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Tag: Anna Maria Island real estate

Castles in the Sand

100 years of paradise

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

Anna Maria is celebrating 100 years of providing exquisite beaches and aqua water to beachgoers and visitors. The celebration started on Memorial Day and will probably go on for several months and rightly so since the Island is something to be celebrated.

Down through the years when I interviewed new business owners or friends who moved to Anna Maria Island, I always asked how they found it. Many of them came as children to visit grandparents and always vowed to return. One drove over the Manatee Avenue bridge because she was early to visit a relative in Bradenton and couldn’t believe what she found, buying a Gulf-front piece of property the same day on a credit card. And one of my favorite stories was when a couple on vacation in their RV drove over the Cortez Bridge and turned right instead of left. They too bought a home the same day and opened a business.

My personal story happened in 1995 when I was visiting a friend in Bradenton and was taken to Anna Maria for dinner. That was the first of many visits to the Island, including the one that sent us home to sell our house. In January of 1997, my husband and I rented a beach house on the Gulf side of North Shore Drive. It turned out to be one of the best vacations I ever had and I knew then this is where I wanted to be.

To say Anna Maria Island has changed since those years would be a vast understatement and the thing that has changed the most is real estate construction and values. May sales statistics released by the Realtor Association of Sarasota and Manatee is showing our market is still moving forward.

Single-family closed properties were up 17.2% compared to May of last year. The median sale price for single-family homes was down 6.4% to $515,000 and the average selling price for single-family properties was also down by 4.1% to $686,015. The median time to contract was 32 days, compared to six days last year. Pending inventory was up by 31.8% and the month’s supply of available properties was 2.7 months, compared to last year at 1.2 months.

Condo sales were up 5% when compared to May of last year. The median sale price was up 3.4% to $382,645 and the average sale price was also up by 37.3% to $606,255. The median time to contract was 37 days, compared to 6 days last year, and pending inventory was up 8.9%. The month’s supply of available properties was 3.4 months, compared to one month last year.

Condo sales had the edge this month in both sales and selling price, which in this market could change in a heartbeat. That said, the market is starting to settle down, as stated by the press release issued by the Realtor Association.

“Sarasota-Manatee housing market begins to stabilize but remains a seller’s market,” the press release said.

The summer months have always been the slow time in Island real estate, but don’t bet on that to continue when we’re in a seller’s market.

Anna Maria Island is so much more than its beaches; it’s a lifestyle I fear is slowly eroding just like the beach sand. If there is anything that can be done to slow this progression, I don’t know what it is. I only hope that our little paradise isn’t lost in the name of progress.

Castles in the Sand

Timing is everything

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

In life, sometimes it’s just luck that makes the life-changing decisions we make look genius. In real estate, the importance of the old adage, “location, location, location” is only surpassed by timing – and you can’t plan timing.

The summer of 2020 started the pandemic buying spree and combined with interest rates dropping to 3% it was all-out insanity. Nationally, the median number of days on the market in 2019 pre-pandemic was 30 to 40. In 2020 that number started to drop into the 20s and into the teens in 2021-22.

Florida in general has experienced a longer number of days to get properties into contract. Specifically, Manatee County, as of the last set of statistics released by the Realtor Association of Sarasota and Manatee, reports that single-family homes took 28 days to get into contract as opposed to 5 days last year. Most of this is a reflection of the low inventory available, slightly higher than last year but still historically low.

Buyers who were lucky enough to buy when mortgage rates were low and homes were still available will benefit from that decision for decades, affecting every other aspect of their life choices. Those buyers who missed the market blame themselves for taking their eye off the ball and not acting faster or not taking a risk. Some of this may be true, but frankly, no one during those years really knew what was going to happen. The entire population of the country was frozen in place both literally and figuratively, making decision-making difficult, especially for first-time and marginal buyers.

Similarly, the run-up to the financial crisis and the bursting of the housing bubble in 2008 was unpredictable. Buyers and investors were buying anything and everything for overinflated prices. When the bubble exploded, the value of their properties declined so much it took a decade for some of it to come back.

An economics professor at the University of Georgia presented this hypothetical I recently read. A buyer who purchased a house in June of 2020 for $300,000 – about the median for homes at the time – with a 20% down payment and a 3% mortgage rate would pay about $89,000 in interest over the first 15 years of a 30-year loan. By comparison, someone who bought at the same price in June of 2022 with a 6% mortgage rate would pay about $190,000 in interest over 15 years. Two years made an enormous difference.

But this is now and even if you feel you didn’t act three years ago, you can act now. Economists have always believed that homeownership is an important generator of wealth. They focus on moving forward, especially for young first-time buyers who have years ahead of them to create wealth. Americans have more faith in real estate that in any other investment. A recent Gallup survey indicated that 34% of Americans rated real estate the best long-term investment, down from 41% in 2021 and 45% in 2022.

The lesson here is that buying a home is a more important decision than when you buy that home. You have to be in it to win it, you have to be in it to create a family home, and you have to be in it to create the biggest generator of wealth this country has ever consistently had. Timing is important, but action is long-term.

