Skip to main content

Tag: Castles in the Sand

Castles in the Sand

Mortgage interest rates lowest since 1971

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

Based on current interest rates, it’s a great time to buy a home, and it’s also a great time to sell a home. At this moment in time, sellers have the upper hand, prices are high, inventory is low and buyers are chomping at the bit to buy while interest rates are historically low.

The mortgage interest rates are so low that as of this writing they’re actually the lowest ever recorded by Freddie Mac since 1971, coming in at 3.23% for a 30-year fixed-rate loan. On Bankrate.com, I found an average rate of 3.01%. Remember that rates fluctuate daily and also depend on a buyer’s creditworthiness as well as the amount of down payment and points applied.

The drop in interest rates started in March and continued in April after the country was shut down because of the coronavirus. In March, the rate was about 4.2%, a full point higher than is typical now. Now the conversation from the financial talking heads is that the rates may stay low forever or at least for the foreseeable future until the country totally recovers from the financial impact of the virus. Needless to say, lenders are overwhelmed with applications, giving them the leverage to pick and choose.

Refinancing has also been strong, with homeowners attempting to lower their monthly rate during difficult times and/or pull cash out to help with expenses or attack those long overdue home improvements.

The problem is the banks are reserving their best rates for homebuyers – not homeowners who want to refinance. To make that situation even worse, Freddie Mac levied a new fee on lenders for most refinancing to protect them from potential losses; remember the 2008 housing bubble. Refinance rates even make a difference if the borrower just wants a straight refinance to lower their monthly payment or wants to pull cash out, which would typically have a higher rate.

Since mortgage interest rates have a direct effect on real estate sales, let’s take a look at the August sales numbers from the Realtor Association of Sarasota and Manatee website.

First of all, both Manatee and Sarasota counties broke another record for the median (half above and half below) sale price of single-family homes; Manatee at $360,000 and Sarasota at $330,000.

Manatee County single-family homes closed 9% more properties than August of last year. As stated, the median sale price was $360,000, which is up 13.6% from last year, and the average sale price was $480,903, 17.7% up from last year. Median time to contract was 30 days; last August it was 42 days. The month’s supply of available properties was 2.1 months; last year it was 3.3 months.

Condo sales were up 54.2%, the median sale price was $223,000, up 8.8% from last year. The average sale price was $261,548, up 4.1% from last year. Time to contract was 46 days; last year it was 50 days. The month’s supply of available properties was 3.3 months; last year it was 3.6 months.

Great numbers for property owners and sellers, but I’m still worried about the lack of inventory here and across the country. Record low interest rates and a change in lifestyle created by the coronavirus has accelerated the demand for properties. In the meantime, we can all enjoy the real estate wave. Stay safe.

Castles in the Sand

COVID can’t ground soaring real estate market

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

Strange doesn’t even come close to describing today’s real estate market. You would think that in the middle of a pandemic, everyone would be afraid to leave their home, much less purchase a new one.

Well, I guess the American people are made of stronger stuff than that because the real estate market is not only alive and well, it’s soaring.

According to the S&P/CoreLogic/Case-Shiller National Home Price Index, the adjusted-for-inflation real home prices rose 45% from February 2012 through May 2020. Not a bad investment if you purchased a home eight years ago. In fact, it’s a remarkable record considering that the United States is dealing with a once-in-a-century coronavirus pandemic, which created a recession and social upheaval.

Florida Realtors also reports an active and appreciating real estate market in our state. No surprise here that during April and May, Florida Realtors reported higher median prices and more pending inventory but fewer closed sales and fewer new listings compared to the second quarter of last year.

Closed sales of single-family homes statewide were down 19.2% from the second quarter of 2019, and condos down 33.9% for the same period. In a typical real estate market, these numbers are a good look into the future, however, this year is an exception with everything related to the virus shifting from week to week. In spite of this, Florida’s home sales are off by less than 2% from last year’s pace as of mid-August when these numbers came out.

Statewide, median sales prices for single-family homes were up 4.7% compared to the second quarter last year, and condo sales were up 6.2% for the same period. Inventory is down 27% statewide compared to last year and the lack of homes will continue to propel prices upward, according to Florida Realtor.

Next week when the August Manatee County sales statistics come out, we’ll have a better idea about what’s happening close to home. In the meantime, let’s see how Cortez and Anna Maria Island are looking relative to million-dollar property closings and availability during May, June and July. Numbers are from realtor.com.

Cortez had six properties listed between $1.2 million and $1.3 million, two more than last time. The City of Anna Maria had had 57 properties listed; last time there were 73 listed. The properties range from one at $6.3 million, three were over $4 million, seven were over $3 million and 12 were over $2 million; the balance was between $2 million and $1 million. The combined cities of Bradenton Beach and Holmes Beach listed 75 properties for sale; last time there were 69. There were four over $4 million, three over $3 million, 22 over $2 million and the balance between $2 million and $1 million.

