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Tag: Anna Maria Island real estate

Castles in the Sand

Calming waters

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

It’s the end of July, and most of the country is hot, really hot. But if you live near the water as we do, it doesn’t seem so bad. Imagine living in a landlocked state and it’s 95 degrees day after day. Aside from keeping cool, living near the water has many other benefits, according to a book called “Blue Mind.”

Sitting on a beach has always been one of my favorite things to do and I have been fortunate enough my entire life to have quick access to wonderful beaches. It gives me a sense of well being and just staring at the water puts me in a mildly meditative state, a blue mind.

This is exactly what Wallace Nichols a marine biologist talks about in his book “Blue Mind.” He says that merely being close to a body of water, sea, river, ocean or lake can promote mental health and happiness. Further, water lowers stress and anxiety, lowers heart and breathing rate and improves creativity. Sometimes even dreaming or daydreaming about a beautiful beach and crystal water can calm down anxiety.

Nichols’s theory would explain the popularity of Anna Maria Island and the accompanying increase in real estate values. Coastal Living Magazine had a recent list of the happiest seaside towns in the country. Anna Maria came in fifth and the only picture the magazine used in their piece was one of Anna Maria’s iconic cottages on Pine Avenue.

Now it’s time to take a look at the June Manatee County sales statistics reported by the Realtor Association of Sarasota and Manatee:

Single-family homes closed 2.2% fewer properties, however, the median sale price was up 5% to $315,000 and the average sale price was $397,987, which is 8.8% higher than last June. The median percentage of original list price to the final sale price was 96%, about the same as last year. The median time to sell was 102 days this June. Last year it was 90 days and the month’s supply of properties is 3.6 months compared to 4.1 last June.

Condos closed 12.2% fewer properties this June compared to last. Like single-family homes, the median sale price for condos was also up by 3.9% to $199,000. The average sale price was also up 1.6% to $236,307. The median percentage of original list price to the final sale price was 95%, up 1.3 percent from last year. The median time to sell was 101 days this year compared to 111 days last year and the month’s supply of properties is 4.1 months, the same as last June.

With the exception of fewer closings, June’s numbers are all in the green for both single-family and condos. If you have a smaller supply of properties to sell, chances are you will have fewer closings – the good and bad of a great real estate market. In addition, the median percentage of listing to sale price is a good indicator of the health of the market. When you’re getting close to 100% of listing to sale, you know things are good.

This time of year, it’s not easy to find a state that is naturally cool, believe me, I’ve tried. It’s also not easy to find a place where people are not over-connected and over-stimulated, creating a red mind the opposite of a blue mind.

However, we have it right here on Anna Maria and the surrounding areas. Is it worth the extra money for a home on or near the water? Just ask anyone who has one. “Blue Mind,” a perfect name for a cottage on the beach.

More Castles in the Sand:

The condo dance

The suburbs and the millennials

Are you as smart as a private equity firm?

Castles in the Sand

The condo dance

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

Every dance has specific dance steps. Even though some dancers may look like they’re just winging it, they’re at least the ones that you keep looking at. Living in a condo requires learning a multiple of dance steps, so if you’re not good at condo dancing, you may need to rethink your purchase.

Condo living is great. It frees you of all the day to day maintenance issues that a house requires – exterior painting and pool cleaning are done, the lawn is mowed and roof repairs are a thing of the past. But all of these services come with a price in both money and control.

The first dance steps you need to learn are those in the condo maintenance fees or homeowner association fees dance. These fees are established in order to pay for all of the services and expenses the condo association is responsible for. Owners pay either a monthly or quarterly fee that goes into the association’s funds and is allocated to specific reserves.

As soon as you are in contract for a condo property, the condo fees are disclosed to you. You, in turn, need to disclose these fees to your lender if you are applying for a mortgage. Condo fees are calculated by lenders right along with principal, interest, taxes and insurance in order to qualify for financing.

Condos with high fees can kill a deal if the potential buyer does not qualify for a mortgage because of the fees. This can be a tricky calculation for condos that are new construction since it’s not uncommon for the developer to lowball common charges in order to sell units, which means that marginal buyers may not get their financing if the fees are adjusted upward prior to closing.

The second dance that has very complicated steps is the giving up control to the condo boards and management company dance. If you’re one of those people who needs to dot every “I” and question every rule, you may have a hard time learning this dance.

There’s a fair amount of freedom you give up to live in a condo. For instance, if you liked skinny dipping in your single-family home pool you better start buying a bunch of bathing suits or, if your neighbors on the other side of your common wall have their grandchildren over every Sunday to watch football, either you join the party or go out for the day. Condo living is nothing if not a compromise.

There is, however, a way to gain some control and that’s by volunteering to join the condo board. Based on how the condo documents are drawn up, condo board members have a lot of power. They can change rules, choose contractors to do jobs and move money around. There certainly are decisions the boards cannot make without a vote of the residents, so learning what decisions condo boards can and cannot make is important before going forward.

If you don’t join the board yourself, make sure you vote for board members that you feel are qualified and ethical. In addition, condo boards that have good management companies to advise and guide them are better run.