Castles in the Sand

It can’t hurt to ask

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

In certain parts of the world, the marketplace is designed for negotiation. Don’t ever offer full price and don’t ever accept the first negotiation are two commonly employed strategies. It’s a culture that was pretty common in this country in generations past. Now it’s rare to purchase a car, an appliance or bike for your child and not pay the asking price.

Even purchasing a home during the past several years has almost lost the art of negotiation with values going crazy and offers being accepted at or well over full price. With the market stabilizing, buyers and sellers are starting to negotiate offers again, but there are other areas in the process of home buying where savings can be achieved. It never hurts to ask.

So, as a buyer or seller, you negotiated the accepted price of a home, but don’t think you’re done. I bet there are a few things you never thought of. They say a good negotiation is when both parties to the transaction come away thinking they left something on the table. Every property comes with stuff. It may be stuff that the buyer wants and the seller can’t take with them, making this a good starting place for negotiations.

Furniture is always negotiable even if the seller was planning on taking it. Furniture is expensive to move and, unless there are some valuable pieces, it may not make sense to hire a mover or shipper to relocate it. This is the time when the buyer can evaluate whether the furnishings have value and negotiate an offer to purchase. Not having to furnish a home can mean really big savings. Many homes in Florida come “turnkey” furnished and this can be a financial asset, especially for a second home purchase.

Everyone reading this lives on or near the water. What floats on the water? Boats. If the seller owns a boat and is moving to Colorado, it’s possible to take it off their hands, especially if the buyer was planning on buying one. This is a win-win for all parties. It’s the same with cars. Shipping a car that might be a few years old may not be cost-effective for a seller and buyers may be looking for another vehicle for their second home or their upcoming teenager’s driver’s license.

There are other ways to reduce expenses when purchasing a property, including negotiating with moving companies that are starting to see a reduction in activity. Try three different moving companies and see what the spread is. Moving companies also have other services like packing and unpacking which, if you ask, you can sometimes get a nice upgrade for not much more money.

As we know, mortgage rates have been fluctuating. Don’t be shy about negotiating origination fees, underwriting and loan application fees. Even the rate can be negotiated, just make sure the lender isn’t adding fees in the form of points to a negotiated interest rate. According to Freddie Mac, between 2010 and 2021, borrowers who applied with two different lenders reduced their mortgage rate by an average of 0.10%.

Sellers generally pay the broker commission on the sale of a property. Remember that realtor commissions are not regulated and can be negotiated as well. That said, I generally don’t like sellers negotiating realtor commissions since I think it can hurt the marketability of the property.

Good negotiating is an art. If you develop the skill to think creatively, you’ll be surprised how much money you can save. My mother grew up in the never pay full-price generation. Sometimes this was embarrassing, but most of the time she was right.

Castles in the Sand

More fraud red flags

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

Summer is here and while you’re sitting on the beach you might not want to think about real estate fraud, but fraudsters may be thinking about you. Over the past few weeks, we’ve gone over different kinds of real estate fraud, but there’s more – lots more.

Deed fraud is something most people don’t even think about. How can someone get a lender to give them money against the equity of your home or indeed take over your identity? It might be easier than you think.

There are many identity theft monitoring subscriptions you can purchase that will alert you if there is a new credit check on your credit report or a new loan or credit card. I have one of these and it is very effective, if occasionally annoying, especially if your credit card has an unusual charge which you know about. Nevertheless, I, for one, think it’s a good investment.

The one thing that may be more difficult to be alerted about is deed fraud, another form of identity theft. Deed fraud occurs when someone steals your identity, forges your name on a deed and takes title to your home. This can be more difficult than it sounds to sort out even if you know about it quickly.

Every state has different regulations on executing a deed of sale, but a sure way to check to see if your deed has been tampered with, especially if you have reason to believe this is the case, is to search Manatee County property records. This is a simple and quick process that involves just entering your name and finding your property records. You will see immediately if the deed has been transferred to someone else just like when you sell or buy a property. It’s a nice little habit to get into once a month considering that identity theft is on the rise.

Another popular fraud is wire fraud starting with scammers checking online multiple listings. They wait for a pending sale then profile as many parties to the transaction as they can and research email addresses. When you purchase or sell a property these days, most of the transaction is done online. With so many people involved in the transaction, there is sensitive paperwork flying around the internet. It’s easy for even the most trusted person to make a mistake or not check details, leaving that up to you as the buyer or seller. Look over everything carefully, don’t just do your online signature and move on to the next page.

There are red flags to look for before you sign off and these are just a few of a long list:  deletions, corrections or other alterations; someone other than the seller is shown on the sales contract; purchase price is substantially higher or lower than current market value; date and amount of existing encumbrances appear suspicious; real estate commission is excessive; chain of title includes an unknown interested party or the buyer and seller have similar names but haven’t disclosed a relationship.

Finally, you can keep up with scams by logging on to the FBI or the Financial Fraud Enforcement Task Force websites if you are suspicious of something related to your transaction or by emails you received online. Don’t open any emails that look official unless you’re positive it’s legitimate.

