Skip to main content

Tag: Castles in the Sand

Castles in the Sand

Interest rates suddenly the enemy

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

So, we’ve had a good run – actually, a spectacular run – especially for those of us who already own homes. Lowest mortgage interest rates in history, soaring housing prices, quick sales – what could go wrong?

Don’t look over your shoulder, but the mortgage interest rate monster is right behind you, getting bigger and bigger, fed by your friendly Federal Reserve. Mortgage rates are closely tied to the 10-Year U.S. Treasury note, which is influenced by inflation, the job market and a variety of other business-connected phenomena. The Federal Reserve announced at the end of last year that they expected to raise interest rates multiple times during this year and we’re just starting to see the effects of that. Rates are up and the stock market is down with a lot of nervous investors out there.

During the first week of January, U.S. mortgage rates rose to their highest level since May 2020, according to Freddie Mac. The average rate for a 30-year loan was 3.22% this week, up from 3.11% the previous week, and you can anticipate further increases. A year ago, the mortgage rates were 2.65%. Naturally, this increases the costs associated with buying a home at a time when home sale prices are near record levels. In spite of this, there is still strong buyer demand for homes and very low inventory rates.

However, there will be a negative impact on some buyers who will start to have problems qualifying for a mortgage at higher rates. For example, a 3.22% rate on a $300,000 loan would be a monthly payment of $1,300, excluding taxes and insurance. At last year’s rate of 2.65%, the monthly payment would be $1,209, excluding taxes and insurance. It’s not big, but enough to cause a problem for a marginal buyer and especially first-time buyers who would have to come up with more cash down so the amount of the loan could be reduced in order to qualify.

Just to give you a little perspective of how historically low the mortgage rates were last year, I checked on Freddie Mac’s website, which has a full analysis of interest rates starting in 1971 when the average rate was 7.31%. The highest rate was in 1981 where the average for the year was a shocking 16.63%. Hard to believe even for those of us who actually remember but especially for young first-time buyers now who are shocked at the relatively small recent increase. The lowest rate was, of course in 2021, which was an average of 2.96%.

The years between 1979 and 1990 all had double-digit interest rates. By the time I had a real estate license, the rates were over 10%, but by then, everyone just assumed it was the new normal. From 1991 to now, the rates never hit double-digit again and went progressively down pretty much every year right through to 2021.

My advice is not to get rattled. It would be foolish to assume that rates going up are going to totally crash the real estate market and to also assume that homeowners aren’t going to sell because they have to pay a higher rate for a new mortgage. Yes, some homeowners will use that as an excuse not to move or determine they can’t afford the increase, but for the most part, everyone will get accustomed to the increase. Even a full point over last year’s low would bring the rate to about 4%, which puts us where we were less than 5 years ago when homes were selling for a lot less.

Hang on, there has been nothing during the last two years that has been easy, but the interest rate monster may not be as scary as we think.

Castles in the Sand

Let the sunshine shine in

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

We have officially gone from a hot housing market to the hottest housing market in the country according to Zillow. Where do we go from here?

Zillow has named Tampa Bay the top housing market in the nation going into 2022, according to the real estate firm’s annual analysis. This is an increase from last year from fourth place to first, overtaking Austin, Texas, which fell to number 10.

Zillow economists expect Tampa’s home values to rise 24.6% in 2022, according to their press release earlier this month. Tampa Bay’s ever-increasing job market and future homeowners relocating from other areas of the country have naturally led to high demand for housing. In addition, fabulous home appreciation rates, which don’t appear to be ending, have contributed to the rise over other major cities.

The top metro areas on Zillow’s list were in the Sun Belt region for the second year in a row. In addition to Tampa Bay being in the number one spot on the list, two other Florida cities, Jacksonville and Orlando, made the top 10 list of hottest housing markets for the new year. The order of the top 10 breakdown is Tampa, Jacksonville, Raleigh, San Antonio, Charlotte, Nashville, Atlanta, Phoenix, Orlando and Austin. The not-so-hot markets in the country are New York, Milwaukee, San Francisco, Chicago and San Jose.

Time to take a look at our local real estate market, undoubtedly fueled by what Tampa is experiencing. This is what the Realtor Association of Sarasota and Manatee is reporting for December:

Single-family homes in Manatee County had a median sale price of $460,000 compared to December of 2020, up 28.5%. The average for single-family homes was $614,066, up 23.6% from the previous year. Both of these numbers are record-breaking again, and to put some perspective on how high our market has appreciated, I checked the September 2015 single-family home average, which was $316,087, just about double appreciation. Inventory continues to be down, with only a 0.6 month’s supply of properties, buyers are paying 100% of list price or more, and single-family homes are going to contract in six days.

Condos had a median sale price in December of $302,965, up 26.8% from December of 2020, and the average sale price was $377,763, up 3.5% from last year. Making a similar comparison to single-family homes, in September of 2015, the median sale price of condos was $157,500 and the average sale price was $188,652, again about double appreciation. Inventory also continues to be down for condos with only a 0.5 month’s supply of properties, buyers are also paying 100% of asking price or more and condos are also going to contract in six days.

