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Tag: Anna Maria Island real estate

Castles in the Sand

Order out of chaos

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

Writing has been compared to bringing order out of chaos, something I try to do weekly on this page, and one of the most chaotic aspects of real estate is the mortgage process, which may be getting even more confusing to the average home buyer.

As confusing as the typical mortgage process is, the relationship of Fannie Mae, Freddie Mac, FHA and Ginnie Mae – entities that are also known as government-sponsored enterprises (GSEs) – to the mortgage market continually contribute to the chaos.

Before we go on, a quick review: Over 50 years ago Congress chartered the government-sponsored enterprises to provide liquidity to housing finance. The GSEs securitized and guaranteed mortgages, freeing up private lenders to provide more loans, making mortgages more readily available to the average home buyer. This created the 30-year, fixed-rate mortgage, which has been the gold standard of housing finance for all these years.

It was a great system until it went off the rails with sub-prime mortgage products partly encouraged by Congress leading to the bursting of the housing bubble and financial collapse in 2008. The American taxpayer was on the hook for $190 billion dollars to keep Fannie and Freddie floating and they have been in government conservatorship since then.

Now the federal government wants to gradually shrink the GSEs and start returning them to private hands. One of the suggested ways is to require them to have additional capital and underwriting standards comparable to private lenders. Will this happen? Maybe, but even if the wheels start to spin in that direction, it will be a long painful process which could turn on a dime subject to the outcome of a national election.

In the meantime, there is a new type of unconventional mortgage that has turned up. It’s called asset-depletion loans or asset-dissipation loans. Basically, they are designed for people who don’t have conventional paychecks, particularly retirees. As long as the borrower’s ability to draw on their assets is not overestimated, the loans can be fine.

Fannie Mae and Freddie Mac do make these loans but only based on a borrower’s 401k assets. However, Fannie and Freddie have eased up on standards for this type of loan, asking for smaller down payments and allowing more debt for borrowers. Again, this creates more risk for the American taxpayers.

So, what else do the gatekeepers of the American housing market have up their sleeve? Well, there is something that many Florida residents will be very interested in. Within the past year, they rolled out a program that would treat manufactured homes the same as it does site-built properties.

This means that a previous market that was difficult to obtain mortgaging for will now operate as a conventional mortgage market. They have also designed mortgages for manufactured homes at lower interest rates than buyers of these properties were previously able to obtain, as well as allowing appraisers to compare manufactured homes to those built on-site when determining value.

This may be a great program for many buyers of manufacturers homes, but in Florida, as we all know, manufactured homes are the most vulnerable in storms. Again, call me crazy, but do we as taxpayers need to assume more mortgage risk?

Fannie Mae and Freddie Mac, as well as all other GSE programs, will go on for a long time before any real change is made. It’s almost impossible to take away something that’s been in effect for so long. All I can do is try to bring order out of the mortgage processing chaos.

More Castles in the Sand:

Luxury ain’t what it used to be

The fun and not-so-fun of selling a home

The fun and not-so-fun of buying a home

Castles in the Sand

Luxury ain’t what it used to be

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

Did you ever feel sorry for the really wealthy real estate owners? Well, we’re at a point in time when there might be just cause for feeling sorry for them because like all sellers, when your market is slow everyone deserves some sympathy.

Wealthy buyers are pulling back from some of the most expensive housing markets in the country. Toll Brothers Inc., the nation’s largest publicly traded luxury-home builder said that purchase agreements fell 3% from a year earlier, worse than the expected 1% predicted.

A large slice of this decline is concentrated in California where homes under contract had an average price of $1.74 million in the last quarter. Toll Brothers further indicated their orders in California tumbled 36% from a year earlier.

Some of this decline in the luxury market, in California at least, is the Chinese buyers that are pulling back from the market combined with the federal tax overall limiting deductions for property taxes and mortgage interest. However, what happens in California may stay in California since Palm Beach, Florida recently had a record sale of over $100 million.

In addition, low interest rates, wage growth and record low unemployment rates are moving first time buyers into the market, creating a demographic shift in the lower price ranges. The luxury market is adversely affected by an improving lower end market since all real estate markets are interconnected.

That said, let’s take a look at the three-month analysis of properties selling over $1 million on Anna Maria Island and in Cortez for May, June and July. Closed sales are compiled from the Manatee County Property Appraisers Office and available properties from realtor.com as of this writing.