Sales in these areas have certainly recovered but are still slightly off. The sales numbers come from the Manatee County Property Appraiser’s website. Cortez did not have any closings over $1 million, the same as last time. The City of Anna Maria had 28 sales over $1 million; last time they had four. Prices ranged from a high of $5.4 million to a low of $1,025,000. There were two sales over $3 million but most of the sales were between $2 million and $1 million. The combined cities of Bradenton Beach and Holmes Beach had 19 sales over $1 million; last time they had five. There was one sale over $4 million and one sale over $3 million; the balance started in the low $2 million to the low $1 million range.

For certain, we are a strong optimistic people as reflected in the growing economy and growing real estate market. Stick with it and stay safe.

Castles in the Sand

To disclose or not to disclose

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

Since there are no perfect houses, when it comes time to sell your imperfect home, just how honest do you have to be about its defects?

Basically, you should disclose anything that might affect a buyer’s decision to buy the property or anything that might influence the buyer’s offer. To accomplish this, pretend you’re the buyer of your own home.

If you list your home with a Florida Realtor, they will likely provide you with a Seller’s Property Disclosure form created by the Florida Realtors Association. While a Seller’s Property Disclosure form is not required under Florida law, the state still requires sellers and their Realtors to disclose any significant property defects that may not be easily visible to the buyer.  If this sounds like a conflict, it’s really not. The form just provides the avenue whereby sellers can be reminded to provide the best information to a buyer that will protect them and provide a good faith and accurate disclosure to the buyer.

Some of the items the disclosure form will address are:

  • Structures, systems and appliances being in working and in sound condition, and whether the home contains aluminum wiring,
  • Termites, other wood-destroying organisms and pests relative to current activity, past treatment and damage,
  • Flooding, drainage, mold, or water intrusion issues,
  • Plumbing leaks, septic systems and wells, if applicable, relative to condition and potable water,
  • Roof soundness, leaks, age, repairs you’re aware of and any other roof defects,
  • Pool and hot tub condition and safety features,
  • Any knowledge of sinkholes,
  • Full disclosure of homeowner’s association restrictions and financial records,
  • Lead-based paint and radon gas, if present,
  • Government claims and litigation against the property, zoning violations or nonconforming use of the property.

Don’t put yourself in a position where a buyer can use anything against you down the road. In our area, the most significant areas of litigation pertain to water penetration and flooding. These are easy areas for a buyer to verify, so don’t fib. That said, you are only obligated to disclose what you know even if it’s something the buyer can’t see.

Is there anything that doesn’t have to be disclosed?

You don’t have to disclose the reason you are selling, and neither should your broker. This includes if you totally hate your next-door neighbor as long as the neighbor is not generally considered a nuisance except to you. You don’t have to disclose if someone passed away in the house and you definitely don’t have to disclose that your house is haunted even if you think it is.

So, put your buyer shoes on before you advise the seller or their broker about condition or fill out a disclosure form. Remember, Florida law requires a seller of a home to disclose to the buyer all known facts that materially affect the value of the property that are not readily observable or known by the buyer. Be as straightforward as you can be, and stay safe.

Castles in the Sand

Everyone needs a change – even in paradise

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

Are you starting to feel like you’re in prison? Granted it’s a really nice prison and you’re enjoying the views, but since you haven’t left recently, even the beach gets redundant. Welcome to what I’ve started calling “Prison in Paradise.”

Staying home for so many months either because of schooling or job or just plain not being able to travel has made everyone start noticing the things in your home you wanted to change. This has driven the home improvement frenzy we’re experiencing. Home Depot, Lowe’s and other home improvement stores were deemed essential services during the lockdowns in many states and allowed to remain open. In fact, Home Depot has been running an increase of at least 35% of its business from last year since April.

Americans stuck at home without much to do have started painting, building, fixing and decorating, long overdue home improvements. Government stimulus checks and stay-at-home meals have put some extra money in the pockets of many people and they are putting it to good use, especially if they’re thinking about selling.

Curb appeal is an old real estate adage that never loses its importance and this is a good place to start. There are buyers who won’t get out of their car if they see something they don’t like and it can be something very minor like a broken flowerpot or walkways in need of repair. Little things like doorknobs that are loose or worn, peeling paint or rotting wood around doors and windows send the wrong message.

We live on an island. Paint your front door with a bold hue, reminding buyers you live on the coast. Add a colorful piece of furniture to cozy up the entry and add plants or replace the ones that are starting to get tired. Lighting outside is also important, so a few walkway lights highlighting your manicured lawn will start to make a difference going into the winter months when sunset comes early.

Whenever I talk about getting your home ready for sale, I always mention clean windows. It may seem like a logical and little thing, but believe me, if you live on or near the water, clean windows are a constant challenge and one you need to be especially vigilant of when selling.

The other thing I always talk about is removing objects from your home. Clean off countertops in both kitchen and bathrooms. It’s nice to have some family photos, but walls and walls and tables covered with them are only a distraction to potential buyers. Same with any collections you have displayed on shelves or bookcases. The less stuff you have, the larger your living space will appear. Turn the lights on, open the window coverings and illuminate any dark corners.

