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Tag: Anna Maria Island real estate

Mortgage rate relief?

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

Aug. 9 was an interesting day. Manatee County was still cleaning up from the flooding and record-breaking rain from Debby and the mortgage rates hit the lowest level in over a year. What’s the connection? Well, you can’t predict a storm and you can’t predict mortgage rates.

We’ve been waiting for a long time for the day when we see interest rates decrease in any meaningful way. Well, it happened, but will it stick and will it shepherd in more rate cuts?

The average 30-year fixed mortgage rate declined significantly in August since hitting a 2024 high of 7.44% to start May. The average rate on the benchmark 30-year mortgage dropped 26 basis points from 6.73% to 6.47% for the week ending Aug. 8, according to Freddie Mac. This was the sharpest weekly decline in about nine months. A basis point is one one-hundredth of a percentage point.

The key factors here are that home prices nationally fell last year to their lowest level in nearly three decades and 2024 has not been much of an improvement. In addition, mortgage rates have roughly doubled since the Federal Reserve began its campaign to curb inflation in early 2022. This increase in rates has pushed up the monthly cost to borrow for a home, blocking buyers who do not qualify for the additional monthly cost. Finally, the other elephant in the real estate room is the inventory of homes for sale. They have been slowly rising but they remain well below historical averages.

Some mortgage advisors say this is happening faster than expected and predict the central bank will approve one rate cut later this year. This should prompt a gradual easing of mortgage rates, but Freddie Mac still expects mortgage rates to remain above 6.5% through the end of the year and then decrease below 6.5% in 2025.

Fannie Mae predicts the rates will average 6.8% in the third quarter and 6.7% in the fourth quarter. They feel this downward trend will continue into the next year, averaging 6.5% in the first quarter of 2025.

The National Association of Realtors thinks rates will average 6.9% in the third quarter and 6.5% for the fourth quarter, going up to 6.7% by the end of the year. In addition, Chief Economist Lawrence Yun says the second half of 2024 will experience moderately lower mortgage rates, higher home sales and stabilizing home prices.

The Mortgage Bankers Association says rates will average 6.8% in the third quarter, going down to 6.6% in the fourth quarter and continue trending downward next year.

All the above is pretty much in agreement, but one of the most interesting opinions came from Melissa Cohn, regional vice president at William Raveis Mortgage, who was interviewed by a Forbes advisor. She hopes mortgage rates will hover in the 5% range next year, but says the presidential election could factor into it, something I have also heard from local brokers. Fiscal policies could impact inflation, which hopefully can stick at 2%, allowing for reduced interest rates for the next five years.

Nevertheless, she feels that when the rates come down, there will be another hot housing market where there are more buyers than sellers, jacking up prices since the problem of low inventory has not been resolved.

Everyone is still holding their breath for the next several months and waiting to see what the Federal Reserve is signaling for next year. Aug. 9 hit a low and a 6.5% rate may not be 3.5%, but it’s better than 7.5% and may just be enough to get everyone moving. Now on to the next storm.

Real estate brats

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

One of the things I love about writing this column is that while I’m doing my research, I frequently stumble on things I never heard of and likely never would in my day-to-day life. This month I learned a new word, “brat.” Brat, of course, is not a new word; it generally refers to someone spoiled or childish. However, this version of it started with an English singer who I had never heard of either.

So, what does this have to do with real estate? If you don’t know, just ask any real estate professional who has worked with fussy buyers who have champagne taste on a beer budget. Dare I say, “brats.”

Part of the reason these buyers feel entitled is because the cost of starter homes has soared in many areas of the country to $1 million. There are more than 200 U.S. cities where buyers will find a price tag of $1 million or more on the typical starter home. The housing shortage that worsened over the pandemic has helped drive the cost of all homes to new heights.

Starter homes are generally defined as being those properties in the lowest third of home values in a given region. Currently, 237 cities in the country fall into this category with starter homes starting at $1 million. This is the most ever; five years ago, there were only 84 such cities.

Nationwide, the typical starter home is worth approximately $196,611, which is comfortably affordable for a median-income home. However, starter home values have grown 54.1% over the past five years, even more than the typical U.S. home in the same time frame, which shows 49.1% growth. This increase in value has delayed the first home purchase for many with the median age of a first-time buyer last year at 35, a year older than in 2019.

This research is from Zillow, which also gave us the names of the top five states with cities where you can find all these $1 million stater homes. The top of the list is California with 117 such cities; New York has 31 cities; New Jersey has 21 cities; and Florida and Massachusetts both have 11 cities each in this category.

Even though our property values are starting to level off, Manatee County, according to the June statistics, had single-family homes averaging $736,322. We’re definitely getting into brat territory. In general, homebuyers could have some good news after years of too much competition with an emerging balanced market. Interest rates for the first time are starting to get below 7% and builders are busy all over, adding to available properties.

