest pace since 2016. NAHB says “higher prices and increased interest rates are generating a notable slowing” in the market.

WASHINGTON – Sales of newly built, single-family homes in July fell 12.6% to a 511,000 seasonally adjusted annual rate from a downwardly revised reading in June, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

New home sales are down 29.6% from a year ago. It’s the lowest pace of new-home sales since January 2016.

“The disappointing sales pace mirrors an ongoing decline in builder sentiment as elevated mortgage rates and higher construction costs are pushing more consumers out of the market, particularly entry-level buyers,” says Jerry Konter, chairman of the National Association of Home Builders (NAHB).

“The sharp drop in new home sales is another clear indicator that housing is in a recession,” adds Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “The combination of higher prices and increased interest rates are generating a notable slowing of the housing market.”

A new home sale occurs when a sales contract is signed or a deposit accepted. The home can be in any stage of construction – not yet started, under construction or completed. After adjusting for seasonal effects, the July reading of 511,000 units is the number of homes that would sell if this pace continued for the next 12 months.

New single-family home inventory remained elevated at a 10.9 months’ supply, up 81.7% over last year, with 464,000 available for sale.

However, only 45,000 of the new home inventory is completed and ready to occupy. The remaining have not started construction or are currently under construction.

The median sales price rose to $439,400 in July, up 5.9% compared to June, and up 8.2% year-to-year.

Regionally, on a year-to-date basis, new home sales fell in all four regions, down 14.9% in the Northeast, 26.5% in the Midwest, 13.4% in the South and 15.7% in the West.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/july-new-home-sales-down-126-month-month

Possible Rent Relief Coming for 3 Fla. Cities

Miami is slated to get almost 20K new apartments this year as multifamily construction cranks up. Also on the top 20 list for newly built units: Orlando and Tampa.

NEW YORK – According to RentCafe, U.S. apartment construction is at a 50-year high, and new units debuting this year may offer some relief to tenants struggling to find a place to live.

The listing service estimates that 420,000 apartments should be delivered nationwide this year, with a construction explosion particularly notable in Southern cities like Dallas and Miami, where many Americans migrated during the pandemic.

In Florida, Miami, Orlando and Tampa made RentCafe’s top 20 list for new apartment units expected to debut this year. Half of the top 20 metropolitan areas ranked by construction should reach five-year highs in apartment deliveries this year.

Total new apartments debuting this year

  1. New York: 28,153
  2. Dallas: 23, 571
  3. Miami: 19,125
  4. Austin, Texas: 18, 288
  5. Houston: 17,759
  6. Phoenix: 15,988
  7. Seattle: 15,341
  8. Atlanta: 12, 838
  9. Washington, D.C.: 12,176
  10. Los Angeles: 11,536
  11. Orlando: 11,388
  12. Denver: 10,570
  13. Nashville: 9,620
  14. Raleigh, N.C.: 9,104
  15. Charlotte: 8,732
  16. Chicago: 8,573
  17. Portland, Oregon: 8,476
  18. San Francisco: 7,399
  19. Minneapolis-St. Paul: 6,266
  20. Tampa: 6,092

The pandemic exacerbated the nation’s housing inventory due to labor shortages and supply-chain disruptions, but RentCafe says apartment developers were generally able to ramp up the pace of construction in the past 18 months or so.

“The construction industry is finally returning to pre-pandemic levels of activity but is still being hampered by three familiar challenges: labor shortages, material costs and availability, and supply chain issues,” says Doug Ressler at Yardi Matrix.

Source: Bloomberg (08/22/22) Tanzi, Alexandre

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

https://www.floridarealtors.org/news-media/news-articles/2022/08/possible-rent-relief-coming-3-fla-cities

Realtors and Clients See Market Changing

In the S. Fla. area, many sellers still want to list their home at the high end, but they’re also starting to understand the new rules with this changing market.

FORT LAUDERDALE, Fla. – The housing market has slowly started to rebalance as less buyer frenzy and higher interest rates help soften it, forcing sellers to adjust to a more normal market.

It’s still a seller’s market, South Florida real estate agents stress, though it’s not the torrid one of six months or a year go where bidding wars were common, homes flew off the market in a matter of days and buyers waived inspection just to get into a home.

“Sellers kind of have a fear of missing out and they know the market has changed,” said Alex Platt with Compass in Boca Raton. “We are lucky that prices are still what they are today, but they just aren’t going to get into the same bidding war as they could a few months ago.”

Here’s what sellers and buyers need to know and prepare for in light of a shift in the South Florida real estate market.

Price the house correctly

Despite record-high housing prices, it’s crucial for sellers to price the home based on what it’s worth, and not on prices that they felt they could get at the peak of the market, real estate agents said.

“In the past, people were pricing it high knowing that with the low inventory and strong buyer pool, you had a great opportunity to capture a record price or someone who was willing to pay more regardless of what other sales had been,” said Dave Gunther, real estate agent with Lang Realty in Delray Beach.

But sellers can’t get away with that now since buyers are aware that there are more options on the market to choose from, so if they don’t end up buying a home at the current price, then something will come on the market soon, he added.

“We have to re-teach [sellers] how to price a home correctly,” said Jeff Lichtenstein, with Echo Fine Properties in Palm Beach Gardens. “They might want to price it at $685,000 let’s say, but the real price should be $650,000. They could get away with that in the past because there was no inventory and a buyer would see it because there wasn’t anything out there.”

Too much aggressiveness in pricing can be reflected in price cuts.

Don’t expect bidding wars

Sellers grew used to bidding wars in the pandemic boom as buyers, eager to land a home and facing stark competition, would bid up the price in order to win a home.

Those instances are far less common, real estate agents warn, and it means sellers need to be prepared to consider all offers that come their way.

“What is not happening is you are not putting a home on the market and hearing 20 bids come in and seven offers,” said Lichtenstein.

According to data on buyer competition from Redfin, 37% of offers with a Redfin agent had at least one competing offer in July. That’s down from 47.8% of offers in June and 51% of offers that had a least one other competing offer the same time a year ago.

Some properties that are on the newer side and have the qualities that most buyers want (three or four bedrooms, a pool and nice view) might face a bidding war, but it’s no longer the norm.

Buyers overall feel that they have more options and don’t have to compromise as much on the home they get. If they don’t like something, they’re more willing to walk away because as inventory comes back, so do their options, agents added.

Stage the home right and be willing to negotiate

As the housing market took off, most sellers didn’t have to negotiate with buyers, as many were willing to waive certain contingencies to get into the house. Now, buyers realize that there is a shift in the market, and sellers now have to come to terms with buyers having more power.

“Sellers need to be more open to negotiation whether it’s in price or in closing dates. Before people would waive financing or waive appraisals but now it’s going to back to the regular old market like it was two years ago,” Platt said.

It was common for buyers to waive inspection periods, but that has started to change as the market cools. According to Gunther, in the past, every third contract would have an inspection period waiver on a fast-moving property, but now he’s only seen one contract like that in the past six months.

Because of that, sellers now need to be willing to accept reasonable requests from buyers.

“Sellers need to know when to bend, especially if there are reasonable requests in the inspection,” said Lichtenstein. “If not, then the buyer will cancel the contract.”

In June, 22.1% of pending home sales were canceled in West Palm Beach, 22% of pending sales were canceled in Fort Lauderdale, while 21.5% were canceled in Miami, according to data from Redfin.

