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Tag: Anna Maria Island real estate

Castles in the Sand

Condo ownership and Florida law

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

I have a condo personality. Not everyone does, but I do. Down through the years, I’ve written quite a bit about condo ownership, culture and personality. I have very happily been living in a condo for over 20 years; it suits me. I despise gardening, cleaning the pool and worrying about the roof, all of which were part of my previous everyday life. But there is one aspect of condo ownership that frankly I haven’t thought much about until the last few years.

After the collapse of the residential condo building in Surfside, there were developers hovering around older condo buildings, especially those with Florida’s most precious commodity, waterfront locations. The interest in these buildings became more intense after the subsequent passage of a Florida law that requires most condo buildings over 30 years old to undergo structural inspections and correct structural failures. Owners and their boards of directors were approached by developers and started conversations about condominium termination rather than perform expensive repairs many long-time owners couldn’t afford.

Florida condominiums are by definition considered legal entities, just like corporations. They have boards of directors, owners, financial budgets and reserves and creditors. It’s different from single-family homes in that once you become an owner, you become part of this legal entity as just one of its unit owners. And that, of course, is where the condo personality or lack thereof comes in. If you don’t like making decisions by committee, better keep looking for the single-family home.

Condo terminations have been more prevalent in Florida than in other parts of the country because of the large number of aging condo units in South Florida and the lack of developable land near the water. According to the Florida Department of Business and Professional Regulation, over the past decade there have been at least 400 buildings that have undergone condo termination.

So how do you actually achieve a condo termination? All condominiums have bylaws that address condo termination and what the required number of owners must agree to in order to take this action. Some are 80%, some are less, and some are 100%. Realistically, under the best of circumstances, getting 100% of anything is virtually impossible.

In 2007, the state of Florida stepped in and passed legislation that essentially contradicted some condo bylaws by allowing 80% of the condo unit owners to agree to dissolve or terminate the condo regardless of what was written in the original bylaws. The state decided it was to the advantage of current owners who were considering condo termination but were stuck. This was also during the period of foreclosure fraud and the real estate crisis impacting the country. The statute goes on to say that once a developer acquires 80% of the units, it can terminate the condo.

Granted, it appears the law was decided in favor of developers, but individual owners are also benefiting. Some of the buildings being terminated would be staring down the barrel of major special assessments in order to bring the property up to code, making it unaffordable for owners and downgrading the value of their units. Developers state they are offering market value to owners, eliminating structural risks to the building and its owners and enhancing the aesthetics of the area.

Could this happen in Manatee County? Of course it could, but because we have height restrictions in many areas of the county, our waterfront condos may not be as tempting to developers. Nevertheless, all condo owners need to be aware of the change in legislation and the reality that termination of condos is happening in Florida.

In the meantime, my condo personality will help me overcome whatever happens.

Castles in the Sand

Navigating the real estate market

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

I recently read a very extensive and well-researched piece in The Wall Street Journal regarding how foreign buyers are back in the United States to buy real estate and relocate their families. As expected, the majority of these buyers are wealthy individuals who are ready to make a move they may have been thinking about and weren’t able to do during COVID-19 lockdowns in their own countries. Well, they’re here now and buying in Florida and other sunbelt states and, naturally, New York City.

Obviously, if you come across a buyer from another country with a pocket full of cash considering your home, it could be your lucky day. That doesn’t mean you still don’t need to adhere to common sense. No one wants to overpay just because they can.

Everyone knows that cleaning, decluttering and making obvious repairs or paint touch-ups is essential in selling your home, however, that isn’t the most important thing to take care of. The most important decision a seller makes is pricing their property correctly and, in a fluctuating market, it’s not as easy as it sounds.

The old real estate adage that all real estate is local should not be ignored. Since anyone reading this will likely be selling a property on the Island or coastline of Manatee County, what you’re really selling is the Gulf of Mexico. Our region has an abundance of waterfront, water view, water peek, canal front, sailboat water, direct access to the Gulf and I’m sure other descriptive wording I haven’t thought of. Every single one of these “water” possibilities changes the value of your home. Reviewing recently closed properties as close to yours and as recent as possible is a good start. Manatee County’s property website provides access to the public and has every closing available and can be sorted in a variety of ways.

You may have the best waterfront on Anna Maria Island, but if you overprice the property with the assumption that you’ll have plenty of leeway to negotiate, it could be a mistake. You may be missing an entire block of buyers who won’t even look above a certain price point. Pricing a home correctly when it first lists is a much better strategy. Remember there are buyers out there who have been actively looking for just the right thing and have educated themselves in the value of the area. They or their agents are aware of anything new on the market and will know instantly if this property is priced right and worth looking at.

Likewise, pricing a property high because of improvements you have made and perceive to be valuable could be another mistake. What you value is not always what buyers are looking for, especially if the improvements are dark or not neutral or specific to your tastes.

During the pandemic frenzy you could sell just about anything that had four walls and a door. No one cared if your 10-year-old daughter glued almost impossible to get off stars on her bedroom walls or if your husband insisted on a black guest bath, but now they do. According to Zillow, in December 2021, about 44% of homes sold above list price; in December 2022, only 25% sold above list price. Today’s buyers now have a more critical eye and are calculating how much those stars are going to cost to remove.

