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Top Emerging Tech Trends Impacting RE Industry

Over $31B was invested in RE tech firms in 2021. Looking ahead, metaverse and blockchain technology may have a significant effect on the future of real estate.

NATIONAL HARBOR, Md. – The metaverse and blockchain technology could have a significant impact on the future of real estate, according to experts at the 2022 Realtors® Legislative Meetings.

Several hundred Realtors attended the Emerging Business Issues and Technology Forum, which provided insight into the top emerging tech trends that are expected to have the biggest impact on the real estate industry in the coming years.

Jane Dzielski, Google’s principal analytical lead, kicked off the session with a presentation on data trends in the real estate sector. She said that prior to the pandemic, only one in 10 households moved each year.

“We are now seeing a ton of moving activity,” Dzielski said. “Twenty-five percent of consumers have moved in the past two years and 24% plan to move in the next year.”

Dzielski also said that while internet searches for buying a second home dropped in the first half of 2020 (-9%), they have surged since then (+23%). According to Google’s data, the top reasons that homeowners cited for purchasing a second home were to diversify their investments, earn money renting, and use as a vacation home.

Ashley Stinton, Second Century Ventures’ head of marketing, discussed the recent rise in investment in real estate technology companies, explaining that over $31 billion was invested in 2021.

“These are unprecedented numbers,” Stinton said. “We’ve seen 12 new prop tech unicorns as well as over 150 merger and acquisition transactions.”

Stinton noted that SCV’s REACH scale-up program plays an active role in shaping the future of real estate technology investment.

“We find, support, accelerate, and scale the innovative companies that are going to have the highest impact on Realtors’ businesses,” she said. “We then bring these technologies to NAR members so that these companies can work hand-in-hand with the Realtor community as they build out their products and services.”

“Blockchains are a new way of thinking about information management,” he said. “They provide a verifiable and trustworthy record of events or transactions. This is a critical component of any transaction.”

Conroy concluded the session underscoring the importance of decentralized finance and the role it could play in real estate in the future.

“Decentralized Finance, or DeFi for short, refers to financial services that exist on blockchains,” he said. “With financing being a key component of the transaction, Realtors should become familiar with the new tools that are becoming available in the DeFi landscape.”

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/top-emerging-tech-trends-impacting-re-industry

The 30-year Mortgage Rate Rises to 5.27%

Freddie Mac: Up from 5.1% last week, it’s the highest since 2009. The average 15-year mortgage rate is now 4.52%, up from 4.4%.

WASHINGTON (AP) — Average long-term U.S. mortgage rates resumed their ascent this week, as the key 30-year loan reached its highest point since 2009.

The increases came in the week preceding the widely anticipated action by the Federal Reserve, announced Wednesday, to intensify its fight against the worst inflation in 40 years by raising its benchmark interest rate by a half-percentage point and signaling further large rate hikes to come.

The Fed’s move, its most aggressive since 2000, will bring higher costs for mortgages as well as credit cards, auto loans and other borrowing for individuals and businesses.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate rose to 5.27% from 5.1% last week, when it edged down after seven weeks of increases. By contrast, the average rate stood at 2.96% a year ago.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, jumped to 4.52% from 4.4% last week.

With inflation at a four-decade high, rising mortgage rates, elevated home prices and tight supply of homes for sale, homeownership has become less attainable, especially for first-time buyers.

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

In a statement Wednesday following their two-day meeting, Fed policymakers noted that Russia’s invasion and war on Ukraine is worsening inflation pressures by raising oil and food prices. Inflation, according to the Fed’s preferred gauge, reached 6.6% last month, the highest in four decades. It has been accelerated by a combination of robust consumer spending, chronic supply bottlenecks and sharply higher gas and food prices.

Copyright © 2022 Associated Press. All rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/05/30-year-mortgage-rate-rises-527

Commercial RE to Grow Despite Interest Rates’ Rise

NAR Chief Economist: Except for the office market, sectors like industrial, apartments, hotels and retail are up and should do well, especially short-term.

NATIONAL HARBOR, Md. – While rising interest rates are posing a risk to economic growth, NAR Chief Economist Lawrence Yun expects the commercial market to perform well despite the headwinds, especially in the short term.

During the 2022 Realtors® Legislative Meetings’ Commercial Economic Issues and Trends Forum, Yun explained that while the commercial market generally follows the overall economy, some things are different this time.

“Outside of the office sector, which is lagging behind as employers allow increased remote work flexibility to keep and attract talent, commercial real estate continues to strengthen,” Yun said. “The industrial sector is booming, retail is turning positive, the hotel industry is recovering, apartments are doing very well, and rents are rising in all commercial sectors.”

Yun added that the residential housing shortage will result in solid rent growth over the next two years, with apartment rents expected to keep rising by more than 10%.

When compared to the challenged office sector, Yun noted that the industrial property market is getting a second wind from the shift to “just-in-case” inventory buildup as wholesale inventories boom.

“With strong demand, industrial rents are likely to keep rising solidly in the next two years while vacancy rates will remain below 5%,” he said.

Though the office sector continues to face challenges, Yun asserted that not all markets are equal.

“While the overall office market is wobbly, some variance exists depending on location. We’ve seen improvement in some midsize markets as companies seek more affordable office locations away from major U.S. cities.”

The volume of multifamily investment in 2021 was the greatest year for any asset class in history, with $352 billion of investments, according to Matt Vance, senior director, CBRE.

“Global economic uncertainty, persistent inflation and rising interest rates have increased the cost of capital and overall capital market volatility,” Vance said. “These conditions have restricted loan proceeds, which has negatively affected asset pricing.”

Vance expects that with the rise in hybrid-working models, employees will spend an additional day or more working remotely when compared to pre-pandemic trends.

“An average work week with 3.5 days spent working in the office would net a 9% reduction in office demand, but that’s if it could happen overnight,” he said. “Future economic growth and job creation will have a balancing effect on the impact of virtual work.”

Yun urged commercial investors to consider land development as an investment opportunity given the scarcity of developed residential lots that are essential to addressing the housing supply shortage. He made an appeal to local governments to ease land zoning regulations and ordinances, which Realtors reported have become more burdensome.

© Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/commercial-re-grow-despite-interest-rates-rise

How Higher Fed Rates May Affect Finances

WASHINGTON (AP) – Record-low mortgages below 3% are long gone. Credit card rates will likely rise. So will the cost of an auto loan. Savers may finally receive a yield high enough to top inflation.

The substantial half-point hike in its benchmark short-term rate that the Federal Reserve announced Wednesday won’t, by itself, have much immediate effect on most Americans’ finances. But additional large hikes are expected to be announced at the Fed’s next two meetings, in June and July, and economists and investors foresee the fastest pace of rate increases since 1989.

The result could be much higher borrowing costs for households well into the future as the Fed fights the most painfully high inflation in four decades and ends a decades-long era of historically low rates.

Chair Jerome Powell hopes that by making borrowing more expensive, the Fed will succeed in cooling demand for homes, cars and other goods and services and thereby slow inflation.

Yet the risks are high. With inflation likely to stay elevated, the Fed may have to drive borrowing costs even higher than it now expects. Doing so could tip the U.S. economy into recession.

Here are some questions and answers about what the rate hikes could mean for consumers and businesses:

Will mortgage rates keep going up?

Rates on home loans have soared in the past few months, mostly in anticipation of the Fed’s moves, and will probably keep rising.

Mortgage rates don’t necessarily move up in tandem with the Fed’s rate increases. Sometimes, they even move in the opposite direction. Long-term mortgages tend to track the yield on the 10-year Treasury note, which, in turn, is influenced by a variety of factors. These include investors’ expectations for future inflation and global demand for U.S. Treasurys.

For now, though, faster inflation and strong U.S. economic growth are sending the 10-year Treasury rate up sharply. As a consequence, mortgage rates have jumped 2 full percentage points just since the year began, to 5.1% on average for a 30-year fixed mortgage, according to Freddie Mac.

In part, the jump in mortgage rates reflects expectations that the Fed will keep raising its key rate. But its forthcoming hikes aren’t likely fully priced in yet. If the Fed jacks up its key rate to as high as 3.5% by mid-2023, as many economists expect, the 10-year Treasury yield will go much higher, too, and mortgages will become more expensive.

How will that affect the housing market?

If you’re looking to buy a home and are frustrated by the lack of available houses, which has triggered bidding wars and eye-watering prices, that’s unlikely to change anytime soon.

Economists say that higher mortgage rates will discourage some would-be purchasers. And average home prices, which have been soaring at about a 20% annual rate, could at least rise at a slower pace.

The surge in mortgage rates “will temper the pace of home price appreciation as more would-be homebuyers are priced out,” said Greg McBride, chief financial analyst for Bankrate.

Still, the number of available homes remains historically low, a trend that will likely frustrate buyers and keep prices high.

What about auto loans?

Fed rate hikes can make auto loans more expensive. But other factors also affect these rates, including competition among car makers that can sometimes lower borrowing costs.

Rates for buyers with lower credit ratings are most likely to rise as a result of the Fed’s hikes, said Alex Yurchenko, chief data officer for Black Book, which monitors U.S. vehicle prices. Because used vehicle prices, on average, are rising, monthly payments will rise too.

For now, new-vehicle loans average about 4.5%. Used-vehicle rates are about 5%.

What about other rates?

For users of credit cards, home equity lines of credit and other variable-interest debt, rates would rise by roughly the same amount as the Fed hike, usually within one or two billing cycles. That’s because those rates are based in part on banks’ prime rate, which moves in tandem with the Fed.

Those who don’t qualify for low-rate credit cards might be stuck paying higher interest on their balances. The rates on their cards would rise as the prime rate does.

