Commercial Real Estate: Opportunities and Challenges Abound

Florida Realtors economist: Real estate’s residential side has been on fire since summer 2020. How has the commercial side fared? It’s hot – and it’s not. It depends on where you look. The delta variant of COVID-19 slowed the office market even as it relit a fire under other commercial sectors.

ORLANDO, Fla – How has the pandemic – and its delta variant resurgence – impacted the U.S. commercial real estate market?

The National Association of Realtors Research Group recently published their latest “Commercial Market Insights – September 2021” report. The insights come from NAR’s Quarterly Commercial Market Survey conducted among its commercial members to gather information about their local market conditions. In the latest survey, respondents were asked how members are adapting to the pandemic and general market observations.

Headline takeaways

The delta variant took a bite out of expected office occupancy gains, as companies halted their expected return-to-work push or slowed plans until the fall. The limited return of business travel also impacted tourism numbers, particularly since convention season was expected to bring business travelers back in droves.

Now that hybrid or entirely remote work options are taking hold, tenants increasingly opt for smaller office spaces and shorter lease terms: 65% of survey respondents reported more businesses leasing or moving into offices with smaller square footage; 54% reported more short-term leases of less than two years.

With a glut of sublease inventory coming to market, tenants are increasingly in the driver’s seat at the negotiating table. Companies underutilizing their space foresee this being the case for the mid-long term, and they’re cutting bait and putting some or all of their space back on the market. This space is competing with vacant space, and can be more attractive if the amount of square footage and remaining lease term resonates with other businesses looking for a small space and a shorter term.

Landlords are being hit with increased construction and labor costs, making tenant improvements more expensive. Tenant retention is key, as recruitment and onboarding is more expensive than in typical times. Suburban office is the darling this cycle, as people grow weary of being home but still desire an alternative to the “typical commute to the headquarters” workweek. Companies are expanding with satellite offices in suburban markets to offer employees that alternative.

Several Florida markets have stronger market conditions compared to the overall U.S. market, particularly Miami, Palm Beach and Daytona Beach. Strong in-migration, affordable residential property and commercial returns allow assets in these markets to offer higher returns.

Drivers of demand

Certain office markets continue to recover, particularly among sectors like finance and insurance, real estate, information services, and professional and business services. While overall employment hasn’t returned to pre-pandemic levels, these sectors continued to hold on to employment more steadily than leisure and hospitality, and retail trade. Increased home sales and e-commerce have helped pull a lot of these industries forward.


Vacancy compression has been most aggressive in the multifamily, retail and industrial sectors. This again is fueled by a healthy housing market – when people buy homes, they buy the stuff to go in them. The housing market in some areas is so hot that would-be buyers are opting out of the purchase process and electing to sit on the sidelines in a rental, helping occupancy in this sector. Unsurprisingly, the office sector continues to see overall net negative absorption quarter after quarter, though the decline is steadily improving.


Rent growth is highest in multifamily, again driven by strong demand from people moving out on their own or discouraged to purchase due to high prices. Some buyers are also choosing to “sell to rent” – selling their current home to cash in on the high prices, pocketing the equity, then moving into a rental until they perceive prices are more in line with their next purchase. Industrial is also seeing strong rent growth fueled by tight vacancy and increased demand. While retail is faring better from an occupancy perspective, a glut of existing space on the market makes it hard for landlords to aggressively push rental rates up. The office market, for example, is seeing negative rent growth due to lackluster demand and steady supply from the sublease side of the market.


It’s a tale as old as, well, this cycle. Construction never kept pace with demand coming out of the Great Recession for a myriad of reasons. As a result, oversupply is rarely a problem in most markets. Coming through the last 18-months, supply chain disruptions and increased prices on construction materials has made the construction process more expensive. Labor continues to be an issue, particularly in markets where a heavy emphasis on single-family construction competes for the same construction workers.

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

© 2021 Florida Realtors®


Report: Fla. Closing Costs Are 2.32% of Home Price

In the U.S., closing costs, including taxes, were up 10.5% year-to-year, and almost $7K for an average price home. In Fla. it’s a bit higher: $8.5K for the average home.

SAN DIEGO – In the first half of 2021, average closing costs for buying a single-family U.S. property were $6,837 including taxes (up 12.3% year-to-year), and $3,836 excluding taxes (up 10.5% year-to-year). Refinancing costs increased marginally to $2,398 – a 4.87% change from the reported 2020 average of $2,287, according to ClosingCorp, a provider of residential real estate closing cost data and technology.

Since ClosingCorp based its calculations on a state or metro area’s average home price, the dollar amounts used for comparisons can vary.

In Florida, the average home price used for the study for the first half of the year was $368,560. Based on that, total closing costs, including taxes, were $8,551. If taxes are backed out, it’s $4,484. At 2.32% of the home’s purchase price, that puts the state at No. 8 in total closing costs.

For the closing-cost calculation, ClosingCorp included the lender’s title policy, owner’s title policy, appraisal, settlement, recording fees, land surveys and transfer tax, based on CoreLogic data.

“To get a better overall picture of what is actually going on in a market, we analyzed data on more than 1.9 million single-family purchase transactions that ran through our ClosingCorp Fees platform in the first half of this year,” says Dori Daganhardt, chief data officer of ClosingCorp. “We are reporting ‘market-specific’ rates and fees, not just network averages charged by the most active settlement services providers in each geographic area.”

In the first half of 2021, higher home prices led to higher closing costs.

“In June, for example, the average national price hit a new high of $373,664; and in July, leading home price indices registered their highest ever year-over-year gains,” says Bob Jennings, chief executive officer of ClosingCorp.

Even though total closing costs rose early this year, however, Jennings says that rate of that increase slowed.

“Although the average home price increased by nearly $45,000, the closing costs, excluding taxes, on that property only increased by $400,” he says. “In fact, closing costs as a percentage of purchase prices declined this year, going from 1.06% of the transaction in 2020 down to 1.03%.”

Taxes included: Closing costs

Highest average: Closing costs

  • District of Columbia ($30,352)
  • Delaware ($17,831)
  • New York ($17,582)
  • Washington ($13,909)
  • Maryland ($12,056)

Lowest average closing costs

  • Missouri ($2,102)
  • Indiana ($2,193)
  • North Dakota ($2,321)
  • Kentucky ($2,355)
  • Wyoming ($2,509)

Without taxes included: Closing costs

Highest average closing costs

  • District of Columbia ($6,523)
  • New York ($6,300)
  • Hawaii ($5,976)
  • California ($5,772)
  • Washington ($4,803)

Lowest average closing costs

  • Arkansas ($2,071)
  • Missouri ($2,102)
  • Indiana ($2,193)
  • Nebraska ($2,193)
  • Kentucky ($2,193)

© 2021 Florida Realtors®


Fla.-Owned Insurer’s CEO Cites ‘Sea of Red Ink’

The head of Citizens Property Insurance calls losses among all state insurers “absolutely staggering.” He blames the marketplace itself, saying it impacts every company.

TALLAHASSEE – Pointing to a “sea of red ink,” the head of the Florida-backed Citizens Property Insurance Corp. described a private insurance industry in the state that is losing gobs of money while homeowners face soaring rates and trouble finding coverage.

“The consistency of loss across the entire marketplace is absolutely staggering,” Citizens President and CEO Barry Gilway told the Florida Legislature’s House Insurance & Banking Subcommittee. “It’s not a decision that one or two companies are making. The reality is that what is occurring in the marketplace is impacting every single company in the market.”

Gilway went before the panel less than six months after lawmakers passed a measure (SB 76) to try to bolster the property-insurance system. But as evidence of continuing problems, the number of policies written by Citizens has soared to more than 700,000 and is expected to climb above 1 million next year, as more homeowners turn to it for coverage.

While Gilway’s presentation focused heavily on financial problems in the insurance industry, Rep. Matt Willhite, D-Wellington, asked about the impact on homeowners, citing a disabled veteran who got hit with a large rate increase.

“Where is the breaking point for the disabled military veteran, who is on a fixed income, that can’t insure their home when they are at a breaking point themselves?” Willhite asked.

With lawmakers preparing to start the 2022 legislative session in January, the meeting Wednesday did not include detailed discussions of proposals to address the problems. As an example of one idea, Rep. Tom Fabricio, R-Miramar, floated the possibility of more broadly opening the market to what are known as surplus-lines carriers, which don’t face the same regulatory oversight as more-traditional insurers.

But House Minority Co-leader Evan Jenne, D-Dania Beach, pointed to numerous changes in the property-insurance system over the past two decades and questioned whether the state needs a new approach.

“Should we be moving in a completely different direction?” Jenne asked. “What we have been trying to do, a lot of it has been built on one another. Yet we continuously find the same results and find ourselves in these sticky situations. Should we be looking at something new?”

Citizens was originally created as an insurer of last resort, but it has seen huge growth since mid-2020 as private insurers have raised rates and reduced policies to try to stem financial losses. Citizens added nearly 22,000 policies last month and had 708,919 policies as of Sept. 30, according to data posted on its website. It had gained almost 200,000 policies since Sept. 30, 2020, when it totaled 511,055 policies, and Gilway said recently that an initial forecast for 2022 includes 1 million to 1.3 million policies.

Many lawmakers and state leaders have long sought to move homeowners from Citizens into the private market, largely because of concerns about financial risks for taxpayers if Florida gets hit with a major hurricane.

But along with private insurers reducing the amount of coverage they will write because of financial problems, Gilway said Citizens often has cheaper rates than private companies. In addition, many homeowners in areas such as Southeast Florida rely on Citizens because they have few other options for coverage.

The legislation passed in April took a series of steps, including trying to help curb lawsuits against insurers and gradually raising a cap on rate increases for Citizens customers.

However, one key part of the bill – designed to prevent contractors from soliciting homeowners to file roof-damage claims – was blocked by a federal judge because of First Amendment concerns. Insurers contend they have faced soaring costs because of unnecessary, if not fraudulent, roof-damage claims.

