Number of buyers looking within their metro dropped 15.6% in 1Q, but the number looking elsewhere fell only 4.2%. Fla. has 5 of top 10 want-to-move-to metros.

SEATTLE – The pandemic-era trend of buyers relocating greater distances didn’t end with the pandemic. While Redfin says searches on its website were down overall in the first quarter (1Q) of 2023, the number searching for a home outside their current metro was down only 4.2% compared to a drop of 15.6% of buyers seeking something else near their current location.

During the pandemic, both of those numbers shot up – but the out-of-state mover numbers shot up more.

The reasons for long-distance relocations have changed a bit, though. Many out-of-state moves took place during the pandemic because workers were no longer tied to an office and commute. More recently, a drive for affordable housing has become a more important. Relatively affordable places are some of the nation’s most popular destinations.

And of the top 10 move-to cities cited by Redfin for 1Q, five are in Florida.

Looking at the trend another way, house hunters moving to a new area make up a bigger piece of the homebuying pie than ever. A record one-quarter (25.1%) of Redfin.com home searchers looked to relocate to a new metro in the first quarter. That’s up from 22.8% a year earlier and around 18% before the pandemic.

Top 10 move-to U.S. metros, 1Q year-to-year

Popularity is determined by net inflow – how many more users looked to move into an area than leave.

1. Miami: Net inflow 8,600 – top origin city, New York City
2. Phoenix: Net inflow 7,600 – top origin city,  Seattle
3. Las Vegas: Net inflow 6,600 – top origin city, Los Angeles
4. Tampa: Net inflow 6,000 – top origin city, New York City
5. Orlando: Net inflow 5,400 – top origin city, New York City
6. Sacramento: Net inflow 5,400 – top origin city, San Francisco
7. Cape Coral: Net inflow 4,900 – top origin city, Chicago
8. North Port-Sarasota: Net inflow 4,900 – top origin city, Chicago
9. Dallas: Net inflow 4,800 – top origin city, Los Angeles
10. Houston: Net inflow 4,300 – top origin city, New York City

Things have changed a bit for the top outbound cities, however. While the nation’s largest cities generally saw a population decline during the pandemic, a few are now seeing a better balance between incoming and outgoing residents. Immigration into major U.S. coastal cities like New York and Los Angeles, for example, has rebounded after dropping off drastically in 2020 and 2021.

In many cases, an uptick in international buyers has made up for some of the residents moving to less expensive destinations. The net inflow of immigrants more than doubled from 2021 to 2022 in the Bay Area, New York, Los Angeles, Washington, D.C. and Boston.

“Several years of declining immigration, compounded by Americans flowing out of big coastal cities during the pandemic, resulted in many major coastal cities losing population,” says Redfin Deputy Chief Economist Taylor Marr. “Last year’s immigration rebound was a boon for those cities, which take in most of the people who move to the U.S. from other countries. For the housing and rental markets, the recovery should add enough demand to at least partly make up for the existing residents who move further inland.”

Top 10 move-out U.S. metros, 1Q year-to-year

1. San Francisco: Net outflow 31,100 – top destination city, Sacramento
2. New York: Net outflow 23,400 – top destination city, Miami
3. Los Angeles: Net outflow 20,300 – top destination city, Las Vegas
4. Washington, D.C. : Net outflow 18,000 – top destination city, Miami
5. Boston: Net outflow 5,800 – top destination city, Miami
6. Seattle: Net outflow 4,700 – top destination city, Phoenix
7. Chicago: Net outflow 4,500 – top destination city, Cape Coral
8. Denver: Net outflow 4,200 – top destination city, Chicago
9. Hartford: Net outflow 3,200 – top destination city, Boston
10. Minneapolis: Net outflow 2,500 – top destination city, Chicago

Overall, Miami, Phoenix, Las Vegas, Tampa and Orlando were the most popular move-to destinations. Sun Belt locales are typically the most popular because they’re relatively affordable. The typical home in eight of the 10 most popular destinations is less expensive than in its top origin.

People are also moving to the Sun Belt from other countries, and immigration into seven of the 10 most popular migration destinations – Phoenix, Tampa, Orlando, Cape Coral, North Port-Sarasota, Dallas and Houston – more than doubled from 2021 to 2022. However, they still didn’t achieve the total numbers of immigrants as the nation’s big coastal metros.

© 2023 Florida Realtors®

At one time, networking was a room full of people chatting and exchanging business cards. Today it can be online, with LinkedIn a top place to do it.

NEW YORK –  The number of LinkedIn users exceeds 700 million people. That makes the platform ideal for connecting with other real estate professionals, potential clients and industry influencers.

An agent’s first step to maximizing LinkedIn is to create a professional profile that reflects their brand and highlights their experience and expertise. Agents’ LinkedIn page should have a professional headshot, a solid headline, and an informative summary of skills and achievements. Agents can also add contact information, their website’s URL and social media links.

Next, users need to expand their network. They can start by joining LinkedIn groups relevant to their business, such as local real estate associations, industry groups and alumni associations. They can also seek out other groups that connect with potential clients, such as homeowners, property investors and renters. When sending connection requests, the message should be personalized.

To share content, real estate professionals can upload articles, blog posts and videos that provide helpful information to their connections. Furthermore, agents can post photos and descriptions of their listed properties and share virtual tours. This will help agents reach potential buyers and renters who are searching for properties in the agent’s area.

Agents can also use LinkedIn’s advertising tools to target specific demographics and geographic regions to promote their listings to a more extensive audience.

Source: Realty Biz News (04/25/2023) Cioppa, Cali

© Copyright 2023 INFORMATION INC., Bethesda, MD (301) 215-4688

President Biden approved a major disaster declaration and FEMA assistance for Broward County. Fort Lauderdale may also offer $5,000 per household.

Note: Members of the Realtor family impacted by the rains and flooding are encouraged to apply for aid from Florida Realtors®’ Disaster Relief Fund. Realtors who wish to donate will also find links on the site.

FORT LAUDERDALE, Fla. – President Joe Biden approved a major disaster declaration for Broward County on Friday, making federal money available for individuals affected by the flooding two weeks ago, as well as state and local governments.

Meanwhile, Mayor Dean Trantalis is proposing giving thousands of dollars to households facing damage that the federal money may not fully cover.

With Biden’s declaration, residents who suffered damage to their homes, many of whom did not have flood insurance, can now apply for money from the Federal Emergency Management Agency (FEMA) for temporary housing and home repairs, loans for uninsured losses, and “other programs to help individuals and business owners recover from the effects of the disaster,” according to the disaster declaration.

In the weeks since the flooding from April 12 to April 14, residents who cannot afford home repairs or new housing have waited anxiously for the money, some of them still living in homes where mold is growing inside.

Gov. Ron DeSantis had submitted the request for the disaster declaration on Tuesday. In the days leading up to and following, officials have urged the federal government to make the declaration as quickly as possible.

The process could have taken up to two weeks, Fort Lauderdale Mayor Dean Trantalis said at a news conference Friday.

Trantalis was in Washington, D.C., on Thursday advocating for federal assistance on behalf of the city. Local officials including Broward Mayor Lamar Fisher and Rep. Jared Moskowitz have sent letters to Biden. Moskowitz described the flooding as a “once-in-a-lifetime event.”

But officials have also warned residents that FEMA money may not make them “whole” again. There could be a cap on how much assistance individuals can receive. Trantalis said that he is working with FEMA to find out what that will be. The money will also take time to get to residents, many of whom cannot afford to wait.

At next Tuesday’s commission meeting, Trantalis said he plans to propose a supplemental $5,000 to households that incurred major damage they cannot afford to repair.

“There are limits to what FEMA will authorize,” he said. “Some people have suffered many tens of thousands of dollars’ worth of damage and FEMA may not cover 100 percent.”

The state’s disaster declaration request had estimated that the flooding caused more than $100 million in damage faced by local governments, schools and Fort Lauderdale-Hollywood International Airport, and resulted in major damage to 1,095 homes, with 255 facing minor damage. Nearly 250 people were temporarily or permanently laid off. Many renters are now facing eviction.

“Many people’s homes were completely devastated,” Trantalis said. “We’ve seen dozens and dozens of beds and sofas, and the entire contents of kitchens, just sitting out on curb waiting to be taken away because they were damaged by the storm. So the City of Fort Lauderdale needs to pony up.”

FEMA also will provide money to state and local governments, as well as some nonprofits, for emergency costs they incurred and “the repair or replacement of facilities damaged” by the storm, the release said.

Fort Lauderdale’s city hall was one of the flooded facilities. Trantalis previously said that the city government would “apply for federal funding to finance a new city hall.”

He met with different government agencies in Washington, D.C., on Thursday to find potential funding sources that will “accelerate the process.” Fort Lauderdale may have a new city hall within 24 to 30 months, Trantalis said.

The FEMA assistance also can be used to support “hazard mitigation measures statewide,” according to the release.

South Florida officials thanked Biden for the prompt response Friday.

“So many people and businesses are still struggling with the impacts of this historic storm event, and this federal declaration to provide financial and loan assistance is the commitment they need right now,” Rep. Debbie Wasserman Schultz said in a statement.

“Thank you @POTUS for approving the Major Disaster Declaration that will provide the necessary resources to address catastrophic flooding in Broward County,” Moskowitz tweeted.

“I’m grateful that President Biden answered our request to help our community. Broward County residents who have been impacted by the April 12 flooding event deserve the support and resources of the federal government,” Fisher said in a statement. “I encourage every affected resident and business owner in our County to apply for disaster assistance through the Federal Emergency Management Agency.”

Residents and business owners can apply for assistance at DisasterAssistance.gov, by calling 800-621-FEMA (3362), or by using the FEMA App.

© 2023 South Florida Sun-Sentinel. Visit sun-sentinel.com. Distributed by Tribune Content Agency, LLC.

An inflation measure the Federal Reserve uses rose 0.3% month-to-month and 4.6% year-to-year, raising the likelihood of another rate increase in May.

WASHINGTON (AP) – A key index of underlying inflation that is closely followed by the Federal Reserve remained elevated last month, keeping the Fed on track to raise interest rates next week for the 10th time since March of last year.