Whatever market adjustment we’re going through in the country, remember there are always foreign buyers who want to move here. It’s a confidence in our country and our markets we may take for granted, but others don’t. If they have the confidence, certainly we should also.

Castles in the Sand

When old is too old

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

Last week we talked about interest rates and the effect they may be having on the national and local real estate markets. But what if you’re a senior citizen, retired and want to buy another home? There may be barriers to obtaining that loan you never considered.

No secret that lots of real estate is sold to seniors in the state of Florida, and not just Florida. The Consumer Financial Protection Bureau reports that 13% of all mortgages originated in 2021 were by people 65 years of age and older; that is over 1.9 million mortgages.

Nevertheless, older borrowers who no longer draw a paycheck and rely on investments and the interest they generate may have a problem proving to a lender that they have sufficient income and assets to qualify for a mortgage. This is especially true now as housing prices have gone up substantially over the past couple of years.

In addition, widows and widowers could have another problem qualifying if they have lost income after their spouse has passed. Frequently pension benefits are lost or reduced and Social Security benefits will also be reduced. A woman I met told me that after the loss of her husband, she couldn’t afford to stay in her house and didn’t qualify for a home equity loan to help with expenses even though there was adequate equity in the property.

Seniors who are depending on investments to cover living expenses will qualify if they are taking regular distributions from IRA accounts, which are considered income. However, if they are just withdrawing funds as needed, lenders may not consider that as income. Every lender is different, so finding one that has worked with seniors in similar positions is helpful. And of course, keeping your credit score up is essential, so be prudent when considering cosigning a car loan for your grandson.

Last week, we also reported on the sales statistics for Manatee County and the national sales statistics came out right around the same time. The National Association of Realtors said the number of closed sales fell 36.9% from last January; this is in line with our statistics that single-family closings were down by 31.7% in Manatee from last year.

Not similar, however, were the national median existing-home prices, which rose 1.3% in January from a year earlier. Manatee County’s median sale price for single-family homes was up 5.4% compared to last January. This should be expected when you see the selling prices on Island homes and other coastal areas in Manatee County.

Also, according to the National Association of Realtors, seven of the top 10 cities with the largest year-over-year increases are in Florida or the Carolinas. Sarasota is up 19.5%, Naples is up 17.2%, Punta Gorda is up 15.2% and Daytona Beach is up 14.5% – the Florida hot spots. Lawrence Yun, the Chief Economist for the National Association of Realtors, says, “Even with a projected reduction in home sales this year, prices are expected to remain stable in the vast majority of the markets due to extremely limited supply.” I would add that supply is gradually improving with the possibility of it impacting sales values.

If you’re a senior and are experiencing a problem getting financing, remember that it is against the law to discriminate because of age. But it’s not against the law to discriminate because of a lack of income. Use the tools available to get that mortgage done before the prices go up again.

Castles in the Sand

Real estate market warming up

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

It’s winter in Florida and it can be a little chilly in the morning, but, if you pay close attention, you may feel a slight warming breeze. However, the breeze I’m talking about is not in the air, but in the real estate market, and it’s starting to stir demand among buyers.

Mortgage rates have fallen by about a full percentage point for a 30-year fixed-rate loan, signaling that the Federal Reserve may be nearly finished lifting interest rates. As of this writing, the average 30-year fixed-rate loan is averaging about 6.79%, but there are loans out there that are as low as 6.46%, and a 15-year fixed-rate loan is averaging about 6.22%.

The last time we saw mortgage rates in the 6% range was for several years between 2003 and 2008 after which the rates started dropping. Understandably, new buyers to the market were appalled when the rates went over 7% from a low of 3% since they had never seen rates this high.

Redfin reports that the number of people contacting real estate agents to start their buying process has increased from a November low. In addition, real estate contracts rose in December and mortgage applications are up by about a quarter nationally since the end of last year.

The real estate market has always been a barometer of how the economy is doing in general because so much of a successful economy is driven by a successful housing market. Goldman Sachs Group economists said this past month “they expect the worst of the downturn has passed and housing is poised to exert less of a drag on economic growth going forward.”

And buyers are hearing the message and getting accustomed to their monthly housing costs being higher if they plan on buying a home. It’s a correction in their thinking which has finally taken hold.

Let’s see if Manatee County residents are also getting the message. These are the January sales statistics reported by the Realtor Association of Sarasota and Manatee.

Single-family homes closed 31.7% fewer homes than January of last year. The median sale price was $505,710, up 5.4%, and the average sale price was $650,544, up 5.8%. Median time to contract was 32 days, compared to 7 days last year, and the month’s supply of properties is 3.2 months.

Condos closed 24.4% fewer properties than last January. The median sale price was $345,000, up 14.4%, and the average sale price was $392,332, up 3.4%. Median time to contract was 26 days, compared to 6 days last year, and the month’s supply of properties is 3.2 months.