Gilway’s comments Wednesday, in some ways, echoed state Insurance Commissioner David Altmaier, who last month told a Senate committee that the condition of the property-insurance market was “dire.”

Gilway, who said he has been in the insurance business for 51 years, used graphics to show lawmakers that dozens of private insurers have sustained net-income losses in recent years. Among the factors he cited were litigation costs and the costs of reinsurance, which is essentially insurance that insurers buy as a backup.

Gilway also said Florida’s Office of Insurance Regulation in 2020 received 105 rate filings from insurers that sought increases of 10% or more – and customers of some companies have seen rate increases of more than 25% in 2020 and 2021.

Gilway said the situation is not “sustainable.”

“It is not acceptable to have Floridians faced with increasing rates that are staggering,” he said.

Source: News Service of Florida


White House Targets Economic Risks from Climate Change

A new 40-page report takes a broad view on steps being taken to mitigate risks, including possible HUD and VA buyer disclosures on flood and climate-related threats.

WASHINGTON (AP) – The Biden administration is taking steps to address the economic risks from climate change, issuing a 40-page report Friday on government-wide plans to protect the financial, insurance and housing markets, and the savings of American families.

Under the report, the mortgage process, stock market disclosures, retirement plans, federal procurement and government budgeting are all being reconsidered so the country could price in the risks being created by climate change. The report is a follow-up to a May executive order by President Joe Biden that essentially calls on the government to analyze how extreme heat, flooding, storms, wildfires and broader adjustments to address climate change could affect the world’s largest economy.

“If this year has shown us anything, it’s that climate change poses an ongoing urgent and systemic risk to our economy and to the lives and livelihoods of everyday Americans, and we must act now,” Gina McCarthy, the White House national climate adviser, told reporters.

A February storm in Texas led to widespread power outages, 210 deaths and severe property damage. Wildfires raged in Western states. The heat dome in the Pacific Northwest caused record temperatures in Seattle and Portland, Oregon. Hurricane Ida struck Louisiana in August and caused deadly flooding in the Northeast.

The actions being recommended by the Biden administration reflect a significant shift in the broader discussion about climate change, suggesting that the nation must prepare for the costs that families, investors and governments will bear.

The report is also an effort to showcase to the world how serious the U.S. government is about tackling climate change ahead of the United Nations Climate Change Conference running from Oct. 31 to Nov. 12 in Glasgow, Scotland.

Among the steps outlined is the government’s Financial Stability Oversight Council developing the tools to identify and lessen climate-related risks to the economy. The Treasury Department plans to address the risks to the insurance sector and availability of coverage. The Securities and Exchange Commission is looking at mandatory disclosure rules about the opportunities and risks generated by climate change.

The Labor Department on Wednesday proposed a rule for investment managers to factor environmental decisions into the choices made for pensions and retirement savings. The Office of Management and Budget announced the government will begin the process of asking federal agencies to consider greenhouse gas emissions from the companies providing supplies. Biden’s budget proposal for fiscal 2023 will feature an assessment of climate risks.

Federal agencies involved in lending and mortgages for homes are looking for the impact on the housing market, with the Department of Housing and Urban Development and its partners developing disclosures for homebuyers on flood and climate-related risks. The Department of Veterans Affairs will also look at climate risks for its home lending program.

The Federal Emergency Management Agency is updating the standards for its National Flood Insurance Program, potentially revising guidelines that go back to 1976.

“We now do recognize that climate change is a systemic risk,” McCarthy said. “We have to look fundamentally at the way the federal government does its job and how we look at the finance system and its stability.”

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.


U.S. Funding More Multifamily in 2022 – 50% Must be Affordable

The U.S. will increase loan caps for multifamily housing by 11.4% next year, and 50% of the $156B total ($140B this year) must go to “mission-driven affordable housing.”

WASHINGTON – The Federal Housing Finance Agency (FHFA) announced 2022 multifamily loan purchase caps for Fannie Mae and Freddie Mac will rise to $78 billion, or an 11.4% increase over 2021 caps.

In 2022, the Enterprises will have a combined $156 billion cap, up from $140 billion this year ($70 billion each). FHFA says the amount is based on future projections for overall growth in the multifamily sector. If demand turns out to be stronger than projected, the amount could move even higher; however, FHFA won’t lower the caps if the market proves to be smaller.

The loans have rules attached. FHFA says the 2022 amounts must have a “strong focus on affordable housing and traditionally underserved markets.” Of the total funding, 50% must be “mission-driven affordable housing,” and 25% must be “affordable to residents at or below 60% of area median income (AMI),” an increase from 20% this year.

FHFA Acting Director Sandra L. Thompson says the increase assures that Fannie and Freddie “have a strong and growing commitment to affordable housing finance, particularly for residents and communities that are the most difficult to serve.”

Along with announcing the funding increase, FHFA says it changed some of the lending definitions, notably what entails “mission-driven affordable housing.” It published information in Appendix A: Multifamily Definitions.

© 2021 Florida Realtors®


How Many Offers Did the Typical 2021 Buyer Make? Two

While stories about multiple offers and foregone inspections are pervasive, a study found that most buyers won by their second bid and 88% had a home inspection.

JACKSONVILLE, Fla. – While more frustrated buyers tried to make their offers seller-friendly so far this year, a Zillow study suggests that it’s not as pervasive as many of the media reports may indicate.

According to the research, the typical U.S. homebuyer nationwide made just two offers so far in 2021 before one was accepted. And while some buyers have decided to forego a home inspection to make their offer more palatable to a seller, 88% of buyers had an inspection done, despite reports that homebuyers were waiving inspections due to the hot housing market.

Before 2021, though, homebuyers had to submit a median of one offer.

The share of first-time homebuyers also dropped in 2021 to 37%, down from 43% in 2020.

The research also found that fewer buyers opted to buy a home sight unseen. Researchers found that virtual home tours proliferated, but nearly all buyers still took a private tour of a home before putting in an offer, with typical homebuyers going on three private tours before making an offer. Only 5% of buyers skipped private tours entirely.

Even though most buyers wanted an in-person home tour before making an offer, however, they still liked the virtual tours – 68% agreed that virtual tours helped them get a better feel for homes than just photos. About 61% wished more listings had 3D tours, and 61% said they wanted to schedule in-person tools online.

On questions about homebuyers’ motives, about 60% said low mortgage interest rates influenced their decision, and about 50% said they had enough saved up for a down payment.

Source: Jacksonville Business Journal (10/11/21) Medici, Andy

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688


U.S. Foreclosures Soar – But They Also Fall

In 3Q, the number of U.S. foreclosures surged 67% year-to-year as homes exited forbearance and bans ended. But compared to “normal” 3Q 2019, they’re down 60%.

WASHINGTON – Foreclosures in the United States are up dramatically nationwide now that emergency measures to help people stay in their homes have begun to expire, an industry report said Thursday.

According to mortgage data firm ATTOM, new foreclosures, or starts, rose by 32% from July to October compared to the April-July period – and were up 67% compared to the same period in 2020.

While the increases are dramatic, the report says they are particularly pronounced mainly because new foreclosures have been exceptionally low since the start of the COVID-19 pandemic due to emergency aid programs that staved off foreclosures for millions of homeowners.

Those programs have begun to expire and the market is seeing an uptick in starts as a result, the report said.

Typically, new foreclosures in the United States average around 40,000 per month. When the aid programs were in effect, that figure was under 5,000.

Thursday’s report showed 19,600 foreclosures in September, which was an increase of 24% from August and 102% from September 2020.

RealtyTrac executive vice president Rick Sharga said starts are still “far below” historical levels.

“September foreclosure actions were almost 70% lower than they were prior to the COVID-19 pandemic in September of 2019, and [third quarter] foreclosure activity was 60% lower than the same quarter that year,” he said. “Even with similar increases in foreclosures over the next few months, we’ll end the year significantly below what we’d see in a normal housing market.”

The report said the most new foreclosures from July to October were seen in Florida (5,400), Illinois (3,600), Texas (3,000), Ohio (2,600), New Jersey (2,100) and New York (2,000).

Copyright 2021 United Press International, Inc. (UPI). Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI’s prior written consent.


Mortgage Rates Surpass 3% Again – Hit a 6-Month High

Average mortgage rates continue to hover around 3%, but they’ve slowly ticked higher. This week, the 30-year, fixed-rate mortgage averaged 3.05%.

MCLEAN, Va. – At 3.05%, this week’s average, 30-year mortgage rate rose to a level unseen in six months, according to Freddie Mac’s weekly survey.

“The 30-year fixed-rate mortgage rose to its highest point since April,” says Sam Khater, Freddie Mac’s chief economist. “As inflationary pressure builds due to the ongoing pandemic and tightening monetary policy, we expect rates to continue a modest upswing.”

Temporary inflation might have little effect on mortgage rates, but expectations for continued inflation might. In addition, some Federal Reserve policies bolster low rates, but the central bank has talked about pulling those back later in the year.

“Historically speaking, rates are still low, but many potential homebuyers are staying on the sidelines due to high home price growth,” says Khater. “Rising mortgage rates combined with growing home prices make affordability more challenging for potential homebuyers.”

Average mortgage rates for the week of Oct. 24, 2021

  • The 30-year fixed-rate mortgage averaged 3.05% with an average 0.7 point for the week, up from last week’s 2.99%. A year ago, it averaged 2.81%.
  • The 15-year fixed-rate mortgage averaged 2.30% with an average 0.7 point, up from last week’s 2.23%. A year ago, the 15-year FRM averaged 2.35%.
  • The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.55% with an average 0.2 point, up from last week’s 2.52%. A year ago, the 5-year ARM averaged 2.90%.

© 2021 Florida Realtors®


Many Condo Appraisers Will Start Assessing Building Safety

In response to the Surfside condo collapse, Fannie Mae says its condominium loan decisions after Jan. 1 will include a stronger look at the overall condo building. Loan decisions will consider current or planned special assessments and any deferred maintenance issues.

