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Tag: Anna Maria Island real estate

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.

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.