There are many anti-fraud acts enacted by states and the federal government. The most well-known one is the Dodd-Frank Act enacted in July 2010 as a result of the prior financial crisis. This act places regulation of the financial industry in the hands of the government to limit risk and enhance transparency. However, don’t assume everyone involved in a real estate transaction or an existing deed is competent and honest. As a homeowner and potential homeowner, you need to be proactive.

This may not be your favorite beach reading, but it is important.

Castles in the Sand

Condominium insurance and assessments

Written by Monica Simpson on . Posted in Business, Castles in the Sand.

Does the talk of insurance make your eyes glaze over? If it does, join the club. Insurance of all types is complex and difficult to understand but in the case of homeowner’s insurance, condominium insurance and flood insurance, it’s getting worse.

I recently learned that condominium insurance in coastal areas is skyrocketing by as much as double over last year’s renewal. This is primarily because 2022’s busy hurricane and storm season left the southwest coast of Florida with unimaginable damage. Insurance companies have left the state leaving very few options for coastal communities. This has compounded the existing problem of fraudulent lawsuits being brought against insurance companies that would not reimburse for overinflated home repairs.

Now we’re also facing increases in flood insurance based on a 2021 FEMA decision calculating policy costs. FEMA’s new method is to equitably distribute premiums across all policyholders based on the value of their properties in addition to their location. The increases will give sticker shock to everyone in both single-family homes and condos. The good news is that readjustments will be phased in over a period of 10-15 years.

The challenge specifically to condominium associations is to come up with the unexpected premium payment. Most associations will need to special assess their owners which creates a potential problem for owners who are considering selling.

The Florida condominium rider requires a seller of a condominium to make the following representation: “Seller represents that seller is not aware of any special or other assessment that has been levied by the association or that has been an item on the agenda or reported in the minutes of the association within 12 months prior to the effective date of a contract for sale.” This is a mouthful, but it’s pretty clear language. The problem is when does a “potential” assessment need to be disclosed?

Like any other disclosure when selling property, always err on the side of caution and disclose everything. For instance, possible disclosures could include if an improvement that could lead to a future assessment is in the minutes from a previous meeting or on an agenda for an upcoming meeting, if there is any indication that an improvement could lead to a future assessment included in any mailing to any unit owner or even if a conversation with a board member indicates the possibility of an assessment.

Anything that even has a hint of a special assessment needs to be disclosed to a potential buyer to protect the seller from future liability. On the other hand, if a seller truly had no knowledge of the possibility of an assessment and it was never discussed at a meeting or was never an agenda item, the seller is likely protected from post-closing liability.

As far as insurance increases, there is a glimmer of hope. The lawsuits against insurers have been somewhat addressed by the Florida Legislature putting in place tort reform starting next year. Hopefully, this will encourage insurers to return to Florida’s enormous marketplace, creating some competition with the benefit of leveling premium costs.

We live in litigious times in a state surrounded by water and prone to hurricanes. Sure, it’s the price we pay for living in what most of us feel is a little bit of paradise. Nevertheless, stay on top of all the insurance issues and what your obligation is for disclosure with a clear eye.

Castles in the Sand

Too good to give up

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

According to Lawrence Yen, whom I quote frequently, “It’s a unique market condition.”

Coming from the chief economist for the National Association of Realtors, this is saying something considering all of the other unique markets we’ve lived through. This particular unique market is the continuation of a lack of inventory even though sales are down in most areas of the country including many parts of Florida, as well as ours.

The problem is that a large portion of homeowners in the country don’t want to sell. This group may actually want to sell and move on to a larger family home or retire to a smaller home, but they feel they are locked into very low-rate mortgages. The “golden handcuffs” homeowners find themselves locked into are keeping the supply of homes for sale unusually low.

The lack of properties is not the first time this has happened. The sub-prime mortgage crisis slowed things down, as did COVID-19 when buyers rushed to snap up larger homes when remote work and school necessitated more family space.

So, what happens when supplies go down or at least don’t go significantly up? Supply and demand kicks in and prices go up. A healthy housing market is traditionally described as having four to six months’ supply of homes. Right now, Manatee County is at 2.7 months for single-family homes.

However, builders are getting a boost from the lack of resales and are starting to build again now that the supply chain is improving. And home improvement contractors are also benefiting since those homeowners who are staying put are expanding and remodeling.

According to the mortgage data firm Black Knight, as of March 31, nearly two-thirds of primary mortgages had an interest rate below 4%. In addition, about 73% of primary mortgages have fixed rates for 30 years; these mortgages are “golden” and something homeowners won’t easily give up. Current mortgage rates are approximately in the mid-6% range and have fortunately been steady for a while.

The April sales statistics for Manatee County were released at the end of last week so it’s time to report what the Realtor Association of Sarasota and Manatee published.

Single-family homes in Manatee County hit a record median sale price of $570,000, 10.7% more than in April last year. This surpasses the previous record for median home prices, meaning so far, our local market continues to be strong relative to the country as a whole. Here’s the rest of the story.

Single-family homes closed with 4.3% fewer properties from April of last year. The median sales price was $570,000, up 10.7% from last April, and the average sale price was $735,779, up 0.9%. The median time to contract was 28 days versus five days last year. New pending sales were up 30.2% and the month’s supply of properties was 2.7 months.

