Monthly Archives: September 2022

A Fed study found that every 1 percentage point increase in remote work resulted in about a 0.9 percentage point increase in housing prices.

NEW YORK – Research from the Federal Reserve Bank of San Francisco reveals that the shift to pandemic-era remote work led to house and rental price increases during that time – and it’s likely to drive costs and inflation up further as remote work becomes permanent.

In the two years ending in November 2021, house prices increased 24%, with more than 60% of that increase attributable to the rise in working from home during the pandemic.

The authors, who adjusted housing data to account for the migration from expensive cities to more affordable areas that occurred during the pandemic, found that each 1 percentage point increase in remote work results in about a 0.9 percentage point increase in house prices. The impact on rent prices has been identical.

“This suggests that the fundamentals of housing demand have changed, such that the persistence of remote work is likely to affect the future path of real estate prices and inflation,” say the study’s authors, Economists Augustus Kmetz and John Mondragon from the San Francisco Fed and Johannes Wieland from the University of California, San Diego.

Source: Bloomberg (09/26/22) Saraiva, Catarina

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

The Fed says its rate hikes will “reset” the housing industry, but the disruption may come largely from buyer-seller confusion. If confused, people tend to do nothing.

NEW YORK – The Federal Reserve’s interest rate hikes may be intended to give the housing industry a “reset,” as chair Jerome Powell wanted, but it also may have further confused homebuyers and sellers on what to do next. Average 30-year fixed mortgage interest rates have spiked from 3.2% to 6.38% over the past six months, tightening supply as sellers hang on to those early, historically low rates. But the demand for housing of all types still remains high nationwide.

On Wednesday, Powell said in an effort to cool “a red-hot housing market” to straighten a “big imbalance,” he now believes it will likely take a “difficult housing correction” to fix things.

“For the longer term, what we need is supply and demand to get better aligned so that housing prices go up at a reasonable level and at a reasonable pace, and that people can afford houses again,” Powell told reporters on Wednesday.

With that in mind, here are what several experts think could lie ahead:

Will U.S. home prices drop?

Mark Zandi, chief economist from Moody’s Analytics, expects year-over-year home price growth in the U.S. to bottom out from 20% to 0% by this time next year. Zandi believes the housing market is already in a correction, which could increase home inventory as the volume of sales declines.

He said there are now 210 out of the top 400 housing markets across the country that are “significantly overvalued” – or overvalued by more than 25%.

“I think this will play out over the next couple of years, and it will be through mid-decade until things bottom out,” Zandi tells USA TODAY.

Could home prices drop sooner?

Maybe. As early as fall, Neda Navab, president of brokerage operations at real estate company Compass in New York, tells USA TODAY she believes that sellers “may come back with a more realistic view on pricing as they realize the pedal-to-the-metal days of last summer have passed.”

Even Powell isn’t sure.

“We probably in the housing market have to go through a correction to get back to that place (lower prices),” Powell said. “But from a business cycle standpoint, this difficult correction should put the housing market back into better balance.”

When will inventory increase?

Housing inventory will remain tight in the coming months and even for the next couple of years, according to National Association of Realtors Chief Economist Lawrence Yun.

Why? “Some homeowners are unwilling to trade up or trade down after locking in historically low mortgage rates in recent years, increasing the need for more new-home construction to boost supply,” Yun said.

Other experts, including Anthony Graziano, CEO of Florida-based Integra Realty Resources, said the U.S. is in a housing correction because the Federal Reserve raised its key interest rate by 0.75 percentage points for a third straight meeting to curb high inflation.

“The Fed is shocking the housing market, and I can even say it’s intentionally shocking the housing market,” Graziano tells USA TODAY. “Part of the inflationary metric is the cost of housing and cost of living and the Fed is trying to control both.”

Will inflation cause housing prices to go down?

In order to slow inflation, consumers have to slow consumption. Buying new or existing housing increases consumption of “more tangible hard goods and that creates demand and that drives inflation and pricing,” said Graziano.

He added that every housing sale (from either paying Realtors, moving, buying furniture, appliances) across the country pours tens of thousands of dollars into the nation’s economy, an economy the Fed is trying to slow down.

“The balancing act that the Fed is trying to create this soft landing, but we haven’t found this soft landing or sweet spot yet,” Graziano said. “Our economy gets negatively impacted when we stop spending, but how do you stop spending without killing the economy? That’s the crossroads the Fed is at.”

Will we have another housing crash?

Zandi said that the housing market is nowhere close to the housing market crash during the 2008 Great Recession.

Graziano and Jeff Taylor, founder and managing director of Mphasis Digital Risk agree with him.

“Absolutely not,” said Taylor who said the housing market is in a correction. “Consumers are thinking, ‘Do I want to buy a house right now when I have other pressing issues that make me want to pause, like paying for high gas and groceries?’”

Graziano said there won’t be a housing crash primarily because of new lending regulations resulting from the 2008 meltdown.

“That’s because (U.S.) households are more economically stronger than in 2006, prior to that crash,” he said. “That’s a good sign because with the Fed, the goal here is not to break the economy, but slow things down. Otherwise, it will break the housing market.”

Copyright 2022, USATODAY.com, USA TODAY

Buyers who need property insurance to close are out of luck while a hurricane threatens Fla., but many insurers expect to start writing policies again on Mon.

MIAMI – Property insurers paused underwriting new residential deals across Florida ahead of Hurricane Ian’s landfall, delaying the closing process for some home buyers. But the wait won’t be too long.

Some property insurers stopped approving coverage statewide for single-family homes, condos and townhouses over the weekend once the National Weather Service announced a tropical storm watch for parts of Florida. New homeowners insurance and flood policies should resume as soon as Monday after Hurricane Ian leaves Florida and the National Weather Service lifts the hurricane watch, said Michael Peltier, spokesperson for residential and commercial insurance provider Citizens Property Insurance.

The pause only impacts buyers who need a mortgage since mortgage lenders require homeowners and flood insurance. It does not affect home buyers who use cash – nearly half of South Florida purchasers.

Weather forecasters predict Hurricane Ian will hit south of the Tampa Bay area as a Category 3 hurricane by Wednesday or Thursday morning. It is expected to exit the state by Saturday morning, according to the latest National Weather Service and National Hurricane Center models.

“It is standard insurance industry practice that once a tropical storm or hurricane is issued by the state, insurers stop writing new policies at that time,” said Peltier. “There is no time to do your due diligence.”

The moratorium is expected to impact about 10% of buyers across the state, said Craig Garcia, president of the Coral Springs-based Capital Partners Mortgage. Most buyers either rush to bind a policy or extend one before an official hurricane warning or watch.

“If you were proactive about it, you could get that bound,” Garcia said. “You always have someone who waits to the bitter end. It’s always going to happen to some people. By large it doesn’t cause delays. The disruption (for mortgage lenders) happens after landfall and then you’re dealing with damage.”

Some mortgage lenders may hesitate to allow a closing to move forward this week, even if a buyer has property insurance in hand. It all depends on where the buyer’s closing is in the state, said Juan Jaureguizar, senior vice president and director of residential lending at the Coconut Grove-based Grove Bank & Trust. He said he would sign off on deals in Miami but think twice about Tampa, which may be in the path of the hurricane.

Miami isn’t a direct hit but, Jaureguizar said, “if I’m looking at closing a property in Tampa, I would hold off.”

Prospective buyers may face more tropical storms and hurricanes this year. Hurricane season starts in June and lasts until late November.

For other storms in the future, it’s up to the buyer to decide whether to request an extension or fast forward to a binding insurance policy ahead of a tropical storm or hurricane, Jaureguizar said. On one hand, buyers risk losing a potentially lower interest rate at a time when interest rates continue to rise, as well as prolong a process that normally takes between 30 and 60 days.

On the other hand, buyers risk closing on a single-family home or condo that may face damage from a storm and either be on the hook for repairs or bank on a force majeure – a clause often written into closings that allows parties to exit a deal in case of an unforeseen event.

© 2022 Miami Herald. Distributed by Tribune Content Agency, LLC.

Chief Economist Yun blames rising mortgage rates, saying the market will stabilize if “mortgage rates moderate and the economy continues adding jobs.”

WASHINGTON – Pending home sales sagged for the third straight month in August, according to the National Association of Realtors® (NAR). Three out of four major regions NAR includes within the survey saw month-over-month decreases in transactions, with the West showing a modest gain.

Year-over-year, all four regions posted double-digit declines.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – fell 2.0% to 88.4 in August. Year-over-year, pending transactions dwindled by 24.2%. An index of 100 is equal to the level of contract activity in 2001.

“The direction of mortgage rates – upward or downward – is the prime mover for home buying, and decade-high rates have deeply cut into contract signings,” says NAR Chief Economist Lawrence Yun. “If mortgage rates moderate and the economy continues adding jobs, then home buying should also stabilize.”