The index, which excludes volatile food and energy costs to capture “core” prices, rose 0.3% from February to March and 4.6% from a year earlier – still far above the Fed’s 2% target rate. Some Fed officials are concerned that core inflation hasn’t declined much since reaching 4.7% in July.

Overall prices ticked up just 0.1% from February to March, the smallest monthly rise since last July and down from a 0.3% increase from January to February, Friday’s Commerce Department report showed. Compared with a year ago, inflation slowed to just 4.2% from 5% in February, though much of that decline reflected lower gas prices. That is the lowest year-over-year overall inflation figure in nearly two years.

A separate government report Friday showed that companies continued to provide solid pay raises to their employees last quarter. The report, called the employment cost index, which measures wages, salaries and benefits, rose 1.2% in the first three months of the year. That was up from 1.1% in the final quarter of last year.

The increase suggested that many businesses are still feeling pressure to raise pay to find and retain workers. While good for employees, that trend could help accelerate inflation if companies raise their prices to cover their higher labor costs.

The government also reported Friday that consumer spending was unchanged from February to March after a tiny gain of 0.1% the previous month, a sign consumers are getting more cautious amid high inflation and interest rates.

The Fed is thought to monitor the inflation gauge that was issued Friday, called the personal consumption expenditures (PCE) price index, even more closely than it does the government’s better-known consumer price index. Typically, the PCE index shows a lower inflation level than CPI. In part, that’s because rents, which have been among the biggest drivers of inflation, carry twice the weight in the CPI that they do in the PCE.

The PCE price index also seeks to account for changes in how people shop when inflation jumps. As a result, it can capture emerging trends – when, for example, consumers shift away from pricey national brands in favor of less expensive store brands.

The PCE index showed that food prices dropped 0.2% from February to March. Gas costs plummeted 3.7%, which partly reflected seasonal changes. Prices at the pump have since increased in many states.

The latest inflation figures point to the dilemma confronting officials at the Federal Reserve: Across the economy, price increases for many goods have slowed significantly. And some previous drivers of inflation, notably clogged supply chains, have eased. Yet prices for many services, including restaurants, auto insurance and hotel rooms, are still surging, fueled by robust demand from consumers who in many cases have enjoyed rising wages.

As a result, the Fed is poised to announce another interest rate hike after its policy meeting next week. The likely quarter-point rise in its benchmark rate would raise it to about 5.1%, the highest level in 17 years.

The Fed’s rate increases are intended to slow borrowing and spending, cool the economy and conquer high inflation. But in the process, the rate hikes typically lead to higher costs for many loans, from mortgages and auto purchases to credit cards and corporate borrowing, and heighten the risk of a recession. Most economists foresee a recession this year as a consequence.

There is growing evidence that the Fed’s efforts to slow consumer spending and economic growth are succeeding. The government’s figures Friday on consumer spending suggested that consumers have grown more cautious since the start of the year, when spending had jumped 2% just in January. The spending surge that month was fueled by a nearly 9% jump in Social Security and other benefit payments that are intended to keep pace with inflation.

And on Thursday, the government reported that the economy expanded at just a 1.1% annual rate in the January-March quarter, much less than the 2.6% growth in the previous quarter.

Even as the economy slows, Fed officials have indicated that they intend to keep borrowing rates high through the end of the year.

Analysts have expressed concern that last month’s collapse of two large banks is causing the banking industry as a whole to pull back on lending to shore up the industry’s financial health. Tighter credit standards could make it harder for businesses to borrow and expand, slowing the economy even further.

At the Fed’s meeting in March, its economic staff forecast that the U.S. economy would fall into a “mild recession” this year, in part because of the economic impact of the banking industry’s turmoil.

Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

There were 31,216 fair-housing complaints in 2021, a 9% year-to-year increase. Most complaints cited disabled access, with race discrimination coming in at No.2.

WASHINGTON – A new study finds that fair housing complaints increased even though there were fewer agencies reporting data.

When President Lyndon Baines Johnson signed the Fair Housing Act on April 11, 1968, he said “fair housing for all – all human beings who live in this country – is now a part of the American way of life.” Congress had been considering the fair housing bill for a long time, but when the Rev. Dr. Martin Luther King, Jr. was assassinated on April 4, Johnson used the national tragedy to urge for the bill’s speedy approval.

It’s been 55 years since the bill was passed, but a new report shows that fair housing is still a struggle for many Americans.

There were more than 31,200 fair housing complaints filed in 2021, according to the National Fair Housing Alliance’s 2022 Fair Housing Trends Report, which cited the most recent year where data was available.

That was the most complaints filed in at least 25 years.

“The most important finding of this report is that the number of housing discrimination complaints increased significantly in 2021, despite the fact there were fewer agencies reporting complaint data,” the report said.

‘Unprecedented attacks’ on Fair Housing

The study said that there were 31,216 housing complaints in 2021, up nearly 9% from the number of complaints filed in 2020. At the same time, there were seven fewer agencies reporting data in 2021 than in 2020.

“Had all fair housing agencies been able to submit their data, undoubtedly the number of reported fair housing complaints would have been even higher,” the report said.

The report said that the increase in discrimination complaints partly stems from “the Trump administration’s unprecedented attacks on fair housing, fair lending, and other civil rights laws and provisions.”

“The Trump administration took a hatchet to previously established fair housing rules designed to expand more equitable opportunities for underserved groups, and it worked vociferously to defund and displace experts at … agencies with responsibility for enforcing our nation’s fair housing and lending laws,” the study said.

The former president’s media representatives did not immediately respond to a request for comment.

Rental-related complaints in 2021 accounted for 81.7% of all transaction types reported, compared with 72.7% in 2020.

Disability cases account for most complaints

Cases alleging discrimination because of disability continue to account for the largest number of complaints, at 53.7%. Discrimination based on disability is usually obvious, the study said, making it easier to detect and more practical to file a complaint.

“Discrimination based on race, which is often harder to detect, comprised the second highest number of complaints,” the report said.

There was an uptick in the “other” category of complaints in 2021 regarding source of income, sexual orientation, criminal background, age, domestic violence, and retaliation.

“The overwhelming number of housing discrimination cases goes undetected and/or unreported,” the report said. “Many instances are difficult to identify or document.”

The study warned that housing providers may engage in many types of discrimination that can be undetectable, including lying about either the availability of apartments or the monthly rent, steering people of color to buy homes only in neighborhoods of color, or undervaluing an appraisal because of the race of the homeowners.

Those who experience discrimination often think it is futile to complain, the report said, even when they are convinced their civil rights have been violated. They also may fear retaliation or eviction by landlord, the report said.

© Copyright 2023, The Victoria Advocate

Homebuyers can secure flood insurance right away, but most current homeowners face a 30-day waiting period – and the 2023 hurricane season begins June 1.

ORLANDO, Fla. – Most homeowners insurance policies don’t cover damage from flooding, generally defined as water that rises up from the ground rather than down from the sky. And if homeowners want to be covered for the 2023 hurricane season through the National Flood Insurance Program (NFIP), they should apply now if they want coverage in place by June 1, the official start of the season, since new policies require a 30-day waiting period until they go into effect.

The 30-day waiting period doesn’t impact new homebuyers, however. There’s no waiting period for flood insurance if making, increasing, extending or renewing a mortgage loan, nor if a change is made on an existing policy at the time of renewal.

The number of private firms that offer flood insurance has also expanded recently, and the rules vary by company. However, it’s unlikely any private firm will issue new policies immediately if a hurricane is threatening the state.

For detailed information about flood policies, check the Flood Insurance Manual on NFIP’s website, contact an insurance agent or call NFIP at (877) 336-2627.

Policy terms and expiration

NFIP flood insurance has a policy term of one year. All policies expire at 12:01 a.m. on the last day of the effective term, but the policyholder is still covered for 30 days after expiration. However, loss claims during the 30-day grace period will only be honored if the policyholder pays the yearly renewal rate before the grace period ends.

A lapsed flood policy could present problems for some homeowners if their mortgage lender requires it. A later renewal could also cost more if original rates were discounted.

© 2023 Florida Realtors®

Under Risk Rating 2.0, how does FEMA determine an individual property’s insurance cost? FEMA says it can’t share data, so a Louisiana parish sued to find out.

NEW ORLEANS – St. Charles Parish filed suit against FEMA on Tuesday over its controversial new system for setting flood insurance rates, alleging the federal agency has failed to respond to public records requests related to how sharp increases in premiums across south Louisiana are being calculated.

The lawsuit was filed in federal court for the Eastern District of Louisiana. The parish said in a statement that FEMA has not provided data related to the parish’s November 2022 request under the Freedom of Information Act for “information used in the model to determine rates affecting its residents.”

According to the suit, FEMA’s responses to the request included stating that its new rating engine was “designed using privately held data that the U.S. government purchased through contracting.”

“The modeling information is very valuable and the company that produced it would be at a significant loss if it were to be made public,” the agency said, according to the suit.

The new system, known as Risk Rating 2.0, is projected to lead to steep rate hikes across south Louisiana and much of the country, phased in over years. St. Charles Parish in particular is in line for big hikes – average increases of 239% for single-family homes, with one ZIP code in the Des Allemands/Bayou Gauche area projected to see 752% hikes.

Single-family homes in Louisiana are projected to see 134% increases on average. The increases are being phased in with 18% annual hikes.

FEMA defends the new system as fairer for all because it does away with the old method that relied on its imperfect flood maps. Risk Rating 2.0 seeks to evaluate the risk of each individual home through a range of factors, including distance from water, rebuilding cost, construction type and ground elevation.

Rates are calculated through a complex algorithm, and some of the data is proprietary. A major issue local leaders say they have with the system is the difficulty in understanding how levees and other flood control measures being put in place can affect rates. They question whether those measures are being properly accounted for.

“We owe it to our residents to seek out this information, make sure it’s correct and if it’s not correct, get it corrected, to make sure that our risks are being accurately reflected,” St. Charles Parish President Matthew Jewell said. “I don’t believe they are.”

FEMA said it does not comment on pending litigation.

The lawsuit may be only the first legal salvo from Louisiana in response to the new rating system. State Attorney General Jeff Landry is said to be preparing a separate lawsuit after calling the formula for setting rates “arbitrary and capricious.”

St. Charles’ initial demand for information was broad and further clarified at FEMA’s request. It eventually asked for “the risk model used to assign premiums to St. Charles Parish residents,” the suit says.