If you just want to enjoy living your life and you don’t care what anyone else thinks, you’re a brat. If you’re carefree, messy and bold, you’re a brat. If you know what “brat coded” means, you are so a brat. And if you don’t get the “brat” thing, you are so out of it. Let’s hope our buyers aren’t brats and understand the value of our area where there are still a lot of carefree people living their lives on the beach who never heard of “brat.”

Hot temps, cool market

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

For some reason, I’m finding this summer more uncomfortable than in past years. I considered that I’m just getting older, but I can’t believe that, or maybe reading the sales statistics every month is getting me hot under the collar.

The June nationwide and local sales statistics both came out the same day on July 23, too late for last week’s paper. The numbers are, to say the least, cool if not frigid. It’s no wonder I’m feeling the heat.

Since the national report is printed in most national newspapers you may have already seen it, but it’s my mission to make sure all my readers don’t miss anything. So, these are the nationwide numbers, and the Manatee County statistics will follow for June:

The national numbers are based on existing single-family homes. The median sale price nationally was $426,900 for June which was up 4.1% from last June. The month’s supply of available properties was 4.1 months.

Manatee County single-family home sales were down 4.1% from last June. The median sale price was $518,950, down 1.2%, and the average sale price was $736,322, up 8.4%. The median time to contract was 57 days compared to 37 days last year. The number of active listings was up 56.6% from last June and the month’s supply of available properties was 4.0 months compared to 2.8 last year.

Condos in Manatee County closed 17.2% fewer units. The median sale price was $344,495, down 6.9%, and the average sale price was $416,198, down 11.6%. The median time to contract was 73 days compared to 34 days last year, and active listings were up 72.3%. The month’s supply of active listings was 5.8 months compared to 3.4 months last year.

The National Association of Realtors reports on the nationwide statistics on their website and the Manatee County numbers are on the Realtor Association of Sarasota and Manatee’s website. As you can see, the national median sale price is considerably lower than Manatee County’s, even though they report a 4.1% increase from last June.

Manatee County shows a slowdown in the housing market, as does Sarasota. Markets are influenced by a variety of multifaceted factors – rising interest rates, economic uncertainty, seasonal factors, market saturation with available listings, buyer choices and affordability. The opinion of the Realtor Association is that there are more opportunities for buyers right now, and serious sellers need to adjust their strategies and expectations.

The Federal Reserve has given some indication that interest rates could be falling before the end of the year, which should remove part of the interest rate negative. And with the end of summer and hurricane season, there could also be some pressure lifted off sellers. A real estate broker recently told me when the first snowfall happens in the north, that’s when you start to see the market moving.

Whatever statistics show, it’s still a moment in time, or at least a month in time, and could change next month. Our economy and national conversation is a moving target and could and likely will change with the next news cycle. Therefore, there’s no reason to get hot under the collar. October is just around the corner and I’m not getting older.

Appraisals an art form

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

The last time I did a column about property appraisals was almost four years ago in the middle of the COVID-19 pandemic when the real estate market was all over the place and a fair appraisal was difficult to achieve. Fast forward to 2024 and things haven’t changed that much. An accurate appraisal is still difficult for some of the same reasons.

In 2020, property values were soaring as a result of people relocating to Florida during COVID and inventory was scarce. We still have some of that going on with values up and inventory low, although the inventory aspect is beginning to level off.

Whether you are buying a new home, refinancing your existing home loan, or selling your home, it’s important to assess the value of the property. A buyer’s lender uses an appraisal not only to assess the value of the property but also to determine such things as your interest rate and required down payment.

The property appraiser is only looking at the value of the property. Whether or not a buyer personally qualifies for the mortgage being applied for is secondary to the value of the property. However, the appraiser’s final value determination has a very profound effect on the mortgage being approved. For example, if the appraisal comes in short it will dictate the amount of mortgage the buyer will be approved for. In this case, the lender may ask for additional funds as a down payment from the buyer or ask the buyer to renegotiate the sale price, lowering the amount of the required mortgage. This is why the job of an independent appraiser is so important.

The appraisal fee is billed to the buyer and becomes part of their closing costs. The buyer is also entitled to a copy of the appraisal, which should be reviewed by the buyer for accuracy. Although appraisers are professionals who generally stand by their final analysis, they can make mistakes in square footage, lot size, updates, omissions and other provable details that could influence the property’s value.

In addition, one of the biggest disagreements on property appraisals is the comparable properties the appraiser has used to support the value. Since appraisers rarely go into a property for sale or one that has just closed, they can only decide by driving by and reading listing information. If you feel the value is incorrect and the appraiser will not make an adjustment, there are government resources where a complaint can be filed, especially if this is preventing the mortgage from being approved.

According to the National Association of Realtors, a critical issue impacting appraisals is appraiser shortages, similar to so many other job-related shortages businesses are experiencing. There are stringent educational requirements and regulations that add to the ability to recruit more appraisers. However, I recently read that appraisers are among the highest-paying trade jobs this year with a median income of over $64,000. I have met many appraisers and, in my opinion, it is a very nice career, especially if you have an interest in the real estate market, have a friendly personality and are computer savvy.