Yun expects the economy to remain sluggish throughout the remainder of this year, with mortgage rates rising to the 7% range over the coming months.

“Only when inflation calms down will we see mortgage rates begin to steady,” says Yun.

As a result of the current interest rate environment and weaker economic activity, NAR expects existing-home sales to decline 15.2% in 2022, to 5.19 million units, while new home sales are projected to fall by 20.9%.

Yun notes that limited housing inventory and almost non-existent distressed property sales have supported home prices, however, even when total housing sales fall. Overall, he forecasts prices will rise by 9.6% in 2022.

In 2023, Yun foresees slower price appreciation and corresponding increases in sales as the year progresses.

“Next year, the annual median home price is expected to rise by only 1.2%,” Yun says. “Home sales will pick up in the second half of 2023, but will be down by 7.1% overall.”

Pending home sales regional breakdown:

• The Northeast PHSI decreased 3.4% from last month to 76.6, down 19.0% from August 2021
• The Midwest index fell 5.2% to 88.4 in August, a 21.1% drop from the previous year
• The South PHSI slid 0.9% to 105.4 in August, a decline of 24.2% from a year ago
• The West index rose by 1.4% in August to 71.0, down 31.3% from August 2021

“Home prices are the least affordable in the West and, consequently, the region suffered deeper annual declines in contract signings due to rising interest rates when compared to other areas of the country,” Yun says. “However, the recent increases of the last two months, though small, are encouraging.”

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

© 2022 Florida Realtors®

The U.S. consumer safety commission issued a warning: Floridians who lose power and rely on generators can die in minutes if a generator isn’t properly ventilated.

WASHINGTON, D.C. – Planning for Hurricane Ian’s aftermath is critical. The U.S. Consumer Product Safety Commission (CPSC) is alerting consumers about the risks of carbon monoxide (CO) poisoning from portable generators and other post-storm hazards.

Use a generator safely

 Portable generators create a risk of CO poisoning that can kill in minutes. CO is called the invisible killer because it’s colorless and odorless. People exposed to CO may become unconscious before experiencing the milder CO-poisoning symptoms of nausea, dizziness or weakness.

The commission estimates that about 85 consumers die in the U.S. each year from CO poisoning from portable generators. A recent CPSC report found that African Americans are at higher risk, accounting for 23% of generator-related CO deaths – nearly double their estimated 13% share of the U.S. population.

 In the case of a power outage, follow important life-saving tips: 

• Never operate a portable generator inside a home, garage, basement, crawlspace or shed. “I’ll keep a door or window open” doesn’t provide enough ventilation to prevent the buildup of lethal levels of CO.

• Operate portable generators at least 20 feet away from the house, and direct the generator’s exhaust away from the home and any other buildings that someone could enter – and keep any nearby windows or other openings closed. Do not operate a generator on an outside porch or in a carport. They are too close to the home.

• Check that portable generators have been maintained properly, and read and follow the labels, instructions and warnings on the generator and in the owner’s manual.

• Look for portable generators that have a CO shut-off safety feature, which is designed to shut the generator off automatically when high levels of CO are present around the generator. Some models with CO shut-off features also have reduced emissions. These models may be advertised as certified to the latest safety standards for portable generators – PGMA G300-2018 and UL 2201 – which reduce deaths from CO poisoning an estimated 87% and 100%, respectively.

Check CO and smoke alarms

Install battery-operated CO alarms or CO alarms with battery backup on each level and outside separate sleeping areas at home. Interconnected CO alarms are best; when one sounds, they all sound. A CO alarm is your last line of defense when using a generator. 

Make sure smoke alarms are installed on every level and inside each bedroom at home.

Test CO and smoke alarms monthly to make sure they’re working properly, and replace batteries if needed. Never ignore an alarm when it sounds. Get outside immediately. Then call 911.

Charcoal and candles

• Never use charcoal indoors. Burning charcoal in an enclosed space can produce lethal levels of CO. Do not cook on a charcoal grill in a garage, even with the door open.

• Use caution when burning candles. If using candles, do not burn them on or near anything that can catch fire. Never leave burning candles unattended. Extinguish candles when leaving the room and before sleeping.

Wet appliances

• Do not touch wet appliances that are still plugged into an electrical source.

• Before using appliances after a weather event, have a professional or your gas or electric company evaluate them for safety. Replace all gas control valves, electrical wiring, circuit breakers and fuses that have been under water.

Gas leaks

If you smell or hear gas leaking, leave your home immediately and contact local gas authorities from outside the home. Do not operate any electronics, such as lights or phone, before leaving.

© 2022 Florida Realtors®

Property managers and other real estate professionals should follow these steps to stay in compliance with federal and state consumer data regulations.

CHICAGO – Property managers and other real estate professionals routinely conduct background and credit checks in the course of business.

Be vigilant, however: You could be sued for not adhering to federal and state regulations when gathering and sharing sensitive consumer data.

The National Association of Realtors®’ (NAR) latest “Window to the Law” video details a property manager’s duty to comply with the Fair Credit Reporting Act when handling this data, including a consumer’s credit and rental history, as well as other personal data.

Aside from the federal law, state consumer data laws vary widely, says NAR staff attorney Mike Rohde. “Regardless of jurisdiction, consumer reports must only be used for a permissible purpose, which includes evaluations connected with credit, employment, insurance and rental housing,” he says.

To prevent liability, Rohde suggests asking for written consent before ordering background or credit checks. If these reports could lead to a negative outcome, such as the denial of employment or rental housing, provide the person with notice and an opportunity to review a copy of the information, he says.

Also, have a system in place to properly dispose of collected background and credit reports. A document retention policy should detail how you’ll handle it.

Source: National Association of Realtors® (NAR)

© 2022 Florida Realtors®

Florida Realtors Legal Hotline is a great resource and free member benefit, but you may not need us. Many callers ask basic-information type questions, like, “There are so many riders – which one should I use?” Here are answers to your simplest questions.

ORLANDO, Fla. – This is a general recap of some basic “housekeeping” items that confuse many callers to Florida Realtors Legal Hotline. Florida welcomes roughly 2,000 new licensees each month, and this article should offer clarity for those folks – and a good recap for more seasoned agents.

1. When a member calls Florida Realtors’ Legal Hotline – a free benefit included in your Realtor membership – an attorney will answer the phone, and you’ll be asked to confirm your name and/or license number. Remember, this is a service for members only. We can’t offer buyers or sellers legal advice.

2. Florida Realtors offers three residential sales contracts: two of them are Florida Realtors/Florida Bar (FR/Bar) Contracts, the ASIS FR/Bar and the standard FR/Bar. The main difference between the two FR/Bar versions lies in the inspection and repair section of those contracts, primarily covered in paragraph 12. The Contract for Residential Sale and Purchase (CRSP) is the third residential contract offered by the association.

3. Each of those types of contracts has its own riders/addenda: the CRSP uses the CRSP addenda, and the FR/Bar contracts use the Comprehensive Riders (CR).

The respective addenda and riders should not be used interchangeably between contracts, as many times the content of an addenda/rider refers to specific paragraphs within the CRSP or FR/Bar contract. And, since the contract paragraphs are different, it can cause confusion. Parties should proceed with extreme caution if they choose to use a non-corresponding addenda/rider with a contract.

4. The only Florida Realtors/Florida Bar contracts Florida Realtors offers are the ASIS FR/Bar and the standard FR/Bar.

The Commercial Contract, Vacant Land Contract and Florida Supreme Court-approved leases are not types of FR/Bar contracts.

5. We are Florida Realtors – not the Florida Real Estate Commission (FREC). Florida Realtors is a membership association. FREC is an arm of Florida government. There’s no such thing as a “FREC Legal Hotline.”

Florida Realtors is the largest trade association in the state. The organization’s members and management team protect private property rights and keep a close eye on some 3,600 pieces of legislation each year and provide various other services, such as the Tech Helpline, Legal Hotline and even this issue of Florida Realtors Legal News.

FREC is a division of the state and “administers and enforces the real estate license law, Chapter 475, Part I, Florida Statutes.” FREC “is also empowered to pass rules that enable it to implement its statutorily authorized duties and responsibilities.” In other words, FREC is the state licensing enforcement entity for real estate licensees.

6. Local association problems? MLS issues? Florida Realtors Legal Hotline attorneys may say, “I don’t know” after you ask your question.

While Florida Realtors works to support the real estate industry in conjunction with various local associations/MLSs, Florida Realtors is autonomous. It has no authority over the operations of local Realtor associations in Florida or any MLSs. Local boards may come up with their own rules, and those can vary from MLS to MLS.

Additionally, many local associations have their own forms for their members. If you see a form in the platform your office uses, it may not be a Florida Realtors document.

If a caller to Florida Realtors’ Legal Hotline has a concern regarding an ethics hearing, arbitration or particular MLS rule, the attorney may be unable to answer the question. If that happens, they’ll refer the caller back to the local association and MLS.