Cortez did not close any $1 million or over properties during May, June and July. In the prior analysis, there were two sales.

The city of Anna Maria closed 13 properties at $1 million or over, ranging from $3,395,000 to $1,075,000. The last three-month analysis showed 14 properties closed in this price range.

Finally, the combined cities of Holmes Beach and Bradenton Beach closed 14 properties $1 million or over during May, June and July, ranging from $3,725,000 to $1,000,000. The last analysis showed 19 closings.

Currently on the market or pending in Cortez, there are six $1 million or over properties. For the last analysis, there were five.

The city of Anna Maria has 48 properties either available or in contract ranging from $5,500,000 to just above $1 million. Besides the highest listing, there are two over $4 million, five over $3 million, 12 over $2 million and the balance below $2 million. The last analysis had 60 properties listed.

Bradenton Beach and Holmes Beach currently have 69 properties either available or in contract ranging from $599,000 to $1,149,000. Three are over $5 million, three are over $4 million, two are over $3 million, 15 are over $2 million and the balance are under $2 million. The last analysis had 68 comparable properties.

If the luxury market is falling off generally around the country price-wise, Anna Maria Island is not listening, at least not yet.

These continue to be pretty impressive numbers for a small island and an even smaller fishing village. And as noted in this paper previously, Cortez is the second least affordable place to live in Florida, according to a study by UnitedSatesZipCodes.org. First place goes to Boca Grande. To be fair, the rankings are determined by calculating several factors and Cortez being a small area with many high-priced homes certainly contributes to this calculation.

See you again in three months. In the meantime, it’s okay to feel sorry for the very wealthy – the little darlings.

More Castles in the Sand:

The fun and not-so-fun of selling a home

The fun and not-so-fun of buying a home

The challenges of inheriting a house

Castles in the Sand

The fun and not-so-fun of selling a home

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

Last week we talked about the fun and not-so-much fun of buying a home. This week we’ll talk a little about selling your home, choosing the perfect realtor and not necessarily one you’re related to. But before we do that, let’s review the June and July Manatee County sales statistics as reported by the Realtor Association of Sarasota and Manatee.

In June, Manatee County closed 2.2% fewer homes than last year, not surprising for this time of year. In spite of that the median sale price, half above and half below, increased by 5% from last year to $315,000. The average sale price was $397,987, up 8.8%, and the month’s supply of properties is down to 3.6 months.

June’s condo sales increased for the number of sales by 6.1%, the median sale price was $210,000, up 14.3%, and the average sale price was $246,381, up 5.2%, all impressive numbers. The month’s supply of properties was 4.2%.

July single-family sales were down slightly by 1.8%, but the median sale price broke a record at $325,000 up 5% from last year. This is the highest median price since the housing crisis more than a decade ago and near historic levels. The average single-family home price was $391,049, up 2%, and the month’s supply of properties was down to 3.4%.

Condo sales were up by 8.7% with a median sale price of $191,000, down 4.1%. The average sale price for condos was $216,523, down 6.6% from last year and the month’s supply of properties was 3.7%.

Do these numbers give you incentive to find that perfect realtor and consider selling? Maybe, but remember statistics are only a snapshot in time and, although our sales and appreciation rates continue to go up every month, it could change in a heartbeat.

But just in case you’re ready to cash in, here are a few tips for choosing a realtor:

Although there are many questions you should ask a real estate professional before you turn over what may be your biggest asset to them, the two that are most important to me are how long have you been in residential real estate sales and what is your specific marketing plan?

Much of real estate experience is an on-the-job learning experience but choosing an agent who has accumulated a few designations or certifications shows a commitment to his/her profession. Certainly, you should ask if real estate sales are their full-time job. There are sales agents who get into the field thinking it’s a part-time job they can fit around their children’s school schedule. Trust me you don’t want this person.

As far as a marketing plan, the agent should be prepared to show you a written plan involving print advertising, open houses and digital participation. They may also include a pricing schedule suggesting a step-down pricing recommendation for 30, 60 or 90 days in the event offers are not coming in. As part of this plan, your agent should advise how frequently he/she will be in touch with you regarding showings and feedback.

It is also important for you to know how long homes in your area are taking to sell and the variation between the listing and final sales prices. I frequently note these statistics in my monthly updates for Manatee County because they are so important to the overall picture of the market.