Appraisers are mandated to develop a report that is impartial, objective and represents an independent opinion of the value of the property. This is why home appraisals have always been more of an art than a science, now more than ever.

Bargains on the beach

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

Realtor.com is part of my everyday life. I check it for new listings, sold listings, open houses and sometimes just to look at the pictures on what may be an otherwise slow day.

Sometimes I even learn something I didn’t know, like their recent story about the 10 most affordable beach towns.

Before you get all excited, all three cities on Anna Maria are not on this list. In fact, they are so far off the list that the median list price for number 10 on Realtor.com’s list couldn’t buy you a garage on Anna Maria Island. Nevertheless, knowing there are other beach towns and barrier islands in the country where properties are available within walking distance of the water will give you a new or continued appreciation of this country’s real estate diversity.

So, let’s start with Realtor.com’s list. Number 1 is Pascagoula, Mississippi on the Gulf coast, with a median list price of $164,900. Number 2 is Atlantic City, New Jersey, with a median list price of $239,000. Number 3 is Deerfield Beach, Florida, with a median list price of $239,950. Number 4 is Dennis Port, Massachusetts on Cape Cod, with a median list price of $277,500. Number 5 is Myrtle Beach, South Carolina, with a median list price of $299,500. Number 6 is Corpus Christi, Texas on the Gulf coast, with a median list price of $315,000. Number 7 is Sunset Beach, North Carolina, with a median list price of $340,000. Number 8 is Grand Isle, Louisiana, a barrier island in the Gulf, with a median list price of $375,000. Number 9 is Newport, Oregon, with a median list price of $399,950. And finally, number 10 is Ocean Shores, Washington, with a median list price of $425,000.

I find these numbers fascinating and some of them surprising. If I could, I would take a field trip to each of them to understand how their sand and water differs from Anna Maria’s. Anna Maria Island is a 7-mile-long barrier island with pristine beaches and aqua Gulf of Mexico water – we all know that. We also have retained a quaint beach community vibe despite the increase of visitors and developers building mega homes, all of which have brought in more high-quality restaurants and upscale shops. The flurry of annual street fairs, parades and entertainment on the Island continues the small-town feel. The annual Easter egg hunt on the beach behind the Sandbar Restaurant is something to be seen, as well as the fishing boats coming in to unload the day’s catch at the Cortez docks.

Anna Maria Island is a stone’s throw away from the Sarasota-Bradenton International Airport, which is expanding and adding flights almost daily. We’re also within 10 miles of some of the best professional live theatres in the state. Let’s not forget access to the city of Sarasota with its fabulous waterfront, high-end restaurants and more shops and museums. Even little old downtown Bradenton is starting to shine with new hotels, a farmers market and street fairs.

Anna Maria Island, for all the changes it has gone through this century, is still a special place we have to protect at any cost. When people cross the bridge for the first time and wonder what it would be like to live here, we can all tell them, it’s great.

The three-month sofa

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

Tomorrow is July 4, a festive day for the country and Anna Maria Island, where small-town vibes and celebrations still happen. Flags flying, parades, fireworks and barbecues will be on full display, but what about the display of your home if you’re planning on selling it soon? This is where you may want to talk about home staging.

Reading about home staging reminded me of my three-month sofa. When we were selling our New York home and moving to Florida our family room sofa was, you might say, a little odorous. It had barely survived the puppyhood of our dog and there was no way I was embarrassing myself and Duffy in front of the real estate community.

The problem was quickly resolved at one of the discount furniture stores where the furniture was up on racks. When the salesman asked us what we were looking for, I said a three-month sofa. He got it and two days later Duffy’s puppy mistakes were history, and I could boast that we were leaving a brand-new sofa.

Sorry if this was a little long-winded, but the point is don’t have anything nasty in your house when you sell because, believe me, that’s the only thing the buyer will remember. Buyers will also wonder what else in the property has not been maintained if something as simple as a sofa is trashed.

My sofa saga was an easy and inexpensive fix, but homeowners go to great lengths to make their homes presentable for sale. Home staging has gone from catering to high-end properties to sellers in all price ranges who are starting to understand the value of appearances. Requests to hire home staging companies have increased 10% in the first quarter of this year alone and the average cost to stage a home rose 10% to $1,816 compared with the year before the pandemic per Thumbtack, an online service professional platform.

Similar to all professions, staging has a menu of options for homeowners ranging from a one-day consultation to help declutter to a 60-day contract involving new high-end furniture. According to the National Association of Realtors, Realtors can personally stage the home for a minimal fee of around $400.

Virtual staging is currently the cost-cutting option, using software to show what the space could look like at a cost of approximately $100 a room. This could, however, backfire when the buyer is disappointed that the sleek color-coordinated look is not actually in the home when they tour it.