This sprucing up comes at an opportune time for Anna Maria and the coastal communities of Manatee County. Typically, homeowners who may be thinking about placing their property on the market would be getting ready to work on their punch list before selling. Now, however, many of the jobs are already done and even though the summer market has been really good, we can anticipate that the fall and winter market will be even better.

Think of your home as purchasing a really elegant dress and then adding shabby, worn shoes. Peeling paint, dead plants and broken walkways are the shabby shoes of your home. Keep painting and stay safe.

Castles in the Sand

Real estate sales reaching lofty heights

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

The above-the-fold headline in a national newspaper a couple of weeks ago said this: “Home sales reach lofty heights.” My real estate heart started fluttering even before I read the first sentence, and by the time I was done, I was swooning.

As it turned out, my flutter was well-deserved and somewhat understated. According to the National Associations of Realtors, existing home sales rose 24.7% in July from a month before; just to be clear, that’s one month. The annual increase in sales from July of last year increased 8.7%. The last time sales activity was this high was in December of 2006.

These are spectacular numbers nationally, leading Lawrence Yun, the National Association of Realtor’s (NAR) chief economist, to say, “the housing market is actually past the recovery phase and is now in a booming stage.” A strong housing market is always a positive sign for the economy; home purchases lead to increased spending across the board on furniture, appliances, renovations and landscaping.

How is all this possible? We’re still in the middle of a pandemic. Millions of people are out of work, it’s summer and it’s an active hurricane season. The answer in part appears to be that Americans are totally rethinking where and how they live and they are not wasting any time looking for a change in lifestyle. According to a survey by realtor.com, about 40% of home buyers are looking to buy soon and are not waiting for the virus to slow down.

Everyone wants a reboot after being stuck at home for five months watching the walls closing in. Condominium owners want single-family homes and single-family homeowners want larger and more spread out property. City dwellers want the suburbs or country living and everyone wants to change the negative features in their homes that they may have just noticed. This activity is not only affecting the resale market but the new home market, which represents about 10% of the real estate market, is also roaring back.

And speaking of spectacular, Manatee County’s sales numbers for July are right up there with the national numbers.

There was a 26.7% increase in the sale of single-family homes from July of last year to this year. The median (half above, half below) price of single-family homes was $358,963, a 10.5% increase from last year. It should be noted that the national median home price for July was $304,100 – a record high.

The single-family average sale price was $476,011, an increase of 21.7%, with a median time to contract of only 37 days. Pending inventory was up 25.7%, and we’re still suffering from a serious lack of inventory down to only 2.3 months available properties.

Condos closed 16.5% more units in July over last year and the median sales price was $220,000, up 15.2%. The average condo sale price was $270,527 up 24.9% from last year and the median time to contract was 64 days. Pending inventory is up 42% and the month’s supply of available properties is 3.6%.

Another interesting turn is that nationally, first-time buyers accounted for 34% of sales in July per the NAR. Many of these first-time buyers are millennials who are being motivated by the virus to get off the sidelines, start families and adjust their lifestyles. This is a surprise to me but it’s true, a lot of young people are working remotely, still getting paid and for some reason don’t want to let the virus dictate their future. Good for them.

Well, now that my heart’s rhythm is back to normal, I can stop worrying about the real estate market for a while and concentrate on COVID and hurricanes; there is always something. Stay safe.

Castles in the Sand

Buy a yard for your Zoom

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

If you look at a lot of waterfront advertising, you see a commonly used phrase – “buy your boat a home.” Now with COVID-19 influencing almost everything in our lives, pretty soon you’re likely to see this phrase, “buy a yard for your Zoom.”

There has been a lot of chatter, including in this space, about the trend of big-city dwellers giving up their small expensive apartments and hitting the trail for the suburbs or moving out of state. Now that owning a single-family home is back in vogue, it’s also realigning itself as one of your top assets.

Since the 2008 financial crisis burst the housing bubble, it’s taken a long time for housing values to return as well as housing preference to return for younger generations. It took COVID-19 to bring both those aspects of the housing market back into play, pushing up values as a new generation is looking at single-family homeownership as an appreciable asset and a more comfortable form of shelter.

The COVID-19 housing bubble that some economists are worried about is different, however, than the one that built up before 2008. This one is driven by the need for more working space to accommodate working and learning remotely for now and for many going well into the future, in addition to recognizing the personal liabilities of living shoulder to shoulder with strangers and the ability to expand geographically where you live and where you work.

The housing bubble prior to 2008 was based strictly on making good investments and turning a quick profit. Homeowners used their homes as cash registers, maxing out their equity, and investors bought up new construction and resales with an eye to flipping for profit – not a place to live. This housing expansion has firmer legs as buyers are literally changing not only their residences but their lifestyles.

Because of this trend, buyers have a different list of wants for their homes, per a survey done by Redfin. The top item they’re looking for is space to work from home and space for children to learn from home, generally a larger home in all areas. They also want more recreational space and a yard, and if they’re giving up their city life they want to pay less. All of this change comes with a more workable floor plan, which now includes gathering areas for the family who may all be working individually in their respective spaces.