Should the Fed decide to raise rates by 2 percentage points or more over the next two years – a distinct possibility – that would significantly enlarge interest payments.

Will I be able to earn more on my savings?

Probably, though not likely by very much. And it depends on where your savings, if you have any, are parked.

Savings, certificates of deposit and money market accounts don’t typically track the Fed’s changes. Instead, banks tend to capitalize on a higher-rate environment to try to increase their profits. They do so by imposing higher rates on borrowers, without necessarily offering any juicer rates to savers.

This is particularly true for large banks now. They’ve been flooded with savings as a result of government financial aid and reduced spending by many wealthier Americans during the pandemic. They won’t need to raise savings rates to attract more deposits or CD buyers.

But online banks and others with high-yield savings accounts could be an exception. These accounts are known for aggressively competing for depositors. The only catch is that they typically require significant deposits.

Still, savers are starting to see some better potential returns from Treasurys. On Tuesday, the yield on the 10-year note was 2.96%, after having briefly topped 3% for the first time since 2018.

Financial markets expect inflation to average 2.83% over 10 years. That level would give investors a positive, if very small, return of about 0.13%.

“All of a sudden, we end up in this position where fixed income is way more competitive than it was before,” said Jason Pride, chief investment officer for Private Wealth at Glenmede.

AP Auto Writer Tom Krisher in Detroit contributed to this report.

Copyright © 2022 The Associated Press, Christopher Rugaber, AP economics writer. All rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/05/how-higher-fed-rates-may-affect-finances

Rising Interest Rates to Slow Fla. Housing Market?

Experts offer mixed views. Some say moderately priced-home sales won’t slow yet due to low inventory; others expect impacts from stocks to the housing market.

TAMPA, Fla. (WFLA) – The Federal Reserve announced a .5% interest rate hike on Wednesday aimed to combat skyrocketing inflation.

Many are wondering what impact rising rates will have on the booming housing market, if any. According to experts, it’s a mixed answer.

For moderately priced homes, it will likely not slow down sales in the near future, they said.

“We’re still very depleted as far as the number of houses available for people out there. So, I think even if prices might begin to plateau out a little bit, I think the demand is going to be there for a little while, so we’re going to see prices grow and also see houses move pretty quickly,” said Stephen Gay, a Realtor® with the Stephen Gay Group at Smith and Associates.

For the more expensive homes, Gay said he is already seeing sales slowdown in recent weeks.

“Above $1 million it used to be, even two months ago, you could throw a crazy number out there and you could get multiple offers and it might even go higher than that crazy number. Now I think buyers are getting more data conscience and looking at what things are really worth, rather than being so desperate to get into anything,” said Gay.

With the price of mortgages climbing, and now expected to jump even higher with the fed raising interest rates, consumers will have to pay even more for their dream home.

“Every percent increase in interest rate decreases your purchasing power by 10%. So that’s a huge impact especially for people especially with these really high prices,” said Gay.

“This tremendous growth we’ve seen in real estate is going to start to tap down a little bit,” said Stephen Overton, a financial advisor with Ameriprise Financial Services.

Overton believes higher interest rates will be felt across the board, from stocks to buying a car to the housing market.

“When you’re looking for a house, the mortgages are now 4% to 4.5%, you can afford less house. That slows down demand for houses. and increases the cost for a mortgage, which will hurt housing,” said Overton.

Yet, experts don’t predict much of a price break anytime soon for homes under a million dollars in Florida.

“In any market it’s always location, location, location, and right now Florida is the location to be. So we definitely will not get hit if there is some kind of slowdown in the market like other areas of the country might be,” said Gay. “The problem I think in the lower price point is builders buying and tearing them down, and building back houses, you also have a lot of large investors that are buying them for rental properties, another thing that’s taking a lot of houses off the market is Airbnb’s.”

Copyright © 2022 WFLA, Nexstar Broadcasting, Inc. All rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/05/rising-interest-rates-slow-fla-housing-market

NAR Housing Forecast: Expect Market Uncertainty

Chief Economist Yun told Realtors at Legislative Meetings this week that 2022 has thrown curveballs like “record-low inventory and unyielding inflation.”

NATIONAL HARBOR, Md. – Two years after enduring the devastating financial impacts of COVID-19, the U.S. economy has made an impressive comeback, in large part due to a booming housing market. However, as National Association of Realtors® Chief Economist Lawrence Yun explained today, there are significant questions regarding the sector’s direction over the coming months.

“Housing kept the economy afloat as home prices rose and buyer demand intensified,” said Yun to 9,000 Realtors® and industry experts in attendance at the Residential Economic Issues and Trends Forum, part of this week’s 2022 Realtors Legislative Meetings. “However, this year has already thrown some curveballs, including record-low inventory and unyielding inflation.”

While housing supply appears to be on the upswing as builders increasingly construct new homes, Yun says inflation will persist and in turn cause strain for would-be buyers. Additionally, other external economic factors will negatively impact the market, both indirectly and directly, he said.

“The Russia-Ukraine war and escalating fuel prices have contributed to further housing unaffordability for buyers,” he said.

Yun explained that a more immediate impact for home seekers has been the rapid increase of mortgage rates, along with other anti-inflationary actions from the Federal Reserve.

“Mortgages now compared to just a few months ago are costing more money for home buyers,” he said. “For a median-priced home, the price difference is $300 to $400 more per month, which is a hefty toll for a working family.”

NAR calculates purchasing a home is now 55% more expensive than a year ago. These rising mortgage rates and prices hurt affordability, and although wages are improving, Yun says they are “wiped away” due to inflation.

“Wages have risen by 6% from one year ago and that’s good news,” he continued. “But inflation is at 8.5%.”

He estimates inflation will remain elevated for the next several months and that the market will see further monetary policy tightening through a series of rate hikes.

Citing a five-month decline in pending home sales, as well as a drop in newly constructed single-family sales, Yun predicts the higher mortgage rates will slow the housing market.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/nar-housing-forecast-expect-market-uncertainty

Build Your Business with Video Marketing

Video helps Realtors form connections via social media, which has about 4.62B active users globally. Studies show listings with videos get 403% more inquiries.

NORWALK, Conn. – The real estate industry flourishes via connections and relationships, making it essential for agents to use new ways to establish themselves and their businesses as the world becomes increasingly digital.

A recent study found that there are 4.62 billion active social media users globally. Roughly 54% of agents surveyed in a recent National Association of Realtors® poll said the main reason for social media use in their business was because they are expected to have an online presence.

Other key reasons included social media marketing as an ideal way to tell a story and to support growth as a real estate professional.

Best practices for creating video content for business purposes include ensuring the audio and visuals are clear and avoiding design elements that clutter the imagery.

Agents also should consider using a simple lighting setup or good natural lighting.

Being brief is preferred, but a video’s length can vary for each platform. When working on longer-form videos, 3-5 minutes should be sufficient.

Many viewers prefer to watch video content with captions rather than sound, so it is important to always add grammatically correct captions.

Videos can also serve as customized communications, including client process and update videos. Agents can make walk-through and listing videos for prospective clients as well.

Studies have shown that listings with videos get 403% more inquiries. Other ways to enhance videos include adding drone property views, client testimonials, and educational content.

Source: RISMedia (04/27/22) Bauer, Adam

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/build-your-business-video-marketing

The Best Way to Buy a House with Friends?

RE Q&A: Like going into business together, buying a house together works best with a written agreement so all understand risks, rights and responsibilities.

FORT LAUDERDALE, Fla. – Question: A few friends and I went in on a house together. I made the initial down payment, and we split the mortgage payment each month. The plan is for them to save their share of the down payment over 10 years and pay me that amount while adding their name to the title. Was this the right way to set this up? Are there any negative consequences to our plan? – Victoria

Answer: Buying a property with friends is like going into business together.

These scenarios work out best if everyone understands their rights and responsibilities and the risks involved.

The best way to ensure a successful outcome is by making sure the plan’s foundation is sound.

Even when everyone is nodding along, there is no way to tell if everyone is really on the same page.

The best way to ensure this is to sign a written agreement. The written word has a certain magic – it takes an idea out of someone’s head and makes it real and better understood by others.

I often deal with people who say they are in sync until we start writing out the agreement and realize they had different ideas about the project. It is best to hammer out these differences before starting because discovering the problem after the fact is much more difficult and costly.

There are potential issues with the way you structured this.

For example, if the person in title unexpectedly passes away, the property might go to their spouse or children instead of their friends helping to foot the bill. Similar issues could occur if one of the other friends dies.

Problems could quickly arise if two or more friends have a falling out, or if someone stops making their part of the monthly payments.

There can also be tax consequences when it comes time to add their names to the title or sell the property.

Setting this up properly, helped by experienced professionals, is a small expense compared to the problems it can help avoid.

Copyright © 2022 South Florida Sun Sentinel, Gary M. Singer. All rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/05/best-way-buy-house-friends

U.S. Annual Home Price Growth Up 20.9% in March

CoreLogic: A record high, the annual growth was the largest in the 45-year history of the home price index. Fla. had the highest state home price gain, 31.4%.

IRVINE, Calif. – U.S. home prices continued to post significant year-over-year gains in March, up by 20.9%, another record high. Even with the past year’s streak of double-digit price increases, annual gains are projected to slow to around 6% by next March, due in part to rising mortgage rates and higher home prices hampering affordability for some home shoppers.

Buyers who closed on a property in March had a good chance of locking in mortgage rates around 4% or slightly lower. By late April, rates had moved up to more than 5%, a jump of about 30% from the same time last year and a trend that might derail more prospective buyers.

“The annual growth in the U.S. index was the largest we have measured in the 45-year history of the CoreLogic Home Price Index,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Couple that price increase with the rapid rise in mortgage rates and buyer affordability has fallen sharply.

