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Tag: Anna Maria Island real estate

Castles in the Sand

Mortgage interest rates rising again

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Here’s a little perspective on the continuing increase of the 30-year, fixed-rate mortgage. Several months ago, I did an analysis of the average fixed-rate mortgage rates starting in 1971 recorded on Freddie Mac’s website. At the time, something told me that I should hang onto this research, however, I had no idea how much I would be referring to it during the past couple of months.

Since the Federal Reserve decided to increase interest rates in an effort to control inflation, the housing market has been substantially disrupted. Currently, the U.S. mortgage rates have reached their highest level in more than 13 years. The average interest rate for 2008 was 6.3% and we are already seeing rates at or near 6%. In June, the Federal Reserve increased rates by 0.75% points and Fed Chairman Jerome Powell indicates things are not likely to change soon. He hints that at the July meeting there will be another 0.75% increase. Mortgage rates don’t automatically increase when the Fed raises rates, but they are heavily influenced by it.

What we’re seeing happening around the country and in Florida is a decline in the number of sales, not a decline in sale price. Even though there is some increase in the number of new properties hitting the market, it is so marginal it doesn’t even come close to providing enough inventory to satisfy hungry buyers. In Manatee County in May, the supply of single-family homes finally exceeded one month, which is anemic when you consider that a six-month supply of available properties has traditionally been the benchmark for a healthy real estate market.

Complicating the availability versus demand ratio even further is the fact that so many homeowners refinanced their mortgages when rates were under and just over 3%. These homeowners have no incentive to sell any time soon and move on or up to another home. Even potential retirees are rethinking the benefit of selling, helping to freeze the market, not to mention the pandemic providing a new way to do business remotely, allowing employees to work from areas of the country with lower housing prices shifting the market.

Because the interest rates were so low for so long, buyers were able to purchase larger and more expensive homes. However, now with less purchasing power, young buyers are facing the reality of settling for a smaller home with fewer amenities in an area they may not really want to be. Housing costs in the country have jumped from 24% of the average household budget in the early 1970s to 27% in the late 1980s to 35% in 2019 with higher housing costs likely to come based on the increase in sale prices.

Most real estate professionals and economists don’t see prices going down. Goldman Sachs estimates housing prices will grow around 10% this year nationally and Bank of America forecasts 15%. So, it doesn’t look like the Federal Reserve’s plan to lower the heat on the housing market by increasing mortgage rates has worked; there is still a huge demand for properties. It has, however, brought a lot of pain to first time and marginal buyers.

Tony Veldkamp, the president of the Realtor Association of Sarasota and Manatee wisely says, “If the time is right for someone to purchase a home, they should not let interest rates deter them if they can afford the increase in payments. Homes can be permanent, whereas interest rates are temporary.”

I agree. The big picture is that interest rates are still low relative to other times in our history, and that’s my perspective.

Castles in the Sand

Homebuyers getting hit every day

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Buying a home was once a happy time for families. Homes were plentiful to choose from, and imagining your grandmother’s credenza in the dining room and the Christmas tree in the living room front window made for happy thoughts.

Now, however, looking for a home is a stressful event if you’re just the average potential homeowner. Inventory is low, prices are high, and, of course, now we have to stress even more about the increase in mortgage interest rates.

As of June 23, according to Forbes, the average rate for a 30-year, fixed-rate mortgage was 5.89% and the average rate for a 15-year, fixed-rate mortgage was 5.13%. These numbers are slightly down. However, typically they are going up, forcing buyers to make some serious decisions, especially if they may not qualify for the additional monthly cost of the increased financing rate.

They can come up with more cash and apply for a smaller loan – usually not a good option for marginal buyers. They can lower their criteria for what kind of home they want at a lower price point and hope it exists. Or they can drop out of the market completely with the hope things improve in a year or whenever. Unfortunately, this is an option that is happening more and more as the interest rates and the selling prices keep going up.

New home buyers are getting hit even harder. Buyers who are in contract for new construction but haven’t closed are facing mortgage interest rates that are getting close to doubling since they agreed to purchase the home. In addition, they are also confronting construction that is taking longer than usual due to supply-chain and labor constraints. Some new home buyers also have to make difficult decisions; how long can they hold out while they’re watching mortgage interest rates go up and the construction on their new home crawling along?

Time now for the May Manatee County sales statistics published by the Realtor Association of Sarasota and Manatee.

Single-family homes closed 7.3% less than last May. The median sale price was $550,000, 37.5% higher, and the average sale price was $715,504, 26.1% higher. The median time to contract has not changed at six days but the month’s sup- ply of available properties has changed to 1.2 months availability. The good news is new listings are up 17.2%.

Condo sales were up 6.3% over last year. The median sale price was $369,900, 51.9% higher, and the average sale price was $441,674, 41.5% higher. The median time to contract is six days, the same as single family, and the month’s supply of available properties is one month. The good news for condos is also that new listings are up 15.5%.

A combination of higher interest rates and our normal summer slowdown is resulting in a fewer number of sales and more available properties on the market. However, prices, both average and median, remain very strong, according to the president of the Realtor Association, and are still increasing.