Summing up Redfin’s survey of home buyers, 21% of buyers want space to work from home, another 21% said they want more outdoor space and 7% said they want a place for children to learn from home. This is substantially different from the formal dining rooms and living rooms from the past that were ornamental rather than functional.

The real estate market will continue to shift until this virus is beaten, but it will leave radical changes to the market. Right now, sales are way up, inventory is way down and mortgage rates are ridiculously low. We do risk future foreclosures for some homeowners who can’t get on their feet after the virus is gone but there is little doubt the remaining real estate market will look different.

So, if you’re doing a lot of Zoom meetings, kick it up a notch and buy a home with a nice yard as your background, it may also turn out to be your best financial asset. Stay safe.

Castles in the Sand

When the news is good, be happy

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

The news hasn’t been that great recently, but the one bright spot is the country’s housing market. Likewise, Manatee County’s housing market is shining almost as bright as the afternoon westerly sun, so let’s enjoy it while we have it.

According to Lawrence Yun, chief economist for the National Associations of Realtors (NAR), “the housing market is hot, red hot.” The NRA reported sales of previously-owned homes rose 20.7% in June over the prior month, the biggest monthly increase on record going back to 1968 – another first during these harrowing times.

In addition to soaring existing home sales, there are rising new home sales and an increasing amount of homebuilder activity. Much of this is being generated by the record low mortgage rates and a flood of mortgage applications. Young families are finally breaking out, looking for more space, taking another look at the advantages of living in the suburbs, and the wealthy are looking for second homes away from the chaos of the cities.

Also, according to the National Association of Realtors, the regions with the most activity were the west and the south, with the northeast having the least amount of activity. The most popular price point with the most increased sales nationally was between $250,000 to $500,000. Although Anna Maria Island’s price points are generally higher, Manatee County’s fits right in there also with strong sales numbers for June, as follows:

Closed sales of single-family homes in June increased 7.2% from June of last year, but the really interesting number is that Manatee County closed 668 single-family homes in June 2020 compared to May 2020 at 445 closings. The median sale price was $325,000 this June compared to $315,000 last June, 3.2% more. The average sale price for June was $419,373 compared to June last year of $397,987, a 5.4% increase.

Condo closings are also up 2.5% from June of last year. The June 2020 closings number is 250 compared to May 2020 of 150, again a tremendous increase. The median sale price was up 7.7% to $214,230 from June of last year and the average sale price was up 1% from June of last year to $238,556.

It appears that Manatee County is substantially gaining ground over both last year and last month, certainly the right direction if we can keep it up. However, the problem that plagues us is the availability of properties, which is down for both single-family and condos. Single-family month’s supply of inventory for June 2020 was only 2.6 months, down 27.8% from June 2019, which was already at a low point. Condos are down to a 3.8 months availability rate, down 7.3% from last year. A six-month’s supply of available homes has always been the optimum number to strive for.

Home sales numbers are a lagging statistic since properties generally go into contract a month or two before closing. Therefore, June’s numbers are probably a reflection of sales in April and May while most states were still locked down. That said, increasing home sales could have an enormous effect on the economy as a whole since the housing market typically accounts for between 15% and 18% of the U.S. economy. Construction of new homes, furnishings and renovations could play a big role in adding jobs and money to the economy.

Will this jump in home sales last? We can only hope the sun continues to shine on our little corner of the world, but for now, just be happy. Stay safe.

Castles in the Sand

Are historic low interest rates a good thing?

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

I really hate to use this much-overused opening line from A Tale of Two Cities, but it works and I have no shame. “It was the best of times, it was the worst of times” perfectly describes the residential real estate mortgage market we find ourselves in as another by-product of the coronavirus pandemic.

It’s the best of times for individuals who have the ability to purchase homes since the rate for 30-year conventional home mortgages has fallen to the lowest point on record. In a year that already has massive “firsts” here’s another. About two weeks ago the average rate on a 30-year fixed-rate mortgage fell to 2.98%, per Freddie Mac. Rates are at the lowest level in almost 50 years of record keeping. This was the third consecutive week and the seventh time this year that rates on these loans have fallen.

At the beginning of the year before the pandemic hit, the 30-year mortgage was about 3.72%, an extremely good rate. Those of us who remember the early 1980s may remember a high of 18% residential home mortgage rates, an unthinkable number now. In addition, Jumbo loans, those typically larger than $510,400, are around 3.77% in most markets. However, lenders have placed more restrictions on these non-government-backed loans, considered to be risky compared to loans backed by Fannie Mae and Freddie Mac.

So why is this happening and why may it be considered “the worst of times?” Mortgage rates are influenced by the 10-year Treasury note since they compete for the same type of investor interested in stability. Because we’re in a very volatile financial time, investors are looking to protect their assets by buying long-term Treasury bonds, narrowing the gap between bonds and mortgage rates. Therefore, mortgage rates dropping like a rock may not be as great as it sounds for the economic health of the country.