In April, 30-year fixed mortgage rates averaged nearly 2 percentage points higher than one year earlier. With the growth in home prices, that means the monthly principal and interest payment to buy the median-priced home was up about 50% in April compared with last April.”

Top takeaways

Nationally, home prices increased 20.9% in March 2022, compared to March 2021. On a month-over-month basis, home prices increased by 3.3% compared to February 2022.

In March, annual appreciation of detached properties (22%) was 4.7 percentage points higher than that of attached properties (17.3%).

Annual home price gains are forecast to slow to 5.9% by March 2023.

In March, Tampa, Fla., logged the highest year-over-year home price increase of the country’s 20 largest metro areas at 32.5%. Phoenix ranked second with a 30.4% year-over-year gain. On the lower end of the price growth spectrum were the New York and Washington metro areas, both at 9.9%.

Mirroring metro level trends, Florida and Arizona were the states with the highest home price gains, a respective 31.4% and 28.7%. Tennessee edged out Nevada for third place with a 26.7% increase in home price growth.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/us-annual-home-price-growth-209-march

Why Most Americans Say They Don’t Like Neighbors

Lending Tree survey: 75% say they dislike at least one of their neighbors, either due to noise, rudeness, problem pets, messy yards or ‘weird vibes.’

CHARLOTTE, N.C. – Many Americans say they aren’t happy with their neighbor, whether it’s due to “weird vibes,” noise or rudeness, finds a new survey of more than 1,500 consumers from LendingTree. Nearly three-quarters of Americans say they dislike at least one of their neighbors.

Twenty-three percent of respondents say they’ve called the police on their neighbors. And, more than one in 10 Americans say they’ve moved because they didn’t like their neighbors.

Broken out by age group, the younger generation – Gen Z – were more than twice as likely as baby boomers to say they hate the smell of cigarette-smoking neighbors. Millennials had more gripes about problem pets. Baby boomers were more likely to dislike neighbors with messy yards. Gen Xers (those between ages 42 and 56) were most likely to call out rudeness as a top neighbor gripe.

“In today’s hot housing market where prices are high and inventory is limited, the unfortunate reality is that some people might not have any other choice but to live near someone they don’t like,” says Jacob Channel, LendingTree’s senior economist. “And while getting ‘bad vibes’ from a neighbor can certainly be annoying, dealing with them might be worth it if it means you have an affordable place to live.”

While some may not be happy with the person next door, other homeowners say they like their neighbors – at least a few of them. Seventy-four percent of respondents say they are friends with a neighbor. But they also say there is some friendly competition. Seventeen percent of Americans say they feel financially pressured to keep up with their neighbors, more than double that amount when respondents live in a homeowners association (36%).

Even friendly neighbors snoop: 32% of Americans say they’ve looked up a neighbor’s home online to see the value and check out the inside of the home, the survey finds.

Source: “Nearly 75% of Americans Dislike a Neighbor – Most Common Among Gen Zers, Apartment Dwellers and Northeasterners,” Lending Tree (April 26, 2022)

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/why-most-americans-say-they-dont-neighbors

Lots of Help Available for Down Payments

The Fla. Housing Finance Corp. saw its volume jump in 2021; activity was so brisk that it stayed open 24/7 and increased its housing assistance amounts.

SARASOTA, Fla. – Lawmakers in Washington have earmarked billions of dollars for down payment assistance for first-time homebuyers as part of the Build Back Better legislative package championed by President Biden. But rookie buyers don’t have to wait for Congress to act – if it ever does.

Plenty of financial aid is available to help buyers who are short on cash for a down payment and closing costs. Indeed, while a good chunk of the economy shut down during the pandemic, the state entities that administer assistance programs have been chugging right along.

“All state housing finance agencies stayed open, and still are,” reports Sean Moss of Down Payment Resource, an Atlanta firm that tracks nearly 2,200 different programs that buyers can tap for help.

These agencies not only remained open, but in some cases, they set records. “Business is booming,” says Lisa DeBrock of the Washington State Housing Finance Commission. “Our phones are ringing off the hook.”

The Florida Housing Finance Corporation saw its volume jump considerably last year; activity was so brisk that it stayed open 24/7 and increased its assistance amounts. And the Arizona Industrial Development Authority has helped 750 buyers so far this year.

“I expect our volume to drop off slightly next year – but then, I expected it to drop off this year, and it didn’t,” says Dirk Swift, AZIDA’s executive director.

According to the National Association of Realtors’ latest figures, about 17% of first-time buyers receive some sort of monetary help, mostly in the form of gifts or loans from parents, friends or other relatives. After all, saving for a down payment remains the highest hurdle for most buyers.

Less than 3%, NAR found, typically receive support from other entities. Had other rookies sought out these sources, perhaps many more of them would have been able to finally step onto the ownership ladder.

One problem is knowing what’s available. A new pact between DPR and Zillow should go a long way toward correcting that issue. The deal allows the popular real estate website – 2.7 billion unique visits in last year’s third quarter alone – to post all possible assistance programs that may be available to buyers searching for properties on its platform.

Another issue is knowing where to find help. And a third is that some lenders and real estate agents look down their noses at down payment assistance.

Let’s dissect each point:

What’s available: DPR says 84% of the 2,180 programs it tracks were actively funded and available from state and municipal governments, nonprofits and employers. Every state has more than one program, reports Moss, and several offer more than 100 options. California has the most options, with 350.

Programs include grants and no- or low-interest second mortgages with payments that may be deferred or even forgiven. Some are aimed specifically at veterans, first responders, educators, people with disabilities or other special circumstances.

Most programs are aimed at first-time buyers, but some are not. Most have some kind of income or sales price limitation. But in some high-cost markets, the income ceiling can exceed 180% of the area median income. Even with income ceilings, though, the benefits can range into tens of thousands of dollars. And they can be combined with each other and used with all types of mortgages, including those backed by Uncle Sam.

Benefits like that are worth looking into, if only because owning a house is the quickest, safest way to build wealth. If you had purchased a house three years ago using one of her state’s programs, Washington’s DeBrock points out, you would have already amassed thousands of dollars in equity.

Where to find help: One way to find what’s available is to go to downpaymentresource.com, themortgagereports.com or Zillow.com. Or simply search online for the benefits offered in your state.

You might even ask a lender or a real estate agent if they know about such programs in your state. DPR partners with a number of lenders, banks and multiple listing services. Some use the data as consumer-facing information on their websites, while others use it internally to inform their own people or members.

Misconceptions and misinformation: Some lenders believe that down payments that don’t come solely from the borrower’s wallet are not safe. Others think such loans are too difficult to deal with. But people who run the state agencies beg to differ.

Swift in Arizona says it’s actually more difficult to deal with applicants whose funds come from family or friends than those whose money comes from state-run assistance programs. DeBrock agrees.

“The strength of DPA programs is that lenders don’t have to worry about the funds being there at closing,” says DeBrock. “The buyer has to go to closing” to access the funds.

Adds Charles White, who directs Florida’s programs: Assistance is “very trustworthy. … Borrowers are completely underwritten” to make sure they meet program requirements.

Another issue is that some lenders don’t prioritize affordable lending. But then, that’s another story.

Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.

Copyright © 2022 Sarasota Herald-Tribune, Lew Sichelman, guest columnist. All rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/05/lots-help-available-down-payments

Create Name Recognition with No Budget

How? Agents can walk their farm area, knocking on doors and introducing themselves in a safe, organized way. Community outreach and Facebook farming work too.

TALLAHASSEE, Fla. – Darryl Davis, CEO of Darryl Davis Seminars, says one of the ways to build a brand with little to no budget is door-knocking, where agents knock on a door and introduce themselves in a safe and organized way.

An agent can commit an afternoon to walking their farm, using a script such as, “Market changes have spurred a lot of questions about home value, and I am happy to answer any questions you might have and provide you with a market analysis if you like. I care about this community and all of its homeowners. What do you need? How can I help?”

Agents should also be making sphere of influence calls. The conversation might mention that there’s been significant change in the market that may affect homeowners’ buying and selling power. Agents can say, “If you have any of those questions, or if there is anything I can do for you during these crazy times, I’m here to help,” and let the conversation unfold.

Another effective option is Facebook farming, which involves the agent serving as an expert and service-minded professional on the community page of the farm area they are marketing to. If someone needs the number for a trusted plumber or landscaper, for instance, the agent can share their sources.

Davis’ rule of thumb is that for every six to eight shares, help offered or social posts, agents can share something about real estate, such as a market analysis.

Agents can also do open houses, charitable work and other community outreach, and direct-mail campaigns such as batches of 20 introduction letters in their farm area.

Source: Inman (04/26/22) Davis, Darryl

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/create-name-recognition-no-budget

Mortgage Payment Nearly 50% Above a Year Ago

Realtor.com: The combo of higher rates and home prices has made monthly payments quickly climb. That impact is adding an extra $580 to buyers’ monthly expenses.

SANTA CLARA, Calif. – There’s reason talk of sticker shock has grown increasingly common in real estate: Home prices and mortgage rates have significantly increased home buyers’ costs in just one year.

Mortgage rates have risen at the fastest pace in four decades. The 30-year fixed-rate mortgage averaged 5.10% last week, Freddie Mac reports. A year ago, rates averaged below 3%.

Home prices are escalating as well. The median existing-home price for all housing types in March was $373,300, up 15% compared to a year earlier, according to National Association of Realtors® data.

The combination of higher rates and home prices has made monthly payments quickly climb. Home buyers of a median-price home are now facing a monthly mortgage payment that is nearly 50% higher than a year ago, George Ratiu, manager of economic research at realtor.com®, told MarketWatch. The impact is adding an extra $580 to buyers’ monthly expenses.

“It is not surprising that many are stepping back from the market, hoping that conditions will improve,” Ratiu says.