In a January response, according to the lawsuit, FEMA appeared to refer to its contract with actuarial and consulting firm Milliman, which was paid nearly $11 million for the work. It said that releasing the information requested would breach an exemption from the Freedom of Information Act protecting trade secrets and commercial financial information.

St. Charles filed an appeal to that response, but still has not received the requested data, it says.

Louisianans are more likely to hold flood insurance policies than any other state, and as a result, the state will be especially hard hit by the changes. The highest projected percentage increase in the nation is in Plaquemines Parish’s 70082 ZIP code. Homes there are projected to see a 1,098% boost, to an average annual premium of $8,058 from the current $673.

FEMA says rates rose each year under the old system and that around 20% of policyholders are seeing decreases under the new one. But increases in the old system averaged around 10% per year, according to FEMA, and decreases under Risk Rating 2.0 are occurring only once, in the first year.

Risk Rating 2.0 is meant to bring the flood insurance program more in line with private-sector practices by setting actuarially sound rates and putting it on a more sustainable path. It currently carries debt of around $20 billion, and much of that was the result of flooding following the Hurricane Katrina levee failures, which produced more than $16 billion in paid claims.

© Copyright 2023, The Advocate / Capital City Press LLC, all rights reserved.

The planning process starts with questions. HUD notes that things like technology have changed, and it will update regulations after a public comment period.

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) says federal fair-housing regulations about access for those with disabilities should be updated – but it’s not doing so until the public weighs in.

To secure those public comments, HUD published an Advance Notice of Proposed Rulemaking (ANPRM) in the Federal Register. It’s “considering revising Section 504 of the Rehabilitation Act of 1973 (Section 504) implementing regulation at 24 C.F.R. part 8” and requests public comment before considering potential revisions.

Section 504 prohibits discrimination on the basis of disability in programs and activities receiving federal financial assistance from HUD, and it follows through on the White House Blueprint for a Renters Bill of Rights announced earlier this year.

“Inclusive communities and accessible, affordable housing are at the core of HUD’s mission,” says Demetria L. McCain, principal deputy assistant secretary for fair housing and equal opportunity. “Modern standards for accessible program design must reflect advances in building practices and technology. Hearing from the public, particularly stakeholders most directly impacted, is an integral part of HUD’s rulemaking process.”

In the request for comment, HUD asks 12 broad questions. They include things like:

• Is the definition of ‘‘individual with disabilities’’ consistent with the ADA Amendments Act of 2008?
• Are there specific examples of discrimination that individuals with mental health or substance use disabilities have experienced?
• What types of auxiliary aids and services do individuals with disabilities need in housing and community development programs and activities?
• What challenges exist in using a housing choice voucher (HCV) in the private market to secure a unit that meets disability-related needs?
• A number of federal agencies oversee federal accessibility laws. How can it “harmonize … the requirements among the various standards and achieve greater consistency in the design and construction of buildings and facilities?

HUD invites all members of the public – individuals with disabilities, HUD recipients, all levels of government, tribes, housing providers and social service providers – to provide input. Comments may be submitted electronically through regulations.gov, or through the methods described in the advance notice of proposed rulemaking.

For more information, visit www.hud.gov/504.

© 2023 Florida Realtors®

Almost 1,100 Fort Lauderdale-area homes suffered major losses. Gov. DeSantis asked for federal assistance after the area was hit with 26 inches of rain.

Note: Members of the Realtor family impacted by the rains and flooding are encouraged to apply for aid from Florida Realtors®’ Disaster Relief Fund. Realtors who wish to donate will also find links on the site.

FORT LAUDERDALE, Fla. – A detailed, preliminary assessment of damage from the historical April 12-13 flooding in Broward County reported more than $100 million of damage, “major damage” to almost 2,000 homes, and hundreds of temporary and permanent layoffs by affected businesses.

The damage assessment was contained in a request Tuesday from Gov. Ron DeSantis to President Joe Biden for the federal assistance to help pay for the aftermath of the flooding that dumped nearly 26 inches of rain at Fort Lauderdale-Hollywood International Airport in a 24-hour period.

DeSantis asked Biden for a major disaster declaration for Broward County. His request was made Tuesday, in a letter to Biden via the Federal Emergency Management Agency. DeSantis made his request 13 days after the rains began inundating east central Broward County, especially Fort Lauderdale, Dania Beach and nearby areas.

The flooding closed the airport for two days, destroyed homes and damaged many businesses, and disrupted gasoline deliveries from Port Everglades to counties throughout the southern part of the state. The letter cited the rain that began midday April 12 and lasted until midnight the next day.

The “event resulted in historic flooding in areas not ever before seen in Broward County,” the letter stated, adding that, “the flooding in Broward County resulted in significant damage in concentrated areas.”

Damage

According to the request:

• Damage teams from the state and Federal Emergency Management Agency determined 1,095 homes had received major damage and 255 had minor damage. It wasn’t simply flooding that was waist-high in some areas, but “hundreds of homes have been contaminated with raw sewage, further exacerbating recovery efforts.”

• As of Friday, 2,350 claims have been filed from Broward with the National Flood Insurance Program. Another 35 have been filed from other parts of the state.

• A business damage assessment survey found 227 businesses reported damage from the flooding and 226 reported lost revenue. That resulted in 57 businesses reporting layoffs, with 197 temporary and 50 permanent layoffs. The average reported business damage was $79,333.

• More than $100 million of damage was faced by local governments, schools and the airport.

Government losses

The DeSantis letter said “it has been reported” that Fort Lauderdale City Hall “is a complete loss. This includes all equipment, numerous city vehicles, records management infrastructure, and information technology infrastructure.”

City officials have been discussing their desire for a new City Hall for years, and since the storm have said the existing structure may be a total loss. Mayor Dean Trantalis has said he would look to federal taxpayers to pay for a new City Hall.

“We will apply for federal funding to finance a new City Hall,” Trantalis said Monday.

The governor’s office also said “significant damage and water inundation” was reported by Broward Health.

Broward Health is the brand name for the North Broward Hospital District, the government agency that operates hospitals and health facilities in the northern two-thirds of the county. Its flagship location is Broward Health Medical Center, formerly known as Broward General, just south of downtown Fort Lauderdale.

Lots of rain

The request highlighted the 25.91 inches of rain measured at the airport. It also said rainfall totals in excess of 20 inches were noted in neighborhoods south of the New River including Edgewood, Riverside Park and Tarpon river, and an area of 15 to 20 inches was received from Hollywood and Dania Beach north to Fort Lauderdale.

And it referenced the National Weather Service confirmation of two tornadoes.

Timing, politics

DeSantis’ office announced on Saturday that he would make the request, which was dated Tuesday. It wasn’t clear precisely when or how DeSantis signed the letter to Biden, which was obtained by the South Florida Sun Sentinel after the state’s congressional delegation was copied by FEMA.

DeSantis was in Japan on Tuesday, on the first stop of a multi-nation world tour widely seen as an attempt to burnish his foreign policy credentials before an expected announcement that he’ll run for the 2024 Republican presidential nomination.

Copyright © South Florida Sun Sentinel, Gary M. Singer. Distributed by Tribune Content Agency, LLC. All rights reserved.

Higher mortgage rates, changing markets and weaker demand? It’s not whether or not you’ll have tough RE conversations – it’s how you handle it when they arise.

NEW YORK – Tough client conversations are an unavoidable reality for real estate agents, and addressing the ramifications of changing market conditions will be crucial in 2023, writes Darryl Davis Seminars CEO Darryl Davis.

Affordability, foreclosures and mortgages are all topics of critical importance, and when it comes to holding conversations about affordability, “it helps to partner with local trusted lenders … so you can always have up-to-date financing information so that you can best help your buyers navigate their options,” Davis notes.

And stay positive, especially when talking with worried buyers and sellers.

For foreclosure conversations, Davis recommends agents stay abreast of current and potential future market trends. A conversation about mortgages requires an understanding of how mortgages work and how the different types can affect buyers’ finances over time.

Agents should prepare for these types of conversations by conducting research into local markets, following industry developments, and keeping abreast of current events.

In all cases, they should approach clients with honesty and keep things positive – and if conversations do not go well, they shouldn’t hesitate to seek help through a network of knowledgeable individuals.

Client dialogues can also go more smoothly if the agent is proactive, talking less and listening more.

Source: Inman (02/28/23) Davis, Darryl

© Copyright 2023 INFORMATION INC., Bethesda, MD (301) 215-4688

NAR and realtor.com awarded $5K each to three winners of its initial competition that honors agents’ above-and-beyond efforts to further fair housing goals.

WASHINGTON –The National Association of Realtors® (NAR) and realtor.com honored three winners of the Fair Housing Champion Awards during NAR’s Fair Housing Month event, “At What Price? Overcoming Barriers to Homeownership.”

The award recognizes Realtors for going above and beyond to promote fair housing and increase homeownership in underserved communities. Sponsored by realtor.com, the award program provides a $5,000 prize that winners can dedicate to the housing-related nonprofit organization of their choice.

“Affordability and fair housing are the biggest challenges facing the real estate industry today, and I am so proud of all the work our winners have put in to increase access to homeownership,” says NAR President Kenny Parcell. “They have set an example of leadership and I hope their work will motivate others to take action.”

2023 Fair Housing Champion Awards

• Abra Barnes: The broker-owner of Barnes & Associates, Realtors in Birmingham, Alabama, Barnes’ brokerage is a full-service firm assisting with residential sales, commercial sales and leasing, investor coaching, new construction marketing and acquisitions.

  It’s also passionate about working in low- to moderate-income areas in Birmingham, empowering clients with the knowledge they need to purchase real estate and build generational wealth.

  Although Barnes’ 41 agents focus on residential real estate, Barnes primary focus is commercial real estate. She works with affordable housing developers, nonprofits and fledgling business owners seeking their first brick-and-mortar space. Barnes helped raise awareness of the lingering effects of past discrimination as executive producer of “Lenders, Landlords, and the Law: A Fair Housing Reflection on Diversity and Inclusion.”