Again, if you have the capacity to purchase at this time, the mortgage rates are fabulous. However, you will still have a rocky road ahead because of the lack of available inventory and increasing asking prices. Although mortgage applications were up 17% in June from a year earlier, according to the Mortgage Bankers Association, prices have also accelerated nationally by 4.7% from last June; at the same time the number of homes on the market fell 27.4% per Realtor.com. Some of this can be offset by the lower mortgage rates allowing buyers to qualify for a larger mortgage.

Overall, historically low interest rates may look like a good thing, but it can actually be an indicator that the real estate and financial markets are functioning at borderline crisis levels. Also, home purchasing is out of the question for many Americans who have lost their jobs and may not return for years. Even those who can afford to purchase may shy away from making a life-changing commitment during such unpredictable times.

In spite of everything I just said, Anna Maria Island is a specialized region and hopefully somewhat immune to big national swings. Real estate decisions always have to be viewed through the lens of the future, and unfortunately right now the immediate future is hard to predict. Best of times, worst of times, certainly difficult times. Stay safe.

Castles in the Sand

Perspective on the real estate market

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

There’s no getting around it; what we’re living through is one for the history books. When we finally come to the end of the dark tunnel called COVID, there will be changes to our lifestyle in ways we never imagined. The real estate market is changing too, and one of the leading voices on real estate in the country recently gave an interview that I was fortunate to see.

You might know Barbara Corcoran from the popular TV show, “Shark Tank,” but before she was known nationally, Corcoran started and ran one of the best high-end real estate companies in New York City, The Hamptons and Southeast Florida. Her story of creating Corcoran in the early 1970s is a master class in becoming an entrepreneur through hard work and natural ability; that’s why when Barbara Corcoran talks about real estate, we should all pay attention.

When asked about the future of homeownership in America and how the pandemic will change that, she was very clear – it won’t. Homeownership is the lifeblood of our economy and personal lives; it is essential for communities to thrive and support education and is the primary way for average Americans to build equity and fund retirement. She also thinks that Realtors will not be phased out and replaced exclusively by online business since real estate sales is still dependent on human-to-human contact.

She went on to say that all residential real estate purchases have an element of emotion, and with what is going on now, the emotions are building to an even higher level. After being locked down for months, homeowners are starting to see flaws in their homes they never noticed before, whether it’s the workable flow of the home, the age of the home or the size of the home. This is resulting in homeowners looking for a change they never knew they wanted.

As I’ve stated since the pandemic began, there is a shortage of inventory and what looks to be a national trend of increasing values with the exception of some of the big cities. Some of this activity may be fueled by this feeling of change that families are looking for, resulting in a robust real estate market, surprising many economists.

Her analysis of the commercial real estate market, particularly in big cities, is not quite so positive. In fact, she states that the combination of employees working from home and the high cost of living and working in big cities is making employers rethink the level of office space they actually need. We already have seen several big companies and government workers being offered the ability to permanently work from home and we can anticipate this to continue.

Again, this can only be good news for the state of Florida. As we have recently seen, there is a large number of out-of-state people looking to relocate permanently to Florida or at least purchase properties here, escaping large congested cities. When Barbara Corcoran was asked a question about Florida real estate on the east coast, she said since the east coast of Florida is almost built out, the inevitable result will be prices increasing. All you need to do is take a look around Manatee County and all the new construction going up or in the planning stages to understand this is an ongoing trend on our coast as well.

Finally, since she is a New Yorker and is bullish on the city, she does think it will eventually return – museums, restaurants and the arts will always entice people. I hope she’s right and I hope that New York City’s future attracts more permanent residents than tourists; we already have enough of that right here. Stay safe.

Castles in the Sand

COVID-19 hitting the credit market

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

Just when you need credit the most it’s becoming more elusive. Americans have always depended on the equity in their homes as a slush fund for an emergency or big-ticket items like tuitions and home repairs. But now, with millions of us out of work, tapping a home’s equity may not be an option.

A few weeks ago, we talked about maintaining a good credit score during these difficult times. As part of the stimulus package, credit cards, auto loans and mortgage loans can take a pause in payments to give consumers some time to get through the pandemic and back to work. The law says lenders that allow borrowers to defer payments can’t report this information to the credit-reporting companies, however, these delays are still having an impact on the credit market in general.

Bankers and lenders are having a difficult time determining who among loan applicants actually has good credit, assuming that not all of the information is being reported. Therefore, they are approving fewer forms of consumer debt. In particular, home-equity lines of credit are being pulled back by lenders just at the time when Americans may be looking for emergency money.

Lenders are trying to protect themselves from the big losses they experienced during the 2008 financial crisis when the real estate market took a dramatic downturn. If you remember, that was when homeowners were using their home’s equity like an ATM machine, and when the crisis hit, the value of the home was underwater and many were foreclosed, leaving the banks and the American taxpayers holding the bag.

Helocs, basically a credit line, and home equity loans are becoming harder to come by as lenders tighten up their application process because of job loss and the potential of home values falling. People who have lost their jobs may no longer qualify, in addition to the difficulty of performing appraisals during the pandemic. Lenders are also raising the credit scores they are willing to accept and/or decreasing the amount of money they’re willing to loan.