I used September 2015 as a comparison to now because that’s the year the average single-family home in Manatee County sold for more than $300,000, which was very significant at the time.

Zillow’s economist, Alexandra Lee, said in her recent statement: “Buyers should be ready for a strong competition for homes, which means bidding wars and homes flying off the market only days after they are listed.” Basically, across the board, sellers will remain in the driver’s seat, particularly in the hottest markets. However, Zillow indicates even in the cooler markets, there will not be many deals to be made.

Let the sunshine keep shining in on the hottest real estate market in the country, not a northern city in the pack. I think as I write this it’s snowing in New York and Chicago. You think maybe there’s a connection?

Castles in the Sand

Changing real estate times

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

There is a Chinese curse that declares, “May you live in interesting times.” What we’re living through may be a curse or a blessing as it relates to real estate, and I predict we won’t know for quite a while.

For nearly two years, there has been a convergence of events that have influenced every aspect of our lives. As it relates to the real estate market, COVID-19 drove us into our homes, locking down with families, working on computers for both school and work. Because of this, the trend in remote working has exploded. Prior to the pandemic, only about 10% of the labor force worked remotely full time. The forecast now is that as much as a quarter of the labor force is expected to stay fully remote in the long term.

This fact is encouraging existing businesses and new businesses to change their plans for the future. A whole new economy is being developed based on remote workers who can relocate to smaller cities and regions anywhere in the country. Real estate prices are booming in regions where no one previously expected this kind of growth.

The second thing that has happened during the past two years is the millennial generation waking up to home ownership. Broadly, millennials are defined as being born from 1981 to 1996. They have now surpassed the baby boomers to become the largest living adult generation in the country. With the oldest of the generation approaching 40 compounded by COVID and remotely working, millennials now represent the majority of home buyers, accounting for more than half of all home purchase loan applications last year.

Millennials had faced several challenges getting started in homeownership. The financial crisis of 2008 set them back in their careers, denying them the opportunity to save for down payments while managing their student debt. In addition, they had a distrust of homeownership as an investment after the crash of the housing market and they did not expect to accrue large equity in a home the way their parents did. Most of them went on to rent and spend their money on travel and other life-fulfilling activities that didn’t involve mortgage payments and family.

Many of them moved back home to the suburbs and their childhood homes, leaving city life behind during COVID lockdowns. They started to appreciate the safe environment and space where they grew up and started taking another look around.

By the time they made their decision to move on with their adult life and purchase a home, the COVID housing boom was well underway, leaving them in the dust again. Nevertheless, they became the dominant buyers of homes in the country, helping to spark the surge of home prices and lack of inventory.

Because of this generation’s appetite for homeownership, many economists forecast homebuying demand is likely to remain strong for years to come. In addition, housing analysts don’t expect a wave of sustained home price cuts for quite a while, according to the Wall Street Journal. Between the pandemic and the popularity of remote work, the millennial home buying trends will probably continue.

Aside from agreeing that we do, indeed, live in interesting times, it’s impossible to know what the next chapter in the housing market will be. We’re all anxious to see what the Florida winter selling season will bring. Everything changes – even desktop computers are back in vogue.

Who would have thought that?

Castles in the Sand

Price, commissions and marketing

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

What’s the common denominator in the real estate market? The sale price, the commission you pay to brokers and the marketing techniques. All three of these topics are creating headlines in the new year.

Starting with the price of real estate, it’s almost redundant to say that existing home sales are on track for their strongest year since 2006, and this is expected to continue with low mortgage interest rates. Currently, mortgage interest rates for a 30-year, fixed-rate mortgage are just over 3%. However, the Federal Reserve has indicated they could move to raise the federal funds rate, which could influence the long-term mortgage rates. Nevertheless, the rates are still low for most buyers and won’t have a major impact on the market.

As reported at the end of December, Manatee County hit another record high in November with the median sale price of single-family homes at $450,411, 28.5% higher than last November. Nationally, as reported by the National Association of Realtors, the median single-family home sold for $353,900, up 13.9% from last November. Note that this is about $100,000 less than Manatee County’s median.

Realtor commissions have always been a source of constant conversation among home sellers, and with selling prices sky-high, the conversation is not about to change. Now, the Justice Department is investigating home sales commissions, which are typically in the 5% to 6% range. Previously, the Justice Department and the National Association of Realtors reached an agreement to provide more disclosure on broker fees and make them more competitive. This agreement was withdrawn last summer so the government can pursue a broader investigation into broker commissions.

The National Association of Realtors indicates that in a tight sales market with rising prices, the job of the real estate agent has become more important than ever to sellers and buyers trying to navigate an unpredictable market. In addition, real estate commissions are fully negotiable and have declined slightly to a national average of about 4.9%.

Finally, since every seller is looking for the best deal they can get, many, especially those who need a degree of privacy, are choosing off-market transactions. Off-market transactions are those that do not go through the local Multiple Listing Service to market the property. This frequently happens when brokers approach homeowners directly with the promise of a buyer for their property, which is technically not on the market. Some homeowners may be thinking of selling but don’t really know the true value and are overwhelmed when they are told what the value actually is.

