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Category Archives: Florida Real Estate News (Reprinted with permission Florida Realtors. All rights reserved.)

Hurricane Prediction: Up to 21 Named Storms

Of those 21 storms, 10 will be hurricanes, experts said, calling it “really a strange thing that we’ve had six consecutive seasons be so active.”

MIAMI – Federal forecasters expect yet another busy Atlantic hurricane season in 2022: As many as 10 hurricanes could form, meteorologists said Tuesday.

The season begins June 1 and runs through Nov. 30. An average season typically spawns seven hurricanes and peaks in August and September. If predictions hold true, it will be a record seventh consecutive year of above-normal activity.

“It’s really a strange thing that we’ve had six consecutive seasons be so active,” University of Miami hurricane researcher Brian McNoldy said.

The National Oceanic and Atmospheric Administration (NOAA) said 14 to 21 named storms will develop. These numbers include tropical storms, which contain wind speeds of 39 mph or higher. Storms become hurricanes when winds reach 74 mph.

Of the predicted hurricanes, three to six could be major hurricanes, packing wind speeds of 111 mph or higher.

The National Hurricane Center ran out of names for Atlantic storms in the past two years; there were a record-setting 30 named storms in 2020 and 21 last year. In the past five years there have been more Category 4 and 5 hurricane landfalls in the United States than in the previous 50 years combined.

The predicted active season is a result of several climate factors, including the ongoing La Niña, warmer-than-average sea surface temperatures in the Atlantic Ocean and Caribbean Sea, weaker tropical Atlantic trade winds and an enhanced west African monsoon.

El Niño, a natural warming of ocean water in the tropical Pacific Ocean, tends to suppress Atlantic hurricane activity. Its opposite, La Niña, a cooling of that same water, usually boosts the number of hurricanes in the Atlantic.

NOAA’s forecast follows others this spring that called for a more active hurricane season.

Last month, meteorologists at Colorado State University predicted 19 tropical storms will form, nine of which will become hurricanes.

Several other hurricane experts agree with NOAA that the Atlantic conditions are ripe for yet another active hurricane season.

“We’re seeing these storms happen more frequently. They’re lasting longer,” FEMA Director Deanne Criswell said in a New York City news conference.

Forecasters also released their prediction for the eastern Pacific basin, where 10 to 17 named storms are forecast. An average eastern Pacific hurricane season produces 15 named storms. Eastern Pacific storms primarily stay out to sea and seldom affect the U.S. mainland.

Contributing: The Associated Press

https://www.floridarealtors.org/news-media/news-articles/2022/05/hurricane-prediction-21-named-storms

Condo Q&A: Can HOAs Ban Political Signs?

The short answer: Yes. The longer answer: The process to do so depends on governing docs, and it might not be as simple as it sounds.

BOCA RATON, Fla. – Question: With the midterms right around the corner, our HOA board of directors is considering banning political signs in the community. We had a lot of community fights two years ago that seemed to divide the community and the board wants to prevent that from happening again. Can the board ban political signs by adopting a rule or will we need to amend our governing documents? – K.D., Boca Raton

Answer: Yes, your homeowners association can ban political signs – but it may be more difficult than your board of directors is anticipating. Without reviewing your governing documents, I cannot state if an amendment will be necessary or if a rule can be adopted.

That being said, I would recommend an amendment be adopted if the board attempts to ban political signs, as an association’s restrictive covenants carry more legal authority and are more likely to withstand judicial scrutiny than a rule adopted by the board of directors.

Assuming the association moves forward amending the governing documents, the amendment will need to be adopted by the members of your association. The proposed amendment must pass by the required voting percentage of the association’s members as stated in the governing documents.

Section 720.306(1)(b), Florida Statutes, states that unless otherwise provided in the governing documents or required by law, any governing document of the association may be amended by the affirmative vote of two-thirds of the voting interests of the association. The members meeting to adopt the proposed amendment would need to be properly noticed as required, at least 14 days advanced notice, and the amendment must be mailed with the meeting notice and proxy. Assuming the proposed amendment is adopted by the members at the members’ meeting, the amendment will need to be recorded in the official records of the county before it can become enforceable.

There are several factors that should be considered by the board of directors when preparing the proposed amendment to ban political signs in the community.

First, the amendment needs to provide what type of signs are prohibited. Often, the governing documents will restrict the use of signs in the community but will be silent as to flags, banners, pendants, and stickers.

If the governing documents are silent as to these other items, then the sign restrictions do not include references to these other display items, the association may have issues when attempting to apply the sign restrictions to these alternative display items. It should be noted that Section 720.304(2), Florida Statutes, states that all owners are allowed to display one portable flag no larger than four and-a-half feet by six feet, removable United States flag or official flag of the State of Florida in a respectful manner, and one additional flag that represents the United States Army, Navy, Air Force, Marine Corps, or Coast Guard, or a POW-MIA, regardless of any covenants, restrictions, or rules of the association. Additionally, Section 720.304(6), Florida Statutes, provides that any parcel owner may display a sign of reasonable size provided by a security services company within ten feet of any entrance to the home.

Second, trying to specify the type of content that is restricted to “political” may be problematic. While some statements and symbols are closely associated with politics, other statements and symbols may not be as universally agreed upon as being political. Attempting to define what is political may be difficult and likely fall short of being able to capture every sign the association may ultimately want to prevent.

Additionally, even if the association states that it will be the sole arbitrator on what is considered political, this may be an issue under Section 720.303(1), Florida Statutes, which has generally been cited by courts to prevent uncodified standards from being applied due to their subjective nature.

Therefore, the best option would be to restrict all signs, regardless of content. While a potentially unpopular approach, this provides the strongest legal authority when it comes to enforcing the sign restriction as the association has made it clear to all residents that signs, other than those specifically enumerated as permissible under Florida law, are not permitted on the lots.

Alternatively, allowing political signs for a limited period of time prior to the election and requiring all political signs to be removed within a limited time frame after election day might be an easier alternative than attempting to ban political signs altogether.

Christopher I. Miller, Esq., is an attorney with the law firm Goede, DeBoest & Cross, PLLC. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

© 2022 Journal Media Group

https://www.floridarealtors.org/news-media/news-articles/2022/05/condo-qa-can-hoas-ban-political-signs

Rising Home Prices Hurting Rental Returns

Attom study: Between 2021 and 2022, rental returns on a three-bedroom house declined in three out of four counties – largely because home prices rose 15%.

RVINE, Calif. – A new Attom Data Solutions report finds that profits on three-bedroom rentals decreased between 2021 and 2022 in 72% of the 212 counties analyzed.

Most declines were modest – less than one percentage point over the past year – but three-quarters of the counties where median home prices exceeded $250,000 saw declines in rental yields. The report also found returns decreasing in counties where median home prices are below $250,000, but returns remain above 8% on average in those counties.

The declines in returns come as home prices rise along with rents, which increases the amount landlords must pay for rental properties. Median prices for three-bedroom houses increased at least 15% between 2021 and 2022 in half of the counties analyzed, but only one-third of markets saw rents increase that much, according to the report.

The largest returns on single-family rentals were seen in lower-priced counties, which also recorded fewer declines in profits. The affordable counties with the highest yields on average were Atlantic County, New Jersey (12.2% yields); Wayne County, Michigan (10.7%); and Jefferson County, Texas (10.1%).

The smallest returns were found in counties where median home prices were at least $500,000, including Santa Clara County, California (3.1%); San Mateo County, California (3.2%); Williamson County, Tennessee (3.9%); and Kings County (Brooklyn), New York (4%).

Of the 212 counties in the study, 27% saw wages growing faster, including Cook County, Illinois; Orange County, California; Kings County, New York; and Miami-Dade County, Florida.

Large cities like New York and Miami have seen rents increase to historic highs as the cities have emerged from the pandemic, but those markets may still be in a recovery phase, according to analysts.

Source: Inman (05/23/22) Verde, Ben

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/rising-home-prices-hurting-rental-returns

Condo Issues Emerge During Special Session

The Florida Legislature put condo safety on this week’s agenda by adding inspections and new financial requirements into a bill by way of an amendment.

TALLAHASSEE, Fla. – Nearly a year after 98 people died in the collapse of the Champlain Towers South building in Surfside, Florida lawmakers rushed Tuesday to approve a proposal that would lead to new condominium inspection and financial requirements.

The House and Senate added the issue to a special legislative session that Gov. Ron DeSantis called to address problems in the property-insurance market. Lawmakers could not reach agreement during this year’s regular session on the condominium issue, despite pressure after the June collapse of the Surfside building.

The Senate tacked the condominium changes onto a property-insurance bill (SB 4-D), which it then passed in a 38-0 vote. The House is expected to give final approval Wednesday.

House Speaker Chris Sprowls, R-Palm Harbor, acknowledged “a lot of criticism” about lawmakers not passing a condominium bill during the regular session. But he said the new proposal is an improvement over what was considered earlier.

“Doing the right thing sometimes is hard and it’s complicated, but I do think that the bill that we have today is significantly better than the bill we could have agreed on a couple months ago,” Sprowls said.

The proposal, in part, would set up a system of required inspections for condominium buildings three stories or higher. Inspections would be required for buildings that have been occupied for 30 years – or 25 years if the buildings are within three miles of a coastline. After initial inspections, the buildings would have to go through the process every 10 years.

If engineers or architects see “any substantial structural deterioration” in initial inspections, the proposal would require additional inspections. Those inspections “may be as extensive or as limited as necessary to fully assess areas of structural distress in order to confirm that the building is structurally sound and safe for its intended use, and to recommend a program for fully assessing and repairing distressed and damaged portions of the building,” the proposal said.

Inspection reports would have to be provided to condominium associations and local building officials. Summaries of the reports would have to be distributed to condominium unit owners.

Also, under the proposal, county commissions “may” pass ordinances that would require condominium associations to move forward with repairs for structural deterioration.

A key issue during the regular legislative session involved condominium-association reserve funds to make repairs to buildings. The issue is difficult, at least in part, because it can require condominium residents to pay extra money to bolster reserves.

The new proposal would require what are described as “structural integrity reserve” studies that would help determine how much money would need to be set aside.

Sprowls said the issue has been crucial to the House.

“It was important to the House that if there’s a structural integrity issue for a building, that people do what’s necessary to defend the people who live there, to protect (them) by making sure they fix it, put the dollars aside to fix it,” he said.

Senate Community Affairs Chairwoman Jennifer Bradley, a Fleming Island Republican who has spearheaded the condominium issue in the Senate, pointed toward trying to strike a balance.

“As we have continued to work on this important issue, I believe we have found the right balance between requiring critical protections to ensure the structural integrity of condo buildings and allowing for the (association) boards to manage funds paid by homeowners,” Bradley said in a prepared statement.

Source: News Service of Florida

https://www.floridarealtors.org/news-media/news-articles/2022/05/condo-issues-emerge-during-special-session

Judge Increases Surfside Collapse Money to $96M

A previous property settlement of $83 million – which doesn’t include a separate loss-of-life case – was increased to $96 million on Tuesday.