Successful condo living is a “live and let live” concept. Minor infractions of rules should be overlooked and flexibility will make your living experience rewarding. If you want a carefree lifestyle and the ability to lock your door and leave, like so many people in Florida do, condo living is a perfect fit. But first you need to learn the condo dance and how to dance like a pro.

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The suburbs and the millennials

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Real independence

Castles in the Sand

The suburbs and the millennials

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

For several years, I wrote about how the millennials were moving into the cities. They didn’t want anything to do with the suburbs and their parents’ lifestyle. Well, in the space of two weeks I discovered that everything old is new again.

In the 1950’s families, including mine, were moving from the city to the suburbs, buying up new homes in what were once potato fields and family farms. This migration from the cities to the suburbs happened because of the demand for housing after World War II when the veterans could finally settle down and start their families.

When the grandchildren of those families grew up, they said, “No way,” and vowed not to return to the mundane lifestyle of backyard barbeques and Little League. But don’t ever say never since the millennials, many of whom are in their late 30s, are coming back with families in tow, only this time instead of moving to the suburbs outside of major Northern cities, they’re coming south. This reversal has a lot to do with the mobility of jobs and the growth of the South, which is benefitting from the real estate slow down and taxes of the Northeast.

Recently, a very extensive piece in the Wall Street Journal studied the reversal from city to suburban life. It reported that the growth rates of the suburbs are far outpacing metropolitan areas and the South is winning the race. This supports what I wrote about last week regarding investors buying up first-time buyer properties, hurting millennials who suddenly want to buy houses and raise families.

Some of the hot Sun Belt areas with good job opportunities that are benefitting from this influx of young families are Frisco, Texas, Nolensville, Tennessee, Scottsdale, Georgia and our very own Lakewood Ranch.

As fate will have it, the same day I read the story about the city to suburban reversal there was a report in the Bradenton Herald about 3,000 new homes that will be built in Lakewood Ranch. After a little research, I discovered a couple of interesting things about Lakewood Ranch that we who live surrounded by water probably haven’t paid attention to.

First of all, 74 percent of Lakewood Ranch residents are either between the ages of 25 – 44 or over 65. I also read that Massachusetts General Hospital is opening a Brain Health Initiative that will be based in Lakewood Ranch, kind of an achievement for the Bradenton area. Also, the median age in Lakewood Ranch is 49.4 compared to Anna Maria Island’s 64.3. There are not too many millennials with families moving here. Finally, Lakewood Ranch is 31,000 acres and 29 square miles with a population of over 11,000.

The reason I’m telling you this is two-fold. First of all, to keep everyone aware of changes in real estate trends both locally and nationally and second to help us sun and sand worshippers appreciate what’s going on east of our shoreline. We’re all part of the same region, so what happens in Lakewood Ranch can have a serious impact on us – traffic, parking, success of restaurants and shops just to name a few. The millennials may prefer to live in Lakewood Ranch, but for them visiting Anna Maria Island is one of the reasons they came here.

Well, once again, millennials are picking up where baby boomers left off. Now it’s their turn to influence all aspects of life in the country. Everything old is new again.

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Castles in the Sand

Are you as smart as a private equity firm?

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

The phrase, “follow the money,” goes back to the Watergate era as a method to shed light on corrupt activities by looking at money transfers. But following the money does not always lead to corruption. It could lead to some really good business advice.

Last week we reported the May real estate sales statistics in both Manatee and Sarasota counties being up substantially to the point of registering the highest numbers post-recession. Manatee County’s median single-family home sale prices were up 4.9% from last year continuing the $300,000 or above median sales price for most of the past year and a half. How much of this increase in selling price is fueled by investors, we have no sure way of knowing. What we do know is investors are totally into the U.S. real estate market.

Based on data released by CoreLogic, Inc., last month more than 11% of U.S. home purchases in 2018 were made by investors. This is a record high of investors, the highest recorded and nearly twice the levels before the 2008 housing crash. Investors are purchasing to flip properties or turn them into single-family rentals. The investor profile is everything from big private-equity firms to real estate speculators and individuals who want to get in on the action.

Investors swooped into the housing market in 2011 and 2012, buying with all cash when prices were low and mortgage credit was difficult to get for the average buyer. Economists gave them credit for helping to stabilize the market but expected the investors to slow down when prices started climbing after everything returned to normal. However, that hasn’t happened, partly because of strong rental demand.

Unfortunately, much of the rental demand is coming from first-time buyers, specifically millennials who are competing with investors that are buying up the low end of the real estate market with all cash transactions. According to the CoreLogic survey, investors purchased one in five homes in the bottom third price range in 2018, exactly where first-time buyers generally start at.

Complicating things further for first-time buyers is technology. The internet has made it easier for smaller investors and foreign buyers to purchase properties sight unseen. A few weeks ago, I talked about iBuyer companies, such as Opendoor, Zillow and Redfin that offer cash to homeowners who want a quick deal, avoiding the stress of putting their homes on the market.

