Monthly Archives: August 2022

Pace of Interest Rate Increases Changes Deals Quickly

Florida Realtors economist: Today’s homebuyers stress over inflation and rising mortgage rates, which are pushing buyers to lower expectations and find something quickly.

ORLANDO, Fla. – We know that the process from offer to close is one of the most stressful for even a seasoned Realtor®. A hiccup on a credit report, an unexpected issue in the inspection – it seems nearly anything can potentially scuttle a deal before everyone gets to the closing table.

Financial issues are among the top issues for homebuyers, particularly among the 87% of buyers who finance their home purchase, according to the National Association of Realtors’ 2020 Profile of Home Buyers and Sellers. Those who obtain loans finance approximately 88% of their purchase.

For buyers who managed to save a down payment in the last few years, several obstacles stand in their way. Housing inventory plummeted when many people stopped putting their homes on the market, even as demand skyrocketed from people moving out of city centers to sunbelt markets during the pandemic. As a result, out-of-state buyers continually outbid local buyers thanks to large cash-outs after selling a home in a higher cost area.

But this is old news.

The new challenge facing today’s buyer is the rapid pace of economic challenges pushing against them, namely inflation and increasing interest rates.

Their nest egg of a down payment is worth less today than it was a year ago since yesterday’s dollar only stretches to about 92 cents today (accounting for approximately 8% inflation). Inflation also hampers their ability to keep saving, as the same basket of goods today costs more than it did a year ago.

While inflation has always been at play, the current inflation rate is at a 40-year high, and wage growth hasn’t risen enough to overcome the impact of pricier goods and services. Instead of putting $500 per month in their savings account, for example, people increasingly dip into money usually set aside for savings just to cover their increased cost of living.

But more astonishing is the pace of interest rate increases on a mortgage.

The Fed increased the Federal Funds Effective Rate significantly over the past few months in an effort to address the impact of inflation. On July 27, the Fed raised the interest rates on the Federal Funds Effective Rate by another 0.75% to 2.33%, the second large increase in the same number of months. The real estate industry is particularly impacted by fluctuations in this rate, as mortgage rates typically track alongside.

While everyone foresaw interest rate increases, the speed of those increases was relatively unexpected. Buyers who started looking for a home in January 2022 with a certain budget in mind have likely changed that budget considerably in just the last six months.

Since the Fed increases were expected, many argue that the market already priced those increases into the 30-year fixed rate mortgage, and that interest rates on loans may be at their peak. Still others see more pain to come since the Fed indicated there will be more increases this year and possibly into 2023.

Either way, mortgage rates, while historically still in the low end, are well above the 5-year average of 3.78% and have increased over 2 percentage points just since January 2022.

Rate increases have certainly been seen before, but never at this pace. These increases are enough to completely knock a buyer out of the market if they were already on the edge of affordability to begin with.

Fortunately, market forces that could dampen the rapid pace of price growth are falling into place. With inventory also increasing lately, there is some hope among buyers that prices will begin to soften as more supply helps absorb a still-strong wave of buyer demand.

Still, prices are over 20% what they were a year ago today. That, coupled with higher interest rates, ultimately depresses the purchasing power of buyers, particularly among first-time buyers who can’t benefit from cash-out equity to fuel their down payment.

So, what’s a Realtor to do?

Understand these factors are changing more rapidly than in a typical market and have those conversations early and often with your buyer. Know how close to the margins they are, and if another rate swing comes down soon, can they absorb it or will it knock them out of the game? Get honest about their monthly expenses now before you get too far – are they able to keep fully contributing to their savings during this time of high costs, or are they starting to flatline?

Finally, have them revisit their expectations. Perhaps it’s time to consider a different zip code or property type.

Use SunStats to show them the trends in their area for the different property types they are considering.

The step to homeownership may look a little different now than it did a year ago – but there are still steps out there to take. It just may take a little more creativity to overcome obstacles and get your clients into a home.

Jennifer Warner is an economist and Director of Economic Development

© 2022 Florida Realtors®


Insurer Applies for New Fla. Stopgap Program

Demotech downgraded the financial rating of five Fla. insurers this week, but one quickly chose to use a new state program that can keep it in business and insuring homes.

TALLAHASSEE, Fla. – A day after getting hit with a financial-rating downgrade, United Property & Casualty Insurance Co. on Tuesday became the first Florida property insurer to take part in a stopgap state program aimed at maintaining coverage for homeowners.