7. Finally, we’ve mentioned this in many articles, but remember: The contract controls how time is calculated – it’s not based on any law. Be sure to check, then double check, the time section of your contract to clarify how it’s calculated since times can vary by contract.

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

© 2022 Florida Realtors®

During negotiations, a listing broker created a dual (variable rate) commission arrangement on the fly and reached an agreement. But they didn’t have time to disclose that change to a potential cooperating broker. Does the Code require disclosure every single time, no matter what?

ORLANDO, Fla. – Dear Shannon: I’m a commercial broker and took a listing for a small commercial building. It was reasonably priced, and two offers came in quickly. One of the offers was from a client of mine and the other from another broker’s buyer.

The two offers were nearly identical – full-price, no contingencies – and I presented both to the seller. They considered making a counteroffer, but I said, in my experience, countering a full-price offer could result in one or both buyers walking away from the table. The seller didn’t want to take a chance of having buyers walk away. As a result, the seller said, “If you reduce your commission, I’ll accept the offer you procured.” I agreed.

The other buyer’s broker learned that I had reduced my commission to make the offer that I procured more desirable. They were very unhappy and told me that by reducing the listing commission for the offer I procured, I created a dual or variable commission arrangement that must be disclosed. And then they filed an ethics complaint against me claiming I violated Article 3 as interpreted by Standard of Practice 3-4.

I told the other broker there was no time to provide disclosure because the renegotiation of my commission was happening on the spot at the same time the seller was accepting an offer. What was I supposed to do? Stop the seller from accepting an offer and quickly disclose to the other buyer’s broker that I had reduced my commission?

Please explain to this other buyer’s broker that it was not practical for me to make this disclosure. – Not Practical

Dear Not Practical: Thank you for reaching out. You make an excellent point. The question is, under Article 3, as established in Standard of Practice 3-4, are you obligated to inform the other buyer’s broker that you modified the listing commission prior to the offer being accepted? Let’s think this through and look closely at what the code says about this situation.

Standards of Practice serve to clarify the ethical obligations imposed by various Articles. Under Article 3 we find Standard of Practice 3-4 which states: Realtors®, acting as listing brokers, have an affirmative obligation to disclose the existence of dual or variable rate commission arrangements (i.e., listings where one amount of commission is payable if the listing broker’s firm is the procuring cause of sale/lease and a different amount of commission is payable if the sale/lease results through the efforts of the seller/landlord or a cooperating broker). The listing broker shall, as soon as practical, disclose the existence of such arrangements to potential cooperating brokers and shall, in response to inquiries from cooperating brokers, disclose the differential that would result in a cooperative transaction or in a sale/lease that results through the efforts of the seller/landlord. If the cooperating broker is a buyer/tenant representative, the buyer/tenant representative must disclose such information to their client before the client makes an offer to purchase or lease. (Amended 1/02)

By reducing the listing commission for the offer you procured, you created a “dual or variable rate commission arrangement” that you have an obligation to disclose. But keep reading. Notice Standard of Practice 3-4 goes on to say “The listing broker shall, as soon as practical, disclose the existence of such arrangements to potential cooperating brokers …” So, what does that mean?

In your situation, you were renegotiating your commission at the same time the seller was agreeing to accept an offer. Standard of Practice 3-4 says you have to disclose the dual or variable rate commission arrangement “as soon as practical.” Even though you might have created a dual or variable commission arrangement, providing the required disclosure to the other buyer’s broker right then and there might not have been “practical” given the situation.

Ultimately, a professional standards tribunal would determine whether or not, in your particular circumstance, disclosure was practical or not. You made an excellent point and if the other buyer’s broker files an ethics complaint, I would not be surprised if the professional standards tribunal found, given the situation you described, that you were not in violation of Article 3 of the Code of Ethics, as clarified by Standard of Practice 3-4.

So yes, you have an obligation to disclose a dual or variable rate of compensation to a potential cooperating broker. However, the Code requires such disclosure be done “as soon as practical.”

Shannon Allen is an attorney and Florida Realtors Director of Local Association Services
Note: Advice deemed accurate on date of publication

© 2022 Florida Realtors®

What if a buyer and seller sign a contract but the buyer fails to submit the agreed-upon deposit?  Some Realtors think the seller is then free to relist the property – but if they call the Legal Hotline to confirm it, they find the issue isn’t quite that simple.

ORLANDO, Fla. – A common hotline call from listing agents seeks confirmation that if the buyer never makes the deposit, there is no contract. Callers want to confirm that their seller is now free to relist the property and sell it to someone else.

The seller may be able to relist the property, but it’s not because no contact exists. Money need not change hands to form an enforceable contract.

Mind blown, right?

This is a very simplistic version of Contracts 101, but essentially only three things are needed to form a contract: an offer that sets forth the terms of the contract, an acceptance of those terms, and what is known as consideration. Consideration is an exchange of something of value that binds the parties to one another.

But wait! Wouldn’t money be that “thing of value” that consideration requires? It certainly can be. In fact, now-archaic versions of contract law did require that some money be exchanged to form a contract. Over time, the amount of money shrunk until many contracts used what is called “nominal” consideration, which could be very small. This older concept of the law is why sometimes deeds will recite that a nominal amount such as $10 has exchanged hands as part of the transaction. This allows the parties to prove “consideration” without showing the actual purchase price, which was almost certainly a lot more than $10.

Eventually, lawyers and courts abandoned the concept of nominal consideration. The modern view of contract law considers the promises of the parties to one another to have sufficient value to form the basis of consideration. The buyer promises to pay a certain sum to the seller and the seller promises to convey title for that sum. No money needs to exchange hands to form the contract, though the monetary exchange will certainly have to occur to perform the contract.

If the parties neglect to include a deposit in a contract, the contract can still be formed just by the parties’ signatures.

So why have a deposit at all? Since a residential transaction can take several weeks, the seller usually wants some assurance if they’re agreeing to take their house off the market for that period. The earnest money deposit is designed to act as liquidated damages the seller can recover if the buyer does not complete the transaction.

This finally leads us to what actually happens under the Florida Realtors-Florida Bar residential contracts when a buyer fails to make a deposit. Paragraph 15(a) states that failure to make a deposit – either an initial or additional deposit – shall be a buyer’s default. Under general contract law, once a party has declared the other party in default, the party that declared breach is relieved of the duty to perform under the contract. The party not in breach can then move on to their remedies, such as recovering liquidated damages. Parties also have a duty to mitigate their damages, which, in the case of a seller could mean relisting the property.

The important takeaway: Failure to make a deposit does not render the contract void. The contract was formed by the exchange of promises and continues to exist until one party refuses to perform or declares the other in default. If the buyer fails or refuses to make the deposit, it is important for the seller to take action and not sit on their rights.

Richard Swank is Florida Realtors Associate General Counsel
Note: Information deemed accurate on date of publication

© 2022 Florida Realtors®

There’s often more than one way to interpret a rule. When warring sides can’t agree, it’s up to a judge, jury or panel to decide.

ORLANDO, Fla. – A broker represented a seller in a transaction-broker capacity. He was on vacation when two offers landed in his inbox. One came from an associate inside his company, while the second came from another broker who had a reputation for aggressive behavior. The offers were comparable, with the listing broker’s offer having a slightly lower purchase price but no financing contingency.

The seller was also away from home on a business trip, so she and her broker chatted over the phone about the two offers. At the conclusion of that call, they agreed that the listing broker would have the associate from his company forward that offer to the seller’s email address and field any questions or counteroffer terms the seller might have. Since the seller said she wasn’t interested in the terms of the competing broker’s offer, it wasn’t forwarded.

The seller accepted the offer from the listing broker’s associate, and the transaction went to closing. The rival broker noticed the sale and, upon confirming details, saw that the purchase price the seller accepted was slightly lower than the one he had submitted. He exercised his right under NAR Code of Ethics Standard of Practice 1-7 and demanded that the listing broker confirm that his buyer’s offer was presented to the seller. The listing broker explained the situation and assured the broker that seller had ample information about both offers before choosing the one his associate presented.

The cooperating broker was irate that his buyer’s offer wasn’t forwarded to the seller, so he filed an ethics complaint, alleging a violation of Article 1, citing Standard of Practice 1-7 “When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing.” He argued that discussing key contract terms over the phone wasn’t submitting the entire written offer, which is what the rule requires.

The listing broker had the seller testify that she was satisfied with her listing broker’s description  of both offers and was perfectly happy with the decision to just receive a copy of the offer she ultimately accepted. The broker further argued that he did objectively describe both offers faithfully over the phone and that since the rule doesn’t explicitly include the phrase “in writing,” a verbal submission could be acceptable. He finally argued that the spirit of the rule is to ensure his seller can make a fully informed decision, and that since both offers were written on the same form, the only real differences were the terms he objectively explained over the phone. In his closing statement, he said he regretted not asking the seller to send an email confirming she didn’t want to see the other offer, but that if they did find him in violation of Article 1, he asked that they issue a low-level discipline, like a letter of warning.