SURFSIDE, Fla. – Homeowners with condos in the Florida building that collapsed and killed 98 people nearly a year ago but whose families suffered no loss of life will share at least $96 million from a court settlement, a judge said Tuesday.

That is in addition to the payout of about $1 billion to be shared by families of the victims of the June 24 collapse of the Champlain Towers South building in Surfside. Additional fees for lawyers will be settled later.

The initial amount for property owners was previously set at $83 million, but Circuit Judge Michael Hanzman in Miami agreed at a hearing Tuesday that the higher amount was proper for 136 condo owners in the 12-story building.

“What I care about now is finishing this case and getting money into the hands of victims,” Hanzman said, noting that under Florida law, the condo owners could have been assessed a lot of money to pay for the loss of the building.

“This is an outstanding result for the property owners,” the judge said.

Meanwhile, lawmakers in Tallahassee introduced legislation Tuesday in response to the tragedy that would tighten building safety rules by requiring all condominiums higher than three stories statewide to have periodic inspections of their structural integrity. The issue was added to a special legislative session called to address rising property insurance rates.

Legislative leaders were in agreement over requiring inspections and recertification of the buildings after 30 years, or 25 years if the building is within 3 miles (5 kilometers) of the coast, and every 10 years thereafter.

When the Champlain Towers South collapsed last June, it was 40 years old and undergoing what was then a 40-year-recertification process required by Miami-Dade County.

The exact details of the lawsuit settlement over loss of life are to be done by Friday, followed by a hearing for any objections. A billionaire developer from Dubai is set to purchase the 1.8-acre (1-hectare) beachside site for $120 million.

An auction for the property initially was set for Tuesday, but no other parties countered the bid by Hussain Sajwani, of DAMAC Properties, before a deadline last Friday.

Attorney Harley Tropin, who represents plaintiffs in the case, said the final settlement for deaths in the condo building’s collapse has grown to more than $1 billion, an increase from the $997 million announced in court earlier.

The money comes from several sources, ranging from insurance companies to engineering companies to the luxury condominium next door that was part of the lawsuit. None of the parties are admitting wrongdoing. The details on who is paying exactly what into the settlements have yet to be determined.

The twin settlements are still in the works but Hanzman said the case should be settled by September, so that victim families and property owners know what to expect. This would still be an unusually quick settlement for a case of this magnitude, lawyers said.

“One of the benefits of a settlement is finality,” the judge said.

Most of the building collapsed suddenly around 1:20 a.m. last June 24 as most of its residents slept. Only three people survived the initial collapse.

No other survivors were found despite the around-the-clock efforts of rescuers who dug through a 40-foot (12-meter) pile of rubble for two weeks. Another three dozen people were in the portion of the building that remained standing, but was ultimately demolished.

The National Institute of Standards and Technology is investigating the cause of the collapse, a process that is expected to take years.

In the court case, Judge Hanzman set a noon Friday deadline for a final settlement agreement to be filed. If that does not happen, the judge said he would hold a full hearing on why a final deal has not been reached.

“At some point, this plane has to come in for a landing,” Hanzman said.

The collapse drew new scrutiny to high-rise safety statewide, especially in vulnerable coastal areas. At the time, Miami Dade and neighboring Broward counties were the only ones of Florida’s 67 counties with a building recertification process. The new legislation would broaden those certifications statewide, as well as require them significantly earlier in the building’s lifespan.

Earlier legislation proposing a statewide inspection and recertification regimen failed during the regular legislative session that ended in March.

The new measure would require condominium associations to provide inspection reports to owners, and if structural repairs are needed, work must begin within a year of the report.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. Anderson reported from St. Petersburg, Florida. Brendan Farrington reported from Tallahassee, Florida.

https://www.floridarealtors.org/news-media/news-articles/2022/05/judge-increases-surfside-collapse-money-96m

The Perfect Song for Your Open House?

A study found that music influences diners’ food choices in a restaurant, but what works for an open house? Consider local tastes and a home’s style when choosing.

NEW YORK – A 2015 study by Australian researchers found that the type of music playing can influence the meals people select from menus and even how much money they spend.

The findings suggest that playing music – the right kind, at least – during an open house can enhance an agent’s real estate sales rate.

But what kind of music? When choosing for an open house, agents should consider the house’s tone, the local real estate market, the demographics of targeted buyers, and who might attend. Agents say instrumental tunes often create a calming atmosphere, but they should also check playlists on platforms like Spotify to see what other agents have selected for past real estate open houses.

If a home has a surround-sound system, agents may ask permission to use it during the open house. Otherwise, they can hide speakers in each room throughout the home to create the desired effect. Some agents even play different tracks in different parts of the home, though they keep the volume low enough that the different tracks don’t compete with each other or prevent people from talking.

On the other hand, any type of mood music should be loud enough that people can easily hear it without straining.

RISMedia (05/23/22)

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/perfect-song-your-open-house

April New-Home Sales Drop Unexpected 16.6%

Pundits expected a slight drop in April new-home sales. NAHB’s chair calls the drop significant and cites the higher cost of new construction and rising interest rates.

WASHINGTON – New home sales posted a double-digit percentage decline in April, down 16.6%. It’s the weakest pace in two years, with the National Association of Home Builders (NAHB) citing rising mortgage rates and worsening affordability conditions for the drop.

Sales of newly built, single-family homes in April fell 16.6% to a 591,000 seasonally adjusted annual rate from a downwardly revised reading in March, according to data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

Year-to-year, new home sales are down 26.9%.

“The volume of signed sales contracts significantly declined in April as the cost of purchasing a home increased in 2022 as interest rates surged higher,” says Jerry Konter, chairman of the National Association of Home Builders (NAHB). “Higher construction costs fueled by rising material prices and supply-side constraints along with limited existing home inventory are pricing many potential homebuyers out of the market.”

NAHB cites another indicator of deteriorating affordability conditions, particularly for the entry-level market: A year ago, 25% of new home sales were priced below $300,000; in April that share fell to 10%.

“The April drop for new home sales is a clear recession warning,” says NAHB Chief Economist Robert Dietz. “The median price of a newly-built single-family home increased 19.7% year-over-year. While the nation needs additional housing, home sales are slackening as tightening monetary policy continues to put upward pressure on mortgage rates and supply chain disruptions raise construction costs.”

A new home sale occurs when a sales contract is signed or a deposit accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the April reading of 591,000 units is the number of homes that would sell if April’s pace continued for the next 12 months.

In an indication that builders will be slowing construction, new single-family home inventory jumped to a 9-months’ supply – up 40% over last year. NAHB says 444,000 new homes are available for sale, though only 38,000 of those are completed and ready to occupy.

The median sales price for a new home rose to $450,600 in April from $435,000 in March, up more than 19% compared to a year ago, primarily due to higher development costs, including materials, according to NAHB.

Regionally, on a year-to-date basis, new home sales fell in three regions, down 16.8% in the Midwest, 19.3% in the South and 0.6% in the West. New home sales rose 6.5% in the Northeast.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/april-new-home-sales-drop-unexpected-166

Hurricane Tax ‘Holiday’ Adds Pet Supplies

Fla.’s sales-tax “holiday” on hurricane supplies starts this Saturday, and for the first time it includes pet supplies, including some bags of pet food and cat litter.

TALLAHASSEE, Fla. – With a sales-tax “holiday” starting this weekend, Floridians can save a few dollars on pet supplies as they stockpile other needs for the upcoming hurricane season.

The state’s two-week disaster-preparedness tax holiday begins Saturday and, for the first time, shoppers can avoid paying sales taxes on numerous types of pet supplies. The holiday was part of a broad tax package (HB 7071) that lawmakers passed in March and Gov. Ron DeSantis signed on May 6.

At the request of a Girl Scout Troop 60601 in Palm Harbor, lawmakers agreed to lift sales taxes during the holiday on pet carriers that cost $100 or less; pet beds that cost $40 or less; bags of pet food that cost $30 or less; bags of cat litter that cost $25 or less; leashes, collars and muzzles that sell for $20 or less; packages of pet-waste disposable bags that cost $15 or less; and cans of pet food that cost $2 or less.

The troop proposed including pet supplies as part of work toward what is known as a “Silver Award.”

“By adding these items to the tax holiday, we will help citizens to be ready when an emergency happens,” one member of the troop told the House Ways & Means Committee in February. They will be able to take their pets to a local shelter and have the mandatory supplies for their pets to stay there.”

The overall tax holiday, which will last through June 10, is geared toward the June 1 start of hurricane season. It has become a regular tax break for Floridians, similar to a back-to-school tax holiday held around the start of the school year.

Pet supplies aren’t the only new items included in this year’s disaster-preparedness holiday. Lawmakers added smoke detectors, fire extinguishers and carbon-monoxide detectors that cost $70 or less amid calls for residents to safely use generators. Also, people can avoid paying sales taxes on generators that cost $1,000 or less.

“We have now had more deaths over the last several years from generator carbon-monoxide poisoning than we have from storm surge itself,” Florida Division of Emergency Management Director Kevin Guthrie said.

Guthrie added that the state has had “more indirect fatalities with disasters over the last several seasons than we have with direct fatalities. That’s obviously something that we want to make sure we tell people to be safe on, generator function and how to make sure that people are setting their generators up properly, which is not outside of a window, not inside of their closed garage”.

Florida Retail Federation President Scott Shalley encouraged people to take advantage of the discount period, as inflation is at a four-decade high and experts predict an active hurricane season.

“At a time when people are feeling the crunch of inflation, this is a really great opportunity to get out and prepare for hurricane season and save a little money while doing so,” Shalley said.

Other discounted items this year include tarpaulins, waterproof sheeting and tie-down kits that sell for $100 or less; coolers and portable power banks that sell for $60 or less; portable lights that cost $40 or less; reusable ice packs that cost $20 or less; and gas tanks, portable radios, two-way radios, weather-band radios and packs of AA-cell, AAA-cell, C-cell, D-cell, 6-volt, or 9-volt batteries that cost $50 or less.

Source: News Service of Florida

https://www.floridarealtors.org/news-media/news-articles/2022/05/hurricane-tax-holiday-adds-pet-supplies

Economic Survey: Mild Recession, Much Disagreement

WASHINGTON – Despite a solid economy and booming job growth, the specter of recession is looming ever larger as a growing number of economists raise their odds for a downturn and the stock market takes a historic drubbing.

Here’s the good news: If there is a slump, top economists say, it probably will be relatively mild.

Think early 1990s and 2001 slides, not the job-killing collapses of 2007-09 and 2020 that were triggered by the housing crisis and COVID-19 pandemic.

“If it were to happen, it wouldn’t last long, it would not be severe, and we’ll be on the other side of it quickly,” says Mark Zandi, chief economist of Moody’s Analytics.

That’s largely because U.S. consumers and the economy are in good financial shape, with few signs of the kind of excesses that have triggered past downturns, Zandi says.