United, which had about 185,000 policies in Florida as of March 31, was one of three insurers downgraded Monday by the Demotech ratings agency amid widespread financial troubles in the state’s property-insurance market. On Tuesday, Demotech withdrew the financial ratings of two more Florida property insurers – Bankers Specialty Insurance Co. and First Community Insurance Co. – bringing the total number of withdrawals or downgrades to five.

Financial ratings are important, in part, because mortgage-industry giants Fannie Mae and Freddie Mac require homes to be insured by financially sound companies. For insurers rated by Demotech, Fannie Mae and Freddie Mac require “A” ratings or better.

The downgrade Monday dropped United’s rating from “A Exceptional” to “M Moderate.” Ordinarily, the drop below the Fannie Mae and Freddie Mac standards likely would force United customers to find other insurance coverage.

But the Florida Office of Insurance Regulation last week announced a program that involves the state’s Citizens Property Insurance Corp. acting as a financial backstop for private insurers that get downgraded. Citizens will take on a reinsurance role to help make sure claims get paid if insurers go insolvent.

The arrangement is designed to satisfy Fannie Mae and Freddie Mac. It uses an exception in Fannie Mae and Freddie Mac standards that applies when reinsurers take responsibility for paying claims if insurers go belly up.

The Office of Insurance Regulation posted information on its website Tuesday that said United will participate in the program.

Regulators put together the program after Demotech indicated it could downgrade about 17 insurers. Along with downgrading United, Demotech on Monday withdrew financial-stability ratings for Weston Property & Casualty Insurance Co. and FedNat Insurance Co. The Insurance Journal first reported the downgrades.

It was not immediately clear whether Demotech will downgrade additional insurers – or whether United, Weston and FedNat were even part of the potential 17 downgrades that prompted regulators to put together the new program. Demotech did not disclose the names of companies it was scrutinizing.

In an order issued Tuesday about the program, the Office of Insurance Regulation cited the possibility that downgrades otherwise could leave homeowners with few choices but to seek coverage from Citizens. The state-backed company was created as an insurer of last resort but has ballooned to covering more than 900,000 homes as private insurers have dropped customers to shed financial risks.

“The sudden loss of an acceptable financial strength rating for numerous insurers, effective during the Atlantic hurricane season, would have a significant, immediate and adverse impact on the welfare of Florida insurance consumers, insurers, agents and the overall property insurance market,” said the order signed by Insurance Commissioner David Altmaier. “The majority of policies from downgraded insurers would likely be forced to seek coverage from Citizens as a result of the loss of the financial strength rating.”

He says this “temporary reinsurance arrangement allows those insurers to remain viable, to continue to provide coverage for Floridians and to keep policies out of Citizens.”

Under state law, another agency, the Florida Insurance Guaranty Association, pays claims when insurers go insolvent. Under the new arrangement, if the association reaches its claims-paying limit, Citizens would step in and cover claims as a reinsurer.

Regulators have said the new program is temporary, but serving in the reinsurance role could create additional financial exposure for Citizens. Citizens has cash and buys reinsurance on the private market to help pay claims. But if the cash and reinsurance are not enough, it can collect additional money from policyholders throughout the state – a process known as collecting assessments – to pay claims.

Gov. Ron DeSantis called a special legislative session in May to address the property-insurance system, but problems have persisted. A report issued July 1 by the Office of Insurance Regulation, for example, said 27 property insurers were subject to “enhanced monitoring” because of their financial conditions.

Signs had emerged in recent months of financial problems at United and FedNat. United said in July that its board had started a “review of its strategic and capital raising alternatives” that could include moves such as a sale. FedNat reached an agreement in May with the Office of Insurance Regulation that called for it to cancel policies and shift other policies to an affiliated company, Monarch National Insurance Co. Monarch has an “A Exceptional” rating from Demotech.

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


Study: Climate Change Has Little Impact on Sales

While no one wants a life in a high-risk area, buyers generally ignore philosophical dangers and continue to pay a premium for properties in fire or flood zones.

SEATTLE – Homebuyers paid a premium for high-fire-risk and high-flood-risk homes during the pandemic, according to research from Redfin. Even as climate-change gains a higher profile, more people have moved into climate-risky areas than out of them in recent years.

The 50 U.S. counties with the largest percentage of homes facing high fire and flood risk saw their populations increase by an average of 3% and 1.9%, respectively, from 2016 through 2020, due to positive net migration.

In addition, second-home purchases with high flood, storm and/or heat risk surged roughly 40% over the past two years.