These properties are either flipped or sold to investors for potential rentals. CoreLogic further reported that investors bought about half of the starter homes in Philadelphia last year and about 40% of the lower end of the market in Detroit. Again, first-time buyers are being run over by cash investors and technology.

Investors are also banking on renting vs. buying being a double-edged sword. Owning their home has always been the goal of Americans and many feel that renting is inherently wrong and a waste of money. Now, however, first-time buyers are rethinking that calculation. Mobility for job advancement is important to millennials who understand that about five years is the break-even point between owning and renting and may opt to rent until their careers are stabilized.

Renting instead of buying is a conversation that doesn’t make me happy. I still believe that owning your own home has more benefits than renting and should not be entirely a business decision. My opinion – follow the money straight to your new home.

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Real independence

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Castles in the Sand

Real independence

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

July 4 is Independence Day, representing this country’s desire to be independent of not only the British but also to be self-sufficient, able to make to our own decisions and to live in freedom. We’re a lucky people living in the United States and we’re also lucky to be living in Florida, especially if you own property here.

Manatee County real estate values and activity continue to grow practically every month, and May was no exception. These are the May sales statistics reported by the Realtor Association of Sarasota and Manatee, which reflect the multiple listing services recorded sales numbers.

Single-family home sales in May compared to May of last year increased by 13.3%. The median sale price, half above and half below, increased by 4.9% to $319,995. This is the highest median price in 10 years. In addition, since December of 2017, the median sale price for single-family sales in Manatee County has been at or above $300,000 for 12 of those months.

The average sale price for single-family homes compared to May of last year was $388,672, down by 4%. The median time to sell was 97 days, down 1%, and the month’s supply of properties was down 11.6% to 3.8 months. As a side note for single-family properties, cash sales were up 10.8%.

Sarasota County’s numbers are also good for single-family sales. The median sale price for May compared to May of last year was $305,305, up 8.7%, and the average was $411,199, up 8%.

Condo sales in Manatee County were up 6.1% and the median sale price was up 14.3% to $210,000 compared to last May. The average for May was up 5.2% to $246,381, the median time to sell was up 15.1% to 107 days and the month’s supply was down 6.7% to 4.2 months. By comparison, Sarasota’s median condo sale price was $238,000, up 1.4%, and the average sale price was up 5.5% to $361,732.

These are fabulous numbers for both Manatee County and our close neighbor Sarasota County. It was reported that these are the highest post-recession sales numbers for single-family properties for both counties. It’s hard to imagine things getting much better, but it is expected they will, based on the stable interest rates below 4% and the fact that the Federal Reserve has indicated it could cut interest rates further in the months ahead.

The state of Florida is also experiencing upward mobility in the sales of both single-family homes and condo sales. Statewide in May compared to last May there were 9.6% more closed single-family homes with a median sale price of $266,000, up 4.3%. Condo sales in the state in May closed 1.6% more properties with a median sale price of $195,000 up 3.7%.

Nationally, existing single-family home sales increased by 2.5% in May as reported by the National Association of Realtors. It also points to falling mortgage interest rates being beneficial to the housing market and is optimistic that the spring selling season will give the somewhat sluggish national housing market a well-needed push.

The national median sale price for single-family homes was $277,700, up 4.8% for last year and the strongest monthly pace of growth since last August. The National Association of Realtors also reported that there have been 87 straight months of year-over-year gains in the national housing market.

So, enjoy your holiday and the good news about the real estate market. We are indeed lucky in so many ways. Happy Independence Day.

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Castles in the Sand

The buyer’s best buddy

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

I love learning new words, and I love applying those new words to anything in real estate. My new word is chimera, which is from Greek mythology and is a fire-breathing female monster. Now before you start with the female jokes, chimera is also a thing that is hoped or wished for but, in fact, is illusory or impossible to achieve.

There was a time in this country when mortgages were not easy to come by. Typically, if you wanted a mortgage to finance a home, they were short term loans with very large down payments, balloon payments and floating rates. The creation of the 30-year fixed-rate mortgage came about after the Great Depression and was part of The New Deal which established the Federal Housing Administration (FHA), setting up 15- and 30-year mortgages. Subsequent to that in 1938, Fannie Mae was launched as a way to free up mortgage money making it more available to Americans.

Fannie Mae and then Freddie Mac were created to encourage banks to make more home loans by backing the loans with federal guarantees, thus removing almost all of the home lending risk. These mortgages were then packaged into securities and sold to investors.

This was a great system until it wasn’t. A major part of why the financial crisis happened is because non-conforming loans were given to buyers who were essentially not qualified by lending institutions that were not verifying their ability to repay the loan. All of these subprime mortgages were sold as securities to investors who knew that Freddie and Fannie were assuming the risk backed by the federal government.

When the house of cards finally fell down, Fannie and Freddie were put under government conservatorship in 2008, fundamentally using your tax dollars to bail them out. So here we are now with about half of the home loans today still being backed by Fannie and Freddie.