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

https://www.floridarealtors.org/news-media/news-articles/2022/08/realtors-and-clients-see-market-changing

Baltimore Couple Suing Appraiser for Black Bias

Two Baltimore professors who wrote books on Jim Crow laws removed all evidence of their race from their home and a second appraisal came in $278K higher.

NEW YORK (AP) – How much does it pay to hide the photos of your family at your home, or anything else that shows your race? If you’re Black and trying to find out how much your house is worth, one family suggests it could be hundreds of thousands of dollars.

A couple in Baltimore is suing an appraiser and a mortgage lender, alleging their home was severely undervalued because they are Black, blocking them from refinancing their mortgage. The couple says a separate appraisal, done after “whitewashing” the place by removing family photos and having a white colleague stand in for them, pegged the home’s value higher by $278,000.

The two “were shocked at the appraisal and recognized that the low valuation was because of racial discrimination,” according to the suit filed earlier this week in U.S. District Court in Maryland.

Officials at the lender accused in the case, loanDepot, declined to discuss the allegations. But in a statement, the publicly traded company said it strongly opposes bias. “While appraisals are performed independently by outside expert appraisal firms, all participants in the home finance process must work to find ways to contribute to eradicating bias.”

The appraisal company in the case, 20/20 Valuations, could not be immediately reached for comment. Neither it nor the individual appraiser named in the suit has lawyers listed yet in the court filings.

The situation began last year, when two professors at Johns Hopkins University, Nathan Connolly and Shani Mott, wanted to do the same thing millions of others across the country were doing. They hoped to take advantage of low interest rates and refinance their mortgage and a home-equity loan.

The couple had bought their four-bedroom home in 2017 for $450,000 and had made several upgrades to it. They remodeled their club room for $35,000, for example. They also invested in a tankless water heater, recessed lighting and other improvements that the family’s lawyers say raised the value of the home.

That would be on top of the general rise that home prices enjoyed in the area and across the country between 2017 and 2021.

The couple applied in mid-2021 with loanDepot, which initially approved them for a 2.25% interest rate, pending an appraisal to ensure the home was worth enough in case of a default. A loanDepot lending officer told the family a “pretty conservative” estimate was $550,000, according to the suit.

But the appraiser from 20/20 Valuation, who was hired by loanDepot, said the home was worth only $472,000, according to the complaint. It pushed loanDepot to call to say it would not extend the loan, according to the complaint.

The suit alleges that while researching other homes to benchmark against the plaintiff’s home, the appraiser ignored nearby sales in majority-white areas, similar to the plaintiff’s, that had higher values. Instead, the complaint said he included lower-valued homes and ones in areas with more Black residents.

Later that year, the couple learned the government assessed the value of their home at $622,000. After that, they tried for another loan. This time, they conducted an experiment where they replaced family photos with ones borrowed from white friends and colleagues. They even brought in new artwork, including a vintage print featuring a “white pin-up model.” And they made sure not to be home during the appraisal, with a white colleague there instead to greet the appraiser.

After that, the home appraised for $750,000, or 59% more than the appraisal from less than seven months earlier.

“It’s shocking to a lot of people that a home should be an objective valuation, but when the appraiser appraises it believing it’s a Black-owned home, it gets one value, and suddenly it’s worth 50% more when the appraiser believes it’s a white-owned home,” said John Relman of the Relman Colfax law firm that’s representing the plaintiffs.

“You have two eminent professors at Johns Hopkins. They did everything they were told to do,” Relman said. But “appraisal discrimination is so nuanced and so pernicious that it literally follows them into this predominantly white neighborhood. And they, unlike their neighbors, can’t access the value that’s rising and that they should benefit from.”

The U.S. housing industry has a long history of racial discrimination, one that helped build the racial wealth gap and one that carries through today. Last year, on the 100th anniversary of the Tulsa race massacre, President Joe Biden said he was launching an interagency initiative to combat bias in home appraisals.

It’s a history with which the plaintiffs are well aware. Connolly has written a book about how property ownership helped set the terms of Jim Crow segregation between the early 1900s and the 1960s. Mott has written about African-American and American literature and history.

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

https://www.floridarealtors.org/news-media/news-articles/2022/08/baltimore-couple-suing-appraiser-black-bias

Fla. Homeowner Assistance Fund: Aug. 26 Deadline

The Fla. DEO says Fri. is the last day registered homeowners can apply for HAF aid; they plan to spend the full $676M based on applications received by then.

TALLAHASSEE, Fla. – Florida’s Homeowner Assistance Fund (HAF) was created to help homeowners financially harmed by the COVID-19 pandemic. The state’s funds, part of federal laws, are created to prevent mortgage delinquencies, defaults, foreclosures and displacements. They can also provide assistance with home energy services, internet costs, property and/or flood insurance, property taxes, and homeowner or condominium association fees.

Under the plan, each state oversees distribution. Of the money allotted – a minimum of $50 million per state – Florida received $676,102,379 through the U.S. Department of the Treasury.

Eligible Florida homeowners may receive up to $50,000 in assistance. In distributing the money, the U.S. Treasury created guidelines, saying, “Funds from the HAF may be used for assistance with mortgage payments, homeowner’s insurance, utility payments and other specified purposes.” Based on those guidelines, the Florida DEO created a 48-page document and posted it online, Needs Assessment and Plan for the Homeowner Assistance Fund, outlining how Florida will use and distribute the funds.

The deadline for applications is Friday, Aug. 26, 2022, providing applicants previously registered.

According to the Florida Department of Economic Opportunity (DEO), Florida is halfway completed with more than $328 million awarded to date, “more than any other state in the nation.”

Program results so far, according to DEO

  • A total of 11,740 homeowner applications have been approved, with more than $328 million in awards to date.
  • 20,849 homeowners have been invited to apply but have not started their applications.
  • 16,562 applications have been started by homeowners but not been submitted.
  • 22,799 applications have been submitted to DEO by homeowners.

“Our goal with these modifications is to ensure we can maximize our serving those Floridians who are somewhere in the application process now or have applied by the end of this week,” says DEO Secretary Dane Eagle. “I encourage all homeowners who have been invited to apply to complete and submit their applications for relief before the deadline on August 26.”

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/fla-homeowner-assistance-fund-aug-26-deadline

Non-Profit to Offer Affordable Factory-Built Homes

EUGENE, Ore. – As a boy in the late 1950s, Terry McDonald watched as workers built an 80,000 square-foot manufacturing plant in an industrial neighborhood on the west side of Eugene. Long after childhood, McDonald felt an affinity for the factory, where American Steel once fabricated heavy-duty logging equipment until the timber industry waned in Oregon.

Now, as the executive director of the local Society of St. Vincent de Paul, McDonald has made a career of turning other people’s castoff goods into cash to support low-income housing and the charity’s other anti-poverty initiatives. He easily imagined a creative reuse for the midcentury factory, a space flooded with natural light from paned-glass windows high above the manufacturing floor.

“I looked at this building and said: ‘Someday, I would like to own that building,’” McDonald said. “Old industrial buildings are just kind of fun.”

Over the next year, McDonald and his team will transform the massive space into a nonprofit manufactured home factory capable of producing as many as 80 homes a month.

Known as the HOPE Community Corporation, it’s a unique nonprofit venture, supported by $15 million in housing money from the Oregon legislature. Once the group is up and running in 2023, HOPE could employ more than 100 people to build factory-built homes for low-income families, at a time when many states face a critical housing shortage.