Cash sales continue to drop 31.6% for single-family and 34.6% for condos. However, inventory is increasing and the median and average sale prices are still in positive territory compared to last year. The combination of increased inventory and values that are holding is a great thing. There are regions around the country that would love to be in our position.

In addition, historically, 6% interest rates are not unusual. What was unusual was when they got down to 3%. We as a country have always survived high-interest rates frequently much higher than 6%. Buyers continued to buy even then because owning a home is ultimately the goal of most Americans. So, enjoy the warming trend and be patient it you haven’t felt it yet, it’s coming.

Castles in the Sand

When the numbers are too high to count

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

Several years ago, I started writing a monthly column analyzing the over $1 million properties on the Island and in Cortez. Then, because of the volume of properties, I amended that to do the analysis quarterly. Now I’m faced with the reality of having so many properties over $1 million that it’s easier to count the ones under a million and provide an overview of what’s going on. And what’s going on is mind blowing, probably something I don’t need to tell you.

Little Cortez has 19 properties either available or pending. Twelve of them are $1 million or over, counting a $999,000 property. The properties start with $4,999,999 and several of the properties are part of the new Hunters Point community.

The city of Anna Maria, which everyone knows by now is the second most expensive zip code in the state of Florida, continues to grow. There are 80 properties either available or pending on the north end and only two of those listings are under $1 million. It starts at $12,775,000 and ends at $1,399,900 with only 16 properties between $1 million and $2 million.

The combined cities of Bradenton Beach and Holmes Beach have 172 available or pending properties. They start at $12,995,000 and end at $999,000. There are only 53 out of 172 properties listed under $1 million.

All of the above numbers are based on the available information as of this writing, which changes daily. Nevertheless, it’s pretty obvious that we have broken records and keep breaking them. But why?

It seems like the world is moving to Florida and based on the increase in population numbers it very well may be. The population of Florida in 2022 was 22,244,823, an increase of 1.91% from 2021. The population of Florida at the end of 2019, when the COVID-19 pandemic was just starting, was 21,492,056, an increase of 752,767 in just three years.

As a comparison, the state of New York for the year 2022 had a population of 19,677,151. You would have to go back to 2014, long before COVID was even a word, when Florida’s population was 19,853,880 to come close to New York state’s current population. The increases in Florida’s population show a consistent growth pattern, with only two states, California and Texas, having higher populations.

And there are other reasons for Florida’s expanding population. Certainly, the lack of state income tax is a huge draw for wealthy individuals and businesses alike. Florida has a lower budget by billions than other large states and a higher GDP rate. And, although our sales tax and some permitting fees may be higher than other large states, in the end, it’s generally a more affordable state to live in.

Finally, do I even want to go down the lifestyle road, something it’s impossible to put a number on? For the most part, properties are being bought by buyers from out of state and it’s not all about the money.

I guess I really do know the reason the sales numbers are too high to count and the population keeps increasing. In spite of some adjustments to the real estate market all over the state, chances are it will continue, especially when buyers and sellers realize it’s now or never.

Castles in the Sand

A question of affordability

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

Buying a house during the past almost three years can be compared to a rollercoaster ride. You go up and you go down, you scream and you hold your breath waiting for the next hairpin turn. But maybe, just maybe, we’re starting to see the end of the ride.

The National Association of Realtors reported at the end of last year that the sales of previously owned homes, most of the real estate market, slid 17.7% in 2022. Also, on a month-to-month basis, sales fell 1.5% in December for an 11th straight monthly decline, the worst rate since November of 2010.

The housing boom generated by the pandemic and the ability for workers to work remotely accelerated selling prices and demand until the Federal Reserve stepped in to cool the economy and curb inflation by raising interest rates. This took a big chunk out of the ability of buyers to proceed with purchases when borrowing rates more than doubled.

As recently as October of last year, mortgage interest rates climbed over 7%, a rate not seen for two decades. This, plus the increased asking price of homes, forced many buyers out of the market since they could not qualify for the additional monthly carrying charges. Now, however, the rates are starting to trend down, and as of Feb. 5, Forbes reported the following average annual percentage rates (APR) rates: 6.37% for a 30-year fixed mortgage and 5.56% for a 15-year fixed mortgage, the two most popular mortgage products.

The forecast for 2023 is that 30-year, fixed-rate mortgage rates will stay within the 5% to 6% range. Freddie Mac forecasts the average 30-year mortgage rate to start at 6.6% in the first quarter and end up at 6.2% in the last quarter of this year and Lawrence Yun, the National Association of Realtor’s chief economist said, “Mortgage rates have fallen for the past few weeks, so I’m very hopeful that the worst in home sales is probably coming to an end.”

The other bit of good news is that the Federal Reserve raised their benchmark interest rate by only a quarter of a percent rather than a full half percent, which they have been doing monthly for some time. All of this may point to the fact that the mortgage rates have hit their peak, advertising to buyers and sellers it may be time to get back in the game.

Next week when we review the January sales statistics, we’ll have a better idea if our local market is starting to show an increase in sales activity and available inventory. As far as affordability, the asking prices on the Island are as high as ever and the construction of new homes is on practically every street. If the city of Anna Maria is second in Florida’s most expensive median listing price, as recently reported by Realtor.com, it will take a lot to turn that around any time soon.