Making the biggest investment of your life has always been a stressful event, but it was also mixed with pleasant thoughts of the future and paint colors. Now, however, for the average buyer who needs to watch their dollars, the pleasant thoughts are gone, and they’re left with the stress. My heart goes out to them.

Castles in the Sand

Condo living getting more complicated

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Florida is the mecca for condo living. East coast, west coast, the Panhandle, Orlando – no matter where you go in Florida, it’s likely you will trip over a condominium complex. However, the carefree condo living turnkey lifestyle so many Floridians have come to love is under the scrutiny of Fannie Mae and Freddie Mac.

I’ve written frequently about needing a “condo personality” to successfully embrace the condo lifestyle. “Live and let live” is the approach all condo owners should adopt. Losing total control of your property and the ability to make even small decisions is not for everyone.

You may love that all of the landscaping is taken care of, but you may hate that you can’t plant your tomatoes at the beginning of the season. You may love that you don’t need to clean and add chemicals to the pool, but you may hate when another resident tells you your grandchildren are making too much noise. And you may love that the roof repairs are someone else’s responsibility, but you won’t like the special assessment you have to pay to do the repairs.

Now, after the Surfside catastrophe, as predicted, there is more fallout. Florida lawmakers have passed legislation requiring recertification of condominium buildings three stories or taller that are more than 30 years old, or more than 25 years old within 3 miles of the coast, ongoing every 10 years thereafter. Now Fannie Mae and Freddie Mac are getting into the act.

The majority of lenders follow Fannie and Freddie guidelines when they are qualifying individuals for home mortgages, and they in turn guarantee the loans. Now Fannie and Freddie are requiring certain actions in order to mitigate their risk of loss for mortgages they are backing. The quasi-governmental agencies are creating a database of condominiums ineligible for financing and, therefore, they will not approve mortgages for buyers in these buildings.

Primarily they are looking for maintenance issues in older condo buildings that will make them ineligible for secured mortgages. The major issue is significant deferred maintenance and unsafe conditions. Are the deficiencies, defects, substantial damage or deferred maintenance severe enough to affect the safety, soundness, structural integrity or habitability of the property? Do the required improvements impede the safe and sound functioning of one or more of the building’s major structural or mechanical elements? And has the building not passed or completed inspection required by local ordinance or state statute?

In addition, lenders, with the assistance of condo boards and/or managers, are being asked to complete a questionnaire regarding the condition of the building. Most of the questions involve knowledge of deficiencies in structural integrity and safety. Some of these questions can be answered by board members, who are usually residents of the building, but others may require professional documentation. As of now the permanent requirements are still being worked on and will be available to lenders in the coming months.

This will be a new responsibility for condo boards whose directors are charged with maintaining buildings and preserving their value. If a lender is uncertain or unable to confirm the safety of the building, they will decline the loan so as not to jeopardize their relationship with Fannie Mae and Freddie Mac.

At this point it’s confusing, but will probably smooth out over time. If you own a condo unit or are considering purchasing one, be aware of changes on the horizon. Even if your purchase does not require financing, you still want to guarantee the building you’re purchasing is secure in order to keep your carefree lifestyle carefree.

Castles in the Sand

Money flowing into Florida

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

I recently read an interesting historical novel about the wealthy landowners in the South in the years just before the Civil War. These privileged folks moved their entire households, including their money – carried in the form of gold transported in chests – to escape the summer heat. Well, things haven’t changed that much, only this time the money is in the form of wire transfers and the migration isn’t from a warm climate but to a warm climate.

According to the IRS’s report about migration of taxpayers between states, 2020 was a banner year for states with low tax policies, and guess which state accrued the most income? Florida had $23.7 billion more in income for 2020, followed by Texas with $6.3 billion and Arizona with $4.8 billion. Of the remaining top income-producing states, no one was even close to Florida, which stands alone in this area.

I probably don’t need to tell you where all of this wealth is being transferred from, but I will: California, Illinois, Massachusetts, New York, New Jersey and other Northeastern states. New York state lost the most income, topping out at $19.5 billion.

Obviously, the flow of money is attached to their owners moving to our state and looking for properties to purchase, which accounts for the following analysis of $1-million-and-over properties in our area. This report covers six months from Nov. 1, 2021, through April 30, 2022. The available and pending properties are from the realtor.com website and the closed properties are from the Manatee County Property Appraiser’s website.

In Cortez, currently on the market or pending there are three properties listed over $1 million;  at $4,750,000, $3,350,000 and $2,950,000. The new community of Hunters Point has several properties listed, all of them over $1 million, starting at $1,850,000.

Anna Maria has 44 properties listed or pending $1 million or over; three over $8 million, two over $6 million, three over $5 million, seven over $4 million, nine over $3 million, 17 over $2 million and three over $1 million. The combined cities of Holmes Beach and Bradenton Beach have 69 properties listed or pending over $1 million; one listed over $28 million, one listed over $14 million, one listed over $11 million, one listed over $19 million and one listed over $7 million. There are also four listed over $6 million, one listed over $5 million, five listed over $4 million, seven listed over $3 million, 24 listed over $2 million and 23 listed over $1 million.