Nationwide, there’s an estimated shortage of about 3.8 million housing units. The shortfall has many causes, including growing investor ownership of homes, but it stems largely from a construction slowdown that began in 2008 during the Great Recession and never regained the momentum to meet present-day need.

There are repercussions not only for homelessness but for nearly everyone looking for a place to live – buyers can’t afford ever-increasing prices, and renters face escalating rents.

Apartments are scarce, too, especially those for lower-income renters, according to a recent study by the National Multifamily Housing Council and the National Apartment Association. Three states alone, California, Florida and Texas, will require 1.5 million new apartments by 2035, the study found. As supply chain bottlenecks persist and interest rates and borrowing costs rise, the housing shortage could worsen without intervention.

Because manufactured homes are built on an assembly line, they’re less expensive and faster to construct. They’re seen as essential for providing new housing, especially for lower-income buyers who may have been priced out of site-built homes or expensive rental markets. Many housing experts see factory-built homes as an effective way of meeting current housing needs, especially in rural areas.

“The importance of manufactured housing for addressing our current affordability crisis is just immense, because manufactured housing is half the cost to build of traditional, site-built construction,” said Esther Sullivan, a sociology professor at the University of Colorado Denver and the author of “Manufactured Insecurity,” a book that examines challenges faced by residents of American mobile home parks.

“I’m not trying to say it’s perfect … but there’s just a lot of opportunity to capitalize on the cost savings that comes from factory production.”

The average factory-built home costs $106,000 to build, compared with $351,000 for site-built homes, said Lesli Gooch, chief executive officer of the Manufactured Housing Institute, a trade organization that in June exhibited some of the industry’s newer home models on the National Mall in Washington, D.C. The techniques used in factory-built homes are the difference between $72 and $140 per square foot in construction costs, Gooch said, though some of those estimates, as with all construction, may have increased recently because of inflation and supply chain issues.

Cheaper doesn’t mean it’s shoddier, Gooch said. Factory-built homes are constructed on an assembly line with the precision and quality that comes from a controlled building environment, she said. They also must meet the national construction and safety standards of the U.S. Department of Housing and Urban Development, which has building inspectors on site in factories.

“Sometimes people have preconceived notions about what a manufactured home is,” she said. “That notion is not what’s being produced today.”

Manufactured homes are factory-built structures built after 1976 to HUD codes. Before that, they were called mobile homes or trailers, terms no longer a part of federal law or common usage.

Manufactured homes are delivered in one piece, unlike modular housing, which also is built mostly in a factory, but assembled from multiple components on site and subject to local building codes.

The Biden administration’s Housing Supply Action Plan released in May specifically supports the production of new manufactured housing and new ways of financing such homes.

States such as Oregon have begun to respond, with zoning rules that allow more types of mobile homes, in more locations. So have many cities, Gooch said, among them some in Tennessee that have begun allowing so-called CrossMod homes that look more like site-built homes, but are made in factories.

Yet barriers to owning a manufactured home remain nationwide.

Many low-income buyers don’t have access to traditional mortgages to purchase new homes, and instead rely on personal property loans. Such loans can have higher interest rates, as well as fewer of the protections of federally backed mortgages, including forbearance when owners fail to make payments.

Manufactured homes also can have complicated ownership structure. In mobile home parks, people may rent the lot, but own their own home; outside of parks, they are more likely to own both the home and the land it sits on.

As important as it is to build new homes, it’s also a priority to maintain existing manufactured housing stock, said Heather Way, a law professor at the University of Texas School of Law and an expert in preventing displacement. It can be done with zoning, she said.

In Austin, Texas, a city facing rapid gentrification in some neighborhoods, the city rezoned mobile home parks in a way that prohibits them from being torn down and converted to other uses. Way also worked on statewide legislation passed in 2019 that made it easier for people who inherit manufactured homes with murky titles to get the same sort of property tax exemptions as those who inherit more traditionally built homes.

Legislation passed in Colorado this year offers more protections to tenants who own manufactured homes in mobile home parks, Sullivan said. If owners of mobile home parks put them up for sale, tenants have 120 days to purchase the parks.

The law also gives local governments more ability to step in and buy the parks, too. And if mobile home park owners convert their parks to other uses, they must compensate people who rent lots the cost of moving their homes. It costs on average $7,000 to move a manufactured home to a new site, and most stay once they’re in place.

Some simple approaches can help communities maintain existing manufactured housing, or add to it, Sullivan said. Cities can add language to their comprehensive growth plans that acknowledges the importance of manufactured housing in their communities. States and housing nonprofits also can support efforts on the part of tenants to organize as resident-owned communities, by providing low-interest loans to buy the land and legal and financial support.

That’s what’s happening in the fire-stricken southern Oregon community of Talent. There, the nonprofit CASA of Oregon is helping future residents acquire and manage a mobile home park where all but 10 of the 98 homes were destroyed by fire in 2020. If the timing works out, CASA hopes to supply the park with homes purchased from the HOPE factory run by McDonald.

After fires destroyed thousands of manufactured homes in southern Oregon in 2020, regional HUD officials “heard loud and clear from community members” about their housing needs and hopes for the future, said Margaret Salazar, the federal agency’s Northwest regional administrator. People crave opportunities to own their own homes, she said. Many of the people who lost homes to the fires in 2020 are Latino.

“That is a huge part of our strategic plan is expanding homeownership opportunities that are sustainable, and that are really rooted in our work on racial equity as well, and on addressing racial disparities in homeownership,” Salazar said. “Low-income folks, working people are really looking for creative opportunities to be able to become homeowners. And so, I see this as another opportunity.”

As homes roll out of the HOPE factory, McDonald said he’s not yet certain how they will be priced. St. Vincent de Paul already owns eight Oregon mobile home parks for residents with low incomes, which was part of the impetus for starting a factory, McDonald said. He couldn’t find enough homes to replace some of the aging stock at their existing parks.

Their goal is to offer affordable homes, built sustainably and with fire resilient materials. The homes also will come with energy efficient appliances and features that keep utility costs low for their future owners. McDonald already is working with the Federal Home Loan Bank of Des Moines to design loans to help people buy the homes the Eugene factory will produce.

“So, the goal on this is to try and basically hit a home run all at one time,” he said. “This is a model where we can actually succeed in helping address one slice of the issue, but it’s an important slice.”

© Copyright 2022, Culpeper Star-Exponent, Culpeper, VA

https://www.floridarealtors.org/news-media/news-articles/2022/08/non-profit-offer-affordable-factory-built-homes

Is Your Facebook Page a Ghost Town?

On Facebook, people don’t usually come to you – you have to draw them in. They must choose to keep returning because they find your page interesting.

NEW YORK – Real estate professionals’ use of social media became particularly important during the pandemic lockdowns, and it will continue to expand. Outside of paid ads, however, a social media page has to be interesting enough to draw viewers if it hopes to succeed.

Real estate professionals using Facebook have several tools to enhance their page’s graphics, such as Canva, which is easy to use and has many stock images and templates to choose from. Agents also should consult their company’s own marketing teams to create branded content that is easy to download and share.

Within their strategic content plan, agents should include some spontaneity. Along with new listings, just sold, market updates and advice, agents may share a little about themselves – ideally something that might emphasize similarities they have with prospective clients.