So, just like getting off the rollercoaster, it takes you a few minutes to get your land legs back under you and wait for your heart to return to a normal beat. Everyone’s hoping this is that time… prices are still high but leveling off, mortgage rates are gradually declining and sellers who have been sitting on their super-low mortgage rates may start to reconsider the financial benefit of selling. However, stand by – there’s always another rollercoaster coming down the track.

Castles in the Sand

An island in the sun

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

I clearly remember traveling to the Caribbean islands when I was still living in the cold northeast and wondering what it would be like to live and work in such a beautiful place. Do high heel shoes become a thing of the past, to be replaced by flip flops, and do you immediately discard anything that says 100% wool, not to mention pantyhose? I did all of this and never looked back except to be grateful that I found this particular Island when I did.

Don’t misunderstand; I am very pro-real estate and most of the homes on Anna Maria Island are tasteful, new and built to current hurricane building codes, making them safer than their one-level ranch ancestors. Nevertheless, these days if I visit a small island, I can’t help comparing it to Anna Maria Island and can’t even imagine what the next 10 years will bring.

For now, let’s see what the December sales statistics for Manatee County have to say, reported by the Realtor Association of Sarasota and Manatee:

Single-family homes closed 29.7% fewer properties from December of last year. The median selling price was $507,000, up 10.2% from last year, but the average selling price was $610,237, down 0.6% from last year. The median time to contract was 27 days this December compared to six days last December, and the month’s supply of available properties is three months this year compared to 0.6 last year.

Condos closed 24.2% fewer properties from December of last year. The median selling price was $344,475, up 13.7% from last year, but the average selling price was $364,057, down 3.6% from last year. The median time to contract was 19 days compared to six days last year, and the month’s supply of available properties was 2.7 months this December compared to 0.5 last year.

The consensus of opinion is that 2022 has been a change or shift in the market and we are seeing that as well. Dr. Lawrence Yun, chief economist for the National Association of Realtors, indicates that inflation has been dropping and consumers can expect mortgage rates will likely fall as well.

In addition, although there are fewer sales, we have a significant increase in listings, making more properties available. Our market is still, however, considered a seller’s market per the Realtor Association of Sarasota and Manatee.

An island – really just a spit of sand in the Atlantic Ocean – that made all these feelings come roaring back was a one-day stop at a totally undeveloped island called Half Moon Cay, a private island owned by one of the major cruise companies. The actual name for this dot of paradise is Little San Salvador Island 100 miles southeast of Nassau in the Bahamas. Half Moon Cay’s size is close to Anna Maria Island’s, but you would never know it driving around. There are only a handful of homes, a beautiful lagoon, a tourist center with shops and a spectacular unspoiled beach.

That said, based on a recent profile of Anna Maria in the Wall Street Journal, Anna Maria, “a tropical oasis,” is Florida’s second-most expensive zip code (34216) as ranked by median listing price, according to realtor.com. Anna Maria city is topped by Miami’s Fisher Island, pretty good company.

As Anna Maria keeps growing and property values keep going up, I wonder what would happen to lovely Little San Salvador if civilization invaded their beach. Every time I read a profile of Anna Maria in a national publication it leaves me shaking in my flip-flops, but that’s progress and this is an island in the sun.

Castles in the Sand

Back to the real world – part two

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

Last week we talked about the real-world problem of Florida homeowner’s insurance. As pointed out, new legislation that attempts to eliminate assignment of claims and thus protect against frivolous lawsuits has been signed by Gov. Ron DeSantis. The hope is this will encourage new insurance carriers to do business in Florida and retain the existing companies.

This week we’re continuing to bring the real world back, this time, however, it’s for condo owners. Condo homeowners who may have been happily dozing last year could have missed the new Florida condo owner’s requirements, so let’s have a review.

In May, the governor signed a law in response to the 2021 tragic collapse of Champlain Towers South in Surfside, Florida that killed 98 people. Under the new law, structural inspections are required of condo buildings three stories or higher over 30 years old, or 25 years old if within 3 miles of the coast. There are an estimated 2 million residents in the state of Florida who reside in more than 912,000 condominium units that are 30 years old or older and a lot more who are within 3 miles of the coast, including all of Anna Maria Island and most of the Manatee County coastline.

The recertification inspections must be performed by Dec. 31, 2024 by certified inspectors and paid for by the condo associations. The results of the inspections must be turned over to condo owners, condo associations and local municipalities. If the inspections reveal major structural problems, law enforcement agencies and condo associations will determine how to move forward with condo residents, who, of course, have to pay for the inspections and the repairs.

Even if structural repairs aren’t needed immediately, the bill has other major provisions involving reserve requirements that for sure will become a financial headache for condo associations that have put off repairs. Well, now is the time to pay the price for those bad decisions because, under the new law, condos can no longer waive reserves for building components deemed critical to structural soundness. This provision is called the Structural Integrity Reserve Study.