As far as closed properties, Cortez had five over $1 million. Anna Maria had 82 over $1 million, two over $9 million, one over $7 million, two over $6 million, three over $5 million, five over $4 million, six over $3 million, 29 over $2 million and 34 over $1 million. The combined cities of Holmes Beach and Bradenton Beach closed 128 properties over $1 million, five over $9 million, one over $8 million, one over $5 million, 12 over $4 million, eight over $3 million, 26 over $2 million and 75 over $1 million.

All three areas increased their closed sales from the previous six months by approximately 30% to 50%. The available and pending listings also increased, but by a much smaller amount. In addition, the selling and listing prices are also higher than six months ago.

Our new residents may not have gold in their suitcases, but the cash keeps flowing into Florida anyway, and not for just a visit, as in years past, but for a lifetime. The rest of the country may be slowing down, but Florida isn’t getting the message.

Castles in the Sand

Tallahassee finally at work

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Just when you think it’s hopeless, there is a sliver of hope. The special session of the Florida Legislature is finally getting some changes on the books related to condominium recertification and homeowner’s insurance, all in the same week.

The special session called by Gov. Ron DeSantis was originally meant to address skyrocketing property insurance rates, however, the condominium safety bill was added to the agenda at the last minute. Both subjects were addressed in bills passed by the House and the Senate and signed by the governor.

Broadly, this is the outline of the condominium recertification requirements:

  • Recertification of condos three stories or taller will be required after 30 years, or 25 years if the building is within 3 miles of the coast, and every 10 years thereafter.
  • In addition, the bill requires that condominium associations have sufficient reserves to pay for major repairs and conduct a study of the reserves every decade.
  • Also, it will require associations to provide inspection reports to owners, and if structural repairs are needed, work must begin within a year of the report. Most of the provisions in the law will take effect in 2024, giving everyone some time to prepare.

There are estimated to be more than 1.5 million condominium units in Florida operated by nearly 28,000 associations, according to a legislative analysis conducted earlier this year. Of those, more than 912,000 are older than 30 years and are home to more than 2 million residents. With only about 650 certified structural engineers in the state, this will be a problem in getting the recertification program up and running in a timely manner.

As far as the homeowner’s insurance proposals, legislators came up with several short- and long-term fixes for the insurance market. Some of the proposals are:

  • Preventing insurers from dropping or refusing to insure homes solely because of a roof’s age if the roof is less than 10 years old.
  • For roofs older than 15 years, insurers will have to allow homeowners to have an inspection of the roof’s condition before refusing coverage.
  • Legislators also placed numerous limits on the fees lawyers can collect in lawsuits against insurers. Insurers have continually blamed excessive litigation by trial lawyers and claims triggered by fraudulent roofers for driving up the costs.
  • Legislators also agreed to assign $2 billion to create a new program for reinsurance – insurance that insurers buy – and require any companies that use it to pass those savings on to homeowners.
  • Enhancing scrutiny of insurers that fail.

At this point, no one can predict if rates will go down. My fear is that stricter regulations regarding roofs and scrutiny of companies will not sit well with the insurance companies and give them a reason not to do business in Florida. They will, however, like making it more difficult for lawyers to bring lawsuits. That said, we need to start somewhere, and hopefully Florida insurance companies will decide that our state is a good place to do business with a huge pool of homeowners.

The Florida real estate market has so much going for it, it’s important to everyone to make sure our buildings are safe and our insurance is affordable.

Castles in the Sand

Insurance and affordability

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

It’s the week to report the April sales statistics for Manatee County; it’s also the week where the Florida Legislature may be going into a special session to address the out-of-control property insurance market.

These two topics are completely opposite of each other on the likeability scale – we all love higher sale rates, and we all hate higher insurance rates.

Let’s get the insurance update out of the way so we can enjoy the real estate market part. Gov. Ron DeSantis must be getting a lot of phone calls in Tallahassee because he decided to call another special session of the Legislature when they couldn’t come up with any suggestions that would work to resolve the property insurance problems.

The special session is mandated to bring some stability into the property insurance market, which is experiencing companies leaving the state, dropping policies and/or increasing premiums by double digits. Before they ended their regular session earlier this year, the House and Senate in our state were at odds about how to address the insurance problems. A large part of the problem is higher litigation in Florida relative to other states and with the hurricane season starting June 1, it would take a minor miracle to get anything resolved that quickly.

Before we go over the April numbers, the Emerging Housing Market Index, which measures homebuyers looking for an appreciating housing market and lifestyle amenities, is illuminating for the first quarter of the year. It confirms what most of the real estate economists predicted – that buyers will eventually be priced out of the coastal big city markets and turn to smaller, less dense communities. This, of course, is an opportunity for those who can work remotely and are migrating because of affordability and increasing mortgage interest rates.

The top five emerging housing markets are: Rapid City, South Dakota, Santa Cruz, California, North Port, Florida, Santa Rosa, California, and Naples, Florida. North Port and Naples, Florida were the top two markets in the fourth quarter of 2021. Let’s hope our wonderful Florida west coast doesn’t get discovered too quickly.