In addition, audiences want an agent that can offer intelligent content, and one that can deliver that content in a way that adds to their user experience.

Ideally, posts should be released similar to an email drip campaign on a regular schedule that hits a sweet spot – they arrive often enough that the agent isn’t forgotten, but not so often that users feel they’re getting too much. An excessive number in a short period may prompt recipients to unsubscribe.

Regarding images or videos, they should be high quality, including when recording a market update or home tour.

After getting likes, shares and comments on a post, agents should continue to respond and engage with followers. Conversations have the potential to result in a signed listing or a closed sale. Rather than making their page a one-way messaging device, agents should strive to use posts that encourage a conversation and keep the exchange flowing.

Source: Inman (08/17/22) Stace, Laura

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

https://www.floridarealtors.org/news-media/news-articles/2022/08/your-facebook-page-ghost-town

Business Owners Ready To Cut Costs

NEW YORK – Business owners worried about a possible recession are reevaluating budgets and spending so they can keep their staff safely employed. For many higher-ups, they’ve been here before.

Steve Shriver is CEO of the lip care company Eco Lips. During the 2008 recession, Shriver said he had to take himself off the payroll and take on another job to prevent layoffs, and he cut as few costs as possible. He currently has a staff of 80 employees.

Now, with another recession on the horizon, Shriver said he’ll be happy if the company can “stay flat,” or not see any growth or shrinkage with its revenue. He also said that to keep his staff employed, the company will freeze additional hiring and step up its planning.

Shriver declined to disclose the company’s annual sales or how it’s grown since 2008.

“It’s super-important that on a daily basis, we are auditing our expenses to reduce expenses outside of labor costs,” Shriver said. “It’s monitoring the cost of goods, making sure that we’re charging enough for products, having enough gross margin to be able to afford to keep our staff.”

80% of workers scared of losing jobs during a recession

According to a study from Insight Global, 80% of workers are worried that their job is not recession-proof. And with inflation at an all-time high, 56% of workers don’t feel prepared financially for a recession.

Bert Bean is the CEO of Insight Global, a staffing company that helps job seekers look for careers in health care, finance, IT and government. He said that during the mass layoffs amid the COVID-19 pandemic, workers overall lost trust and faith in their employers. As a CEO himself, he said layoffs shouldn’t be the first thing an employer thinks about when it comes to saving a company during a recession.

“You can decide to cut back costs or you can decide to actually grow through the recession and take more of an offensive measure,” he said, adding that companies should be transparent with employees.

Businesses brace for slower consumer spending

Taufeek Shah is CEO of minority-owned Lola’s Fine Hot Sauce. He said his biggest fear with a recession is the slow economic growth with consumer spending and how it could affect the cost of its goods.

“We’re a small business, and we’re always trying our best to stay ahead,” Shah said. “We’re going to stick to our guns, but my biggest fear is if consumer spending goes down to next to nothing.”

Shah said that because Lola’s isn’t a multimillion-dollar company, it’s able to pivot in a difficult time faster, because it knows what areas of the business it can focus on while maintaining product quality and customer experience.

Harji Singh, a co-founder of the Delta 8 cannabis beverage LOKI, said he shares Shah’s thinking, adding that the alcohol industry did very well during the 2008 recession.

Singh, who also owns a creative agency, said the company is trying to spend as wisely as possible, cutting back on events and influencer marketing that other beverage companies might be doing. Because the company is only 50 people with a core team of eight, Singh said, it is trying to leverage resources the company already has to keep staff where they are now.

“We’ve seen what happened in the recession in 2008, so we’re trying to position ourselves to spend wisely and leverage all resources we already have to scale the brand,” Singh said. “Find out where the majority of your revenue is coming from and double down on it to build the best relationship you can with that market.”

Small business owners are worried about the supply chain again

But some companies are still recovering from the pandemic and supply chain interruptions that followed.

Shah said COVID-19 was a double-edged sword because when the pandemic hit, panic buying helped Lola’s products sell, but once that slowed, supply chain bottlenecks started affecting production.

“I would almost tell you right now, supply chains are worse now than during COVID,” he said. “Fortunately for us, we have contracts for any time we get a product that does not meet the quality standard.”

Some businesses said they aren’t too worried about staffing during a recession.

Greg Davies is CEO of Full Measure Education, a startup that works exclusively with higher education institutions to make student interaction accessible. When learning went remote, Full Measure helped universities create virtual campus tours and helped students register for orientation and even make a deposit for on-campus living.

“Traditionally recessions are good for higher (education),” Davies said. “So far, it looks like our market isn’t really impacted by this, but we’re looking at it on a monthly basis for how we need to reconsider and what we should change accordingly.”

Entrepreneurs try to keep recession and inflation in perspective

Davies said business owners should remember that economic events like a recession don’t last forever, and they should keep employees primed and ready to help in case the business is affected.

Singh said business owners should nurture relationships with employees, including vendor relationships, for when things get crazy.

“When things do hit the fan, it comes down to a personal connection at that point,” Singh said. “People would rather keep someone they personally like or a company they personally like verses just another vendor or just another product on our shelf.”

Copyright 2022, USATODAY.com, USA TODAY

https://www.floridarealtors.org/news-media/news-articles/2022/08/business-owners-ready-cut-costs

Buyers Still Want Yards – Pools Not as Much

The pandemic-created love for outdoor spaces continues, though a survey of home designers found a drop in demand for pools, solar panels and smart home features.

WILMINGTON, Del. – The 2022 Home Design report by the remodeling platform Fixr surveyed 47 home designers, with 98% citing natural lighting as their clients’ most preferred home feature, followed by home offices (96%) and useable outdoor spaces (92%). Experts believe that natural lighting coincided with homeowners’ desire for more energy-efficient thermal insulation (86%) and HVAC systems (75%).

However, pandemic preferences such as swimming pools, solar panels and smart home features were cited by just 18%, 20%, and 43%, respectively.

“By creating a functional outdoor living space, you have more usable areas on your property to enjoy,” according to the report. “This can allow you to entertain, relax or exercise without having to go anywhere, increasing enjoyment in your home.”

The report also found that the average homeowner spends about $3,500 to transform their spare room into a desirable work-from-home space.

Other features preferred by homeowners include home security systems (76%), spare rooms (68%), privacy features including automatic blinds and fences (63%), and multi-use garages (42%).

Source: Inman (08/15/22) McPherson, Marian

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

https://www.floridarealtors.org/news-media/news-articles/2022/08/buyers-still-want-yards-pools-not-much

Commercial Boosted by Supply Chain Expansion

The pandemic uncovered weaknesses in U.S. manufacturing and a dependence on foreign nations, but a push to bring industry back home will help the commercial RE market.

WASHINGTON – U.S. companies are looking to bring operations home from overseas, which will open new opportunities for commercial brokers, speakers at the National Association of Realtors®’ (NAR) C5 Summit said.

Speakers discussed the nuances of onshoring, friendshoring, nearshoring and repatriating, but they agreed on this: U.S. companies are looking to bring operations home from overseas – or at least closer to home – in part to prevent future supply chain issues.

“COVID was a wake-up call,” CNBC commentator Ron Insana told conference attendees in a conversation with Nadeem Meghji, Blackstone’s head of Real Estate America. “We’re seeing companies move from a just-in-time model to a just-in-case model.” That means more opportunity for U.S. brokers, especially those in business-friendly environments.