In addition, some condo associations will have to make up reserves waived in prior years and provide new reserves not previously required for certain structural issues. In the past, Florida legislation did not require condo associations to fully fund their reserve studies, giving condo owners and boards a great deal of flexibility. Now, however, the new law requires associations to keep their structural integrity reserves fully funded based on the reserve study or face possible legal action. Obviously, condo associations need to choose their licensed Florida inspectors carefully since what their study shows after their inspection is very difficult to have changed.

As insurance rates go up, Florida condo residents are struggling to comply with these new regulations in the face of a pullback in the real estate market because of increased mortgage interest rates. Higher condo fees that will result after the inspections and reserve mandates will hit long-time condo residents, many of them seniors on fixed incomes.

In spite of insurance issues, recertifications and hurricanes, U.S. citizens still want to move to Florida. According to the Census Bureau, between July 2021 and July 2022, Florida was the top state out of 10 with incoming domestic population migration at 318,855, followed by Texas at 230,961. The rest of the top 10 didn’t even break 100,000.

We may be faced with real-world problems but I doubt that it would make anyone leave. It will smooth out eventually, resulting in stronger building regulations, a good thing for the future of Florida real estate.

Castles in the Sand

Back to the real world

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

We’re well into January, so it’s time to get back to the real world and one of the real world’s less exciting topics is homeowner’s insurance. Most of us want to go kicking and screaming away from the topic of insurance, especially in Florida which has the highest insurance premium rates in the country, but with the new year, we have some new legislation likely putting you in a much better mood.

Last month, the governor signed legislation to prevent the state’s property insurance market from collapsing under a tidal wave of lawsuits. Not only does this significantly help the state’s budget, but it may also help every homeowner’s budget in Florida as well.

Previously, Florida law has allowed policyholders who want to avoid dealing directly with their insurance companies to assign their claim benefits to contractors who work with trial lawyers. The contractors would often inflate fees, resulting in rejections by insurance companies. Then the attorneys would sue insurers to obtain what they say are legitimate charges, put- ting the insurers in the position to pay the attorneys’ costs if they lose a case. This resulted in insurers being inundated with frivolous lawsuits and passing this cost on to their customers to cover legal costs and risks. Florida insurers had more than 100,000 lawsuits last year, compared to the other 49 states totaling only 24,700.

Many insurance companies have failed and left the state recently and others are also leaving the market because they can’t obtain reinsurance. The new legislation eliminates the assignment of benefits and the requirement that insurers pay plaintiffs’ attorney’s fees if they lose. It also sets up a $1 billion state reinsurance fund to help insurers. The state-backed Citizens Property Insurance Corporation, the “insurer of last resort,” will also benefit from the legislation. Homeowners with Citizens policies will be required to accept private coverage from an insurer that offers premiums within 20% of their current Citizens policy. Overall, it could take a while, but the legislation could result in more private companies entering the Florida market with competitive rates benefiting homeowners.

None of this new legislation, however, will help homeowners who are going to war with both their homeowner’s insurance company and their flood insurance carriers in the wake of Hurricane Ian. Floods and the resulting insurance claims are not as clear-cut as they may sound. The definition of flood damage as opposed to wind damage can be interpreted differently by different insurers. This is already resulting in litigation from homeowners who say their carriers aren’t honoring their claims and the insurance carriers saying they aren’t legally obligated to cover the claims.

Trying to distinguish between flood and hurricane damage is more of a challenge than homeowners ever expected. Homeowners are stuck in the middle while insurance companies try and parse what exactly their responsibility is. Measuring how high water rose on the walls of an existing house is one thing but what if the house was built on a slab and it’s gone? Was it the flood or was it the wind?

The fact that just over 40% of the Florida homes in the two coastal counties hardest hit by Hurricane Ian are covered by flood policies doesn’t make it any easier for anyone since these homeowners may be looking to their homeowner’s insurance carriers for compensation. I guarantee a lot of this will end up in court and no one will be happy with the outcome.

Remember when living on the coast in Florida felt like you weren’t actually living in the real world? Well, the real world has invaded us, and its name is insurance.

Castles in the Sand

Fear is in the air

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

Welcome to a new real estate year. Unfortunately, the new year looks a lot like the old year.

With interest rates and inventory levels fluctuating, a general feeling of confusion is spreading among both buyers and sellers – you might even call it fear.

The November Manatee County sales statistics are below average and confirm what most of us know – that sales are down and prices have also been trending down in recent months. However, the Realtor Association of Sarasota and Manatee stated, “median sale prices continue to show year-over-year increases, while other factors point towards more typical market conditions.” In other words, selling prices are up compared to last year and more properties are available for sale which indicates a more normal market.

By the way, these numbers came out on Dec. 21, the day I was boarding a ship in Fort Lauderdale for a holiday cruise. Therefore, I apologize for the late reporting.

Nevertheless, the numbers don’t lie, but they do tell us that Florida in general is still in one of the better real estate sales positions in the country. In fact, per Redfin.com, an online brokerage, reports that out of the top 10 relocation choices, the state of Florida has captured five of them. They are #3 Miami; #5 Tampa; #7 Cape Coral; #8 North Port-Sarasota and #10 Orlando. The other five are in Sacramento, Las Vegas, San Diego, Phoenix and Dallas, in that order.