This may or may not work out for the homeowner, or it can be the old adage: if it sounds too good to be true, it may be too good to be true. There are lots of pros and cons to off-market, with the top con being not hearing offers from other potential buyers and eliminating the “bidding war” that is happening in most transactions in this market.

The National Association of Realtors does allow brokers to market homes through its agency in certain circumstances without sharing with other brokers in the community. This is called an office exclusive or pocket listing and again may be advantageous for certain sellers.

If these types of marketing techniques appeal to you as a seller, do your homework first. Get the comps independently of the broker by checking tax records and online comparable sales, and make sure your home is located in a desirable area.

Every property has its own unique qualities, and every property also shares similar marketing options. It’s up to you to choose what’s the best way to market your property. Sale prices up, inventory down; nothing appears to be changing in the new year.

Castles in the Sand

Good shoes

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

Back in the days when I worked in New York City, I wore real shoes; not the sandals and flip flops that pass as footwear in Florida, but good shoes that matched my outfits and cost a tidy sum. I always felt that if you wore good shoes it didn’t matter what the rest of your outfit looked like and how much money it cost or didn’t cost – it was all about the shoes setting off everything else.

Well, the same can be said about homes. We all want our homes to show their best assets when we put them on the market and one of the very best assets that you can show off is the front lawn. First impressions do count and before a potential buyer gets out of the car, they will notice the front of the house including the landscaping, the front door and the bike with training wheels your 5-year-old left smack dab in the middle of your freshly mowed lawn. A lawn can tell you a lot about the owners of the home and their attention to the maintenance and details of the property.

The following will tell you a lot about the Manatee real estate market for October as reported by the Realtor Association of Sarasota and Manatee: Single-family homes closed were down 12.3% because of a lack of inventory. The median single-family home sold for $425,000, up 18.1% and the average sold for $565,362, up 17.5%. The median time to contract was six days and the month’s supply of properties is 0.8 months.

Condo sales were also down by 11.6% because of low inventory. The median sale price was $278,000, up 9%, and the average sale price was $330,662, up 12.2%. The median time to contract was seven days and the month’s supply of available properties was 0.6 months.

Cash sales for both single-family homes and condos remain high, with an increase of 8.5% for single-family and 10.7% for condos.

We’re kind of getting used to these great reports every month and so is the rest of the country. As reported by the National Association of Realtors, home prices climbed across the United States in the third quarter. The median sales price for single-family existing homes was higher in the quarter compared with a year before. Nationwide, the median single-family existing-home sales price rose 16% in the third quarter to $363,700 from a year earlier.

Realtor.com states that the geographic shifts that have been happening as a result of people working from home because of COVID-19 still hasn’t settled down. They feel we’re still in the early stages of these shifts and won’t know for a while where it will all end.

The Bradenton Herald reported recently that the population of Manatee County has increased more than 70,000 since the last census in 2010. I’m guessing that’s a lagging number and the actual increase in population was quite a bit more.

The chief economist for the National Association of Realtors, Lawrence Yun, says the speed of home price increases should be reduced as more homes hit the market early next year and mortgage rates continue to climb.

That might be the case nationwide, but Florida real estate is still on fire, and we’re not done yet. The President of the Realtor Association of Sarasota and Manatee said this about the October statistics: “Make no mistake – prices are going to rise in 2022, and most likely by a lot. There simply aren’t enough homes coming to market to offset the enormous demand.”

Meanwhile, don’t forget to keep your landscaping in tip-top shape; you don’t want to miss out on these fabulous selling prices. After all, your front lawn is the shoes that make the outfit.

Castles in the Sand

Resident spirit or creaking house?

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

Halloween is this weekend, so it’s time to discuss the prospect of your house having a real live spirit who has taken up residence. Well, maybe not real live, but a spirit with an agenda.

Many homeowners believe they are sharing their homes with a spirit. They may see actual images or something that looks sort of like a spirit, or they may hear unusual sounds or talking. I’m not here to tell you that there are no such things as spirits who refuse to leave what once was their home, but chances are what you’re hearing are normal sounds and noises unique to every home.

When you move into a new house, it may take a while to figure out that the dripping noise you’re hearing isn’t your roof about to collapse, but the condensation from your air conditioning system. Likewise, houses – especially new construction – may take a while to settle. If you hear what you swear are footsteps from the upstairs bedrooms it may be just the wooden framing taking a little stretch and not the inhabitants of the Indian burial ground next door.

On the other hand, sounds could be a subtle warning of impending problems. Appliances are notorious for creating noise when something in the motor is thinking about giving up. Loud compressors in your refrigerator and dishwasher pumps that you’re starting to just notice could be a warning, as well as the never-ending running toilet.

There are so many noises coming into your home from outside sometimes it’s hard to tell if it’s in the house or out. Trees and bushes scratching the windows, small animal claws and pecking birds can certainly drive you crazy. If you live on the water, get used to boat engines, snorting dolphins and jumping fish – it’s all part of the charm and not part of a haunting.

There are, however, homes where the owner truly believes and may even have proof of hauntings. The house used in the movie, “The Conjuring,” in Rhode Island is currently on the market. The present owners have turned their home into a little business by allowing paranormal investigators to spend the night on the property. It’s apparently a nice little business and one they hope to pass on to the new buyers.