Now finally, these are the April sales statistics as reported by the Realtor Association of Sarasota and Manatee:

Single-family homes closed 18.3% fewer properties. The median sale price was $515,000, up 27.2% from last year, and the average sale price was $729,375, up 26.2% from last year. New listings are up 1.1% and a month’s supply of inventory is up 33.3%, which is still very low at 0.8 month’s supply. The median time to contract is five days.

Condos closed 26.7% fewer properties. The median sale price was $350,000, up 48.9%, and the average sale price was $400,371, up 32.1%. New listings are up 7.7% and a month’s supply of inventory is up 14.3%, still very low at 0.8 month’s supply. The median time to contract is also five days.

The president of the Realtor Association of Sarasota and Manatee states, “As we’ve been anticipating, it appears that the rising interest rates and inflation are beginning to put pressure on our local real estate market.”

Yes, I agree there is a slight dip in the market with fewer sales, but I still think it will take a long time for the selling prices to experience the same dip – too many buyers and too few properties.

Florida continues to be nothing if not interesting. Don’t expect it to change anytime soon. Besides as lovely as it may be, who would really want to live in South Dakota after you’ve seen Anna Maria?

Castles in the Sand

Are you noticing the mortgage interest rates?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

My April 20 column was titled “The end of an era,” the era being one of ultra-low mortgage interest rates. In that column I reported that the current average mortgage interest rate was 4.72%, a rate that was probably already a week old.

Now, only a month later, the average interest rate is 5.42%, likely hovering just above 6% after the most recent Federal Reserve rate hike of half a percent. When the rate hit 5.27%, it represented a 13-year high.

So far, the country in general has not seen a slowdown of the surge in home prices, according to the National Association of Realtors. Quite the contrary, many buyers are trying to lock in purchases before the rates climb even further, which Realtors can guarantee they will, continuing to push selling prices up and up.

So, what does the average potential home buyer do in this real estate environment? Mortgage interest rates are going up almost weekly. Inventory is being depleted with everyone rushing into the market before the rates go up even more. Sellers are taking advantage of the increase and the anxiety of buyers to do tough negotiating and/or increase their asking price.

Many buyers are just dropping out, renewing their leases, moving in with family and waiting for the insanity to end. Others who can afford it aren’t giving up. Some are opting to pay fees to secure lower rates in the form of rate lock-in agreements. It’s not unusual for the typical 60-day lock-in to expire before the buyer finds a property, putting them in the position to extend the lock-in, costing – of course – more money. Others are adding cash into the transaction so they can qualify for a lower mortgage amount making up for the higher rates.

In addition, adjustable-rate mortgages are starting to come back starting under 4% for now. This new generation of adjustable-rate mortgages are more closely regulated than the ones that helped to create the financial crisis. At that time, low teaser rates attracted buyers and then after a year or two went up so high many homeowners couldn’t afford the increase. Now lenders can’t offer short-term rates and lenders are required to have caps on how much the rates can increase. Nevertheless, borrowers still need to be careful when going into a variable rate mortgage, since not knowing what your mortgage rate will be down the road is still a risk.

Most real estate economists still think that home prices will come down by the end of the year because of the higher mortgage interest rates. However, all real estate is local, and Manatee County is such a specialized area with a high percentage of cash buyers, increasing mortgage rates will have less of an effect.

Even if you’re not in the market for a new home, increasing rates influence the entire real estate market. It’s important to pay attention to the rate increases which could at some point have an impact on the value of your home proving the economists right.

At the end of 2021, the average rate on a 30-year, fixed-rate mortgage was 3.1%; by the time this column is in print it could very well be at 6%. It appears mortgage interest rates keep creating new eras every couple of months, enough to make a homebuyer’s head spin.

Castles in the Sand

Is it worth the walk?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Many years ago, my husband and I were in Athens, Greece, and on our way down from touring the sights at the top of Acropolis Hill, someone stopped us and asked, “Was it worth the walk?” After my initial shock that this question would be asked – considering where we were – I thought, “Isn’t everything worth the walk?”

The thing that is definitely worth the walk now is every single house that comes on the market in your price range, even if it’s not exactly your dream house.

We’re in what appears to be a changing real estate market. This spring seems likely to be less competitive than last spring when homes flew off the market as buyers rushed to take advantage of ultralow interest rates in an appreciating housing market. Some buyers will have to drop out of the market if they were borderline for financing, but there will still be plenty of qualified buyers and plenty with cash. No one expects prices to go down anytime soon, but an increase in inventory is looking promising.

The increase in mortgage rates is slowing home sales. Existing home sales fell 4.5% nationally in March compared to March of last year, according to the National Associations of Realtors. Manatee County’s home sales for March decreased by a lot more than that, falling by 20.2% compared to March of last year. In the opinion of the chief economist for the National Association of Realtors, the frenzy is winding down and the volume of home sales is starting to revert to pre-pandemic levels. That I’ll believe when I see it, especially on Anna Maria Island. There are still multiple buyers for every property that comes on the market, even if there will be more properties available.

As reported last week, Manatee County continues to ride the enormous wave of an appreciating market. Selling prices continue to break records in both Manatee and Sarasota and indeed the entire North Port-Sarasota-Bradenton region, which is reporting a 29.9% increase in single-family homes from last March. Sarasota County also showed a large increase of 28.4% in the sale price for single-family homes, however, Manatee County led the pack with a 32.9% increase in single-family sales prices.