There’s no question that these government-backed agencies have done their part in creating the American lifestyle and dream of home ownership, but is it time for an overhaul of the system? In favor of keeping the status quo, lawmakers point out that that government has a responsibility to keep housing affordable for both individuals’ ability to build wealth and allowing businesses that depend on homeownership to thrive. Also, they point out that banks don’t want to keep loans on their books and, if Fannie and Freddie are dismantled, banks would rethink making loans if the economy starts to slow down drying up available mortgage funds.

On the other hand, some say the government shouldn’t assume the risk associated with home ownership and more competition in the form of private equity would be a better mix. No one wants a replay of 2008.

Over the last 10 years, there have been innumerable arguments between lawmakers and government officials about how to proceed going forward and how big Fannie and Freddie should be allowed to become. Some say part of their business should be returned to private institutions, and some say they should not exist at all. None of this will be resolved anytime soon.

However, if your chimera is owning your home, it’s actually a good time to buy. Interest rates have dropped below 4 percent for the first time since early last year, and the Federal Reserve is holding steady with the prime rate for now.

Whatever happens between the federal government and Fannie Mae and Freddie Mac isn’t your problem right now; embrace the illusion and buy a house.

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Real estate selling for the smartphone generation

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Castles in the Sand

Real estate selling for the smartphone generation

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

If your smartphone has become an extension of one hand and the TV remote an extension of the other, then iBuying may be the next logical step in selling your home.

There have always been people who need to sell their homes quickly because of a lost job, a sudden move or personal tragedy. Usually, selling fast comes at a price, but Zillow and other online tech companies think they can efficiently predict the value of a home, make you an offer and get you moving.

Last year, Zillow moved into home flipping, and it now has nine regions in play and expects to be in 20 markets by early next year. Interested homeowners complete a questionnaire on Zillow’s website and they receive an initial offer within 48 hours and a final one after an inspection. There is a service fee of about seven percent of the purchase price based on needed repairs. If accepted, Zillow closes the transaction within 90 days and then attempts to resell the house.

Sounds easy, right? Well, it is in the sense that you don’t have to pick up the kids’ socks and put away the breakfast dishes to get ready for a showing. You also may not have to make maintenance repairs or updating if you’re willing to accept Zillow’s offer reflecting these changes.

This can cut both ways. Yes, you don’t have to come up with the money to do the repairs and you avoid the inconvenience, but you may give up money in the long run. Most buyers like properties that are move-in ready and don’t want a renovation project. It’s easier for them to pay more and build the work that’s already done into the mortgage than close at a lower price and come up with the money to renovate. Zillow says let that be our problem, here’s your money, goodbye.

Zillow and other online companies are primarily working in areas that are homogeneous, consistent neighborhoods where many of the homes are the same and value is quick and easy to determine. Arizona and Florida are prime areas for iBuyer programs where many of the homes are in subdivisions with identical or similar homes.

However, their goal is to move into more diverse and more expensive areas in the Northeast. They’re throwing the dice and hoping that homeowners are willing to pay higher fees for a convenient and speedy transaction. Higher priced properties tend to take a longer time to sell, costing homeowners more in carrying charges and potential repairs, especially if another property has already been purchased or is about to close.

Zillow admits its margins are “razor thin,” but is moving forward quickly. In 2018 Zillow bought less than 700 homes, but it expects to expand that to 5,000 homes per month in three to five years. The business model is to turn the property around in 90 days and remove the emotional aspect of the sale, which frequently slows down the process.

Naturally, not being part of the smartphone generation, I’m a little worried. Worried about these companies being overextended and left with a bunch of houses not selling and flooding the market. Sound familiar? On the other hand, the generation that embraced Uber may be ready for the click and swipe of selling their home.

Frankly, I kind of like the emotional aspect of selling a home you’ve lived in for many years, raised a family in and lovingly took care of. Recently my nephew and his wife purchased their first home, over full ask and with other buyers breathing down their necks. What got them the house was a personal letter to the owner with their recent wedding picture enclosed. That was the couple he wanted his beloved house to go to. I’ll take emotion any day.

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What’s in a color

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Castles in the Sand

What’s in a color

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

Did you know there is an entire segment of psychology devoted to color?

Color can dramatically affect moods according to experts in color psychology, so what effect does color have on the color of our homes? Apparently quite a bit.

Zillow, an online real estate database, did a 2018 paint color analysis revealing that colors can have a significant impact on a home’s sale price. The major and somewhat shocking discovery that came out of this analysis is that homes with black or charcoal gray front doors sell for $6,271 more. Interesting, but don’t tell that to the Chinese who consider red a lucky color frequently used on front doors. The Chinese study of Feng Sui teaches that good chi comes into a home through the front door, making lucky red front doors popular.

Coastal Living, an online magazine, has their own opinion about the color of front doors on the coast and none of them are black, gray or red. Here is what Coastal Living recommends: seafoam, Dutch blue, raspberry, blue-green, yellow, Capri blue,
white, tangerine orange, blue-grey, salmon and aqua.