Factors dragging on the economy

Fueling the growing recession chatter is a confluence of shocks to the economy. Inflation is at a 40-year high of 8.3%, and the Federal Reserve is raising interest rates aggressively to fight it, both of which are burdening consumers with higher costs and starting to squeeze corporate earnings.

As a result, the Standard & Poor’s 500 index is down nearly 20% from its peak early this year, pushing it close to bear market territory on Friday.

Although the health crisis largely has eased and Americans are resuming activities like traveling and going to sporting events, it hasn’t gone away. COVID-19 cases have recently spiked from low levels.

Meanwhile, Russia’s war in Ukraine and China’s new COVID-19-sparked lockdowns pose new hurdles to unwinding the global supply chain bottlenecks that have kept inflation elevated.

What are the odds of a recession?

Here’s one plausible recession scenario: As prices and interest rates climb and the battered stock market makes investors feel less wealthy, consumers will pull back spending. Businesses will rein in investment and hiring while expanding layoffs. Economic activity will start to slow and job losses will mount.

Zandi puts the chances of a recession at 33% within the next 12 months and 50% within two years but believes the nation will probably sidestep it. More than half of economists and other experts surveyed by the National Association of Business Economics say the risk of a downturn within 12 months is greater than 25%, according to a report out Monday.

What would a recession mean?

Although both retail sales and job growth were robust in April, there are early signs of a slowdown, says Paul Christopher, head of global market strategy for Wells Fargo Investment Institute. Initial jobless claims – a gauge of layoffs – were historically low last week at 218,000 but marked a four-month high. Mortgage applications and existing home sales have been tumbling amid rising interest rates. And credit card spending has declined.

If there is slump, Zandi reckons it will start at the end of the year and last five or six months. Economic output, he says, probably would fall 2%, 3 million jobs would be lost, and the unemployment rate would rise from April’s 3.6% to about 5%.

That’s not a good thing. But during the Great Recession of 2007-09, gross domestic product fell 3.8%, 8.7 million jobs were wiped out and unemployment reached 10%, according to Labor Department figures and Wells Fargo. In the COVID-19 slump in 2020, GDP fell by more than 10%, 22 million jobs were erased and unemployment reached 14.7%.

Wells Fargo’s Christopher is more sanguine than Zandi. He estimates GDP will fall 1.3% in a recession he believes will begin late this year and unemployment will rise to 4.4%. That would equate to about 2 million jobs lost.

“There’s no reason to think the bottom is going to fall out of the economy,” Christopher says.

Thomas Goldsby, a professor of supply chain management at University of Tennessee, even thinks a mild downswing would have a silver lining by giving backed-up supply chains a chance to heal, relieving inflation pressures.

“A little slowdown might tamper the chaos a bit,” he says.

Here’s why economists think any recession probably would be contained:

Consumers still have lots of cash

Americans still have $2.6 trillion in excess savings from hunkering down during the pandemic, federal stimulus checks and other aid, Zandi says. Even if inflation and higher interest rates force people to adjust spending, they’re not going to close their wallets just as summer and a resumption of traveling and other activities beckon.

Solid household, firm balance sheets – Household debt payments amounted to 9.3% of disposable income personal income in the fourth quarter, a figure that has edged up recently but is down from 9.9% in late 2019 and 13.2% in 2007 before the Great Recession.

Corporate debt is at a record high, but in line with long-term trends relative to GDP, says RBC Wealth Management.

Few excesses in economy – Severe recessions are often triggered by dramatic imbalances, Zandi notes, such as the commercial real estate crisis in the early 1990s, the dot-com meltdown in 2000 and the housing crash of the 2000s. No such crises are evident. Housing and stock prices have been overvalued but are now falling, and they’re not bubbles waiting to burst, he says.

Strong labor market – Job openings and the number of people quitting jobs reached record highs in March, Labor Department figures show. That has kept wages rising sharply. Such trends probably will ease but won’t completely reverse, giving consumers the wherewithal to keep spending, Christopher says.

COVID-19, supply chain snags should ease – The effects of the Russia-Ukraine war and COVID-19 on supply chains and the economy should ease this year, Zandi says, helping slow inflation and counter the impact of rising interest rates.

What might happen in a recession?

Some economists disagree that any recession will be tempered. Deutsche Bank’s David Folkerts-Landau is predicting a severe downturn. The Fed, he says, can raise rates to tamp down demand but can’t fix the supply snarls that have been worsened by the war and China’s lockdowns. Plus, he says, the Fed was slow to hike rates to curtail rising prices and now needs to catch up.

As a result, he believes the central bank will boost its key interest rate to about 5% – not the 3% most economists are expecting – sparking a sharp pullback in consumer and business spending.

JPMorgan Chase’s Michael Feroli notes the Fed never has been adept at measured tweaks to the economy. “Whenever the vacancy rate goes down a little (because higher rates lead businesses to cut job openings), it goes down a lot” as corporate America’s mindset broadly shifts to increased caution, Feroli says. That would mean a notable rise in unemployment, he says.

Joseph LaVorgna, chief economist of the Americas for research firm Natixis, sees another path to a mild recession. As the stock market tumbles and borrowing costs rise, the Fed will reverse course this summer and pause in its plan to raise its key rate to about 2.75% by year-end.

“It will begin to really scare the Fed and they’ll do a 180,” says LaVorgna, who was a top economic adviser to President Donald Trump.

He predicts a slump, but no more than 100,000 to 200,000 job losses.

Copyright 2022, USATODAY.com, USA TODAY

https://www.floridarealtors.org/news-media/news-articles/2022/05/economic-survey-mild-recession-much-disagreement

New Yorkers and Californians Flock to Florida

Fla. rents are up because demand is up, and new residents boost demand. In 2020, 167 people moved in for every 100 who left. In 2021, the inbound number was 210.

MIAMI – In Florida’s top metros, rents have risen by 24% to 32% in a year. Usually, rents swing by about 1% or 2% per year.

New Yorkers and Californians are flocking to the Sunshine State, with Florida reporting the largest year-to-year increase in net migration among all U.S. states, according to a new data report from moveBuddha. The report used a combination of U.S. Census Bureau data and moveBuddha proprietary data, as well as Zillow’s Home Value Index and Florida Housing Data.

In 2020, 167 people moved into Florida for every 100 who left. In 2021, that number surged to 210 inbound residents for every 100 who left, meaning more than twice as many people moved into the state than left it.

In 2022, the surge is so far being led by Californians and New Yorkers – each state represented, respectively, 10% of inbound moves to Florida as of early 2022, or about 20% collectively. Following New York and California, individuals from Illinois (6.8%), New Jersey (5.9%) and Pennsylvania (5.4%) also make up a large percentage of new settlers, according to the report.

So, why are people moving to Florida?

While there is not one direct answer, the report provides several reasons why individuals may be choosing Florida over other states to settle down in.

As far as expenses, California, New York and Illinois are all in the top 10 for state income tax, while Florida boasts no state income tax at all, as well as lower property taxes. This week, state legislators meet for a Special Session on property insurance in hopes of clearing policy to stabilize Florida’s skyrocketing property insurance market, another effort to decrease costs for residents.

It’s also no surprise the Sunshine State has become a hub for retirees to spend their golden years – Florida has the second-largest percentage of 65+ residents out of all the states, second only to Maine. And, families of Florida seniors also can benefit from their residency after Gov. Ron DeSantis signed into law a policy that waives out-of-state tuition at some universities for grandchildren of Floridians.

Florida also is booming in the tech industry, attracting more tech companies than any other state in 2021 – 2,715 new businesses totaling 10,522 jobs.

And then of course, there’s the pandemic.

The COVID-19 pandemic led to an influx in remote working conditions, leading some to move based on destination rather than work location.

On the more political side, some newcomers to the state may find appeal in the lack of COVID-19 restrictions. DeSantis has been a vocal critic of strict mitigation measures, staunchly opposing mask and vaccine mandates throughout the COVID-19 pandemic. COVID-19 struck Florida in March 2020 as lawmakers were wrapping the final weeks of that year’s Legislative Session.

However, his response to the pandemic has been criticized by others, who saw the Governor’s position as too lax during the pandemic’s peak. More than 74,000 individuals have died from COVID-19 in Florida.

Outside of money and politics, there is of course the reason the peninsula earned its nickname “The Sunshine State” – the coastal climate of Florida, while hot in the summer, cannot be beat. The tropical weather, year-round sunshine and mild winters make the state a haven for those used to harsh snows up North. It’s also the reason many Floridians taunt: “We live where you vacation.”

Impact of newcomers

The influx of out-of-state newcomers is prompting some major shifts.

Perhaps one of the most noticeable impacts the growth has caused on Floridians is the rising cost of rent. The top five Florida cities with the highest percent-increase in Zillow Home Value Index (ZHVI) from 2020-22 also show large population growth in the past decade. The top five cities each have ZHVI increases above 50% over the past two years.

For example, Cape Coral, which reported the highest ZHVI increase from 2020 to 2022 at 63%, saw its population increase by 30% between 2010 and 2020.

Rent increases have only garnered more momentum over the last year. An analysis by Florida real estate academics cited in an NBC report found in Florida’s four top metro-markets – Tampa Bay, Fort Myers, Miami and Orlando – rents have risen by 24% to 32% in a year. Usually, rents swing by about 1% or 2% per year.

The increases are hitting South Florida especially hard. When averaged among the state’s largest metros, housing values have increased about 70% from 2010 to 2020, followed by a rise of another 39% in the last two years alone, according to moveBuddha.

Where are people moving?

In the last decade, nearly 3 million new people moved to the state of Florida.

In 2022, the city of Ocala saw the highest inbound over outbound ratio – for every 596 people to move to Florida’s horse capital, only 100 left. As far as 2022 in-to-out ratios, Ocala was followed by Sarasota (311 to 100), St. Augustine (250 to 100) and Tampa (242 to 100).

Tampa was also among the top three metro areas that saw the most new residents from 2010 to 2020, along with Orlando and Miami.

So, while it doesn’t look like the mass migration to Florida is slowing down anytime soon, the affordability of the state – a critical part of its appeal – is teetering. Affordable housing and property insurance are measures legislators will have to address in the coming years, as the state continues to turn visitors into residents each day.

© Copyright 2022, Highlands News-Sun, All Rights Reserved

https://www.floridarealtors.org/news-media/news-articles/2022/05/new-yorkers-and-californians-flock-florida

2 of 3 Fla. Homes on Market Less than 30 Days

Florida Realtors economist: In 1Q 2022, half of new Fla. listings went under contract in 12 days – but look beyond that one statistic to see the shift in market speed.

ORLANDO, Fla –Florida Realtors market metrics – such as closed sales, median sale price and active inventory – summarize what’s happening in your market. But sometimes, one number can’t present the entire story.

In the first quarter (1Q) of 2022, the median time to contract for all property types in Florida was down to just 12 days. The median is the “middle,” so this means half of the homes sold in 12 days or less. This compares to 24 days one year ago, in 1Q 2021.