Many buyers “were already constrained by low inventories, which have been driving prices higher,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a recent research note, as quoted by MarketWatch. “Sustained increases in mortgage rates will be an additional headwind for home sales going forward.”

Source: “Buyers of a Median-Price Home Are Looking at a Monthly Mortgage Payment That Is Almost 50% Higher Than It Was a Year Ago,” MarketWatch (April 29, 2022)

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/mortgage-payment-nearly-50-above-year-ago

Fed to Make Fastest Rate Hikes in Decades?

WASHINGTON (AP) – The Federal Reserve is poised this week to accelerate its most drastic steps in three decades to attack inflation by making it costlier to borrow – for a car, a home, a business deal, a credit card purchase – all of which will compound Americans’ financial strains and likely weaken the economy.

Yet with inflation having surged to a 40-year high, the Fed has come under extraordinary pressure to act aggressively to slow spending and curb the price spikes that are bedeviling households and companies.

After its latest rate-setting meeting ends Wednesday, the Fed will almost certainly announce that it’s raising its benchmark short-term interest rate by a half-percentage point – the sharpest rate hike since 2000. The Fed will likely carry out another half-point rate hike at its next meeting in June and possibly at the next one after that, in July. Economists foresee still further rate hikes in the months to follow.

What’s more, the Fed is also expected to announce Wednesday that it will begin quickly shrinking its vast stockpile of Treasury and mortgage bonds beginning in June – a move that will have the effect of further tightening credit.

Chair Jerome Powell and the Fed will take these steps largely in the dark. No one knows just how high the central bank’s short-term rate must go to slow the economy and restrain inflation. Nor do the officials know how much they can reduce the Fed’s unprecedented $9 trillion balance sheet before they risk destabilizing financial markets.

“I liken it to driving in reverse while using the rear-view mirror,” said Diane Swonk, chief economist at the consulting firm Grant Thornton. “They just don’t know what obstacles they’re going to hit.”

Yet many economists think the Fed is already acting too late. Even as inflation has soared, the Fed’s benchmark rate is in a range of just 0.25% to 0.5%, a level low enough to stimulate growth. Adjusted for inflation, the Fed’s key rate – which influences many consumer and business loans – is deep in negative territory.

That’s why Powell and other Fed officials have said in recent weeks that they want to raise rates “expeditiously,” to a level that neither boosts nor restrains the economy – what economists refer to as the “neutral” rate. Policymakers consider a neutral rate to be roughly 2.4%. But no one is certain what the neutral rate is at any particular time, especially in an economy that is evolving quickly.

If, as most economists expect, the Fed this year carries out three half-point rate hikes and then follows with three quarter-point hikes, its rate would reach roughly neutral by year’s end. Those increases would amount to the fastest pace of rate hikes since 1989, noted Roberto Perli, an economist at Piper Sandler.

Even dovish Fed officials, such as Charles Evans, president of the Federal Reserve Bank of Chicago, have endorsed that path. (Fed “doves” typically prefer keeping rates low to support hiring, while “hawks” often support higher rates to curb inflation.)

Powell said last week that once the Fed reaches its neutral rate, it may then tighten credit even further – to a level that would restrain growth – “if that turns out to be appropriate.” Financial markets are pricing in a rate as high as 3.6% by mid-2023, which would be the highest in 15 years.

Expectations for the Fed’s path have become clearer over just the past few months as inflation has intensified. That’s a sharp shift from just a few month ago: After the Fed met in January, Powell said, “It is not possible to predict with much confidence exactly what path for our policy rate is going to prove appropriate.”

Jon Steinsson, an economics professor at the University of California, Berkeley, thinks the Fed should provide more formal guidance, given how fast the economy is changing in the aftermath of the pandemic recession and Russia’s war against Ukraine, which has exacerbated supply shortages across the world. The Fed’s most recent formal forecast, in March, had projected seven quarter-point rate hikes this year – a pace that is already hopelessly out of date.

Steinsson, who in early January had called for a quarter-point increase at every meeting this year, said last week, “It is appropriate to do things fast to send the signal that a pretty significant amount of tightening is needed.”

One challenge the Fed faces is that the neutral rate is even more uncertain now than usual. When the Fed’s key rate reached 2.25% to 2.5% in 2018, it triggered a drop-off in home sales and financial markets fell. The Powell Fed responded by doing a U-turn: It cut rates three times in 2019. That experience suggested that the neutral rate might be lower than the Fed thinks.

But given how much prices have since spiked, thereby reducing inflation-adjusted interest rates, whatever Fed rate would actually slow growth might be far above 2.4%.

Shrinking the Fed’s balance sheet adds another uncertainty. That is particularly true given that the Fed is expected to let $95 billion of securities roll off each month as they mature. That’s nearly double the $50 billion pace it maintained before the pandemic, the last time it reduced its bond holdings.

“Turning two knobs at the same time does make it a bit more complicated,” said Ellen Gaske, lead economist at PGIM Fixed Income.

Brett Ryan, an economist at Deutsche Bank, said the balance-sheet reduction will be roughly equivalent to three quarter-point increases through next year. When added to the expected rate hikes, that would translate into about 4 percentage points of tightening through 2023. Such a dramatic step-up in borrowing costs would send the economy into recession by late next year, Deutsche Bank forecasts.

Yet Powell is counting on the robust job market and solid consumer spending to spare the U.S. such a fate. Though the economy shrank in the January-March quarter by a 1.4% annual rate, businesses and consumers increased their spending at a solid pace.

If sustained, that spending could keep the economy expanding in the coming months and perhaps beyond.

Copyright 2022 The Associated Press, Christopher Rugaber, AP economics writer. All rights reserved.

https://www.floridarealtors.org/news-media/news-articles/2022/05/fed-make-fastest-rate-hikes-decades

Prepare for the 2022 Hurricane Season

June 1 marks the start of hurricane season. Make a disaster plan now and stock up on supplies like batteries, flashlights, water and more.

TALLAHASSEE, Fla. – In recognition of Hurricane Preparedness Week, Florida Chief Financial Officer (CFO) and State Fire Marshal Jimmy Patronis offers hurricane preparedness tips and resources to aid Floridians with their disaster plans. This year’s hurricane season begins June 1.

“The 2022 hurricane season is only one month away and I am urging Floridians to take advantage of the calm before the storm to prepare now,” Patronis said. “There is nothing more important than having a disaster plan in place to protect you, your family and your home. This week, Hurricane Preparedness Week, is the perfect time to take advantage of cost savings, harden your home and stock up on essential tax-free hurricane supplies such as batteries, flashlights, water and much more.

“Business owners should also work now to prepare to weather and recover from what is expected to be another busy storm season. As we’ve seen in the past, hurricanes can intensify and develop fast, and getting prepared now can help save lives.”

Hurricane preparedness tips:

Secure flood insurance coverage. Standard homeowner’s insurance policies don’t cover flood damage. If you live in a flood-prone area, contact your agent about obtaining flood insurance. There are over 30 insurance carriers writing flood insurance in Florida’s private insurance market. Depending on your home’s location, you may qualify to enroll in the federally administered National Flood Insurance Program.

Ensure you are adequately covered. The value of your home and possessions may have increased during the past several years, or you may have made improvements or purchased expensive personal items. Review your insurance policy and check your coverage limits.

Consider additional living expense coverage. Additional living expense features of most homeowners’ policies pay some expenses for losses that leave homes unlivable during repairs. Such expenses could include limited motel, restaurant and storage costs.

Do not wait until a storm approaches. Property insurance companies do not accept new applications or requests to increase coverage once a hurricane nears Florida, so it’s important not to wait until a storm is imminent to verify coverages. In addition, most flood insurance policies take 30 days to go into effect, so it’s vital to act now.

For more hurricane financial preparedness tips or resources, go to PrepareFL.com.

Copyright © 2022 States News Service

https://www.floridarealtors.org/news-media/news-articles/2022/05/prepare-2022-hurricane-season

Focus on Inventory and Fair Housing Solutions

NAR: Fair housing for all and addressing inventory, supply and affordability issues are Realtor priorities this week at the 2022 Legislative Meetings.

NATIONAL HARBOR, Md. – As part of this week’s 2022 Realtors® Legislative Meetings, The Advocacy Scoop session provided National Association of Realtors® members with an inside take on the state of real estate in Congress.

NAR President Leslie Rouda Smith opened the session by highlighting three priorities Realtors are taking to lawmakers on Capitol Hill this week: addressing inventory, supply, and affordability; ensuring fair housing for all; and demonstrating how NAR research products can inform policymaking.

“We often say our advocacy operation is second to none – and we say that because it’s true,” Rouda Smith said. “We don’t represent an industry. We represent a profession made up of 1.5 million individuals working every day in their communities to change lives.”

NAR Chief Advocacy Officer Shannon McGahn followed with a “State of the Union” speech on real estate issues, highlighting that inventory is top of mind for Realtors.

“Our job is to fight for your clients, consumers, and the entire industry to make sure we have enough housing supply to make homeownership accessible, available and affordable,” McGahn said.

She also stressed the importance of NAR’s nonpartisan, issue-focused advocacy structure. “No matter who is in power, our issues stay the same. Our fight for all consumers continues. And we keep these legislative conversations going throughout the year, back in the districts.”

During a rapid-fire panel discussion, NAR’s full leadership team, including President Leslie Rouda Smith, President-elect Kenny Parcell, First Vice President Tracy Kasper, Treasurer Nancy Lane, Immediate Past President Charlie Oppler, Vice President of Advocacy Kaki Lybbert, Vice President of Association Affairs Shannon King, and CEO Bob Goldberg discussed the top issues in real estate with three NAR policy experts.