WASHINGTON – It might become more difficult to get a condo mortgage loan after Jan. 1, 2022, if appraisers cite potential safety problems with the building, notably potential special assessments or safety issues.

According to Fannie Mae, the new requirements apply to mortgages it purchases, a standard most lenders follow.

According to Fannie Mae Director, Single-Family Collateral Risk Management, Jodi Horne, the collapse of Champlain Towers South in Surfside, Fla., in late June 2021 led the secondary mortgage lender to tighten its oversight of condo buildings.

While an official explanation for the collapse hasn’t been released, Horne cites “significant deferred maintenance that led to potentially life-threatening structural deficiencies.” As a result, she says Fannie Mae focused new attention on “significant deferred maintenance of aging condo and co-op infrastructure” that “reaffirm our commitment to supporting sustainable homeownership in condo and co-op projects.”

After Jan. 1, Fannie Mae will generally not support condo or co-op loans with deferred maintenance or “a repair directive from a local regulatory authority or inspection agency to make repairs due to unsafe conditions are ineligible for delivery to us until required repairs have been made.”

Updated requirements for Fannie-backed condo/co-op loans after Jan. 1

  • Stricter eligibility review requirements for any condo or co-op project that issued or is planning to issue a special assessment to address deferred maintenance items that impact the “safety, soundness, structural integrity or habitability of a condo or co-op”
  • Stronger lender requirements for reviewing condo and co-op project reserves
  • Stricter emphasis on appraisals, notably that they must document special assessments or deferred maintenance that could impact the “safety, soundness, structural integrity or habitability of a condo or co-op unit or the overall project and its amenities.”

“Adequate financial reserves are critical to funding the significant maintenance that supports ongoing viability of condo and co-op projects,” Horne writes. “Our latest guidelines reinforce our project reserve requirements and focus on their importance.”

Fannie Mae calls the new requirements “temporary” but “in place until further notice.” At the same time, Horne says Fannie Mae is not yet done studying the issues faced by older condo and co-op infrastructure.

Additional information about Fannie Mae’s updates

© 2021 Florida Realtors®


U.S. Land Border Plan: Vaccinated Canadians Can Return in Nov.

WASHINGTON – A motley coalition of elected officials, bilateral business leaders and travelers-turned-lobbyists briefly cheered the coming reprieve from restrictions at the Canada-U.S. border Wednesday before confronting their next challenge: the question of mixed-dose vaccinations.

The plan for early November, spelled out by senior Biden administration officials as well as Homeland Security Secretary Alejandro Mayorkas, was short on key details, most notably whether the U.S. will consider the many Canadians who received two different vaccines to be fully vaccinated.

“Cross-border travel creates significant economic activity in our border communities and benefits our broader economy. We are pleased to be taking steps to resume regular travel in a safe and sustainable manner,” Mayorkas said in a statement.

“This new travel system will create consistent, stringent protocols for all foreign nationals travelling to the United States – whether by air, land, or ferry – and accounts for the wide availability of COVID-19 vaccinations.”

U.S. officials say experts at the Centers for Disease Control and Prevention are actively exploring the issue of whether to allow travelers who received a mix of vaccines. Ottawa has also been actively lobbying the White House on the issue, including with the Public Health Agency of Canada’s own research on the effectiveness of mixed doses.

That question, along with the absence of a hard start date beyond early November and a lack of specificity on what kind of paperwork travelers will be required to show, dampened the enthusiasm for an announcement people on both sides of the border have been waiting to hear for months.

“The job is not finished,” said Perrin Beatty, president and chief executive officer of the Canadian Chamber of Commerce.

“The two governments need to work together to ensure that fully vaccinated Canadians with mixed-dose combinations are eligible for entry into the United States.”

New York congressman Brian Higgins, whose crusade against the travel restrictions has made him the movement’s de facto spiritual leader, acknowledged that the White House needs to clarify precisely how it intends to define a fully vaccinated traveler.

“That is one of the issues that we’re trying to get clarification on,” Higgins told a news conference. “That’s one of those outstanding issues and still needs to be addressed.” Why it took so long might remain a mystery for the ages, he added.

“I think it’s completely irrational. I think it’s totally unnecessary. These borders should have been opened at the same time, and should have been opened months, months earlier than they actually were opened.”

The U.S. will not be requiring travelers to show proof of a negative test for COVID-19, unlike Canada, which includes a recent negative PCR test among the requirements for everyone entering the country, including Canadian citizens and permanent residents.

Beatty also called on Canada to eliminate the need for a pre-departure test, as well as to work with the U.S. on an interoperable vaccine certification system in order to deal with anticipated higher travel volumes.

Drew Dilkens, the mayor of Windsor, Ontario, called Wednesday’s announcement “a long time coming,” but echoed calls for more details about the logistics and for Canada to revisit the testing requirement. “PCR tests, at least in Ontario, cost about $200 a person,” Dilkens said. “So you’re not going to go over for the day, you’re not going to go over to see a baseball game or a concert or just pop over to see Mom and Dad – it’s going to be a very planned trip and it’s going to be very expensive.”

Deputy Prime Minister Chrystia Freeland, who happened to be in Washington on Wednesday, warned Canadians not to let down their guard just yet.

“We have almost – almost – gotten past COVID,” Freeland said. “Just try to do the things you need to do, and maybe hold back on doing the things that you just want to do. I think if we can keep on doing that for a few more weeks, Canada can really fully put COVID behind us.”

Sarnia Mayor Mike Bradley said he believes Canadians will continue to be cautious, given that some parts of the U.S. have looser public health measures and higher COVID-19 case counts – a concern he said also emerged when Canada eased its border restrictions for Americans in early August.

“I do believe the Canadian government made a mistake by opening our border without getting a reciprocal arrangement with the Americans. It’s four months later, but it’s happening, and it’s a good thing,” he said. “I just need to make sure that all the things will be in place to protect people when they go there and come back.”

Evan Rachkovsky, spokesman for the Canadian Snowbird Association, said he anticipates vehicle traffic at the border will come close to pre-pandemic levels once the restrictions are eased – but said the White House is definitely “cutting it close” for snowbirds hoping to winter in the southern U.S.

“There is obviously a bit of scrambling – some snowbirds have already made plans to ship their vehicle down south and then fly to meet those vehicles in the United States,” Rachkovsky said.

The Biden administration’s strategy is to dovetail the land border policy with its new international travel rules, which will also take effect in November and replace existing travel bans with a new requirement that all foreign nationals show proof of vaccination.

As of early January, all foreign nationals entering the U.S., whether for essential or non-essential reasons, will be required to show proof of vaccination, officials said. In order to be considered fully vaccinated, travelers must have received a full course of a COVID-19 vaccine approved by either the U.S. Food and Drug Administration or the World Health Organization. That includes Oxford-AstraZeneca, a vaccine used in Canada that never received FDA approval.

Fully vaccinated U.S. citizens and permanent residents have been allowed back into Canada since August, provided they have waited at least 14 days since getting a full course of a Health Canada-approved vaccine and can show proof of a recent negative COVID-19 test.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. This report by The Canadian Press was first published Oct. 13, 2021, with files from Paola Loriggio in Toronto and Chris Reynolds in Ottawa.


Some Nonbanks Raised Conforming Loan Limits to $625K

Loan limits will likely go up to $625K in 2022, but FHFA hasn’t announced it yet. Still, higher home values have convinced some lenders to boost loan limits now.

WASHINGTON – Several nonbanks are raising their conforming single-family loan limits to $625,000 to help borrowers keep pace with rising home prices. The announcements jumpstart the Federal Housing Finance Agency (FHF), which typically announces conforming loan limit increases for the upcoming year in November or early December.

The loan limits define the upper range for conforming loans acceptable to Fannie Mae and Freddie Mac. Conforming loan limits are currently capped by the FHFA at $548,250 in most markets.

Rocket Co., Finance of America Mortgage, Homepoint, PennyMac and United Wholesale Mortgage are among the lenders that recently announced an increase to their conforming loan limits. The higher-balance loan programs represent an increase of more than $75,000 to the maximum loan limit for a conforming loan in many markets.

“We want to help ease some of the barriers to entry and the heavy burden that comes with rising home prices, and continue to push the dream of homeownership out of reach for many first-time buyers,” Bill Dallas, Finance of America Mortgage president, said in a statement. “Increasing the estimated maximum loan amount on our tailored loans expands access to mortgage credit at lower rates to purchase and refinance borrowers.”

The swift increase in home prices has prompted lenders to take steps earlier than the FHFA’s 2022 announcement, they say.

“We view this as a retrospective step forward of the FHFA’s upcoming increase in the loan limit for 2022, which we expect will be more than that experienced in the previous year,” PennyMac officials said in a statement. “The average nationwide home price will roughly reflect an appreciation of 15% to 20%. The idea is to gain some market share and drive earnings in the near term … and eventually distribute loans to (Fannie Mae and Freddie Mac after) the new limits take effect.”

Lenders expect rising interest rates to cut into their business over the coming months. Credit has been shrinking, and some housing analysts say that lenders may be jumping ahead on the conforming loan limit to try to capture more business.

“It is certainly a safe bet that the FHFA will raise the loan limit in November,” says Joel Kahn, associate vice president of economic and industry forecasting for the Mortgage Bankers Association. “It’s just how much goes up, and whether lenders have the liquidity to fund/hold those loans until they disburse them to the GSE.”

Source: “Rocket, Homepoint, FOA Raise Fannie, Freddie Conforming Loan Limits,” The Anand Market (Oct. 12, 2021); Finance of America Mortgage; and PennyMac

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688


What Would Boost the Real Estate Industry? More Babies

The U.S. birth rate is the lowest it’s been in more than 100 years, and pregnant homeowner couples are a top reason buyers decide to upgrade to a large house.

CHICAGO – The nation’s birth rate is at more than a 100-year low – the lowest level since the National Center for Health Statistics first started collecting such data. And that lower birth rate could have a future impact on housing demand, according to Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors® (NAR).

Birth rates have been declining since 2007 but have fallen at a faster clip since the pandemic.