Zillow’s study also discovered that light blue bathrooms can bring in an additional $2,786 and that red kitchens can take $2,310 off a home’s sale price. In addition, Zillow’s analysis reported that houses painted yellow or any hue of yellow on the exterior sold for $3,408 less.

Do we believe any of this? Maybe some of it, but isn’t the best front door one that blends in with the rest of the property, is clean and doesn’t need painting? What we do believe is its time for another three-month report of properties selling over $1 million dollars on the Island and in Cortez. This time we’re looking at February, March and April with closed properties compiled from the Manatee County Property Appraisers Office and available properties from Realtor.com as of this writing.

There were two closed properties for these three months for $1 million or over in the village of Cortez. One closed for $1,200,000 and the other closed for $1,379,000. The previous three-month analysis had no closings in this price range.

The city of Anna Maria had 14 closings for $1 million or over. The largest closed sale was for $4,350,000 and the smallest was $1,050,000. The previous three-month analysis was also 14 closed properties. Aside from the $4 million dollar closing, all the other closings were under $2 million.

The combined cities of Bradenton Beach and Holmes Beach had a total of 19 closed properties over $1 million. The highest sale was for $2,450,000, the lowest was for $1 million and there were four $2 million or over sales. The previous three-month analysis had seven properties selling for $1 million or over.

Currently available as of this writing in Cortez there are five properties between $1,500,000, which is residential land, and $1,100,000. The last time there were six in this price range available.

The city of Anna Maria has 60 properties on the market over $1 million ranging from $5,500,000 to $1,049,000. There are four over $4 million, six over $3 million and 17 over $2 million. The last analysis for Anna Maria had 58 properties available.

Finally, Holmes Beach and Bradenton Beach have a total of 68 properties $1 million or over, ranging from $6,200,000 to $1,025,000. There is one property listed over $5 million, three properties listed over $3 million and two properties listed over $2 million. The previous three months had 85 available properties.

I guess we should keep the color psychologists in business since they’ve gone to the trouble of telling us exactly what our mood should be based on color. According to them black represents unhappiness and red is excitement, but what do they know.

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Castles in the Sand

We may be getting older, but we’re not stupid

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

Did you know that every day 10,000 baby boomers turn 65? Just to refresh your aging memories, baby boomers are defined as those born between 1946 and 1964, therefore, baby boomers will be impacting our society for a lot longer. So, what do the smart real estate professionals do? They market smart houses and aging in place.

This is becoming such a hot topic that the continuing education course required of real estate licensees every two years contains two entire modules on smart homes and senior living. These are some of the more important points covered and tested in the most recent course.

A smart home is one that provides comfort, security, energy efficiency and convenience. These are all features that not only help seniors but also can improve property values especially for homeowners and prospective homeowners who are baby boomers.

When you’re talking cost to value in real estate, it’s always a balance between what it costs to make an improvement versus what the return will be. Well, based on a Coldwell Banker survey, 54 percent of homeowners said they would add smart home products if it made a house sell for more money. Sixty-five percent of those would pay $1,500 or more to add smart home features, and 40 percent would pay up to $3,000 or more.

In addition, Market Watch reports that the number of smart homes in North America is expected to hit 73 million by 2021 or more than 50 percent of all households. Unfortunately, real estate appraisers are just starting to give value to smart homes.

Smart homes are starting to have a very big impact on baby boomers who apparently prefer the phrase thriving in place as opposed to aging in place. Sixty-one percent of those over 55 are planning to stay in their homes indefinitely and 67 percent of those over 55 believe smart home technology could help them. Whether you’re thriving or aging, there are things that can help you live independently and safely.

Certainly, the most important smart features for seniors is health monitoring devices. There are many devices designed to monitor blood pressure and other vital signs that send alerts to a family member, physician or health care professional. There is a device to alert family members if a senior is not in his/her home or within a specific range and medicine containers that beep if the medicine is not taken. And one very practical device will automatically turn a stove off if it is left unattended for a predetermined length of time.

Next, are all of the convenience and security smart innovations – smart locks to avoid being locked out, smart home security monitors when not at home, smart sensors to track movements within the home and smart devices to let you and a family member know when a door or window is unlocked.

There is smart lighting that can be voice activated, smart thermostats and smart appliances which can create shopping lists and even give you the ability to look inside the refrigerator, monitor oven temperatures and activate your robotic vacuum cleaner.

Lest we forget the all-important remote shopping, ordering anything online, whether it’s clothes, books, your grandchild’s birthday present or food, has become second nature to people. Out of all progress made in smart homes, seniors having the ability to have things delivered is probably the biggest innovation and is growing daily.

If you’re a baby boomer or older, get smart. Don’t fight the technology, embrace it. It will only make your life easier and may also improve the value of your home. Remember – thrive, don’t age.

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Castles in the Sand

Home ownership and the millennials

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

It pains me to say this, and I hope it’s not true, but there are signs that the face of home ownership is starting to change. Housing was always the driver of the economy, both purchasing homes and the purchases that were associated with homeownership, but home ownership may be taking a time out.