Bryan Greene, vice president of policy advocacy, outlined NAR’s initiatives to expand homeownership to more people, especially groups that have been historically excluded. “The brick wall we face is supply. If we don’t have housing, we can’t expand access. So, we’re engaged in a range of efforts to ensure we have housing supply.”

Evan Liddiard, director of federal taxation, provided updates on existing proposals to boost inventory through tax incentives, including renovating distressed properties, converting unused commercial properties to residential, and providing down payment assistance and tax credits to first-time buyers. But he also broached new ideas. “One potential solution we’re discussing is what if we offer some owners of rental properties a capital gains tax break if they sell to first-time buyers?”

Dr. Jessica Lautz, vice president of demographics and behavioral insights, focused on how NAR’s research products can influence policymaking at all levels of government. “We’ve worked to ensure the research products we’re releasing can be used on the Hill and also in your local communities.”

Lautz highlighted three recent reports from NAR: The Double Trouble of the Housing Market, A Snapshot of Race and Home Buying in America and Obstacles to Home Buying.

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/focus-inventory-and-fair-housing-solutions

Steps for a Fierce Listing Presentation

Share info about your expertise, emphasize your value and demonstrate your access to vital marketing and other resources to give sellers peace of mind.

LOS ANGELES – In the current competitive real estate market, listing presentations are more important than ever, asserts Rainy Hake Austin, president of The Agency in Los Angeles.

To ensure their listing presentation is effective, agents should introduce themselves and share some information about their career, expertise and passions.

Agents also should emphasize their personal value proposition and allude to it throughout the presentation. They only need to select a few things in which they are skilled.

Agents also should emphasize to potential clients that they have access to their brokerage’s marketing, technology, syndication, and networking resources and tools.

If agents present themselves as a marketing or technology expert, they will need to demonstrate that. The presentation should be attractive and tech-forward, but agents should keep their language short and concise. It is also crucial to show the value of the client’s home based on the current market.

Agents should not provide too many details or overwhelm prospective clients with information. The goal is to provide sellers with peace of mind and have them feeling relieved by the time the presentation concludes.

Agents need to stay top-of-mind and may offer a leave-behind such as a printed version of the presentation, a folder with helpful materials or even gourmet cupcakes from a local bakery. 

Source: Inman (04/25/22) Austin, Rainy Hake

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/steps-fierce-listing-presentation

1Q 2022: Double-Digit Price Gains for 70% of Metros

WASHINGTON – The first quarter of 2022 saw more markets reach double-digit annual price gains than the previous quarter, according to the National Association of Realtors®’ latest quarterly report. Seventy percent of 185 measured metros experienced such price gains, up from 66% in the preceding quarter.

These increases come as median single-family existing-home prices rose at a faster rate nationally – 15.7% – from one year ago, up to $368,200. In comparison, the year-over-year pace in the prior quarter was 14.3%.

Notably, the South region made up 45% of single-family existing-home sales in the first quarter and notched a double-digit price appreciation of 20.1%. Meanwhile, the Northeast saw a climb of 6.7%, the Midwest 8.5%, and the West 5.9%.

“Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022,” said Lawrence Yun, NAR chief economist. “Given the extremely low inventory, we’re unlikely to see price declines, but appreciation should slow in the coming months.”

Yun notes his prediction is based on an expectation of further supply for the upcoming quarter, citing that the beginning of the first quarter registered a record-low amount of inventory. He also anticipates other changes.

“I expect more pullback in housing demand as mortgage rates take a heavier toll on affordability,” he added. “There are no indications that rates will ease anytime soon.”

The top 10 areas with the highest year-over-year price gains were made up of midsize and small markets, with half of the sites located in Florida. Those include Punta Gorda, Fla. (34.4%); Ocala, Fla. (33.8%); Ogden-Clearfield, Utah (30.8%); Lakeland-Winter Haven, Fla. (30.1%); Decatur, Ala. (28.9%); Tampa-St. Petersburg-Clearwater, Fla. (28.8%); Fort Collins, Colo. (28.4%); North Point-Bradenton-Sarasota, Fla. (28.0%); Myrtle Beach-Conway-North Myrtle Beach, N.C.-S.C. (28.0%); and Salt Lake City, Utah (27.9%).

“Traditionally, homes in these markets were viewed as relatively inexpensive, but with recent migration trends, prices have increased significantly,” Yun said. “As more families relocate to various areas, we may see some surprising markets on our top 10 list.

“Price gains in many smaller, tertiary cities are now outpacing those in the more expensive primary and secondary markets,” he continued. “This is due to buyers looking for less expensive housing and also a result of more opportunities to work from home, making relocation to smaller markets possible.”

Half of the nation’s top 10 most expensive markets were in California, including San Jose-Sunnyvale-Sta. Clara, Calif. ($1,875,000; 25%); San Francisco-Oakland-Hayward, Calif. ($1,380,000; 15%); Anaheim-Sta. Ana-Irvine, Calif. ($1,260,000; 26%); Urban Honolulu, Hawaii ($1,127,900; 19.9%); San Diego-Carlsbad, Calif. ($905,000; 18.5%); Boulder, Colo. ($859,100; 18.2%); Los Angeles-Long Beach-Glendale, Calif. ($792,500; 13.1%); Seattle-Tacoma-Bellevue, Wash. ($746,200; 14.2%); Naples-Immokalee-Marco Island, Fla. ($745,000; 24.3%); and Denver-Aurora-Lakewood, Colo. ($662,200; 19.4%).

With sustained price appreciation and higher mortgage rates, affordability greatly worsened in the first quarter of 2022. The monthly mortgage payment on a typical existing single-family home with a 20% down payment rose to $1,383, which is up $319, or 30%, from one year ago. Families typically spent 18.7% of their income on mortgage payments (14.2% one year ago).

“Declining affordability is always the most problematic to first-time buyers, who have no home to leverage, and it remains challenging for moderate-income potential buyers, as well,” Yun added.

During the first quarter, a home purchase was seen as unaffordable for a first-time buyer intending to purchase a typical home. The mortgage payment on a 10% down payment loan on a typical starter home valued at $313,000 rose to $1,363. That is an increase of $313 from one year ago or 30% from one year ago. First-time buyers typically spent 28.4% of their family income on mortgage payments, thus making a home purchase unaffordable. A mortgage is considered unaffordable if the monthly payment (principal and interest) amounts to over 25% of the family’s income.

A family needed at least $100,000 to afford a 10% down payment mortgage in 27 markets (up from just 20 markets in the previous quarter). However, a family needed less than $50,000 to afford a home in 63 markets (81 markets in the prior quarter).

© 2022 Florida Realtors®

https://www.floridarealtors.org/news-media/news-articles/2022/05/1q-2022-double-digit-price-gains-70-metros

Rating Agency Says Insurance Action ‘Essential’

A special legislative session starts May 23 to discuss property insurance issues from high reinsurance and litigation costs to insurers’ rising rate requests.

TALLAHASSEE, Fla. –  The financial-rating agency AM Best said Monday that further “action is essential” to stabilize Florida’s property-insurance market, as lawmakers prepare to grapple with the issue during a special legislative session this month.

The agency issued a four-page commentary that described a stew of problems for insurers, such as high reinsurance and litigation costs, and pointed to companies seeking hefty rate increases and reducing the numbers of policies they write.

“Insurance industry leaders in Florida have been warning that the current environment for those offering personal property coverage is on shaky ground, given the state’s risks and litigiousness,” the commentary said. “Escalating losses have prompted advocacy groups to call for legislative reform to stabilize the insurance market. Growing support led to legislation introduced in 2019 and again in 2021 aimed at lowering the runaway costs of litigation, a key driver of operating losses, but reform has not achieved the desired effect. Further action is essential to stabilize the market.”

The document came three weeks before the scheduled May 23 start of the special legislative session, which Gov. Ron DeSantis called after the House and Senate could not reach agreement during this year’s regular session on an insurance bill.

It also came after three property insurers – Lighthouse Property Insurance Corp., Avatar Property & Casualty Insurance Co. and St. Johns Insurance Co. – have been declared insolvent since February.

Meanwhile, in an April 25 filing at the federal Securities and Exchange Commission, FedNat Holding Co., which has three property-insurance subsidiaries that do business in Florida, cited “substantial doubt with respect to its ability to continue as a going concern.”

FedNat said it had agreed to file a plan with the Florida Office of Insurance Regulation to demonstrate its “ability to secure and maintain a financial strength rating acceptable to the secondary mortgage market, acquire sufficient reinsurance as of its July 1, 2022, renewal, support its existing business via the securing of additional capital and address its non-Florida losses and policies.”

Alexis Bakofsky, chief of staff at the Office of Insurance Regulation, said in an email Monday that FedNat had filed the plan, which was not subject to release because it had been marked as a trade secret under state law.

“OIR is working closely with FedNat to protect policyholders,” Bakofsky said in the email.

It remains unclear what steps lawmakers will take during the special session, as many homeowners across the state get hit with rate increases or lose coverage.

The AM Best commentary was titled, “Troubled Florida Property Market Participants Under Immense Pressure.” It said hurricanes have not been the “primary culprit” in the insurance problems but cited other issues, such as reinsurance and litigation costs and large numbers of roof-damage claims.

“Insurers have responded with rate increases, underwriting adjustments and targeted non-renewals while avoiding more problematic areas of the state,” the document said. “Despite these initiatives, rate adequacy continues to challenge some carriers as they request rate increases, compounding rate actions taken in previous periods.”

Reinsurance, which is essentially backup coverage that insurers purchase, plays a critical role in the Florida market. Increasing reinsurance costs and concerns about availability are raising concerns in the industry, as reinsurance coverage comes up for renewal.

“Florida property insurers may find full placement of their catastrophe reinsurance programs ahead of the upcoming renewal season a challenge,” Chris Draghi, an associate director at AM Best, said in a prepared statement.