Even personal loans, which were always available with shorter repayment terms and higher interest rates, are tumbling. According to Equifax, there were an estimated 79,000 personal loans completed in mid-May compared with 226,000 in mid-March. In addition, new auto loans and leases as well as new credit cards were all down substantially.

With the economy in total confusion, lenders can’t tell if a borrower who has opted to take a deferment of their loan is doing so because of lost income or if they’re simply taking advantage of relief options. Naturally, lenders are taking a very conservative approach to making loans, another reason why consumers should not take a pause on any of their credit cards, auto loans and certainly not their mortgages if they can afford to pay during these times. This action could catch up with them down the road no matter what the federal government’s intention was.

Meanwhile, housing inventory all around the country is dropping, falling 19.7% at the end of April, and the shortage of available properties will surely increase. Of course, the result is home prices moving up – 4.7% at the end of April – since those who can afford to purchase even during these times are looking at historic low interest rates and are taking advantage.

Like many other national disasters we’ve faced, this too shall pass, but not without a lot of financial damage to business and individuals. When the lenders start getting in gear again, they’ll be looking for customers so hopefully homeowners can hang on until then. Stay safe.

Castles in the Sand

Add one more problem to the list

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

I was at lunch recently with friends and we talked about new vocabulary words that may come out of the pandemic, like covid brain, covid dining and covid social distancing. Real estate has always had its own set of buzz words, so it’s likely that covid will add several more. How about covid-renovated homes, covid-sized, covid-ready furniture, covid home office, covid learning labs – well, you get the picture.

Unfortunately, about a week ago the Miami Herald published an extensive article about what may be Florida’s newest covid word: “covid wind insurance.”

The Herald didn’t actually call the increase in wind insurance in our state “covid,” but we might as well blame it on the virus since I’m sure there has to be a connection, like the high unemployment rate. According to the Miami Herald, home insurance is getting a lot more expensive in the state, which already has the highest property insurance rates in the country.

The reason for this is the increased premiums in reinsurance. Reinsurance is insurance for insurers or stop-loss insurance. It acts as a buffer for insurers to transfer portions of their risk to other parties. The object is to keep the insurance companies afloat and guarantee there is enough cash to pay claims in the event of a devasting storm with multiple losses.

This year, reinsurance premiums rose by an estimated 26%, the highest since 2005 when Florida experienced back-to-back hurricanes. It frequently takes years to determine the real cost of claims after a storm. For example, Hurricane Irma’s initial estimate of damage in 2017 was around $9 billion, a figure that experts predicted was manageable. However, that initial dollar amount has risen to $17 billion in just three years. Reinsurers also point to the increase in lawsuits and the resulting legal bills for insurance companies pushing up the premiums.

One of the major worries here, in addition to the financial aspect, is homeowners with no mortgages on their property dropping coverage. Lenders require adequate insurance coverage on any properties they hold the mortgage on as a condition of granting the mortgage, but homeowners without mortgages frequently assume the risk of not insuring.

Insurers are already dropping South Florida clients, stating the cost is prohibitive for them to do business. This will increase the number of properties being insured by Citizens, the state-owned insurer of last resort. Obviously, this is bad news for the entire state since all Florida residents will be on the hook to make up any shortfall in funds as a result of a major storm. Florida does have a large pot of money known as the Florida Hurricane Catastrophe Fund to fall back on, but adding private insurers is the better way.

There is one way to help mitigate hurricane damage to your residence – build a round home. Round home construction is aerodynamic and in theory prevents wind from building up enough pressure on any one side, avoiding a structural failure. The roof is also constructed with an optimal pitch, deflecting winds and reducing lift. If you’re interested, check out Deltec Homes, an Asheville, NC company that is building these homes along the Atlantic coast.

So, let’s see, we have a pandemic, soaring infection rates in Florida, a busier-than-average hurricane season and now, of course, insurance rates are going up. Part of this is the price we pay for living in paradise and part of it is our covid cross to bear. Stay safe.

Castles in the Sand

There’s almost never a free ride

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

If it sounds too good to be true, watch out. The coronavirus has caused many homeowners to lose jobs or take substantial cuts in income as the economy of the country shrinks. Government programs have helped, but not without consequences for homeowners and banking institutions.

The federal government has mandated that lenders give a break to consumers on some of their outstanding loans including mortgage loans, auto loans, credit cards and private student loans. Federal student loan payments are automatically suspended under the laws passed in late March.

Part of the problem with these pauses in required payments is that it can still negatively impact your credit score even though the law was written with the intention that this doesn’t happen. But as we know, there is no simple black and white when it comes to laws written in Congress, especially during such a complicated time.

For instance, if your mortgage was current when you received payment relief, chances are your credit rating will not be dinged, however, if you were experiencing late payments or skipped payments prior to the pause you will probably see your credit rating go down. Same with other types of loans since credit reports reflect anything that is not consistent in your credit history no matter what was indicated in the law. Also, you can assume there will be plenty of errors made to credit reporting companies during this time so when the dust settles, review your credit report and advise the appropriate credit reporting company of discrepancies.