You can find out if homes in your local area are moving off of the market faster than the state by reviewing the median time to contract on SunStats, an interactive market tool – a free service as part of Florida Realtors membership.

The median provides a great starting point, but we can slice this data to reveal additional insights into the speed between listing and contract.

A cumulative frequency graph shows the percentage of properties selling under a certain number of days. For instance, if 2% of homes sell on the day they’re listed (0 days), and 3% sell the next day, a total of 5% (or 1 in 20 homes) sold in one day or less.

At 50%, a cumulative frequency chart tells us the same thing as the median time to contract.

The bulge in the lines has shifted toward fewer days for a higher percentage of homes. How quickly are homes selling?

In Florida across all property types, 68% (2 in 3 homes) sold in under 30 days in the first quarter of 2022. One year earlier, in 1Q 2021, about 54% of homes sold in 30 days or less, while only 41% sold at that pace in 1Q 2020. We can zoom in to look at these details.

Recall that 41% of homes sold in 30 days just two years ago; now, in 1Q 2022, 41% of homes sold in a week or less!

You’ve likely experienced this market frenzy since the pandemic uncertainty eased. A home today serves more functions than it did in the past, so buyers who find one that suits their needs swoop it up quickly.

As interest rates rise, demand levels may moderate and push the curve back, however. We’ll follow up with any notable changes in the data as the year progresses.

Erica Plemmons is an economist and Director of Housing Statistics

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/2-3-fla-homes-market-less-30-days

DeSantis Green Lights Hometown Heroes Housing

The $100M program, a top Florida Realtors priority, will provide zero-interest loans to be used toward down payment and closing costs – up to 5% of the loan or $25K.

TALLAHASSEE, Fla. – During a press conference in Southwest Florida on Monday, Florida Governor Ron DeSantis announced the launch of Florida Realtors® top 2022 legislative priority, the Hometown Heroes Housing Program (HHHP).

Administered by the Florida Housing Finance Corporation (FHFC), HHHP would reduce the upfront costs for qualifying hometown heroes by providing zero-interest loans to help with down payment and closing costs, up to a limit of 5% of the first mortgage loan or $25,000.

Florida Realtors worked closely with the Florida Legislature throughout the 2022 session to create HHHP. Funded at $100 million, the program is designed to help some of the state’s most essential workers become homeowners.

“During the pandemic and beyond, our hometown heroes – the nurses, EMTs, firefighters, law enforcement officers and educators – were the ones who kept us safe, cared for our loved ones, and taught our children,” says 2022 Florida Realtors President Christina Pappas. “Unfortunately, with skyrocketing home prices, they often can’t afford to live in the communities where they work. The Hometown Heroes Housing Program is a great way to help address this issue.” 

The program will be available to more than 50 occupations, and is subject to certain income and purchase price limits that vary by county. DeSantis said mortgage loan officers throughout the state would begin accepting applications for the program beginning June 1, 2022.

“There are 1,000 lenders involved in the program to start providing assistance to essential workers, such as police officers, firefighters, doctors, nurses and teachers, among other professions,” says Florida Realtors Vice President of Public Policy Andy Gonzalez.

More details about the program can be found on FHFC’s website.

 “We are extremely grateful to the governor and the Florida Legislature for recognizing the tremendous housing burden that our hometown heroes face,” adds Pappas. “These professionals perform such a vital role in our daily lives. We should be doing everything possible to help them achieve the dream of homeownership.”

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/desantis-green-lights-hometown-heroes-housing

Legislature Looks at Property Insurance Reform

The Florida Legislature looks at the state’s property insurance challenges this week. A range of proposals will consider legal, structural and reinsurance updates.

TALLAHASSEE, Fla. – In the face of rising rates for property insurance, the Florida Legislature will consider a range of bills this week in a special session called to tackle the issue. Given the bills introduced, it appears the solution is seen as an array of options, with possibly a menu of items approved.

Changes lawmakers will consider this week

Civil remedies reform

  • Contingency Fee Multiplier – attorney fees x hours x multiplier – limited to rare and exceptional circumstances.
  • Eliminates Attorney Fee Awards in AOB (assignment of benefits); eliminates attorney fee awards in litigation involving a property insurance claim that is assigned to a third party (usually a contractor).
  • Bad Faith: Policyholders must establish that their property insurer breached the insurance contract before they can prevail in a bad faith lawsuit.

Roof reform

  • Insurers unable to refuse to write or renew policies on homes with roofs that are less than 15 years old solely because of the roof’s age.
  • For a roof that is at least 15 years old, insurers must allow homeowners to have a roof inspection before requiring the replacement of the roof as a condition of writing or renewing the homeowner’s insurance policy.
  • Insurers unable to refuse to write or renew a homeowner’s insurance policy solely because of the roof’s age if an inspection shows that the roof has five years or more of useful life.
  • If insurers want to inspect damage in person, insurers must send an adjuster within 45 days of a non-hurricane claim.
  • Allows property insurers to require a separate roof deductible (with an opt-out provision) that may not exceed the lesser of 2% of the policy dwelling limits or 50% of the roof replacement costs.
  • Roof deductible provision must be clear and allow policyholders to opt-out of the separate roof deductible.
  • Roof deductible does not apply to:
  1. Total loss to the primary structure that is caused by a covered peril.
  2. A loss caused by a hurricane.
  3. A roof loss resulting from a tree fall or other hazard that damages the roof and punctures the roof deck.
  4. A roof loss requiring repair of less than 50% of the roof.
  • Policyholders who select a roof deductible must receive a premium credit or discount.
  • Requires disclosure to policyholders that:
  1. Prominently displays the actual dollar value of the roof deductible at issuance and renewal on the declarations page.
  2. Provides notice that a roof deductible may result in high out-of-pocket expenses to the policyholder on a separate page behind the declarations page.
  • Specifies that when a roof deductible is applied, no other deductibles may be applied.
  • Allows an insurer to limit payment on a roof claim to actual cash value until the policyholder pays the roof deductible.

Roofing contractor disclosures

  • Prohibits written contractors’ solicitations that encourage consumers to make a property insurance claim for roof damage unless the solicitation provides notice that:
  1. The consumer is responsible for the payment of any deductible.
  2. It is insurance fraud punishable as a felony for a contractor to pay or waive an insurance deductible.
  3. It is insurance fraud punishable as a felony to intentionally file an insurance claim containing false, fraudulent or misleading information.

Consumer choice on roof repair

  • Creates a statutory exception to the Florida Building Code so that roofs that are more than 25% damaged but already comply with the 2007 Florida Building Code may be repaired instead of being required to be replaced.

Cat Fund reform

  • Authorizes $2B for a new Reinsurance to Assist Policyholders (RAP) program for insurers. This reinsurance coverage is provided at no cost to the insurer.
  1. This program allows insurers to obtain reimbursement for hurricane losses earlier than they normally would under the Florida Hurricane Catastrophe Fund (Cat Fund).
  2. Insurers that participate in RAP for 2022 are required to reduce their policyholder’s rates by June 30, 2022, to reflect the savings from RAP. Insurers that defer using RAP until 2023 must reduce policyholder rates to reflect savings by May 1, 2023.

Home hardening grants to Florida homeowners

  • Effective July 1, $150M is appropriated to provide hurricane mitigation inspections and matching grants to help Floridians afford home hardening improvements to their homestead single-family residences with an insured valued at $500,000 or less (home must be located in a wind-borne debris region and the application for initial construction must have been made prior to 2008).
  • The program provides $2 in grant funds for every $1 provided by the homeowner. Applicants may receive up to $10,000 in program money.
  • Builds on but is different from the sales tax exemption on impact-resistant windows, doors, and garage doors that is now law.

Greater claim transparency for policyholders

  • Requires insurers to notify policyholders that they may request a copy of any detailed estimate of the amount of the loss generated by an insurer’s adjuster. After receiving the request, insurers must send the detailed estimate to policyholders within 7 days.
  • Requires insurers to provide a reasonable explanation in writing to the policyholder of the basis for the payment, denial or partial denial of a claim. If the insurer’s claim payment is less than specified in any insurer’s detailed estimate of the amount of the loss, the insurer must provide a reasonable explanation in writing of the difference to the policyholder.

Insurer solvency, stability oversight and Office of Insurance Regulation (OIR)

  • Creates an Insurer Stability Unit to aid in the detection and prevention of insurer insolvencies
  • Requires an analysis of the causes and business practices of any insurer deemed insolvent
  • Requires numerous new reports regarding homeowners insurance related to market conditions

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/legislature-looks-property-insurance-reform

NAR and UI Call for Inclusive Housing Reform

A Friday forum hosted by NAR and the Urban Institute brought together government and reporters to focus on better ways to serve marginalized U.S. communities.

WASHINGTON – The National Association of Realtors® (NAR) and the Urban Institute hosted a policy forum Friday at the National Press Club in Washington, D.C., to discuss mortgage finance reform and other policies that could make homeownership more accessible to underserved communities.

The event, “Financing the Future of Housing,” featured a keynote interview with James Wylie, associate director of the Office of Fair Lending Oversight at the Federal Housing Finance Agency (FHFA). The address was followed by two panel discussions.

“Realtors® play an important role in building a more sustainable and equitable housing system,” Wylie said. “By helping homebuyers, particularly those in underserved areas and in communities of color, understand what counseling services and resources are available to them, we can work together to help close the equity gap.”

Wylie talked about credit score reform, which the FHFA supports, to make housing finance more inclusive.

“For most, rent is the primary bill before becoming a homeowner,” he said. “Consumers should get credit for that, and it should be part of underwriting.”

Wylie also spoke about the housing supply problem, a top advocacy priority for NAR.

“We are trying to find every angle we can on the supply issue. It’s a real challenge,” he said. “We are not going to solve it alone; it will require a partnership across the industry.”

2022 NAR Vice President of Advocacy Kaki Lybbert provided an overview of Realtor efforts to expand homeownership, from championing policy proposals to increase housing supply to supporting initiatives such as the Black Homeownership Collaborative’s 3by30 plan to add three million net new Black homeowners by 2030.

“Our commitment to opening the door to more homeowners is ongoing and growing,” Lybbert said. “Every family deserves to have the opportunity to reap the benefits of homeownership – from building generational wealth to building memories for years to come. Thank you for working with us to make the American Dream of homeownership accessible to all.”

Policy check-up: retain, repair or replace

Andrew Ackerman of The Wall Street Journal moderated the first panel that also included Wendy Penn, associate vice president of affordable housing initiatives at the Mortgage Bankers Association; Mike Calhoun, president of the Center for Responsible Lending; and Lisa Rice, president and CEO of the National Fair Housing Alliance. Their topic for discussion: the current system: what works, what doesn’t and what needs to be replaced.

“The dramatic increases in the cost of housing and financing force us to reevaluate the products and services required to provide needed housing, especially for those long denied these opportunities,” Calhoun said.

Rice agreed. “Our housing and finance systems are inherently unfair,” she said. “Consumers of color have to go into a biased system and landscape of unfairness in order to gain access. Special purpose credit programs allow for-profit and nonprofit entities to assess why consumers cannot access credit and design credit programs that allow those consumers to access credit in a safe and sound manner.”