• Sofia Crisp: The executive director at Housing Consultants Group in Greensboro and High Point, North Carolina, Crisp – a 30-year veteran in the business and 2023 president of the Greensboro Regional Realtors Association – leverages her industry knowledge and community connections to build bridges to homeownership. She operates HCG as a nonprofit brokerage to help clients get into new homes at an affordable cost. To accomplish that, she works with the city of Greensboro, nonprofit organizations, lenders and a nonprofit builder.

• Frank J. Williams: The managing director of F.J. Williams Realty in Chicago, Illinois, Williams has been a fierce advocate for fair housing legislation on the state and local level, where he believes fair housing isn’t just about integrating neighborhoods – it’s also about integrating the industry.

  He was president of the Southside Chicago chapter of the NAACP from 1979 to 1985, president of the Chicago Association of Realtors (CAR) in 1989, CAR Realtor of the Year in 1992, and an inductee into the CAR Hall of Fame in 2017. Williams opened his real estate brokerage on the southwest side of Chicago in January 1971 where he continues his crusade as a broker, educator and leader today.

“Discrimination and a lack of housing affordability disproportionately impact marginalized communities, and that makes it harder for many individuals to gain access to homeownership and start building generational wealth,” says Realtor.com Chief Marketing Officer Mickey Neuberger. “Realtor.com applauds these Fair Housing Champions for their progress towards ensuring greater fair housing access for everyone and embodying the core values of our “To Each Their Home” tagline.”

© 2023 Florida Realtors®

Artificial Intelligence (AI) holds great promise for your business – but it holds even greater promise for scammers who can create “deep fake” videos and photos that not only look just like your listings, they could even look exactly like you.

CHICAGO – Cybercriminals are using artificial intelligence to impersonate agents and other parties to a real estate deal. Here’s how you can stop them.

You’ve probably seen “deepfake” videos online purporting to show a person doing or saying something they never actually did. It’s one of the dangers of artificial intelligence: Savvy users can imitate or replace a person’s face or voice to create highly convincing video or audio forgeries and manipulate or deceive audiences.

Deepfakes are often used against political or public figures to disrupt discourse. But how can deepfakes put your real estate business at risk?

1. AI can create fake listings, like fraudulent rental ads, to defraud consumers.
2. Deepfake videos can trick agents into taking listings or writing virtual sales contracts for properties that don’t exist or are not representative of the actual condition of the property.
3. AI can create fake reviews or video testimonials for real estate agents or brokers. Fraudulent reviews may convince consumers – or even other real estate pros – to work with agents who have ethical, disciplinary or criminal issues.
4. Deepfakes can be used to slander, defame or damage an agent’s reputation by depicting him or her saying things that were never said.
5. Deepfakes can impersonate real estate professionals in order to gain access to sensitive information about clients and defraud them.
6. Fake AI-generated property tours online could deceive buyers and agents about property condition.
7. Deepfake videos can be used to lure agents into virtual meetings with a cybercriminal who poses as a legitimate party to the transaction.
8. Cybercriminals can use AI to impersonate clients and seek unauthorized information about a property, net proceeds from a sale, confirm financial information from lenders or get employment details.

One of the most significant risks of AI in real estate has to do with wire fraud. The use of deepfakes has made wire fraud even more challenging to detect.

Case in point: In 2019, a cybercriminal used AI voice technology to trick the CEO of a U.K.–based energy firm to transfer $243,000 to a secret account.

To protect buyers and sellers from such risks, you must take necessary steps to ensure your clients’ identities and transactions are secure. This includes verifying identities, implementing secure payment procedures and adopting strict security measures.

You should consistently advise clients of the prevalence of wire fraud in the real estate industry as well as potential deepfake crimes. One step to prevent wire fraud is to put a warning in your email signature.

Steps to protect against deepfakes

• Stay informed. Know the latest developments in deepfake technology, and be aware of the potential ways cybercriminals could use it to harm the real estate industry. It’s imperative for brokers to provide regular cybersecurity training. Technology changes quickly.
• Verify information. Be cautious with any information or media related to real estate. Regardless of the source – whether it’s a lender, colleague or client – take steps to verify the authenticity of the information before acting on it. Reach out directly to the source to confirm, and make sure to communicate via an email address or phone number you know to be authentic.
• Use secure communication channels. Use domain-based and encrypted email and messaging apps rather than free email accounts when communicating with clients or colleagues about sensitive information related to real estate.
• Use watermarks on real estate documents. To guarantee the authenticity and integrity of real estate documents and materials, employ watermarks and other authentication techniques to detect any unauthorized modifications.
• Educate others. Teach your fellow real estate pros and consumers about the dangers of deepfakes and the importance of being vigilant.

It’s important to note that deepfake detection tools are still in the early stages of development and may not always be effective at detecting all deepfakes. However, there are several software tools that can be helpful. Two popular and highly rated ones are ZeroGPT, a free resource with a 98% accuracy rate, and Sensity, a deepfake detection tool that uses artificial intelligence to analyze facial expressions and other video features to determine if they have been altered. It also helps verify ID cards and documents.

Integrating ChatGPT, artificial intelligence and deepfakes into the real estate industry brings benefits and potential risks. As technology continues to evolve, real estate pros and consumers need to stay informed and take action to mitigate the potential dangers of these technologies.

By being cautious, verifying the authenticity of information and transactions and implementing proactive measures, you can ensure a more trustworthy and secure real estate market for all stakeholders.

Source: The National Association of Realtors® (NAR). Tracey Hawkins is a former real estate agent and has taught agent safety for many years.

© 2023 Florida Realtors®

Some housing-crisis-era loans a decade ago had “piggyback” mortgages – part of a 20% down payment – and some debt collectors recently started to demand money.

WASHINGTON, D.C. – The 2008 housing crisis continues to haunt some Americans. Debt collectors who sat on mortgage defaults are starting to resurrect them and demand payment.

In the years leading up the 2008 housing crisis, many lenders offered “toxic loans” to homebuyers who had no reasonable ability to repay. As part of that process, they often relied on “piggyback” loans. Also known as an 80/20 loan, it involved a first lien loan for 80% of the value of a home and a second lien loan for the remaining 20% – the rough equivalent of a down payment.

When the real estate market crashed, many lenders sold those piggyback loans – also called silent second mortgages or zombie mortgages – to debt collectors for pennies on the dollar without ever contacting borrowers to tell them they still owed the money.

Now some of these debt collectors are demanding the mortgage balance, interest and fees. And they’re threatening foreclosures on families who do not or cannot pay.

“Some debt collectors, who sat silent for a decade, are now pursuing homeowners on zombie mortgages inflated with interest and fees,” says Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra. “We are making clear that threatening to sue to collect on expired zombie mortgage debt is illegal.”

On Wednesday, CFPB – the federal agency overseeing U.S. consumer issues – published guidance on debt collectors covered by the Fair Debt Collection Practices Act. It says many of their demands are no longer valid because they’ve passed the statute of limitations.

Debt collectors now attempting to collect on these zombie second mortgages may be in violation of the Fair Debt Collection Practices Act. The CFPB’s advisory opinion reminds covered debt collectors that:

• The Fair Debt Collection Practices Act and its implementing Regulation F prohibit a debt collector from suing or threatening to sue to collect a time-barred debt.
• The prohibition applies even if the debt collector does not know that the debt is time barred. Accordingly, any debt collector covered under the Fair Debt Collection Practices Act may violate the law if they bring or threaten to bring a state court foreclosure action.

CFPB says it will be monitoring the debt collection market for violations related to time-barred mortgages as well as to time-barred non-mortgage debt:

Consumers can submit complaints about zombie mortgages, time-barred debts and other financial products or services by visiting the CFPB’s website or calling (855) 411-CFPB (2372).

© 2023 Florida Realtors®

Under just-passed Fla. tort reform, multifamily operators can limit their liability for injuries on their property. If they follow a specific roster of security guidelines, they can attain a “presumption against negligence.”

TALLAHASSEE, Fla. – The Florida Legislature has passed and Governor Ron DeSantis has signed HB 837, which will significantly reform tort law in Florida. The proposed language covers a variety of topics and specifically addresses negligent security.

HB 837 will protect apartment and other multifamily housing property owners from liability if an individual is injured while lawfully on the premises. Of significance, HB 837 provides a presumption against liability if the property owner follows and completes their checklist of precautionary measures and requirements.

A presumption is a rule of law that permits a court to presume a fact is true until the greater weight of evidence disproves or rebuts the presumption. Moreover, a presumption places the burden on the opposing party to establish the nonexistence of the assumed fact.

For example, Florida courts currently recognize a presumption of negligence against the driver of a vehicle that rear-ends another vehicle. However, the driver of the vehicle that rear-ended the other may negate this presumption by presenting evidence to the contrary. Accordingly, a presumption against liability is a powerful tool in litigation.

Requirements for presumption against negligence

To assume this presumption against negligence, HB 837 provides three requirements. A property owner must show that they followed those requirements prior to the incident that gave rise to the negligence action. The burden is on the property owner to demonstrate that they have satisfied all three requirements prior to assuming the presumption against negligence.

These requirements are:

1. A list of physical property safety measures to be taken on the property
2. A crime prevention analysis
3. Crime prevention training for all employees.

Physical property safety measures

The first requirement includes the implementation of the following safety measures on the property:

• A security camera system at points of entry and exit that records and maintains footage for at least 30 days. The goal of this precaution is to assist in offender identification and apprehension.
• A lighted parking lot that provides light from dusk until dawn.
• Lighting in walkways, laundry rooms, common areas and porches from dusk until dawn.
• A deadbolt measuring at least one inch in each dwelling unit door.
• A locking device on each window and each exterior sliding door, and another on other doors not used for community purposes.
• Locked gates with key or fob access along pool fence areas.
• A peephole or door viewer on each dwelling unit door that does not include a window or that does not have a window next to the door.

Crime prevention analysis

The second of HB 837’s criteria includes a requirement that by January 1, 2025, the property owner has a “crime prevention through environmental design” completed – no more than three years old – completed for the property. Such assessment must be performed by a law enforcement agency or a Florida Crime Prevention Through Environmental Design Practitioner (FCP). The property owner must remain in substantial compliance with this assessment.

The final version of the signed law will detail what the assessments will entail.

Crime prevention training

HB 837’s third and final requirement is that by January 1, 2025, the property owner must provide proper crime deterrence and safety training to current employees. This training is to familiarize employees with security principles, devices, measures and standards set forth in the checklist of physical safety measures listed in requirement one.