This is probably the part of the article where you want to know what happened next. However, this is a hypothetical, so there’s no outcome to report. While NAR Case Interpretations do include an outcome and rationale, this hypothetical would ultimately be up to the panel to decide. While I have my own thoughts, a panel may see things differently. They may even disagree among themselves and would ultimately go with a majority vote.

The origin of this idea was a case I reviewed recently, where there was a phone conversation about competing offers, with an attorney for the licensee arguing this meets the legal requirement of presenting an offer. It made me wonder how one of our local board hearing panels would analyze a similar fact pattern using the Code of Ethics.

Here are a few practical takeaways, from the perspective of a member calling the Florida Realtors Legal Hotline.

• Each hearing panel conducts its own analysis of the rules and interprets the Code of Ethics. There are standards of practice and case interpretations to help guide their decision-making process, but the analysis is ultimately up to each panel.
• Every case is different, and the tone and demeanor of the people making arguments can influence the outcome. So can additional facts that arise during the hearing.
• Rules can start to look a little different if you spend a lot of time ruminating on each word. For example, there’s one specific sentence our department has been kicking around for two years. I’ve probably logged at least 20 hours looking at it and writing about it. And we still don’t agree about the “correct” interpretation, likely because, in my opinion, it’s open to at least two.
• While we love to share information about how laws and procedural rules fit together, it’s very challenging to predict an outcome based on a phone conversation where we hear from just one side. I’d take anyone who says “the Legal Hotline told me I’m right” with a grain of salt. I’d be willing to bet there was more nuance to that conversation, and unless it’s a simple issue, “you got it right” is a very rare response for us.
• It is possible to seek a professional analysis of what a reasonable range of outcomes might be, but that task is best left to a party’s own lawyer who has reviewed all of the documents, confirmed the facts, researched the law and, importantly, analyzed the key people who play a role in the outcome (judge, jury, witnesses, attorneys representing both sides, etc.).

Joel Maxson is Associate General Counsel for Florida Realtors
Note: Information deemed accurate on date of publication

© 2022 Florida Realtors®

The national Home Price index reported a 15.8% annual gain in July, down from 18.1% in June – the largest price deceleration in the history of the index.

NEW YORK – S&P Dow Jones Indices (S&P DJI) released its July report on U.S. home prices, finding that home price gains decelerated across the United States at the fastest pace in more than 27 years of history.

Year-over-year

The S&P CoreLogic Case-Shiller index, which covers all nine U.S. census divisions, reported a 15.8% annual gain in July, down from 18.1% in the previous month. The 10-City Composite annual increase came in at 14.9%, down from 17.4% the previous month. The 20-City Composite posted a 16.1% year-over-year gain, down from 18.7% the previous month.

Florida cities saw less of a price deceleration. Tampa and Miami reported the highest year-over-year gains among the 20 cities in July. Tampa led the way with a 31.8% year-over-year price increase, followed by Miami in second with a 31.7% increase.

All 20 cities reported lower price increases in the year ending July 2022 versus the year ending June 2022.

“Although U.S. housing prices remain substantially above their year-ago levels, July’s report reflects a forceful deceleration,” says Craig J. Lazzara, managing director at S&P DJI. “For example, while the National Composite Index rose by 15.8% in the 12 months ended July 2022, its year-over-year price rise in June was 18.1%. The -2.3% difference between those two monthly rates of gain is the largest deceleration in the history of the index.”

Lazzara says the 10-year and 20-year indexes showed similar results. The 10-year was up 14.9% in July vs. 17.4% in June and the 20-City Composite was up 16.1% in July vs. 18.7% in June.

On a month-over-month basis, all three composites declined in July.

July’s year-over-year price change was positive for each one of the 20 cities with a median gain of 15.0%, but in every case, July’s gain was less than June’s,” says Lazzara. “Prices declined in 12 cities on a month-to-month basis. Tampa (up 31.8%) narrowly edged Miami (up 31.7%) to remain at the top of the league table for the fifth consecutive month, with Dallas (up 24.7%) holding on to third place.

As has been the case for the last several months, price growth was strongest in the Southeast (up 27.5%) and South (up 26.9%).”

Month-over-month

Before seasonal adjustment, the U.S. National Index posted a -0.3% month-over-month decrease in July, while the 10-City and 20-City Composites both posted decreases of -0.8%.

After seasonal adjustment, the U.S. National Index posted a month-over-month decrease of -0.2%, and the 10-City and 20-City Composites posted decreases of -0.5% and -0.4%, respectively.

In July, only 7 cities reported increases before and after seasonal adjustments.

“As the Federal Reserve continues to move interest rates upward, mortgage financing has become more expensive, a process that continues to this day,” adds Lazzara. “Given the prospects for a more challenging macroeconomic environment, home prices may well continue to decelerate.”

© 2022 Florida Realtors®

NAHB credits a short-term decline in mortgage rates (to 5.3%) as a reason for the uptick, as new-home inventory remains at an elevated 8.1-months’ supply.

WASHINGTON – Sales of newly built, single-family homes in August increased 28.8% to a 685,000 seasonally adjusted annual rate from an upwardly revised reading in July, according to new data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

Despite the August increase, however, new home sales are down 14% on a year-to-date basis.

“The sales gain in August reflects that there is clearly sidelined demand for housing, but it is being constrained by rising interest rates that are pricing many potential consumers out of the market, particularly entry-level buyers,” says National Association of Home Builders (NAHB) Chief Economist Robert Dietz. “After a brief lull when mortgage rates fell below 5.3% for much of August, they have since jumped much higher in September and are now approaching 7%.”

A new home sale occurs when a sales contract is signed or a deposit accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the August reading of 685,000 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 an 8.1-months’ supply. The count of homes available for sale, 461,000, is up 24.6% over last year – only 49,000 of that number is completed and ready to occupy. The remaining have not started construction or are currently under construction.

The median new home price in August was $436,800, up 8.2% from a year ago, in part due to increased construction costs. NAHB says it’s a diminished growth rate as a growing number of builders cut prices due to slackening demand.

Regionally, on a year-to-date basis, new home sales fell in all four regions, down 15.6% in the Northeast, 24.5% in the Midwest, 10.8% in the South and 16.7% in the West.

© 2022 Florida Realtors®

The Florida Realtors/Florida Bar contract has clauses that deal with casualty and bad-weather events. Here are the top four in the AS IS contract.

ORLANDO, Fla. – When hurricanes impact real estate transactions, many Realtors scramble to locate casualty and bad weather provisions. This short inventory provides an overview of key provisions in the Florida Realtors/Florida Bar “AS IS” Residential Contract for Sale and Purchase revised in October of 2021, along with one reference to the casualty provision contained in the Florida Residential Landlord and Tenant Act.

1. Section 18(G) Force Majeure
   This is an automatic extension that comes into play when a dramatic event prevents a party’s performance or closing from happening. It takes an unusual and unplanned event to trigger this “Force Majeure” clause, as you can see from a few of the examples given, such as, hurricanes, acts of God and acts of terrorism. Once the clause is triggered, though, certain time periods (including the closing date, if applicable) will be extended for a reasonable time up to 7 days after the force majeure no longer prevents performance. Parties should pay attention to the time in relation to the closing date, though, since either party may terminate the contract by delivering a written notice if force majeure continues to prevent performance more than 30 days beyond the closing date.
2. Section 18(L) Access to Property to Conduct Appraisals, Inspections, and Walk-Through
   After a hurricane passes over a property, a buyer often wants to take another look at the property, regardless of whether the buyer is still in the inspection period. This clause generally favors the buyer’s request, as it provides that “Seller shall, upon reasonable notice, provide utilities service and access to Property for appraisals and inspections, including a walk-through (or follow-up walk-through if necessary) prior to Closing.”
3. Section 18(M) Risk of Loss
   If the buyer or seller discover casualty damage from the hurricane, this clause describes the rights and obligations of each party. If the cost to restore the property does not exceed 1.5% of the purchase price (this cost includes the cost of pruning or removing damaged trees), then the cost is a seller obligation. If the restoration isn’t complete prior to closing, the seller will escrow a sum equal to 125% of the estimated cost to complete the restoration. If the cost of restoration exceeds 1.5% of the purchase price, then buyer has the option to either take the property along with 1.5% of the purchase price, or receive a refund of the deposit, releasing buyer and seller from all further obligations under the contract.
4. Section 83.63, Florida Statutes (Casualty Damage)
   This brief section simply provides that if rented residential premises are damaged or destroyed “so that the enjoyment of the premises is substantially impaired, the tenant may terminate the rental agreement and immediately vacate the premises.” This section continues to present a second scenario whereby a tenant may “vacate the part of the premises rendered unusable by the casualty, in which case the tenant’s liability for rent shall be reduced by the fair rental value of that part of the premises damaged or destroyed.”