“The baby bust has likely been fueled by economic and health concerns of women during the pandemic,” Lautz writes in NAR’s blog. “As some families saw women leave the workforce in the last year, it may not have been financially possible to add a new baby to the family. Some women may not have felt comfortable going into a doctor’s office during pregnancy or had limited family support systems due to safety concerns of COVID-19.”

The birth rate can have implications for real estate because pregnancy is often a leading housing decision, prompting new families to buy a home or desire a larger home, Lautz notes. The decline in childbirth coincides with fewer home buyers with children in the home.

In 1985, 58% of buyers had children under the age of 18. That percentage has since fallen to 33%, Lautz notes.

Source: “A Nearly Unbelievable Data Point: The Birth Rate,” National Association of REALTORS® Economists’ Outlook blog (Oct. 4, 2021)

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688


Jumbo Home Loans Near Pre-2008 Crisis Levels

Fewer buyers qualify for conventional mortgages due to higher prices and lower downpayments. As a result, the number of jumbo loans is at pre-Great-Recession levels.

NEW YORK – Bank of America (BofA) researchers reported that originations of “jumbo” U.S. residential mortgage loans surpassing “conforming limits” set for Freddie Mac and Fannie Mae could total $550 billion this year, a level not seen since the run-up to the 2008 financial crisis.

Jumbo originations reached about $283 billion in the first half of 2021, putting the annual volume close to a post-crisis record. However, several public mortgage lenders recently said they would offer borrowers confirming loans of up to $625,000, a level expected to match new federal guidelines for 2022.

Bank of America said jumbo mortgage-bond issuance in 2021 has already reached a post-2008 record of $38 billion, with $45 billion likely by year’s end. The firm cited an expanded investor base for private-label mortgage bonds, as well as low credit losses and “strong” origination guidelines.

Credit in the U.S. housing market is on the rise yet remains relatively tight in the years since millions of homes wound up in foreclosure. Qualified borrowers recently could obtain rates of less than 3% on 30-year fixed home loans, a boon for many first-time home buyers.

Wall Street generally expects the Federal Reserve to detail its plan in November for tapering its $120 billion in monthly emergency purchases of Treasury and agency mortgage-backed securities as the U.S. economy bounces back. Tapering could also push mortgage rates higher.

Source: MarketWatch (10/11/21) Wiltermuth, Joy

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688


Can’t Afford a Home? Co-buying Skyrockets

More roommates are committing to long-term relationships and co-buying a home. ATTOM says the number of co-buyers with different last names surged 771% in six years.

SAN FRANCISCO – Millennials are pooling finances with roommates, friends and significant others to buy a home together.

The number of home and condo sales by co-buyers is increasing, according to research from ATTOM Data Solutions. The number of co-buyers with different last names surged by a whopping 771% between 2014 and 2021.

The trend especially took off during the pandemic. From April to June 2020, 11% of buyers purchased as an unmarried couple and 3% as “other” (e.g., roommates), according to data from the National Association of Realtors® (NAR). That’s up from 9% and 2%, respectively, in 2019.

“During the pandemic, people have been renting and they may have wanted more space, and so they looked at, perhaps, their roommate and decided, ‘Let’s go buy a home together,” Jessica Lautz, vice president of demographics and behavioral insights for NAR, told The Wall Street Journal.

But affording a home isn’t easy for a first-time buyer. The median existing-home price for all housing types was $356,700 in August, up nearly 15% from a year earlier.

Besides the higher costs to buy, student loan debt increasingly burdens young adults, hampering their ability to afford a home. Half of the potential homebuyers surveyed this year say they haven’t bought yet because of student debt, according to a report by NAR and Morning Consult. Millennials are the most likely to point to student debt as a top reason for delaying homeownership.

Those with student loan debt are still finding ways to buy, though. In addition to co-buying, for example, they may apply for a mortgage with a co-signer such as a family member to help improve their credit status.

Source: “Millennials Team Up to Fulfill the Dream of Homeownership,” The Wall Street Journal (Oct. 11, 2021) [Log-in required.]

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688


Buyer, 84, Fatally Shoots Agent Over Home Dispute

A Va. homebuyer bought a home sight unseen and wanted to “return the house.” He killed his real estate agent who went over to talk about it and, later, himself.

PORTSMOUTH, Va. – Real estate professionals are on edge and in shock in Portsmouth, Va., where a real estate agent in the community was shot and killed by his homebuyer client.

Albert Baglione, 84, had just moved into his new home in Portsmouth, which he purchased sight unseen from Alabama. He moved in last Thursday. The next day, Baglione called his real estate agent asking to “return the house,” a neighbor told local WTKR-News 3.

Soren Arn-Oelschlegel, 41, a real estate professional with Long & Foster in Suffolk, Va., arrived at the house to talk with the man about his concerns. The conversation turned deadly.

Police were later called to the home, where police say that Baglione admitted to them that he killed Arn-Oelschlegel.

After Baglione spoke to police from his doorstep, he quickly shut the door to his home and then a gunshot rang out. Baglione took his own life, according to police reports. Police later found Arn-Oelschlegel inside the home with a fatal gunshot wound.

Colleagues and friends remembered Arn-Oelschlegel as a Realtor® immersed in his community, and a member of the LGBTQ nonprofit Hampton Roads Pride for more than a decade.

“He always had tons of energy,” Rudy Almanazor, president of Hampton Roads Pride, told WTKR-News 3. “I never saw him not smiling, laughing and wanting to have fun. He worked hard, played hard.”

The Outer Banks Association of Realtors® posted the following message on its site: “It really gives you pause when a tragedy happens so close to home. The shocking news of a 41-year-old Realtor being shot and killed by his buyer is unreal.”

Source: “New Details Released in Death of Hampton Roads REALTOR® Killed in Murder-Suicide,” WTKR.com (Oct. 11, 2021) and “REALTOR® Shot and Killed in Portsmouth,” The Outer Banks Voice (Oct. 11, 2021)

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688


Lawmakers Consider Changes to Fla. Law After Surfside Tragedy

How can the state mitigate condo disasters following the tragedy in Surfside? A Fla. Bar task force pulled together experts and submitted its recommendations on Tues. In Sept., Realtors outlined the problems condo buyers face getting important docs, suggesting better records and tighter oversight.

TALLAHASSEE, Fla. – In the aftermath of the collapse of Champlain Towers South in Surfside, Florida, state lawmakers and other stakeholders looked closely at existing laws and asked what could be done to avert a similar tragedy going forward. The building collapse killed 98 residents on June 24, 2021.

In response, the Florida Bar created the Condominium Law and Policy Life Safety Advisory Task Force, a task force that interviewed or heard from experts in various fields. The task force submitted its report to Gov. Ron DeSantis and the Florida Legislature on Tuesday.

While the governor and lawmakers say they need time to study the report, it’s expected to spark a discussion and possibly lead to changes in Florida condo law during the 2022 session of the Florida Legislature.

The Florida Bar Condominium Law and Policy Life Safety Advisory Task Force report includes a number of recommendations for condominium developments in Florida, including:

  • Require timely maintenance and repair
  • Empower condo boards to impose assessments on owners
  • Empower condo boards to borrow money to pay for repairs
  • Mandate engineer or architect reports on each building’s common elements
  • Require those common-element reports to be updated every five years
  • Boost requirements for cash reserves

According to task force chair and Florida attorney Bill Sklar, the recommendation to boost cash reserves is likely one of the most controversial proposals.

Realtors note problems faced by condo buyers

Speaking before a Sept. 8 meeting of the task force, Florida Realtors® members pointed out problems faced by many condominium buyers – problems that also reflect on difficulties current condo owners face. They called for greater transparency in condo sales.

“There were 20 new sales and eight rentals preceding Champlain,” said Keith Wood, director of ERA American Real Estate Sales and Rentals, according to Florida Bar News. “Would this have occurred if the whole picture had been presented? Maybe. Maybe not.”

Wood said Florida condo buyers can’t easily obtain inspection reports to help potential buyers understand a building’s condition. “Prospective owners don’t know the right questions to ask,” he said. “The transparency side is fundamentally unfair, and in no one’s best interest.”

According to Wesley Ulloa, broker and founder of South Florida’s Luxe Properties, it’s not just records that are difficult to obtain. She told the task force that she sometimes has difficulty even identifying board members – and once she does identify board members and obtain records, the minutes don’t clearly state whether a vote was taken to waive the requirement that an association maintain adequate reserves.

“We would like that information upfront, and in an easily accessible manner,” she said at the meeting. “We believe it’s a best practice that reserves should not be waived.”

Ulloa cited an example in Florida Bar News: She said a professional condo management company recently produced maintenance and other records for her buyer just two days before closing – records that she requested weeks earlier.

“That is too late for a potential purchaser to make a decision,” she said. “We are putting a buyer’s back up against the wall to decide whether they want to purchase it or not.”

Danielle Blake, chief of public policy for the Miami Association of Realtors, focused on mandatory 40-year inspection reports required by some South Florida metros. “When buyers are asking, when members are asking, where do I get that report, I don’t know where to tell them to go,” she said.

Florida has over 900,000 condominiums that are at least 30 years old, and proposed changes could impact about two million residents. Roberto Balbis, principal engineer for Ardaman & Associates Inc., told the task force that 40-year inspection requirements aren’t mandated statewide, noting that Gulf of Mexico salt spray is just as corrosive as Atlantic Ocean salt spray.

“I don’t see why that certification shouldn’t apply to Tampa or Clearwater,” Balbis told the task force in September. “Forty years seems like a long time.”

Source: Wall Street Journal, Oct. 12, 2021; Florida Bar News, Sept. 10, 2021

© 2021 Florida Realtors®


Commercial Investors Worry About Possible 1031 Exchange Rules

WASHINGTON – One proposal in President Joe Biden’s $1.8 trillion American Families Plan has been drawing close attention from concerned commercial real estate investors. It would place a $500,000 limit on 1031 exchanges, which allow investors to defer paying tax on real estate gains if they reinvest the proceeds to buy other property within six months of the sale.