Is it worth the money? Most real estate professionals say yes, it is and that staging a home increased the volume of offers between 1% to 5%. It’s also a built-in way to get ready to move when all your stuff and personal things get stored away.

There are a couple of downsides to staging. The obvious is the cost, but staging can also delay a home getting on the market until the staging is completed. And it may not be as comfortable having to live in a staged home, especially if the selling process continues to take longer.

While you’re watching the fireworks be thankful for our freedoms. The freedom to discuss anything you want to and the freedom to control your assets. Your home is likely your largest investment and this country gives you the freedom to do with it as you like. Not every country in the world lives with that creed; we are among the very fortunate. Happy Independence Day.

Home sales and hurricanes

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

This is one of those times when I just want to put my head in the sand or at least lay on top of it and totally zone out. The weather is hot, hot, hot, the real estate market is cold, cold, cold and the threat of hurricanes is breathing fire down on us. Let’s start with the hurricanes.

Every hurricane prediction is in agreement that this will be an above-average season in the Atlantic Basin. The one I always look for is the Colorado State University forecast because I love that we’re getting our hurricane forecast from a landlocked mountain state. Nevertheless, their prediction is for 23 named storms, 11 hurricanes and five major hurricanes.

Before you put your head in the sand along with mine, remember that the Eastern Seaboard coastline is very long from as far north as Massachusetts to the southern tip of Florida and around into the Gulf of Mexico. My point is the hurricanes have a lot of area to choose from, but as they say, it only takes one and you have to be ready.

Anyone reading this lives either on the water or close enough to it that will require knowing your evacuation route, including emergency shelters and/or hotels or friends and relatives to evacuate to.

Get your three days’ worth of supplies for each family member where it is easily accessible. Nonperishable food, water, medications, first aid kit, flashlights, batteries, radio, cash, some clothing and important documents.

Secure your property, hopefully not the day before a storm is due, but how about right now? Window and door protections are at the top of the list.

Put away any outdoor projectiles, chairs, tables, toys, tree branches. If you have a garage, use it or move your vehicles to a more protected area. Get a backup power source, a generator, if you can arrange that. Turn off utilities, especially gas, and if you evacuate, leave your refrigerator and freezer free of raw meat or anything else that will go bad and damage your refrigerator if the power is off for several days.

Getting ready for hurricanes is one thing, getting ready for the real estate market is another thing. Let’s see what the May sales statistics show, released by the Realtor Association of Sarasota and Manatee:

Single-family homes closed 0.2% fewer properties than last May. The median sale price was $525,000, 1.9% lower than last year, and the average sale price was $709,406, up 3.4%. The median time to contract was 45 days compared to 32 days last year and there were 24.8% more new listings. The month’s supply of available inventory is 4.1 months compared to 2.7 months last year.

Condos closed 25.8% fewer properties compared to last year. The median sale price was $361,495, 5.5% lower, and the average sale price was $412,368, 32% lower than last year. The median time to contract was 56 days compared to 37 days last May, and new listings were down 5.3%. The month’s supply of available listings is 6.3 months compared to 3.4 months.

As you can see, the report of fewer sales and generally increased inventory is shifting the market to a potential buyer’s market. Condos are feeling the effects more than single-family, I believe partly because of the summer season, where potential buyers for winter condo retreats has declined. We’ll have to wait until the fall to see if this is the case; in the meantime, the condo market may continue to decline the further we get into hurricane season and warmer weather.

Meanwhile, be prepared for storms, stay alert and enjoy the warm Gulf waters.

Roofs: Need I say more?

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

It’s Florida, it’s hurricane season and your insurer is taking a good look at the most important thing over your head, and it’s not your favorite baseball cap.

It used to be that a roof needed to be replaced every 20 to 30 years, sometimes even 40 years depending on where you live and the material of your roof. Well, we live in Florida and it’s probably the worst environment for roofs in the country if you’re not including states north of Massachusetts where purchasing a snow broom and a variety of snow shovels are the norm.

To complicate the weather issues, we also have insurance issues which thankfully are starting to work themselves out. After a rising number of homeowners had their insurance policies canceled or their insurers refused to offer them coverage simply due to the age of their roofs, the Florida Legislature implemented new roof requirements for homeowners’ insurance in Florida in May of 2022. It’s not perfect, but the legislation has helped many homeowners.

According to the Tampa Bay Times: “Companies would be blocked from denying coverage because of a roof’s age if the roof is less than 15 years old. And for roofs that are older than 15 years, insurers would have to allow an insurance agent or homeowner to have an inspection on the roof’s condition before refusing coverage. If the inspections show the roof has five or more years of useful life left, the insurance company could not reject coverage simply because of age.”

Essentially, the legislation aimed to improve conditions for both homeowners and insurers. While insurers could no longer drop homeowners simply because of the age of their roof, they also received financial protection to cover their own losses. This reduced the likelihood of unnecessary roof replacements when repairs would be sufficient, lowering homeowner premiums and costs to insurers.