While this article serves as a broad overview of key provisions, Florida Realtors Legal Hotline lawyers are always happy to discuss the nuances of these provisions. They are often overlooked when the sun is shining and deals are closing without incident, but it is helpful to know where they are, so you can get to them quickly when the winds are blowing.

Joel Maxson is Associate General Counsel for Florida Realtors

Note: Information deemed accurate on date of publication

© 2022 Florida Realtors®

The Conference Board credits “jobs, wages and declining gas prices” for the 4.4-point Sept. rise. Both current outlooks and future expectations increased.

BOSTON – The Conference Board Consumer Confidence Index increased in September for the second consecutive month and now stands at 108.0, up from 103.6 in August.

The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – rose to 149.6 from 145.3 last month.

The Expectations Index – based on consumers’ short-term future outlook for income, business, and labor market conditions – increased to 80.3 from 75.8.

“Consumer confidence improved in September for the second consecutive month supported in particular by jobs, wages, and declining gas prices,” says Lynn Franco, senior director of economic indicators at The Conference Board. “The Present Situation Index rose again after declining from April through July. The Expectations Index also improved from summer lows.”

Franco notes that recession risks persist, but “concerns about inflation dissipated further in September – prompted largely by declining prices at the gas pump – and are now at their lowest level since the start of the year.”

While consumer attitudes about buying big-ticket items such as cars rose, however, their attitudes about buying a home fell. The homebuyer drop-off “no doubt reflects rising mortgage rates and a cooling housing market,” says Franco.

“Looking ahead, the improvement in confidence may bode well for consumer spending in the final months of 2022, but inflation and interest-rate hikes remain strong headwinds to growth in the short term.”

Present situation

Consumers’ appraisal of current business conditions was more favorable in September:

• 20.8% said business conditions were “good,” up from 19.0%
• 21.2% said business conditions were “bad,” down from 22.6%

Consumers’ assessment of the labor market also improved:

• 49.4% said jobs were “plentiful,” up from 47.6%
• 11.4% said jobs were “hard to get,” down slightly from 11.6%

Expectations six months in the future

Consumers were more upbeat about short-term business conditions:

• 19.3% expect business conditions to improve, up from 17.3%
• 21.0% expect business conditions to worsen, down from 21.7%

They were also more optimistic about the short-term labor market:

• 17.5% expect more jobs to be available, up from 17.1%
• 17.7% anticipate fewer jobs, down from 19.6%

However, consumer attitudes were mixed about their short-term financial prospects:

• 18.4% expect their incomes to increase, up from 16.6%
• Conversely, 14.3% expect their incomes will decrease, up from 13.9%

Toluna conducts the monthly Consumer Confidence Survey for The Conference Board. The cutoff date for preliminary results was Sept. 20.

© 2022 Florida Realtors®

FedNat Insurance Co. cancelled 56.5K policies in May and agreed to transfer 83K in June, but it doesn’t have enough funds to process its existing claims.

TALLAHASSEE, Fla. – State regulators Friday asked a judge to place a property-insurance company in receivership, making it the sixth Florida property insurer declared insolvent this year amid widespread financial problems in the industry.

The Florida Department of Financial Services sought to be appointed receiver for FedNat Insurance Co., which canceled 56,500 policies in May and reached an agreement to transfer about 83,000 policies to another company in June.

Despite shedding the policies, FedNat remained responsible for claims and other types of obligations from before June 1, according to court documents. It notified the state Office of Insurance Regulation (OIR) on Sept. 13 that it did not have enough money for what is known in the insurance industry as a “runoff” of the obligations.

“Respondent (FedNat) notified OIR that it had overstated its cash position and could not complete a solvent runoff,” said the court petition, filed by the Department of Financial Services’ Division of Rehabilitation and Liquidation. “OIR immediately sent an examiner to the company. On September 14, 2022, Respondent advised OIR that it did not have sufficient cash on hand to pay its obligations and debts as they come due in the normal course of business. Therefore, Respondent is insolvent as defined (by a section of state law) and delinquency proceedings are appropriate.”

Insurance Commissioner David Altmaier sent a letter Wednesday to state Chief Financial Officer Jimmy Patronis, who oversees the Department of Financial Services, that ultimately triggered the court petition Friday.

The filing was another sign of trouble in Florida’s property-insurance system. Other insurers declared insolvent since February were Southern Fidelity Insurance Co., Weston Property and Casualty Insurance Co.; Lighthouse Property Insurance Corp., Avatar Property & Casualty Insurance Co. and St. Johns Insurance Co.

Those insolvencies have contributed to massive growth in the number of customers pouring into the state-backed Citizens Property Insurance Corp., which was created as an insurer of last resort. As of Sept. 16, Citizens had 1.055 million policies, more than double the number from two years earlier.

A document presented to the Citizens Board of Governors last week said Citizens had received 19,740 customers who previously had been insured by FedNat. The document did not provide details about those policies, but the Office of Insurance Regulation in May issued an order that included what one regulator described as an “extraordinary remedy” of the early cancellation of 56,500 FedNat policies.

Before that order, FedNat had about 140,000 policies, the regulator, Virginia Christy, said in an affidavit attached to Friday’s court filing. Along with the cancellations, FedNat agreed to transfer the roughly 83,000 remaining policies to a related company, Monarch National Insurance Co., with the condition that Monarch would not be responsible for obligations from before June 1.

Court documents indicate that the Office of Insurance Regulation has been concerned about FedNat’s finances since at least March 2020, when the state started requiring the company to file monthly financial statements. Later in 2020, regulators started holding frequent conference calls with company officials about its financial status.

“Despite capital infusions, Respondent’s (financial) surplus continued to decline, and its underwriting losses continued to increase throughout the remainder of 2020 and into and throughout 2021,” the court petition said.

Along with canceling policies and agreeing to transfer the remaining policies to Monarch, the Sunrise-based FedNat this year also stopped writing new policies, the petition said. It also lost its financial rating Aug. 1 from the ratings agency Demotech.

When property insurers become insolvent, the non-profit Florida Insurance Guaranty Association typically steps in to pay claims. Known as FIGA, the organization has authority to levy “assessments,” which are costs passed on to insurance policyholders across the state.

FIGA already is using money from assessments of 1.3% and 0.7% to pay costs related to other insolvencies. Its board last month approved a plan to borrow $150 million, with the debt financed by extending the 0.7% assessment through 2023.

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

If a metro saw pandemic-era sales surge, it’s more likely to have skittish buyers canceling contracts in Aug. In Jacksonville, 1 out of 4 buyers walked away.

SEATTLE – Nationwide, roughly 64,000 home-purchase agreements fell through in August – 15.2% of homes that went under contract that month. That’s up from 12.1% a year earlier and is comparable with July’s revised rate of 15.5%, according to a new report from Redfin.

The percentage has hovered around 15% for three months in a row – the highest level on record with the exception of March and April 2020, when the onset of the coronavirus pandemic brought the housing market to a near standstill. Before the pandemic, it was consistently around 12% going back through 2017.

Homebuyers were most likely to back out of deals in Sun Belt cities that surged in popularity and price during the pandemic, such as Phoenix, Tampa and Las Vegas. They were least likely to back out in pricey coastal hubs like San Francisco and New York, which went out of vogue during the pandemic but are now making a comeback as workers return to the office.

A slowing housing market allows more buyers to bow out of deals because they often don’t need to waive important contract contingencies in order to compete in bidding wars. As more buyers include inspection, financing and appraisal contingencies in their contract, a higher percentage can now cancel the purchase if there’s an issue, such as a failure to secure a mortgage or problems because the appraisal is different from the agreed-upon selling price.

Some buyers may also be backing out of deals because they’re waiting to see if home prices fall.

Surging mortgage rates may also be a factor. The average 30-year-fixed mortgage rate hit 6.29% last week – the highest since 2008 – sending the typical homebuyer’s monthly mortgage payment up 45% from a year ago.

“Some homebuyers are finding that by the time they go under contract and lock in their mortgage rates, rates could be much higher than they were when they toured the home and/or got pre-approved. That can kill the deal because the buyer is no longer financially comfortable with the purchase,” says Sam Chute, a Redfin real estate agent who works with sellers in Miami.

Sun belt buyers

In Jacksonville, roughly 800 home-purchase agreements were called off in August, equal to one out of every four home transactions (26.1%) that went under contract that month. It’s the highest percentage among the 50 most populous U.S. metropolitan areas. Next came Las Vegas (23%), Atlanta (22.6%), Orlando (21.9%), Fort Lauderdale (21.7%), Phoenix (21.6%), Tampa (21.5%) and four Texas metros: Fort Worth (21.5%), San Antonio (21.1%) and Houston (20.6%).

Redfin says four of those 10 metros – Las Vegas, Phoenix, Tampa and San Antonio – have consistently ranked on its list of top migration destinations. They initially attracted buyers because they’re relatively affordable, but an influx of demand caused prices to skyrocket.

