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Castles in the Sand

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

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

Labor Day has just passed and in some parts of the country, that signals the end of summer – but not in Florida. We still have plenty of hot weather and hurricane threats, think Irma, but September does signal the beginning of buying season or at least the beginning of the thought process of buying a home.

Looking for a new home is fun with a capital F. Who doesn’t love HGTV, online home listing websites and going to open houses? It’s getting to the actual making of an offer and getting it accepted that is the not-so-much-fun part.

Choosing a realtor to purchase a home may not seem as important as choosing one to sell a home, but it is every bit as important. You want someone who has the proper sales credentials in the area of your choice, who understands the values and what’s been on the market and for how long. You want someone who can guide you in applying for a mortgage, recommend an attorney and tell you which schools are in the area.

But most of all, you want someone you connect with and who will communicate with you on a regular basis, especially one who has their pulse on the market and is keyed into new listings as soon as they hit. Keep in mind that this person may not be your best friend or your brother-in-law in spite of how much you love them.

Once you’ve found the perfect home, you will complete the offer-to-purchase form with your broker or with an attorney. In addition to the actual dollar offer, other details will be the amount of financing, if any, the down payment upon contract or earnest money; the requirement to have the home inspected; closing date and whether or not you plan on employing an attorney. The earnest money is kept in a broker’s escrow account and is returned to the buyer if the transaction does not close.

All of the above are considered contingencies to the contract and have specific guidelines. For example, if you’re applying for a mortgage you will have a specific number of days to obtain a mortgage commitment after contract. Usually property sales that involve financing are contingent on the buyer getting a mortgage commitment; no commitment, no contract. A bank appraisal will be required prior to a mortgage commitment, and if the appraisal is below the agreed-upon price, the deal is off unless the buyer and seller come to different terms. Other contingencies also are a home inspection within a specific number of days, clean termite inspection, well and septic tests.

Generally, after an initial offer, there is a counteroffer. Counteroffers can be in the form of a higher sale price, removal of some of the contingencies, a different closing date and even personal property within the home. This is a negotiation process, and all parties to the transaction should attempt to work with an offer, even if at first it appears to be unworkable.

Finally, you’re in contract, all inspections are good to go, your mortgage commitment is in and the movers are booked. There is one more final and very important step – the final walkthrough. Just prior to closing, usually the day of or the day before, the buyers will do a final inspection of the property to verify that there haven’t been any major changes since the last time they were there. If repairs were required, check to make sure they have been made satisfactorily and that the property is broom clean except for personal items or furniture that both buyer and seller agreed to leave.

That’s it. You did it; you bought a home. Now wasn’t that fun?

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Castles in the Sand

Uncovering a home’s defects

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

The definition of “disclose” is to uncover or reveal. When it comes to uncovering problems in a property you’re interested in purchasing, the pathway is cluttered with rules that are frequently unclear. Nevertheless, about once a year I like to do a column about real estate disclosure, and late summer is a good time to review this in preparation for the upcoming selling season.

Last week I focused specifically on disclosing previous flooding incidents. This week I’ll touch on many of the other aspects of home disclosures.

In an effort to protect buyers, many states are holding sellers responsible to disclose defects before closing. Since 1985, Florida law has provided for that as well.  As we reviewed last week, the Florida Seller’s Disclosure form is not mandatory for sellers to fill out and sign, however, they are still required to disclose any material defects in the property that could affect the value of that property if they are aware of it, and this is where it gets foggy. If a seller states he/she has no previous knowledge of, for instance, sinkholes and after the closing a sinkhole develops, can the new owner hold the previous owner responsible? According to state law, after closing the onus is on the new owner to prove that the previous owner knew about the defect and willfully did not disclose it.

Some of the points covered on a seller’s disclosure are potential claims against the property or pending court cases, including in the case of condominiums; special assessments that have been approved; all of the HOA or condominium association rules and fees, boundary issues for single-family homes; the aforementioned sinkholes; and environmental hazards such as asbestos, lead paint, mold, Chinese drywall construction, and wood-destroying organisms. Disclosure also includes the condition of major systems, like plumbing, air conditioning and heat and electrical. Condition of appliances is also a disclosure item as is in-ground pools, hot tubs and, of course, roofs.

The approximately six-page form does not specifically ask about property tax, which is easily acquired from county property rolls, but sellers are generally asked what the annual property tax is, flood insurance if the property is in a flood zone and frequently utility bills. Buyers should not rely on any information about taxes and certainly not utilities. The amount of property taxes that the buyer may be obligated to pay in the year subsequent to purchase will undoubtedly change since a sale triggers reassessment of the property generally based on purchase price.

Finally, sellers will be relieved to know that if the property was the site of a homicide, suicide or death, it is not considered a material fact and does not need to be disclosed. Further, according to Florida law, if the property was inhabited by an individual with HIV/AIDS, it is not required to disclose this fact. Also, if the seller shares with you or the real estate broker that they believe the house is haunted, there is no legal disclosure ruling one way or the other; essentially the law is silent on this.