In addition, insurance companies can now offer policies that pay out the actual cash value for roofs over 10 years old rather than the cost of a full replacement. Homeowners can now opt to buy a policy with a stated value limit for roof coverage and lower payments based on a schedule for roofs over 10 years old subject to an inspection.

And while we’re talking inspections, any roof inspection should be performed by a certified roof inspector, not by a contractor who may have an interest in installing a new roof. Inspectors can be found on certification organizations’ websites such as the National Roof Certification & Inspection Association.

A homeowner’s situation with their insurer is one problem facing them today. The other issue is buyers who want to know that they’re buying a secure and preferably new roof so they don’t have any insurance issues. It frequently comes up in negotiations, especially if a potential buyer hires a roof inspector. If you have an older roof, even if you haven’t experienced any leaks, be prepared to get pushback from buyers.

Finally, the type of roof you have is key to longevity. Metal roofs can last for 50 years. Concrete or clay tiles also last up to 50 years. Wood is more vulnerable and even the old standby asphalt shingles are also vulnerable to Florida’s weather. How insurance companies treat roofs that have a long life even if they are over 15 years old is going to be on a case-by-case basis.

Do what you can to keep the most important thing over your head in good shape by keeping up with repairs and adding roof straps or clips. At least you’ll be safer in a storm even if your insurance company isn’t happy.

Reinsurance causing rate hikes

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

I know, not more talk about insurance, especially a week after the beginning of hurricane season. But if the Wall Street Journal can put it on their front page, I can report it.

Reinsurance is apparently the reason for the increase in insurance rates around the country. And if you don’t know what reinsurance is, like it or not, I’m going to tell you.

Simply, as if anything related to insurance is simple, reinsurance is insurance for insurers. Reinsurance lets insurers sell policies in vulnerable areas without the risk of being wiped out by a single disaster. The reinsurance market is a global entity that spreads the risk globally, allowing local insurance companies to provide insurance in risky areas, like Florida.

According to the Wall Street Journal, the reinsurance market is unregulated and is one of the major drivers of the high cost of property coverage across the country. Last year this came to a head after the reinsurance companies suffered a sharp drop in profits and started raising rates and cutting coverage at the start of last year.

This, of course, has had consumer advocates complaining that reinsurer profits have come at the expense of homeowners. The advocates have called for a federal reinsurance program, similar to the national flood insurance program, to protect consumers from unrestrained cost increases. The reinsurance industry says they’re the wrong target and are only responding to the increase in losses in the home insurance industry.

Wherever the blame lies, at least in Florida there is a round of reinsurance renewals currently underway, as well as in other high-risk states, that will help determine whether more premium increases are in the future. Interestingly, insurance brokers who are tracking a round of reinsurance policy renewals in June say they expect premiums to stay fairly level in Florida; we can only hope. However, there is some new money coming into the industry which may help to lower prices assuming this year’s hurricane season is overstated even though this year’s prediction is calling for the largest number of major hurricanes ever forecasted.

Since everything related to insurance influences the real estate market, the increased cost of reinsurance will be affecting the availability of home insurance. If there isn’t insurance available or the cost of the insurance is unreachable for buyers, it will slow the real estate market. Nevertheless, Lisa Miller, a Florida-based insurance adviser, indicates the 2024 reinsurance costs are going to be better.

We don’t usually talk specifically about reinsurance since the cost of it has always been built into our insurance company’s overall costs. But it is now becoming an issue on its own and hopefully will help explain to the average homeowner why insurance has gone up and what the future may hold.

The good news for us is across the country, approved home insurance rates are higher in Texas, Louisiana, Washington state and several more states than in Florida. The West, including California, is exposed to wildfires and the Midwest, tornadoes, both of which can be just as or more devastating than hurricanes.

I guess what I’m saying is there are no risk-free places to live, but some reasonable legislation or big brains should get together and see what can be done for the average homeowner. Think that will ever happen?

Reverse mortgage loans explained

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

Anyone who considers themselves a senior, which I certainly do, at some point will probably have considered a reverse mortgage. It’s not a conventional mortgage designed for the majority of home purchasers but rather a vehicle for senior homeowners to tap into their home equity.

What exactly is home equity? Home equity is the amount of your home that you actually own. Specifically, the equity is the difference between what your home is worth and what you owe your lender or lenders. Don’t confuse it with “mental equity,” which is a term sometimes used in real estate where sellers think they know what their property is worth.

Seniors who are 62 or over can apply for a reverse mortgage, releasing some of the equity in their property. With property values increasing in the past three to four years, seniors who have owned their homes for a long time are considering reverse mortgages with an eye to staying in their homes. Homeowners are still responsible for paying property taxes, insurance and maintenance; however, the repayment of the loan is deferred until the homeowner dies, sells or moves out of the home.