Many of the metros where deal cancellations are least common are metros that saw people leave during the pandemic, including the Bay Area and New York.

Newark, New Jersey, had the lowest percentage of deal cancellations (2.7%), followed by San Francisco (4.2%), Nassau County, New York (6.1%), New York (7%), Montgomery County, Pennsylvania (7.6%), San Jose, California (8.2%), Milwaukee (8.9%), Oakland, California (9.2%), Boston (10.1%) and Seattle (10.3%).

© 2022 Florida Realtors®

Shutters take time to put up and make homes feel like caves – but waiting too long is a mistake. Expert advice: Start once the NHC declares an area hurricane watch.

MIAMI – Ian is making a trek toward Florida. The state is in the cone of concern.

That means we are talking about, or at least thinking about, putting up our hurricane shutters.

Is now the time to do that? Or is it best to wait a bit? Or is it even necessary given the track?

Here’s a guide: When should you shutter?

We’ve heard about the potential threat to South Florida and the Keys from a likely strong Hurricane Ian for days and many are wondering: When do I put up my hurricane shutters? Or have someone else – like my landlord or condo association – do it for me?

The always answer from the National Hurricane Center is you should start to put up storm shutters when a hurricane watch is issued for where you live. A hurricane watch is issued two days ahead of a storm based on when hurricane conditions are expected to begin in an area within 48 hours.

So … Ian. And South Florida.

“Based off the current forecast, all of that preparation should be done by Monday night, Monday evening,” Jamie Rhome, deputy director of the National Hurricane Center, said Saturday morning.

“But it remains to be seen if we’ll ever need a hurricane watch for South Florida, which portions of South Florida may be under a watch, so we can’t say that you got to put up your shutters on day X, Y or Z. But, as people were thinking about the possibility of shuttering, their current timeline is if it were to be needed it would need to be completed by Monday sunset,” Rhome said.

Monitor reports on the storm’s progress. For instance, the Keys could see conditions deteriorate sooner than, say, Palm Beach, if Ian’s track clings closer to the island chain.

People’s needs may differ, of course. Some have attached hurricane shutters to their homes that can be quickly drawn in a matter of minutes. Others may have more cumbersome aluminum slats that need to be placed and screwed onto a frame. And that takes effort and, for some, may require aid from a family member, neighbor or friend.

Who is responsible for putting shutters up?

The responsibility can vary widely. If you’re the sole owner of the property and don’t rent or live in a condo association, then it’s on you to protect your home.

If you rent, often your landlord will want to protect their property and may work with you to secure the home. Some condo associations put up shutters. Others leave it to the residents to protect their own units. Check your association’s documents if you aren’t sure – but you were probably made aware of storm policies when you moved in to the community. Your association manager may also send out emails with hurricane advice and rules for where you live.

A hurricane warning is when hurricane conditions are expected in 36 hours. By this point, you should have your shutters in place.

As for masking tape? Don’t do it. Masking tape does not protect your windows from hurricane-force winds, and only leaves an unsightly mess if the storm bypasses your neighborhood. So, again for those in the back rows, no tape!

“Everybody’s situation is gonna be a little different,” Rhome said.

© 2022 Miami Herald. Distributed by Tribune Content Agency, LLC.

Boston Fed official acknowledged “apprehension about the possibility of a significant downturn,” but says “a more modest slowdown, while challenging, is achievable.”

oston, said Monday that a higher unemployment rate will be needed to bring down inflation from unusually high levels, but also suggested any economic downturn would likely be modest.

In her first speech as Boston Fed president, Collins said the economy is resilient enough to withstand the higher interest rates needed to combat inflation, which is near a four-decade high. Her comments echoed similar remarks from Raphael Bostic, president of the Atlanta Fed, on Sunday. Fed Chair Jerome Powell has also said that fighting inflation would cause “pain” for households and businesses.

“Accomplishing price stability will require slower employment growth and a somewhat higher unemployment rate,” Collins said in a speech to the Greater Boston Chamber of Commerce.

Collins acknowledged that job losses are painful and said “there is apprehension about the possibility of a significant downturn.” Yet she maintained that “the goal of a more modest slowdown, while challenging, is achievable.”

Her comments added to an ongoing debate about how badly the Federal Reserve’s ongoing interest rate increases – the fastest in more than 40 years – will hurt the economy. By lifting its benchmark rate, the Fed is pushing up the cost of a wide range of consumer and business loans, including mortgages, auto loans, and credit cards.

Fed officials hope those increases will achieve a “soft landing” by slowing consumer and business spending enough to bring down inflation but not so much as to cause a recession.

Yet many economists are increasingly skeptical that such an outcome is likely. The Fed has lifted its key rate to a range of 3% to 3.25%, the highest in 14 years, yet job growth remains solid and consumers are still spending at a decent pace. That suggests the Fed may have to push rates higher than expected to slow consumer demand and inflation.

At a policy meeting last week, the Fed lifted its short-term rate by three-quarters of a point for the third straight time. Fed Chair Jerome Powell, at a press conference after the meeting, said that “the chances of a soft landing are likely to diminish” as the Fed steadily raises borrowing costs.

“No one knows whether this process will lead to a recession or, if so, how significant that recession would be,” Powell said.

Collins is one of 12 voting members of the Fed’s policymaking committee and is the first Black woman to serve as president of a regional Fed bank. She was sworn in July 1. Collins previously served as executive vice president at the University of Michigan and served on the board of directors for the Chicago Fed.

Atlanta Fed President Bostic, in an interview Sunday on CBS News’ “Face the Nation,” also said “we need to have a slowdown” to get inflation under control.

“But I do think that we’re going to do all that we can at the Federal Reserve to avoid deep, deep pain,” he added.

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

Teachers, police and nurses should be able to buy a home in the communities they serve. Amendment 3’s new property tax break can help make that happen.

TALLAHASSEE, Fla. – Constitutional amendments can be confusing, but Amendment 3, which will appear on the November ballot, is straightforward and worthwhile.

Among the three amendments Florida voters will consider in November, one is a tax benefit for Florida’s hometown heroes, which includes teachers, law enforcement officers, emergency medical personnel, active duty members of the military and Florida National Guard, child welfare service employees and others.

Florida Realtors® strongly supports Amendment 3.

“For decades, Florida Realtors and its more than 225,000 members have been vocal advocates for affordable housing,” says Christina Pappas, president of Florida Realtors. “With affordability climbing further out of reach in the state, it’s become extremely challenging for the men and women who serve our communities to live in the areas where they serve. Amendment 3 will help by providing much-needed property tax relief to hometown heroes in our state.”

Amendment 3 would provide hometown heroes an additional $50,000 homestead property exemption on non-school levies if one of the included hometown heroes owns the property.

If passed by voters, the additional tax break would complement the newly created Hometown Heroes Housing Program (HHHP) funded by the Florida Legislature this year, an issue also strongly backed by Florida Realtors. The $100 million in funding under HHHP offers zero-interest loans to help hometown heroes with down payments and closing costs.

According to data compiled by Florida Realtors, the median sale price of a Florida home was just under $374,000 at the end of last year – 21% higher than one year earlier, and 47% higher in just three years. Many targeted hometown hero occupations don’t pay salaries high enough to afford such a home.

“Amendment 3 and the HHHP make a compelling statement to the men and women who serve our state, our communities and our country that we support them,” adds Pappas. “We want to make sure they have a chance of achieving the American dream of homeownership.”

© 2022 Florida Realtors®

U.S. bidding wars dropped 2.6 percentage points between July and Aug, with Tampa dropping 11 points and Orlando down 12.4. Still, bidding wars rose 2.8 points in Miami.

SEATTLE – Nationwide, 44.6% of home offers written by Redfin agents faced competition in August, the lowest bidding-war rate since the beginning of the pandemic when the housing market nearly ground to a halt, according to a new report from Redfin.

Year-to-year, U.S. bidding wars are down 63.5% a year earlier, and a revised rate of 47.2% in July marks the seventh-straight monthly decline.

The three Florida metros included in the study had mixed results, however. Miami came close to the national average, while two Central Florida cities saw a more dramatic month-to-month drop. Researchers say Tampa had the second-lowest bidding war rate of all cities in the study, with San Antonio and Phoenix also seeing a noteworthy drop.

Share of Florida offers that faced competition

• Miami: 42.2% (Aug. 2022) – 39.4% (July 2022) – 57.5% (Aug. 2021)
• Orlando: 30% (Aug. 2022) – 42.4% (July 2022) – 56.7% (Aug. 2021)
• Tampa: 23.8% (Aug. 2022) – 35.7% (July 2022) – 53.6% (Aug. 2021)

The typical home in a U.S. bidding war received 3.2 offers in August compared with 3.5 offers one month earlier and 5 offers one year earlier, according to the study.