Penn highlighted problems that result from distrusting the system, including a reluctance to ask for help, especially among underserved communities.

“We don’t often pay enough attention to people’s minor crises,” she said. “A critical repair turns into a code violation, which turns into a fine, and it spirals from there. Then someone calls and says, ‘I’ll buy your home for cash.’ That’s what’s stripping the wealth out of these communities.”

“We can’t just get [people] into homes; we have to keep them there,” Penn said.

Policy resilience: Withstanding future shocks and challenges

The second panel was moderated by Marketplace Senior Correspondent Amy Scott. It included panelists Jerry Howard, CEO of the National Association of Home Builders; Michael Neal, principal research associate at the Urban Institute’s Housing Finance Policy Center; and Jacob Corvidae, principal at RMI. The group discussed specific roadblocks to closing the homeownership gap and solutions to overcome those roadblocks.

“Households of color continue to experience disproportionate challenges in pursuit of the American Dream and its promised benefits,” Neal said. “But by exploring the benefits of new homeownership strategies … we can advance a housing market that works for everyone.”

“Right now, the average American cannot afford to buy the average house that’s on the market,” Howard added. “Construction costs have risen by 21%, labor costs have risen by 15%, and regulatory compliance costs are going back up.”

Corvidae focused on extreme weather events and how they exacerbated the homeownership gap – and they’ll cause even greater problems in the future.

“Study after study has shown when these extreme weather events occur, they disproportionally affect communities of color and lower-income households,” he said. “We need to match transparency with loan products that can … create investment to solve these problems.”

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/nar-and-ui-call-inclusive-housing-reform

As Mortgage Rates Rise, Brokers Urge Calm

DOVER, Del. – Chris Moore has brokered mortgages for 35 years, and he’s experienced rises and falls in rates. So when the average mortgage rate was at a decade-high level Thursday, he wasn’t about to discourage would-be buyers.

The way the Georgetown-based Mortgage Market of Delaware founder sees it, a 5.25% rate for 30 years is still doable for many.

And there’s always the opportunity to refinance the loan once rates drop, he said.

The average rate, reported by mortgage buying company Freddie Mac, stood at 3% a year ago. The cost may rise even more.

However, in the real estate market, rates and home prices inevitably ebb and flow, Moore said.

Some folks may be leery of the future right now. For instance, Moore said that, while his office was receiving 20 contacts for service a week at the same time in 2021, that number has dropped 50%. His advice: Trust in the future.

In his opinion, “This (is) one of those cycles where the rates will probably increase for another three or four years, and then, we’ll have another cycle where rates will decrease, and people will go back to refinancing.”

While today’s rate may be slightly uncomfortable, Delaware Association of Realtors president Dr. Susan Giove pointed to the past. The rate between 1971 and now peaked at 18.45% in October 1981, according to Freddie Mac. Also, from 1972-2000, annual rates averaged 9.03%.

There’s plenty going on worldwide to push mortgage rates higher. The war in Ukraine continues, supply chain issues exist, inflation is at lofty levels, the stock market has dropped significantly, and COVID-19 remains, among other challenges.

“All those types of issues scare the market, and people are going to pull their money out of mortgage-backed securities and the general stock market, period,” said Marc Pierannunzio, sales manager for Main Street Home Loans in Dover. “So when there’s a world in distress, I think people want their money in safer spots. You know, it’s the ‘cash is king’ aspect. So we’re seeing less money invested in the market.”

Even in the current market and its high mortgage rates, Moore believes there are still deals to be had. He noted that today’s rate should be considered an “acquisition cost.”

Further, he said, home seekers can still refinance a 30-year loan when rates inevitably drop.

“If you like a home, if you like the location and can afford it, then it’s still a time to buy in,” he said. “There’s going to be another refinance cycle coming, and you can gain value when it arrives.”

Finding an affordable home is the challenge, according to The Associated Press, with rising mortgage rates occurring in conjunction with sharply higher home prices.

Zach Foust, a team leader at Loft Realty in Milford, theorized that “as interest rates are going up, we’re seeing buyer demand slow right now, and that is leading to less offers on properties. The crazy asking prices are not as much (concern).”

Also, according to Moore, “You’re all the time going to have buyers. People are relocating and moving into the area all the time, especially in our area down here, especially a place like Georgetown, which is just going crazy.”

Giove can vouch for a quick selling market even in the midst of rising mortgage costs.

“The days a property is on the market are still crazy. They’re still very short,” she said. “The longest is like seven days. My broker and I were talking about this only yesterday with certain properties that we both have had … within the past 30 days. “They were made active on the market, and they were under contract within seven days.”

AP reported that utilizing five-year adjustable-rate mortgages, which will change based on the current market at the time, made up 13% of all home loans by dollar volume nationwide in March, their highest share since January 2020, according to CoreLogic.

The Federal Reserve earlier this month intensified its fight against the worst inflation in 40 years by raising its benchmark interest rate by a half-percentage point and signaling further large rate hikes to come. The Fed’s move, its most aggressive since 2000, will bring higher costs for mortgages, as well as credit cards, auto loans and other borrowing for individuals and businesses, AP reported.

Certainly, Moore has developed the mettle to ride the storm out. He said he bought his first home with a 16% mortgage in the late 1970s or early 1980s, and that fell to 12%.

“Now, people say, ‘Well, I’m not going to pay 5% for a home,” he said.

Sales of previously occupied U.S. homes slowed for the third consecutive month in April as mortgage rates surged, driving up borrowing costs for would-be buyers as home prices also soared to new highs.

The National Association of Realtors reported Thursday that existing home sales fell 2.4% last month. Sales have fallen to the slowest pace since June 2020. The median home price in April jumped 14.8% from a year ago to $391,200. That’s the highest since 1999, NAR said.

Some economists predict that home sales this year could decline as much as 10% from 2021 levels.

“Economic uncertainty is causing mortgage rate volatility,” said Freddie Mac Chief Economist Sam Khater. “As a result, purchase demand is waning, and homebuilder sentiment has dropped to the lowest level in nearly two years.”

© Copyright 2022 The Delaware State News

https://www.floridarealtors.org/news-media/news-articles/2022/05/mortgage-rates-rise-brokers-urge-calm

Dubai Developer Buys Surfside Collapse Site

A Dubai billionaire bought the land where a condo collapsed in Surfside for $120M – the only bid submitted and high enough to apparently deter other bidders.

SURFSIDE, Fla. – A billionaire developer from Dubai is set to purchase the site of a South Florida condominium that collapsed last June, killing 98 people, for $120 million after no other bids were submitted by the Friday evening deadline for next week’s auction.

Michael Fay, of Avison Young, said hundreds of potential buyers had shown interest in the property, but none were ultimately prepared to match the strong initial bid of Hussain Sajwani, of DAMAC Properties. Avison Young is the commercial real estate firm appointed to market the land as part of a class-action lawsuit.

The auction for the 1.8-acre (0.72-hectare) parcel in Surfside was scheduled for Tuesday. Earlier this month, families of the victims reached a $997 million settlement with local officials, the developers of an adjacent building and others whom they hold responsible for the collapse of the 40-year-old, 12-story beachside building during the early hours of June 24.

Most of the Champlain Towers South collapsed suddenly about 1:20 a.m. last June 24 as most of its residents slept. Only three people survived the initial collapse. No other survivors were found despite the around-the-clock efforts of rescuers who dug through a 40-foot (12-meter) pile of rubble for two weeks. Another three dozen people were in the portion of the building that remained standing.

The condominium’s residents and visitors formed a melting pot: Orthodox Jews, Latin Americans, Israelis, Europeans and snowbirds from the Northeast.

The National Institute of Standards and Technology is investigating the cause of the collapse, a process that is expected to take years.

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/dubai-developer-buys-surfside-collapse-site

Buyers Got Cold Feet? 6 Objection Handlers

The real estate market can be scary for buyers, but education can help – like saying we don’t want another global collapse even if the last one did lower mortgage rates.

NEW YORK – Homebuyers are taking a wait-and-see approach as mortgage rates continue to rise and the stock market remains volatile. However, The Medford Team CEO Carl Medford offers some tips on how to motivate buyers in today’s market.

When buyers say they’re waiting for lower mortgage rates, real estate professionals need to educate them about the way recently record-low rates reached ultra-lows: “Although understandable that buyers want continued low-interest rates, we all hope that the primary conditions that produced those rates – a total global economic collapse and subsequent global pandemic – will not be returning any time soon. With a more normalized economy, rates will head upward and most likely return to historic averages over the next few years,” he says.

When potential buyers say they’re waiting for home prices to fall, agents should remind them that even a bigger inventory won’t be enough to offset projected interest rate increases: “At the end of the day, the most important number is not the purchase price of any home, but the amount of the monthly mortgage payment,” he explains.

Homes also help Americans earn long-term wealth, have tax advantages that renting doesn’t, and is one of the safest long-term investments Americans can make.

When buyers want to start offering “low-ball offers,” Medford says they’ll knock themselves out of the competition quickly and alienate sellers and buyer’s agents.

Those who want to remain renters, on the other hand, should learn to understand that landlords will have to raise rents to cover higher mortgage rates and increased maintenance and labor costs.

For those who want the perfect home but can’t afford it out of the gate, Medford advises agents to ensure homebuyers have realistic expectations for the market and are able to make prudent financial decisions.

Potential buyers who say they cannot afford to buy in the local market can be encouraged to buy in a different market. They can “think of it as an investment,” particularly if they can afford to buy outside of the U.S.

Source: Inman (05/18/22) Medford, Carl

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/buyers-got-cold-feet-6-objection-handlers

Some Homeowners Refuse to Sell to Investors

COLUMBUS, Ohio – A few days after Francie Orthmeyer listed her Northeast Side home this spring, she had 26 offers on the house, the highest one for $250,000, in cash.

She instead accepted an offer for $13,000 less. The reason: She did not want investors to buy her home of 31 years.

“I just did not feel good about it,” Orthmeyer said. “I thought, ‘this guy must be an investor, not someone buying it for a home.’ I didn’t want to do that with my neighbors. I like my neighbors.”

Orthmeyer instead sold her home to a young couple purchasing their first residence.

“I knew they had been looking for a long time, I knew they were getting discouraged,” she said. “I’m 78. I think they need a house more than I need the money.”

Orthmeyer is one of many Columbus-area homeowners who are fighting back against real-estate investors’ growing presence in the only way they know how: by refusing to sell to them – even if it means leaving cash on the table.

It’s impossible to know exactly how many sellers have refused investor offers, but when Orthmeyer’s agent, Kathy Chiero, mentioned Orthmeyer’s decision on Facebook, her post received about 500 likes and more than 100 comments, many from other agents who said they had similar clients.

“What it tells me is that this surprising choice of this woman is inspiring in its reflection of the rare time when a homeowner chooses a buyer’s need over their wallet,” said Chiero, with Keller Williams Greater Columbus Realty.