Part of the reason may be perceptions if climate change is viewed as a global problem that will exist in any location. The survey found that 63% of people who moved during the pandemic believed climate change is, or will be, an issue in the place where they now live.

“From devastating floods in Kentucky and Missouri to deadly fires in California and brutal heat waves across the U.S., it’s clear that natural disasters are intensifying. Still, people are moving into risky areas,” said Redfin Chief Economist Daryl Fairweather. “When people decide where to live, they consider a whole host of things ahead of climate change, which has potential implications on their safety, home stability and finances.”

Homes in high-risk vs. low-risk areas

The median sale price of U.S. homes with high fire risk was $550,500 in April 2022, compared with $431,300 for homes with low fire risk. In other words, the typical home with high fire risk sold for $119,200 (27.6%) more than the typical home with low fire risk – the largest premium in dollar terms since at least 2017.

Places like suburbia – which faces a greater first risk than downtown city locations – saw a surge in homebuyer demand over the last two years, causing prices to jump.

Similarly, the median sale price of homes with high flood risk was $402,010 in the first quarter of 2021, compared with $353,783 for homes with low flood risk. That means high-risk homes sold for a record 13.6% premium – up from a premium of 10.1% in the first quarter of 2020.

© 2022 Florida Realtors®


Tried-and True Marketing Campaign? Change It

Some newer agents haven’t seen a real estate market in transition, and they may need to rethink phrases they’ve used for a few years, such as “This one won’t last!”

NEW YORK – As some active markets undergo changes, real estate agents need to recalibrate their marketing to make sure it stays relevant to current buyers and sellers. To this end, agents should assess their messaging to ensure it’s up to date.

For instance, when a home has been on the market for several weeks, taglines such as “This one won’t last” are a poor fit.

Agents should go over everything – their listing descriptions, website copy and social media messaging.

It’s also important to take into account what people’s current top concerns and what they hope to achieve. It requires an agent to see the market in transition and imagine where it will be a few months and even a year in the future.

Newer agents may benefit by reaching out to a mentor, broker or a mastermind. They should continuously look for learning opportunities and strive to become a source of expertise. They can then highlight that expertise by talking to people, holding workshops and creating content that informs and educates others in a consistent manner.

Other key steps include exploring potential niches that can open up in a changing market, converting people’s inquiries into content, checking analytics and focusing on what proves to be effective.

Source: Inman (07/29/22) Murdock, Christy

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


Fla.’s Consumers Slightly More Optimistic in July

UF: Consumer-sentiment scores remain low, but July’s numbers were about a half point higher. Households making $50K or less held the most pessimistic views.

GAINESVILLE, Fla.  – July consumer confidence among Floridians increased four-tenths of a point to 61.4 from June’s revised figure of 61, a trend that also occurred nationally.

Among the five components that make up the index, two increased, two remained unchanged and one decreased.

Current conditions: Floridians’ opinions about current economic conditions were mixed. Views of personal financial situations now compared with a year ago decreased slightly by five-tenths of a point, from 53.8 to 53.3.

On the other hand, opinions on whether it’s a good time to buy a major household item like an appliance increased 1.5 points, from 51.1 to 52.6. However, those hit hardest by inflation – households making $50,000 or less – were a bit more pessimistic.

Future expectations: While Floridians’ attitudes about 2023 haven’t changed much, they’re a bit more excited about the U.S. economy five years from now.

Expectations of personal finances one year from now stayed at 76.1 month-to-month. Similarly, expectations about U.S. economic conditions over the next year were unchanged at 57.8.

However, the outlook of U.S. economic conditions over the next five years increased 1.1 points from 66.3 to 67.4. though lower-income Floridians with incomes less than $50,000 were, again, a bit more pessimistic.

“Floridians are slightly more optimistic in July, but despite this positive change, confidence remains low at levels that are comparable to those observed during the Great Recession,” says Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.

“It is noteworthy that Floridians with an annual income under $50,000 reported more pessimistic views in four of the five components that make up the index. This is not surprising, considering the rising cost of housing, groceries and gasoline, which account for a large portion of their budgets,” he says. “Inflation increased 9.1% from last year in June, the fastest pace since the early 1980s, indicating that soaring prices will remain as one of the major threats to the economy in the coming months.”

Job gains remained strong. According to the Florida Department of Economic Opportunity, Florida’s unemployment rate declined two-tenths of a percentage point to 2.8% in June. Moreover, the state gained 453,600 non-agricultural jobs over the year with all ten major industries experiencing positive gains. Similarly, the U.S. labor market has remained strong.