Insurers also have blamed questionable, if not fraudulent, roof-damage claims for causing losses. That also has resulted in insurers declining to provide coverage for homes with old roofs.

During a pre-hurricane season briefing with reporters Monday, Charles Nyce, an associate professor of risk management and insurance at Florida State University, said insurers do not want to sell insurance on homes with roofs that are more than 10 years old.

“I don’t want to sound alarm bells too much, but I don’t think you can look at the current state of the private-insurance market in the state of Florida and say that it is good,” Nyce said. “It is a very fragile market that we have, extremely fragile.”

News Service Assignment Manager Tom Urban contributed to this report.

Source: The News Service of Florida

https://www.floridarealtors.org/news-media/news-articles/2022/05/rating-agency-says-insurance-action-essential

Where Beach House Rentals Earn the Most Revenue

Seven of the top 10 most profitable areas were in the South, including Fla.’s Navarre Beach, Daytona Beach and Port St. Joe.

NEW YORK – Property management company Vacasa assessed the profitability of rental beach houses in various U.S. destinations, based on the towns’ capitalization rate.

The data was used in areas where Vacasa managed at least 50 units. Average taxes, homeowners association fees, utilities, insurance and management fees in each area were removed from average annual rental income to calculate the cap rate.

Seven of the top 10 most profitable areas were in the South, including the Florida cities of Navarre Beach, Daytona Beach and Port St. Joe.

Navarre Beach has a 6.6% cap rate, a median home price of $382,392, and average annual gross rental revenue of $43,202. Daytona Beach has a 6.5% cap rate, a median home price of $247,960, and average annual gross rental revenue of $31,913. Port St. Joe has a 6.1% cap rate, a median home price of $360,721, and average annual gross rental revenue of $39,688.

Source: New York Times (04/28/22) Kolomatsky, Michael

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

https://www.floridarealtors.org/news-media/news-articles/2022/05/where-beach-house-rentals-earn-most-revenue

Insolvent Property Insurer Liquidated

The judge’s order noted further efforts would be “futile.” Tampa-based Lighthouse Property Insurance’s 27K policies in Fla. will be canceled within 30 days.

TALLAHASSEE, Fla. – Saying it would be “futile” to try further to rehabilitate the company, a Louisiana judge has ordered liquidation of Tampa-based Lighthouse Property Insurance because it is insolvent.

The order issued Thursday by Judge Richard “Chip” Moore III in Louisiana’s East Baton Rouge Parish was another sign of trouble in Florida’s property-insurance market, as Lighthouse had about 27,000 policies in Florida as of earlier this month.

All of Lighthouse’s policies in Florida will be canceled within 30 days, according to the order, posted on the Lighthouse website. The company also has insured homes in Louisiana, North Carolina, South Carolina and Texas.

The Florida Insurance Guaranty Association, an organization created to deal with insolvencies, said Friday that it has been activated to help pay outstanding Lighthouse claims.

The liquidation was not a shock, as Louisiana Insurance Commissioner James Donelon earlier placed Lighthouse into receivership. Lighthouse told insurance agents in February that it would stop writing new business in Florida. Also, the rating agency Demotech announced March 29 that it was withdrawing its financial-stability ratings for Lighthouse and the related Lighthouse Excalibur Insurance Co. The Demotech announcement pointed to losses from Hurricane Ida, which slammed into Louisiana last year.

In the order Thursday, Moore wrote that “further efforts to rehabilitate Lighthouse Property Insurance would be futile and would result in loss to Lighthouse Property Insurance’s creditors and policyholders.”

Lighthouse became the third Florida property-insurer to be declared insolvent since late February, following Avatar Property & Casualty Insurance Co. and St. Johns Insurance Co.

Slide Insurance Co. picked up the policies of St. Johns Insurance customers, but a similar arrangement was not in place for customers of Avatar. A document on the Lighthouse website said that as of April 20, it had sent out more than 360 “requests for proposals” to insurance companies licensed in Florida and the other affected states about the potential acquisition of policies.

Gov. Ron DeSantis on Tuesday called a special legislative session that will start May 23 to address problems in the Florida property-insurance market.

Insurers have shed policies and sought hefty rate increases because of financial losses in the state. As part of the fallout, thousands of customers a week are getting coverage from the state-backed Citizens Property Insurance Corp., which was created as an insurer of last resort.

The House and Senate could not reach agreement on an insurance bill during this year’s regular legislative session. It remains unclear what will result from the special session, though one issue drawing discussion is trying to help insurers afford and obtain reinsurance, which is crucial backup coverage.

During a meeting last week, the Florida Insurance Guaranty Association board agreed to borrow $250 million to pay claims stemming from insolvent insurers. That debt will be financed through “assessments” that are passed through to policyholders across the state.

Source: News Service of Florida

https://www.floridarealtors.org/news-media/news-articles/2022/05/insolvent-property-insurer-liquidated

Not Just California: Hiring Outpaces Homebuilding

Calif., Fla. and other states continue to struggle to keep their homebuilding apace with a growing workforce. This imbalance helps fuel higher home prices.

ANAHEIM, Calif. – Real estate’s secret sauce remains “jobs, jobs, jobs,” but California and other states continue to struggle to keep their homebuilding apace with a growing workforce.

California builders filed permits for 1.1 million housing units from 2010 through 2022’s first quarter, according to U.S. Census Bureau stats. This might surprise you: It’s the third-largest homebuilding total nationwide behind Texas and Florida.

In the same period, California bosses added 3.1 million more workers – No. 1 among the states, says the Bureau of Labor Statistics.

That imbalance creates a California “homebuilding hole” of 2 million fewer homes created than workers added. And that hole equals 12.6% of the state’s 15.6 million workers, the No. 2 share in the nation.

This chasm is a critical reason why California home prices are up 102% since 2010, the eighth-largest increase among the states, according to a Federal Housing Finance Agency index.

More hiring than building is by no means a California oddity.

Let’s look some of the nation’s largest homebuilding holes, ranked as a share of a state’s total employment. These states have some of the best-performing economies in the nation and also have solid reputations for their homebuilding prowess.

No. 1 Utah: 267,203 permits filed since 2010 (No. 15 nationally) trailing 478,600 more jobs (No. 12). That’s a 211,397 hole or 15.1% of jobs. Prices? Up 119% since 2010, No. 3.

No. 3 Idaho: 139,804 permits (No. 30 nationally) trailing 215,400 more jobs (No. 25). That’s a 75,596 hole or 11% of jobs. Prices? Up 130% since 2010, tops in the nation.

No. 4 Nevada: 180,864 permits (No. 26 nationally) trailing 317,800 more jobs (No. 20). That’s a 136,936 hole or 10.8% of jobs. Prices? Up 129% since 2010, No. 2.

No. 5 Georgia: 518,301 permits (No. 5 nationally) trailing 899,700 more jobs (No. 4). That’s a 381,399 hole or 8.9% of jobs. Prices? Up 71% since 2010, No. 16.

No. 6 Florida: 1.37 million permits (No. 2 nationally) trailing 2.08 million more jobs (No. 3). That’s a 708,167 hole or 8.7% of jobs. Prices? Up 110% since 2010, No. 6.

And we can’t ignore Texas, ranking No. 10 on this scorecard with 2.05 million permits (No. 1 nationally) trailing 2.89 million more jobs (No. 2). That’s an 832,319 hole or 7.1% of jobs. Prices? Up 97% since 2010, No. 9.

All told, 32 states including California and the District of Columbia had more hiring than homebuilding after the Great Recession ended.

These states permitted 12 million residences since 2010 as 19.2 million workers were added – a collective 7.2 million homebuilding hole. The rest of the nation had 500,000 more construction permits than new employees.

So, it makes sense that these 32 states averaged 74% home-price appreciation since the Great Recession vs. 49% elsewhere across the country.

Here are the 19 states where homebuilding outpaced job creation – and note the modest home-price growth since 2010: Connecticut (24%), Delaware (33%), Mississippi (36%), New Jersey (36%), Alaska (36%), West Virginia (37%), Louisiana (37%), New Mexico (42%), Vermont (43%), Iowa (47%), Wyoming (50%), Oklahoma (52%),
Kansas (54%), Minnesota (58%), Maine (62%), North Dakota (67%), Nebraska (68%), Hawaii (69%), and South Dakota (73%).

Jonathan Lansner is the business columnist for the Southern California News Group.

© 2022 MediaNews Group, Inc., The Orange County Register. Distributed by Tribune Content Agency, LLC.

https://www.floridarealtors.org/news-media/news-articles/2022/05/not-just-california-hiring-outpaces-homebuilding

65% of Buyers Would Make Offer Within 3 Days

Report: 20% of those surveyed said they’d make an offer immediately. Some buyers (56%) are willing to consider a 2nd job to earn more money for a home purchase.

CHARLOTTE, N.C. – Home buyers realize they need to be quick with their offers in today’s competitive housing market, a new report says. Sixty-five percent of buyers recently surveyed said they’d make an offer within three days of viewing it if they’re interested. Twenty percent say they’d make an offer immediately, according to Bank of America’s new 2022 Homebuyer Insights Report, based on about 2,000 responses.

Homes spent an average of 17 days on the market in March. Eighty-seven percent of homes sold in March were on the market for less than a month, according to National Association of Realtors® data.

Higher home prices and mortgage rates are straining buyers’ budgets. A home is often the most expensive purchase people make in their lifetime. Buyers are finding they have to budget wisely or increase the amount of money they can devote toward homeownership.

Some buyers say they’ve had to moonlight or take on freelance work to try to earn more money. Fifty-six percent of home buyers surveyed said they are willing to consider a second job to earn supplemental income for a home purchase, according to the Bank of America survey. One-third of prospective buyers said they’d consider starting an online store to sell handcrafted pieces or selling some of their belongings to increase the amount of money they have to purchase a home.