One thing that’s not haunted are the Manatee County property values, so here are September’s from the Realtor Association of Sarasota and Manatee:

Single-family homes closed 4.5% fewer properties than last September. The median sale price was $430,000, up 22.9% from last year, and the average sale price was $580,073, up 21.9% from last year. The median time to contract was 48 days, down 29.4% from last year, and the month’s supply of properties is .08 months.

Condos closed 26.4% fewer properties than last September. The median sale price was $285,000, up 29.5% from last year, and the average sale price was $321,810, up 6.9% from last year. The median time to contract was 6 days, down 85% from last year and the month’s supply of available properties was 0.6 months.

Cash offers are still very dominant in the single-family market, up 53.4%, however, condo cash offers dipped a little – by 6%. September was a slower month, not untypical for this time of year, with sale prices a little flat but with inventory so low we can expect that to turn around quickly as the season begins in full force. The Realtor Association of Sarasota and Manatee is calling September the “calm before the storm,” so get ready for another record-setting real estate season.

As far as your current home, understand your home’s sounds and investigate anything that sounds out of whack before calling the ghostbusters. Enjoy Halloween and the friendly goblins at your door.

Castles in the Sand

Love is blind

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

Usually, I write this column around Valentine’s Day, but this year I don’t think I can wait ‘til February. So, let’s talk about the mistakes both buyers and sellers make in an overheated real estate market and how it’s dangerous to fall in love with a home, even if it’s your own.

We’re approaching the busy selling season in Florida and everyone’s emotions are on high alert, waiting to see if sellers let loose a plethora of new listings and if buyers are still out there and not discouraged. Whatever happens, the old selling and buying rules are still in place – don’t let your emotions rule your good judgment.

A buyer will someday be a seller, so it’s important to choose a home that doesn’t have significant location flaws. The interior of a home can be fixed, renovated or enlarged, but if the home you’re settling for is near a highway, bridge or school, that can’t be changed. It’s tempting in this market to buy whatever is available and in your price range, but you still need to consider location first.

Florida has been experiencing a tremendous influx of buyers since COVID. Some are moving for our state’s attractive economic environment, some are just done with the congestion and weather in other parts of the country. Because of this a lot of new Florida residents are making emotional decisions and may someday regret it when they become sellers.

For the same reasons as above, buyers are buying homes sight unseen. The best way to tour a home is in person, or if you have a trusted friend or relative to do it for you. However, walking in the door for the first time after you’ve closed could be a shock when the kitchen cabinets are a lot more dinged than the pictures showed.

Waiving inspections even on homes that you plan on totally renovating is also a gamble. Plumbing, septic and flooding issues will still be there after you renovate the kitchen. Inspections are especially important for vacation properties, where the goal is to keep it low maintenance and enjoyable.

In this market, buyers who are priced out of single-family homes are jumping into condo ownership, many of them without realizing that properties with homeowner’s associations have restrictions you may find tough to live with. Read the condo documents, financials and rules and regulations thoroughly before signing the final contract.

In addition, the biggest mistake sellers make is assuming that a buyer will love your collection of 18th-century dolls scattered around your house and will overlook the dishes in the kitchen sink as just part of living. Wrong, a buyer’s eye will immediately go to the defects in a home and one that has too much stuff or is offensive in some way goes to the bottom of the list, even in this market.

Most sellers in this market have accumulated a lot of capital gains. Hopefully, everyone knows to keep accurate records of home improvements that can be used to offset the remaining capital gains after the IRS exemption ($250,000 for individuals, $500,000 for couples). Also consider during the negotiating process whether holding out for that extra $10,000 will actually give you money in your pocket when the capital gains are considered. It might not be worth losing the buyer for a smaller dollar amount than you thought.

The above points out just some of the ways a crazy real estate market can make you forget that you’re probably buying or selling the largest investment of your life. As in love, emotions can drive mistakes; don’t be blind to the consequences.

Castles in the Sand

Here today, gone tomorrow

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

If you want to buy a property in the Bradenton-Sarasota area you have to act fast, and I mean lightning fast. Whatever comes on the market today will likely be gone within a week, selling at record-breaking prices every month.

None of this is a surprise to buyers who are out there beating the bushes daily or to their agents who are scurrying around looking for properties to satisfy the buyers lined up at their doors. But what’s interesting about some of these buyers is that they are coming from less traditional areas of the country. Local real estate professionals are reporting buyers from California, Washington state and other areas on the west coast of the country. When this was confirmed at the Island Publix check-out when I asked where all these people were coming from, I knew it was true.

Further confirmation of our hot market came from CoreLogic when they published the hottest metro areas in the country that people are relocating to. Bradenton-Sarasota came in at #14, Tampa at #5 and five other Florida regions were all in the top 15. The New York-Newark-Jersey City region was #1 in loss of residents.

Further, the National Association of Realtors reported in their July and August existing home sales reports the four regions of the country that are seeing the most home sales: The South continues to be the highest, maintaining over 40% of the market for both months; the Midwest comes in second at over 20%; the West is third, also over 20% and the Northeast is the lowest, just breaking 10% of the market share.