More than 10 years after the financial crisis hit the housing market, it has not recovered on a national level to the same degree as the economy in general. According to the Census Bureau, last year there were a combined 5.4 million new and existing homes sold. This is about the same as in 1998, where we had 50 million fewer people living in the country. I don’t know why we’re surprised to learn that we still have a hangover from the financial crisis since housing was the primary reason for the financial crisis and the careless lending practices of government-backed Fannie Mae and Freddie Mac.

Now there is another little wrinkle in why the housing market has not picked up – millennials.

Millennials, those born from 1981 to 1995, were supposed to be the hope of the housing market when they reached the age when people usually purchase homes, only it’s not happening. The homeownership rate among households headed by someone under 35 was 35.4 percent as of the first quarter of this year. The Census Bureau goes on to say that, by comparison in 1999, the homeownership rate for this age group was about 40 percent.

The speculation is that the financial crisis hit this generation hard. The unemployment rate was high and it took millennials longer to get a foothold in the workforce, build careers and deal with college debt, leaving purchasing a home at the bottom of their list.

In addition, there has been a renewed preference for city living, which is where the higher paying jobs are and lower homeownership rates. And finally, this generation witnessed something that no one thought would ever happen – owning a home did not guarantee a good investment, complicated with a loss of incentive based on the 2017 tax cuts.

After all that good news, let’s see what’s happened in April in Manatee County based on the reporting of the Realtor Association of Sarasota and Manatee:

Sale of single-family properties did well in April compared to last April. The number of closed sales were up 3.9 percent. The median sale price was up 1.6 percent to $315,000, however, the average sale price was down 3.5 percent to $390,612. The median time to contract was 48 days and the median time to the sale of the property or closing was 92 days. The month’s supply of available properties was 4 months down 7 percent.

As far as condos, Manatee County closed 0.7 percent fewer this April compared to last year. The median sale price was also down 4.1 percent to $196,500 and the average sale price was down 7.8 percent to $236,127. The median time to contract was 43 days and the median time to the sale of the property or closing was 88 days. The month’s supply of properties was 4.7 months, down 4.1 percent.

Overall, the single-family properties are holding well over $300,000, an important a benchmark, and although condo sales are down in value, they’re not down substantially in numbers closed. The really interesting numbers are the amount of available properties going down for both single-family and condos. Four months of availability is low. It’s good news for sellers, not so good for buyers and not really good for a vibrant market.

Are we entering a new era? If we are, new isn’t always bad, it may just a realignment of our priorities and expectations. Real estate markets are dynamic and that’s a good thing. Maybe we were standing still for too long.

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

Last week we had a conversation about financing second homes and some updated government regulations about renting. We even touched on the pending Florida legislation regarding short-term vacation rentals, but this week we’re going to talk about the practicality and affordability of second homes and falling in love.

Vacation homes are the ultimate discretionary purchase just above recreational boats. The one thing both of these big-ticket items have in common is the emotional aspect that manifests itself by the warm tingle that overwhelms you when you set eyes on the object of your affection. But be careful, it’s dangerous to fall in love so quickly and requires a great deal of vetting.

A vacation home should make you feel like you’re on vacation when you walk in the front door. You don’t want to step in and notice the peeling paint, mold or the ancient appliances. You also don’t want something too big or high maintenance that it infringes on what should be a relaxing time. Technology will make some of this easier to manage as well as making your property more secure when you’re not there. You can control the heating and cooling, unlock the doors should a contractor need to get in and set up cameras to see if something looks not quite right.

That said, if you’re finding your vacation home overwhelming then your future buyer will feel the same way. Vacation homes live by an entirely different set of criteria than your full-time home. The location should be the prime motivator in making a second home decision and worry more about views, beach access and walkability than the quality of schools. According to the National Association of Realtors, the most popular vacation home locations are resort areas and beach locations which account for 66 percent of the market.

If you’re considering purchasing a vacation home with a partner or partners here are a few points to consider. What is each partner’s usage schedule? Unless you are really cozy with your partners, you need to carve out some private time for you and your family. Also, are friends or family of one the partners always welcome even if the owner is not with them? Should the property be rented part of the year to cover expenses and how will the maintenance costs be managed? And who gets the final say on picking upgrades like paint color, furniture or air conditioner and appliance replacement?

And the biggest consideration is what if one of the partners wants out for personal or financial reasons? An escape hatch needs to be developed and agreed on by all partners before purchasing. Some of the things to address are the timeframe, the minimum number of years to own and a buyout arrangement or selling the property.

Finally, many Florida second homeowners decide to convert their second home to their full-time residence for tax purposes. This option is becoming more and more popular as taxes in northern states continue to go up. Keep in mind that the state of Florida has a very advanced way of keeping track of how long Florida residents spend in another home they own, so keep good records since the burden of proof will be on you.

Pretty soon we may all need vacation homes to relax since I recently read that 6,000 new homes will be built on the north side of Manatee County. Our quiet little corner of the world is no more, but at least we all fell in love at the right time.

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

It doesn’t take long for a get together with friends and neighbors to morph into a conversation about real estate. One of the preferred topics among the dozens of available real estate topics is second homes, so here’s something that you can float during your next real estate conversation.