Investors have played a growing role in the Columbus housing market during the pandemic. During the last three months of 2021, investors bought 16.8% of Columbus-area homes, or about one out of every six homes, up from about 12.4% a year earlier, according to the real-estate firm Redfin.

Another study, released Tuesday by the National Association of Realtors, found that institutional buyers purchased 16% of Ohio homes in 2021, tying the state for the sixth-highest rate in the nation. Institutions bought 20% of homes sold last year in Franklin County, according to the study, while in Cuyahoga County, they bought 26% and in Hamilton County, 23%.

“I really started noticing investors early on with the 2021 market, mainly with Blacklick and Gahanna listings,” said Tina Wedebrook, an agent with RE/MAX Connection in Gahanna. “Especially in Licking Heights schools, every single listing had investor offers – we’d have three, four, even five curb offers, sight unseen, all for cash.”

But, while many sellers take the investor cash, others don’t.

“I’ve had sellers say, ‘This is a family home,’ and they didn’t want to sell to an investor who might just flip it or rent it out,” Wedebrook said.

Buyers typically find themselves at a disadvantage against investors, who often offer cash and the promise of a quick closing, and frequently go over the asking price.

Kat Hartnagel understands first-hand how hard it is to compete with investors. She and her family moved to North Carolina three years ago after repeatedly being beat out of buying a home in California.

“We just couldn’t get a house, no matter how much we offered, because investors were getting them all,” she said. “We just couldn’t compete.”

So when Hartnagel’s mother, Donna Gerlach, passed away in the fall, leaving her Westerville home, Hartnagel made the decision not to sell it to an investor, even if it meant less money.

“I flat-out said, ‘I want a family in there, I don’t want an investor,’” she said. “It’s not about the money, it’s who’s going to be there.”

Working with Karen Newbanks, with LifePoint Real Estate, Hartnagel listed the home at the end of January. Within days, the home had attracted 18 offers, about half of them from investors, Newbanks said. Hartnagel sold the home to a man with two children.

“Having a family in the house is more important than an investor,” she said. “There are families out there who have been trying to get homes for years.”

Agents are careful to note that homeowners don’t have carte blanche on who to sell to. They can’t, for example, refuse to sell to people based on race, religion, sex or age.

But investors are not a protected class, noted Chiero.

When Joe DeFrancis and his family recently sold their Delaware home, they received an offer from an investor the moment the “coming soon” sign was posted. DeFrancis told his real-estate agent, Dena Feraru, with Coldwell Banker, he wasn’t interested.

“I wanted to make sure I was selling to someone who would welcome the home as we did when we moved in, and the satisfaction of selling to someone who would make it a home,” DeFrancis said. For DeFrancis, whose family had lived in the home seven years, the property meant more than money.

“I wanted someone to benefit from the family environment of the house, instead of someone trying to just make money off the house,” DeFrancis said. “Given how intense the housing market is right now, not a whole lot of families are able to jump in front of the line like investors … For me it meant more to sell to a family instead of an investor.”

Chris and Christy Reaman were both hurt and helped by homeowners who chose not to sell to investors. The couple was renting a home in Reynoldsburg when the investor-owner sold it to someone who planned to occupy the home, giving the Reamans two months to find a new place. As active duty Army, Chris was relying on a VA loan, which made it very hard to compete against cash offers.

“We were outbid on every single house we’d bid on,” he said.

After nearly giving up, the couple noticed a three-bedroom, two-bath Reynoldsburg ranch newly listed for $235,000. They connected with the agent, Taylor Miller, with CRT Realtors, who spoke with the owner, Nelson Kohman, himself an investor who runs the firm Scioto Valley Enterprise.

The home ended up getting four offers, one for $10,000 over asking with a clause agreeing to go up to $10,000 more if the appraisal didn’t come in high enough.

Instead, Kohman went with the Reamans’ offer for list price of $235,000.

“We found out he was in the military and needed a place to live,” Kohman said. “There was a considerable difference in the offers, but it still allowed us to profit on it, and we felt he was a special person.”

Buyers like the Reamans who are relying on FHA or VA loans are at a particular disadvantage when competing against investors because of some of the requirements that come with the loans, such as inspections.

Real-estate agent Jeanne Zekan has landed homes for some of her veteran clients by linking them with sellers who choose veterans over investors.

“Typically, the bottom line is people want the most money. Who wouldn’t?” said Zekan, with eXp Realty. “But I’ve had some who want veterans.”

Zekan recently represented a veteran who bought a home from another veteran on the West Side for list price after her client wrote a letter explaining why he wanted the home.

“I’m sure they had other offers well-above list,” she said.

© Copyright 2022, The Columbus Dispatch. All rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/05/some-homeowners-refuse-sell-investors

Not Just Hurricanes: Fla. Also Faces Wildfire Risks

Realtor.com added “wildfire risk” to all listings, and while 6% of Fla. homes face a threat, that number could double by 2052, according to the rating company.

MIAMI – When Hurricane Michael tore through North Florida in 2018 as a Category 5 storm, it left more than 3 million acres of felled trees in its wake. Those largely untouched trees were the perfect fuel for three simultaneous wildfires that raged through the region in March. The Chipola Complex fires turned the skies smoky and blood red, destroyed two homes, prompted the evacuation of a thousand more and consumed more than 30,000 acres of forest before firefighters got it under control.

Research from First Street Foundation released Monday suggests that as climate change warms the planet, the risk of wildfires like those in Florida could double by mid-century. Matthew Eby, executive director of the nonprofit climate research group, said its modeling shows Florida’s current 6% of properties at risk from wildfires could jump to 12% by 2052.

“Florida is already a hot place, and it’s seeing an increase,” he said. “What you end up with is a pronounced effect of the changes of wildfire risk.”

On the national map First Street created, most of the increased risk is – unsurprisingly – in the West. But Florida is a lone dark red spot on the East Coast. That’s partially because the state is expected to stay hotter for more days of the year with climate change, and also because Florida is so developed that it physically has more pieces of property at risk than in other states, where thousands of acres may count as one property.

While Florida is better known for its floods from rainstorms, hurricanes and high tides, the state has a long history of wildfires. The report suggests that as the state gets hotter, it could make it more likely for more wildfires to form.

“The fires aren’t bigger, they just take off more often because it is drier and it is hotter,” Eby said.

In South Florida, researchers found the biggest risk is for homes near the eastern border of the Everglades. Earlier this month, ash and smoke from three separate Everglades fires were visible in Weston.

Florida’s Polk County was No. 5 on a national ranking of counties with the highest number of properties at risk of wildfire. By First Street’s math, 88% of the county’s 380,000 properties had a 1% chance of experiencing a wildfire in the next 30 years. Osceola and Pasco, although smaller counties, have similar percentages of properties at risk.

Bryan Williams, a meteorologist with the Florida Forest Service, said First Street’s findings make sense to him. He sees an opportunity for more fires in Florida as the state gets hotter with climate change.

“Look at the past five years. Florida has basically been on the very warm side of things,” he said. “You’re seeing more drought, you’re seeing higher temps, and in April and May you’re seeing relative humidity getting pretty low. It’s kinda one of those trends that you look at and it’s concerning.”

Williams says fire season, like hurricane season, has a peak. And in Florida, that’s April and May. As of Monday, most of the state was ranked at “moderate” fire risk, the second-lowest level. Florida fires are most commonly started by lightning, he said, and unlike in the West, where fire easily races uphill, in Florida, fires mainly spread by wind.

“We’ve had issues where a whole neighborhood gets smoked in by a fire if the wind is right that day,” Williams said. The next day, with a wind shift, they can be clear.

What’s your fire risk?

Unlike with flooding, there’s no nationally accepted standard for what counts as a property at risk from fire. So First Street made its own standard – about a 1% chance that a property could experience a wildfire within the next 30 years.

That means a home with fire risk has a far lower chance of experiencing a fire than a house that the federal government deems at flood risk, which is when a property has a 26% chance of flooding over a 30-year period.

Eby said that’s because the consequences of a fire are much more intense than a flood.

“When you think of fire, there’s no such thing as a little bit of wildfire in your home,” he said. “When you have a wildfire in your home, the structure is usually destroyed.”

Along with the national report, Flood Street also launched a tool that lets users check the fire risk – now and in the future – for individual properties. It’s available on any real estate listing on Realtor.com, part of a collaboration that informs property buyers of the chance of climate change-driven floods and fires affecting their homes in the future.

Eby said the new fire section will go above the listing for nearby schools on the site, along with previous First Street data about flood risk.

“I think that speaks volumes to what they’re hearing from consumers and users as to the request and need for this,” he said.

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/not-just-hurricanes-fla-also-faces-wildfire-risks

Agents: Buyers More Interested in ‘Green Features’

Panhandle Realtors note an uptick in interest for energy-efficient homes, but it comes with a downside: Many homebuyers can’t afford the increased cost.

PANAMA CITY BEACH, Fla. – Local real estate agents say energy-efficient homes are becoming more popular.

However, the “green features” in these homes can be quite expensive, which could be a turnoff for some buyers since home prices in Bay County already are out of reach for many families.

According to the Central Panhandle Association of Realtors, there was a more than 30% jump from 2021 to 2022 in the number of real estate agents and brokers across the United States who said they helped a client buy or sell a “green” home during the past 12 months.

“Sustainability continues to play a growing role in consumers’ purchasing decisions, and this is becoming even more prevalent in the real estate market,” Leslie Rouda Smith, president of the National Association of Realtors said in a news release. “With the residential property market, in particular, home buyers have expressed increased interest in eco-friendly factors like solar panels and energy efficiency.”

However, Amin Delawalla, a real estate agent for Berkshire Hathaway HomeServices Beach Properties of Florida, said while solar panels can provide some serious benefits for homeowners, they also come with drawbacks that might limit their popularity in the local market.

In addition to solar panels, Delawalla said other popular green features include smart thermostats able to automatically adjust a home’s temperature based on if anyone is there, tankless water heaters that prevent homes from running out of hot water and showerhead faucets designed to save water.

“Solar panels are great, (and) they help you save on utility bills, (but) I think the (main) decision owners have to make is (if) they are going to pay for the solar panels upfront or finance them,” he said. “If you’re going to finance them, you have to be cognizant of (the fact) that if you sell your home before that loan is paid off, your new buyer might not be willing to take over that loan.”

That is especially true in Bay County, where it is almost impossible to buy a new home for less than $300,000.

Many local homebuyers don’t want solar panels because they make already high home prices rise even higher, Delawalla said.

According to Aric Bowen, operations manager for Sundew Solar in Panama City, the price of fitting a home with solar panels varies based on the size of the house and its electrical demand, but a good guess is a cost of $40,000 to $50,000 to fully equip a standard three-bedroom, two-bathroom home.

This is what is needed to practically eliminate an electric bill, he said.

Still, buyers would have to pay a monthly fee of about $10 to $30 to remain connected to the power grid, and those who finance the panels also would have an additional monthly payment that could range from about $100 to $150, Bowen noted.