Pretty much you can assume that any tangible defect related to a property needs to be disclosed, whether it is in writing or verbally. However, I would encourage all sellers to fill out the written disclosure statement providing the buyers with a feeling of transparency and avoiding any misunderstandings about the condition of the property. Nice when things are uncluttered.

Castles in the Sand

Are you as smart as a private equity firm?

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

The phrase, “follow the money,” goes back to the Watergate era as a method to shed light on corrupt activities by looking at money transfers. But following the money does not always lead to corruption. It could lead to some really good business advice.

Last week we reported the May real estate sales statistics in both Manatee and Sarasota counties being up substantially to the point of registering the highest numbers post-recession. Manatee County’s median single-family home sale prices were up 4.9% from last year continuing the $300,000 or above median sales price for most of the past year and a half. How much of this increase in selling price is fueled by investors, we have no sure way of knowing. What we do know is investors are totally into the U.S. real estate market.

Based on data released by CoreLogic, Inc., last month more than 11% of U.S. home purchases in 2018 were made by investors. This is a record high of investors, the highest recorded and nearly twice the levels before the 2008 housing crash. Investors are purchasing to flip properties or turn them into single-family rentals. The investor profile is everything from big private-equity firms to real estate speculators and individuals who want to get in on the action.

Investors swooped into the housing market in 2011 and 2012, buying with all cash when prices were low and mortgage credit was difficult to get for the average buyer. Economists gave them credit for helping to stabilize the market but expected the investors to slow down when prices started climbing after everything returned to normal. However, that hasn’t happened, partly because of strong rental demand.

Unfortunately, much of the rental demand is coming from first-time buyers, specifically millennials who are competing with investors that are buying up the low end of the real estate market with all cash transactions. According to the CoreLogic survey, investors purchased one in five homes in the bottom third price range in 2018, exactly where first-time buyers generally start at.

Complicating things further for first-time buyers is technology. The internet has made it easier for smaller investors and foreign buyers to purchase properties sight unseen. A few weeks ago, I talked about iBuyer companies, such as Opendoor, Zillow and Redfin that offer cash to homeowners who want a quick deal, avoiding the stress of putting their homes on the market.

These properties are either flipped or sold to investors for potential rentals. CoreLogic further reported that investors bought about half of the starter homes in Philadelphia last year and about 40% of the lower end of the market in Detroit. Again, first-time buyers are being run over by cash investors and technology.

Investors are also banking on renting vs. buying being a double-edged sword. Owning their home has always been the goal of Americans and many feel that renting is inherently wrong and a waste of money. Now, however, first-time buyers are rethinking that calculation. Mobility for job advancement is important to millennials who understand that about five years is the break-even point between owning and renting and may opt to rent until their careers are stabilized.

Renting instead of buying is a conversation that doesn’t make me happy. I still believe that owning your own home has more benefits than renting and should not be entirely a business decision. My opinion – follow the money straight to your new home.

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The buyer’s best buddy

Real estate selling for the smartphone generation

Castles in the Sand

Is a piece better than the whole pie?

Written by Louise Bolger on . Posted in Archives.

A very long time ago in the history of writing this column, I discovered fractional ownership as a new and interesting real estate topic. I quickly dropped the subject when I realized it wasn’t something that had caught on in great numbers across the vacation real estate industry. Well, recently there was an extensive piece in The Wall Street Journal about fractional ownership which sparked my interest again, so I took another look.

As all of us who live in Florida, and certainly on Anna Maria Island, know, second homes are the ultimate discretionary purchase. Many people would like to have one but no one really needs one. Therefore, it would appear that fractional ownership arrangements would be the perfect fit for potential second homeowners. But are they and how do they compare to timeshares?

Timeshares and fractional ownerships are very similar in that they can be sold, gifted or inherited, and require annual maintenance fees. Fractional owners receive a real property deed whereas timeshare owners receive a type of deed but specifically for an assigned period of time, usually one or two weeks. In addition, fractional properties are usually organized into residence clubs, which appeal to more upscale buyers with higher prices, nicer amenities and fewer owners than timeshares, making the concept as well as the properties more exclusive. But be careful. The more fractions that are sold, the more they resemble timeshares.

Also, proponents of fractional properties point out that a purchase of a fractional property can be arranged for much longer periods of time, creating more of a second home concept instead of just a vacation getaway. In addition, the case can be made that fractional ownership provides equity benefits with more of the possibility of making a profit when it’s sold, but like all real estate, there are no guarantees. Although timeshares can appreciate in value, depending on the property and location, typically they do not. Of course, conventional financing for both fractional ownerships and timeshares is near to impossible.  Purchases are generally made with cash.

So, who are the buyers of fractional ownership? They are generally people who can afford a vacation home but don’t have the time to use it on an annual basis and just want a winter or summer getaway. Or, as the Wall Street Journal piece pointed out, they may be people who want to spend months hopping from one fractional to another around the globe.

Although there are fractional ownership properties in Florida, I couldn’t find any on Anna Maria Island. Two of the big players in fractional ownership clubs are Timbers Resorts and Elite Destinations. There is also the Luxury Fractional Guide online to check out if anyone is interested in further research, and you should do your research. Since fractional ownership clubs make their money on selling the properties and reselling the properties, it’s important to verify that their maintenance program is well funded and well managed.