In Manatee County, the sales statistics from the Realtor Association of Sarasota and Manatee for July are: Single-family homes closed 5.8% fewer properties compared to last year. The median sales price was $430,000, up 19.8%; the average sale price was $566,595, up 19%; the median time to contract was six days, and the month’s supply of properties was .08 months.

Condos also closed fewer units, down 6.5%. The median sale price was $250,050, up 13.7%; the average sale price was $309,887, up 14.5%; the median time to contract was six days and the month’s supply of properties was 0.6 months.

By comparison, the National Association of Realtors reported the median price of existing single-family home sales for July was $359,900.

Now on to August: Single-family homes closed 2.7% fewer homes compared to last year. The median sale price was $430,000, same as July, up 19.4%; the average sale price was $579,647, up 20.5%; the median time to contract was five days and the month’s supply of properties was 0.8 months.

Condos closed 12.2% fewer units; the median price was $275,000, up 23.3%; the average sale price was $302,733, up 15.5%; the median time to contract was seven days and the month’s supply was 0.7 months.

By comparison, the National Association of Realtors reported the median price of existing single-family home sales for August was $356,700, slightly down from July.

In addition, the Realtor Association of Sarasota and Manatee reported that August was the 15th consecutive month that the price of single-family homes increased for this region.

At this point, I don’t think there is any relief for the poor buyers. The fewer properties on the market, the higher the prices will go, resulting in fewer actual sales, as we can see from July and August. Since we’re at the beginning of our busy sale season in Florida, it will be interesting to see where we are with available properties in a few months.

Not sure when it will end, but I’m pretty sure you will find out first at the Publix check-out.

More Castles in the Sand

Home renovations not for the faint of heart

Are you ready to be an island investor?

How not to derail your transaction

Castles in the Sand

Are you ready to be an island investor?

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

Investing in real estate can be a lifelong dream or a recurring nightmare – usually, it turns out to be both.

What sounds better than owning an island home that you can rent for outlandish prices and also use? What can go wrong? Well, plenty can go wrong, but first you have to find the property to complete your dream.

Real estate typically provides a better rate of return than the stock market with the absence of the market’s volatility. Over time, the value of a property increases, building equity and providing more control over the asset than stock market investing. Historically the longer an investor holds onto real estate, the more money will be made. Since real estate is a highly tangible asset and will always have value, it can survive up and down real estate markets.

In addition, real estate investing comes with numerous tax benefits, such as tax deductions on mortgage interest up to federal limits, deduction of expenses and continuing cash flow. However, if your investment property is also one that you plan to use personally, there are restrictions on the time allocated for personal use in order to qualify the property as an investment and the ability to deduct certain expenses.

Looking for an investment property is entirely different than looking for a home to live in. Investors are or should be concerned with cash flow and the vacancy factor. Ideally, an investor wants to at minimum break even, that is cover all the property expenses with the income from rentals. In fact, if you’re looking for an investment property, that should be your first question – how many times does it rent and what is the annual rental income? Also, if you’re looking for a condo investment, read the condo documents to determine restrictions on renting and advise potential renters of the association’s rules and regulations.

When calculating expenses don’t forget to include property tax, mortgage payment, homeowner’s fees and repairs. Conventional mortgages for investment properties could be a slightly higher rate than owner-occupied properties. In addition, restrictions from Fannie Mae and Freddie Mac will limit the number of conventional mortgages an investor can have. This is usually four, and investors who plan on making more investments may need to look to the private money market for financing.

Most investment buyers on Anna Maria Island are looking for a property to hold long-term since the property values go up almost daily and rentals are lucrative and plentiful. But some are planning to buy low (good luck with that), make improvements and flip the property to another buyer.

There is also an emotional aspect to owning investment property. When your phone rings in the middle of your daughter’s wedding and the tenant has a major plumbing leak, you have to at the very least make a couple of calls. This is why many investors hire management companies to handle emergencies and screen tenants. Hiring a management company, however, does cut into your cash flow.

Real estate is a vibrant business that creates a ton of buzz and is something everyone loves to talk about. Remember the old adage, God keeps making people but not land. On Anna Maria Island, this adage is on steroids; no more land but lots more people.

Castles in the Sand

House hunting wars

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

On the HGTV channel’s show “House Hunters,” they make buying a home civilized and stress-free. A smiling real estate professional shows you three homes all in your price range, all in acceptable condition and all with the right number of rooms. Nothing to worry about here.

Unfortunately for buyers who are trying to buy a home right now, it may be a rude awakening from the fiction of “House Hunters” to the reality of bidding wars. And though this may be a bloodless war, by the time you are done you may feel like you’ve been traumatized, nonetheless.

A few months ago, I read a very clever piece by Kris Frieswick, a columnist with a national profile, about the five stages of grief that accompany the loss of a bidding war. Although it was meant to be humorous, it is really an important lesson for today’s house hunters, the essence of which I will share with you.

Stage one, denial:  I didn’t like the house anyway. It was a stupid house. Keep saying this until you stop thinking about the stupid house.