The bill would limit gains to $500,000 for each taxpayer ($1 million for married taxpayers filing a joint return) each year for real property exchanges that are like-kind. Any gains from like-kind exchanges in excess of these limits would be recognized by the taxpayer in the year of the exchange. The tax break has been in the U.S. tax code since 1921.

Putting a limit on 1031 exchanges “would absolutely slow down the movement of capital in the industry,” said Keith Sturm, a principal with Minneapolis-based Upland Real Estate Group.

A proposed increase in the capital gains tax from 20% to 39.6% would also reduce returns for real estate investors.

“Most commercial real estate transactions are pretty high-dollar amounts, $1.5 million-plus. People don’t like paying 40 to 50% in taxes on the value of properties. So instead of selling and losing half of their value they just might decide to hold onto the property,” Sturm said.

According to a study supported by accounting firm Ernst & Young, eliminating 1031 exchanges would negatively impact the economy by up to $13.1 billion annually. One analysis (backed by research from Ernst & Young) found that a repeal of 1031 exchanges would likely result in less federal tax revenue.

In a statement, the National Association of Realtors pointed out that 1031 exchanges are used primarily by retirees, investors and landlords, not by the super-rich.

To qualify for tax-free deferral of a gain, the law also requires that before an investor closes on the sale of property to be used for a 1031 exchange, they enter into a contract with a qualified intermediary who will receive (temporarily) the sale proceeds similar to escrow. The intermediary holds the funds until the new property is purchased, said Brad Williams, a real estate attorney and partner with the Dorsey & Whitney law firm in Minneapolis.

Williams said so-called “reverse exchanges” in which a replacement property is identified and purchased first, have become more common than in the past. That’s driven by the intense competition among buyers for suitable properties, in a “hot” market.

In some cases, the tax deferral enables 1031 property buyers to pay higher prices for more desirable properties, or put money into necessary improvements, Williams pointed out.

1031 exchanges are not always relatively simple deals of exchanging one property for another, Williams said. With new developments funded by multiple sources of 1031 capital, “some of those deals can get pretty exotic.”

Bill Katter, president and chief investment officer of United Properties Development, pointed out that tax deferrals for like-kind exchanges are not unique to real estate, but are also available in every other asset class, including stocks. Historically the exchanges have been heavily favored by investors to defer gains. Exchanges “have fueled liquidity in our business, particularly for long-term, net-lease property; for example, a Starbucks location with a 10-year lease,” Katter said.

The 1031 exchange has often been used by farmers who sell their land for single-family home development. The 1031s are usually focused on predictable income, as opposed to high-risk acquisitions, such as an office building which relies on a few tenants to generate income. “Single-tenant retail and multifamily housing properties are good candidates for 1031 buyers,” Katter said.

United Properties has developed a number of 7-Eleven retail outlets in Colorado, “and most of our buyers have been selling raw property or farmland.”

Farmers are allowed a “green acre” tax deferment when they sell land if it will continue to be used for agriculture. Otherwise, 1031 exchanges are the only way to avoid a big tax bill on such transactions, Katter said.

How likely is the prospect that 1031 exchange gains will be capped?

“There are differing opinions on that in the industry,” Katter said. “The consensus is that it is not likely to go away.” But the odds are not zero. He said real estate investors considering a 1031 exchange should stay well-informed on the applicable tax law discussions taking place in Washington.

Mox Gunderson, senior director of capital markets with the Minneapolis office of Jones Lang Lasalle, said he has recently observed “an increase in velocity” in 1031 transactions, possibly attributable to the possible change in the law. About half of the transactions his office handles as an intermediary broker are 1031 exchanges, many in the currently robust market for industrial properties. He also believes it is unlikely the proposed cap will become law, considering the positive impact the availability of 1031’s has on the economy.

“Any potential changes in the 1031 rules are certainly a concern to sellers,” said Sturm. “If the 1031 went away it would totally change the dynamics of real estate investment.”

One transaction typically triggers multiple transactions, he noted. “It might start with someone selling an apartment building in California. That person might do an exchange and buy a Walgreens in Minneapolis. The guy who sold that Walgreens might buy a Chick-fil-A [restaurant] in Tennessee. Eventually, somebody pays the taxes,” including state and local transfer taxes generated from each of the transactions.

Service providers involved in these transactions might include title companies, 1031 exchange companies, environmental companies, real estate brokers, lenders and attorneys. All of these service providers are paying income tax for the revenue generated, Sturm pointed out.

The 1031 exchanges also have the effect of promoting the “highest and best use” of ag property, for example a vacant property that is transformed into multifamily housing.

The time constraints placed on 1031 exchanges have a positive impact by inducing sellers to make decisions and complete new acquisitions within the time limit. Without exchanges, “I would expect velocity to slow tremendously.”

Also, without an exchange, a certain property may not be salable, where taxes would be higher than proceeds would be from a sale, Sturm said. “That happens quite a bit with farmland.”

Sturm believes the proposed cap originated with people who don’t understand how the 1031 process works. “Once people understand the process and what it is doing [for the economy], very few people would want to have it eliminated.”

Copyright © 2021 BridgeTower Media. All rights reserved; © Copyright, 2021, Finance & Commerce (Minneapolis, MN)


Fortify Finances Against Natural Disaster

It’s not enough to pack survival tools and photos when evacuating before a disaster. Pack cash too – or at least have credit that can help you cover the first few days.

MIAMI – Emergency preparedness experts recommend that you have a “go bag” and a “stay bin” for disasters: kits with supplies to help you survive a few days if you have to evacuate your home or shelter in place.

Preparing your finances for natural disasters is also smart. Having cash on hand, access to credit and the right insurance coverage can help you get through perilous times. Fortifying your home against disasters also can be a good investment.

Not everyone can make these preparations, of course. People with the fewest resources often suffer the brunt of disasters. But anything you can do to bolster your situation now could help you limit the toll.

Stash some cash

Having cash on hand could help you pay for groceries, gas, shelter and other necessities if ATMs and payment systems aren’t functioning, which could happen if the power goes out or cyberattacks knock systems offline.

You may need more than you think, especially if you’re away from your home for more than a few days. Insurance consumer advocate Amy Bach recommends keeping at least $2,000 in a safe place somewhere in your home. After a widespread disaster, there is often “incredible competition” for rentals and other lodging, and a cash deposit could help you secure a place to stay, says Bach, executive director of the nonprofit United Policyholders.

The currency should be in addition to any emergency savings you have at the bank. Again, anything is better than nothing. While financial planners typically recommend an emergency fund equal to three to six months of expenses, even a couple hundred dollars can help you cope.

Get some credit

Your insurance may have high deductibles or other limitations on your coverage that require you to pay thousands or even tens of thousands of dollars out of pocket. Earthquake and hurricane policies, for example, often have deductibles of 10% or more of the insured value. Insurers also may limit how much they pay for upgrades needed to meet current building codes or for replacing older roofs, Bach says.

A home equity line of credit can give you access to a relatively inexpensive source of money in an emergency. You’ll need to set this up long before disaster strikes, since lenders won’t let you borrow against a damaged home. Resist the urge to tap this credit for other purposes, so that the money is available when you need it.

An alternative if you’re a renter or otherwise can’t qualify for a HELOC is to ask your bank for a personal line of credit. Credit cards can also help pay the bills if there’s enough available credit. Once you have $500 or so set aside for emergencies, consider paying down your credit cards and aim to use no more than 30% of your credit limits. Using even less of your credit limits would be even better, because it frees up more space on your cards and also helps to build or maintain your credit scores.

Try to cover the big risks

Check your home’s susceptibility to various disasters at freehomerisk.com, a database created by HazardHub, which supplies risk data to insurance companies. Each hazard your property might face is graded from A to F. The lower the grade, the more you should consider ways to mitigate the risk if you can, says HazardHub co-founder Bob Frady.

That could mean buying additional coverage. A typical homeowners or renters policy doesn’t cover damage from floods or earthquakes, for example, but such coverage can be purchased separately.

Review your policy to see what’s covered and what’s not. Make sure you have replacement coverage for your possessions rather than actual cash value coverage, which pays considerably less. You’ll also want at least 24 months of loss-of-use coverage, which pays for your living expenses while your home is rebuilt, Bach says. Widespread disasters can cause even longer rebuilding times.

“It usually takes at least two years to rebuild after a wildfire,” she says.

Protect your property if you can

There’s no way to make your home entirely disaster-proof, but there are ways to “harden it” to reduce potential losses, Frady says.

Frady helped start HazardHub after a friend’s home suffered significant uninsured damage when a nearby river overflowed its banks. The friend didn’t realize she lived next to a flood zone because she wasn’t required by her mortgage lender to buy flood insurance, Frady says. If she’d known, she could have purchased the insurance and taken steps to protect her property, such as regularly changing the batteries in her sump pump, which failed, and keeping valuable items out of the basement or other low points in the house.

Installing storm shutters may reduce losses to hurricanes and tornadoes, while bolting your house to its foundation can help it survive an earthquake.

“There’s power in knowing what the perils are, and that can lead you to create a safer location,” Frady says.

Liz Weston is a columnist at NerdWallet, a certified financial planner and author of “Your Credit Score.”

Copyright 2021 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 website NerdWallet.


S. Fla. Condo Sales Unfazed by Surfside Condo Collapse

After the 12-story Surfside condo complex collapsed, experts wondered if condo demand would decline – but 3Q Miami-Dade condo sales were the highest in years, with luxury units selling at a record pace. Any stigma seems isolated to older inventory and buildings close to the Surfside tragedy.

MIAMI – The deadly collapse of a 12-story condo tower in Surfside left urgent questions about the safety of similar buildings – and also the future of South Florida’s condo market, especially in older buildings.

New data shows the market only heated up, with record sales and price growth across South Florida in the third quarter of this year, according to a preliminary report on the impact of the collapse on the condo market by Analytics, a Miami-based real estate research firm.