“However, the strong labor market coupled with elevated inflation will keep the Fed on track to approve further increases in interest rates, raising borrowing costs that are likely to dampen spending, and therefore increasing the risk of a recession,” says Sandoval. “Looking forward, we expect consumer confidence to remain depressed in the months ahead.”

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

© 2022 Florida Realtors®


June Home Prices Cooled at Record Pace

Home price increases dropped 2 percentage points – but even at that rate, it would still take six months to return to any historically “normal” monthly increases.

NEW YORK – Black Knight reported that rising mortgage rates and inflation in the broader economy caused a cooldown in home prices in June amid declining demand. The yearly rate of price appreciation dropped from 19.3% to 17.3%.

“The slowdown was broad-based among the top 50 markets at the metro level, with some areas experiencing even more pronounced cooling,” says Black Knight Data & Analytics President Ben Graboske. “In fact, 25% of major U.S. markets saw growth slow by three percentage points in June, with four decelerating by four or more points in that month alone.”

However, Graboske added that the market would have to see six more months of similar deceleration for price growth to revert to long-run averages.

While Black Knight found that the cooling prices are concurrent with a sharp rise in home inventory, the inventory of for-sale homes remains 54% lower than 2017-2019 levels.

“With a national shortage of more than 700,000 listings, it would take more than a year of such record increases for inventory levels to fully normalize,” Graboske says.

Source: CNBC (08/01/22) Olick, Diana

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


FTC Fines iBuyer Opendoor $62M for ‘Tricking’ Sellers

The FTC alleges the iBuyer used “misleading and deceptive information,” and its sellers “made thousands of dollars less” than they could have via a traditional listing.

WASHINGTON – The Federal Trade Commission (FTC) today took action against an online iBuyer. It claims Opendoor Labs Inc. cheated potential home sellers by tricking them into thinking that they could make more money selling their home to Opendoor than on the open market using a traditional sales process.

The FTC alleges that Opendoor used misleading and deceptive information when in reality, most people who sold to Opendoor made thousands of dollars less than they would have made selling their homes using the traditional process.

Under a proposed administrative order, Opendoor must pay $62 million and stop its deceptive tactics.

“Opendoor promised to revolutionize the real estate market but built its business using old-fashioned deception about how much consumers could earn from selling their homes on the platform,” says Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “There is nothing innovative about cheating consumers.”

Opendoor, headquartered in Tempe, Arizona, operates an online real estate business that, among other things, buys homes directly from consumers as an alternative to consumers selling their homes on the open market. Advertised as an “iBuyer,” Opendoor claimed to use cutting-edge technology to save consumers money by providing “market-value” offers and reducing transaction costs compared with the traditional home sales process.

Opendoor’s marketing materials included charts comparing their consumers’ net proceeds from selling to Opendoor versus on the market. Those charts almost always showed that consumers would make thousands of dollars more by selling to Opendoor. In fact, the FTC complaint states that the vast majority of consumers who sold to Opendoor actually lost thousands of dollars compared with a traditional real estate sale. It says Opendoor’s offers have been below market value on average and its costs higher than what consumers typically pay when using a traditional Realtor.

FTC claims of misrepresentation include:

  • Opendoor said it used projected market value prices when making offers to buy homes, when in fact those prices included downward adjustments to the market values
  • Opendoor said it made money from disclosed fees, when it actually made money by buying low and selling high
  • Consumers likely would have paid the same amount in repair costs whether they sold their home through Opendoor or in traditional sales
  • Consumers likely would have paid less in costs by selling to Opendoor than they would pay in traditional sales

Enforcement action

Opendoor has agreed to a proposed order that requires the company to:

  • Pay $62 million: The order requires Opendoor to pay the Commission $62 million, which is expected to be used for consumer redress.
  • Stop deceiving potential home sellers: The order prohibits Opendoor from making the deceptive, false, and unsubstantiated claims it made to consumers about how much money they will receive or the costs they will have to pay to use its service.
  • Stop making baseless claims: The order requires Opendoor to have competent and reliable evidence to support any representations made about the costs, savings or financial benefits associated with using its service, and any claims about the costs associated with traditional home sales.

Opendoor ‘strongly disagrees’ with the allegations

“While we strongly disagree with the FTC’s allegations, our decision to settle with the Commission will allow us to resolve the matter and focus on helping consumers buy, sell and move with simplicity, certainty and speed,” Opendoor said in a statement. “Importantly, the allegations raised by the FTC are related to activity that occurred between 2017 and 2019, and target marketing messages the company modified years ago.”