So where does all this great information and opinion leave potential buyers? It leaves them with the hope of more properties to see that may fit what they’re looking for. They shouldn’t expect the prices, certainly in our area, to change much, if at all, but they may get more of what they were looking for in a home.

This goes directly back to my “Is it worth the walk?” scenario and the answer is “Yes.” Every house that comes on the market in your price range and in your desired area should be seriously considered. Forget about the colors on the walls or the lack of interesting landscaping or the clutter on the bathroom counters. It’s time to go back to basic house-hunting principles: If a home has good bones, it should go on your list; if you can qualify for a mortgage for this home, it should go on your list; and if the home is workable, keeping the future in mind for your family or for your investment, it should go on your list.

It’s possible that eventually, prices will level off as the pipeline of buyers waiting for new properties is gradually exhausted, but we have no idea when or if that will happen. Now is the time to take the walk up the hill. You’ll be glad you did.

More Castles in the Sand

 

Does anyone know what’s going on?

 

The end of an era

 

Addictive real estate

Castles in the Sand

Legislators toss condo rules out

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

For a while there I thought we would have one more headache to worry about in addition to insurance rates and hurricanes. On March 11, Florida legislators failed to reach an agreement on a bill to improve building structures. So, one less headache but far less oversight.

Therefore, let’s take a quick review of what is going on. Because of the Champlain Towers South collapse on the east coast, everyone woke up to the possibility of older condos, especially those on or adjacent to barrier islands, being in jeopardy. Florida lawmakers attempted to pass legislation that would require specific inspections for condo buildings. However, at the end of the legislative session, they were not able to come to an agreement. Some of the legislators cited hardships on condo owners and associations who are not in a financial position to bear the brunt of the inspection results.

These discussions have been going on for a while and about a month ago the Florida House passed a bill outlining measures to help alleviate the possibility of older condo buildings being neglected. It was passed in the Florida Senate to little avail since they closed the session without any agreement between the two houses. This came as a surprise since most of the legislators and the governor expected something to come out of the negotiations.

The House bill stated that condo buildings that are three stories or taller need to be inspected and recertified at 30 years of age. In addition, those that are within 3 miles of the coast would require recertification at 25 years of age. After that, recertification would be required every 10 years. The Senate bill was similar, changing the benchmark to 20 years for buildings near the coast and inspections every seven years thereafter.

I wouldn’t get too excited about the end of this legislation. First of all, it could easily come back in the next legislative session. In addition, it’s possible that insurance companies and financial institutions may now impose reserve requirements on buildings, stepping in where the state official has been absent.

In spite of what happens or does not happen in Tallahassee, Manatee County’s real estate is still rolling along. These are the February sales statistics published by the Realtor Association of Sarasota and Manatee.

Single-family homes closed 4.3% more homes in February this year compared to last February. The median selling price was $478,000, up 25.8% above last February and almost the same as January of this year. The average sale price was $693,229, up 25.3% from last February. The median time for properties to get into contract is six days of being listed.

Condos closed 16.8% fewer units in February compared to last February. The median sales price was $325,000, up 41.3% compared to last February, and the average sale price was $371,367, up 36.1% from last year. The median time for properties to get into contract is five days of being listed.

The primary problem our market faces is low inventory which is resulting in fewer closed sales. With mortgage rates going up, that will put more pressure on the market from buyers looking to purchase before they go up even further. According to the Realtor Association of Sarasota and Manatee, the imbalance of supply and demand contributes to the rapidly increasing prices.

This is Florida, and for all our success in attracting new residents and having improving housing prices, we still have everything related to living on the water to contend with. I predict this isn’t the end of condo recertifications and a review of condo reserves.

More Castles in the Sand

 

Surfside: More collateral damage

 

When will the real estate market return to normal?

 

Feng shui your entry

Castles in the Sand

Move over and make room, there’s more coming

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

As if the COVID-19 pandemic and political unrest last year and, of course, going into this year, aren’t enough, the Census Bureau started reporting population counts and Florida is one of the states at the top of the heap.

Florida’s population has been growing for the last 10 years, making us the third-most-populous state in the country after California and Texas. Coming from New York, I’m always surprised to hear from friends and relatives that they had no clue Florida’s population surpassed New York State’s. This occurred back in 2014 with a slight margin that has grown every year since then.

According to the U.S. Census Bureau, Texas, Florida, California, North Carolina and Arizona were the states with the biggest population growth from 2010 to 2020. Florida’s gain during that period is just under 3 million residents. The states with the biggest declines during the past 10 years are Vermont, Connecticut, New York, West Virginia and Illinois.

These numbers, however, do not reflect the mostly coastal states and Illinois that have lost population from July 2019 to July 2020. Much of this decline may be contributed to the pandemic but chances are the numbers will decline even more when the balance of 2020 is counted, when people started relocating. In addition, Texas (373,965), Florida (241,256) and Arizona (129,556) are the top three states in the country that have gained population this year.