Analysis

Looking ahead, the above-described presumption will be beneficial to property owners in managing litigation costs in negligent security cases, and security measures across the state will consequently improve.

Under the prior standard, negligent security cases usually result in a “battle of the experts,” since each party retains a security expert to testify on the foreseeability of the criminal action that occurred, and the reasonableness of the steps the property owner took to maintain the property in a safe condition. The experts retained by the injured party usually argue that the property did not have sufficient lighting, security cameras or door locks.

Under HB 837, property owners are incentivized to proactively implement these security measures and will be presumed not to be negligent if the above requirements are met.

HB 837’s checklists should be celebrated by property owners and tenants as welcome safety changes to Florida law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Copyright © Stephanie A. Trobradovic, Wilson Elser Moskowitz Edelman & Dicker LLP
111 North Orange Avenue, Suite 1200, Orlando, FL 32801

Dear Shannon: NAR amended Standard of Practice 3-9, and I’m sure it was important to change “listing broker” references to “seller.” But what does that mean? May Realtors directly contact a seller for showing instructions now?

ORLANDO, Fla. – Dear Shannon: SOP 3-9 (Standard of Practice) was amended and the word “listing broker” was replaced with the word “seller.” I’m a cooperating broker and built my business around representing buyers. Does this mean I can contact the seller directly for showing instructions?

Your last article (Why am I in Violation if Everybody Does It?), was shocking – the one where the listing broker permitted access to a listed property on terms other than those authorized by the seller. Yikes! Now that’s got me comparing SOP 1-16 with the change to SOP 3-9. Doesn’t this SOP 3-9 change mean that the listing broker is now in violation of both Article 1, as interpreted by SOP 1-16, and also Article 3, as interpreted by the amended SOP 3-9? So, a violation of both Article 1 and Article 3? Your previous article only mentioned a violation of Article 1. And same question for a cooperating broker: If they permit access to listed property on terms other than those authorized by the seller, wouldn’t that be a violation of both Article 1 and Article 3? – Seeking Clarity

Dear Seeking Clarity: Thank you so much for reaching out on this. You are correct, the amendment to Standard of Practice 3-9 replaced the words “listing broker” with the word “seller.” And this amendment became effective on Jan. 1, 2023.

The amended Standard of Practice 3-9 states: Realtors® shall not provide access to listed property on terms other than those established by the owner or the seller. (Adopted 1/10, Amended 1/23)

The answer to your first question is “no,” the amendment to SOP 3-9 does NOT mean that cooperating brokers can contact the seller directly for showing instructions.

Contacting the seller directly regarding showing instructions could be a potential issue under Article 16, which states Realtors® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other Realtors® have with clients. (Amended 1/04). The intent of the amendment to SOP 3-9 was simply to reinforce the already existing concept that the seller (not the listing broker) is the one who is in charge of establishing terms by which their listed property may be accessed.

As to your other questions, if both the listing broker and the cooperating broker permitted access to listed property on terms other than those authorized by the seller, then a violation of Article 1, in this narrow discussion, is the better Article for the listing broker; and Article 3, again in this narrow discussion, is the better Article for the cooperating broker. I’m glad reading my previous article has you thinking about SOP 1-16 and SOP 3-9. Let’s take a look together:

• SOP 1-16 says: Realtors® shall not access or use, or permit or enable others to access or use, listed or managed property on terms or conditions other than those authorized by the owner or seller. (Adopted 1/12)
• SOP 3-9 says: Realtors® shall not provide access to listed property on terms other than those established by the owner or the seller. (Adopted 1/10, Amended 1/23)

Notice the language is similar but not identical. SOP 1-16 leans more toward the listing side and SOP 3-9 leans more toward the selling (or cooperating broker) side.

To interpret and support the Code, the Professional Standards Committee of the National Association of Realtors® adopted Standards of Practice which are “interpretations” of the Code. As such, Standards of Practice apply the Code of Ethic’s principles to specific conduct in specific circumstances.

While Standards of Practice 1-16 and 3-9 sound similar, they actually interpret very different Articles. These two Standards of Practice serve to clarify the ethical obligations imposed by Article 1 and Article 3, respectively. Now let’s look at the language of Articles 1 and Article 3:

• Article 1 says: When representing a buyer, seller, landlord, tenant, or other client as an agent, Realtors® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve Realtors® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, Realtors® remain obligated to treat all parties honestly. (Amended 1/01)
• Article 3 says: Realtors® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker. (Amended 1/95)

In a nutshell and for our narrow discussion, Article 1 focuses on promoting the interests of the client and Article 3 focuses on cooperating with other brokers.

So, if the listing broker is the one who is accessing or using, or permitting or enabling others to access or use, listed or managed property on terms or conditions other than those authorized by the owner or seller, then, for this narrow discussion, a possible violation of Article 1 (as opposed to Article 3) is the better Article.

And if the cooperating broker is the one who is providing access to listed property on terms other than those established by the owner or the seller, then, again for this narrow discussion, a possible violation of Article 3 (as opposed to Article 1) is the better Article.

In conclusion, this isn’t really a violation of both Article 1 and Article 3, because Article 1 is more appropriate for the listing broker and Article 3 would be more appropriate for the cooperating broker. This does not mean that listing brokers cannot violate Article 3, nor does it mean that cooperating brokers cannot violate Article 1. This simply means that in this narrow set of circumstances there might be a better Article.

Stay tuned for a future article where we compare SOP 16-16 with SOP 3-2.

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

© 2023 Florida Realtors®

How does a homeowners’ association rider differ from a condominium rider? How is it similar? This month’s focus is on the similarities between the two. Next month we’ll focus on the differences.

ORLANDO, Fla. – With over 1.5 million condominium units (condos) in Florida, and over 3.71 million homes in homeowners’ associations (HOAs), most of our members have helped prepare contracts that address issues associated with association rules. There are important contract riders associated with each type of community, and we’ll look at two specific riders – the CR-6x A Condominium Rider and the CR-6 B Homeowners’ Association/Community Disclosure.

We’ll look at some similarities in this article, and next month we’ll contrast some key differences.

Similarity 1: Disclosures mandated by statute

Both riders contain disclosures mandated by Florida law. These statutory disclosures are quite different in how they work, so the main similarity is that if the seller neglects to include the statutory language in their contract – or deliver it to the buyer after a contract is signed and wait for a review period to expire – the buyer is allowed to void the contract until closing. The condo disclosure comes from Section 718.503, Florida Statutes, and the HOA disclosure comes from Section 720.401, Florida Statutes.

The mandatory language in both statutes is written IN ALL CAPITAL LETTERS, and the drafters of the rider kept the ALL CAPS formatting in place. It’s interesting to note that a seller should leave this mandatory ALL CAPS language alone in both instances, but that anything outside of this ALL CAPS language remains negotiable, should the parties want to modify other aspects of the condo or HOA rider.

Similarity 2: Both Riders go beyond the minimum statutory requirement

Both riders expand on the statutory language’s minimum requirements and address various issues that could impact transactions. For example, both include room for a seller to disclose whether association approval is required. If required, then these sections describe what both sides are obligated to do, like initiate the approval process (seller) or show up for an in-person interview if required (buyer). They both conclude with a deadline to get the approval. If the deadline expires without association approval, then the contract will terminate, and the buyer is entitled to a return of the deposit.

Both riders also contain a detailed section that allows a buyer and seller to negotiate whether certain special assessments that can be paid in installments will be paid in full before closing, or whether a buyer will pay installments due after closing. These are nuanced sections that use slightly different wording, so the parties should pay close attention if special assessments that meet these descriptions exist.

Similarity 3: Both riders disclose assessments and fees

Both condos and HOAs have mandatory assessments. At a minimum, there will be some amount of general assessments. There may or may not be special assessments or additional fees.

Both riders allow the seller to disclose the amounts of these assessments and fees to the buyer. For both condos and HOAs, the seller should be hyper vigilant to ensure these amounts are accurate. It seems best for the seller who pays the assessments and fees to confirm the amounts, but if anyone – like one of our members – helps a seller research the amounts, that helper should also be extra careful to calculate the correct amount because both the seller and the researcher could share some liability if it’s not right.

Similarity 4: Both reference a buyer’s right to void the contract

Both riders describe certain rights a buyer might have to void a contract. While there are significant differences in when and why a buyer can void the contract, both mention such a right. Although we’ll cover differences in the next article, it’s worth pointing out that if the HOA rider is completed and attached to the contract, the buyer does NOT have a right to void the contract.

Similarity 5: Both warn the buyer to research

Both disclosures reference rules, restrictions, and governing documents in general terms. They encourage (but don’t obligate) a buyer to carefully read those documents.

This is an interesting note to end on. We would encourage any buyer to spend time investigating what can go wrong with associations, and to carefully weigh the pros and cons of buying a property saddled with an association vs. one without. We would also highly encourage buyers to dig into the details of any specific association’s history. Has it been fiscally responsible so far? How are the reserves? What are the rules? How often do the rules change? How aggressively does the association enforce the rules? Do neighbors get along or fight? Is there any litigation pending? How often does this association foreclose on owners in the neighborhood? And so on.

There are some things a buyer can’t predict, like how bad it could get if one or more evil tyrants manage to secure leadership in the association, or whether hidden fraud or theft currently exists in the association. However, there are plenty of things they can do to at least rule out issues they could uncover through basic research.

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

© 2023 Florida Realtors®

Special assessments appear in various places of the Florida Realtors/Florida Bar contract, but Paragraph 3(c) on the Condo Rider has confused more than a few members.

ORLANDO, Fla. – The contracts and riders/addenda Florida Realtors offers members mention “special assessments” in various places. However, one tends to cause the most confusion: Paragraph 3(c) of the Florida Realtors/Florida Bar Condominium Rider (Condo Rider). This article focuses on that paragraph and how it operates.

Paragraph 3 of the Condo Rider is entitled “Fees, Assessments, Prorations and Litigation” and broken down into four subsections. The third section, subsection (c) covers “Special Assessments and Prorations.” A special assessment, in short, is a stand-alone charge above and beyond expected debt obligations, like a regular monthly payment.