A recent piece of good news extended the moratorium on evictions and foreclosures to Aug. 31 from June 30 for single-family and condo mortgages backed by Fannie Mae or Freddie Mac. However, like everything else financially-related during this time, some of these homeowners may unfortunately be putting off the inevitable as well as creating a problem for financial institutions down the road.

Manatee County’s May sales transactions as reported by the Realtor Association of Sarasota and Manatee are another mixed bag compared to last May, but here they are:

Single-family homes closed 38.7% fewer properties from last year. The median sale price was $325,000, up 1.6%, average selling price was $409,038, up 5.2%. The median time to sell was down 22% to 84 days, new pending sales were up 10.9% and new listings were down 11.7%. Month’s supply of available properties was down to 3 months, up 21.1%.

Condos closed 49.2% fewer properties compared to last May. The median sale price was $229,950, up 9.5%, average sale price was $261,466, up 6.1%. The median time to sell was down 10.3% to 96 days. New pending sales were down 8%, new listings were up 7.8% and month’s supply of available properties was up 4.8% to 4.4 months.

Overall better than I expected, but we’re still in an adjustment period with sales numbers lagging from before the shutdown. A lack of inventory continues to be the biggest problem for our market.

It’s hard to say what June is going to bring us, but Florida, in spite of higher infection rates, is starting to dig out of their financial hole at a good pace. The unemployment rate is down to 12.9%, slightly better than the national rate of 13.3%, and better than many other states.

However, the Federal Reserve reported that household net worth fell by 5.6% in the first quarter from the previous three months. Net worth includes home equity and investments, both of which have a direct impact on a buyer’s ability to purchase homes.

Have a happy July 4th, good luck in your search for fireworks, and as always, stay safe.

Castles in the Sand

How things have changed

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

Change seems to be the word that I’m most using these days, and rightfully so since within the span of three short months our lives have completely been turned upside down. For real estate, the changes have been staggering and many will be permanent, including everything from the way we purchase homes to the way homes are designed.

The virus has turned our lives into a virtual world; many work from home, go to school virtually and as it turns out, buy homes virtually. The traditional home viewing system is starting to be a thing of the past, just like reading real books and reading virtual books; some people still need to hold that book in their hands and others think it’s a waste of time. Since buying a home is generally the largest investment of most people’s lives, the virtual technology is being approached carefully. It may not be the right fit for first-time buyers who don’t have the homeowning experience to understand everything they’re looking at, but if you’re familiar with the area and don’t have the time or inclination to travel, it may be a godsend.

According to the National Association of Realtors, last year only 3.5% of buyers purchased a home without viewing it in person. But a survey done the last week of April by the NAR found that 31% of agents had at least one sight-unseen sale. As the technology moves along and becomes more user friendly and specific, more and more buyers are becoming comfortable with the idea of a virtual purchase. Among other new devices, there are virtual reality goggles being made available to buyers, a Marco Polo video app for virtual walk-throughs in addition to traditional pictures and videos. Even home inspectors are videotaping their inspections, giving the buyer a permanent record of the inspection with the ability to review it several times.

Another real estate by-product of the shutdown is the desire for less open floor plans. Remember how everyone wanted an open floor plan to bring the family together in one place, well maybe now there has been too much togetherness. After months of trying to carve out their own work and entertainment areas, families are renovating or building with an eye towards a private space for family members and a smaller family gathering location at the end of the day.

Kitchens in particular are important to families now more than ever since most meals are being cooked at home, requiring more storage and appliances, and this may be more than just a COVID necessity which will be phased out. Families are starting to see the benefits of gathering together for a real family dinner each night that’s more than just takeout pizza once a week.

Homeowners with the ability and funds are also building separate structures or additions to their homes for the permanent at-home workspace they anticipate for the future. Since right now we don’t know how or when schools and colleges will begin normal classes, having a study area separate from the living area of the home may be more of a necessity than a luxury in the future. And apartment dwellers are also trying to create hidden storage areas where they can hide their electronic devices when not in use, assuming their current arrangement may not be temporary.

Upside down is somewhat of an understatement considering what we’ve been living through. I’m convinced that when we look back at this year, we’ll see how virtual home purchasing and home redesign are two of the major changes to real estate that come out of this crisis. I hope the family dinner aspect sticks too; a lot of us grew up that way and it was a good thing. Stay safe.

Castles in the Sand

Million-dollar surprises

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

The last time I wrote my million-dollar update published on March 18, we had no idea what a challenge the next months would be. I ended this column with the wish that the next three months wouldn’t have too many surprises, and here we are – one startling surprise after another.

A lot has happened since mid-March, and as reported, the April Manatee County sales statistics were down in all areas, but the sales prices were up, reflecting many sales that were under contract prior to mid-March. When the May sales statistics are posted later in the month, we’ll likely see more of the same.

However, based on a survey of more than 300 homebuilders, the sales of newly-built homes went up 21% in May from a year earlier. Economists are saying this survey offers a potential look at the sales activity yet to come around the country after the decline in March and April.