In addition to being 62 or over to qualify, you also need to have enough equity in your home. The loan works by making payments to the borrower based on a percentage of the equity that has been built up in the home. The factors that determine the loan amount include your age, the value of your home, the interest rate and the FHA mortgage limit, $1,089,300 as of this writing.

The obvious benefit is that you can continue to live in your home and retain the title. The proceeds of the loan are generally tax-free cash, so you can use the money as you see fit for improvements and everyday living expenses. You choose the disbursement option; lump sum, monthly payout, quarterly, etc.

The primary drawback of reverse mortgages is that the loans are generally more expensive than other financial products. The balance of the loan increases over time as does the interest on the loan and the fees associated with the loan, eating into any home equity that is left.

If this is something that you might consider, the first thing you should do is attend a counseling session from a licensed third-party counseling agency. The Department of Housing and Urban Development (HUD) maintains a list of counselors available in Florida.

Next, research and identify companies that specialize in reverse mortgages. Factors to look for when evaluating companies are years in business, number of products offered, customer service availability, state licensing, Better Business Bureau (BBB) ratings and the inclusion of a mobile application. Once you have found a company you’re comfortable with, discuss what options may be available to you as far as qualification, timeline and any other questions you may have.

When the application is completed, the process is similar to a traditional mortgage application. The loan will go to an underwriter and appraiser and once approved, a distribution is made.

No matter what age you are, it’s tempting to look at all the equity you have in your home and convert it into a “piggy bank.” Like any loan where you reduce your equity, whether it’s a home equity loan, refinancing your current mortgage or a reverse mortgage, always remember that the funds you withdraw are real money and analyze what the effect of that could have on your future. Get professional advice and good luck.

Everyone’s talking about home prices

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

I challenge you to enter a room with at least four adult homeowners and not hear the conversation eventually gravitating to the price of homes.

Some of the conversation centers on fear that what their home is worth is just a moment in time and will completely disappear, others think they caused the high value of their home because they’re so smart and others probably think who cares, I’ll worry about it when it’s time to sell. Wherever you are in this conversation, the effect of home prices will have a major influence on your future.

According to a recent analysis by ResiClub of the Case-Shiller National Home Price Index, home prices have surged 47.1% since the start of 2020, easily outstripping the gains seen in recent decades. By comparison, home prices in the 1990s and 2010s grew a respective 30.1% and 44.7%.

In addition, home price growth so far this decade is on the verge of surpassing all the growth seen in the 2000s. During that period, housing prices skyrocketed 47.3%, including an 80% spike before the 2007 housing market crash.

There are several driving forces behind the spike in prices. Some of the reasons are underbuilding because of a rapid rise in mortgage rates and expensive construction materials. Available home supply remains down 34.3% from the typical amount before the COVID-19 pandemic in early 2020. Remember these are national profiles; what happens locally and especially in Florida does not always follow the national trend.

All of this is complicated by sellers who are locked into record-low mortgage rates and are reluctant to sell, further limiting the available supply of properties. Currently, about 80% of mortgage holders have a rate below 5%. That’s a lot of people who don’t want to move.

Nevertheless, prices continue to increase and, per the National Association of Realtors, the median single-family home price grew 5% from a year ago. This increase was confirmed in 93% of the metro areas in the country during the first quarter.

Two of the fastest-growing markets in the country, Texas and Florida, may be starting to see a softening of prices. Again, all real estate is local, so let’s see what the April sales statistics for Manatee County reported by the Realtor Association of Sarasota and Manatee look like.

Single-family homes closed 3.5% more properties compared to last year and condos closed 7.8% more properties compared to last year. Keep in mind these are lagging numbers for contracts probably written a couple of months before.

The median sale price for single-family homes was $530,000, down 7.0%, and the median sale price for condos was $352,420, down 7.5%. The average sale price for single-family homes was $718,603, down 2.3%, and the average sale price for condos was $435,292, down 3.7%.

The median time to contract for single-family homes was 44 days compared to 28 days last year, and for condos, it was almost the same at 44 days this year compared to 27 last year. New listings are up for both single-family at 17.1% and condos at 24.2%. Finally, the months’ supply of available properties is up to 3.9 months for single-family and 6.3 months for condos.

You don’t have to be a mathematician to see that inventory has surged, resulting in a more competitive market and longer selling periods. Selling prices are already down and could be further impacted because of the additional competition.

The best way to discuss what your homes are worth among friends is probably not to. No one gets the credit for it and no one will get the blame if prices start to level off. I’m with the guy who says, “I’ll worry about it when it’s time to sell.”

Lower your mortgage rate – it’s possible

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

Last week the big news was the escalation of mortgage rates and the prediction by the mortgage “experts” that we’re not seeing them being lowered anytime soon. This week we’ll touch on ways to maybe achieve a lower rate and help buyers get their foot in the door. There are a few strategies that could help buyers secure a lower mortgage rate now and revisit the loan down the road, but it may not be for everyone.

