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Castles in the Sand

Does anyone have a clue what’s going on?

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

Just like the coronavirus predictions about numbers of infections and deaths have been off the mark, so too are the predictions about the future real estate market. There are a whole range of conflicting opinions out there, all from reputable sources saying exactly the opposite things; what’s a girl to do?

So far, in spite of the shrinking economy and evaporating jobs, in the housing market values are stabilized and, in some regions, even higher. This of course has to do with the classic supply and demand dynamic that we’ve been experiencing for a long time, only now supply is contracting even faster.

The National Association of Realtors (NAR) reported that the March median home price nationally rose 8% from March of 2019. Manatee County’s March median sale price was also up by 2.4%. They also reported that buyer demand fell 8.5% nationally for March compared to last year but at the same time, supply is at a five-year low.

The NAR says homeowners are waiting to list their homes either because they have decided not to move, or they are worried about letting buyers into their homes during the pandemic. Many homeowners say that until the lockdowns are lifted, they will just take a “wait and see” attitude to selling. In addition, homes that are currently on the market are not cutting prices. According to Realtor.com, by the end of last month, only 4% of sellers cut their prices, indicating buyers haven’t viewed their homes in person. Nevertheless, buyers are out there still looking for a bargain and could possibly trip on a situation where homeowners absolutely need to sell because of coronavirus fallout.

Mortgage applications were also down by 20% at the end of April compared to a year earlier. The fear here is that down the road, values could drop when the forbearance period ends, and homeowners cannot keep up with the payments.

The way it stands now is some economists expect home sales to crash this year while some say prices and sales will climb slightly or hold flat. Fannie May said in April that it expects the median existing home price to tick up to $275,000 this year from $272,000 last year while CoreLogic calls for a nationwide home price increase of 0.5%. Zillow says home prices are likely to drop 2% to 3% compared to last year. The more you read about these predictions the more you realize no one really knows.

Let’s look at the April sales numbers in Manatee County reported by the Realtor Association of Sarasota and Manatee comparing April of this year to April of last year.

Single-family closings for this April compared to last year were down 21.2%. Median sale price was $340,000, up 7.9%, and average sale price was $406,699, up 4.1%. New pending sales were down 36.7% and months supply of available properties was 3.3 months, down 17.5%.

Condo closings were down 30.9%. Median sale price was $212,000, up 7.9%, and average sale price was $236,764, up 0.3%. New pending sales were down 53.3% and months supply of available properties was 4.4 months, down 6.4%.

All of the negative figures are no surprise relative to what we have been living through. However, the average and median sale prices are up, much like the trend around the country. Keep in mind that sales statistics are a lagging number frequently based on negotiated contracts that may have been in the pipeline prior to the shutdown.

All we can do is keep watching the numbers and hope that as businesses open more sales will be booked. At this point it’s anyone’s guess what’s going to happen with the virus or with the real estate market. Stay tuned and stay well.

Castles in the Sand

When the real estate market sneezes, it infects everyone

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

The last thing anyone wants these days is for someone next to you in line at the market, the bank or in our slowly-opening restaurants to sneeze near you. But if the real estate market starts to get seriously infected from the effects of the coronavirus, it may start to sneeze all over related industries.

The American housing market is such a major influence on the country’s economy that even a slight downturn could have a very big effect on goods and services generated from buying, selling and building new homes. Right now, there are large portions of the country where the real estate market is at a total standstill because of lockdowns. Properties cannot be shown to prospective buyers, sellers are taking their homes off the market and construction of new homes and apartments has mostly stopped.

Obviously, there are hundreds of industries related to the real estate market that are losing money and jobs. The construction industry is being particularly impacted per the Commerce Department which reported a 22% decrease in new home construction in March from February. The Northeast region is experiencing the most pronounced decrease in new home construction with a 42.5% decline during this period.