The fractional ownership concept makes me a little uneasy, but for owners who want a property in an area with escalating property values, it may be the only way to spend time there for more than just a quick visit. While I was doing my research, I found that Cabo San Lucas, Mexico, had several fractional ownership clubs. It just so happens that I’m headed there at the end of the month. What are the chances of me coming back with a new deeded property? I don’t think so; I want all of the pie.

More Castles in the Sand:

2019 real estate trends

Red tide, hurricanes and interest rates

No Christmas gifts for foreign buyers

Castles in the Sand

Cooling temps cooling market

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

It’s a little chilly outside as I write this, however, it is December and even Florida starts to cool down a little. But is the cool weather a harbinger of our real estate market cooling off? It’s possible based on how the national markets are faring.

According to the National Association of Realtors, existing home sales in the country have declined for eight straight months. This is the longest slow-down in more than four years even after the U.S. economy has had one of its best six-month periods in a decade. The unemployment rate is near its lowest level in 50 years and the stock market for the first half of 2018 was exploding.

In conjunction with this, home sale prices also slowed based on the national statistics for September for the sixth consecutive month. The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas, reported that for the year ending in September, home selling prices rose 5.5 percent compared to 5.7 percent a year ago. So why is one-sixth of the country’s economy not growing at the same pace as the rest of the country?

Part of the reason has been the rising interest mortgage rates. According to Freddie Mac, the 30-year fixed-rate mortgage rate was 4.75 percent in mid-December. This is up from below 4 percent at the start of 2018, resulting in an increase of inventory in some markets.

A slow-down in prices is not necessarily a bad thing for some buyers who may now gain entry into the housing market after five years of rapidly rising prices, in spite of increased mortgage rates. It might also give these buyers the opportunity for their wages to catch up with the decline in pricing, again depending on which part of the country they’re in.

Some of the markets around the country that are seeing price growth are Las Vegas, Phoenix and Tampa. These are also some of the cities that had some of the biggest losses and gains during the last housing cycle. And we may not be done, according to Lawrence Yun, the chief economist for the National Association of Realtors, who says that sales seem unlikely to rebound in the short term.

There is, however, one area of the real estate market that is humming, and that’s home refinancing. Homeowners who may have decided not to move are taking cash out of the equity in their homes to make improvements, buy down credit card debt or send the kids to college. Their calculation is that even if the mortgage rate for a refinance on their mortgage is higher, in the long term it’s still cheap money spread out over the life of the mortgage.

The danger of course is overextending, home values fall, and you end up owing more than the home is worth. This is exactly what happened during the financial crisis, and even though safeguards have been put in place, homeowners still need to be prepared for any eventuality.

Like all things in the crazy financial world we’re living through, we’ll just have to wait and see if we’re facing a cooling-off period or just a blip on the radar screen. But don’t let that keep you from having a wonderful New Year celebration and an equally wonderful new year.

Castles in the Sand

Red tide, hurricanes and interest rates

Written by Louise Bolger on . Posted in Uncategorized.

It’s been a strange year and a few months for real estate. Irma took a toll, although not a devastating one, but enough for us and prospective buyers to sit up and take notice. Then the red tide rolled into town and took its time leaving, with traces still floating around, and then interest rates went up, putting a damper on the housing market nationally and the potential that it could trickle down to us. In spite of, this Anna Maria Island still keeps moving forward with selling prices holding and buyers still looking.

Since everyone in real estate, homeowners and professionals alike, are always interested in the upper end of the market, it’s time to do an analysis of $1 million and over sales and listings for residential properties including condos and vacant land. We’ll take a look at July, August, September and October. The closed property numbers are from the Manatee County Property Appraisers Office and the available or pending properties as of this writing are from realtor.com.

Cortez had two properties close over $1 million; last time this tiny area didn’t have any. The city of Anna Maria had 17 properties $1 million or over close during these months ranging from $1,000,000 to $2,500,000; during the previous analysis, there were nine. The combined cities of Holmes Beach and Bradenton Beach had 14 over $1 million closings during these months, ranging from $1,100,000 to $5,000,000. In the previous analysis, there were 19 sales.

As far as currently on the market or pending, Cortez has five, ranging from $1,099,900 to $1,500,000, which is a waterfront lot. During the previous analysis, there were four properties in this price range. The city of Anna Maria currently has 51 properties over $1 million, ranging from $1,049,000 to $5,200,000. Of these, two are over $3 million, and two are over $4 million. Last time, Anna Maria had 64 properties listed at $1 million or more.

And the combined cities of Holmes Beach and Bradenton Beach have 68 properties currently listed over $1 million, ranging from $1,000,000 to $7,775,000, which is a large waterfront parcel of land. Of these, two are over $3 million, three are $4 million or over and one is over $5 million. Last time these cities had 77 properties available in this price range.

Although not exact, the numbers are fairly consistent. Much of the country is experiencing a slowdown of the real estate market because of the lack of inventory driving up prices but resulting in lower sales. We too see that in our marketplace, but we also have the additional element of a reputation for hurricanes and the persistent red tide, which is getting a lot of media publicity around the country. Now that we’re getting into the busy selling season, we should have a clearer idea of the availability of buyers.