The company says it’s “pleased to put this matter behind us and looks forward to continuing to provide consumers with a modern real estate experience.”

© 2022 Florida Realtors®


Could Housing Solutions Help Close the Racial Gap?

U.S. housing discrimination has a long history, from redlining to VA loan policies. But if legal problems are solved, would an adequate housing supply do the rest?

WASHINGTON – The nation’s housing shortage has also fueled a housing inequity problem, Bryan Greene, vice president of policy advocacy for the National Association of Realtors® (NAR), writes in an essay included in a new report, “Housing Underproduction in the U.S.

To close the widening racial gap in ownership, housing’s underproduction must be widely addressed, he notes.

But that problem is only worsening: The Up for Growth report puts a new number on the nation’s housing shortage – 3.8 million homes, more than double where it stood in 2012. The deepening inventory crisis is widening in scope, affecting urban, suburban and rural areas alike, and hitting certain minority groups particularly hard, according to the report.

U.S. map showing the severity of housing underproduction

Source: “Housing Underproduction in the U.S.”

“Underproduction in this country has many causes,” Greene writes. “Local zoning and land-use restrictions have, for decades, proved to be one of the greatest barriers to housing construction, affordable housing and diverse communities.”

The report notes long historical racial inequities in access to housing, such as from past discriminatory government grants and programs, widespread exclusionary zoning policies originally designed with racial segregation in mind, racially restrictive covenants written into home deeds from the 1910s to the 1940s, redlining practices that limited access to capital investments to prospective homeowners of color, and urban renewal projects that caused displacement and gentrification. These have led to a widening racial wealth gap that has stretched over generations and has made it more difficult for families of color to qualify for loans and afford homeownership, according to the report.

The gap between Black and white homeownership rates has widened over recent years. These historic and systemic constraints combined with housing underproduction and high prices make homeownership even less attainable for buyers of color, the report notes.

‘Double trouble’

In a report released earlier this year, NAR called record-high home prices and record-low housing inventories “double trouble” for real estate, particularly for Black Americans. The report found that about half of the homes for sale would require a household income of $100,000 or more to purchase.

That has placed homeownership increasingly out of reach for a number of households: 50% of Asians, 65% of Whites, 75% of Hispanics and 80% of Blacks do not earn enough income to buy these homes, the report notes.

Where to go from here

Housing supply and housing equity can be addressed on multiple fronts, such as by expanding the types of housing available for greater income levels and a broadening focus on land use.

Greene points to zoning reforms, investments in new construction, expansion of financing, and tax incentives that prompt investment in housing and convert unused commercial space to residential spaces.

NAR continues to advocate for tax code incentives to promote zoning and land-use changes, such as tax credits or other support to communities that ease zoning rules that had been limiting the supply of homes, such as minimum lot sizes and bans on multifamily housing. Such policies can not only help ease housing shortages but ultimately help expand housing opportunities to more people, Greene writes.

“For more than a half-century we’ve witnessed how land-use decisions can limit housing development, affordability and equity,” Greene notes. “We cannot stand by and lament this lack of progress. Now, it is time to act.”

Source: National Association of Realtors® (NAR)

© 2022 Florida Realtors®


HUD: $2.8 Billion in Grants for Homeless Services

Sept. 30 application deadline: HUD says the money prioritizes homeless youth and survivors of domestic violence, dating violence, sexual assault and stalking.

WASHINGTON (AP) – The Department of Housing and Urban Development (HUD) is providing $2.8 billion in fresh funding for homeless services organizations across the country.

The funding, announced Monday, will be allocated via competitive bids through HUD’s Continuum of Care Program, the largest source of federal grant support to housing and services programs for people experiencing homelessness.

HUD funds approximately 7,000 homeless services projects annually through the program. Applications for the new round of funding are due to HUD by Sept. 29.

A HUD statement announcing the funding said that existing Continuum of Care participants can “renew existing projects, apply for new projects and reallocate resources from lower performing projects to better serve people experiencing homelessness.”

The announcement specifies that the new funding will prioritize services for homeless youth and for “survivors of domestic violence, dating violence, sexual assault, and stalking.”

Other priorities in the funding include an emphasis on racial equity and anti-discrimination polices for LGTBQ+ individuals. Access to the Continuum of Care funding will also be expanded to welcome applicants from Native American tribes and internal tribal housing support programs.

HUD Secretary Marcia Fudge said in a statement that the new funding “will help more Americans experiencing homelessness move into homes and access critical supportive services like health care, education, and job training.”