It’s no surprise to anyone who is even remotely interested in the real estate market that people are leaving high-taxed states and embracing Florida’s low-tax and friendly business environment. This year the number of people relocating to Florida from other states has exploded and now many companies are looking to Florida and Texas to relocate their businesses.

After almost a year of running businesses remotely, corporations are starting to understand they don’t need the expense and inconvenience of a bricks-and-mortar building to operate. They can offer their employees alternatives increasing both their bottom line and that of the company. Miami, in particular, is attracting major financial investment companies, a few of which have already relocated and others considering the move.

As previously stated, COVID-19 is certainly playing a big part in the movement of populations. But a lot of this started after the 2017 tax reform, which included a cap on state and local tax deductibility on federal income taxes. States with high personal income tax and exorbitant property taxes that could no longer be fully deducted had residents sharpening their pencils at tax time. Many upper-income families decided it just wasn’t worth the taxes they paid to stay in certain states and started looking elsewhere.

With a new administration in Washington, it’s possible that the tax reforms of 2017 could be reversed. This could have somewhat of an effect on people’s decisions to move, however, paying $30,000 a year in property tax is not the same as being able to take a tax deduction on that amount. So, the real estate community will wait and see if a different national tax environment changes the movement of populations to the sunbelt, which started well before the tax reforms of 2017.

Florida frequently is the subject of jokes from more sophisticated regions of the country. Dave Barry wrote a whole book about it. But based on the 10-year population growth, no one really cares. I-10 and I-95 are jam-packed with moving trucks headed south and properties are selling in one day.

Make room Floridians – we ain’t seen nothing yet. Stay safe.

More Castles in the Sand:

New year, new homes

Are home sales starting to slip?

Real estate sales surge continues

Waterline resort units on sale now

Waterline resort units on sale now

Written by SUN contributor on . Posted in Business, Real estate | Development.

HOLMES BEACH – If you’ve ever dreamed of owning a piece of the Waterline Marina Resort and Beach Club, now is your chance.

The 37 two-bedroom, fully furnished units went on the market at 10:08 a.m. on Aug. 8. Pricing for the units starts in the low $500,000s. Interested buyers can contact the sales office at 727-379-4656, email waterline@cbrealty.com, go to the realty website or visit the onsite sales office at 5325 Marina Drive in Holmes Beach. The sales of the units are a collaboration between hotel developer Mainsail Lodging & Development and Georgia Salaverri of Coldwell Banker Residential Real Estate.

Each of the units, or villas, features two bedrooms, a gourmet kitchen with full-size appliances, living area and balcony. All units are provided to the owners fully furnished. With Waterline remaining a full-service resort, onsite amenities include a meeting room, fitness room, pool, marina access and a full-service restaurant, Eliza Ann’s. Due to COVID-19 precautions, Eliza Ann’s and the hotel’s bar are currently closed.

Owners of the units will be able to stay in the units whenever they’re in town and also put them in a program to be rented as hotel rooms when vacant. All current reservations at the hotel will be honored despite the unit sales. Guests will still be able to make reservations at the hotel through the resort’s website.

The Waterline Marina Resort and Beach Club was developed by Mainsail and opened in December 2017 as the first full-service hotel on Anna Maria Island, located in the downtown commercial district within walking distance to salons, restaurants, shops, art galleries and more. It is part of the Marriott Autograph Collection of boutique hotels.

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Castles in the Sand

Florida’s in the tax driver’s seat

Written by Louise Bolger on . Posted in Business, Castles in the Sand, Real estate | Development.

It’s almost tax time again so why not talk again about Florida’s advantageous tax position and the influx of new residents. I like to tie in our growing population with real estate sales statistics since it’s my opinion there’s a direct correlation between the two. I’ll also report the January sales in this column.

But first, it’s been two years since the new tax law was signed and we’re just starting to see the effects. Local economies and housing markets are motivating residents of high tax states to relocate to more tax-friendly states like Florida with no state income tax. Even though the tax overhaul resulted in many people experiencing lower taxes, homeowners in high tax states are being seriously hurt and when many of these high-end individuals move, it has a ripple effect on the economies of that state.

If you remember, part of the new law capped how much homeowners can subtract from their federal taxes for the payment of local property and income taxes. The cap is set at $10,000 which, in states like New York, New Jersey and Illinois to name a few, is far below what most homeowners pay in property tax and state tax combined.

The average property tax in the United States in 2018 was about $3,500 according to a national data real estate firm. However, this is far below what much of the northeastern states pay in property tax. In Westchester County in New York State, the average property tax was more than $17,000, the highest in the country. In addition, the law also lowered the size of mortgages for which new buyers can deduct the interest to $750,000 from $1 million, just adding to the high tax and high property value states’ misery.

Not everyone is moving because of taxes exclusively, some were considering a move already and many were near retirement and just needed a little push. Whatever the reason, Florida is one of the beneficiaries of the movement with increased sales and rising property values.

These are the January sales statistics for Manatee County from the Realtor Association of Sarasota and Manatee: Single-family homes closed 22.4% more homes in January compared to last January. The median sale price was $329,500, an increase of 6.6%, and the average sale price was $420,775, an increase of 8.7%. Condos closed 47.7% more properties this January compared to last year. The median sale price was $210,000, up 7.7%, and the average sale price was $236,687, down 1.8%.