Sales for condos in Miami-Dade County in the third quarter of 2021 were the highest in years, with 6,259 units sold. The priciest units – those over $1 million – also sold at a record pace, with 663 closing in the third quarter, a 228% increase from pre-COVID levels in 2019, data shows.

The boom continued elsewhere in South Florida, too.

“The flow of capital to South Florida shows absolutely no sign of abatement,” said Ana Bozovic, founder of the firm. The company expects to release a full report on the aftermath of the collapse of the Champlain Towers South and its effect on the condo market later this week.

The numbers are the highest for a third quarter in years, the data shows. There were slight dips heading into the third quarter, but that trend happens each year because the second quarter always has the highest sales volume of the year, Bozovic said.

On the ground, agents are seeing record numbers of buyers flocking to South Florida condos. Preconstruction sales are up along with sales of existing condos and their selling prices, said Sepehr Niakan, broker and owner of Blackbook Properties in Miami.

The 40-year-old Champlain Towers South collapsed in the early morning on June 24, after numerous engineering reports had warned of concrete deterioration and $9 million in needed repairs. At the time, some experts warned that older condos could see declining sales as prospective buyers got skittish about maintenance costs and safety.

“If there were to be any negative market effects, they would be isolated to older inventory and to inventory immediately around the site of Champlain Towers,” Bozovic said.

The condo-heavy area surrounding the collapse site did see a drop in sales, falling to pre-COVID levels in the months that followed the tragedy, data shows. The Surfside area is a smaller market, and usually sees about 100 transactions a year, noted Bozovic. The third quarter saw 16 condos sold, down from about 50 in the second quarter and a little under 60 sales in the first quarter of 2021.

It’s something Realtor Vivian Fernandez with Ocean Yes Realty in Miami has seen play out with some of her clients. Her business slowed down briefly after the collapse, but quickly picked up steam again.

Fernandez said she noticed a slight uptick in buyers interested in newer condos – those built after 1990. Her business sold 697 condos from just after the aftermath of the collapse to the beginning of October. Of those sold, 39.7% were in buildings constructed after 1990. For the same period in 2020, about 31% of sales were in newer buildings.

Prospective buyers are also asking more questions about the integrity of the building, Fernandez said. Instead of focusing on cosmetic changes like the layout of the unit, buyers are asking to inspect the basement to make sure the structure of the building is safe.

Things could change in the market, however, as insurance companies begin to decide which buildings they will insure based on repairs and maintenance, said Peter Zalewiski with Condo Vultures in Miami.

© 2021 South Florida Sun-Sentinel. Distributed by Tribune Content Agency, LLC.


Redfin Expands Program Allowing Buyers to Self-Tour Homes

Buyers are allowed to tour vacant homes without an agent. Redfin’s app unlocks the door, and an agreement with ADT provides monitoring and security.

SEATTLE – Redfin is allowing more buyers to tour homes for sale on their own without an agent. An expansion of the Direct Access Home tours brings the program to 22 markets and introduces a partnership with the security firm ADT to provide 24/7 monitoring and smart-home devices.

Potential buyers who use Direct Access to tour vacant homes without an agent use a Redfin app to unlock the door, with the smart locks and sensors provided by ADT. As buyers tour, sellers can monitor who enters and exits their property.

Redfin launched Direct Access on vacant seller homes in select markets last year. The company says that homes in the Direct Access program get double the number of tours, on average, compared with other homes on the market. The company plans to roll out the service to all U.S. markets where it has a presence.

“In this hot market, more than a third of homes are finding a buyer within the first week, and buyers are hustling to see new homes as quickly as possible,” Bridget Frey, Redfin’s chief technology officer, told Security System News. “Direct Access Makes it simple to tour our sellers’ homes conveniently and safely without having to coordinate with an agent to schedule a showing, driving double the foot traffic that leads to offers for our sellers.”

Homebuyers who purchase a Direct Access home with ADT’s smart-home security systems already installed are given the option to keep the smart lock, ADT security panel and sensors, which ADT values at $899. But to keep the security devices, buyers must sign up for ADT’s smart-home security monitoring services to activate them.

Redfin says it takes other precautions in the self-guided buyer tours. It verifies the identity of every buyer prior to a tour, uses geofencing technology to monitor when a buyer enters and exits the home, and covers up to $100,000 in the event of loss or damage to the home.

Source: Redfin.com and Redfin Direct Access

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688


Many Bathroom Remodels Are Really More of an Upgrade

Survey: Remodeling skyrocketed during lockdowns with many homeowners focused on their bathrooms. The desire to “soak in a bathtub” rose 6 percentage points.

NEW YORK – Bathrooms have become popular spots to renovate during the pandemic, particularly to outfit with more spa-like features, according to the 2021 Houzz Bathroom Trends Study, a survey of nearly 3,000 homeowners planning or who have recently completed a bathroom renovation.

The report finds a higher interest in both bathtub and shower upgrades. The percentage of homeowners who relax in their renovated bathroom by soaking in the bathtub is up by six percentage points this year, reaching 61%, the survey finds. That outpaces the 54% share who unwind with long showers.

More than three-quarters of homeowners added premium features to their bathtubs and showers. For the bathtub, it often included space for whirlpool baths. Shower upgrades included rainfall showerheads, dual showers, body sprayers and thermostatic mixers, which maintain a steady temperature.

“In the midst of the chaos created by the pandemic, we’re seeing homeowners turn to their bathrooms for respite, creating calming sanctuaries with premium features, hygienic surfaces, and plants and other greenery,” says Marine Sargsyan, a senior economist with Houzz. “Given the major changes involved, homeowners renovating their bathrooms are seeking out professional help at a growing rate, and hiring general contractors.”

The median cost of bathroom projects rose to $8,000 this year. Higher-end projects started at $30,000.

The following are some additional trends revealed in the report:

  • More greenery: Nearly one-third of homeowners added plants to their bathroom after a renovation for their aesthetics, their role in creating a calming environment and their help purifying the air.
  • Marble is hot: Marble is being used by renovating homeowners this year more often than before. It’s becoming a favorite for flooring inside and outside the shower, along with the walls outside the shower.
  • Colorful vanities: White continues to be the most popular choice, but blue and wood vanities gained popularity. The share of homeowners opting for blue vanities doubled year-to-year (8% in 2021, up from 4% in 2020), while medium and light wood tones are becoming more common (14% and 8%, respectively in 2021).
  • Lighting priorities: More owners add lights to their bathroom upgrades. Wall lights and recessed lights remain the two most popular upgrades, but lighted mirrors, such as those with LED lighting and anti-fogging systems, pendant lights and chandeliers gained popularity this year. Dimmable lighting also contributed to a more spa-like atmosphere.
  • Commode upgrades: More than a third of homeowners who upgraded their toilets during renovations added technology. Bidets remain the most popular tech feature, added by one in five homeowners, followed by self-cleaning mechanisms, heated seats, overflow protection and built-in nightlights.
  • Custom medicine cabinets: Nearly one-third of renovating homeowners installed custom or semi-custom medicine cabinets. Many of these cabinets also included features like hidden plugs and inside lighting.

Source: “2021 Houzz Bathroom Trends Study,” Houzz (Oct. 6, 2021)

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688


Small Businesses Less Optimistic as Inflation, Labor Take Toll

Business is good, according to NFIB’s monthly study – but it would be better for small companies if they could get more workers and not worry about inflation.

WASHINGTON – A monthly study of small business attitudes, the NFIB Small Business Optimism Index, decreased one point in September to 99.1. Three of the index components improved, five declined and two were unchanged.

Overall, America’s small businesses are doing well, but many have trouble attracting new employees and some face supply-chain shortages.

“Small business owners are doing their best to meet the needs of customers, but are unable to hire workers or receive the needed supplies and inventories,” says NFIB Chief Economist Bill Dunkelberg.

He says small-business owners also fear possible changes in policy that could impact their bottom line. “The outlook for economic policy is not encouraging to owners, as lawmakers shift to talks about tax increases and additional regulations,” says Dunkelberg.

In response to a tight labor market, they survey found that 30% of small-business owners plan to raise compensation in the next three months, up four points from August’s record-high reading. While 12% of owners cited labor costs as their top business problem, 28% cited labor quality. Both were record-high readings for the monthly survey.

Capital expenditures

Overall, small businesses appear to be shying away from capital expenditures when they can: 53% expect capital outlays in the next six months, down two points from August and historically a weak reading. Of those with recent expenditures, 37% spent it on new equipment, 21% acquired vehicles, 12% improved or expanded facilities and 10% spent money for new fixtures and furniture. July 6% of owners acquired new buildings or land for expansion.

In the next few months, 28% play capital outlays, down two points from August and one point below NFIB’s 48-year average.

Sales improving

Seasonally adjusted, 3% of owners reported higher nominal sales in the past three months, up three points from August. The net percent of owners expecting higher real sales volumes improved by four points to a net 2%.

The net percent of owners reporting inventory increases rose five points to a net 3%, back into positive territory after two months with owners reporting more declines than gains. NFIB says it’s the highest reading since the pandemic started.

Over 35% of owners say supply chain disruptions had a significant impact on their business; 32% report a moderate impact and 21% report a mild impact. Only 10% of owners report no impact at all.

One in 10 (10%) owners say current inventory stocks were “too low” in September, down one point from August. A net 9% of owners plan inventory investment in the coming months, down two points from August but historically a notably elevated reading.

Inflation affecting prices

The net percent of owners raising average selling prices decreased three points to a net 46% (seasonally adjusted). Unadjusted, 8% of owners reported lower average selling prices and 53% reported higher average prices. Price hikes were the most frequent in wholesale (75% higher, 0% lower), manufacturing (67% higher, 4% lower), and retail (71% higher, 2% lower).

Seasonally adjusted, a net 46% of owners plan price hikes.

The frequency of positive profit trends increased one point to a net negative 14%. Among the owners reporting lower profits, 26% blamed the rise in the cost of materials, 23% blamed weaker sales, 19% cited labor costs, 10% cited the usual season change, 6% cited lower prices, and 6% cited higher taxes or regulatory costs.