Blackstone, which purchases companies as well as their underlying real estate assets, owns nearly $600 billion in property worldwide.

“One of the benefits of a global business is being able to see what works and what doesn’t,” Meghji said. “Broadly speaking, warehouse logistics has been a theme for us, not just in the U.S. but now also in Europe and Asia.”

Nearly 500 brokers, trade organizations and economic development professionals gathered for the C5 Summit in New York, the second year NAR has hosted the commercial real estate conference. The “5” in the event title stands for capital, connect, commerce, community, and commercial.

Meghji wasn’t the only speaker touting the strength of the warehouse sector. Other brokers and analysts speaking at the conference agreed that warehouses were expected to remain strong. Several speakers also mentioned life sciences, biotechnology and health care as sectors that will continue to perform well. With the growth of streaming content, Blackstone is investing in movie production facilities as well.

Self-storage facilities, which took off in 2019 and 2020, were cited by many speakers as a sector with staying power. NAR economist Lawrence Yun said one factor was the housing shortage and resulting high prices. People are doubling up to save money, moving in with parents or grandparents. “They need someplace to put all their stuff,” he said. “So I think self-storage will continue to have legs.”

Although the office market remains a question mark, 2021 was a phenomenal year for many commercial real estate sectors, and 2022 and 2023 are shaping up to see only a slight drop-off. Concerning factors include continued interest rate hikes and geopolitical conflict. But holding real estate in the right location and the right sectors is a great hedge.

“We’ve oriented our entire business around assets with cash-flow growth,” Meghji said.

Location is key. For example, Meghji says Blackstone isn’t looking at warehouse facilities or distribution centers in remote locations, but concentrating on locations near larger populations, where companies can meet the demands of last-mile delivery.

Throughout the conference, speakers touched on the importance of setting and meeting environmental, social and governance goals. Investors and tenants demand it, and governments are mandating and incentivizing it.

“And it’s the right thing to do for the planet,” Meghji said. “Real estate happens to be a pretty big greenhouse emitter.”

Blackstone has its sights set on being carbon neutral by 2025. It’s doing that not only by improving energy efficiency in its buildings but also by investing in renewable solutions, such as hydroelectric, wind and solar.

With the strength of the U.S. dollar, there was also a lot of talk at C5 about whether the U.S. would continue to be a target for foreign investment. The consensus was that it would, but other countries are competing. In a session on opportunities within Dubai, Shadi Bteddini, CEO of Century 21 United Arab Emirates and Century 21 India, said money is pouring into Dubai because the government has made the right moves to attract foreign investment. Bteddini is also CEO of Front Desk Real Estate, the international trustee of the Dubai Land Department, a role aimed at attracting global investors to Dubai.

Blackstone’s Meghji called India a growth market; the country is “producing hundreds of thousands of engineers” and moving from being a source of mostly low-level tech support to being an innovator. And the Indian government is finally taking steps to build needed infrastructure to support the demands of a growing middle class.

But both speakers said the U.S. continues to be a safe haven for investment. Bteddini said Dubai has $8 billion worth of assets under management in the U.S. and is looking to double that.

Meghji said the U.S. is still the best place for investment. “I would not bet against this country and the opportunity we have right in front of us,” he said.

Source: National Association of Realtors® (NAR)

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/commercial-boosted-supply-chain-expansion

RPR Updating Mobile App on Tuesday

The Realtor app that generates buyer and seller reports was updated. The new version goes live Tues., and members need to update the RPR Mobile app on their devices.

CHICAGO – RPR (Realtors Property Resource, narrpr.com) says it has an “exciting update” for RPR Mobile, its phone app, and a heads up that members will need to update it through Google Play or the App Store.

RPR is a wholly owned subsidiary of NAR and exclusively used by Realtors as a benefit of membership. It includes almost all active U.S. residential listings and commercial listings. The app includes a long list of important data, such as listings, a property’s tax and mortgage history, sales, valuations, demographics and school information.

Realtors can also quickly create client-friendly reports that for printing, emailing or texting.

The update modernizes the app and offers new features, according to RPR’s announcement, including:

  • A refreshed interface, with familiar usability
  • Buyer Tour enhancements
  • Improved property search filters

How it works: Once the update goes live, members will need to upgrade their RPR app before they can use it. Once updated, they log in using their RPR credentials. If they’ve previously set up fingerprint or face recognition, those options will still work.

The new app works on phones only, and members who usually access RPR on their tablet devices are advised to use the webpage, which also has a responsive design.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/rpr-updating-mobile-app-tuesday

New Renting Option: Mobile Home Communities

Rather than buy a mobile home and rent the land, a Zephyrhills developer will rent both for one price – about $1,750 per month for a 3 bed/2 bath home.

ZEPHYRHILLS, Fla. – Florida continues to have an affordable housing crisis, and ERC Communities Inc. believes that modular homes could solve the problem.

Modular homes offer better quality than mobile homes and trailers – and similar amenities to a single-family home, according to ERC Communities officials. The company has planned a 60-unit modular home community featuring three-bedroom, two-bathroom homes that will rent for around $1,750 a month in Zephyrhills.

“The mere fact that you have something that can be as affordable as this – I think similar square footage, just under 1,400-square feet in a brand new conventionally built home, would have to be in the mid-$2,000 range and same with apartments,” says ERC Communities Inc. Chairman Jerry Ellenburg. “So we’re filling in an affordability gap that otherwise doesn’t exist.”

All the homes in the community will be rental only – none will be available for purchase.

Source: Bay News 9 (08/10/22) Weathers, Saundra

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

https://www.floridarealtors.org/news-media/news-articles/2022/08/new-renting-option-mobile-home-communities

Rate of Rent Increases Slowed for Second Month

Study: Jacksonville’s rents rose only 3.6% year-to-year in July, but they were up 17.8% in three S. Florida counties. Nationally, rents were up 13.5% year-to-year.

SEATTLE – U.S. landlords’ “asking rents” were up 14% year -over-year to $2,032 in July, according to a report from Redfin – the smallest annual increase since November and down from June (15%) and May (16%).

Month-over-month, the median asking rent climbed 0.6% –its slowest growth since February and down from 2.1% one year earlier.

“Big rent hikes may finally be coming to an end as landlords adjust to waning tenant budgets that are being strained by the rising cost of groceries, gas and other regular expenses,” says Redfin Chief Economist Daryl Fairweather.

“Still, rents are increasing faster than overall inflation, which has started to ease. We expect rental growth to continue to slow, but markets with strong job growth and limited new housing construction, like New York and Seattle, will likely continue to experience large rent increases.”

Nationwide in July 2022, actual rents were up slightly less at 13.5% year-to-year. July’s median monthly rent was $2,032.

Florida metros varied widely, with Jacksonville’s 3.6% year-to-year increase below the national average, even as three South Florida counites saw increases greater than 17%.

Florida market year-over-year rent increases

  1. Jacksonville: 3.6% (median $1,661 in July 2022)
  2. Tampa: 12.2% ($2,227)
  3. Orlando: 14.1% ($2,164)
  4. Fort Lauderdale: 17.8% ($3,068)
  5. Miami: 17.8% ($3,068)
  6. West Palm Beach: 17.8% ($3,068)

Asking rents rose 31% year over year in Cincinnati, the largest jump among the 50 most populous U.S. metropolitan areas, though down from 39% the month before.