Finally, giving your listing to a relative may look appealing since you already have a relationship and he/she may offer to reduce commission for you. However, it takes away the business aspect of the transaction and gets into the emotional aspect. My advice is don’t do it.

I’m looking forward to receiving the August Manatee County real estate numbers and hope you have a fun selling experience with a qualified broker.

More Castles in the Sand:

The fun and not-so-fun of buying a home

The challenges of inheriting a house

Uncovering a home’s defects

Castles in the Sand

The challenges of inheriting a house

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

No one wants to see a loved one pass away, but it’s inevitable that we all will have that experience and along with the grief comes the distribution of personal items and property. As emotional as sifting through your family’s papers and clothing is, the real challenge at this time of your life will be selling their property.

The important thing to be clarified before death is if there is a will or trust in place. Dying without a will causes the estate to default to the statutes of the state to determine who the legal heirs are. Needless to say, that will be a time-consuming and possibly costly process involving probate. Even a will needs to go through a probate process, however, living trusts will avoid probate. These are all legal issues which will need a legal opinion.

If there is a home to be sold and there is a legal will or trust, that responsibility will fall to the executor of the estate. The executor has the power to make all decisions but should certainly confer with all other beneficiaries to the sale of the house.

As in all property sales, decisions need to be made starting with a reasonable selling price. More than one estimate of value should be obtained from real estate professionals and a licensed appraiser should also be considered, especially if there are multiple heirs, to avoid any appearance of impropriety.

Whoever is handling the sale of the property should be prepared to spend some money before the home is sold. Property taxes, utility bills, lawn maintenance and unforeseen repairs all have to be considered prior to sale.

In addition, the property needs to be cleaned out of personal items and, based on the recommendation of a real estate professional, the furniture removed. There are companies that take care of this and any furniture not sold at an estate sale is removed by the estate person for a fee. However, the family will still need to decide which items will go into the sale, which will be passed along to other family members and which will get destroyed – not an easy process.

Then, of course, as in any property sale, decide whether renovations and/or cosmetic fixes should be made. Most professionals will tell you that this is not the time for major renovations. If necessary, cosmetic fixes would be a better choice. Cleaning, painting, yard and garage clean up is probably the most practical and least expensive way to go. Here again, the advice of a competent and experienced real estate professional is essential to understanding the local market.

Heirs who are in a tight financial position and need to sell quickly could consider one of the quick-sale companies as long as they are willing to take a discounted price. The heir’s tax consequences should also be considered before any money is spent and sale offers are considered, especially if the property has been in the deceased’s name for a long time.

Here in Florida it’s very common for parents to pass away and leave property in their estate to be sold by their heirs. This is a little more of a problem if the beneficiaries are out of state, but again because it’s common in Florida, there are several companies to assist heirs in the disposal of personal property and furniture.

Selling a family home is always emotional and more so on the heels of a loved one’s death. Ask for help during this time; it’s out there.

More Castles in the Sand:

Uncovering a home’s defects

How to determine the truth about home flooding

It’s all about the kitchen

Castles in the Sand

How to determine the truth about home flooding

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

Home inspections and seller property disclosures are an intricate part of home buying. You would think a seller’s disclosure is pretty clear cut, but it’s far from that, especially when it comes to flooding.

Flooding is the one thing potential property owners on bodies of water want to know the most about but, in fact, know the least. In Florida, there is a seller’s property disclosure form provided by the Florida Realtors Association. Although this form is provided to sellers when they list their property for sale with a real estate professional in Florida, they have no legal obligation to fill it out and sign it. Sellers and their realtors do, however, have a legal obligation to disclose to the buyer all facts that can materially affect the value of the property. It just doesn’t have to be in writing.

When it comes to the disclosure on previous or present flooding, sellers are only required to disclose what they know. If the house was flooded five years before they purchased and they were not aware of it, there’s nothing to pass on to a new buyer. Essentially sellers are required to disclose material defects to buyers that they know about.

Since most home inspectors cannot determine if a home has been flooded in the past, where do buyers go for a history of the property’s flooding? It’s a good question and one that U.S. lawmakers are just starting to look at. The House Financial Services Committee advanced legislation in June that would require the Federal Emergency Management Agency (FEMA) to share information about a property’s flood history. This would be a least a step in the right direction for buyers, but when and how this information is provided could be a long way off.