Condos closed 15.8% fewer properties from April of last year. The median sales price was $380,795, up 8.8%, and the average sale price was $452,160, up 12.9%. The median time to contract was 27 days versus five days last year. New pending sales were up 4% and the month’s supply of properties was 3.5 months.

One of the advantageous side effects of this unique market is the fact that in spite of inflation and job layoffs, the housing market and housing prices may stay strong nationally. Not great news for marginal buyers or first-time buyers, but buyers with equity from a previous home and income to cover the additional mortgage rates will keep things afloat.

Unique can be a good or a bad thing; either way, we’re still struggling with a lack of inventory.

Pines Trailer Park purchase offer accepted

Pines Trailer Park purchase offer accepted

Written by Joe Hendricks on . Posted in Bradenton Beach, Community News, Featured.

BRADENTON BEACH – A May 8 letter Largo-based attorney David Luczak sent to the Pines Trailer Park Homeowners Association board members addresses the sale of the waterfront mobile home park. The accepted purchase offer appears to give the Pines Trailer Park’s permanent and seasonal residents at least five years to remain in their mobile homes and make their future plans.

The pending sale follows the Pines Trailer Park residents’ unsuccessful efforts to form a co-op and raise enough money to purchase the mobile home park owned by Richard and William Jackson’s Jackson Partnership LLLP.

Pines Trailer Park purchase offer accepted
Some of the mobile homes in the Pines Trailer Park have direct waterfront views. – Joe Hendricks | Sun

Luczak’s letter begins by saying, “As you know, this office represents the owners and management of the Pines Trailer Park. In accordance with the provisions of Florida Statutes 723.071(2), we hereby notify you that we have received a bona fide offer to purchase Pines Trailer Park. We intend to consider and accept this offer. The terms are as follows:

  • Purchase Price: $16.25 million, which includes all park-owned mobile homes, recreational vehicles, equipment, materials, vehicles, buildings, etc.
  • Initial deposit: $1 million non-refundable deposit within three days of the execution and delivery of the purchase and sale agreement.
  • Due diligence: The due diligence period shall run for 15 days from the date of the execution of the purchase and sale agreement.
  • Additional deposit: At the end of the due diligence period, the buyer shall deposit an additional $1 million. At that time, the entire $2 million deposit shall be non-refundable.
  • Closing: Forty-five days from the successful completion of the due diligence period this transaction shall close unless extended by agreement of the buyer and seller,” according to Luczak’s letter.”

Luczak’s letter does not identify the person or entity purchasing the park.

The final term of the offer appears to allow the current Pines residents and mobile homeowners five to seven more years to remain in the park:

  • “Seller financing: Seller to hold a purchase money mortgage on the subject property in the amount of $8.125 million at 4.5% interest payable with interest-only payments for five years and no right of pre-payment. Buyer may not seek a land use change during the period of the mortgage financing. Seller may agree to a two-year extension on financing with interest-only monthly payments and the same terms as the original five-year mortgage,” according to Luczak’s letter.
Pines Trailer Park purchase offer accepted
Several residents’ meetings were held inside the Pines clubhouse. – Joe Hendricks | Sun

While attempting to raise the money needed to buy the park, the Pines residents and homeowners participated in several community meetings that were held in the Pines clubhouse building. The printed minutes for the April 18 meeting address the rezoning that would be required in order to redevelop the Pines property as something other than a mobile home park.

“The new purchaser of the park will have to get the property rezoned in order to change the land use from a resident park to something else. It is hard to guess how long that process would take,” according to the April 18 meeting minutes.

Rezoning the Pines’ property from its current M-1 Mobile Home Park District zoning designation would require the approval of the Bradenton Beach City Commission after the proposed rezoning is first reviewed by city staff and the city’s planning and zoning board.

Related coverage

 

Pines purchase efforts fall short

Castles in the Sand

Fraud by any other name is still fraud

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

For many of us who hold Florida real estate licenses in the state, you will be renewing this year. Renewal is pretty easy, it’s a 14-hour open book test and a state fee. Every renewal period addresses different aspects of real estate and this year one of the modules, as they’re called, addresses fraud in real estate transactions, specifically in real estate financing. So, I’m sharing some of what I’ve learned with you.

Mortgage fraud manifests in many ways, so many that it’s impossible to review every law-breaking scheme creative fraudsters come up with, however, mortgage fraud is at the top of the list. Any misstatement, misrepresentation or omission of information that lenders relied upon to fund the purchase of a property is considered fraud.

An outright lie by a homeowner or their broker relative to a structural defect for example, is fraud. Likewise, fraud can also be the omission of a material fact that involves the structure of a property, like not disclosing that you have a leak in the bedroom from the roof and simply painted over the stain. This all goes back to the seller’s disclosure obligation as we discussed several weeks ago.

An anxious seller may also commit fraud by improving the financial position of a marginal buyer by offering them cash, enhancing their ability to qualify for a mortgage. Any money exchanged between a buyer and seller without the knowledge of a mortgage lender that affects the value of the property could be viewed as fraud. This isn’t to say that a buyer can’t offer their furniture for sale to a seller for a dollar amount separate from the purchase price.