The first one is a temporary buydown in which a seller, or more frequently a builder, pays an upfront fee to reduce a buyer’s mortgage rate for a specified period of time. It can give a buyer, especially first-time buyers, time to ease into higher payments if they expect their personal incomes will rise in the future or if traditional mortgage rates decline. There are lenders that offer it, but typically builders use it as an incentive for home buyers instead of reducing their price.

There are a variety of temporary buydowns out there with terms that involve number of years and percentage of rate drops. However, all of the temporary buydown arrangements are based on the buyer qualifying for a mortgage based on the current mortgage rate as well as having a high credit score. If you qualify, it’s still worth it, especially in the early years of home ownership, which are always the most expensive.

Another strategy is buying discount points. Essentially what you’re doing is buying the prepaid interest at closing to reduce the size of the mortgage in return for a lower rate. The lower rate is for the life of the mortgage, which can be a substantial savings if you’re planning on living in the home for a long time.

The difficult part of buying discount points and the additional fees that are assessed is that you will require a large down payment. If you have the cash to do this, you need to determine the break-even point, which is the level you save more money than you spend. If this makes financial sense, it could be a good option.

Finally, assumable mortgages can help keep rates down if you can find one. This loan allows a seller to transfer his or her mortgage to a buyer who in turn picks up the remaining loan balance, the repayment period and other terms of the seller’s existing mortgage. All of this sounds great if the seller’s rate is considerably lower than what the buyer can secure at this time. Buyers still need quite a bit of cash to cover the difference between the loan balance and the selling price and they also need to qualify for the loan just like any other mortgage product.

There certainly are a lot of assumable mortgages out there, however, they are generally not conventional mortgages. Most if not all of these loans are government-backed or insured loans by the FHA or VA. It’s also not a simple process for either the buyer or seller and may require some legal advice for the novice.

Getting a lower mortgage interest rate in this financial environment is difficult, but if you have the means, the nerve and a little bit of luck, it could happen. In the meantime, sit tight and see what develops between now and the end of the year. The country is going through many changes and so are the mortgage markets.

Buyers losing hope

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

Tired of waiting for mortgage rates to come down? You’re not alone. Every potential buyer out there is waiting for the same thing, the problem is the Federal Reserve isn’t moving the needle, so it might be a long wait.

The Federal Reserve made no move in their last meeting in April, not up, not down. The good news is since they didn’t move rates up, it’s obvious they’re still fighting inflation, which simply refuses to budge. The stock market loved the status quo and enjoyed two big days thinking the Feds will eventually see the light and start reducing rates. Maybe yes, maybe no. Meanwhile, sellers who are desperate to sell their homes but don’t want to give up their low-interest rate mortgages are sitting back, and the buyers who were able to buy a lot more house three years ago are wondering what the heck just happened.

What happened is that in March of this year, a median-income household could afford to buy a house for no more than $416,000, assuming a 20% down payment. Three years earlier, that same household could afford a purchase price of up to $561,000, all things being equal. Then of course there are renters, 20% of them, who don’t expect to ever own a home based on a property management firm’s survey.

So, what are the experts saying? According to Forbes, Freddie Mac says mortgage rates will stay above 6.5% through this quarter. Fannie Mae is forecasting the 30-year fixed rate to average 6.6% in 2024 and 6.1% in 2025. The National Association of Realtors says rates will likely be in the 6% to 7% range for most of the year. The Mortgage Bankers Association predicts 6.7% in the second quarter and ending 2024 at 6.4%. Bank of America is anticipating a rate cut in December and is optimistic that mortgage rates will eventually drop below 7%.

There are, of course, more predictions but the common thread they all have is changing opinions from declining interest rates this year to a more modest prediction based on inflation. They also all agree that waiting to jump into the market is not a good idea. If you wait for interest rates to come down, you’ll be fighting an appreciation of values and likely won’t gain anything. Despite elevated mortgage rates, buyers can still look around for the best rate and at least move on with their lives with the option of refinancing the mortgage down the road.

Buyers, especially younger buyers and first-time buyers, may need to reevaluate what they really want. Do they want a home to build a life in or will they just be sitting in their rental and hope the Federal Reserve bails them out? And frankly, 7% is not such a terrible rate. Real estate markets have lived through, survived and even flourished with double-digit interest rates.

The best advice from economists is don’t wait. You can’t time the market and by now the buyers who have been trying to wait it out probably are well aware they may have made a bad choice. Don’t endure more pain; move forward and reorganize your life and assets to accommodate the reality.

Boomers continue to boom

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

Just when you think they’re too old to influence the smart, better-educated and computer-savvy younger generations, they raise their grey and balding heads again to remind their kids and grandkids they are still alive and influential.

For years, the prediction would be that boomers would start to sell off their big houses, flooding the market with properties. Instead, just the opposite is happening. Many aren’t even considering selling their large family homes, and for good reason.