Let’s take a look at 3(c) to hopefully make it easier to follow and, therefore, to complete and understand.

Subsection 3(c)(i) reads as follows:

Click image to enlarge

What exactly is supposed to go here? This section is where sellers inform buyers about any special or other assessments of the association.

Any special or other assessments? No, just those levied by the association OR been an item on the agenda OR reported in the minutes of the association.

Wait, for how long? Within twelve (12) months prior to the effective date of the sales contract. Many of the time calculations in the sales contracts involve the effective date, and this is just another example of why the date is vital for understanding contract calculations.

It’s important to note that this section covers levied AND pending assessments. Levied, as used here, is in the past tense and means an assessment that the association has charged or imposed. Pending is defined as any special assessment that has been an item on the agenda OR reported in the minutes of the association in the previous twelve (12) months.

Practical tip: Before completing this section, sellers should verify their information directly with the association. While sellers may be aware of a levied assessment, they might not be up to date on a pending one, given that pending assessments are assessments on the agenda or reported in the minutes for the previous twelve (12) months. This is especially true for sellers who may not primarily occupy the property.

As you will see later, skipping this step – not personally verifying pending assessment with the association prior to completing this section – could come back to haunt the seller.

Let’s move on to subsection 3(c)(ii), which states:

Click image to enlarge

This section deals with levied or pending assessments that can be paid in installments. Many associations don’t require owners to pay an entire assessment amount upfront, but instead state that owners can pay the assessment in installments. Sellers should definitely check with the association to verify this information.

Once a seller has confirms that a levied or pending assessment may be paid in installments, this subsection clarifies who will pay the individual installments. While the seller pays any due before closing, the parties can choose who will pay installments due after closing by checking one of two boxes. The section may be left blank, but if it is, the buyer pays installments due after closing by default.

Note: If the box for Seller is checked, the seller pays the assessment in full prior to or at closing. Even if an assessment has an installment option, that option ends if the seller agrees to pay off any amounts due after closing. At this point, the seller stops using installments and pays off the full amount of the remaining debt obligation.

Subsection 3(c)(iii) says:

Click image to enlarge

Remember when I mentioned that a failure on the part of the seller to verify levied or pending assessments could come back to bite them? Well, here are the teeth.

To clarify, the seller’s failure to disclose levied or pending assessments existing as of the effective date results in the seller paying those undisclosed assessments in full at the time of closing. Sellers who filled out this paragraph off the top of their head – without doublechecking with the association – could end up with an extra unexpected cost. It’s important to tell your sellers to verify this information before they complete this document.

Practical tip: When taking any listing of property subject to an association, a prepared agent will let sellers know what information they need to get from the association. Give a copy of the applicable rider/addenda to sellers so they can review the questions and know what to ask. And start this process at the beginning, i.e. when taking the listing, not once sellers start getting offers.

Subsection 3(c)(iv) discusses what happens if a special or other assessment is imposed after the effective date and states:

Click image to enlarge

This language emphasizes that any special assessment that is imposed after the effective date of the sales contract, which was not pending as of the effective date, will be broken down between the parties, with the seller paying all amounts due before closing and the buyer paying all amounts due after.

Note: This section says the imposed special assessment here was not pending, i.e. been on the agenda or reported in the minutes of the association in the previous twelve (12) months prior to the effective date. Again, knowing the effective date of the sales contract is important here! If the special assessment being imposed after the effective date was pending, then it should have been disclosed in subsection 3(c)(i).

Subsection 3(c)(v) clarifies exactly when an assessment is considered levied per paragraph 3.

Click image to enlarge

This section spells out that an assessment is deemed levied by an association on the date when the assessment has been approved, per Florida law and the condo documents buyer is entitled to receive under paragraph 5. This definition helps both the seller and buyer determine if/when an assessment has been levied.

And the last subsection of paragraph 3, subsection 3(c)(vi), discusses association assets and liabilities, such as reserve accounts, and clarifies that those items shall not be prorated.

Click image to enlarge

Prorations of many items are covered in the main body of the contract in paragraph 18(K), so this section of the Condo Rider makes it clear that the above items are not to be prorated.

As you can see, paragraph 3(c) covers a lot of information! Wise sellers will gather this information at the onset of the listing so they can accurately complete this (and other) sections of the Condo Rider. As noted, failure to verify the sellers’ personal knowledge on any applicable assessments could result in unhappy sellers who are faced with paying an assessment in full at closing. So while taking the time to confirm information with the association could be time consuming, it may save sellers a headache at closing.

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

© 2023 Florida Realtors®

Homeland Security says that Risk Rating 2.0 – a flood insurance system that prices policies by house rather than flood zone – needs more tweaking than expected.

WASHINGTON – Department of Homeland Security Secretary Alejandro Mayorkas revealed at a congressional hearing last week that a new federal system for setting flood insurance premiums needs more tweaking than expected.

The system, dubbed Risk Rating 2.0, is one of the few federal initiatives that has drawn bipartisan opposition in Louisiana. Since its inception in 2021, lawmakers of both parties have demanded – without success – that the Federal Emergency Management Agency (FEMA) explain just what variables go into its pricing formula. They’ve also said the revamp gave Louisiana short shrift.

Meanwhile, the feds have defended the new system, which was unveiled after decades of complaints from the country’s interior that FEMA’s older system unfairly subsidized coastal areas. The government has said Risk Rating 2.0 is aimed at better aligning premiums with individual properties’ actual flood risks.

But the Department of Homeland Security, which oversees FEMA, is now rethinking its approach, Mayorkas said to the U.S. House Homeland Security Committee as he presented his agency’s budget Wednesday. The agency is also considering grants to help some businesses and homeowners, he said.

“We are reviewing our grant programs to ensure that again they leave no community disenfranchised … We are reviewing and need to continue to review the Risk Rating 2.0 given the concerns that have been expressed,” Mayorkas said.

Louisiana Congressman Troy Carter said the takeaway from Mayorkas’ testimony is that Risk Rating 2.0 is “not a done deal, like we had been told, and that there will be some revisiting of the formula specifically geared toward fairness and granting relief.”

Carter, whose 2nd Congressional District stretches up the Mississippi River from New Orleans to north Baton Rouge, was one of the only committee members to ask questions that deviated from the committee’s apparent theme: that Mayorkas is responsible for what the GOP sees as a mess on the border with Mexico. He said after the hearing that he did so because flood insurance is far more important to Louisiana than are the country’s problems at the border.

© 2023 The Advocate, Baton Rouge, La. Distributed by Tribune Content Agency, LLC.

The area has a housing affordability problem in part because a limited amount of land for development continues to sell for higher amounts of money.

FORT LAUDERDALE, Fla. – South Florida is seeing a stark drop in the number of new housing projects expected to be developed, as the region deals with an affordability crisis – fueled in part by a lack of available places to live.

New residential housing permits issued in South Florida plummeted 21% in 2022 when compared to the year before, according to the latest data from Point2Homes, a company that analyzes real estate trends.

It stands in contrast to the state of Florida, which saw less than a 1% decrease in 2022 compared to 2021.

“Generally speaking, it’s the combination of an increase of construction costs, coupled with the rise in interest rates,” said Nelson Stabile, principal of real estate development company Integra Investments, and president of Builders Association of South Florida. “The rise also comes with lenders stifling their lending requirements, which makes the feasibility of a new project start to be a little bit more challenging in today’s economic environment than 12 months ago.”

The decrease in permits issued comes at a time when it’s a struggle for many to find affordable places to live and South Florida is dealing with an influx of demand for housing and migration to the area.

The cost of land has been particularly prohibitive when taking into account all the other factors happening in the market, added Peggy Olin, CEO of One World Properties, a real estate brokerage, in Fort Lauderdale.

“The cost of land is outrageous in South Florida compared to other places,” she said. “A lot of developers are analyzing the price of dirt, and it doesn’t make sense. Construction costs aren’t coming down and it’s becoming cost prohibitive to make the numbers work.”

Depending on the area, land in South Florida can range from double to almost four times what it might cost somewhere else, according to Olin.

And as available land is not only expensive but also dwindling, not only have permits overall been on the downturn, but permits issued for single-family homes have also been decreasing when compared to permits issued for multi-family developments.

“It’s easier to build [multi-family] than single-family homes because of the land. When you build horizontally, as opposed to vertically, the opportunities are smaller of where the location can be. And it might not be as appealing because it’s too far out west,” added Orlin.

Florida, however, only saw a small decrease year over year in the number of residential permits issued, less than 1%.

Florida, the third most-populous state, had among the highest raw numbers in the country in terms of permits issued in 2022. While the sheer population is a significant factor, there’s more to the overall picture.

“Florida also has strong population growth and a strong job market. Many people have chosen to relocate to cities like Miami, Orlando and Tampa since the pandemic started,” said Andra Hopulele, senior writer with Point 2 Homes.

Florida’s population expanded 1.9% to 22,244,823 from 2021 to 2022, according to data from the U.S. Census Bureau.

The overall lack of permits being issued only further fuels the affordability crisis in South Florida as developers struggle to keep up with the demand for housing.

“The more product we bring to the market, the more competition we bring between the landlords and sellers, which will force them to lower their prices,” Stabile said.

However, the arrival of the Live Local Bill, a bill aimed at producing more affordable housing in Florida, could help change the scene in South Florida. The “Live Local Act” also preempts local zoning laws, and allows developers to build units in commercial and industrial areas as long as 40% of the units are affordable. It also strips local governments’ power to enact any sort of rent-control measures, and preempts local laws in regards to density and building heights in certain circumstances.

“The more money a developer spends on the process of getting the project approved translates into the cost of the end product,” said Stabile.

© 2023 South Florida Sun-Sentinel. Distributed by Tribune Content Agency, LLC.

According to Apartment List’s latest report, the age group finally has a majority (51.5%) owning homes, though Gen X had a 58% rate when at the same age.

NEW YORK – Thanks to the housing crisis over a decade ago, millennials couldn’t catch a break in the home market. But according to the annual Apartment List Millennial Homeownership Report based on U.S. Census data, 2022 was a milestone for millennials who saw more than half their number (51.%) own a home.

However millennials who do not own a home are falling further behind.

Overall, millennials are behind earlier generations. At the same average age, for example, their immediate predecessors, Gen X, had a homeownership rate of 58%.