FEMA has recently released data on all 2.4 million flood damage claims processed since the 1970s. Unfortunately, it’s not a practical reference for individuals because of size and lack of address referencing. FEMA does update federal flood zone maps but again that is geared more for insurance companies and gives no information specific to individual properties.

There are some organizations that are trying to improve flood disclosure information. One of them is First Street which collaborates with Columbia University and the Massachusetts Institute of Technology among others. It is building a comprehensive database of homes that have flooded or are at risk of future flooding. It uses satellite imagery, high watermark data and other information, including FEMA data on flood claims, to determine if homes may have been flooded.

This information is not new; it has been available to large real estate owners but was financially out of reach for individuals. First Street claims it will launch its database within a year and it will be free for individuals to access. Sounds great, but there is a big margin of error within some of this information. It goes without saying that the impact on property values could be enormous. Will buyers’ willingness to purchase a property be influenced based on this new, possibly subjective information?

Next week we’ll talk about all the other disclosure requirements in Florida and there are plenty. Purchasing property on or near bodies of water, oceans, rivers and lakes are all susceptible to flooding and are inherently risky. There are no guarantees in life and certainly none in homeownership. Do your due diligence with the information available and hope for the best. Look on the bright side, at least we don’t live with the threat of earthquakes.

More Castles in the Sand:

It’s all about the kitchen

Calming waters

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Castles in the Sand

It’s all about the kitchen

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

You may not want to do a kitchen renovation in August, but August is the perfect time to start planning one. Sitting on the patio with your iPad or on the beach with a home decorating magazine is an easy way to start planning that new kitchen. Add a cool coconut drink and you’ll soon forget that it’s 95 degrees.

Kitchen trends change almost as fast as fashion trends. What’s in now will undoubtedly be out in three years. It’s impossible to keep up and most of us don’t even try, but if you’re one of those who must have the latest, here’s where you should be looking:

In spite of the fact that we’re told white kitchen cabinets are out, according to Houzz, it’s still the most popular color at 43% of remodels. Second place is wood cabinets at 25%, followed by gray at 11%.

The trendy colors are now bold – deep blue, red and, ready for this, black. Now over 30 years ago when my sister-in-law was choosing kitchen cabinets for their new home, she picked black. She was always a trendy gal, but at the time I had never seen black kitchen cabinets before and was definitely taken aback. Little did I know she was decades ahead of her time. Today’s black is designed to provide a quiet soulful balance in the kitchen, combining cabinets, matte black appliances and black backsplashes.

Completely the opposite of black, a color that is also new and trending is mint green. Certainly, in my opinion, mint green is a better choice for beach living if you must give up white. Finally, two-tone cabinets, different color uppers and lowers are so in. I expect they’ll be out soon. Nevertheless it is a nice look. If you can’t bear to give up your white cabinets, you can make them trendy with dark lower cabinets.

As far as countertops, stone is and probably always will be the choice of most homeowners. Granite lost its first-place position a long time ago, replaced by quartz, but the trend now is to use concrete counters and natural stone. Backsplashes are also being invaded by natural stone with edges. I wonder how you keep that clean, with it installed right up to the ceiling?

The most popular cabinet style, according to Houzz, is holding with the ubiquitous shaker cabinets chosen by 57% of homeowners. Open shelving instead of all upper cabinets are also trending. They create a more uncluttered feeling, especially with an interesting backsplash. But if you do have upper cabinets, they must go to the ceiling.

And high tech is all over new kitchens – appliances that talk to you and your iPhone and charging stations are a must just as are hoodless ventilation systems. Thankfully rose color hardware and appliances are gone after their 15 minutes of fame.

So is doing an expensive kitchen renovation worth it in dollars? Maybe or maybe not, depending on what you do. Eighty percent of buyers place a nice kitchen in their list of the top three most important spaces in a home. Nationally, the average cost of a kitchen renovation is $35,000 but you could spend three times that.

Most kitchen renovations do add value to a home but most will also not be fully reimbursed in actual dollars. The benefit of a nice kitchen, however, will be in reduced selling time, which is generally reflected in actual dollar savings. Don’t forget, if you’re renovating before putting your home on the market, minor renovations can make a huge difference in appearance and get you the bigger bang for your buck.

It’s easy to dream about your dream kitchen during a hazy summer afternoon, just don’t let the heat and coconut drink give you delusions of grandeur, especially if you’re thinking black cabinets.

More Castles in the Sand:

Calming waters

The condo dance

The suburbs and the millennials

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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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

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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