Some buyers are dropping out of the market because mortgage rates have doubled year-to-year, reaching 6.29% in Freddie Mac’s latest weekly study. The increase in rates makes buying a home much more expensive: A buyer purchasing a $400,000 home has a monthly mortgage payment of roughly $2,500 with today’s mortgage rates, up from under $2,000 with last year’s rates.

To be included in this analysis, metros must have had a monthly average of at least 50 offers submitted by Redfin agents from March 2021 to March 2022.

Townhomes likely face competition, condos less so

Offers for townhouses were more likely than other property types to encounter competition, with 44.1% of Redfin offers facing bidding wars. They were followed by single-family homes (42.1%), multi-family properties (40.2%) and condos (37%).

Townhouses are popular in today’s pricey housing market because they’re typically smaller and more affordable than single-family homes.

© 2022 Florida Realtors®

Florida Realtors economist: If market changes challenge Realtors, sellers’ heads must be spinning. Use SunStats to help clients understand what’s going on.

ORLANDO, Fla. – The breakneck pace of market changes has even the most seasoned Realtors experiencing whiplash. Just 12 months ago, homes were flying off the market as soon as they listed, often with a very different set of terms (think waived appraisals and inspections and more all-cash offers) than typically seen. Some sellers were unlocking massive equity while buyers were enjoying historically low interest rates that boosted their purchasing power.

Cut to today where market conditions are starting to become vastly different. In a time of great change, how do you know if what you’re seeing in the field reflects on a specific deal or if it points to a broader market trend? This is where a peek into the data available exclusively to Florida Realtors® members becomes invaluable.

Market stats help set the table

Like with most things in life, events need context to be understood. Take the listing you just got and put on the market. Is it sitting a little longer than you would have expected given how things had been going? Are buyers seeming a little choosier and making more “down to earth” offers? Aside from any particularities of the house itself, could this shift be due to a broader market trend? Here’s how to find out.

Three key indicators: Active inventory, median sales price, median time to sale

Data can tell a story, but you need to know what to look for to get the entire picture. Put together, active inventory, median time to sale and median sales price can indicate the overall health and pace of your market.

Simply put, the more there is on the market and the longer it takes to sell, the greater the chance prices will fall.

If the supply of homes for sale is low and has been trending lower for several months, you know that there is less for buyers to choose from. This creates competition among buyers who then start waiving contingencies and placing higher bids to win, which increases the median sale price over time.

In aggregate, the more people start paying over what the seller asks (and even what the house will appraise for), the higher the median sale price will be. When you look at these two metrics side by side, you can see that as inventory goes down, median sale price starts to increase. It’s a simple display of supply and demand – the less there is of something, the more expensive it will be.

However, things may be starting to shift. After bottoming out in February 2022, active inventory has increased each month. While the median sale prices are still high, the pace of growth has started to slow, perhaps an indication that more inventory is lessening the competition among buyers who can put more reasonable deals together.

Economists also look to the increasing interest rates as a contributing factor for declining demand, as the cost of a mortgage has accelerated considerably in the past year, kicking more and more people out of the pool of potential buyers.

Then you have to consider how long deals are taking to go from list to closed. The faster this pace, the “frothier” the market.

Before the pandemic, a typical single-family Florida home took around 90 days to close. This allowed for all the pieces to fall into place – buyers considered all their options, did due diligence, may have had a contingency to sell their home, used traditional financing – all the “normal” practices. That all changed when inventory shrank, demand accelerated and buyers were looking to upgrade, take advantage of low interest rates or finally get out of rentals. The heavy competition changed the rules of engagement as the number of cash deals (which close much faster than financed deals) increased.

This is a metric to keep an eye on, particularly in deals where you’re representing a seller. Putting a home under contract in a week after fielding multiple offers may not materialize anymore.

Price tier matters

Not all markets are equal and not all price points are either. Consider this chart below. The active inventory for homes in the lower price point remains well below where it was two years ago, whereas there has been a sharp increase for the higher price points.

What’s in your market?

No two parts of Florida are the same and neither are their real estate markets. Headlines and general talking points are fine, but you owe it to yourself and your clients to dive into what’s happening locally. Take some time to explore Florida Realtors SunStats. Pull up these three metrics for your market and see what’s happening.

Jennifer Warner is an economist and Florida Realtors Director of Economic Development

© 2022 Florida Realtors®

A successful promotion takes planning. It should start with a two-week launch strategy that boosts content such as reels, videos, stories, etc.

NEW YORK – When promoting events through Instagram, it’s essential to plan ahead, says Michelle Berman-Mikel, owner of Berman Media PD and creator of the Instagram Power Method Program.

The first step: Create a two-week launch strategy that boosts such content as reels, videos, stories and so on. Agents need to particularly focus on the use of real-life content, relevant sponsors and emails.

This strategy consists of a structured “Launch” day that can be reverse-engineered to determine the days to post content and send emails. An agent should use their own imagery at the location or photos/videos from past events. Animation or “graphics” from resources like Canva should be avoided.

To project credibility, agents should refer to businesses, individuals and organizations. For instance, agents who want to offer a giveaway for a product or promote an event with sponsors should do interviews at the sponsor’s site. Leading up to the date of the event, agents will use this content on their account and collect it from various sources to correspond with posts on the days the emails go out.

When selecting event sponsors, agents should pay attention to those who have a social presence and create a sponsorship agreement to ensure their participation. The agreement could include email database size and Instagram analytics, including engagement rate, reach and impressions, and a reference to the agent’s account name.

Agents should consider paying for ads only after the organic presence is established. It typically takes six days for a campaign to be executed fully on Instagram.

Source: Inman (09/14/22) Berman-Mikel, Michelle

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

In South Fla., median prices fell a bit in Aug., and many licensees see that as a good thing after months of price increases that were “neither normal nor sustainable.”

MIAMI – Housing prices fell again last month in Miami-Dade County and dipped for the first time in months in neighboring Broward County, an uplifting sign for aspiring home buyers.

Miami-Dade’s median sale price dwindled to $551,250 for a single-family home in August, down from $570,000 the prior month, according to the monthly sales report released Wednesday by the Miami Association of Realtors. Condominium prices also dropped to a $375,000 midpoint from $380,000 in July.

The price decreases in Miami-Dade represent the second consecutive month, after climbing steadily from September through June and reaching historic high marks of $579,000 for a house and $410,000 for a condo.

“Prices never go up forever,” said Ana Bozovic, founder and real estate market analyst at Analytics Miami. “The steady ramp up we have had through mid-2022 was neither normal nor sustainable.”

In August, Broward showed the first signs of a softening residential real estate market. Although condo prices held steady at a $265,000 median, the midpoint sale price for a house fell to $562,500 from $600,000 in July.

The South Florida housing market has overheated during the two-year pandemic due to a tight supply of available homes and an influx of out-of-state buyers who decided to call the area their new home. That pushed demand and prices up since many of these newcomers outbid local residents and paid cash for houses and condos.

The pandemic-induced dramatic shift in the white-collar workplace from office buildings to homes allowing technology, finance, legal professionals and others to work remotely from anywhere during the pandemic has sharply worsened a housing-affordability crisis in South Florida that began well before the coronavirus emerged in March 2020.

Natives and longtime residents in Miami-Dade and Broward have been waiting on the sidelines, betting the runaway housing prices would eventually settle down.

For now, South Florida still has slim pickings for people determined to buy a home. Miami-Dade has an available inventory of 3.3 months of houses and 3.4 months of condos. Broward has supplies of 2.5 months of houses and 2.1 months of condos. This is far from a balanced market, which typically has five to seven months of housing supply to purchase.

Total housing sale transactions did increase from July to August across the region. Miami-Dade reported 2,505 sales, up from 2,375, while Broward recorded 2,700 transactions, higher than the 2,575 in July. Keeping with a longer trend, nearly half of the buyers last month paid for homes in cash – to likely avoid rising interest rates on mortgages, experts say – in both Miami-Dade and Broward.

Florida Atlantic University finance professor Ken H. Johnson, an expert on the real estate market, said interest rates will continue increasing through the remainder of the year.

On Wednesday, the Federal Reserve announced its fifth bump in its benchmark interest rate in 2022, the third increase of three-quarters of 1% – aggressive moves to try to curtail lingering consumer price inflation. The Fed’s rate hikes have pushed 30-year conventional mortgages to an average of 6%, double the mark from a year ago and the highest level since 2008.

Johnson thinks part of the Fed’s inflation-fighting strategy to keep raising interest rates is to limit consumer buying power. One element of the Fed’s thinking, he said, is that as mortgage rates go up fewer people will borrow against the equity in their homes via home equity lines of credit.

“The Fed is aware that we have the availability of credit being driven by the size of equities in our home and the Fed is worried about building bigger lines of credit,” Johnson said. “Many of us worry that this is creating another form of money supply that the Fed doesn’t have control over.”