Fudge added that the Biden administration seeks to “prioritize equity in homelessness efforts and the humane treatment of people experiencing unsheltered homelessness, and the funding announced today will help communities do just that.”

Applications for the FY 2022 CoC Program NOFO are due to HUD on Sept. 30, 2022.

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


In SW Fla., It’s Too Late to Sell at Top of Market

In Lee County, median sales prices are down 4%; in Collier they’re down 7%. Sales volume also dropped a bit while inventory has increased about 8%.

NAPLES, Fla. – For sellers looking to sell at the top of the market (in Southwest Florida), the reality is it’s already too late. The market has peaked, and we are now on the downside of the record high prices we have experienced over the past two years.

After a three-year consistent increase, we have seen the first dip in median sales prices over the past month.

In Lee County, the median sales prices are down 4%, and in Collier sales prices are down 7%. This downward trend has also been seen in the number of sales. Lee County sales are down 10% and Collier County sales are down 30%, making June sales in Collier County the lowest number since 2013.

Though sales prices and volume of sales are down, inventory has increased about 8%. The increase in inventory and decrease in sales will continue to put downward pressure on home prices.

The active market is seeing price reductions of 20 to 1 as compared to price increases. Four months ago, we saw these numbers to be almost exactly the opposite, with most houses selling for above the asking price and even being raised once already on the market.

With these current trends, sellers need to be realistic if they are serious and motivated to sell. The profit margins are still healthy, but buyers are not willing to pay drastically over home value as the market was showing only a few months previously. Housing prices have increased as much as 70% in the last two years, so with an average current price reduction of 5-10%, there is still a lot of win there for sellers if they have proper expectations.

Buyers, this is the market you have been waiting for, the conditions are optimum as the market is correcting itself. It is important to be actively looking and stay patiently ready. There are some great deals out there, but you must be aware and stay diligently prepared to make the necessary moves to secure the best deal possible.

Some buyers may think it is smart to hold off on purchasing if the trends are starting to show a downward price trend. These buyers need to understand that the real estate market is still always a bit of a gamble, and we must continue to watch the trends. If you wait too long you can miss the opportunity and the market could increase again.

What is most important to understand is that this is a market correction not a crash.

The market in southwest Florida saw such a drastic increase over the past two years, it was inevitable that it would eventually start to regulate. Though the market is regulating there is still no need for concern over the current trends.

© 2022 Journal Media Group


Mixed-Income Project Hopes to Solve Problems

A Miami low-income housing project will soon offer market-rate units. The goal is to have some lower-income tenants’ costs paid by the higher-income renters.

MIAMI – Liberty Square is a historic, low-income housing project in Miami now being overhauled as a mixed-income development. It will feature low-income housing, affordable housing and market-rate units.

A partnership between Miami-Dade County and Related Group’s affordable-housing division will spend $500 million to develop more than 1,900 housing units on nine city blocks. About one-third of the project has been finished and occupied, and completion is anticipated by 2026.

“The fact that you do have higher-income folks that can pay more than the lower-income folks are paying will help to provide long-term sustainability,” says Michael Liu, director of the Miami-Dade Department of Public Housing and Community Development.”

Liu says the idea isn’t universal. “In some communities, it takes an effort to educate, and to prove by doing that it can work.”

Miami has more “cost-burdened renters” than any other major metropolitan area, with 60% of its population spending 30% or more of household income on housing, according to a report by the Joint Center for Housing Studies at Harvard University.

The city and Related Group broke ground on the redevelopment project in 2017 and collaborated with the community to obtain their backing. Construction crews tore down the buildings block by block as they replaced them with the new structures, rather than all at once.

The project is expected to include a grocery store, educational facilities, children’s playgrounds and 47,000 square feet of retail space. At least 20% of all the new hires of the construction project must either be public-housing residents or low-income-housing residents of Miami-Dade County.

Source: Wall Street Journal (07/26/22) Acosta, Deborah

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


Cost of Fair vs. Excellent Credit? $288 per Month

A borrower with a “fair” credit score could pay $103,626 more over the life of a 30-year loan compared to a similar borrower with an “excellent” score.

SEATTLE – Potential buyers considering a home buy one day usually receive the same advice: Try to improve your credit score.

For lower credit scores, home buying is out of the question. However even qualified buyers can pay less per month or opt for a bigger home if they improve their credit score before entering the market.

According to a Zillow analysis, buyers with “fair” credit could be paying up to $288 more on their monthly mortgage payment than those with “excellent” credit.