Government-backed mortgages obtained through Fannie Mae and Freddie Mac frequently set higher standards for second home buyers. Second home mortgages are different from investment mortgages, which allow renting and always come with higher mortgage rates. But what if you want to rent out your second home but not classify it as an investment property?

Second Home Riders, which have been in force since 2001, are generally attached to the financing of a second home. The rider has always been interpreted by lenders as prohibiting second home owners with Fannie Mae and Freddie Mac backed mortgages from renting the property. This has recently been clarified making the rental of a second home more broadly accepted by lenders. The new wording for the rider allows homeowners to rent a second home after one year of ownership and it allows short-term renting in the first year.

The language was amended at the request of lenders looking for a clarification related to Airbnb rentals and other short-term rental services. Of course, short-term rentals still must meet state and local vacation rental laws. As we know, currently in the Florida legislature there are two vacation rental bills, which as of this writing are going nowhere. If the state Senate and House can agree prior to the end of the legislative session and the bill passes, it would preempt the regulation of short-term vacation rentals to the state and take the rental authority away from local municipalities.

For now, let’s take a look at all sold properties for the month of March reported by the Realtor Association of Sarasota and Manatee:

Single-family homes closed 8.4 percent more this March compared to last year. The median sale price (half above and half below) was $312,000, 9.5 percent higher than last March. You may recall that February’s median sale price took a dip below the $300,000 mark and was $298,500. The average sale price was $392,616, a 6.9 percent increase. The median days to sell were 58 days, an increase of 23.4 percent, and the month’s supply of available properties was 4.2 months, down 8.7 percent.

Condos closed 2.8 percent less this March compared to last March. The median sale price was $203,450, up 1 percent. February’s median sale price was $189,000. The average sale price was $240,995, down 1.9 percent, median days to sell were 74 days minus 14.9 percent, and the month’s supply of properties was 4.8 months, down 5.9 percent.

Overall, we had a great month. Not only are sale prices up, but properties are selling faster. The flip side is the number of available properties, which is down for both single family and condos. It’s never good to have low inventory. I can’t wait to see the April numbers.

It’s quite a different story on a national level. According to the National Association of Realtors, March existing home sales declined by 4.9 percent from February and 5.4 percent from last March. Nationally, the month’s supply of properties is down to 3.9 months.

Next week we’ll have a little more about Anna Maria’s favorite cocktail party conversation. In the meantime, enjoy your first home and your second home if you’re lucky enough to have one and be happy you live in Manatee County, Florida.

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

The poet W. H. Auden said, “Thousands have lived without love, not one without water.” Surely, he meant both freshwater and the ocean water since both feed the body and soul, but both can have their challenges and both are subject to flooding.

Let’s start with the waters that surround our Island. This is the saltwater that feeds our souls. Those of us who choose to live on the Island or near the surrounding waters would never think of living in a landlocked state, it’s just who we are. But we do pay a price for it and that price may be increasing soon.

The Federal Emergency Management Agency (FEMA) has published new Flood Insurance Rate Maps which will change the base flood elevation for many Manatee County property owners. The last time these maps were updated were 30 to 40 years ago and since then there has been much new technology to better analyze data. In addition, the new maps will consider wave action as well as the height of flood waters.

The result of this will be more accurate maps and could result in flood zone ratings going up for some properties, down for others or no change at all. You can determine how your property is affected by checking the Manatee County website, www.manatee.org and keyword search “flood zone.”

The flood zones are assigned a letter and are also color-coded on the maps. Here is a quick review: A (blue), AE (lavender), Floodway (pink), VE (green), X (shaded) and X (no color). A, AE, Floodway and VE are all high-risk for flood and typically require flood insurance. X (shaded) is moderate risk and does not typically require flood insurance and X (no color) is low risk and does not typically require flood insurance.

As most homeowners who have a federally backed mortgage know, you are required to have flood insurance as one of the terms of the mortgage. However, all homeowners in flood zone areas should carry flood insurance. Also, the Manatee County website has lots of good information specific to your property so it’s worth taking a look at for a variety of reasons, including flood zone information.

But what about the other water essential to our lives, freshwater. It may come as a surprise that flooding in the home is the number one risk that everyday consumers make insurance claims on. One in 50 homeowners filed a water damage claim each year between 2013 and 2017.

Part of the reason there are so many more claims compared to previous years is the increase of water-using appliances like wet bars and water filtration systems as well as the popularity of second story laundry rooms. Old pipes in aging homes, worn out valves and worn out hoses contribute to interior floods.

Some of this can be mitigated by inspecting the caulking around tubs and shower stalls, watching for drips under sinks in both the kitchen and bathrooms, and changing hoses to dishwashers, washing machines and ice makers. Condo living is especially vulnerable to leaks from upper units and residents of upper units should be especially vigilant. There is some technology available containing water detecting sensors but at this stage, they are not 100 percent dependable.

Water is life but too much of it can be deadly and inconvenient. So, check the new floods zone maps and check the old hoses, then relax and enjoy the view.