In addition, homeownership percentage is based, in part, on location. In the Orlando metro area, for example, the millennial homeownership rate is 45% – 7 percentage points below the national average.

In general, millennials own more homes in the nation’s smaller markets, particularly those in the Midwest and Great Lakes regions.

Homeownership by generation

• Silent generation: 76.8%
• Baby boomers: 77.8%
• Generation X: 69.7%
• Millennials: 51.5%

Millennials who have not purchased and home and continue to rent are now getting priced out of homeownership by rapidly rising prices. In the survey, 25% of millennial renters say they will rent forever, and two-thirds have no money set aside for a down payment.

© 2023 Florida Realtors®

As more consumers rely on online reviews, positive user-generated content – comments, thank-you notes, testimonials – acts like a strong referral mechanism.

NEW YORK – Real estate agents can tap user-generated content for a powerful marketing tool.

Positive client testimonials posted on social media channels or the agent’s or broker’s website is one example, and it’s not very difficult to obtain this feedback. Agents who encourage their followers to share photos and videos of their own homes to create a sense of community. Those posting could be from satisfied clients in their new home or “wish list” photos of homes buyers submit to show what type of property the prefer.

One strategy is to develop a branded hashtag and ask followers to share photos and videos using the hashtag. Offering incentives like chances to win a gift card for sharing the best content can also encourage posts. Agents can also highlight their expertise and provide valuable insights to potential clients through blogging.

Moreover, asking clients to post reviews on sites like Zillow, Yelp or Google My Business can foster trust with potential customers.

Source: Realty Biz News (04/18/23) Shepardson, Ben

© Copyright 2023 INFORMATION INC., Bethesda, MD (301) 215-4688

In Tampa, for example, March inflation was 7.7%. But after backing rental costs out of the local calculation, inflation was a somewhat-reasonable 3.8%.

TAMPA, Fla. – In some ways, the Americans moving to Florida bring inflation with them.

Regional inflation is heavily influenced by home prices and rent costs, as evidenced by the Tampa area, which has one of the highest inflation rates in the nation – 7.7% in March, according to the Labor Department. But when shelter costs are removed from the index, the Florida metro’s rate was 3.8% – putting it in line with the Minneapolis area, where inflation excluding housing was 3.6%.

Increasing housing costs and rising inflation in growing, warm-weather metros reflect people migrating out of the Northeast and Midwest to the Sunbelt, says Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.

“People follow jobs and people follow opportunities and people follow weather,” he says.

The Tampa metro area, which includes cities such as Clearwater and St. Petersburg, had overall inflation well above the national rate of 5% and the highest of any region the Labor Department measured in March. It trailed only Phoenix among places that the department regularly surveys.

Southbound migration in search of jobs, sunny weather and less expensive housing is not new, but it increased dramatically during the pandemic. That increased pressure on housing markets pushed up rents and home prices.

In most cases, however, inflation in high-growth areas is near the national average after housing data is removed from the calculation.

Source: Wall Street Journal (04/22/23) Gabriel, Rubin

© Copyright 2023 INFORMATION INC., Bethesda, MD (301) 215-4688

FHFA is raising some loan-level pricing for homebuyers whose lender plans to sell the loan to Fannie or Freddie. The change mainly impacts stronger-credit buyers.

WASHINGTON – In January, the Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac (the GSEs), directed them to change their loan level pricing adjustments (LLPAs) – the upfront fees they charge individual borrowers based on their credit score, down payment and other risk factors.

As a result, fees were raised on some stronger-credit borrowers, and lenders must start complying with the adjustments starting May 1. Many started adjusting pricing in March to accommodate the requirements.

The National Association of Realtors® (NAR) says it continues to urge FHFA to rescind this measure, saying it’s unnecessary given their current financial strength and the affordability concerns plaguing homebuyers nationwide.

Also, starting on August 1, FHFA will impose a new fee on borrowers with debt-to-income ratios (DTIs) greater than 40%. NAR opposes this upfront fee as DTI is a poor measure of a borrower’s ability to repay. It’s urging FHFA to reconsider tying any fees to fluctuating factors such as DTI that may make homebuying further out of reach for more Americans.

NAR is working alongside industry partners to urge regulators to rescind the increased fees on borrowers with higher credit scores and remove the DTI-based LLPA before the August implementation date. NAR strongly opposes this fee since DTIs can change during the financing process, making it difficult to underwrite the loans and making it more likely for a borrower to default given the higher DTI that results from the additional fee imposed.

NAR advocates for the use of compensating factors, where a borrower with a risky factor like low credit score must have a larger down payment or lower DTI.

The GSEs have an obligation to support a national market of all groups and they are making strong profits. Thus, the GSEs could simply reduce the fees for lower credit borrowers and maintain the others at the same cost – especially given the sharp decline in affordability over the last year and the GSEs’ function as market utilities with a Congressional charter.

NAR has publicly opposed the changes and continues to share its concerns with the FHFA. It will continue to work with the Hill and industry partners to seek change.

Source: National Association of Realtors.® Ken Fears is the senior policy representative for banks, lending, and housing finance for the National Association of Realtors® (NAR)

© 2023 Florida Realtors®

NAR: Warehouse, land and storefront demand rose since 2021 but resulted in fewer CRE purchases. Where legal, landlords report fewer addendums banning use.

WASHINGTON – Realtors® are seeing a decline in commercial property purchases by marijuana industry-related businesses and a corresponding increase in leasing activity, according to a new study from the National Association of Realtors® (NAR).

The 2023 Marijuana and Real Estate: A Budding Issue report examines the effects of marijuana legality on various aspects of the real estate industry. The survey, which polled NAR members, divided the responses by states that have legalized medical marijuana only and states that have legalized marijuana for medical and recreational use both before and after 2018.

In states that legalized recreational marijuana within the past five years, 18% of NAR commercial brokers reported an increase in property purchasing over leasing in the past year by marijuana businesses, a decline from 29% in 2021. For states that legalized cannabis more than five years ago, only 14% saw an increase (20% in 2021). In states where only medical marijuana is legal, 4% saw an increase – a significant drop from 21% in 2021.

“State laws have evolved to legalize the use of prescription and recreational marijuana,” says Jessica Lautz, NAR deputy chief economist and vice president of research. “As more states adopt cannabis laws, Realtors are … working with clients to find land, warehouses and storefronts for this growing business.”

Commercial practitioners also find an increased demand for warehouses, land and storefronts for marijuana businesses. In states where only prescription use is legal, 23% saw an increased demand in storefronts, 14% in warehouses and 7% in land. In states where prescription and recreational use is legal, 25% to 29% of members saw an increased demand in warehouses, 18% in storefronts and 13% to 15% in land.

Of residential Realtors surveyed, 15% in states that legalized recreational marijuana more than five years ago had sold a grow house in the past. In those same states, 45% said commercial landlords are willing to take cash for rent, up slightly from 42% in 2021.

May I smoke it? May I grow it?

The report also found that fewer Realtors see lease addendums that restrict growing cannabis on properties – only one in four (27%) in states that legalized both medical and recreational marijuana prior to 2018, down from 44% in 2021.

Addendums related to smoking are also on the decline in legal states. In states where recreational marijuana has been legal for more than five years, 65% of residential property managers saw addendums added to leases restricting smoking on properties, down from 76% two years earlier. For states that legalized within the past five years, 56% saw smoking addendums, down from 59% in 2021.

In contrast, prescription-only states saw an increase in addendums added to leases that restrict smoking on properties, jumping from 40% to 62% in the past two years.

Lautz says Realtors are learning new ways to navigate the residential market as state laws continue to change.

“These findings speak to our members continued efforts to stay informed about how to best advise their clients on the latest developments in the marijuana industry,” Lautz says. “This includes educating clients about lease addendums related to growing and smoking on rental properties, as well as understanding the regulations in each state and unique community rules at the local level.”

© 2023 Florida Realtors®

U.S. sales are “highly sensitive to changes in mortgage rates” says NAR Economist Yun. March inventory rose a meager 1% and prices were down 0.9%.

WASHINGTON – U.S. existing-home sales edged lower in March, according to the National Association of Realtors® (NAR). Month-over-month sales declined in three out of four major U.S. regions included in the report and remained steady in the Northeast.

All regions posted year-over-year decreases.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – fell 2.4% from February to a seasonally adjusted annual rate of 4.44 million in March. Year-over-year, sales fell 22.0% (down from 5.69 million in March 2022).

“Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” says NAR Chief Economist Lawrence Yun. “Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand. It’s a unique housing market.”

Total housing inventory at the end of March was 980,000 units, up 1.0% from February and 5.4% from one year ago (930,000). Unsold inventory is at a 2.6-month supply at the current sales pace, unchanged from February and up slightly year-to-year (2.0 months in March 2022).

“Home prices continue to rise in regions where jobs are being added and housing is relatively affordable,” Yun says. “However, the more expensive areas of the country are adjusting to lower prices.”

Other report findings

• The median existing-home price for all housing types in March was $375,700, a decline of 0.9% from March 2022 ($379,300). Prices climbed slightly in three regions but dropped in the West.
• Properties typically remained on the market for 29 days in March, down from 34 days in February but up from 17 days in March 2022. Almost two out of three homes listed for sale (65%) in March were on the market for less than a month.
• At 28%, the percentage of March first-time buyers remained fairly steady, up from 27% in February and down from 30% in March 2022.
• All-cash sales accounted for 27% of March transactions, down from 28% in February and March 2022.
• Individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in March, down from 18% in February and the previous year.
• Distressed sales – foreclosures and short sales – represented 1% of sales in March, nearly identical to last month and one year ago.

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.27% as of April 13. That’s down from 6.28% from the previous week but up from 5% one year ago.

“With overall consumer price inflation calming and rents expected to decelerate from robust apartment construction, the Federal Reserve’s monetary policy will surely shift from tightening to neutral to possibly loosening over the next 12 months,” Yun predicts. “Therefore, home sales will steadily rebound despite several months of fluctuations.”

Single-family and condo/co-op sales: Single-family home sales faded to a seasonally adjusted annual rate of 3.99 million in March, down 2.7% from 4.10 million in February and 21.1% from one year ago. The median existing single-family home price was $380,000 in March, down 1.4% year-to-year.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 450,000 units in March. That number is identical to February and down 28.6% year-to-year. The median existing condo price was $337,300 in March, an annual increase of 2.1%.