Anyone who has applied for a mortgage since 2010 wonders why their lender is putting them through financial hoops and asking all kinds of questions, requiring a variety of documents to prove who you are and a signature on multiple disclosure forms. The answer is that in the wake of the financial crisis, The Dodd-Frank Act was enacted in 2010 and added a whole new level of regulations affecting the financial industry. Nevertheless, there is still room for fraud.

Probably the most frequent fraud by buyers is not being truthful about their income and/or their other financial obligations. Income that cannot be verified because of self-employment or being paid off the books is a red flag for lender underwriters. Likewise, not disclosing what your actual monthly debt obligation is and getting away with it is fraud and punishable by the law. Fortunately, lenders will pull a credit report and, most of the time, will know if you have more than one mortgage on your current property, a car loan or credit cards you have not disclosed.

Also, lender applications will ask what the intended use of a property is. If the buyer is intending to set up the property as an income rental but does not disclose this to the lender, this too is fraud. Buyers who are intending fraud may also misrepresent the value of the property in order to qualify for a larger mortgage. This is where property appraisers come in. The majority are honest, but when a dishonest appraiser works with a dishonest buyer they can produce a fraudulent appraisal. This particular fraud was not uncommon in the run up of the financial crisis where loans were placed on properties because of fraudulent appraisals and/or misrepresentations of buyer qualifications.

Where there’s money there’s fraud and I’m saving a few other frauds for another week. Be careful out there. There’s always someone out to get your money. You need to outsmart them.

Castles in the Sand

Packing up the wealth

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

Pity the poor governors of some of the large metropolitan areas in the Northeast, West and Mid-west. Specifically, New York and Illinois, where their mostly wealthy and upper-middle-class residents are packing their bags and their money and heading to other states where they think they will be more appreciated.

The IRS’s adjusted gross income statistics show a startling pattern of migration within the United States; two of the most astounding states are Illinois and New York. The IRS data shows a net 105,000 people left Illinois in 2021, costing the state approximately $10.9 billion in adjusted gross income. That’s up from $8.5 billion in 2020 and $6 billion in 2019. New York’s income loss increased to $24.5 billion in 2021 from $19.5 billion in 2020, and $9 billion in 2019. In addition, California lost $29.1 billion in 2021, more than triple what it did in 2019.

By comparison, the lowest tax states kept adding income even during the COVID-19 pandemic. Florida, a state with zero income tax, gained $39.2 billion, up from $23.7 billion in 2020, and $17.1 billion in 2019. The states that contributed the most to Florida’s billion-dollar bonuses were New York, Illinois, New Jersey and California. Florida certainly isn’t alone – many other low-tax states like Texas, Arizona and Nevada have also benefited from this wealth migration. In addition, Florida and other low-tax states led the country in job growth. Florida’s employment grew 4.5% over the past year and Illinois’ gain was 2.2%.

As great as Florida’s wealth gain is, we have dropped out of the Emerging Housing Markets Index compiled by Realtor.com. Although Florida regions have typically been in the top 10, in some of our smaller and growing areas they are not within the top 10 on this most recent index. This is the good and the bad of being a very popular state. Everything becomes more expensive and housing costs, as we all know, are not nearly as affordable in Florida as they once were.

The first quarter index indicates that buyers demand affordable homes and most of these are in the small Midwest cities. The top-ranking area is Lafayette, Indiana and the 10th ranking is the Manchester-Nashua, New Hampshire region. The index ranks the 300 biggest metro areas in the United States. In addition to housing market indicators, the index incorporates economic and lifestyle data. Real estate taxes, unemployment, wages, commute time and small business loans are all factored in.

Finally, I would be remiss not to point out that as of May 1, Fannie Mae and Freddie Mac, the quasi-government agency that controls and insures most of the residential mortgage financing in the country, has changed some of the agency’s mortgage pricing.

The new rules add fees for many borrowers with high credit ratings and large down payments and use them to reduce the cost of borrowing for those with lesser credit ratings and smaller down payments. There is a formula that factors in the borrower’s credit rating and the down payment, but the spirit of the change is to support lower-income homebuyers who, in the opinion of the Federal Housing Finance Agency that regulates Fannie Mae and Freddie Mac, have the “financial capacity to sustain a mortgage.” Congress is naturally taking a look at this new fee schedule and comparing it to the subprime debacle prior to the 2006-07 financial meltdown.

Next time one of the high-tax states evacuees move in next door, greet them and their bags of money. Florida has indisputably changed from when my parents moved here in the 70s and I’m pretty sure they would think it’s a good thing. My father always said Florida has the best roads in the country. He should see the traffic now.

Castles in the Sand

One country, two housing markets

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

The trend has been obvious for a while, east coast versus west coast with COVID-19 accelerating the movement. In fact, the March sales statistics are still showing that home prices are declining the most in the western part of the country.

Since the 1990s, the western part of the country, particularly California and Washington, enjoyed a steady run up of growth because of the technology industry. Now the areas most closely associated with the tech industry have the fastest falling home prices.