I was on Palm Beach Island for a weekend a few weeks ago, and $1 million properties don’t even exist on that island. But on this Island, we have plenty, and, hopefully, that trend will continue into the new year.

Wishing everyone a peaceful and merry holiday.

More Castles in the Sand:

No Christmas gifts for foreign buyers

Tax overhaul saved one thing

Anticipating condo special assessments

Castles in the Sand

Co-living may solve some problems

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

I’m a baby boomer, and they say my generation changed the world with the sheer force of its numbers. Frankly, I don’t know that I agree. It appears to me that the millennials are having a larger impact, and one of the ways is how they’re choosing to live.

Millennials, many of whom are accustomed to having everything done for them and in a hurry from instant responses on their smart phones to instant pizza at their front doors, have added another instant, apartments.

Apartment developers in big cities like New York, Los Angeles and Washington D. C. have created a co-living arrangement. Co-living is basically renting one room and a bathroom and sharing some common space like a kitchen. Sounds like an extension of college dormitory life, only this one has additional perks. Once a month sheets and towels are changed and toiletries replaced. In addition, you don’t even have to find your own friends since a social director organizes get togethers – instant friends.

This was made for the millennial generation which can sometimes find life too much to handle – instant mommy.

Nevertheless, it is a genius idea by the developers who are building co-living arrangements all over the country. They’re tapping into a generation which expect nothing less.

Thankfully, this has not spread to Manatee County, where real properties are selling like instant hot cakes. The sales statistics for September and October, according to the Realtor Association of Sarasota and Manatee, are as follows:

September and October can be strange real estate months, and these also look a little off. Single-family homes closed were up 10.7 percent and closed condos were up 12.5 percent. Single-family median sale price was the same as last year at $295,000, and condo median sale price was up 2.8 percent to $186,575. Single-family average sale price was down 1.8 percent to $348,158, and condo average sale price was also down by 15.7 percent to $210,586. The median time to sale for single-family properties was up from 90 days to 96 days and for condos was down from 103 days to 97 days. Finally, the months’ supply of properties available for sale for single-family homes was 3.8 months this year and 4 months last year, and for condos was 3.4 months this year compared to 3.9 last year, practically no change at all.

October single-family sales were up 14 percent, and closed condos were up really big at 27.3 percent. Single-family median sales were up 4.2 percent to $298,000, and condo median sales were down a little to $191,250 or 1.9 percent. Average single family was $369,104, down 2.2 percent, and average condo sales were also down 1.5 percent to $218,637. Median time to sell for single family was 87 days compared to 92 last year, and condo median time to sell was 96 days compared to 94 last year. The month’s supply of properties for single family was 3.9 months and for condos 3.5 months both down from last year.

As always, the available months of properties on the market is always an important number. The fewer properties for sale, the fewer the sales, and we, just like the country, are generally down.

Is it a case of arrested development or is it an idea that’s changing the world? I hope I never find out, but come to think of it, it does have the potential of lending the idea to senior citizens’ living arrangements – instant grandma.

Castles in the Sand

Before you sell, become a home historian

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

Last week was Halloween, and we talked about disclosing everything, even if not required by law, that might be negative about your home to prospective buyers. What may seem ridiculous to you, like spirits real or not, deaths in the property or other than conventional activities, could be a hot button to a buyer. But do you know everything about your home, the good, the bad and the ugly? Putting your property on the market is the perfect time to delve into your home’s history and a unique marketing tool.

The state of Florida is not known for many historic homes like New York and Boston, dating back to the founding of the country, and even though there were settlements in Florida going back to the Spanish, not too many actual homes have survived compared to the northeast. Bradenton has some beautiful older homes downtown, as do other cities around the state like Jacksonville and St. Augustine, but it doesn’t matter if your home or the home you’re considering purchasing is 100 years old or 20, don’t you want to know its history?

There are professional house historians willing to do research, particularly on older homes dating back to years before records were efficiently kept. They will research public records, church records, history books and even do interviews with local residents who may be familiar with the property. This service, of course, is provided for a hefty fee and results in a nice book full of information for the owners and future owners.

I love the concept and feel that even if your house was built in more recent years, there may still be information about it you don’t know. For instance, who was the architect who designed the house, are the original drawings still on file, and what are the names of the previous owners, an answer which could surprise you, especially in a second home beach area like Anna Maria.

Wouldn’t you just love to know if famous people visited the Island and stayed in your house, such as actors or political personalities? We already know that professional ball players and circus performers came to Anna Maria, maybe they stayed in your home. The possibilities are endless, especially if you can find just the precise person who has been around long enough to point you in the right direction.

A search of the town records would also give you structural information about the home. Were permits pulled to repair damage that could have been from fire or flooding or pest infestation? Did a major hurricane occur in the early years of the home and are there any survivors from that event still around to interview?