An ongoing problem continues to be a lack of inventory, with 3.4 month’s supply for single-family properties and 4.7 month’s supply for condos. These numbers are either down double digits from last year or even. As the Realtor Association of Sarasota and Manatee headline reads in its press release “Home Sales Out-Pace Supply.” Not a great place to be.

For those who want to change your address to one in Florida, make sure you establish a legitimate residency. States are known to conduct residency audits to verify you’re really leaving their state. This happens a lot when people own two homes in different states and want to move their residency. Florida wants you to get a driver’s license, obtain Florida license plates and auto insurance, file a declaration of domicile, apply for Florida homestead exemption, register to vote and open a bank account. Floridians should get ready for this influx to continue.

As with most changes, there’s always a good and a bad aspect and we’re sure to experience both.

More Castles in the Sand:

The greying of the mortgage market

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Jason Sato tops county real estate rankings again

Jason Sato tops county real estate rankings again

Written by Joe Hendricks on . Posted in Business, Real estate | Development.

ANNA MARIA – For the fifth consecutive year, Sato Real Estate’s Jason Sato was the top real estate agent in Manatee County in 2019 in combined total sales and listing volume.

Duncan Real Estate owner and broker Darcie Duncan was again the Island’s second-highest seller and she ranked fourth in total volume countywide. AMI Beaches Real Estate agent Gregg Bayer ranked ninth.

The rankings are according to the 2019 Agent Market Share Report for Manatee County.

Sato made 30 sales and had 42 listings for a total volume of $81.5 million. Duncan made 23 sales and had 38 listings for a total volume of $40 million. Bayer made 17 sales and had 18 listings for a total volume of $35 million.

AMI Beaches Real Estate agent Gregg Bayer did more than $35 million in sales and listings in 2019. – Submitted | AMI Beaches Real Estate

Two agents in the top 20 made more than 50 sales and two others had all listings and no sales.

Sato’s streak

“It’s been five years in a row. It’s a lot of hard work and a lot of time put into it,” Sato said. “I grew up on the Island, I live on the Island and people see that I’m active in the community. I don’t stretch myself thin. I focus all my attention on Anna Maria Island and I want to thank my loyal customers.”

Sato said his sales assistant, Grace Wenzel, and office manager, Monica Reid, contribute significantly to his success.

“They’re very helpful setting appointments and getting the paperwork organized. I’ve got a good team behind me. My customers love Grace and she helps me stay organized.”

Sato was asked how 2019 compared to 2018.

“I was up by about $7 million, but for the most part, it was about the same. Hopefully, we can keep it rolling,” he said.

“If you’re doing $30-35 million a year, you’re doing really well,” he said of his peers.

When asked about market trends, Sato said, “People like the newer stuff. Builders are building nicer spec homes and people seem to like those. The market seems pretty solid. Inventory’s good and interest rates are low. A lot of people are buying second homes and more people are buying for themselves rather than for renting. It’s about half and half. It used to lean way more toward the rental side. People still love the Island. People want to be a part of the Island and I think that’s our biggest selling feature. People love that ‘old Florida island’ feel that we still have.”

Proud mom

Sato co-owns Sato Real Estate with his mom and fellow Realtor, Barbara Sato.

“Five years in a row. Nobody’s done that before,” Barbara Sato said. “I’m super proud of him and I believe he gets there by being honest and hardworking. He was raised here, he lives here, he loves the Island and he knows the Island like the back of his hand. The whole office is so proud of him. He’s very deserving.”

Duncan delivers

When asked about her annual appearance near the top of the rankings, Duncan said, “I attribute it to hard work, good client relationships and being in this business for 30 years. I get up every day, work hard and do the best I can to bring my customers the best service I possibly can. And I love what I do.”

Darcie Duncan was once again second on the Island in sales and total volume. – Submitted | Duncan Real Estate

Regarding market trends, Duncan said, “Prices have stabilized and there’s a lot of interest. I see the market being strong this year and you have never seen interest rates as low as what you’re seeing right now. Out here, we’re seeing rates in the low 3% range. You get a lot of house for your money right now with interest rates so low.”

“A lot of people want to buy here and it’s not as rental driven as it was in the year prior. People are looking to retire here. The inventory levels are stable and there’s a lot of different price points, so there’s something for everyone,” Duncan said, noting she has a nice mixture of on-Island and off-Island clients.

When asked about the Island’s older, traditional, ground-level homes, Duncan said, “We’re seeing more people buy them for permanent residences.”

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Castles in the Sand

What does a mortgage broker do?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

I’ve talked many times in this space about getting a mortgage for a home and how it is one of the most stressful aspects of purchasing. Many people don’t have the time to contact numerous lenders and comb through the details when shopping around and choose instead to go to a mortgage broker for help. But what do they really do and how much does it cost?

Mortgage brokers are licensed in the state of Florida and most states as well. They are financial professionals who act as the bridge between borrowers and lenders. They originate loans and help you connect with a variety of lenders who best fit your financial situation. Working directly with a bank will not give borrowers any flexibility in rates or loan requirements, however, mortgage brokers can offer buyers products of many banks and many more options. This is particularly important for buyers who may not have perfect credit scores and have small down payments.