The eastern part of the country is still attracting companies, adding jobs and keeping the real estate market thriving. Florida in general, including Orlando, Miami, Tampa and other southern markets, is in the lead. However, even northern east coast areas like Connecticut are attracting families who have decided cities may not be the place to raise a family.

According to Black Knight, a research strategy company, this geographical diversity is very unusual and possibly unprecedented. Housing analysts say they have never seen anything quite like this where the division between east and west is so stark.

The National Association of Realtors reports that home sales fell across the country in March. Existing home sales decreased 2.4% in March from the prior month and 22% from a year earlier. Manatee County’s single-family properties had a 4.4% increase in sales in March compared to the previous year, the first year-over-year increase in sales since February of last year.

The market’s slowdown is starting to affect prices, which have fallen on an annual basis for two consecutive months for the first time in 11 years nationally. The national median existing home price in March was down 0.9% to $375,700. Manatee County’s median single-family home prices were also down by 6.3% to $491,988.

There is no doubt that Manatee County as a whole may be more valuable than the national market, but we are also experiencing longer times to sell and a downturn in values. However, the number of pending properties has gone up in Manatee by 7.9% compared to our surrounding areas. And the month’s supply of inventory continues to increase for both condos and single-family homes by triple digits.

The national housing market is still battling the increase in rising mortgage rates, high home prices and low inventory. In addition, a cooling economy with high inflation and the prospect of recession in the next year is keeping some buyers on the sidelines. Home prices are rising or at least stabilizing in regions where jobs are being added and housing is relatively affordable with the more expensive areas of the country adjusting to lower prices.

I recently read a United States Census Bureau report on Manatee County that will make everyone understand all the traffic we’ve all been complaining about and all the irritating construction. Manatee County has increased its population by 29,420 during the past three years, not including 2023. Since 2010, the population has increased by 106,292 and, as of the end of 2022, is 429,125, over 100,000 people in 12 years. Why do I think this is just the beginning?

Is it possible that we’ve hit the bottom and the only way now is up? Maybe, we can certainly strive for that. It is certain that the market is not as competitive as it was last year and even though inventory is still historically low, it is steadily increasing.

Castles in the Sand

Baby boomers continue to influence

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

Is the baby boomer generation ever going to disappear? Well, they surely will, but it could take another 40 years since the youngest of this influential generation is only 58. This large generation born after World War II has affected every aspect of life in America culturally, financially, morally and, of course, in the real estate market.

The latest study of baby boomer influence on the real estate market is from the National Association of Realtors’ (NAR) 2023 Home Buyers and Sellers Generational Trends. This extensive study examines the similarities and differences of recent home buyers and sellers across generations. The study found that the combined share of the real estate market for all baby boomers rose to 39% in 2022, up from 29% the prior year. The combined share of the baby boomer market is defined as the older boomer buyers who are 68-76 years old and the younger boomer buyers who are 58-67 years old.

Millennials ranging from 24-42 years of age have seen their total share of the market fall from 43% in 2021 to 28% last year. Millennials are the target buyer for the baby boomer homes and it’s not advantageous to see this generation’s buying power decreasing, likely because of employment instability and inflation.

Baby boomers have the upper hand in the homebuying market since the majority of them are repeat buyers who have housing equity to purchase dream homes or ease into retirement homes. But if their target buyers are having problems buying, it will eventually affect them. In addition, 26% of all buyers, according to the study, were first-time buyers, which is the lowest since the NAR began tracking the data and a decrease from 34% last year.

A few other interesting points in the study were that all generations agreed that the most common reason to move was to be closer to friends and family and that overall, buyers relocated a median of 50 miles. Also, 86% of all buyers purchased their homes through a real estate agent, proving that regardless of how great the internet is, buyers still want that personal touch.

Time to discuss the March real estate sales statistics for Manatee County reported by the Realtor Association of Sarasota and Manatee:

Single-family homes closed 4.4% more properties from last March. The median sale price was down 6.3% to $491,988 and the average sale price was down 9.3% from last March at $638,055. The median time to contract was 46 days compared to five days last year, and new listings are up by 0.7% and new pending properties are up by 7.9%. The month’s availability of properties is three months, still a low number.

Condos closed 7.7% fewer properties from last March. The median sale price was up 10.1% at $353,000 and the average sale price was up 6.5% at $419,574. The median time to contract was 23 days compared to five last year, new listings were up 3.9% and new pending listings were down 5.8%. The month’s availability of properties is 3.7 months, again a low number.

We have kind of a mixed bag this month in Manatee County, almost as if the market is trying to adjust to the end of season and the influence of the economy. However, we in the state of Florida generally continue to buck the national trend, which we’ll talk about further next week.

Finally, NRA’s study also indicated that the youngest generation of home buyers, Gen Z, have a real desire for homeownership and are getting into the market with help from family to make their first real estate purchase. Some things never change; owning a home is more than just a financial investment, it’s a symbol of stability, independence and community.

Castles in the Sand

Contingency clauses

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

The word “contingent” is defined as “subject to chance,” something that no one wants to hear in a real estate transaction. However, every contract to purchase real estate is likely to have contingency clauses. It’s up to both the buyer and seller to understand what the chance you are taking is and either assume the risk or don’t sign the contract.