10 metros with fastest-rising year-over-year rents

  1. Cincinnati: 31%
  2. Nashville: 26%
  3. Pittsburgh: 24%
  4. New York: 23%
  5. Newark: 23%
  6. Nassau County: 23%
  7. New Brunswick, New Jersey: 23%
  8. Seattle: 22%
  9. Indianapolis: 21%
  10. San Antonio: 21%

Just three of the 50 most populous metro areas saw rents fall year-to-year: 10% in Milwaukee, 8% in Minneapolis and less than 1% in Baltimore. Milwaukee and Minneapolis have seen declining asking rents since April.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/rate-rent-increases-slowed-second-month

Climate, Health Bill Goes Easy on Raising RE Taxes

NAR: The original proposal included tax changes that would have hurt real estate investors. However, the final signed version leaves the industry largely untouched.

WASHINGTON – President Joe Biden signed the Inflation Reduction Act into law Tuesday – a sweeping climate, healthcare and tax bill. While initial proposals included real estate tax increases that concerned investors, the final signed version spares the industry from the worst ones.

The $784 billion legislation allows Medicare to negotiate prescription drug prices, invests billions of dollars into clean energy and imposes a 15% minimum tax on corporations with more than $1 billion of earnings. A portion of the revenue raised also will go toward deficit reduction.

But the law excludes an array of tax measures on real estate investment proposed last year.

“When discussions began on the original Build Back Better plan, there were nearly a dozen tax changes that could have decimated our efforts to increase the supply of affordable housing,” says Shannon McGahn, the National Association of Realtors®’ (NAR) chief advocacy officer. “After spending more than a year educating lawmakers on these proposals, a bipartisan consensus emerged that they weren’t a good idea, and none of the harmful tax changes made it into the final bill.”

NAR launched a comprehensive action plan last year to advocate for affordable housing supply. A study commissioned by NAR showed the U.S. needs 5.5 million housing units, and that it could take more than a decade to fill that gap – even with accelerated new construction.

“A supply shortage of this magnitude requires an all-of-the-above response,” says NAR President Leslie Rouda Smith. “We are working toward zoning reform, money for new construction, expanded financing options and tax incentives to spur investment, converting unused commercial spaces to residential and increasing the supply of construction workers. And our efforts are building consensus that decisive action is needed.”

  • In March, the White House included a major funding request for affordable housing in its budget proposal.
  • In May, thousands of Realtors descended on Washington, D.C., and hand-delivered to Congress a comprehensive list of actions it could take to address the housing shortage.
  • Also in May, the Biden administration released a Housing Supply Action Plan.
  • In July, the Treasury Department allowed the use of $350 billion in American Rescue Plan funds for developing, repairing and operating affordable housing units.

“We aren’t just working with Congress and the administration,” McGahn says. “We’re also working with industry partners and agencies on a wide array of initiatives to expand homeownership – such as the Black Homeownership Collaborative’s 3-by-30 plan to add 3 million net new Black homeowners by 2030.”

Source: National Association of Realtors® (NAR)

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/climate-health-bill-goes-easy-raising-re-taxes

Mortgage Rates Drop a Bit, Down to 5.13%

Rates appear to have hit at least a temporary plateau in the low 5% range. Last week, the 30-year, fixed-rate mortgage averaged 5.22%.

WASHINGTON (AP) – Average long-term U.S. mortgage rates came back down slightly this week after the key 30-year loan rate jumped nearly a quarter point last week.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate fell to 5.13% from 5.22% last week. Last year at this time, the rate stood at 2.86%.

The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, inched down to 4.55% from 4.59% last week. One year ago, it was 2.16%.

Rapidly rising interest rates – which add hundreds of dollars to monthly mortgage payments – have pushed many potential homebuyers to the sideline this year, cooling the once red-hot housing market.

The National Association of Realtors said Thursday that existing home sales fell for the sixth consecutive month in July, slowed by higher mortgage rates and home prices that are still steadily rising, though at a slower pace.

The national median home price jumped 10.8% in July from a year earlier to $403,800. A few months ago, the year-over-year price increase for an existing home was around 15%.

Sales of previously occupied homes fell 5.9% from June and are off more than 20% from a year ago.

The Federal Reserve has increased its main borrowing rate four times this year in an effort to curb four-decade high inflation. Mortgage rates don’t necessarily mirror the Fed’s rate increases. They tend to track the yield on the 10-year Treasury note, which is influenced by a variety of factors, including investors’ expectations for future inflation and global demand for U.S. Treasurys.

Recently, faster inflation and strong U.S. economic growth have sent the 10-year Treasury rate up sharply.

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

https://www.floridarealtors.org/news-media/news-articles/2022/08/mortgage-rates-drop-bit-down-513

CFPB: Financial Firms Liable for Data Leaks

Credit scorers, lenders and other financial firms that collect personal data have a duty to keep it safe – and a liability if they don’t – the U.S. consumer bureau says.

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) confirmed in a circular that financial companies may violate federal consumer financial protection law if they fail to safeguard consumer data.

Americans applying for a mortgage or relying on their credit scores assume that the companies holding data such as Social Security numbers, yearly earnings and total debts go out of their way to keep that data safe from scammers and other crooks. Many do, but CFPB says it will step up enforcement against those companies that do not.

Past data security incidents, including the 2017 Equifax data breach, allowed outsiders to harvest the personal data of hundreds of millions of Americans. In some cases, these incidents violated the Consumer Financial Protection Act, in addition to other laws. CFPB charged Equifax in 2019, for example, with violating the Consumer Financial Protection Act to address misconduct related to data security.

The circular outlines the conditions where a company could be held liable and includes examples.

“While many nonbank companies and financial technology providers have not been subject to careful oversight over their data security, they risk legal liability when they fail to take commonsense steps to protect personal financial data,” says CFPB Director Rohit Chopra.

The CFPB says it’s increasing its focus on potential misuse, and the new circular lists processes it will look at, even though the Consumer Financial Protection Act doesn’t specifically create mandatory processes that help firms avoid liability.

CFPB’s list of possible security failures

  • Multi-factor authentication: Multi-factor authentication makes it harder for criminals to gain access to data. It can protect against credential phishing, such as those using the Web Authentication standard supported by web browsers.
  • Adequate password management: Username and password combinations can be sold on the dark web or posted for free on the internet, creating risk of future breaches. Firms still using passwords, password management policies and practices should find a way to monitor breaches at other entities where employees may be re-using logins and passwords.
  • Timely software updates: Software vendors, including open-source software libraries and projects, often send out patches and updates that address emerging threats. However, criminals also receive these updates and are essentially given instructions on how to hack into secure data within any company that has not yet updated its security software. CPFB will look for protocols to immediately update software and address vulnerabilities once they become publicly known.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/cfpb-financial-firms-liable-data-leaks

Fla.’s July Housing: Median Prices Up, Supply Easing

Florida Realtors: Fla.’s single-family median price up 16.1% ($412K), condo median price up 20.6% ($305K). Mortgage rates, prices impact sales, and inventory is up.

ORLANDO, Fla. – Florida’s housing market reported higher median prices, a rise in new listings of existing single-family homes and continued signs of easing supply constraints in July 2022 compared to a year ago, according to Florida Realtors®’ latest housing data. However, inflation and higher mortgage interest rates continue to impact sales.