In addition, mortgage brokers coordinate and manage paperwork and typically close a home loan faster than a traditional bank. They work in cooperation with real estate agents, underwriters, lenders, title companies and attorneys. They are part of the closing team and are trained to anticipate glitches and troubleshoot problems standing in the way of a closing.

There are disadvantages to using a mortgage broker. Since they are motivated to close as many properties as possible, keeping up with the hands-on service can be a challenge for them. It’s critical that you choose a broker who comes with a good recommendation from a friend, family member or real estate professional who has had recent transactions with the broker. Also, you must feel comfortable with the mortgage broker and feel you can tell them anything since you are essentially telling them everything about your personal finances.

Mortgage brokers are paid by commission by either the borrower or the lender. The fee is typically 1% or 2% of the total loan amount and usually is rolled into the loan in the case of a no-cost loan. However, be alert since rolling in the mortgage broker origination fee could result in a higher interest rate.  The other option is to pay a loan origination fee to the broker separately, again 1% to 2% of the loan amount.

Mortgage brokers are required to disclose all fees up front and can charge only that disclosed fee amount. Further, each fee should be itemized, and the broker should be ready to tell you, the borrower, exactly what each fee was for. Mortgage brokers, like real estate brokers, do not get paid unless there are a closed loan and a closed transaction regardless of how much work they do prior to closing.

After the financial crisis, the Dodd-Frank Act restructured how mortgage brokers get paid. Before this legislation came into effect, lenders could compensate mortgage brokers for getting their clients to agree to high-interest rate loans and signing off on costly fees. This left the door open to an unscrupulous loan broker and hidden fees, affecting many inexperienced buyers.

With so many details involved in purchasing a home, working with a competent mortgage broker whom you’re comfortable with can be a good idea to help you get through the process. They could be invaluable in procuring the best loan for your financial situation and taking some of the work off your shoulders.

More Castles in the Sand

 

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Is Anna Maria Island still Old Florida?

 

Happy new real estate year

Castles in the Sand

Real estate winter

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

It’s winter in southwest Florida and although we talk a lot about beach, road and Publix congestion, we really do love visitors to the Island. We, of course, would love them even more if the visitors converted to owners and not just on Anna Maria Island.

Florida and Arizona have built a real estate market catering largely to retirees, specifically baby boomer retirees. As much as we boomers want to continue influencing the culture and finances of the country, we will inevitably pass away. Not only do we have to face death we may also need to face not being able to live in our homes and migrating to family or assisted living facilities.

Now that I’ve completely ruined your day, these numbers will further depress you. According to Zillow, one in eight owner-occupied homes in the U.S., or roughly nine million residences, are set to hit the market from 2017 through 2027. In addition, Zillow calculates that by 2037 one-quarter of the U.S. homes for sale, or roughly 21 million homes, will be vacated by seniors.

This is a lot of real estate and a good percentage of these homes are in over 55 communities where at least one owner needs to meet that age criteria. These communities have been popular with baby boomers for decades. However, the concern is that the next generation of homeowners are not only looking for a different lifestyle but there aren’t even enough of them to fill the vacancies.

In theory, older homeowners are replaced by younger homeowners and the recent lack of available properties to purchase has kept many millennials stuck in rentals, so this should be a good thing. However, in the case of many of the baby boomer properties, the properties are located in areas where younger buyers don’t want to buy. Suburban living is less of a draw than for previous generations and millennials prefer cities and major metropolitan areas. In addition, even generations below the baby boomers who may be in pre-retirement years have little or no interest in living in planned, age-restricted enclaves no matter how great the weather is.

Economists worry about what the impact of unpopular large retirement communities will have on the local economy surrounding these areas. There are some market experts who suggest that a retooling of these communities to make them more attractive to families and lifting the age restrictions could be a better use of these properties down the road. Arizona and Florida are naturally in the crosshairs of potentially having an overabundance of senior housing. Thankfully for us, Florida’s east coast will be harder impacted.

Real estate markets are a balancing act. If one part of the market has a problem, another part may benefit from those problems. For example, the beautiful and exotic state of Hawaii.

Who doesn’t love Hawaii for vacations, but do you want to live there? Apparently lots of people don’t since Hawaii is experiencing the third straight year of negative migration, with the young, highly educated and well-off being the ones most likely to leave.

Hawaii has the highest cost of living in the country, and according to the Tax Foundation, the real value of $100 in Hawaii is $84.39. According to Zillow, the median list price for a house is $630,000 compared with $284,999 for the U.S. as a whole. In Hawaii, gasoline has been as high at $5.00 a gallon and a gallon of milk $7.00. Hawaiians may be going kicking and screaming from their beautiful state but they’re leaving for the same reasons residents of New York, California, Illinois and New Jersey are leaving – taxes, cost of living and public education.

Inevitably, we will see a dramatic change in the real estate market in the near future. Right now, the baby boomers still rule and will for a while.

More Castles in the Sand:

 

Is Anna Maria Island still Old Florida?

 

Happy new real estate year

 

Home ownership matters