Contingent clauses are commonly attached to an offer to purchase real estate and are included in the real estate contract. Essentially, a contingency clause gives parties to the contract the right to back out of the contract under certain circumstances that must be negotiated between the buyer and seller.

Virtually anything can be written into a real estate contract as a contingency, from the replacement of a roof to including the owner’s boat in the sale, but the most common items are as follows:

  • Financing Contingency: A financing contingency or a mortgage contingency gives the buyer time to apply for and obtain financing for the purchase of the property. This protects the buyer, who can back out from the contract and reclaim their earnest money in the event they are unable to secure financing from a legitimate lender. Keep in mind that in today’s real estate culture, most sellers will want to see a mortgage preapproval from a buyer before they enter into a transaction with them.
  • Appraisal Contingency: Contracts that include a financing contingency will also contain an appraisal contingency. If an appraisal by an independent appraiser comes in under the agreed-upon purchase price, the contract can be canceled or the price and/or terms can be renegotiated.
  • Home Sale Contingency: This gives the buyer a specified amount of time to sell and settle their existing home in order to finance the new one. Again, this protects the buyer but puts the seller at a disadvantage since their property is basically off the market. This was done all the time in the good old days of real estate when most buyers and sellers had more patience, and the real estate market was not as competitive.
  • Inspection Contingency: This allows the buyer to have the home inspected within a specified time period, typically five to seven days. It also protects the buyer, who can cancel the contract or negotiate repairs based on the findings of a professional home inspector. There is also a required termite inspection from a qualified termite inspector in order to obtain financing.

These are the standard contingencies, but I recently read about an innovative contingency regarding the buyer’s job status that’s happening with the job market in turmoil, especially in the tech sector. It’s known as the employment contingency, stating that if the buyer is laid off from their job before closing, they can back out of the deal. There could be a 30-day or more time frame for the buyer to find another job that will still qualify them for a mortgage, but either way it’s a dicey position for a seller to be in. Nevertheless, with the real estate market getting softer, buyers feel more confident asking for contingencies compared to a year ago.

The process of purchasing real estate is fraught with chance; the chance you may not find the right home, the chance that your offer will not be accepted, the chance the home will not pass inspection and the chance that your financials may not allow you to purchase the property. Think of contingency clauses to your contract as just one more chance you have to take in a lifetime of chances.

Castles in the Sand

Honesty is such a lonely word

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

In 1978, Billy Joel won a Grammy Award for his song “Honesty.” The premise of the song was how dishonest relations between lovers can be. But honesty, integrity and straightforwardness of conduct are key elements in a real estate transaction, which essentially is a relationship between people.

It’s been a long time since I wrote about property disclosures when purchasing primarily residential property, so it’s probably time for a few reminders.

In real estate purchases, the buyer needs to be aware of potential problems with the property and employ the proper inspectors to inspect and verify the home is free of major defects. Helping buyers in this area are Florida state laws that require sellers to disclose defects before the property closes. Since 1985, Florida law has provided that with some exceptions, the seller must disclose any facts or conditions about the property that may have a substantial impact on the value or desirability of the property that may not be visibly obvious.

The Florida Association of Realtors provides a standard form that covers many common property characteristics about which buyers want to know. Some of these items are potential claims or court proceedings; nature of condominium or HOA associations rules; boundary issues; status of any sinkholes; any environmental hazards such as asbestos, lead paint, mold, Chinese drywall; damage from wood destroying organisms; flooding or ground leaks; disclosure of the condition of major systems such as central air and heat, plumbing and electrical systems and brands and condition of appliances.

Although sellers are not required to complete and sign this form, they are still required to disclose all relevant information to buyers even when it may not be obvious. The disclosure of hidden problems is, of course, the most important information, and I would be careful if a seller refuses to put in writing the property disclosure information.

Sellers do have some protection regarding disclosure; they are not required to disclose those property defects of which they have no actual knowledge. If buyers discover a material problem after closing, the onus is on them to prove the seller knew about the defect and did not disclose it, as well as justify that the defect has had a substantial impact on the value of the property.

In addition, homeowners do not need to disclose to buyers if the property has been inhabited by a person infected with HIV or AIDS or that a murder or suicide has occurred or is suspected to have occurred on the property. I would add that reports of a property being “haunted” also do not have to be disclosed.

A word of caution: Homeowners may think that if they are selling the property in an “as is” condition, that absolves them from the requirement of full disclosure. This is not the case and sellers will have to disclose any material defects even if the property is listed as “as is” condition.

The lesson here is that buyers need to do their due diligence to uncover any hidden problems in a property. Sellers must adhere to the principles of honesty in making any pertinent disclosures to buyers and instill confidence in the buyers.

Billy may have had it right in 1978 when he wrote “everyone is so untrue.” But I prefer to believe that most people are basically honest and transparent; hopefully, I’m not wrong.

Castles in the Sand

Real estate potpourri

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

Think of the real estate market as one big pot. Into the pot you throw in the asking price of a property, selling price, availability of properties, mortgage interest rate and your personal credit score. When you analyze all these ingredients, you’ve got a pretty good idea of the active real estate market and your ability to purchase.