Stage two, anger:  Maybe the house wasn’t so stupid after all, maybe I’m just a loser. I can’t win the lottery, a pickup basketball game or Candyland with my 5-year-old niece. At this point, Frieswick thinks the loss of the home results in the poor buyer starting to throw things – totally unnecessary since the winning homeowner has no clue what you’re doing.

Stage three, bargaining:  You can’t believe you lost, even offering 5% above the winning offer. What’s wrong with you? The problem is the winning offer was all cash, 30% over asking and included a new Range Rover and same-day closing. Now even the broker thinks you’re a loser. Whatever you do, don’t watch HGTV with those picky, delusional buyers who always seem to find the perfect house – what do they know that you don’t?

Stage four, depression:  At this point, you’re ready to give up; you will never find a house. You are stuck for the rest of your natural life with the itty-bitty kitchen without an island and your grandmother’s dining room table you were saving for your new home. Now would be a good time to deprogram HGTV from your remote.

Stage five, acceptance: Finally, you’re ready to boot up realtor.com again to see what you missed while you were grieving. Have a glass of wine, if there is any left after your depression, and start making a list of what you must have in a home and what you can give up.

This stage will take time – maybe even until after this insanity of the real estate market has calmed down. In the meantime, look around your current house and see what you can do to make it more marketable when the time comes. If you’re in a rental, embrace not having to paint the walls or renovate the bathroom – it’s someone else’s problem.

Bidding wars in home-purchasing doesn’t resemble at all an elegant Sotheby’s art auction. Buyers and their brokers will try any weapon in their arsenal to make their offers look more appealing and financially better for the seller. You will have to kiss a lot of frogs but in the end, you will get over all of the rejections when you eventually find the perfect home and you’re able to reflect on the humor of it all.

Castles in the Sand

Homes with docks more valuable than ever

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

You’ve probably read it dozens of times in real estate advertising: “Buy a home for your boat.” Homes with access to a boat dock have always been popular, but like everything else that COVID-19 has influenced, popular doesn’t even come close.

Because of COVID, pleasure boating filled a void left when get-togethers, bars and restaurants were unavailable because of lockdown restrictions. The obvious pastime was outdoor activities, and for all waterfront communities in the country, boating became all the rage.

According to the National Marine Manufacturers Association, boat sales reached a 13-year high in 2020. This is up 12% from the year before, with more than 310,000 powerboats sold in the United States last year. Being able to work remotely made it even more convenient for potential boaters to dive into their new hobby.

Naturally, houses with private boat docks, especially with boat lifts or the capacity to build one, suddenly became even more in demand than before. Properties without actual docks, but which had seawalls or bulkheads and deep water, also became more valuable to buyers with the hope they could build a dock. That said, the ability to build new docks isn’t as easy as it sounds.

If you purchase a home that does not have a dock or worse, a seawall, there is a rigorous permitting process by both state and federal agencies. Construction on marine land falls under the jurisdiction of the U.S. Army Corps of Engineers, but they hand it over to Florida’s Department of Environmental Protection (DEP). It’s an expensive, time-consuming process that makes homes with existing docks that much more valuable.

For example, if you did not have a home with a dock for your 40-foot vessel it would cost anywhere from $25 to $30 a foot per month in a commercial marina. That calculates to $1,000 to $1,200 monthly. If you really want to buy a home for your boat, you can. Boat slips are available for sale in some of the high-end marinas, such as Longboat Key Moorings on Longboat Key. That will run you about $100,000 to $330,000, depending on the location of the slip and the size of the boat.

How much value does a dock with the proper permits add to the value of the home? This is one of the multitudes of waterfront value questions that every real estate professional has struggled with for decades. Putting a value on waterfront property alone is very difficult because of the diversity of waterfront locations in Florida. Adding docks, seawalls and the ability to build is a whole other level of calculating value. As with most real estate, comparing similar properties that have sold is the gold standard. However, finding waterfront property with the right kind of docking is not so easy. And just to throw another wrench in the mix, we have many waterfront condominiums in Manatee County that come with docks.

If condo living appeals to you and you want a dock for your boat this could be an alternative. Make sure you understand the difference between a dock that is deeded to you and a dock that is part of the association’s limited common elements. A deeded dock puts all of the maintenance responsibility on you as the owner; a dock that is a limited common element is maintained by the association.

Buying a home or condo with a boat slip or the ability to construct one requires more than the average amount of due diligence. Do your homework and make your boat happy in its new home.

Castles in the Sand

COVID-19 has changed the meaning of home

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

If it’s true that everything old is new again, we may be living through the real estate version of that idiom. Small cities and small towns sprinkled over the entire United States are having a resurgence in popularity. The COVID-19 experience has brought a new appreciation of small-town living with the help of remote working.

I am mildly obsessed with the Netflix show “The World’s Most Extraordinary Homes,” which I discovered in my dentist’s office while waiting for my new crown to be finished. The show is pure escapism featuring unbelievably expensive homes, some in exotic locations all around the world. But the real estate trend in the United States at this time is not for extraordinary homes but for modest, get-back-to-basics homes in anything but exotic locations.