You might want to include pre-renovation photos from the time you owned the property, pictures of some things unique to your house like the wall showing how your children grew through the years or a picture from your daughter’s wedding in the yard. Include dates of significant storms and if you evacuated and to where. Brief introductions to current neighbors and some history on the surrounding homes would be a nice touch.

Not only is a history book a great way to introduce potential buyers to your home, but it’s also a wonderful gift to new owners to pass down to future owners. It shows the love you have for your home and keeps the story of the house alive.

Every house has a compelling story to tell, and every room within the house represents a life lived. Make your house one for the history books.

More Castles in the Sand

Real estate sales can require scary disclosures

Florence – another wake-up call

Fannie, Freddie and Ginnie

Castles in the Sand

In real estate, cash rules

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

“Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.”

Warren Buffett said this in 1963 in an era when not everyone considered the bottom line the most important thing. Now, however, not only are the sale and the sale price the most important things, cash is also becoming one of the most important elements of a real estate transaction.

It’s true that real estate transactions go more smoothly when homebuyers are paying with all cash. Closing times are shorter, and there is less stress for both buyers and sellers waiting for the inevitable shoe to drop. Loan applications take longer than expected, the one last piece of documentation is not readily available and interest rates are going up, forcing a reevaluation of qualifications. But cash avoids a lot of those issues, making a cash buyer extremely attractive.

According to the National Association of Realtors Economist’s Outlook, the share of cash buyers dropped to just 21 percent in 2017. That compares with a national average of 31 percent between 2011 and 2013 and as high as 57 percent in Florida in 2012.

Well, Florida is still humming with cash buyers, at least in our area. The July sales statistics for single family homes bought with all cash was up 22.7 percent from last July and for condos up 17.5 percent from last July. For the month of August, however, the cash buyers were off for single family homes down 8.1 percent but for condos they were up 20.8 percent.

And in an interesting article I recently read, Detroit is finally digging out of their deep depression and starting to sell real estate. The median home price as of this writing in Detroit is $32,428, the medial home price nationwide is $234,000. The percentage of homes bought in Detroit for cash as of this writing was 87 percent and nationwide was 28 percent. Obviously, the historic low prices in Detroit is generating all cash offers many from investors and flippers. Flippers may be just what Detroit needs where many homes have permit issues and condition problems preventing buyers from applying for a conventional mortgage.

But let’s see what’s happening in Manatee County for the month of August: Closings were up for both single family (0.2 percent) and for condos (26.9 percent). The single family median sale price was $296,000, up 3.2 percent from last August, and the condo median was $190,000, up 3.8 percent. The average single family sold for $393,126, up 4 percent, and the average for condos was $222,249, up 2.8 percent. The median time to sell for single family was 94 days and for condos 93 days, and the months’ supply of single-family homes was 3.9 percent and for condos, only 3.6 percent.

Nationally, the number of sales is holding steady, down just 1.5 percent for August, prompting Lawrence Yun from the National Board of Realtors to comment that the housing market is heading to an equilibrium, more good news for the economy. The August median national single-family sales price was $264,800, with a 4.3 monthly supply of properties.

Essentially what we have here is good news for Manatee County and the country generally, with some regions doing better than others, and inventory is still down all over, pushing selling prices up. In Manatee County, not only is cash king but condos are also king, with soaring sales and prices.

Everyone loves cash and always will, but don’t let it scare you away from jumping into the pool. You can avoid the sharks by keeping your credit clean and saving your pennies, so you’ll look as good as king cash.

Castles in the Sand

Why aren’t you moving?

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

Last week we talked about moving and the emotional and financial toll it can take on your family. This week we’re going to touch on why people aren’t moving as much, at least not for jobs.

It’s a new world out there; technology has made it possible to practically run a multi-million-dollar business from home in your pajamas. More employers are offering their staff the ability to work virtually from home, saving enormous amounts of corporate dollars. This could be part of the reason why, according to the U.S. census data, fewer people are relocating for jobs.

About 3.5 million people relocated for a new job or job transfer last year, which is a 10 percent drop from 2015, but there are other reasons as well. The once traditional family, where job transfers hinged on the primary breadwinner’s career, usually the husband, are almost gone. During the time I worked in the relocation business we had an awful expression for this, “the trailing spouse,” which conjured up nasty images. In the late 1980s, more than a third of job seekers relocated, and it has gone continually down to below 20 percent after 2000. The first half of this year shows only about 10 percent.

Thankfully these days, no one is trailing primarily because both spouses or partners generally contribute to the financials of the household, and job opportunities must be weighed very differently. In addition, with the high divorce rate and former spouses co-parenting their children, relocating presents logistical issues most employees don’t want to face.

Even for those willing to relocate, the previous generous incentives used to induce skilled workers to uproot themselves and their families have gotten smaller. Therefore, the cost of selling a property and moving to a different location is not being offset by companies as in past years. Add into this the low unemployment rate pretty much all over the country, enabling employees who may want to look for other opportunities to do it a lot closer to home.