In addition, the Mortgage Bankers Association reported mortgage applications for home purchases at the end of May rose for the seventh straight week, up 17% from last year. The speculation is that buyers who may have been thinking of buying next year are moving up their agenda. Part of this is concern about another surge in the coronavirus and buyers’ desire to move out of states or cities where the most infections were. The fear of being quarantined again is motivating buyers to get out of Dodge now and not wait for the other shoe to drop. Not surprisingly, sales were strongest in Florida, up 59% from a year ago, and down in the northeast and California.

Complicating things are rioting in major cities around the country, driving homeowners to consider relocating to safer regions, and the rise of remote working. The rioting will hopefully stop, but the emergence of remote working is probably here to stay.

Major national companies like Facebook anticipate 50% of the workforce will be working remotely within five to 10 years. Even major banking operations have indicated that although they may retain a presence in major cities, remote working is in the best interest of both them and their employees.

What does this mean to the housing market going forward? At the very least there will be a major change in how workers live and work, or as the Zillow chief executive phrased it, “the great reshuffling.”

Let’s see what the upper end of our real estate market has produced in February, March and April. The closed sales are from the Manatee County Property Appraiser’s office and the available properties are from realtor.com as of this writing.

On the market in Cortez, there are four properties listed between $1,299,000 and $1,300,000, the same as the last analysis. The city of Anna Maria has 73 properties listed over $1 million; the last analysis had 63. There is one listed over $6 million, three listed over $4 million, eight listed over $3 million and the balance between $2 million and $1 million. The combined cities of Holmes Beach and Bradenton Beach have 69 properties listed; the last analysis had 93 listed. They range from one over $7 million to two over $5 million, three over $4 million and four over $3 million. The balance is between $2 million and $1 million.

As you can imagine, sales are way off. Cortez had no sales over $1 million, same as last time. The city of Anna Maria had four, all under $2 million; the last time they had 16. And Holmes Beach and Bradenton Beach had five, also all under $2 million; the last time they had 24.

Remember, real estate sales are always a lagging number and half of what we’re looking at was prior to shutdown and half during shutdown. I’m positive things will look better next time. Stay well.

Castles in the Sand

It’s June – do you know what that means?

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

Here we are again – the official beginning of hurricane season. But as every Floridian knows, hurricane season is a moving target, as are hurricanes. One week you’re basking in the glow of sunshine and warm Gulf waters and the next week you’re putting up storm shutters and buying mechanical can openers. Nevertheless, it is what it is and we must not only prepare for winds and lack of electricity but also floods.

The definition of a flood is an excess of water on land that is normally dry. These are scary words for those of us who look out our windows and see water or know that one block in either direction you’ll find it. This is why even homeowners who are not that close to the water need to know what flood zone they’re in, so here is an overview of flood zones dictated by the Federal Emergency Management Agency (FEMA):

  • Zone A (blue) – special flood hazard area that is high risk for flooding and typically requires flood insurance. Does not have a base flood elevation established.
  • Zone AE (lavender) – special flood hazard area that is high risk for flooding and typically requires flood insurance. Does have a base flood elevation established.
  • VE (green) – special flood hazard area that is high risk for flooding and typically requires flood insurance.
  • X (no color) – low risk area that does not typically require flood insurance.
  • 500 Year Flood Zone, X (shaded) – moderate risk area that does not typically require flood insurance.
  • D (shaded) – possible but unknown risk. Flood insurance should not be required.

Rest assured that anything on Anna Maria Island or in waterfront areas of Cortez are in Zone A with a high risk of flooding. These properties will require flood insurance by lenders for properties that have a mortgage.

If you’re not sure what your flood zone is, look at the mymanatee.org website and you’ll find an interactive map of flood zones where you can simply put in your address and it will tell you exactly what your flood zone is outlined in the corresponding color. You will also be able to access the elevation certificate for your area if available.

Flood insurance is purchased through the National Flood Insurance Program and has historically offered subsidized rates. In more recent years, the Biggert-Waters Flood Insurance Reform Act changed many aspects of program eligibility, including non-primary structures. Your rates and eligibility for insurance should be carefully reviewed with an insurance broker authorized to sell policies through the National Flood Insurance Program.

Here again, mymanatee.org is a wealth of information about all aspects of flood insurance, answering many questions you may have. In addition, you can obtain a booklet from FEMA that outlines in detail what flood insurance covers, including condo flood policies.

Maybe future generations won’t have to worry as much about flood-prone areas. There are creative developers in different parts of the world who are designing hotels, homes and office buildings that float. In flood-prone cities like Miami, this could be a potential solution. Rotterdam is already building a 54,000-square-foot floating office building and a developer in the Persian Gulf has plans for 16 hotels, all floating. Think of the possibilities.

The day I was writing this column I received in the mail Manatee County’s “Flood Hazard Area Guide,” sent to all homeowners who live in properties that are located in or near a special flood hazard area. It’s a nice little tri-fold brochure which everyone should keep with other hurricane and evacuation material that I hope you all have ready in the event of a storm.

I guess the only thing good about hurricane season is that it takes our mind off coronavirus for a while, you think? Stay safe.