He also said it normally takes 15 to 25 years to pay off a loan for solar panels.

Like real estate agents, Bowen said he also has noticed a recent uptick in demand for solar panels and other green features.

“It can save (homeowners) money,” he said. “It’s a sound investment, and whether people like it or not, it does lower your carbon footprint. … The technology, I don’t think, is going anywhere. You have a roof, (and) you have this surface that you might as well do something (with) that’s going to make you money or save you money.”

Copyright © 2022, News Herald, The (Panama City, FL), all rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/05/agents-buyers-more-interested-green-features

A Secret Stash of Leads?

Listings that expired more than a year ago may offer opportunities. Owners who didn’t sell for some reason may not realize how much equity they’ve gained since then.

NEW YORK – Real estate professionals often use lead generating platforms, but there are other ways to find leads.

Experts say that expired listings can help agents find leads who may be unaware that the market is currently competitive, notably leads that expired a while ago. By contacting listings off the market more than one to two years, they may discover a wealth of new prospects to contact, incubate or convert to new sales.

Rather than ask these homeowners why their property didn’t sell or if they plan to move, however, agents should consider talking about the increase in property values over the past year, noting that some property values increased over 30%. They should also have data ready to back up their comments.

If owners aren’t aware of their equity increase, agents should recommend that they contact their insurance carrier to be sure they’re not currently underinsured. They also should offer other options that include putting their dead equity to work by acquiring an investment property or using those funds for major home improvements.

Another great source for leads can be clients abandoned by agents who left the business – an opportunity to reach out with a letter, follow-up call or a visit to those addresses in order to let them know that they want to “adopt” them since their previous agent is no longer available to help.

Even before an agent leaves the business and abandons their prospects, other agents can approach them and ask about assuming their client book to ensure the connections are fresh.

Source: RISMedia (05/18/22) Murphy, Terri

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/secret-stash-leads

NAR Group to Study Crypto’s Real Estate Impact

NAR’s president created a presidential advisory group (PAG) to study cryptocurrency’s growing real estate influence, suggesting, “We should consider our own platform.”

WASHINGTON – In March, National Association of Realtors® (NAR) President Leslie Rouda Smith created a presidential advisory group (PAG) to examine the effect of cryptocurrency on real estate. The PAG will meet May 24-25 and is tasked with writing a report of its findings and presenting it to Rouda Smith.

NAR spokesperson Mantill Williams said the PAG will “recommend the most effective approaches for educating Realtors® and advocating on their and their clients’ behalf within this evolving environment.”

Dallas Realtor Kristin Smith of Dave Perry Miller Real Estate will chair the ad-hoc workgroup, which is made up of 17 NAR members.

“We should consider our own platform for this and let the Realtors invest,” Rouda Smith gave a presentation on cryptocurrency at NAR’s Strategic Planning Forum at the Realtors Legislative Meetings. “Give us the first, second and third round seed of investing and that gives us vested interest.”

However, Williams said that “creating a cryptocurrency is not within the realm of the PAG’s charge.”

NAR’s venture capital arm, Second Century Ventures, has invested in a company called Propy that wants to digitize the transaction process and allow buying or selling in any global currency, including cryptocurrency.

Source: Inman (05/06/22) Brambila, Andrea V.

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/nar-group-study-cryptos-real-estate-impact

Fla. Man Found Guilty in Email Closing Scam

In an “email compromise scheme,” a Miami Gardens man monitored business emails, changed wiring instructions at the last minute, and stole almost $400K in closing money.

CHARLOTTE, N.C. – A federal jury convicted a Florida man who operated a “business email compromise scheme” (BEC) that stole more than $1 million in closing proceeds by changing legitimate wiring instructions to a new location, called a “money mule bank account.”

According to the United States Attorney’s Office for the Western District of North Carolina, a federal jury convicted Pierre Yvelt Almonor, 49, of Miami Gardens, Florida, for his role in a conspiracy to launder illegal proceeds from a business email compromise scheme.

Almonor defrauded law firms and other companies, says Dena J. King, U.S. Attorney for the Western District of North Carolina. Almonor’s money-laundering conviction covered conspiracy to commit concealment money laundering, international concealment money laundering, and transactional money laundering.

In announcing the conviction, King was joined by Robert R. Wells, special agent in charge of the Federal Bureau of Investigation (FBI), Charlotte Division.

A BEC is a sophisticated scam that often targets businesses involved in wire transfer payments. The criminals often “spoof” an email address or gain access to a legitimate one by stealing passwords.

A criminal working a real estate case, for example, might get the password used by a title company and monitor the back-and-forth emails with homebuyers. When it becomes time for the buyer to wire a deposit or closing money, the criminal then uses that email access to change the address for the wire transfer. The legitimate company never sees the money because the scammer’s instructions send it to their own account.

The trial included witness testimony and documents filed with the court. According to records from August 2014 through November 2017, Almonor arranged to have nearly $395,000 in real estate closing proceeds stolen through a BEC deposited in a business account over which he exercised control, utilizing it as a “money mule” bank account. Fraudsters use money mule bank accounts as a way to move fraudulently obtained funds.

Almonor then sent money via wires to Spain and South Africa totaling more than $200,000 and withdrew more than $50,000 in proceeds as compensation for his role in the conspiracy.

Almonor remains on bail pending sentencing, and a sentencing date has not been set. The money laundering conspiracy charge carries a maximum sentence of 20 years and a fine of $500,000 or twice the value of the proceeds.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/fla-man-found-guilty-email-closing-scam

Survey: 25% of Buyers Now ‘Undecided’

Inflation has changed perceptions. More potential homebuyers must now use money to pay for daily essentials, and credit card usage rose 49% in 1Q 2022.

DALLAS – Of those consumers planning to buy a home this year, 30% changed their plans due to the economy or their personal budgets. For some of them (7%), their credit score is no longer high enough to qualify for a mortgage, according to a consumer survey by ScoreSense, a credit score monitoring product.

The survey findings in the “ScoreSense Market Report: Survey of Prospective Home Buyer Behavior and Credit Outlook Analysis,” focused on consumers’ plans – on track or changed – for buying a home this year, as well as an analysis of consumer spending and credit activity in the first quarter of 2022.

Plans to buy a new home in 2022

  • Nearly one out four people who planned to buy a home this year are now undecided.
  • Almost 30% of respondents said the economy or their personal budget changed their plans.
  • Respondents cited inflation as the top reason that influencing whether or not to buy a house this year, but 7% said it was their credit score.
  • The most concerning factor for potential buyers: Finding an affordable home.

Credit changes in the first quarter of 2022

  • Credit card usage skyrocketed, up 49% in the first quarter. The number of consumers who have overspent their credit limits also rose by 30%.
  • The number of delinquent accounts – late payments 30 days to 180 days – shot up 27%.
  • However, major derogatory alerts – late payments of 180 days or more, including collections, repossessions and foreclosures – dropped 17%.
  • New trade accounts (the number opening a new account) rose 7%; however, new inquiries dropped 17%.

“Looking at our analysis of credit behavior for the first quarter of this year and further back to last fall, we’re concerned many consumers under financial duress will continue to increasingly use credit to pay for ‘ordinary’ things, such as groceries and gasoline, and hold that debt instead of paying it off at the end of the month,” says Carlos Medina, senior vice president at One Technologies, LLC.

“We’re highly concerned that late payments and overdue payments that go to collections may increase as well,” he adds. “Lastly, credit scores always matter, but we can see how important good credit is now with lenders tightening loan restrictions, as evidenced in our homebuying survey that revealed many consumers are worried their credit scores are no longer high enough to qualify for a mortgage.”

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/survey-25-buyers-now-undecided

More Sellers Charged Capital Gains Taxes

SAN FRANCISCO – If your home’s value has soared, congratulations. If you decide to sell, beware.

Financial advisor James Guarino says some clients don’t realize that home sale profits are potentially taxable until their returns are prepared – and by that time, they may have spent the windfall or invested the money in another house.

“They’re not happy campers when they find out that Uncle Sam not only is going to tax this as a capital gain, but they’re also going to have some exposure at the state level,” says Guarino, a certified public accountant and certified financial planner in Woburn, Massachusetts.

Longtime homeowners who took advantage of previous tax rules, which allowed people to roll the gains from one home into the next, could be in for a particularly nasty surprise. Those old rules could trigger taxes even if you’re under the current $250,000-per-person exemption limits.

Understanding how home sale profits are calculated – and how you can legally reduce your tax bill – could save you money and stress if you’re planning to cash in on the current home price boom.

How tax rules have changed

Until 1997, home sellers didn’t have to pay taxes on their profits if they bought another home of equal or greater value within two years. In addition, people 55 and older could use a one-time exclusion to avoid paying taxes on up to $125,000 of home sale profits.

The Taxpayer Relief Act of 1997 changed the rules so that instead of rolling profits into another home, homeowners could exclude up to $250,000 of home sale profits from their income. To qualify for the full exclusion, home sellers must have owned and lived in the home at least two of the five years prior to the sale. Married couples could shelter up to $500,000.

Those exclusion limits haven’t changed in 25 years, while home values have nearly tripled. The median home sale price when the law passed was $145,800, according to the Federal Reserve Bank of St. Louis. The median was $428,700 in the first three months of this year. Median means half of homes sold for less and half for more.

Having a taxable gain on a home sale used to be relatively rare outside of high-end properties and high-cost cities – but that’s no longer true, financial advisors say.

Why your tax basis matters

Your first step in determining your gain is to identify the amount you realized from the sale. That’s the sales price minus any selling costs, such as real estate commissions. Then figure your tax basis. That’s generally the price you paid for the home, plus certain closing costs and improvements. The higher the basis, the lower your potentially taxable profit.

Let’s say you realized $600,000 from your home sale. You originally bought it for $200,000 and remodeled the kitchen for $50,000. You’d subtract that $250,000 from the $600,000 to get $350,000 in capital gains.

If you’re single, you could exclude $250,000 of the gain and pay tax on the remaining $100,000. (Long-term capital gains are normally taxed at 15% on the federal level, although a big enough profit could push you into the higher 20% capital gains bracket. State tax rates vary.) If you’re married and can exclude up to $500,000 of gain, you wouldn’t owe any tax.

Your tax basis might be lower than the purchase price, however, if you previously deferred gain on a home sale, says CPA Mary Kay Foss of Walnut Creek, California. Say you sold a house before 1997 and rolled a $175,000 profit into the new house – the one that cost you $200,000. The initial tax basis of your home would be just $25,000. Now if you realize $600,000 from the sale, your capital gain would be $525,000, even with the $50,000 kitchen remodel.

Other factors could increase your tax basis and lower your potentially taxable gains. If you owned a home with a spouse who died, for example, at least half of the house’s basis would be “stepped up,” or increased to its market value at the time your partner died. If you live in a community property state such as California, both halves of the home get this step up in tax basis.