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April 15th has finally passed. Every year we hold our breath until this day is in our rearview mirror, especially this year. Let’s see how some of the changes impacted property owners and take a glance at the future.

Mortgage interest and state and local tax deductions have been the most controversial changes in the new tax code. The capping of state and local tax deductions has been a blow to states where these taxes are high and where homeowners own more than one property, driving families to make tough decisions about where to live.

However, of the two, the mortgage interest deduction is the one that could change the face of real estate. The eligible deductible mortgage interest was capped at real estate sales for $750,000 or less, this was reduced from $1 million. But this only tells part of the story; the real change is the doubling of the standard tax deduction to $12,000 for single people and $24,000 for married couples, making the mortgage interest deduction for many homeowners irrelevant.

So far less than half as many American homeowners are claiming the mortgage interest deduction for 2018 taxes than last year. When all tax filings are completed, it is estimated that the number of taxpayers who take the mortgage interest deduction will fall from 20 percent of returns in 2017 to 8 percent of returns in 2018.

For many economists, this is long overdue and could be the first nail in the coffin of the mortgage interest deduction being suspended permanently. The mortgage interest deduction has been in effect since 1913 when the income tax was created, and it was always assumed that the mortgage interest deduction encouraged homeownership, however, study after study does not agree with this. Our close allies, Canada, the United Kingdom and Australia have no mortgage deductions and their homeownership rates are slightly higher than in the United States. Further, this subsidy reduced federal revenues by about $60 billion a year now down to around $30 billion. In addition, the mortgage interest deduction encourages homeowners to purchase larger homes with larger debt, increasing the likelihood of default and many believe has an environmental impact.

And as if New York City doesn’t have enough problems with a soft real estate market and high taxes, now the tax gun is pointed at the ultra-rich. There is already a “mansion tax” in effect in New York of 1 percent of purchased properties valued above $1 million, which doesn’t buy you much in New York City. Now the city wants to impose an additional tax starting at 0.5 percent a year on property valued over $5 million graduating up to 4 percent on property value that exceeds $25 million. How would you like to be a high-end real estate broker in New York if that happens?

As a final note on taxes, now that 2017’s tax returns are hopefully in the file cabinet, it’s probably a good time to have a chat with your accountant relative to payroll deductions. The tax overhaul did decrease weekly withholdings for most people resulting in smaller tax refunds than some people anticipated.

So, congratulations – you made it through a very hairy tax year. Now you can sit on the beach, read trashy novels and make the rounds of island restaurants. You deserve it after surviving the largest tax overhaul in a generation.

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

For me, a good recipe has three main components – less than five ingredients, less than 30 minutes and less than two pots. A good real estate transaction is not so different than a good recipe; the objective is to keep it simple.

One of the most tortuous aspects of buying a home has always been the mortgage application process. First, you are asked to provide the lender with W2s, pay stubs, tax returns and possibly your blood type. Then the “loan officer” does a credit check and pulls your credit score. He/she then rolls up their sleeves and adjusts their eye visor and starts plowing through your personal data trying to find why you may not be trustworthy with their money.

The first thing they’re looking for is credit score and if your score is hovering around 600 be prepared to renew your rental lease or pay a larger down payment and/or higher interest rate. Also, your income must support the amount of mortgage you’re applying for and your general credit report must show no serious late payments and hopefully no bankruptcies.

Naturally, while this process is under scrutiny, you will experience some of the most stress you will ever have especially if you’re a first-time buyer. But there is good news which may not take away all of the steps during the process but could speed up the process considerably.

Mortgage lenders are starting to outspeed themselves, that is promising quick mortgage confirmations and a more streamlined process, even offering cash bonuses if they don’t meet their target date. In 2018 it took an average of 43 days to close a home mortgage but now some lenders are doing it in 21 days or less.

One of the ways this is accomplished is of course through technology that can link banks to the loan application allowing the lender to obtain documentation and data directly. It may also be possible to have a remote closing, also speeding up the process.

In addition, with the blessing of Freddie Mac and Fannie Mae, some properties may be eligible for an “appraisal waiver,” the thought of which makes me shake in my sandals. Instead of Fannie and Freddie having more restrictions in the wake of the 2008 financial crises fueled by low down payments and many no documentation loans, the Housing Finance Reform recently issued has done the opposite, keeping the American taxpayer on the hook for loan defaults.

However, mortgage rates are approaching 4 percent which will hopefully jump-start the housing market. The average 30-year fixed rate mortgage during the first week of April fell to 4.06 percent, the lowest since January of 2018. Freddie Mac said the rates have been dropping quickly as much as a quarter point in one week, the biggest drop in over a decade. Naturally, mortgage applications increased by 8.9 percent in early April.

I’m not sure how I feel about the link to your bank but other than that I’m all for a speedy process, which can be very important if you have an all-cash buyer who has suddenly shown interest in the home you want. So future homebuyers, as you start stepping back into the market since you can’t resist the interest rates, just remember less is more, in mortgage processing and in cooking.

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