  Year-over-year median prices and listings of existing single-family homes across Florida were up in July across Florida as signs continued to point to easing supply constraints. But inflation and higher mortgage interest rates continue to impact sales.

“The trend of improving for-sale inventory continued in July, which hopefully will also help housing affordability and ease rising prices over time for buyers,” says 2022 Florida Realtors President Christina Pappas, vice president of the Keyes Family of Companies in Miami. “However, homes are continuing to go under contract quickly: The median time to contract statewide for single-family existing homes in July was 12 days compared to nine days during the same month a year ago. The median time to contract for existing condo-townhouse units was 13 days compared to 15 in July 2021.

“Market conditions can change quickly. A local Realtor offers their expertise and guidance to help consumers navigate the homebuying or home selling process.

Last month, closed sales of single-family homes statewide totaled 23,705, down 22.9% year-over-year, while existing condo-townhouse sales totaled 9,341, down 30.7% over July 2021, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

While July’s closed sales were down compared to the same time a year ago, Florida Realtors Chief Economist Dr. Brad O’Connor points out: “It’s almost not fair to compare 2022 sales numbers to those from a year ago because 2021 was such a uniquely good year for the housing market, with the 30-year mortgage rate hovering near 3% the entire year. But we should also acknowledge that this July, we saw fewer home sales than we did in July of 2019, before the pandemic. This year’s high mortgage rates, combined with a continuation of last year’s rapid rise in home prices have really put the brakes on the number of completed transactions this summer.”

If not for those two factors – higher mortgage rates and rising prices – “buyer demand would be booming in Florida right now,” he adds.

“Demographically, Florida is in a great position, with the bulk of the state’s millennials moving into the prime age for first-time home purchases, not to mention the high level of interest in Florida among out-of-state buyers, whether they be investors, retirees or untethered workers.” O’Connor saiys. “Rents around the state have increased substantially, as well, so it’s not as though renting has become more attractive relative to buying. But we simply can’t ignore the impact that these higher mortgage rates and home prices are having on the market, and we should expect the number of transactions to reflect that as a result over the next several months.”

The statewide median sales price for single-family existing homes in July was $412,303, up 16.1% from the previous year. Last month’s statewide median price for condo-townhouse units was $305,000, up 20.6% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

On the supply side of the market, the trend of easing inventory (active listings) continued, rising year-over-year in July. The supply of single-family existing homes increased to a 2.2-months’ supply while existing condo-townhouse properties are at a 2.1-months’ supply.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 5.41% in July 2022, significantly higher than the 2.87% average during the same month a year earlier.

To see or download the July 2022 data report PDFs, go to Market Data.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/flas-july-housing-median-prices-supply-easing

NAR: U.S. July Home Sales Fell 5.9%

Properties didn’t stay on the market long (14 days), prices climbed 10.8% year-to-year, and inventory is starting to grow in the face of higher mortgage rates.

WASHINGTON – Existing-home sales sagged for the sixth straight month in July, according to the National Association of Realtors® (NAR). All four major U.S. regions included in the analysis had month-over-month and year-over-year sales declines.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – slipped 5.9% from June to a seasonally adjusted annual rate of 4.81 million in July. Year-over-year, sales fell 20.2% (6.03 million in July 2021).

“The ongoing sales decline reflects the impact of the mortgage rate peak of 6% in early June,” says NAR Chief Economist Lawrence Yun. “Home sales may soon stabilize since mortgage rates have fallen to near 5%, thereby giving an additional boost of purchasing power to homebuyers.”

Total housing inventory registered at the end of July was 1,310,000 units, an increase of 4.8% from June and unchanged year-to-year. Unsold inventory continues its slow growth. It hit a  3.3-month supply at the current sales pace in July, up from 2.9 months in June and 2.6 months in July 2021.

The median existing home price for all housing types in June hit $403,800, up 10.8% year-to-year (from $364,600), and prices increased in all four regions. It marks 125 consecutive months of year-over-year increases – the longest-running streak on record.

“We’re witnessing a housing recession in terms of declining home sales and home building,” Yun adds. “However, it’s not a recession in home prices. Inventory remains tight and prices continue to rise nationally with nearly 40% of homes still commanding the full list price.”

Properties typically remained on the market for 14 days in July, the same as in June and down from 17 days in July 2021. That 14 days are the fewest since NAR began tracking it in May 2011. In July, eight out of 10 (82%) of homes sold in July 2022 were on the market for less than a month.

First-time buyers were responsible for 29% of sales in July, down from 30% in June and also in July 2021. NAR’s 2021 Profile of Home Buyers and Sellers – released in late 2021 – reported that the annual share of first-time buyers was 34%.

All-cash sales accounted for 24% of transactions in July, down from 25% in June, but up from 23% in July 2021.

Individual investors or second-home buyers, who make up many cash sales, purchased 14% of homes in July, down from 16% in June and 15% in July 2021.

Distressed sales – foreclosures and short sales – made up about 1% of sales in July, essentially unchanged from June 2022 and July 2021.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.41% in July, down from 5.52% in June. The average commitment rate across all of 2021 was 2.96%.

Single-family and condo/co-op sales: Single-family home sales declined to a seasonally adjusted annual rate of 4.31 million in July, down 5.5% from 4.56 million in June and down 19.0% from one year ago. The median existing single-family home price was $410,600 in July, up 10.6% from July 2021.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 500,000 units in July, down 9.1% from June and down 29.6% from one year ago. The median existing condo price was $345,000 in July, an annual increase of 9.9%.

“Buying a home remains a worthwhile investment that brings an unmatched combination of security, freedom and accomplishment associated with the American Dream,” says NAR President Leslie Rouda Smith. “Realtors® serve as consumer champions who provide trusted guidance and insight to help home buyers and sellers achieve their goals.”

Regional breakdown: Existing-home sales in the Northeast slid to an annual rate of 620,000 in July, down 7.5% from June and 16.2% from July 2021. The median price in the Northeast was $444,000, an increase of 8.1% year-to-year.

Existing-home sales in the Midwest declined 3.3% from the prior month to an annual rate of 1,190,000 in July, dropping 14.4% from July 2021. The median price in the Midwest was $293,300, up 7.0% from the previous year.

Existing-home sales in the South fell 5.3% in July to an annual rate of 2,130,000, down 19.6% from one year ago. The median price in the South was $365,200, an increase of 14.7% from July 2021.

Existing-home sales in the West retracted 9.4% compared to last month to an annual rate of 870,000 in July, down 30.4% from this time last year. The median price in the West was $614,900, an 8.1% jump from July 2021.

“The action is in the pricey West region which experienced the sharpest sales decline combined with a sizable inventory increase,” Yun says. “It’s likely some Western markets will see prices decline, and that will be welcome news for buyers who watched rapid price jumps during the past two years.”

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/nar-us-july-home-sales-fell-59

Confidence Dips in Multifamily Sector

NAHB’s multifamily survey found mixed results in the second quarter, as a drop in optimism for condo builds overshadowed an increase in outlooks for apartments.

WASHINGTON – Confidence in the new multifamily housing market fell in the second quarter, according the National Association of Home Builders’ (NAHB) Multifamily Market Survey (MMS).

The MMS produces two separate indices: The Multifamily Production Index (MPI) decreased six points to 42 compared to the previous quarter, dragged down largely by the for-sale condo sector. The Multifamily Occupancy Index (MOI) fell eight points to 60.