Rising mortgage interest rates means all homebuyers today can expect to pay around 62% more per month for a typical U.S. home than they would have a year ago. However, monthly increases are, according to the analysis, “exacerbated for millions of Americans with low credit scores or less than perfect credit histories.”

A borrower with an “excellent” credit score (between 760 and 850) can qualify for a 30-year fixed-rate mortgage with a 5.099% interest rate. For the same loan, a similar borrower with a “fair” credit score (between 620 and 639) qualifies for a 6.688% rate. That equates to a $288 difference in monthly mortgage payments and nearly $103,626 in interest over the life of a 30-year fixed loan. The numbers are based on the current price of a typical U.S. home ($354,165).

“If you find you have low credit, take realistic steps to improve your credit score by doing things like disputing possible report errors and paying down as much debt as possible,” says Libby Cooper, Zillow Home Loans vice president. “This could increase the amount of home loan you qualify for.”

Cost to buy a typical U.S. home based on FICO credit scores

Scores – Annual percentage rate

  • 760-850 – 5.099 % ($1,538 per month, $553,743 over 30 years)
  • 700-759 – 5.321 % ($1,557 per month, $567,739 over 30 years)
  • 680-699 – 5.498 % ($1,608 per month, $579,014 over 30 years)
  • 660-679 – 5.712 % ($1,647 per month, $592,782 over 30 years
  • 640-659 – 6.142 % ($1,725 per month, $620,882 over 30 years)
  • 620-639 – 6.688 % ($1,826 per month, $657,369 over 30 years)

There is one fairly new exception to the credit score rules, however: Fannie Mae and Freddie Mac, which back over half of all U.S. mortgages, also consider on-time rent payments with borrowers’ permission. Many people have thin credit, usually because they don’t use enough credit services to create a credit score.

Going forward, these people won’t find that it improves their credit score, but if lenders agree to consider on-time rent payments, it could possibly net them a lower interest rate, which would translate in a lower monthly payment and lower 30-year cost.

© 2022 Florida Realtors®


U.S. Housing Market Collapse? Nowhere in Sight

The housing market has taken a few hits, such as a doubling of mortgage rates in 2022, but it remains solid even if legitimate news providers suggest doom and gloom.

NEW YORK – The rock-hard foundation of the U.S. housing market is suffering some cracks, but an outright collapse is nowhere in sight.

Regardless, sensational news headlines are reverberating like seismic tremors around the country. Here are recent inflammatory headlines from legitimate websites:

  • “U.S. home prices are about to tumble as demand for new houses ‘craters,’ an economist warns.” (BusinessInsider)
  • “Homebuilder confidence suffers near-record plunge” (Newsweek)
  • “Scary times: builders are slashing home prices and slowing construction as buyers pull back, survey shows” (MarketWatch)
  • “The housing market is entering the ‘most significant contraction in activity since 2006,’ says Freddie Mac economist” (Fortune)

Gloomy reports like these can be enough to make builders halt building. Or to prompt homebuyers to delay buying. Or to discourage mortgage brokers from lending.

In an unintentional collaboration, depressing news can have a chilling effect on the housing market. They create a negative tone.

In recent years, however, the real estate market has been resilient, through the ups and downs of the U.S. economy, through pandemics. On a national level, home prices soared 40% over the past two years, according to the Case-Shiller Price Index.

These price increases have been even bigger in Northeast Florida. And even more so in trendy places like Amelia Island, where a hearty demand outstrips a limited supply of houses and condominiums and raw land.

A new complication has clouded the housing picture in recent months, however. It’s the almighty Fed.

With its eye on cooling down inflationary prices, the Federal Reserve has embarked on a campaign of interest rate hikes. Therefore, borrowing costs have inevitably increased for homebuyers.

Meanwhile, the U.S. economy is sputtering, bordering on the brink of a mild recession. Inflation rages at the hottest pace in 40 years. However, employment is still healthy – contrary to most recessions. So there are mixed economic signals.

With U.S. stocks dipping into bear market territory, the economic backdrop for real estate has ultimately darkened. Homebuilding stocks have also cratered – a leading indicator of what potentially lies ahead.

“The market is adjusting to a new reality, with much lower sales volumes and far more inventory,” says Ian Shepherdson, chief economist at Pantheon Macro. “Prices, therefore, have to adjust to the downside, likely quite substantially.”

With Federal Reserve’s recent moves, mortgage rates have doubled from previous levels. As expected, mortgage applications have dropped off a cliff – to the lowest level since 2000.