Smaller cities and regions are turning out to be the big draw for home purchasing. Places like Topeka, Kansas and Decatur, Alabama, where homes would sit on the market, are now experiencing a shortage of inventory similar to the coastal regions outside of major metropolitan areas. This all started with COVID lockdowns and the desire to get out of densely populated areas, but it is now becoming a trend.

Young couples and singles are taking another look at the mid-sized cities and small towns they grew up in and saying this doesn’t look so bad anymore. I can park my car, get a table at a restaurant and get back into a comfort zone with family and old friends.

The only problem is investors are also looking at these areas, snapping up single-family homes and turning them into rentals. Investors are currently representing about a fifth of annual home sales, competing with local buyers and newly-relocated buyers. These smaller regions are experiencing bidding wars just like what we’re finding in coastal Florida.

The Realtor.com Emerging Housing Markets Index compiled in July represents the top 50 metro areas in the country. The top 20 in the index have an average population of just over 300,000, which is less than Manatee County. The index identifies the top metro areas for homebuyers looking for a good appreciating housing market and attractive lifestyle. These areas are ranked according to real estate market data and economic health and an interesting read for the real estate nerds out there, but I’ll just touch on a few of the areas.

First of all, Florida had two regions both represented in the middle of the index and both in the Panhandle – one in Fort Walton and the other in Pensacola. The other 48 regions are spread out all over the country, starting with Billings, Montana as number one and ending with Akron, Ohio at number 50. In between, there are cities like Raleigh, North Carolina, Colorado Springs, Colorado, Yuba City, California and Prescott, Arizona. Home prices in the top 20 markets in the Emerging Home Markets Index have risen 13.7% on average in the past year, per Realtor.com. This is less than the national average but impressive nonetheless. If you are interested in seeing the entire list, you should be able to find it on Realtor.com’s website.

So, is it back to the future? Have we gone from a more complex sophisticated culture to a more down-home 1950s and 1960s vibe? That, of course, remains to be seen. If COVID has changed things that much it wouldn’t necessarily be a bad thing – everything in life can’t be exotic, and I did love The Donna Reed Show.

Castles in the Sand

Are we starting to see a normal market?

Written by Louise Bolger on . Posted in Business, Castles in the Sand, Real estate | Development.

I’m starting to read in national publications that the real estate market is beginning to return to normal with more new listings hitting the market, especially in what is considered the luxury market. Well, if that’s true, no one told the homeowners and homebuyers in Manatee and Sarasota counties.

But could this be a predictor of the future?

According to Realtor.com, nationally new active listings for June were 43% less than June of last year – an improvement from May of this year, when the difference was 60% from May of last year. Those numbers do show a trend in more active listings nationwide. According to Realtor.com, this change is reflected in the new listing prices going down as well in June.

In addition, Realtor.com is reporting that the number of new listings over $1 million jumped 17.5% for the week ended June 19 compared to the same week last year. By comparison, new listings priced under $350,000 were down 7.4% for the same week. Obviously, lower-end homeowners never have the same flexibility that higher-end homeowners do, especially since many of the higher-end properties are second homes.

Real estate analysts are taking the position that more houses are coming on the market particularly for high-end properties. Owners who decided not to list during the worst of the pandemic when it wasn’t practical to list their homes are now ready to move on. Also, even those homeowners who were not thinking about selling are now rethinking their decision when they see the sale prices zooming up. That said, it is still a hot market with very low interest rates for mortgages. However, per the National Association of Realtors, it is no longer a frenzy where the sky’s the limit.

So, do homeowners in Manatee County believe any of this? It sure doesn’t appear that they do. April, May, and June’s new listings are stable at 797, 787 and 784, respectively. Pending numbers are also very close with April at 1,167, May at 1,180 and June at 1,080. And, there is certainly no negative effect on the median selling price at $405,000 for April, $400,000 for May and $405,305 for June.

That said, the last three month’s new listings, pending listings and median single-family sale price appear to be leveling off. Is it buyer fatigue or are we about to see some changes? Florida has seen a large influx of new residents that started before the pandemic but has accelerated since. We are now the third-largest state in population in the country and have attracted many northeastern homeowners and businesses, alike. So, will Florida follow the national trend?

Maybe. A more normal market would be beneficial for everyone. I just don’t think we’re there yet, regardless of what may be happening in other parts of the country. Florida steps to its own drummer and has always surprised the high-end market in what is considered the more sophisticated areas of the country. But those days may be over.

You don’t need to be a prophet to know that you can’t time the stock market and you can’t time the real estate market. If it’s the right time for you to sell for reasons beyond maximizing your profit, then you must do it. If it’s the right time for you to buy, you need to find the best possible property for your family and try and make it work financially. Thankfully, none of us are Nostradamus. Where’s the fun in being him, anyway?

Castles in the Sand

The explosion of the millions

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

As we all know, the real estate market has gone from fundamentally shut down to an unparalleled explosion of demand for housing all over the country, and particularly in Florida. Buyers and real estate professionals are trying to maneuver their way through the maze of historic low inventory and pent-up buyer activity. The result of all this is outsized prices pushing buyers and creating bidding wars.

Recently, buyers have added different strategies to set themselves apart. For instance, cash is king, and if you have it or can borrow it, your offer will put you in the top tier of buyers.