Multifamily Production Index

The MPI measures builder and developer sentiment about current production conditions in the apartment and condo market. The index and all of its components are scaled 0 to 100, so that any number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.

The MPI is a weighted average of three elements: construction of low-rent units-apartments supported by low-income tax credits or other subsidies, market-rate rental units and for-sale units (condominiums).

Two of the three components decreased quarter-to-quarter: The component measuring low-rent units fell 4 points to 45, and the component measuring for-sale units declined 11 points to 33. But the component measuring market rate apartments increased by three points to 52.

Multifamily Occupancy Index

The MOI measures the multifamily housing industry’s perception of occupancies in existing apartments. I’s a weighted average of current occupancy indexes for class A B, and C multifamily units, and can also vary from 0 to 100.

The MOI fell eight points to 60, but multifamily developers on balance are still reporting improving occupancy.

“Overall, rental demand remains solid. Rising mortgage interest rates mean low vacancy in multifamily rental,” says Sean Kelly, executive vice president of LNWA in Wilmington, Del., and chairman of NAHB’s Multifamily Council. “Additionally, recent Treasury guidance related to American Rescue Plan funding creates clarity in the production pipeline for apartments supported by the Low Income Housing Tax Credit.”

“With rising interest rates and high construction costs, multifamily developers need to be cautious given recession concerns,” adds NAHB Chief Economist Robert Dietz. “However, the multifamily market is showing growth this year, with 5-plus unit permits and starts up 18% on a year-to-date basis.”

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/confidence-dips-multifamily-sector

Real Estate Offers Solid Investment Returns

Investors consider a 60/40 stock/bond portfolio standard, but real estate has provided solid returns over the past 12 months, convincing many to diversify.

LAS VEGAS – Stocks and bonds have always been the main source for investments across the United States. In fact, the 60/40 stock/bond portfolio is a standard that most investors follow.

However, following that trend cuts out one of the most stable investments out there in today’s market: real estate. For the last 12 months, ending June 30, 2022, the S&P 500 was down 11%, Dow Jones Index was down 14% and Nasdaq was down 22%. The volatile Bitcoin went down 68%.

Meanwhile, multifamily real estate rent amounts continued to increase during that same period, and home values on sale continue to trend up, meaning profits continued to climb for investors.

Real estate investors are finding value in multifamily real estate. Annual rent for multifamily properties grew an average of 13.5% during 2021. In fact, multifamily properties continued to generate the highest average returns among real estate classes in 2021, a trend that has been going on for the last 40 years.

Another point to consider is that real estate does not follow the typical stock market swings. While stocks and bonds follow the stock market ebb and flow, multifamily properties are independent of those swings. While this may mean that real estate doesn’t see large swings in returns and losses like some stocks do, it does mean that return profits are more stable and constant.

For example, in 2021, a portfolio with a breakdown of 50% stocks, 30% bonds and 20% multifamily real estate had an annualized return of 18.5%, as compared to a portfolio of 60% stocks and 40% bonds, which had an annualized return of 15.9%.

While multifamily properties may give the strongest average total return, according to a 2017 report by CBRE Research, there are other types of properties that give average total returns over 9% as well. Multifamily (9.75%), hotel (9.61%), industrial (9.57%) and retail (9.44%) all give strong returns, with office properties averaging an 8.38% total return.

The reason that multifamily properties top the list? Millennials have a strong desire for rental properties, while baby boomers have started renting more, as well.

Lease agreements for multifamily rentals also typically last just one year, allowing for faster increases over office, industrial and retail leases, which are typically five years or more.

Mike Ballard is the co-founder of Camino Verde Group, a Las Vegas real estate investment and development firm, and is involved in the development of more than $200 million of multifamily or mixed-use real estate in California, Nevada, Texas, South Carolina and Utah.

© Copyright 2022 Las Vegas Business Press. All rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/08/real-estate-offers-solid-investment-returns

HUD: $41M To Boost Affordable Housing

Three national nonprofits will split the money: Habitat for Humanity ($9M), Enterprise Community Partners ($15M) and Local Initiatives Support Corp. ($17M).

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) announced will make $41 million available for local affordable housing and community development activities. The funding is awarded through HUD’s Capacity Building for Affordable Housing and Community Development program, also known as Section 4.

“Communities can scale up their efforts to provide safe, affordable homes for their residents and meet their community development needs,” says HUD Secretary Marcia L. Fudge.

The Section 4 program enhances the capacity of housing development organizations like Community Development Corporations (CDCs) and Community Housing Development Organizations (CHDOs), to carry out affordable-housing and community-development activities for low- and moderate-income families.

HUD says the funding will total nearly $122 million with the help of 3:1 matching grants.

Grant recipients 

  • Local Initiatives Support Corporation (LISC) will receive $17 million with a 3-to-1 match commitment of $51 million. It will use the money to build capacity of CDCs to meet the housing and economic development needs of people with low and moderate incomes.
  • Enterprise Community Partners will receive $15 million with a 3-to-1 match commitment of $45 million. Enterprise’s funds will provide capacity building and technical assistance to address the overarching needs for racial equity in housing – increasing the housing supply and fostering upward mobility in the communities they serve.
  • Habitat for Humanity International will receive $9 million with a 3-to-1 match of $27 million. Habitat will increase CDC staff to bolster internal infrastructure, develop a 3-year plan that aims to advance Black homeownership, and support rural housing organizations, among other things.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/hud-41m-boost-affordable-housing

Some Rental Solutions Unworkable

Studies find rent control is a short-term solution that creates long-term problems. Florida Realtors has filed a lawsuit against Orange County to block a proposal.

ORLANDO, Fla. – Florida needs more rental units in many cities. A number of factors created the problem, including a large influx of new residents during the pandemic, rising construction supply costs and a building industry that has been under-producing since a slowdown during the Great Recession. But high demand and low supply have pushed rental costs higher.

On Aug. 9, Orange County, in a split decision, narrowly passed a proposed ballot referendum that, if approved, would enact a local rent-control ordinance. Florida Realtors, along with the Florida Apartment Association, filed suit against Orange County to block this proposal from appearing on the November ballot.

Florida Realtors CEO Margy Grant says, “Florida Realtors has long advocated for affordable housing. Studies show that rent control has unintended consequences that can make matters worse. A better solution would be to pursue public-private partnerships that result in more affordable housing units.”

According to the Brookings Institution, “While rent control appears to help current tenants in the short run, in the long run it decreases affordability, fuels gentrification, and creates negative spillovers on the surrounding neighborhood.”

The benefit is short-term for a few but aggravates the supply-demand problem over time.

Amanda White, government affairs director for the Florida Apartment Association (FAA), issued this statement on behalf of the association:

“Last week, despite feedback from experts and professionals in the rental housing industry, the Orange County Commission voted to move a fundamentally flawed rent control measure to the General Election ballot. In response to this violation of state law, FAA filed a swift legal challenge alongside the Florida Realtors to prevent Orange County’s rent control measure from advancing to the November ballot.

“Throughout several workshops, FAA and even the county’s own hired experts pointed out the realities of Florida law and the fact that Orange County’s proposal failed to meet the high bar established under statute.”

Florida Realtors’ leaders say the state association will continue to be a strong advocate for housing solutions that will increase supply to offset high increases in rental rates.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/08/some-rental-solutions-unworkable