So where is everyone relocating from? It’s likely you’ll find familiar names in this list, as all big American cities are all bleeding population. The number one city people are leaving is San Francisco and they go down in this order: Los Angeles, New York, Washington, D.C., Boston, Chicago, Detroit, Denver, Seattle and Philadelphia.

Redfin says that nearly 25% of the properties searched on their site are from cities where the person doesn’t currently live. This is up roughly 10% from 5 years ago.

Let’s see what happened in Manatee County for the month of November reported by the Realtor Association of Sarasota and Manatee.

Single-family homes closed 35.6% fewer properties compared to last year. The median selling price was $506,655, up 12.5% from last year, and the average selling price was $636,674, up 7.3% from last year. Median time to contract was 29 days, compared to 6 days last year, and active listings are way up at 246.2%, translating into a 3 months’ supply of properties.

Condos closed 36.4% fewer properties compared to last year. The median selling price was $358,108, up 19.4% compared to last year, and the average selling price was $391,320, up 14.3% from last year. Median time to contract was 18 days, compared to 9 days last year, and active listings were also way up at 266.7%, translating into a 2.7 months’ supply of properties.

Interestingly, cash transactions are down from last year for both single-family by 45.6% and condos by 23.2%. Likely a reflection of the economy in general.

Predictions for the new year are all over the place. Part of the reason no one can figure it out is the speed of last year’s mortgage rate increases gave everyone whiplash. And the Federal Reserve chairman has virtually promised more to come during his December speech raising the prime rate by 0.5%. The sad thing is most prospective buyers can still qualify for loans even at the higher rates but are afraid to buy in such an unpredictable market.

Real estate is still a good investment and Florida is one of the best markets in the country. So, don’t let fear rule you in the new year, do your due diligence and make informed decisions. Welcome to 2023.

Castles in the Sand

Building for rent, not sale

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

The American dream of single-family home ownership, according to certain builders and financial wizards who are paid to know these things, is on the decline. Well, maybe not a decline but certainly a shake-up in the way single-family home living is viewed.

If you haven’t heard of SFRs, which is short for single-family home rentals, don’t feel uninformed since I too just stumbled on it myself. Apparently, while almost everyone was consumed by the escalating single-family home market, the SFR snuck in and is now a hot area in the real estate market. So hot, in fact, that entire communities are being built by enterprising builders comprised of all single-family homes strictly for rent.

The National Association of Home Builders indicate that the $4.4 trillion SFR market is one of the fastest-growing sectors in real estate. They go on to say that single-family built-for-rent homes account for 11% of all single-family home construction in the housing market. This market share is way more than the 3% that was typical over the last several decades.

The demand for single-family rental homes fills a gap on several different levels. With interest rates going up and the price of homes going up, buyers are having a much more difficult time finding a home. So here comes brand new single-family home communities of smart homes with amenities and upgraded fixtures without any of the home ownership hassle. This has a lot of appeal to remote workers who may be transitory and may be more interested in holding on to their cash while still living in a home. Not to mention seniors who have sold their larger properties to cash in on their equity and don’t want to make another financial commitment.

This trend is happening even though rents on single-family homes have risen 10.2% year-over-year through September 2022 due to inflation, per CoreLogic’s single-family rent index. The most recent information is that the median rental cost for a three-bedroom, single-family, detached home is $1,900 per month nationally. Compare this to mortgage payments on a comparable home that have increased 50% since the beginning of the year. Buyers are doing the math and have determined that renting is a lot more cost-effective than owning in today’s market with interest rates double what they were two years ago.

There are a handful of companies around the country that are constructing built-for-rent communities and quite a bit of information is available on the internet about these companies and their homes. In Florida, I did find a few built-to-rent communities in Palmetto, Plant City and Wesley Chapel near Tampa, but so far Florida has not caught the built-to-rent bug on a grand scale.

We all know the benefits of owning your own home – building equity, pride of ownership, freedom to do what you want with your property and the consistency of neighborhoods not always guaranteed in rental communities. However, despite this, buyers are sitting out buying and waiting for what they think will be a single-family correction to the market. Investing their down payment money in high-interest savings accounts and waiting to see if the dust settles on the housing market has become a real development.

Real estate is always dynamic and hard to predict. Every buyer’s family and financial situation is unique so if SFRs works for you this might be the time to dive in. However, you may think interest rates are high, but historically under 7%, where they are now, is a good rate so if that’s the only thing stopping you from buying, think about it. Happy New Year!

Castles in the Sand

Do you need a mortgage button?

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

The tradition of a mortgage button is a little scrimshaw button mounted atop a stairway’s newel post, as a symbol the mortgage was paid off. This is something I saw for the first time on Nantucket Island where my uncle and his wife retired many years ago. Ever since then, I’ve been fascinated with the concept of a mortgage button. Now, however, paying off your mortgage may not be as impressive as in times gone by for every homeowner.