Buyers love non-contingency offers; that means no mortgage as we discussed, but also no home inspection. It’s a good strategy if you’re comfortable with the property, especially if you know something about home construction.

One of the newest strategies out there in this market is an escalation clause in your offer. In order to be competitive, buyers are stipulating that they will top any offer from another buyer up to a certain level. This at least keeps you in the game and gives you an opportunity to improve your offer.

In addition, it’s always important to be flexible, but in this market, it’s essential. Get yourself in a position to change your desired closing date to fit the schedule of the seller as well as accepting any little quirky changes that may come up.

Finally, don’t wait if a new property comes on the market – be prepared to act quickly.

Now let’s look at the million-dollar-and-over market in the three cities on Anna Maria Island and in Cortez. This analysis will cover February, March and April closed sales as reported on the Manatee County Property Appraiser’s website and properties that are currently on the market or pending from realtor.com.

Cortez closed three properties over $1 million; one for $2,250,000, one for $1,215,000 and one for $1,075,000. The last three-month analysis showed two properties over $1 million.

The city of Anna Maria closed 31 properties; one for $4 million, three for $3 million or over, five over $2 million and 22 at $1 million or over. The last analysis showed that Anna Maria closed 41 properties.

The combined cities of Bradenton Beach and Holmes Beach closed 58 properties; two over $4 million, two over $3 million, 10 over $2 million and 44 at $1 million or over. Last time, 39 properties were closed.

Available and pending properties as of this writing are, of course, a blowout again, so here we go: Cortez has a property listed at $4,750,000, the highest I have ever seen for a single-family home, and there is land listed for $1,300,000. The new development, Hunters Point, has seven properties listed from $1,300,000 to $785,000, three of them over $1 million. Last time, Cortez had three.

The city of Anna Maria has 46 properties over $1 million; one over $6 million, two over $5 million, two over $4 million, three over $3 million, 14 over $2 million and 24 over $1 million. The lowest-priced available property in the city is $995,000. Last time Anna Maria had 31 properties available.

Finally, the combined cities of Holmes Beach and Bradenton Beach had 67 properties listed or pending over $1 million; one over $6 million, two over $5 million, two over $4 million, six over $3 million, 20 over $2 million and 36 over $1 million.

I’ve decided that after 15 months of ending my column with “stay safe,” it’s time to put this phrase to bed. Not that we still shouldn’t protect ourselves and our family from COVID-19, I just feel it’s time to be more positive. Besides, we now have a new “stay safe” to contend with –  hurricanes. Here’s hoping we have a safe season.

Castles in the Sand

It’s worth the stretch

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

A very wise real estate broker I was fortunate to meet more than 40 years ago not only got me interested in selling real estate, but also gave me great advice about buying as much house as you can possibly afford. In a fundamental way, it changed my life, pushing me to buy a home I loved but thought I couldn’t afford.

Today’s millennials are facing the same decisions my husband and I made all those years ago. Should we take the leap into homeownership, spending more than we ever thought we would, or should we play it safe?

As difficult as it is for buyers to find a home in this market, if you do find one and it’s over the top of your price point, don’t discard it. My rule of thumb is if a lender thinks you’re qualified, believe them, even if your parents and friends think you’re nuts. Get into the game now and you’re set for the next 30 years and you won’t be at the mercy of landlords.

Generally, lenders are qualifying buyers based on between a quarter and a third of their monthly gross income on the monthly mortgage payment. That range increases to between 35% and 45% of your monthly gross income if you include maintenance, taxes and insurance. Credit scores are still very important in analyzing credit worthiness, so be ready in the event you have anything on your credit report that is incorrect or needs an explanation.

Finally, first-time buyers are frequently short on cash and may opt for a mortgage down payment of less than 20%. If you are considering this, don’t forget that you will be required to pay mortgage insurance, which will cost from $30 to $70 a month for every $100,000 borrowed. This insurance is for the protection of the lender should you default on the loan before there is a sufficient build-up of equity. It will stay in effect until you have paid enough of the principal to equal equity in the amount of 20% of the home’s value. Also, the mortgage insurance payment will count towards your monthly costs and will be included when qualifying for a mortgage.

Historically, mortgage rates are very low and housing costs are very high. But should buyers sit out the market waiting for prices to come down? Good luck with that; the only time home values went down was after the financial crisis, which was generated by risky mortgage lending and exotic mortgage programs, all of which have been corrected through legislation passed after the crisis.

Even if buyers end up with a mortgage payment they are not totally comfortable with, it’s likely they will grow into the payment. As younger buyers establish careers, the anticipation is their income is likely to rise over time, so while you’re stretching to make those early monthly payments, you’re building equity and long-term wealth. Young buyers also should not discount the psychological benefits of owning a home of your own – pride of ownership, family building and becoming part of a community have real-life benefits.

Playing it safe turned out not to be in my playbook, so thank you, June, for confirming what I already knew. As my mother always said, paying rent is throwing money away, another wise woman. Go for the stretch, you 30-year-olds; you’ll look back on it as one of life’s pivotal moments. Stay safe, we’re almost there.