March regional breakdown: Existing-home sales in the Northeast were unchanged from February at an annual rate of 520,000 in March, but they’re down 21.2% from March 2022. The median price in the Northeast was $395,400, up 1.0% year-to-year.

In the Midwest, existing-home sales fell 5.5% month-to-month (annual rate of 1.03 million), and 17.6% year-to-year. The median price in the Midwest was $273,400, up 1.7% compared to March 2022.

Existing-home sales in the South fell 1.0% in March from February to an annual rate of 2.07 million, and 20.4% decrease year-to-year. The median price in the South was $347,600, an increase of 0.3% from one year ago.

In the West, existing-home sales declined 3.5% from the previous month to an annual rate of 820,000, down 30.5% from the prior year. The median price in the West was $565,400, down 7.5% from March 2022.

© 2023 Florida Realtors®

Microsoft’s Bing AI ChatGPT is similar to a virtual assistant you don’t have to pay. It can have human-like talks with clients and keep an agent organized.

NEW YORK – A major feature of Microsoft’s Bing artificial intelligence (AI) ChatGPT? It allows users to have human-like conversations that includes commands and questions. As a result, real estate professionals can use Bing AI ChatGPT to develop chatbots, virtual assistants and beneficial programs.

It can also help agents complete key tasks more rapidly, including finding and talking to buyers and sellers, setting up meetings and sending bulk emails. With an AI “assistant” handling the routine work, agents can focus more closely on other business aspects, such as closing deals.

ChatGPT technology can also help agents write persuasive listing descriptions – and it can do it faster than a real person. It can even independently select the ideal parts of the property to make stand out.

When writing cold emails, ChatGPT can create custom messages for automated emails that match specific business targets, such as developing new leads. ChatGPT can also assist agents with automating customized phone sales scripts.

In addition, AI technology can examine customer feedback to identify what customers want, as well as recommend social media content topics that would interest an agent’s target audience.

ChatGPT also helps answer the question “Are my marketing efforts paying off?” It can provide reports that show how well SEO (search engine optimization) efforts are doing and suggest ways to improve them.

An important note about ChatGPT, though: It will occasionally overlook subtle points, and it takes time to learn how to successfully use the platform. However, take the time to set it up now will save future work time and money.

Source: Realty Biz News (03/20/2023) Cioppa, Cali

© Copyright 2023 INFORMATION INC., Bethesda, MD (301) 215-4688

Lenders are skittish due to a bank run and higher interest rates. As a result, they raised the bar for loan approvals to businesses and homeowners.

WASHINGTON – Hear that? It’s the sound of credit crunching all across America. Okay, if not crunching, maybe squeezing. Or tightening. Or whatever euphemistic verb you might choose to communicate that, basically, it’s gotten more difficult to borrow lately.

Lots of measures have shown that businesses and consumers have found it more challenging to obtain financing recently, particularly in the wake of major regional bank failures in March. For example, recent data from the Federal Reserve show that commercial bank lending fell by over $100 billion in the two weeks ending March 29. That is the largest two-week cutback in overall bank lending, in dollar terms, in records going back half a century.

This same two-week period also saw the largest decline in commercial and industrial loans on record: and the largest decline on record in lending to real estate, and the largest decline on record in bank holdings of mortgages.

Which might not be surprising. Lending is down partly because there are fewer deposits to lend out: Since the Federal Reserve began to raise rates about a year ago, deposits leaving the banking sector have totaled nearly $1 trillion, according to calculations from Apollo chief economist Torsten Slok.

While some analysts have suggested that these metrics should be taken with a grain of salt – they may reflect some funky stuff happening in the numbers because of Silicon Valley Bank entering receivership – other “softer” measures also point to tightening credit conditions.

For example, the share of households reporting that it has become harder to obtain credit today than a year ago just rose to its highest level since at least 2013, when the Federal Reserve Bank of New York began tracking the question. Likewise, a rising share of businesses say their last loan was harder to get than previous attempts had been, according to the National Federation of Independent Business’s recent survey of small businesses.

Another telling (if anecdotal) detail: In my own visits to several cities lately, I’ve been struck by how many retail bank storefronts no longer prominently advertise the rates they charge for mortgages; instead, bank windows are emblazoned with the high rates they pay on certificates of deposit (CDs). That’s a sign that they’re trying harder to bring money in than to find ways to lend it out.

It’s possible, of course, that these trends are just a temporary blip, while everyone finds their bearings and sorts out their books post-SVB failure. After all, the collapse of SVB (and of Signature Bank) was an enormous shock to the system. Many uninsured depositors at small banks got spooked at once and started moving their money to bigger banks or to money-market funds. Maybe those trends will settle down, or even reverse, soon.

But some more enduring credit tightening, relative to the lax conditions of recent years, is inevitable. That is, after all, the whole point of the Fed’s interest rate hikes: to tighten financial conditions in service of cooling demand and thereby (hopefully) to lead consumers and businesses to stop pushing prices up so fast.

In other words, making it harder to borrow is a feature, not a bug, of the Fed’s inflation-fighting strategy.

The problem is that rate hikes are a blunt instrument, one whose deployment can cause a lot of collateral damage. The Fed’s late start to raising rates led the central bank to then play catch-up by raising rates more aggressively than usual, and we’re now starting to see the fallout, including on Main Street.

Lots of risks lurk ahead. Smaller banks make a lot of commercial real estate loans, for example. Many of those loans look unhealthy right now because of persistently high office vacancies; plus, a record number of commercial mortgages are set to mature in 2023. These borrowers may struggle to adjust to sharply higher rates, and analysts fear a wave of defaults.

Those defaults would be very painful for the smaller banks that hold those loans – as well as for the other customers who rely on such banks for their financing, which are disproportionately small businesses. In fact, in most U.S. counties, smaller banks provide roughly 90% of loans to small businesses, according to Goldman Sachs.

These kinds of factors might already be dragging on the economy. The Fed’s challenge right now is to ascertain how big that drag might be – and how close we already are to achieving the conditions necessary to imminently crush inflation. Which, for now, still remains too high, a fact that implies the need for more rate hikes.

On the other hand, Fed staff are already projecting a mild recession later this year. Which would suggest the Fed might want to hold back on raising rates further. To wit: A sizable contingent of traders predict that the Fed will be cutting rates by the second half of this year.

As I have been saying, virtually whatever the Fed chooses to do next, it will in some dimension be the wrong decision.

© Copyright © 2023 The Standard-Journal, all rights reserved.

The rate for an average 30-year, fixed-rate loan rose this week for the first time in months, from last week’s 6.27% to 6.39%.

WASHINGTON (AP) – U.S. mortgage rates rose this week for the first time in more than a month, posing at least a temporary setback for would-be home buyers and a housing market already reeling from more than a year of interest-rate hikes by the Federal Reserve.

Mortgage buyer Freddie Mac said Thursday that that average fixed-rate 30-year mortgage edged up to 6.39% from 6.27% the week before. A year ago, the average rate was 5.11%.

The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, also rose – to 5.76% from 5.54% a week earlier.

The Fed, responding to a surge in inflation that last year hit a four-decade high, has raised its benchmark interest rate nine times in just over a year. Mortgage rates surged to a two-decade high of 7.08% last fall. But rates had fallen five straight weeks before the upturn this week.

Higher borrowing costs have taken a toll on the housing market. The National Association of Realtors reported Thursday that sales of existing U.S. homes fell 2.4% from February to March at an annual rate of 4.44 million – signaling a disappointing start to the spring homebuying season. Median home prices fell to $375,700 – down 0.9% from a year ago, the biggest year-over-year drop since January 2012.

Investment in U.S. housing has dropped for seven straight quarters, including freefalls at an annual rate of 27.1% from July through September, and 25.1% from October through December last year.

Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

A study finds that several Fla. metros now “stand out for their extreme mismatches” between housing aid and asking rents, with Orlando the nation’s top “mismatch.”

SEATTLE – During the first two years of the pandemic, the typical U.S. rent increased 18% while the value of housing vouchers rose only 7%. The vouchers also don’t help everyone who needs it. In 2021, there were 19 million voucher-eligible households but fewer than 2 million vouchers.

According to Zillow research, most U.S. metros have almost 10 times more qualified voucher recipients than vouchers. The analysis also found that voucher values grew at less than half the pace of typical rents during the pandemic.

“Renters across the country are struggling as costs have skyrocketed and vouchers have failed to keep up,” says Orphe Divounguy, Zillow senior economist. “Better calculating for voucher values and more funding are good short-term solutions, but building more homes is the long-term answer.”

The research didn’t find a single large metro area with enough vouchers to meet demand – and there were nearly four times more severely cost-burdened households than voucher recipients.

Florida a top state for voucher/asking-rent mismatch

Orlando had the highest mismatch in the nation, with 12 severely cost-burdened households for every available voucher.

Counties with the biggest disparity between rent growth and voucher values were scattered throughout the country, the research found, but Florida – a state that experienced among the fastest rent increases in the country – stood out again with several counties suffering the largest gaps.

In Miami-Dade County, rent growth outpaced voucher values by almost 50 percentage points in those two years.

U.S. county – percent that rent growth outpaced voucher values

1. Miami-Dade County – 47.8 %
2. Lee County – 46.5 %
3. Palm Beach County – 38.9 %
4. Broward County – 37.7 %
5. Ocean County, New Jersey – 33.8 %
6. Pinellas County – 28.2 %How vouchers work

Voucher program

The Housing Choice Voucher Program is a rental assistance program provided by the U.S. Department of Housing and Urban Development (HUD) and sometimes is referred to as Section 8. The program pays landlords a portion of the rent directly on behalf of the tenant, and the tenant pays the difference.

Voucher eligibility is based on income and family size. In general, a family’s income may not exceed 50% of the median income for the county or metropolitan area in which the family chooses to live. Typically, a voucher holder pays about 30% of their income as rent and the program pays the rest, up to a ceiling determined by HUD as the area’s fair market value.

Recent Zillow research found that it would take four full-time minimum wage workers to reasonably afford a two-bedroom rental, illustrating the daunting financial challenges many renters face today.

© 2023 Florida Realtors®