In today’s world, there are many forms of retirement, or not retiring at all. Because of Zoom, inflation and interest rates, many individuals who would have retired even 10 years ago are postponing retiring. If your choice is to retire, are you planning to pay off your home’s mortgage with other assets or will you keep your mortgage in place? Retiring with your home “free and clear” was a goal of previous generations and many homeowners still strive for this, but financial managers may want to have a further discussion about the real benefits.

Even if you decide to give up work or work part-time, many have calculated that carrying a mortgage is a better choice. This is especially true if you have a low-rate mortgage because of either owning your home only a few years or, like many people, having refinanced your existing mortgage when rates were ultra-low. According to the Federal Reserve, nearly 58% of those ages 65-74 had mortgages or home-equity lines of credit on a primary residence in 2019. This is up 22% from 1989 based on available statistics.

Even if you can afford to pay off your mortgage before retiring, does it make sense to deplete your cash or investments for this use? A financial advisor will look at all of your income and assets and make a recommendation designed specifically for you, including safe, low-risk investments.

In addition, your tax consultant needs to be in the loop since tax ramifications must be considered. Although the 2017 tax overhaul significantly raised the standard deduction, there are still homeowners who will benefit from a home mortgage interest deduction.

Finally, keeping a low-rate mortgage frees up equity that you otherwise would not have access to. After retirement or switching to part-time work, your family income is obviously reduced, which would make it difficult to qualify for a new mort-

gage or home equity loan should you need it for a health emergency or other reason. Or just having the money available for a new car, dream vacation or to help out a family member may be enough of a reason not to pay off your mortgage.

Paying off your mortgage and retiring with no debt certainly gives you peace of mind, and that’s something to be proud of and a reason to get a mortgage button. The mortgage button can also be called a brag button indicating there is no lien on the property. Part of the mortgage button’s myth or fact is also another little-known aspect that the mortgage, when paid off, is stored in the newel post at the base of the home’s stairway before the mortgage button is installed.

Historians have debated the truth about the mortgage button for over a century. As for me, it’s a great story, true or not, and a special memory from my first trip to a magical island. Happy holidays!

Castles in the Sand

How big is too big?

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

Sometimes what seems like a great idea may not be in the long run. Kind of like that Jaguar you had to have when you were 18; it looked pretty, but it was always in the expensive foreign car repair shop.

Last week’s big financial announcement from the federal government was the increase in Fannie Mae and Freddie Mac’s mortgage loan eligibility. What does that mean? It means that the federal government is now backing mortgages for over $1 million for the first time. Remember that Fannie and Freddie don’t make loans. The companies are under government control and have been since 2008 for a good reason. They buy mortgages from lenders and package them into securities that are sold to investors. In 2008, when loose lending practices created a bubble of foreclosures, these investors lost big time, crashing the stock market and almost our economy.

Fannie and Freddie’s mandate when the government programs were established was to guarantee middle-class mortgages and make housing more affordable for the average buyer. Because of this, not everyone in the financial community is on board with the government insuring even larger home loans geared more to the wealthy and further increasing taxpayer liability.

Fannie and Freddie’s loan limit, which is known as the conforming loan limit, will now be a high of $1,089,300 in high-cost areas, up from $970,800, and $726,200 up from $510,400 in other parts of the country. The high-cost areas are mostly the California and New York coastlines with some pockets in other areas of the country. All Florida counties with the exception of Monroe County, which encompasses the Keys, are at the $726,200 limit.

Loan limits are determined every year using a formula that factors in the average housing prices. This year, about 100 counties in the country are determined to be high-cost markets out of approximately 3,000 counties. The increases in the loan limits may make it easier and cost less for borrowers purchasing single-family homes. Conforming loans usually have lower closing costs and can require lower down payments than residential mortgages that go over the loan limits.

With higher mortgage rates and higher asking prices for homes, many prospective buyers have been unable to qualify for loans or had to reevaluate their buying criteria. Fannie and Freddie argue that raising the loan limits is necessary in order to reflect the higher home prices and the higher interest rates. They view their job as needing to keep pace with home prices to address affordability.

Anna Maria is obviously a high-cost area of Florida even though our buyers are not benefiting from the increase in loan limits. Many buyers of our multi-million-dollar homes are either coming in with all cash, finding private funding or applying for a jumbo loan, which is over the federal loan limit.

As much as I sympathize with high-cost buyers in theory, I still question the benefit of large loan limits in our economy, especially when Fannie Mae and Freddie Mac were designed initially to help the middle class. Nevertheless, far be it from me to compare a bad automobile choice to the federal government, but I can’t help remembering the financial crash in 2007- 08. Remember the one that we almost didn’t survive based on the foreclosures of non-conforming home loans backed by the federal government? Just saying!

Castles in the Sand

Are there any houses without flaws?

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

“A mark, fault or other imperfection that mars a substance or object.” That, my friends, is the definition of a flaw. If you think you can find a house that doesn’t fit this description, you’re probably dreaming.

Every home built or lived in has flaws; it’s up to the buyer and seller to decide
if the flaw is serious enough to repair or serious enough to not buy the home. Here are some things to think about on both sides of the transaction.

Buyers need to be aware of many things when first viewing a home. If you have young children, or are just sensitive to noise, be aware of traffic or boat noise at various times of the day. Sometimes homes on main roads are priced better but may not work for your family.