Not only are job seekers unwilling to relocate but just regular people are deciding to stay put and renovate homes rather than give up a low mortgage rate and upend the family. Nationally, according to The National Association of Realtors, the sale of existing homes from June to July fell 0.7 percent. This represents the fourth straight month of declines. Compared with a year earlier in July of last year, sales were down 1.5 percent. Lack of inventory to sell is what is pushing sale prices up, keeping buyers out of the market, which depends on a continuing flow of new homeowners to keep it healthy.

We, however, in Manatee County are not having the same problems plaguing the rest of the country. Single-family sales for the month of July were up 19.2 percent from last year and up 10.1 percent for condos. Appreciation rates are also continuing their upward trend. This doesn’t mean we don’t have a shortage of inventory, we do, and in July it dropped a little further, but so far, the number of sales are being maintained.

Florida has never been a state that imported a lot of job seekers. That certainly has changed in recent years with so many younger people relocating from high priced, high taxed Northern states. However, for the most part, our incoming population consists of second-home buyers and retirees, and that’s what’s keeping the sales going.

So why aren’t you moving? Probably because Florida has lots to offer, not the least of which is a more relaxed way of life and sunshine. Have laptop, won’t travel.

More Castles in the Sand

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We’re Americans; we borrow

Who’s entitled to title insurance?

Castles in the Sand

Home sales declining, but not here

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

As reported at the end of July, U.S. growth exceeded 4 percent, the fastest since 2014. Nevertheless, even this great economic news isn’t helping the national housing market from pulling itself out of a slump.

According to the National Association of Realtors, in June, the sale of existing homes declined by 2.2 percent. Realtors and other professionals are speculating that after years of low inventory, despite reports that inventory is finally starting to increase and prices are rising, buyers are exhausted. This combined with higher interest rates which jumped in June to 4.57 percent is eroding buyer confidence, resulting in many buyers taking a “wait and see” position.

Well, here in Manatee County, buyer confidence, prices and turnover seem not to be affected by the national picture. June sales statistics reported by the Realtor Association of Sarasota & Manatee are encouraging, especially since we are getting into the slow sales season. That said, June closings do reflect earlier months’ sales so don’t be surprised to see a slight downturn in coming months.

The total number of single family homes sold in June was 637, up 4.8 percent from last year. The median sale price was $300,000, up 0.8 percent, and the average sale price was $365,637, dead even with last June. Properties are selling at 96.2 percent of original list price and it’s taking a median time to sell of 90 days.

As far as the condo market sales, the numbers are even better. There were 278 sales, up 20.9 percent from June of last year. The median sales price was $191,500, up 4.9 percent and the average sale price was $232,691, up 1.9 percent. Condos are selling at 93.8 percent of the original listing price and the median time to sell was 111 days.

Unlike the national numbers, Manatee County is not showing an increase in available properties for sale. For single family homes there were 2,133 properties available for sale minus 1.1 percent from last June. And for condos there were 895 properties available for sale minus 2.8 percent from last June. This still leaves us with only an approximate four-month supply of available properties in both categories, an unhealthy number.

As a side note, there was an interesting report, again by the National Board of Realtors, that foreign purchases of U.S. homes had their biggest drop ever. Purchases by international buyers totaled $121 billion for the fiscal year ended in March, down from $153 billion the previous fiscal year.

Most of the international buyers are concentrated in the very upscale areas of the country like Manhattan, Seattle, San Francisco, Miami and Orange County, Cal., so luxury property buyers in these areas will be happy.

There are many Chinese buyers for these properties who are pulling back because of restrictions from the Chinese government allowing only $50,000 to be taken out of the country. In addition, banks in China are required to report what the money is being used for and buying real estate is not one of the approved reasons. Also, Canadian buyers, many of whom purchase second home in Florida, are pulling back in recent years, primarily because of the strength of the U.S. dollar.

Even though our market seems to keep rolling along, generally a declining real estate market or even one that goes sideways is not good for the economy in general. Housing contributes about 15 to 18 percent of gross domestic product to the economy and a fickle real estate market impacts home improvement spending, construction and mortgage lending among other areas.

All real estate is local and for the moment, we’re in the perfect location.

Castles in the Sand

The fastest way to kill a sale

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

Your beautiful, perfectly updated and decorated Island house is on the market. You have a pool, it’s within walking distance to the beach and it’s priced competitively, so why isn’t it selling? You may be surprised what turns off potential buyers, and sometimes it has nothing to do with the house.

I’ve said it before, and I’ll keep on saying it, first impressions count more than most people realize. Everything from the neighbor’s barking dog to the color of the front door will be remembered by buyers as soon as they step out of the car. And believe it or not, your own family could be the kiss of death for a transaction. Teenagers who don’t want to move and elderly parents who also don’t want to upend their life could easily suggest flaws in the house or in the area.

“Wow, did you hear that air conditioner turn on? It really makes a loud noise all the time.” or “These stairs are so steep I can hardly make it to the first landing.” In addition, be careful with home health aides, cleaning people and landscapers who may be afraid of losing their job if you sell.

But by far the biggest influence on a buyer is a tenant, and that can work as a positive or a negative thing. A tenant is in the best position to let out little secrets about the property that may be unhelpful simply because they don’t want to move. On the other hand, a happy tenant can be a real source of information, since they live in the house. The best advice is before you allow your house to be shown, make sure it’s vacant of tenants, teenagers, and grandma.