Home buyers also are showing some willingness to compromise to move toward homeownership, including by:

• Moving to an up-and-coming neighborhood (82%)

• Buying a home further from entertainment, restaurants, and shopping (79%)

• Buying a smaller home (71%)

• Forgoing outdoor space (70%)

Source: “2022 Homebuyer Insights Report,” Bank of America

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

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Redfin Settles Suit Alleging Housing Discrimination

Advocates: Housing opportunities will expand in major cities’ communities of color. Redfin said it prefers to spend money advancing fair housing, not litigation.

SEATTLE – Fair housing advocates on Friday announced a settlement agreement to resolve a lawsuit against real estate brokerage Redfin that will expand housing opportunities for consumers in communities of color in numerous major cities.

Under the agreement, Seattle-based Redfin will change its minimum housing price policy, alter other practices, and pay $4 million to settle the suit brought against it by the National Fair Housing Alliance and nine other fair housing organizations in 2020.

The changes will increase access to Redfin’s real estate services across the country and help counter redlining and residential segregation that NFHA and the other plaintiffs alleged Redfin’s policies perpetuated. Redlining is a now-illegal practice in which banks would refuse to make home loans to someone because they live in an area deemed to be a poor financial risk.

“Our goal was to ensure that all neighborhoods are treated fairly and have access to the full range of services provided by any real estate company,” said Lisa Rice, president and CEO of NFHA. “The steps Redfin has agreed to take are a positive move toward stamping out some of the nation’s most harmful practices, like redlining and appraisal bias.”

The lawsuit alleged Redfin’s minimum home price policy violated the Fair Housing Act by discriminating against sellers and buyers of homes in communities of color. NFHA and the other plaintiffs alleged that policies that limit or deny services for homes priced under certain values can perpetuate racial segregation and contribute to the racial wealth gap.

Redfin said in a statement that it preferred to spend money on advancing fair housing rather than on litigation, and that the settlement was not an admission of liability.

“Our commitment to broadening the price range of the homes we can sell is why, every year, by design, we lose money selling low-priced homes,” the company said. “As part of the settlement, we will increase our investment in serving buyers interested in low-priced homes in communities that have historically been underserved by the real estate industry … Redfin hasn’t broken the law and we continue to stand behind our business practices.”

Redfin has agreed to make changes that will stand for at least three years after an initial implementation period. The company also will seek to increase racial diversity in its workforce, advertise its services to reach non-white consumers, and require agents and local partner realty firms to attend fair housing training.

The lawsuit alleged that Redfin’s minimum home price policy had an adverse impact on buyers and sellers of homes in predominantly non-white communities based on race and national origin. The complaint alleged that Redfin offered no services in non-white ZIP codes at a disproportionately higher rate than in white ZIP codes in Baltimore; Chicago; Detroit; Kansas City, Missouri; Kansas City, Kansas; Long Island, New York; Louisville, Kentucky; Memphis, Tennessee; Milwaukee; Newark, New Jersey; and Philadelphia.

The lawsuit was filed in the federal district court in Seattle.

Other plaintiffs included the South Suburban Housing Center; HOPE Fair Housing Center; Fair Housing Center of Metropolitan Detroit, Fair Housing Justice Center Inc., Long Island Housing Services Inc., Lexington Fair Housing Council, Metropolitan Milwaukee Fair Housing Council, the Fair Housing Rights Center in Southeastern Pennsylvania and Open Communities.

Redfin operates in 95 markets in the U.S. and Canada and has generated $195 billion in home sales.

In the lawsuit, Redfin was accused of systematic racial discrimination by offering fewer services to homebuyers and sellers in minority communities — a type of digital redlining that has depressed home values and exacerbated historic injustice in the housing market.

The housing organizations said that during a two-year investigation they documented the effect of Redfin’s “minimum price policy,” which requires homes to be listed for certain prices to reap the benefits of Redfin’s services.

The company was vastly less likely to offer Realtor services, professional photos, virtual tours, online promotion or commission rebates for homes listed in overwhelmingly minority neighborhoods than it was in overwhelmingly white ones, the investigation found.

That meant homes in minority neighborhoods were likely to stay on the market longer and sell for lower prices than they otherwise might have, the lawsuit said.

“Redfin’s policies and practices operate as a discriminatory stranglehold on communities of color, often the very communities that have been battered by a century of residential segregation, systemic racism, and disinvestment,” the lawsuit said.

Under the minimum price policy, Redfin didn’t offer its full services unless homes were listed for certain prices, which vary by market. When potential buyers clicked on homes that fall below those minimums, they received a message saying, “Redfin is currently unable to show this property.”

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

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Florida Ranked No. 1 State for Retirement

Report: The state came in No. 1 for reader feedback, No. 5 for quality of life, No. 8 for affordability and No. 39 for health care.

TULSA, Okla.– According to RetirementLiving’s 2022 Best States for Retirement report, Florida ranks No. 1 in reader feedback, No. 5 for quality of life, No. 8 for affordability, and No. 39 for health care.

The top 10 states on the 2022 list are Florida, New Hampshire, Arizona, North Carolina, Alaska, Texas, South Dakota, Washington, Nebraska and Alabama.

According to the rankings, Illinois is the worst state for retirement.

The report ranked states based on 13 data sources and reader feedback to measure states on cost of living, quality of life, health care and other categories.

Source: South Florida Agent (04/25/22) Regan, Patrick

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

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Demand Doubles for ARMs

Lower intro rates from adjustable-rate mortgages may entice more buyers now. The increase coincides with a 1.5 percentage point rise in the 30-year fixed rate.

WASHINGTON – The share of mortgage applications with adjustable-rate mortgages doubled last week when compared to three months ago, the Mortgage Bankers Association reported Wednesday. ARMs, which start at one rate and then fluctuate after a set period, comprised more than 9% of loans and 17% of the dollar volume.

ARMs were blamed for contributing to the housing bubble of the mid-2000s, offering teaser low rates to borrowers that, once they reset, led to some homeowners no longer being able to afford their mortgage. Lenders say they’re stricter about who qualifies for ARMs nowadays.

The latest lower introductory rates from ARMs may grow more enticing as home buyers watch other rates quickly climb. The average contract interest rate for the 30-year fixed-rate mortgage with conforming loan balances ($647,200 or less) rose to 5.37% last week. That is up from 3.17% just a year ago, the Mortgage Bankers Association reports. The average rate on a 5-year ARM, however, was 4.28% last week.

The doubled share of ARM applications compared to three months ago coincides with the 1.5 percentage point increase in the 30-year fixed rate, says Joel Kan, an MBA economist.

“As buyers continue to navigate today’s housing market and rising interest rates, many are considering adjustable-rate mortgages,” says Glenn Brunker, president of Ally Home. “ARMs can help buyers save money over a fixed rate because they often offer a lower monthly mortgage payment for the initial period of the loan, typically five, seven or 10 years.”

When determining whether to choose a fixed or ARM mortgage, borrowers likely will want to make two main considerations, Brunker says: How long they’ll be in the home and their personal finances and affordability.

“The interest rate on a fixed-rate mortgage is locked in for the life of the loan – whether it’s 15, 20 or 30 years,” he says. “So if a buyer is planning to stay in their home for an extended period of time, the peace of mind that comes with a fixed-rate mortgage is beneficial.”

Also, he notes that ARM loans may increase if interest rates rise further when they do reach that adjustable reset period. But there is some protection offered on ARMs based on periodic and lifetime caps on interest rate increases, which borrowers can look into before they commit.

Source: “Adjustable-Rate Mortgage Demand Doubles as Interest Rates Hit the Highest Since 2009,” CNBC (April 27, 2022) and Ally Home

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

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U.S. Economy Contracts for 1st Time Since 2020

McLEAN, Va. – After a blockbuster 2021, the U.S. economy decidedly came back to earth early this year, contracting for the first time since the second quarter of 2020.

The trade deficit widened and companies pulled back stockpiling, more than offsetting solid consumer spending and business investment.

The nation’s gross domestic product, the value of all goods and services produced in the U.S., shrank at a seasonally adjusted annual rate of 1.4% in the January-March period, the Commerce Department said Thursday. Economists surveyed by Bloomberg had forecast a 1% rise in GDP.

It marks the economy’s worst quarterly showing since the depths of the health crisis in spring 2020 and follows sizzling gains of 6.9% in the fourth quarter and 5.7% for all of last year. That was the strongest annual rise since 1984.

But it doesn’t mean the economy is in a recession, though the odds of a slump already had risen to 20% to 30% over the next 12 months from 15% in 2021, top economists say.

A drop in quarterly output – or even two in a row – doesn’t equate to a downturn. Rather, the National Bureau of Economic Research defines a recession based on a significant decline in economic activity, including employment, retail sales and industrial production.

U.S. consumers and businesses – the core of the economy – remain healthy.

“While the possibility of a 2023 recession can’t be ruled out, current economic momentum in the economy remains too strong for things to suddenly sputter out,” economist Thomas Feltmate of TD Economics wrote in a note to clients.

Inflation eases but remains high

Growth should still be sturdy, if markedly slower, in 2022. But Thursday’s report kicks off an uncertain year for the economy as inflation eases but remains elevated and the Federal Reserve wages an aggressive campaign to fight it with interest rate hikes that could risk a downturn.

In the first quarter, trade accounted for the dismal performance, subtracting more than 3 percentage points from growth.

Exports fell 5.9% as U.S. manufacturers continued to grapple with supply snarls, and foreign countries struggled with COVID-19 flare-ups.

Meanwhile, imports surged 17.7% as a result of American consumers who continued to snap up goods. The combination widened the trade gap.