Naturally, obvious structural issues like sloping floors or cracks in the walls should raise a red flag.

Water is a problem if leaks get out of control in a home. Question water stains, mold, peeling paint or blisters on the paint and an overall musty odor. Look under sinks for water dripping and run faucets to see if they leak.

Check to see if the floors are maintained. Scratches on hardwood, cracks on tile and worn carpeting could be an indication of an overall maintenance issue in the home.

Look carefully at the appliances and see if they’re rusty or have dents and look worn out. It’s perfectly legitimate to ask if the appliances are in working order and ask their age. Any hanging wires or broken fixtures could indicate a worse electrical problem and should be questioned.

Finally, landscaping and the entire exterior of the home will give you an im- mediate negative or positive impression the minute you step out of the car. First impressions do count.

If you’re selling, sometimes rather than take on a major renovation of a kitchen
or bathroom it’s just as productive to use a little elbow grease. Even though there is still a shortage of inventory in most markets, buyers are frequently turned off by little things. Any type of odor, whether it’s musty, pet, gym shorts or baby, needs to be corrected. When you’re putting your house up for sale, the best favor you can do it is investing in a deep cleaning. The second-best thing you can do is enhance your curb appeal. Remove the bikes, toys and half-dead plants. Paint peeling on outdoor trim and dirty windows are a no-no.

If your home needs more than a good clean-up, fresh paint may not be as dramatic as a new bathroom, but it will do that first impression a lot of good. Refinishing hardwood floors or putting down an inexpensive piece of carpeting in the kids’ rooms will more than pay for itself. Other small fixes that buyers love are new doors and custom closets, many of which you can do yourself. Think about what appeals to you when you look at Realtor pictures of homes for sale. It could be as simple as new throw pillows and bed quilts. I once bought a $300 new sofa for my family room after my dog made the old one his home. It worked perfectly. The buyers even wanted to buy it from us.

Homes aren’t the only things that have flaws. Most of us can look in the mirror and see a long list of things that need fixing. Just remember, there are no perfect homes and no perfect people. A good lesson to keep in mind.

Castles in the Sand

Let’s talk turkey

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

So, after the turkey is consumed, the pies are half gone and the dishwasher is running its first load, it’s time to talk turkey. And what’s everyone’s favorite dinner conversation – real estate.

Let’s start with one of the mysteries of the ages, why mortgage rates go up and down. If you think you’re going to get an understandable answer from me, guess again. Some mysteries are never solved.

As of this writing, the average rates are 6.89% for a 30-year, fixed-rate mortgage and 6.26% for a 15-year, fixed-rate mortgage. Adjustable-rate mortgages are 5.52%, not too much better but could put borderline buyers in the range of qualifying. These rates have actually ticked down a little from 7% a few weeks ago in spite of the Federal Reserve upping their rate by 0.75% again.

Nationally, home sales typically go down when rates go up since fewer potential homeowners qualify for a loan. Despite the sharp decline in sales, home prices are rising on a year-over-year basis, in part be- cause supply remains low. Unfortunately, a slower housing demand affects other goods and services. Furniture, appliances, lumber and plumbing sales declined in September due to less demand for those products, slowing down the overall economy.

Not surprising, the future predictions are all over the place. The Mortgage Bank-
ers Association thinks mortgage rates are expected to end 2022 at 4.8% and to decline gradually to 4.6% by 2024. Good news, if you believe it, for buyers who are trying to decide between an adjustable-rate mortgage and a conventional one.

The National Association of Realtors kind of agrees with the above, saying that all in all, the 30-year, fixed-rate mortgage is likely to hit 5.3% by the end of the year, and that 5-year adjustable-rate mortgages will be at 4% by the end of the year.

Finally, a senior economist at Zillow says that competing dynamics suggest that there will be little reason for mortgage rates to decline anytime soon.

As far as pricing is concerned, the National Association of Realtors expects prices to post year-over-year declines starting next year.

Let’s just see what the Manatee County market did for the month of October according to the Realtor Association of Sarasota and Manatee.

Single-family homes closed at 22.5% less than last October. The median price was $549,444, up 29.3% from last year and the average price was $711,358, up 25.8% from last year. Median time to contract was 24 days compared to 6 days last October and the month’s supply of properties was 2.8 months versus 0.8 last year.

Condos closed 22.5% less than last October. The median price was $368,700, up 32.6%, and the average price was $388,103, up 17.4%. Median time to contract was
22 days versus 7 days last year and the month’s supply of properties was 2.3 months compared to 0.6 last year.

The trend of fewer sales and raising inventory is continuing. Some real estate analysts feel the market is leveling off with less of a bounce to higher values. A lot of this as it relates to Florida is impacted by hurricanes, interest rates and inflation. And we’re not alone. Just coming over one of my news feeds is a report that home sales nationally fell for a ninth straight month in October, according to the National Association of Realtors.

I hope this gives you some debatable information to discuss at the Thanksgiving dinner table. Just remember that when it comes to talking turkey, you probably know as much as anyone. Happy Thanksgiving.