The same level of decline has been seen in homebuilder confidence. A measure of this confidence dropped precipitously in July. Consequently, prices of new homes should follow a similar downward path, although the trajectory is the question.

The number of home listings remains low nationally. However, new listings increased at the fastest pace in five years, according to Realtor.com. And listing prices are being reduced in some red-hot markets (Austin, Las Vegas, Nashville).

But all these measures and statistics and sensational headlines must be put into context. Home prices are still near record levels, in most places. Here in Nassau County, prices are still at record levels, especially around Amelia Island.

Cracks in a foundation will usually spread over time. And only time will tell how the housing market endures, through the obstacles and challenges.

Copyright © 2022 News Leader, Community Newspapers, Inc. All rights reserved. Steve Nicklas is a financial adviser with a national brokerage firm who lives and works on Amelia Island.


What If a Dead Former Owner’s Deed Shows Up Online?

RE Q&A: A buyer bought her home from a widow. But even with a death certificate, the county didn’t remove her deceased husband’s name from the deed.

FORT LAUDERDALE, Fla. – Question: I purchased a property from a widow who owned the home with her deceased husband. Some questions about the ownership seemed to be resolved by presenting his death certificate to the county. Still, his name shows up when I search the property online.

I asked the county to remove his name from the deed but was told they could not do that. I want to sell the property, but how can I if his deed still shows up online? – Kimberley

Answer: Title to your home is determined differently than the title to a car or boat. A car’s title is an official certificate signed and turned over to the new owner and then registered with the state.

Home title has a different process. It is determined by reviewing your county’s official records.

Each deed or other record, known as “muniments of title,” is reviewed by an experienced professional to determine the property’s current owner. This is part of what your closing attorney is responsible for.

A deed will be signed, witnessed, and notarized to transfer property to a new owner. While the deed must contain certain legal formalities, it is nothing more than tangible evidence of the intent to transfer ownership to a new owner.

The rules about our system of land ownership go back almost a thousand years to the medieval ceremony known as “livery of seisin,” where the townspeople would witness a landowner handing over a clump of dirt to the new owner to establish the transfer. Over the years, the law has evolved so we can accomplish this sitting in air conditioning holding a pen.

Public records, such as deeds, are permanently recorded in chronological order with your county and cannot be changed. The mere fact that someone was on a prior deed does not matter if there is other recorded evidence of the transfer.

In your case, the deed from the widow and the recorded death certificate should suffice.

If the deceased’s name is still showing on the Property Appraiser’s website, you should confirm your ownership with the title agent that handled your closing. Ask them to investigate.

If it turns out that there is a bigger problem, you can make a claim against the title insurance policy you most likely bought at closing.

Copyright © South Florida Sun Sentinel, Gary M. Singer. All rights reserved.


Mamma Mia! ABBA’s Fla. Vacation Home for Sale

For slightly less than $4M, one ABBA fan can own a piece of history. The Swedish Longhouse style Gulf Coast home duplicates the same design in a mirror style.

TIERRA VERDE, Fla. – They had smash hits including “Dancing Queen,” “Waterloo” and the entire soundtrack to the musical “Mamma Mia!” (which was based on their hit music), but now one lucky person can own a part of ABBA’s history – their vacation home.

For the first time in almost half a century, the Tierra Verde, Florida, estate is on the market for $3.95 million.

“On the quiet island of Tierra Verde, a home suspended in time and originally designed and built in Swedish Longhouse style for the iconic band ABBA has come to the market for the first time in almost four decades!” the listing on Sotheby’s International Realty says.

“Imagine the band members arriving at the home under the grand porte-cochere and beginning their time away from London in this home, custom designed for relaxation and fun.”

The six-bedroom, 4.5-plus-bathroom home has been updated, according to the listing, so no worries for a potential new owner. Features of the residence include:

  • Two-story ceilings
  • Imported stone fireplace
  • Pool deck
  • New roof
  • Skylights
  • Fresh paint both inside and outside
  • Indoor hot tub

According to the listing, the 4,527-square-foot home “is divided into two identical ‘mirrored’ floor plans with each side including a downstairs master suite, loft area and two bedrooms with a Jack-and-Jill bath.”

ABBA is a Swedish band featuring Agnetha Faltskog, Bjorn Ulvaeus, Benny Andersson and Anni-Frid Lynstad – with the first letters of the members’ first names creating the palindrome “ABBA.” The band was popular from 1972-1982 before breaking up, only to reunite in 2016.

© 2022 The Charlotte Observer. Distributed by Tribune Content Agency, LLC.