Firms added to inventories more slowly

Companies bulked up their inventories late last year after drawing them down earlier in response to late deliveries. But they replenished stockpiles so aggressively – adding more than 5 percentage points to GDP growth – that there was bound to be a pullback in the first quarter, says economist Ian Shepherdson of Pantheon Macroeconomics.

Consumer spending, which makes up 70% of economic activity, grew 2.7% following a 2.5% rise late last year. Those are decent numbers, but they pale next to the double-digit advances of early 2021 when the economy was re-opening and federal stimulus checks juiced purchases.

On the one hand, the nation continued to heal from COVID-19 in recent months as cases tumbled after January’s omicron surge, leading many Americans to resume shopping, traveling and dining out. That has partly made up for a cutback in consumers’ spending binges on sofas, TVs and other goods while they hunkered down during the pandemic.

Households also have been bolstered by robust job and wage growth as employers struggle to fill a near-record number of openings. Many people are still out of the labor force – meaning they’re not working or looking for jobs – for COVID-19-related reasons.

But inflation hit a 40-year high of 8.6% in March and the spike in gasoline, food and rent costs has led many households to curtail their discretionary purchases, says Wells Fargo economist Sam Bullard.

Supply chain untangles, but Ukraine, China pose challenges

The supply chain bottlenecks that helped fuel the soaring prices are starting to ease and many economists believe inflation has peaked. But Russia’s war in Ukraine and COVID-19-related lockdowns in China pose new threats to the shipment of goods across the globe.

Bullard expects the economy to grow 2.8% this year, a healthy showing in relation to the pre-pandemic era, but a big downshift from last year’s leap in output.

And the Fed has vowed to bring down inflation with sharp interest rate hikes, raising concerns about whether the central bank can slow the price increases without triggering a recession. Pearce predicted the first-quarter drop in GDP would not keep the Fed from hiking rates by half a percentage point at a meeting next week.

How other parts of the economy performed:

Business investment rebounds

Business capital spending grew a healthy 9.2% after a 2.9% gain in the fourth quarter.

Outlays for computers, delivery trucks, factory machines and other equipment jumped 15.3%. Supply chain snags are easing, spurring businesses to order more vehicles and other equipment that had been in short supply. And persistent w shortages are leading companies to buy more labor-saving technology, says economist Michael Pearce of Capital Economics.

But spending on buildings, oil rigs and other structures edged down 0.9% after an 8.3% decline late last year. Intellectual property spending rose 8.1%, notching strong results for the seventh straight quarter.

Residential investment rises

Housing construction and renovation rose a modest 2.1% following a 2.2% gain the previous quarter.

The industry is facing hurdles such as rising prices and interest rates, along with supply chain problems that have slowed deliveries of materials and pushed up prices.

But low housing inventories mean builders need to put up more homes, and the improving health crisis is coaxing construction workers back to job sites, says economist Shernette McLeod of TD Economics.

Government spending falls

Government spending slid 2.7% after a 2.6% drop the prior quarter. Federal spending declined 5.9% while state and local spending dipped 0.8%.

Copyright © 2022, USATODAY.com, USA TODAY

https://www.floridarealtors.org/news-media/news-articles/2022/04/us-economy-contracts-1st-time-2020

Report: Seller Profit Margins Dip Slightly

ATTOM: Though still at historical highs, profit margins on median-priced single-family home sales fell to 47.2% in 1Q 2022; it was 51.6% in 4Q 2021.

IRVINE, Calif. – Home prices are still rising, but sellers’ profits may be slowing from their recent highs. However, most sellers continue to see huge gains and profits still remain at historical highs.

The profit margins on median-priced single-family home sales across the U.S. fell to 47.2% in the first quarter. It was the first quarterly decline since late 2019 and the largest in a decade, according to a new report released by ATTOM Data Solutions. The first-quarter profit margin was down from 51.6% in the fourth quarter of 2021.

That said, profit margins – the percent change between median purchase and resale prices – often decrease during the slower winter homebuying seasons. But the latest dip of more than four percentage points was larger than typically seen at that time of year, researchers say.

The typical return on investment remains historically high. Gross profits are near record highs.

The typical single-family home sale nationwide had a median gross profit of $103,000 in the first quarter. That is down from $107,187 in the fourth quarter of 2021. But the first-quarter median is significantly above the profit of $75,001 from a year earlier.

“Home prices simply can’t continue to go up as rapidly as they have for the past few years,” says Rick Sharga, executive vice president of market intelligence for ATTOM. “The combination of higher prices, rising mortgage rates, and the highest rates of inflation in 40 years may be pricing some prospective buyers out of the market, which means we may begin to see lower sales numbers. Ultimately, as affordability worsens, price appreciation should slow down.”

The largest quarterly decreases in profit margins by metro area in the first quarter were: Santa Barbara, Calif. (margin down from 72.9% in the fourth quarter of 2021 to 45.8% in the first quarter of 2022); Boise, Idaho (down from 110.4% to 88.8%); Brownsville, Texas (down from 54.3% to 38.1%); St. Louis (down from 37.6% to 23.9%); and Des Moines, Iowa (down from 48.1% to 35.2%).

The housing market has been showing other early signs of normalizing. Contract signings dropped in March, the fifth consecutive month that pending home sales have fallen, the National Association of Realtors® reported Wednesday.

Source: “Home Sales, Seller Profits Dip Across U.S. in First Quarter of 2022 as Price Increases Slow,” ATTOM Data Solutions (April 27, 2022)

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The Home Renovation Boom Continues

Houzz: Renovation activity and spending hit their highest rate since 2018. Homeowners report a 20% increase in the median renovation spend, reaching $18K.

PALO ALTO, Calif. – Home renovation activity and spending reached its highest rate since 2018, according to the Houzz & Home survey, conducted by the home remodeling site Houzz and reflecting the opinions of nearly 70,000 respondents.

Homeowners are reporting a 20% increase in the median renovation spend, reaching $18,000. Houzz researchers note a big part of that growth is from homeowners with higher budget projects who increased their budgets from $85,000 in 2020 to $100,000 in 2021.

The remodeling surge doesn’t appear to be letting up either. More than half of homeowners surveyed say they plan to renovate in 2022, and 46% plan to decorate their home. Their planned budget has increased to $15,000 for 2022 versus the $10,000 amount it had been for the past three years, Houzz notes in its study.

“Renovation activity remains strong due to market fundamentals, including limited and aging housing stock, despite heightened product and material costs driven by supply chain disruptions,” says Marine Sargsyan, Houzz staff economist. “Homeowners are clearly committed to investing in their homes and are exploring diverse funding sources. This is especially pronounced among recent homebuyers, who rely heavily on cash from previous home sales to fund their projects and spend significantly more than the national median.”

Indeed, recent home buyers spent nearly double the national median ($30,000), according to the survey. Long-term homeowners – those who moved into their home six or more years ago – spent a median of $15,000. Short-term homeowners – those who moved into their home between one and five years ago – spent a median of $19,000 on home renovations.

What they’re renovating

Investments in home remodeling rose for interior rooms, the Houzz survey finds. Kitchens saw an increase of 25% in 2021 compared to 2020, or $15,000 versus $12,000, respectively. Kitchens remain the most popular interior room for home updates and also the most expensive to complete.

Other interior rooms in a home that posted an increase in remodeling included guest bathrooms, laundry rooms, living rooms and guest bedrooms, according to the survey.

Homeowners also are spending more on security systems. Outdoor security systems are the second most frequently installed outdoor upgrade behind lighting.

Financing the home renovation

More homeowners are starting to finance their house projects. The number of homeowners who are relying on cash from savings to fund their renovation projects fell by seven percentage points in 2021 to 76%. Homeowners financing renovation projects with credit cards increased six percentage points to 35%. Recent home buyers and short-term homeowners were more likely to rely on cash from a previous home sale (42% and 19%, respectively) to fund their house projects. On the other hand, long-term homeowners were the most likely to use secured home loans at 17%.

As homeowners spruce up their homes, they may find benefits of those upgrades at resale. The National Association of Realtors®, along with the National Association of the Remodeling Industry, recently released a report that highlights the home remodeling projects that offer potentially the biggest boost at resale.

In the 2022 Remodeling Impact Report, they found that refinishing hardwood floors is the remodeling project that pays back the most.

Source: “The Houzz & Home Survey,” Houzz (April 27, 2022)

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https://www.floridarealtors.org/news-media/news-articles/2022/04/home-renovation-boom-continues

Tools to Run a Real Estate Business on the Cloud

Cloud-based options and software like Dropbox or Microsoft365 offer automatic backup and recovery – files are available even if a device is lost or damaged.

NORWALK, Conn. – Real estate professionals are increasingly turning to cloud computing to enhance their business strategies. With cloud-based storage options and software, all agents need is an internet connection and a smartphone or other mobile device to access and share documents.

Cloud solutions offer automatic backup and recovery so agents never lose their files, even if their device is lost, stolen or damaged. In most instances, agents just drag and drop files into a cloud-based application.

Popular cloud storage options to consider include Dropbox, which lets users store content securely and send a link to others for easy sharing. Google Drive offers up to 15GB of free storage space, making it ideal for Android users, while iCloud is ideal for people who use Apple’s iOS devices.

Meanwhile, the Box app facilitates collaboration and integrates with Outlook, Google Docs and Microsoft Office365.

Microsoft365 is another popular option for real estate cloud software. It comes with 1TB of OneDrive storage, and users can purchase additional storage.

With SpiderOak, users can easily drag and drop content into their SpiderOak Hive folder to sync data and share it with others.

And, compliant with government security requirements, Huddle offers cutting edge security features. This makes it an ideal real estate cloud software option for many agents and their clients.

Source: RISMedia (04/25/22)

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