Boomers own half of all of the $32 trillion in home equity in the country, according to a Redfin analysis of Federal Reserve data. In addition, nearly 80% of boomers own their primary residence and about a quarter own an investment property. More than half of them have retirement accounts with a median balance of $191,200, as well as 27% owning stocks and bonds outside of retirement accounts with a median amount of $201,800. These statistics come from a data scientist for the St. Louis Fed who researches wealth.

And it gets better. Not selling their properties has helped boomers accumulate a level of wealth greater than any other living generation. The median prices of existing single-family homes have increased more than tenfold since the early 1970s, when the oldest boomers were buying their first homes.

Even though boomers have a big financial incentive to stay in their homes with either no mortgage or very low-rate mortgages, some are moving on. Boomers made up 31% of home buyers, while millennials made up 38% in 2023, as reported by the National Association of Realtors. They frequently buy with cash, avoiding the higher interest rates in today’s market.

The boomers have had a major influence on the current real estate market. Mortgage rates topped 7% after the Federal Reserve’s last meeting when they held rates at their current level. That has pushed up the yield on 10-year treasuries, which mortgage rates tend to track. They also didn’t give any indication of lowering the rate any time soon based on the level of inflation, however, many economists still expect rates to decline later this year.

Even though new properties have been listed, there is a continuing low supply of homes for sale nationally. This continues to push prices higher with the national median existing-home price going up 4.8% in March from a year earlier to $393,500, as reported by the National Association of Realtors. The Manatee County median sale price for March by comparison was $498,805, 1.4% higher than last year.

Homebuyers are also confused about coming changes to the rules governing how real estate agents get paid and how this will affect their overall costs. And let’s not forget it’s a presidential election year, as well as one with several worldwide military conflicts bubbling up. All this influences home shoppers and sellers to perhaps pause until there is more clarity and less stress in the market.

The lack of boomer activity is, to a large degree, another byproduct of COVID-19, the pandemic that keeps on giving. As bad as COVID-19 was, it has worked to the advantage of boomers, increasing their equity tremendously and allowing them to refinance existing mortgages to a historic low rate.

The baby boomer generation has influenced everything that has gone on in this country since 1946, when the oldest of them were born, and they’re not going away. Whether it’s housing or the price of milk, boomers continue leaving their mark.

Cost of American dream rising

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

Owning a home of your own has been the American dream for over 75 years. It’s so embedded in our culture that it can create stress and feelings of low self-worth if you don’t own your own home. Unfortunately, that’s not about to change anytime soon.

The cost of home ownership increased so much last year that, according to a National Association of Realtors index, home ownership fell to the lowest level since 1985. The culprit here is the cost of increasing mortgage interest rates, insurance, maintenance, utility and homeowners’ association fees. Municipalities are also raising property taxes to keep up with their increasing expenses of running local government due to inflation. Even homeowners who refinanced when the rates were around 3% or 4% are still feeling the crunch, and first-time homebuyers are gradually being priced out of their own American dream.

The Labor Department reported that consumer prices rose 3.5% in March from a year earlier. The stronger-than-expected inflation data will likely prompt the Federal Reserve to hold rates at the current level for longer than expected. This could also keep mortgage rates frozen in place, further disrupting the real estate market, and keeping homeowners currently holding low-interest rate mortgages also frozen in place.

As I’m writing this, a Wall Street Journal update hit my iPhone reporting that the average rate on the standard 30-year fixed rate mortgage jumped by nearly a quarter percentage point to 7.1% based on a survey of lenders by mortgage-finance giant Freddie Mac. That is the highest level since late 2023 and the largest weekly increase in nearly a year. This is approximately double from three years ago. However, putting it in perspective, it is still a lot more affordable compared to the 1980s when rates were in double digits, ranging from 10% up to 16%.

So much of what goes on in the real estate market is dependent on unseen factors and sometimes even just a general feeling by the population that something is off. Let’s see if the March sales statistics are on or off as reported by the Realtor Association of Sarasota and Manatee:

Single-family properties closed 3.4% less than last March. The median selling price was $498,805, 1.4% higher than last year, and the average sale price was $653,281, 2.4% higher than last year. The median time to contract was 51 days compared to 46 last year, and there were 0.6% more listings than last year.

Condos closed 2.5% more than last March. The median selling price was $342,988, down 2.8%, and the average sale price was $429,893, 2.5% higher than last year. The median time to contract was 54 days compared to 23 last year and there were 14.9% more new listings than last year.

Inventory of properties is up to 4.1 months for single-family and 6.4 months for condos. Six months of available inventory is just about normal and something we haven’t seen in a long time.

The Realtor Association points out the counties have undergone significant changes throughout the first quarter of 2024. The National Association of Realtors reported the biggest monthly drop in sales in more than a year. This and other data suggest that we are transitioning towards market conditions that favor buyers including more negotiating power and an increased supply of inventory per the Realtor Association.

American dream or homeowner’s nightmare? Don’t lose faith, times have been better and times have been much worse, but the dream doesn’t go away.