For those owners reporting higher profits, 57% credited sales volumes, 19% usual seasonal change, and 5% higher prices.

Business loans

Only 2% of owners said that all their borrowing needs weren’t satisfied, while 20% said. Twenty percent said all credit needs were met and 62% said they’re not interested in a loan. A net 4% of owners said their last loan was harder to get than in previous attempts, though none considered financing their top business problem, and 0% said they paid a higher rate on their most recent loan.

© 2021 Florida Realtors®


Institutional Single-Family Rentals Have Come of Age

Before the Great Recession, mom-and-pop investors owned most single-family home rentals. But today, large institutional investors have turned it into a big business.

NEW YORK – Single-family homes have historically been owned by one of two groups – homeowners who lived in the houses and “mom-and-pop” investors who rented them out.

For the latter group, single-family homes provided a relatively uncomplicated entry into real estate investing. These properties are typically more affordable than other multifamily assets, such as mid- or high-rise buildings, and while the tenant pays the mortgage, the “mom and pop” build equity.

But when home values collapsed under loads of debt during the Great Recession, institutional investors like Colony Capital, Starwood Capital and Blackstone began buying up suburban single-family homes at significantly discounted rates in order to rent them out. A growing number of institutional investors quickly followed suit, citing favorable long-term secular trends that were beginning to play out.

These trends included the maturation of millennials, which would lead to marriage, child rearing and a desire for good neighborhoods, good schools, more living space and a yard. At the same time, many of these same millennials were locked out of homeownership by heavy student debt burdens, which made it difficult to save for a down payment, and by the imposition of strict mortgage underwriting standards following the Great Recession.

From 2006 to 2018, the number of single-family rentals in the U.S. grew 30.1% to nearly 14.7 million, according to the Urban Institute. Institutional ownership in the sector has risen rapidly as well, and new players continue to enter the market.

Though institutional ownership has grown significantly in recent years, it still makes up a small percentage of the single-family rental market, leaving a long runway for continued growth. Of some 23 million single-family rentals in the U.S. today, 1.16% are owned by large operators, according to the National Rental Home Council (NRHC).

Solid fundamentals

The resiliency of single-family rentals during the pandemic has helped solidify confidence in the asset class. Along with the previously noted secular trends, a transition to “work-from-home,” health concerns stemming from dense urban living arrangements and lockdowns that restricted movement have helped bolster single-family rental demand and fundamentals.

The Single-Family Rental Market Index, a quarterly survey that gauges the industry’s health by measuring factors such as median rent, leasing activity and occupancy, rose to 90.3 out of 100 in the first quarter of 2021 from 62.5 out of 100 a year earlier, according to John Burns Real Estate Consulting and NRHC, which created the index in mid-2019. Similarly, same-property portfolio occupancy, which refers to properties that had completed renovations or became stabilized prior to the start of the quarter and does not include properties that were slated for sale, climbed to a record high index of 80.1 in the first quarter from 60.3 a year earlier. Single-family rental operators also reported a tsunami of leasing activity and expected it to remain brisk through the next six months.

The strong demand is fueling robust rent growth. Single-family rental rates increased 5.3% in April 2021 compared to a year earlier, according to CoreLogic. A shortage of housing (the U.S. is 5.5 million homes short of where it should be) and a consequent rise in home prices suggest that the single-family rental industry will enjoy healthy demand and rent growth for the foreseeable future.

The rise of build-to-rent

Given the overall housing shortage, the single-family rental industry increasingly builds communities of single-family rentals to meet the demand rather than solely depending on the acquisition and conversion of existing homes. This so-called “build-to-rent” segment of the single-family rental asset class is not new. Not long after institutional investors began buying homes to rent, homebuilders like Lennar began building single-family rental communities, and other single-family rental operators contracted with builders to buy their newly constructed homes.

The approach brought some 25,000 single-family rentals to the market in 2014, and since then, more and more homebuilders and investors have embraced the concept. In 2020, builders added 226,000 single-family rentals to the market, up from 219,000 in 2019, according to the U.S. Census Bureau.

For renters, the properties provide all the benefits of a new upscale apartment – professional management and maintenance, and amenities like pools and gyms – but in a standalone setting that offers more space and privacy. Anecdotally, it seems that a large number of residents in build-to-rent communities are millennials and empty nesters. While both of these groups continue to display a preference for mobility and freedom from a mortgage, millennials in particular see the new suburban homes as ideal settings to start a family.

For quite some time, real estate observers have debated as to whether the single-family rental boom was a fad or a permanent fixture of the U.S. housing market. With the emergence of the build-to-rent segment of the single-family rental market, it is clear that single-family rentals are here to stay. It’s hard to ignore how the industry’s growing investment appeal mirrors the rise of multifamily itself as a favored institutional asset class over the last few decades. From March 2020 to June 2021 alone, institutional funds poured roughly $15 billion into build-to-rent companies, as well as conventional single-family rental operators, according to John Burns Real Estate Consulting, which only tabulated the 25 largest deals.

In fact, the single-family rental industry is estimated to be a $3.4 trillion market, which is just shy of the multifamily industry’s $3.5 trillion market value, according to Walker & Dunlop. The commercial real estate finance company also predicts that the growth of the single-family rental space will outpace that of apartment, office, retail, storage and hospitality properties over the next few years, because population growth will continue to put pressure on housing needs, especially as the millennial generation creates more families.

Capitalizing on the opportunity

While mom-and-pop investors still dominate the single-family rental space, that landscape is gradually changing. For investors who want access to the high-growth asset class without the hassle of midnight phone calls to plunge a toilet, crowdfunding can provide access to invest in single-family rentals and build-to-rent communities. Investors will still receive the benefits that come with it, including escalating rent payments and appreciation to name a few. And like other real estate asset classes, single-family rentals have a relatively low correlation to the stock market, which can help diversify investment portfolios. As hard assets, single-family rentals could also provide a hedge against inflation.

© 2021 Penton Media. Adam Kaufman is co-founder and COO of the real estate crowdfunding platform ArborCrowd.


Soaring Home Prices Roiling Appraisals, Upending Sales

In Aug., 13% of appraisals came in below a home’s contract price. It was higher in May (19.7%), but is still up compared to sales early last year (7.3% in Jan. 2020).

NEW YORK – An abnormally high number of homes across the United States are being appraised below their agreed-upon sales prices, causing some deals to implode.

With home prices soaring in recent months, buyers often pay above asking price to win bidding wars. As a result, CoreLogic estimated that about 13% of appraisals came in below the contract price in August. That’s better than in May (19.7%), but still notably higher than pre-pandemic appraisals. In January 2020, it was 7.3%.

The disparity underscores the risks buyers face in the current market, especially those stretching their dollars to win a bidding war. Mortgage lenders will typically offer only enough to cover the appraised value of a home, forcing buyers to either provide the balance, renegotiate or terminate the deal if an appraisal comes in below the contract price.

Many buyers prepare for the possibility of a lower appraisal by making down payments of just 5% to 10% and holding their extra cash in case they need it to make up any difference should the appraisal fall below the sales price, says Phoenix-area Realtor Nicole Dudley.

To create a home appraisal, appraisers normally rely on factors like data from recent closed and pending sales. But since sales usually close a month or two after going under contract, some buyers say rapidly increasing home values can sometimes skew appraisals that rely on home values recorded months earlier.

In a separate poll by the National Association of Realtors, 12% of contracts closed or terminated in August were hit with appraisal issues, compared to 9% in August 2019, before the pandemic-fueled housing surge.

In recent months, many buyers voided their right to terminate a contract due to a low appraisal in an effort to make their offers compete. However, this practice appears to be waning somewhat as the market cools.

Source: Wall Street Journal (10/10/21) Friedman, Nicole

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688


High Home Prices Continue to Weigh on Homebuying Sentiment

Fannie Mae’s index dropped 1.2 points in Sept. More consumers (66%) thought it was a bad time to buy a home while only 28% believed it was a good time to buy.

WASHINGTON – The Fannie Mae Home Purchase Sentiment Index® (HPSI) dropped 1.2 points to 74.5 in September, as survey respondents continued to report divergent opinions of homebuying and home-selling conditions.

Overall, three of the index’s six components decreased month over month. Most notably, an even greater share of consumers reported that it’s a bad time to buy a home – with that number now sitting at 66% last month and significantly higher than the 28% of respondents who believe it’s a good time to buy. The home-selling conditions component remained mostly flat, with a strong majority of consumers maintaining that it’s a good time to sell. Year over year, the full index is down 6.5 points.

“The HPSI declined slightly this month but remains within the general bounds we’ve seen since the end of last year,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “The survey’s story is also largely unchanged: Consumers feel it’s a bad time to buy a home but a good time to sell – and they continue to cite high home prices as the primary reason.

“Across all consumer segments, renters and younger consumers were slightly more likely to indicate it’s a bad time to buy, perhaps a reflection of their generally lower incomes and their observation that the availability of affordable homes is lacking. We’re also seeing a softening in consumers’ expectations that home prices will continue to increase; however, in our view, other housing market fundamentals remain supportive of further home price appreciation – including low levels of inventory and low interest rates.”

Home Purchase Sentiment Index highlights

Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased in September by 1.2 points to 74.5. The HPSI is down 6.5 points compared to the same time last year.

Good/bad time to buy: The percentage of respondents who say it is a good time to buy a home decreased from 32% to 28%, while the percentage who say it is a bad time to buy increased from 63% to 66%. As a result, the net share of those who say it is a good time to buy decreased 7 percentage points month over month.

Good/bad time to sell: The percentage of respondents who say it is a good time to sell a home increased from 73% to 74%, while the percentage who say it’s a bad time to sell remained unchanged at 19%. As a result, the net share of those who say it is a good time to sell increased 1 percentage point month over month.

Home price expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 40% to 37%, while the percentage who say home prices will go down remained unchanged at 24%. The share who think home prices will stay the same increased from 31% to 33%. As a result, the net share of Americans who say home prices will go up decreased 3 percentage points month over month.