Last week we discussed the Manatee County sales for the month of February, in which closed sales were down and the median selling price was up for both condos and single-family properties compared to last year.

Nationally, however, sales of single-family homes were down over twice what ours were, 22.6% compared to 10%, according to the National Association of Realtors. Nationally, the median single-family sales price fell 0.2% compared to last year to $363,000. Manatee County’s median single-family selling price was up 2.5% to $490,000 compared to last year. So far, our local market, although slowly adjusting, is outpacing the national market.

As for interest rates, as of this writing, the average 30-year fixed rate is just below 7%, which generally gives a boost to the number of sales. Remember last week we talked about buyers being “rate sensitive” – this may wake them up. However, the Federal Reserve at a March meeting raised the baseline rate by a quarter percent, hinting that they may be slowing down these regular increases. Every time there is a rate increase, we hold our breath to see what, if any, impact there will be on the home mortgage market.

I also noticed the number of cash buyers is gradually going down every month. In February, cash buyers for single-family homes were down 20.5% from a year ago and cash buyers for condos are down 23.9% from last year. It’s hard to say how much impact interest rates have on cash buyers. Buyers with cash frequently offer an all-cash contract, which enhances their negotiating ability, and then take a mortgage on the property after closing. With higher and fluctuating interest rates, that will likely change the cash buyer’s thinking on this strategy.

Finally, with interest rates higher than a year ago, credit scores are more important than ever. A small boost to your credit score can make a big impact on the cost of buying a home. Raising your credit scores in the time before applying for a mortgage is the most tangible way to reduce costs related to purchasing a home. You may not have any control over the increase in prices or lack of inventory, but credit scores are totally in your control.

The object is to get that credit score at or over 760 to obtain the most advantageous interest rate. The first thing to do is look at your credit report from all three of the credit reporting agencies. Check for errors, such as someone who has fraudulently attempted to get credit under your name, if a loan is not recorded as paid or a credit card you dropped is still showing as active.

Don’t apply for any new credit or financing until your home shopping and mortgage application is completed. If possible, pay down your debts or ask for a higher limit on your credit cards. Lenders consider how much debt you have compared to how much your line of credit is. It’s always better to have more credit available even if you don’t need it.

I never said it wasn’t complicated to buy a home and a potpourri of knowledge is essential. Shakespeare’s witches may say that the real estate market is all trouble and toil, but in the end, it’s all worth it.

Castles in the Sand

Rate sensitive

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

Mortgage rates appear to be controlling the real estate market across the country. My new favorite term is “rate sensitive.” This means that a buyer who would have been happy at 6.75% ran for the hills when the rates rose to 7%, about where they are as of this writing for a 30-year, fixed-rate mortgage.

I’m not dismissing the importance of rate increases in real money to buyers’ budgets, but nevertheless, a lot of them are walking for not a lot of money. To be fair, a one-point increase in a mortgage rate would have the same effect on affordability as a 10% increase in home prices, per First American Financial Corp. This could eliminate the buyer from qualifying for the home they are currently considering, lower their home buying expectations or cause them to disappear completely from the marketplace.

Earlier in the year when the rates were solidly in the 6% or a little over range, buyers were on the move. This may explain why our Manatee County statistics this

month show more pending properties in February 2023 compared to January 2023 even though the annual trend has been going down monthly. This was a surprise to many professionals in the housing market who now think that gain may be given back. The general consensus is that buyers now are much more cautious and are paying more attention than the people that were buying last year.

Here are the February sales statistics for Manatee County reported by the Realtor Association of Sarasota and Manatee:

Single-family homes closed 10% fewer properties than last year. The median selling price was $490,000, up 2.5% from last year, and the average selling price was $639,562, down 7.7% from last year. The median time to contract was 39 days compared to six days and the month’s supply of properties is 3.1 months compared to 0.6 months last year.

Condos closed 21.1% fewer properties than last year. The median selling price was $369,900, up 13.8%, and the average selling price was $435,748, up 17.3% from last year. The median time to contract was 29 days compared to 5 days and the month’s supply of properties was 3.4 months compared to 0.5 months last year.

March and April generally are busy months for closings in Florida before buy- ers return north. The next two months may tell a slightly different story, but there is no doubt that higher interest rates are having an effect.

One quick note about your home’s as- sessed value. Property taxes across the country have risen in recent years based on the increased value of your home. When you receive the new assessment and tax bill, don’t just file it in one of those folders that you’ll never look at again. Read it over for errors that could be anything from the size of your lot to the size of your home and the size of your new pool. Don’t be afraid to contact the assessor’s office and review this with them.

It’s also a good idea to stay on top of the recent sales in your neighborhood. Zillow, Trulia and Realtor.com will give you just about anything you need to know in addition to the Manatee County public records. If you really feel your home has been appraised higher than it should be, you can ask a licensed Realtor for an evaluation or a licensed appraiser. A Realtor may prepare an evaluation as a goodwill measure, but a licensed appraiser will charge a fee, however, an appraiser’s evaluation may hold more weight. And don’t forget to apply for any exemptions you may be entitled to.

We are living through a sensitive time for just about anything related to finances. Keep the tissues handy and your head on straight.