In the meantime, let’s see what’s happening as far as sales and listings over $1 million in Cortez and the three cities of Anna Maria Island. This analysis will be for April, May, and June. Closed properties are from the Manatee County Property Appraiser’s Office and the properties on the market are from Realtor.com. These properties are either single-family homes, condos or vacant land.

Cortez did not have any properties closing at $1 million or more during this period. In the previous three months, there was one sale. Anna Maria city had nine sales at $1 million or more, ranging from $2,400,000 to $1,004,000. For the previous three months, there were 11 sales. The combined cities of Holmes Beach and Bradenton Beach had 19 sales, ranging from $2,424,000 to $1,000,000. For the previous three months, there were eight sales.

Properties on the market as of this writing are:

Cortez has four properties $1 million or over ranging from $1,500,000 to $1,135,000. Last time there also were four properties in this price range.

The city of Anna Maria has 64 properties priced at $1 million or more, ranging from $4,899,000 to $1,099,500. There is one property at $4 million or more, six properties at $3 million or more and 13 properties at $2 million or more. Last time, there were 56 properties.

The combined cities of Holmes Beach and Bradenton Beach had 77 properties at $1 million or more, ranging from $9,500,000 (Gulf-front land) to $1 million. There was one property at $5 million or over, not including the $9.5 million land, three at over $4 million, one at over $3 million and 15 at over $2 million. Last time, there were seven properties in these price ranges.

Getting back to deal killers, the home inspector has always been the terror of real estate professionals and sellers. The good ones can present simple or even substantial defects in such a way that they do not seem insurmountable, but the bad ones will send buyers down the street. And if you have a buyer who wants to get an OK from his/her Feng Shui advisor before moving on, best not to count your pennies just yet.

Always remember selling is a process, the best you can do is remove any obstacles that may trip you up.

More Castles in the Sand

Property values, taxes always hot topics

Where have all the houses gone?

Preparing your home for sale

Castles in the Sand

Home interest rates rising

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

Easter just passed, and, hopefully, you didn’t put all your eggs in one basket.

But what if the United States puts maybe not all of its eggs into one basket, but a pretty large percentage of them. Chances are you’ll start worrying about overflowing the basket, and this is why.

About 15 percent of the U.S. gross domestic product represents the housing sector. For a few years now there has been a loss of inventory, which has been pushing prices up and up. Now potential buyers could be impacted with another threat to the housing industry – higher interest rates.

Mortgage rates have hit their highest level since 2014 and are now about 4.5 percent, which is the highest in more than four years. According to Freddie Mac, the average mortgage interest rate at the beginning of the year was 3.95 percent. This doesn’t sound like a lot, but it could push marginal buyers either out of the market or cause them to make other financial choices, all which could have an overall effect on the economy.

In addition, while the rates are still historically low, millennial buyers who are starting to flood the market may get their first dose of sticker shock. This combined with the lack of inventory has resulted in home sales activity slowing down in recent months. Some current homeowners are opting to renovate rather than move and be forced to take on a higher rate mortgage than they likely have, further reducing available inventory.

Typically, when interest rates are threatening to go up, buyers are motivated to seriously look for homes and lock in at a lower rate. This is especially true in higher priced markets where a difference of one percentage point can make the monthly mortgage payment increase by hundreds of dollars. Nevertheless, some economists believe that mortgage rates would have to reach 6 percent before buyers are forced to decide whether or not to buy a home based purely on interest rates.

The housing sectors that have been hit more than original mortgage financing are home equity loans and lines of credit. And to make that market even less attractive are the new tax laws, which will have an impact on the deductibility of home equity interest.

When the tax cut law was enacted, not all of the minor aspects of the changes were reported in detail. One of those aspects was the ability to deduct the interest on home equity loans and lines of credit. Initially, it was reported that none of this interest would be tax deductible now, however, there is a better explanation of the rules governing interest deductions for these loans.

The nuance in the law is that interest on home equity loans remains deductible as long as the loan can be classified as acquisition indebtedness. What this means to the normal human brain is that the borrowed funds need to be used for substantial improvements of a qualifying residence like a major renovation or an addition to your existing home. If you want to take out a home equity loan to pay off your credit cards, buy a car or make a college tuition payment, you will not be able to deduct the interest on the loan.

Likewise, if you want to take out a home equity loan on your primary residence to purchase a second home, this would not qualify for the interest deduction under the new tax law. Keep in mind that your regular mortgage interest remains tax-deductible up to a lower cap of $750,000 of loan principal rather than the $1 million previous cap.

The best way to figure out any interest deduction questions is to seek advice from a tax professional. Time to get rid of those Easter baskets anyway.

Castles in the Sand

Million-dollar sales

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

House styles are not that much different than fashion styles. What’s in fashion for housing may not change every year, but it does change frequently enough that buyers need to keep their antennas up.

This year Cortez is in line for a substantial change, one that the developers hope will preserve the integrity of the historic fishing village. But first let’s talk about what’s happened in the over $1 million range during October, November and December of last year.