How to reduce your gains

Another way to beef up your basis: home improvements. To qualify, the improvements must “add to the value of your home, prolong its useful life, or adapt it to new uses,” according to IRS Publication 523, Selling Your Home.

Room additions, updated kitchens and new plumbing count; repairs or maintenance, such as painting, typically don’t. You also can’t count improvements that were later torn out or replaced.

Home sellers should carefully review Publication 523 to understand which costs can reduce their gains, and keep documentation – such as receipts – in case they’re audited, says Susan Allen, senior manager for tax practice and ethics for the American Institute of CPAs.

“Be proactive with your record maintenance because we all know if you go back 10 years later and look for something, it’s a lot harder to find,” Allen says.

Liz Weston is a columnist at NerdWallet, a certified financial planner and author of “Your Credit Score.” Email: lweston@nerdwallet.com. Twitter: @lizweston.

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/more-sellers-charged-capital-gains-taxes

NAR: U.S. Homes Sales Dropped 2.4% in April

Year-to-year, sales dropped 5.9%. The inventory of for-sale homes, while higher at a 2.2-months’ supply, means the U.S. remains in “seller’s market” territory.

WASHINGTON – In April, existing-home sales recorded a third straight month of declines, according to the National Association of Realtors®’ (NAR) monthly report.

Month-over-month sales were split among the four major U.S. regions: Two areas posted gains and two experiencing posted April declines. Year-over-year, all four regions saw a drop in sales.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – slid 2.4% from March to a seasonally adjusted annual rate of 5.61 million in April. Year-over-year, sales dropped 5.9% (5.96 million in April 2021).

“Higher home prices and sharply higher mortgage rates have reduced buyer activity,” says Lawrence Yun, NAR’s chief economist. “It looks like more declines are imminent in the upcoming months, and we’ll likely return to pre-pandemic home sales activity after the remarkable surge over the past two years.”

Total housing inventory at the end of April amounted to 1,030,000 units, up 10.8% from March and down 10.4% from one year ago (1.15 million). Unsold inventory is at a 2.2-month supply at the current sales pace, up from 1.9 months in March and down from 2.3 months in April 2021.

“Housing supply has started to improve, albeit at an extremely sluggish pace,” adds Yun.

He also noted the rare state of the current marketplace.

“The market is quite unusual as sales are coming down, but listed homes are still selling swiftly, and home prices are much higher than a year ago,” says Yun. “Moreover, an increasing number of buyers with short tenure expectations could opt for 5-year adjustable-rate mortgages, thereby assuring fixed payments over five years because of the rate reset. The cash buyers, not impacted by mortgage rate changes, remain elevated.”

The median existing-home price for all housing types in April was $391,200, up 14.8% from April 2021 ($340,700), with prices higher in each region. It marks 122 consecutive months of year-over-year increases, the longest-running streak on record.

Properties typically remained on the market for 17 days in April, equal to both the number of days in March 2022 and in April 2021. Nine out of 10 (88%) homes sold in April 2022 were on the market for less than a month.

First-time buyers were responsible for 28% of sales in April, down from 30% in March and 31% in April 2021.

All-cash sales accounted for 26% of April’s transactions, down from 28% in March and up from 25% recorded in April 2021.

Individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in April, down from 18% in March and equal to 17% in April 2021.

Distressed sales – foreclosures and short sales – represented less than 1% of sales in April, equal to the percentage seen in March and down from 2% in April 2021.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.98% in April, up from 4.17% in March. The average commitment rate across all of 2021 was 2.96%.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/nar-us-homes-sales-dropped-24-april

Mortgage Rates Slip a Little, Down to 5.25%

“Economic uncertainty causes rate volatility,” says Freddie Mac’s chief economist. The average 30-year, fixed-rate loan moved down a bit from last week’s 5.3%.

WASHINGTON (AP) – Average long-term U.S. mortgage rates retreated modestly this week, but interest on the key 30-year loan remains at decade-high levels.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate slipped to 5.25% from 5.3% last week. By contrast, the average rate stood at 3% a year ago.

Earlier this month, the Federal Reserve intensified its fight against the worst inflation in 40 years by raising its benchmark interest rate by a half-percentage point and signaling more big rate hikes to come. The Fed’s move, its most aggressive since 2000, will mean higher costs for mortgages as well as credit cards, auto loans and other borrowing for individuals and businesses.

Last week, the government reported that U.S. producer prices soared 11% in April from a year earlier, a hefty gain that indicates high inflation for consumers and businesses will linger in the months ahead. In a separate report last week, government data showed that consumer prices jumped 8.3% last month from a year ago, just below the 8.5% year-over-year surge in March, which was the highest since 1981.

Homeownership has become an increasingly difficult aspiration recently, especially for first-time buyers. Besides staggering inflation, rising mortgage rates and higher home prices, the supply of homes for sale continues to be scarce.

Some economists predict that home sales this year could decline as much as 10% from 2021 levels.

“Economic uncertainty is causing mortgage rate volatility,” said Freddie Mac Chief Economist Sam Khater. “As a result, purchase demand is waning, and homebuilder sentiment has dropped to the lowest level in nearly two years.”

Khater noted that builders are also facing rising costs.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, slipped to 4.43% from 4.48% last week. That rate was 2.29% a year ago.

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/mortgage-rates-slip-little-down-525

Fla. April Home Median Prices Up, Limited Supply

Florida Realtors: Fla.’s single-family median price up 21.8% to $410K. Condo median price up 24% to $310K. Higher interest rates and tight inventory slow sales.

ORLANDO, Fla. – Florida’s housing market may be showing some beginning signs of cooling in April: Mortgage interest rates and median home prices continued to rise amid a still-constrained supply of for-sale homes, resulting in fewer closed sales compared to a year ago, according to Florida Realtors®’ latest housing data.

“Rising interest rates and high inflation are impacting all of us, and those factors are definitely affecting Florida’s housing market,” says 2022 Florida Realtors President Christina Pappas, vice president of the Keyes Family of Companies in Miami. “However, our lack of a state income tax, our beautiful beaches and waterways, and warm sunny weather continues to attract new residents, investors and second-home buyers to Florida, especially in the work-from-anywhere world today. In April, the median time to contract for single-family existing was eight days compared to 11 days during the same month a year ago. And the median time to contract for existing condo-townhouse units was 10 days compared to 24 in April 2021.

“Buying or selling a home is a complex process, and a local Realtor can help consumers understand their local market and provide expert guidance to ensure peace of mind.”

Last month, closed sales of single-family homes statewide totaled 28,171, down 15.3% year-over-year, while existing condo-townhouse sales totaled 13,711, down 20.9% from April 2021. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

Florida Realtors Chief Economist Dr. Brad O’Connor pointed to the rapid rise in mortgage interest rates this year, particularly in March and April, as a major factor slowing home sales last month, along with still-rising home prices and restricted supply.

“Remember, 2021 was characterized by near-record low mortgage rates that allowed for a huge surge in homebuying demand,” he said. “So it’s simply unreasonable for us to expect that the market will perform just as well this year, now that we are in a higher interest-rate environment. Closed sales are performing at about the level they were leading up to the pandemic, despite higher mortgage rates, low supply and much, much higher sale prices.”

The statewide median sales price for single-family existing homes in April was $410,000, up 21.8% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units was $310,000, up 24% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Dr. O’Connor added, “Again we need to remind ourselves that many home sales that closed in April actually had their prices determined when they went under contract a month or two earlier, just as rates were really starting to take off.

“In the longer run, price growth should start to moderate in response to these higher rates, so this is an important statistic to keep your eye on over the next few months as an increasing share of sellers will inevitably have to start adjusting their expectations to a degree.”

On the supply side of the market, inventory (active listings) remained tightly constrained in April 2022: Single-family existing homes were at very limited 1.1-months’ supply while condo-townhouse inventory was at a 1.3-months’ supply.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.98% in April, significantly higher than the 3.06% averaged during the same month a year earlier.

To see the full statewide housing activity reports, go to the Florida Realtors Newsroom and look under Latest Releases or download the April 2022 data report PDFs under Market Data.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/fla-april-home-median-prices-limited-supply

Latest Fake Online Listing? The ‘Full House’ House

Zillow featured the home used for the TV show “Full House,” only to walk it back and say the property, listed for $37M, wasn’t actually for sale.

SAN FRANCISCO (KRON) – Zillow has confirmed that the San Francisco house featured in the “Full House” credit sequence is not actually for sale.

The house was posted for sale on Zillow for $37 million on Tuesday. As of Wednesday, the listing had been taken down.

“Our teams use a number of different tools to prevent inappropriate content from publishing in the first place, but if a listing is found to be fraudulent after it’s posted, our team takes steps to remove it,” a Zillow spokesperson told Nexstar’s KRON. “In this case, we discovered a ‘For Sale By Owner’ listing was illegitimate after it was posted and have since taken it down. We apologize for any confusion this may have caused.”

The house, located at 1709 Broderick St. in San Francisco’s Pacific Heights neighborhood, was last sold Oct. 2, 2020, for $5.4 million, according to Zillow.

It was previously owned by “Full House” executive producer and creator Jeff Franklin, who purchased it in 2016. The appearance of the home changed over time since the show aired, and Franklin reportedly wanted the house to look like it did on television. However, neighbors opposed his suggested renovations due to a possible influx in tourists.

Franklin sold the house in 2020.

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https://www.floridarealtors.org/news-media/news-articles/2022/05/latest-fake-online-listing-full-house-house

3 Fla. Metros in Top 15 for Mortgage Fraud

Buyers feel pressure to lie on mortgage applications as homes become less affordable, and it’s become more prevalent in South Fla., Orlando and Tampa metros.

NEW YORK – Mortgage fraud is on the rise, and it’s worse in some areas. CoreLogic’s Mortgage Fraud Risk Index found an overall 15% increase when comparing the first quarter of 2022 to the first quarter of 2021.

“We may expect to see additional increases in risk behavior as borrowers try to quickly close on their loans ahead of rate increases,” CoreLogic notes in a brief.

Three Florida metros rank in the top 15 worst states for mortgage fraud, according to the index:

  • No. 2: Miami-Fort Lauderdale-Pompano Beach, with an index of 253 and year-to-year mortgage-fraud increase of 16%.
  • No. 11: Orlando-Kissimmee-Sanford, with an index of 168 and 1% year-to-year increase
  • No. 15: Tampa-St. Petersburg-Clearwater, with an index of 161 – but a 7% year-to-year decrease

The top U.S. metro for mortgage fraud, according to CoreLogic, is Poughkeepsie-Newburgh-Middletown, New York, with an index of 253 and a 16% year-to-year increase.

Refinances made up 46% of the loan applications in the first quarter, a falling number. A greater share of the refinance population will be for cash out, which will likely translate into higher fraud risk moving forward, CoreLogic notes in the report’s brief.

Source: “Q1 2022 Quarterly Mortgage Fraud Brief,” CoreLogic (May 16, 2022)

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https://www.floridarealtors.org/news-media/news-articles/2022/05/3-fla-metros-top-15-mortgage-fraud