Meanwhile, Joey Francilus, a North Miami native and digital strategist, has been shopping for a home but is reassessing the timeline due to interest rate jumps and protracted consumer price increases. The 32-year-old wants to buy by late 2023 a three-bedroom, two-bathroom house in North Miami, similar to the home where he grew up. His mother, Marie Severe Jean-Francois, emigrated from Haiti to New York City in 1979 and soon after moved to Miami. She bought her home in 1998 for $88,000. Today, it’s valued at $400,000.

Francilus fears the South Florida newcomers with deep pockets are continuing to force out longtime residents like him.

“We can have growth,” he said, of the housing market. “But if we’re pricing out the very people who make this town what it is, then what’s the cost? We’re losing our essence, if the people who make this town can’t afford to live here.”

George Washington University School of Business Professor Vanessa Perry studies the homeownership gap and thinks that aspiring first-time home buyers like Francilus are hindered more than others by higher mortgage rates.

“That’s a particular constraint we are dealing with now, because house prices are so high and we’re seeing such enormous rates of house price appreciation over the pandemic,” Perry said. “It makes it even more difficult for the first-time home buyer to enter the market, because they need a mortgage to buy a home and qualifying for that mortgage is even more difficult than it was a year ago.”

© 2022 Miami Herald. Distributed by Tribune Content Agency, LLC.

A tree will soon symbolize your Realtor membership. In partnership with the National Forest Foundation, NAR will plant more than 1.5M trees by 2025.

CHICAGO – The National Association of Realtors® (NAR) announced a partnership with the National Forest Foundation (NFF) that will result in 1.575 million trees being planted across the United States.

According to NAR, it will plant at least one tree for each Realtor® by the end of 2025. NAR 2022 President Leslie Rouda Smith spearheaded the climate-friendly initiative.

“As part of our association’s comprehensive sustainability and resilience plan, NAR is leading by example, like we always do,” says Rouda Smith. “We’re helping to foster more vibrant communities by increasing the number of trees around us, delivering cleaner air, enhancing stormwater mitigation and encouraging biodiversity in ecosystems.

Planting 1.575 million trees reduces 750,000 metric tons of carbon in the atmosphere, equivalent to 145,931 homes’ electricity use for one year or the annual operation of over 160,000 gas-powered passenger vehicles, according to the U.S. Environmental Protection Agency (EPA).

NAR doesn’t know yet where all the trees will go, however. It says the locations will be based on repopulation needs in areas affected by events like wildfires, drought or deforestation. NFF only plants native, ecologically appropriate trees and targets support to areas that need the most help.

“We are excited to partner with NAR to expand our tree planting efforts,” says Mary Mitsos, President and CEO at the NFF. “The future of our national forests depends on partnerships like this one to sustain natural ecosystems, foster resilient forests and promote healthy communities. Each contributing dollar means one more tree planted to help to mitigate wildfires, offset carbon footprint, combat climate change and maintain 193 million acres of National Forests.”

Under the NAR-NFF agreement, NFF will plant 1,575,000 trees in National Forest locations nationwide based on NAR’s guaranteed donation of $1.575 million.

© 2022 Florida Realtors®

The average 30-year, fixed-rate mortgage didn’t spend much time hovering around the 6% mark. It rose 0.27 percentage points this week, up from last week’s 6.02%.

WASHINGTON (AP) – Average long-term U.S. mortgage rates jumped by more than a quarter-point this week to their highest level since 2007 as the Federal Reserve intensified its effort to tamp down decades-high inflation and cool the economy.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate climbed to 6.29%, from 6.02% last week. That’s the highest it’s been since August of 2007, a year before a crash in the housing market triggered the Great Recession.

Rapidly rising mortgage rates threaten to sideline even more homebuyers after more than doubling in 2022. Last year, prospective homebuyers were looking at rates well below 3%.

On Wednesday, the Federal Reserve bumped its benchmark borrowing rate by another three-quarters of a point in an effort to constrain the economy, its fifth increase this year and third consecutive 0.75 percentage point increase.

Perhaps nowhere else is the effect of the Fed’s action more apparent than the housing sector. Existing home sales have been in decline for seven straight months as the rising cost to borrow money puts homes out of reach for more people.

The National Association of Realtors said Wednesday that existing home sales fell 0.4% last month from July to a seasonally adjusted annual rate of 4.80 million. Sales fell 19.9% from August last year, and are now at the slowest annual pace since May 2020, early in the pandemic.

The national median home price jumped 7.7% in August from a year earlier to $389,500. As the housing market has cooled, home prices have been rising at a more moderate pace after surging annually by around 20% earlier this year. Before the pandemic, the median home price was rising about 5% a year.

In the four weeks ended Sept. 11, home listings fell 19% from a year earlier, the largest drop since May 2020, the real estate brokerage Redfin found.

Many potential homebuyers are opting out of the market as the higher rates add hundreds of dollars to monthly mortgage payments. On the other end, many homeowners are reluctant to sell as they are likely locked into a much lower rate than they’d get on their next mortgage.

The Fed’s move Wednesday boosted its benchmark short-term rate, which affects many consumer and business loans, to a range of 3% to 3.25%, the highest level since early 2008. Fed officials forecast that they will further raise their benchmark rate to roughly 4.4% by year’s end, a full point higher than they envisioned as recently as June. And they expect to raise the rate again next year, to about 4.6%. That would be the highest level since 2007.

By raising borrowing rates, the Fed makes it costlier to take out a mortgage and an auto or business loan. Consumers and businesses then presumably borrow and spend less, cooling the economy and slowing inflation.

Mortgage rates don’t necessarily mirror the Fed’s rate increases but tend to track the yield on the 10-year Treasury note. That’s 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, to 3.65%.

The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, jumped to 5.44% from 5.21% last week. That’s the highest level since 2008. Last year at this time the rate on a 15-year mortgage was 2.15%.

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

NAR and other real estate groups met at the White House Wed. for a “candid discussion” on construction, zoning reforms, financing expansion and tax incentives.

WASHINGTON – National Association of Realtors® (NAR) President Leslie Rouda Smith participated in a White House meeting with a diverse group of housing industry leaders Wednesday.

The group met to explore viable solutions to the nation’s housing supply and affordability crisis. The discussion covered legislative, administrative, private sector, and state and local actions to address housing supply and affordability challenges across the country.

National Economic Council Director Brian Deese, Domestic Policy Council Director Ambassador Susan Rice, Housing and Urban Development Secretary Marcia Fudge and Federal Housing Finance Agency Director Sandra Thompson represented the Biden Administration in discussions.

“This was a candid discussion of ideas about how to fill the historic 5.5 million housing unit gap in the United States,” says Rouda Smith. “Housing supply is the number one issue for millions of consumers … locked out of the market. I conveyed to the Administration and my colleagues our support for a comprehensive plan that includes investment in new construction, zoning reforms, expansion of financing, and tax incentives to spur investment in housing and convert unused commercial space to residential.”

The White House invited leaders from a diverse group of housing industry organizations, including the Mortgage Bankers Association, National Association of Home Builders, National Housing Conference, National Multi-Housing Council, National Low Income Housing Coalition, National Fair Housing Alliance, Bipartisan Policy Center and Affordable Housing Tax Credit Coalition.

“Discussions like this are critical to raising awareness about housing affordability,” adds Rouda Smith. “Middle-income, first-time and first-generation homebuyers feel the most impact of this supply shortage as they face greater obstacles in the current economic climate. We look forward to continuing discussions with the Administration, policymakers and our industry partners to advance viable reforms that have a lasting impact on the housing market.”

© 2022 Florida Realtors®

When home prices were rising, the iBuyer made “easy profits,” but some think its losses now – 42% of its Aug. sales – mirror Zillow’s failed iBuying venture.

NEW YORK – Home-flipper and iBuyer Opendoor Technologies lost money on 42% of its transactions in August, with especially hard losses in key markets like Los Angeles and Phoenix, according to YipitData reports.

Opendoor has already warned investors that it expected to lose up to $175 million in adjusted earnings before interest, taxes, depreciation and amortization in the third quarter.

Opendoor’s losses closely mirror the pricing problems that ended Zillow Offers, Zillow Group’s iBuying business, last year, according to Mike DelPrete at the University of Colorado Boulder.

Although this attrition may not doom the company, DelPrete speculates that September’s numbers may be even worse.

Opendoor racked up easy profits when home prices were soaring earlier in the year, before diminished affordability and high mortgage rates shut out would-be buyers. By June, median home prices had started falling in some areas, especially in Sun Belt markets. This forced Opendoor to offload thousands of properties it had agreed to buy when prices were increasing. The company elected to honor the offers, telling investors in August that the decision was an investment in the company’s brand.

Opendoor will eventually finish selling through the inventory acquired before the market changed, giving it an opportunity to stem its losses and resume profitable home sales.

Source: Bloomberg (09/19/22) Clark, Patrick; Kane, Elizabeth

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