Cortez did not have any over $1 million sales during these three months. During the previous three months it had one sale.

The city of Anna Maria had 9 sales ranging from $4,500,000 to $1,100,000. During the previous three months, there were 14 sales.

The combined towns of Bradenton Beach and Holmes Beach had 11 $1 million or over sales ranging from $2,299,000 to $1,025,000. For the previous three months analyzed, there were 13.

As of this writing, the $1 million and over available properties and a few pending are as follows:

Cortez has five properties from $1,795,000 to $1,195,000. During the previous three months there were six.

The city of Anna Maria has 42 properties ranging from $4,595,000 to $1,049,000 with five of these over $3 million. During the previous three months there were 36.

Bradenton Beach and Holmes Beach have a combined 47 properties, ranging from a large complex listed at $9,500,000 to $1,048,000. One of these is just under $5 million, and there are two over $3 million. During the last three-month period analyzed there were 56 properties.

Closed properties are from the Manatee County Property Appraiser’s Office, and the available properties are from the realtor.com website, generally reflecting the properties on the Multiple Listing Service.

Now for the changes in Cortez. The Hunters Point Resort and Marina has been approved by Manatee County commissioners, who voted unanimously in favor. The new community fronts Cortez Road just east of the Cortez Bridge across from the historic fishing village. It will have water access via canals out to the Intracoastal and the Gulf and will be comprised of 86 single-story, cottage-style homes, 62 hotel rooms, and 48 boat slips, a marina, bistro, clubhouse and retail space.

What’s interesting about this innovative community is the size of the homes. The energy-efficient cottages are built to zero energy standards, with each home capable of producing as much if not more energy than it consumes. In addition, the cottages are only 500 square feet of air-conditioned interior space with multiple decks, including roof decks and driveways. The developer says these are not tiny houses, rather single-family homes designed with upscale interiors for buyers who are interested in downsizing and boating.

According to the National Association of Realtors, the median size of an existing single-family home purchased in 2017 was 1,930 square feet, which was actually down from 2016 by 20 square feet. Maybe this is the latest trend in housing and Hunters Point is on to something.

Whether you’re buying a new dress or a new house, the important thing to remember is what actually fits your style and your lifestyle, and it doesn’t have to cost a million. I’ll be back again in three months with another $1 million and over report.

Castles in the Sand

New cash for the new year

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

We’re 10 days into the new year, and although November seems like hundreds of miles away in our rear-view mirrors, it’s actually not. There is also an interesting trend going on all over the country and reflected in our transactions as well – all-cash buyers.

First let’s look at the November sales numbers:

Single-family home closings in Manatee County were up 7.5 percent. The median sales price, half above and half below, was $289,000, up 3.6 percent from November of last year. The average sale price was $362,338, up 7.2 percent from last year. The median time to sell was 93 days, which was up from last year by 5.7 percent, and the month’s supply of properties was 4.3 percent, which has been a relatively stable number for many months. The all-cash transactions were up an impressive 25.4 percent, representing 153 sales during the month.

Condo sales also were up in all areas, with closed sales up 16.3 percent compared to November of last year. The median sales price was $181,250, up 12.9 percent, and the average sale price was $222,561, up 15.5 percent. Median time to sell was 95 days, up 20.3 percent from last year. Month’s supply of properties was the same as single family at 4.3 percent, again a very consistent number. The all-cash sales were up 8.3 percent, representing 106 closed sales. Sales statistics are from the Realtor Association of Sarasota and Manatee.

As you can see, the all-cash transactions are up for both single family and condos, which is also a national trend according to Attom Data Solutions, a data provider.  It reports that 28.8 percent of U.S. home sales during 2017 have been all-cash transactions. This is slightly higher than 2016 which was 28.6 percent. The typical norm for all-cash transactions, which was common in the early 2000s, was 20 percent.

With the economy doing well and mortgage credit readily available at still excellent rates, why are all-cash transactions so prevalent? Economists really don’t have an answer as to why buyers want to tie up so much cash in a home purchase. But cash deals are very attractive to sellers because they don’t need to wait for a bank to process a mortgage, resulting in faster closings.

There is a lot of cash floating around the country, not only from investors and wealthy buyers with deep pockets, but also from baby boomers downsizing. It’s not uncommon for people to move from pricey markets to less expensive ones, especially ones in states like Florida with tax advantages.

Some of the cash buyers also represent first-time buyers, who are using cash that has been gifted to them from their parents. But what about first-time buyers who don’t have the cash and are attempting to buy their first home and require a mortgage? Many of these buyers are losing homes to all-cash buyers, creating a whole new problem in the marketplace. First-time buyers generally drive the market and are the building blocks of the next generation of home owners, and if they can’t get in, it will eventually affect the general market.

It’s not uncommon for buyers to offer an all-cash deal only to then, after closing, apply for a mortgage. Mortgage lenders are starting to recognize this and are offering first-time buyers a product to convert their all-cash purchase to a mortgage right after closing, but they still need the cash to begin with.

Let’s hope the new year will continue our positive real estate trend whether they be financed or all-cash. Good luck with your real estate transactions in 2018.