Mortgage rate expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 6% to 8%, while the percentage who expect mortgage rates to go up decreased from 53% to 51%. The share who think mortgage rates will stay the same decreased from 35% to 33%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 4 percentage points month over month.

Job concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 82% to 81%, while the percentage who say they are concerned increased from 15% to 16%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 2 percentage points month over month.

Household income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 26% to 27%, while the percentage who say their household income is significantly lower increased from 12% to 13%. The percentage who say their household income is about the same decreased from 59% to 57%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago remained unchanged month over month.

Fannie Mae’s National Housing Survey (NHS) polled approximately 1,000 respondents via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010).

The September 2021 National Housing Survey was conducted between Sept. 1 and Sept. 26, 2021.

© 2021 Florida Realtors®


RE Q&A: Is Now a Good Time to Start Being a Landlord?

To be successful, treat it like a business. Keep a cushion of several months’ expenses to carry the property’s costs in case of any issues like a non-paying tenant.

FORT LAUDERDALE, Fla. – Question: We are getting older and ready to move to a smaller home. Our plan has always been to rent our existing house to make extra money toward our retirement. After the eviction moratorium, we are nervous. Is it a good time to be a landlord? — Jerri

Answer: Not collecting rent is a scary prospect that every landlord needs to be prepared for.

Whether it is because of a pandemic, natural disaster or non-paying tenant, you need to have enough of a cushion to carry the house’s expenses for at least several months.

Renting property, done correctly, can be rewarding.

The good news for landlords coming out of the coronavirus crisis is that rents are higher now.

To be a successful landlord, treat it like a business. Write everything down and save your receipts. Keeping track of your financials can help when it is time to file your taxes.

Tenant selection is critical to successfully renting your property. It is better to spend extra time upfront choosing your tenant than spending even more time evicting them. Check work history and do a background and credit search to ensure your prospective tenant is financially stable.

Take the time to read the landlord-tenant statute. It is written to be understandable to non-lawyers and reads almost like an instruction manual for renting.

Knowing your rights and responsibilities is key to a good experience. If you feel intimidated by the process, you can hire a real estate agent to help you.

Once you find a good tenant, do not ruin the relationship by trying to be friends. Being friendly is good, but who wants to evict a buddy for not paying the rent.

Remember to treat this as a business relationship. Respond to repair requests quickly.

In return, your tenant also needs to take the relationship seriously. Explain that they need to treat the house as their home and must pay their rent on time.

Accepting excuses rather than rent rarely works out. Posting a warning notice for nonpayment sends a clear message that the rent needs to be paid each month to avoid immediate consequences.

Copyright © 2021 South Florida Sun Sentinel, Gary Singer. All rights reserved.


How Much Can You Save by Downsizing? It Depends

In the biggest 20 U.S. metros, you could save an average of $194K going from a 4-bedroom to a 2-bedroom home. Miami metro downsizers were 5th on the list for savings.

MIAMI – As property values continue to rise, homeowners looking to downsize can save varying amounts based on where they live. A new StorageCafe study found homeowners in the 20 largest U.S. metros could save $194,000 when downsizing from a four-bedroom home to a two-bedroom home.

Such savings are even higher in some markets, according to StorageCafe, which looked at such factors as property taxes over 10 years and closing costs for selling and buying both properties.

California led the list, with San Francisco, San Diego, and Los Angeles taking the first three spots on the list for large downsizing savings at $406,000, $264,700, and $239,800, respectively.

In South Florida, downsizers in Miami-Fort Lauderdale-Pompano Beach ranked fifth on the list for savings. Homeowners looking to downsize in the Miami area could save roughly $230,000, according to the report. Downsizing in the city of Miami could save homeowners about $160,000, while Fort Lauderdale homeowners could save $364,000.

The report indicates that the most profitable route in South Florida would be moving from a four-bedroom home in Miami to a two-bedroom home in Pompano Beach, which could save nearly $290,000. Those downsizing from Miami to Fort Lauderdale could save more than $150,000. 

Source: South Florida Agent (09/29/21) Hughes, Liz

© Copyright 2021 INFORMATION, INC. Bethesda, MD (301) 215-4688


Homeowner Equity Grows to Nearly $3T in Q2

CoreLogic: Homeowners with mortgages – about 63% of all U.S. properties– saw a 29.3% annual increase in equity, averaging out to a gain of about $51.5K per borrower.

NEW YORK – Homeowners gained a total of $2.9 trillion in equity in the second quarter of 2021 as home prices continued to grow, according to a new report.

Negative equity share, where a homeowner owes more on their home than what it is worth, fell to 2.3% in the second quarter, and 163,000 homeowners regained equity, CoreLogic’s Homeowner Equity Report showed.

Homeowners with mortgages, which is about 63% of all properties in the U.S., saw a 29.3% annual increase in equity. This averages out to an annual gain of $51,500 per borrower.

If you want to take advantage of an increase in your home value, consider taking out a cash-out refinance. At today’s record low interest rates, you can take money out of your home and possibly still lower your monthly mortgage payment.

Consumer confidence in Q2 rises to highest level since pandemic began

As home prices grow, so does Americans’ confidence in the housing market, U.S. News & World Report previously said. By the end of the second quarter, consumer confidence had risen to the highest point since the beginning of the pandemic.

Additionally, in a recent CoreLogic consumer survey, 59% of mortgage holders said they are extremely confident in their ability to keep up with their monthly payments in the year ahead.

CoreLogic explained that homeowners have been able to remain current on their monthly payments due to government provisions, increased vaccine availability that has allowed people to return to work and record homeowner equity gains.

“The growth in homeowner equity provides a strong financial cushion for tens of millions Americans,” CoreLogic President and CEO Frank Martell said. “For those most impacted by the pandemic, equity gains will help play a critical role in staving off foreclosure. Based on projected increases in economic activity and home values over the next year, we expect to see further gains in equity and a corresponding drop in negative equity, forbearance rates and foreclosure.”

If you’re interested in tapping into your home’s equity, consider taking out a mortgage refinance amid the current low interest rates. A refinance could also help you lower your mortgage payment if you are struggling financially.

Home equity sits at record levels

A person’s home equity is determined by how much they’ve paid down their mortgage and home price changes. In July, home price gains hit a record high of 19.7% annually, according to the latest S&P CoreLogic Case-Shiller Index Report. This boost is up from the previous month’s annual increase of 18.7%, which was also a record high.

“Home equity wealth is at a record level and will bolster economic activity in the coming year,” CoreLogic Chief Economist Frank Nothaft said. “Higher wealth spurs additional consumer expenditures and also supports room additions and other investments in homes, adding to overall economic activity.”

Homeowners can take advantage of their newfound equity through a cash-out mortgage refinance and use the funds for home improvement projects or to consolidate high-interest debt.

Copyright © 2021 Local TV LLC. All rights reserved.


Mortgage Rates Decrease Slightly

The average 30-year fixed-rate mortgage decreased slightly this week, easing to 2.99%; it was 3.01% last week. The 15-year FRM averaged 2.23% this week.

MCLEAN, Va. – The average 30-year fixed-rate mortgage (FRM) decreased slightly this week, easing to 2.99%; however, many analysts predict that mortgage rates will continue to rise modestly over the next year.

“Mortgage rates continue to hover at around 3% again this week due to rising economic and financial market uncertainties,” said Sam Khater, Freddie Mac’s chief economist. “Unfortunately, with the expectation that both mortgage rates and home prices will continue to rise, competition remains high and housing affordability is declining.”

Average mortgage rates for the week of Oct. 7

•The 30-year fixed-rate mortgage averaged 2.99% with an average 0.7 point, down slightly from last week’s 3.01%. A year ago at this time, the 30-year FRM averaged 2.87%.

•The 15-year fixed-rate mortgage averaged 2.23% with an average 0.7 point, down from last week’s averaged 2.28%. A year ago at this time, the 15-year FRM averaged 2.37%.

•The 5-year Treasury-indexed hybrid adjustable rate mortgage (ARM) averaged 2.52% with an average 0.3 point, up from last week’s 2.48%. A year ago at this time, the 5-year ARM averaged 2.89%.

© 2021 Florida Realtors®


Investors Bet Flexible Leases Are a Lasting Trend

Remote work sparked demand for short-term housing with flexible terms. Some estimate the number of workers who remain fully remote will eventually top out at about 20%.

NEW YORK – Investors believe one pandemic-related trend will offer up long-term results: short-term apartment leases. They’re rushing to invest in such buildings that can offer flexible short-term apartment rentals, even as more workers return to the office.

Over the past year, companies like Blueground, June Homes, and Landing have added thousands of units to their platforms, The Wall Street Journal reports. They’re raising millions in recent funding rounds as short-term rentals win more attention from Wall Street.

Remote work sparked a demand for short-term housing with flexible terms. About half of the nation’s office workers continue to work remotely. Short-term housing providers believe the number of workers who remain fully remote will eventually top out at about 20%.

“That’s about 36 million workers,” Kulveer Taggar, co-founder and CEO of Zeus Living, which specializes in single-family homes, told The Wall Street Journal.

Even renters who return to the office may favor a short-term rental over a full year’s lease.

Many of these short-term lease providers sublet to tenants through a digital platform on a month-to-month basis. Many do not require a security deposit either, The Wall Street Journal reports. Many of the companies also offer fully furnished units.

Blueground, which offers fully furnished units, offers flexible arrangements at a higher cost. For example, tenants may have to pay anywhere between 15% to 100% more than what they would for a traditional 12-month lease for an unfurnished apartment.

June Homes, in contrast, offers tenants the option to rent any unit unfurnished, furnished, or partially furnished. It also offers a shared apartment option for many of its properties as it targets younger generations.

Source: “Short-Stay Housing Companies Are Confident Even as Workers Return to the Office,” The Wall Street Journal (Oct. 5, 2021) [Login required]

© Copyright 2021 INFORMATION, INC. Bethesda, MD (301) 215-4688