New construction generates a plethora of jobs – carpenters, plumbers and electricians in addition to support and office staff. The materials alone needed to build range from lumber to sheetrock to paint to concrete and roofing not to mention heating and air conditioning systems.

Sales of existing properties are also down across the country as they are right here in Manatee County. If and when this will turn around as we in Florida start to open our economy, we just don’t know. But what we do know is that a slow real estate resale market touches so many other areas of the economy.

When someone purchases a home, they spend money preparing that home for the specifics they need and require for their family. Even the lack of simple renovations like new flooring, appliances, landscaping and paint will have an effect on the economy. This is in addition to major renovations to existing homes that have been sold or aren’t even on the market yet. The fallout from homeowners holding up on renovations can’t be calculated but inevitably will be substantial.

And what about the financial part of all this? Job loss is now measured in the millions, impacting tax revenue at every level of national, state and local governments. Much of this loss will ultimately be traced back to the real estate market, including the hard-working real estate professionals whose income and careers have been upended.

The one bright light for the real estate industry has been its ability to pivot to electronics to market and close properties. Agents all over the country are running virtual open houses and creating video tours for available properties. Video chats are taking the place of conference room meetings and available digital mortgage platforms can remotely verify employment and assets. A decade ago, the housing market would have been completely shut down during a situation like this; now at least everyone can move forward, even if at a slower pace.

So, no sneezing in public – we all have to do our part. As far as the real estate market, we don’t really know what the future is and neither does anyone else. Stay safe and wear a mask.

Castles in the Sand

What’s bad for New York may be good for Florida

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

I am a New Yorker, I was born in New York City and worked for 25 years in the city. Until I moved to Florida over 20 years ago, I lived my whole life in either New York City or its surrounding suburbs. I love New York City. I have never found another city anywhere in the world where I have traveled to match New York’s vibrant energy, diversity and culture; it is simply one of a kind.

However, now I fear the best of what the city has to offer may be gone. What the 911 terrorists could not do, an uncontrollable virus may very well complete. What does this mean to us now comfortably living in Florida and about to open our businesses, beaches and stores? It could mean a lot especially as it relates to real estate.

New York state has been losing residents for a long while; as of mid-2019, it lost almost 77,000 residents from the previous year. A combination of out-of-sight state and local taxes along with overpriced real estate has made it almost impossible for young families to exist in New York City and many of its suburban communities within commuting distance to the city. Now, because of the pandemic, a large percentage of employees and their companies are finding out that working remotely is possible. They are realizing they may not need to be in an office in the middle of a city, they can live wherever they want and enjoy a higher quality of life for them and their families.

Because of the virus, existing home sales fell nationally in March by 8.5% as expected. This is unfortunate after February’s growth was at the highest level in more than a year. The national real estate market was perfectly set up for a big spring buying season with low unemployment and low mortgage rates, making buying a home ideal, but now all of that is on hold. The lack of sales could have a negative effect on price growth combined with the loss of jobs, but that remains to be seen.

However, Florida – with our low taxes, low regulations and balanced budget in addition to a variety of housing options all more favorably priced than the northeast – is increasingly becoming a big draw. I read a recent interview with a realtor in southeast Florida who reported that in recent weeks he has seen a significant jump in inquiries for available properties. In the past he said he typically got one or two leads a day from the northeast. Now, he is averaging about 10 per day from the suburbs of New Jersey, Manhattan and Long Island as well as other parts of the northeast that have been hardest hit by the virus. Northeast buyers are telling him that they see a second wave of retirees relocating to Florida full time, much of it based on not only financial advantages but also lack of density.

There you have it. I cannot fall out of love with New York City, but I can see how it is changed and may no longer be the best fit for many. Residents of northeastern states may have had it paying for the privilege of living on top of each other and are ready to social distance permanently. My advice to Florida realtors is market to the northeast, especially those areas considered the tri-state – New York, New Jersey and Connecticut. My feel is there are a lot of people who have been simmering with thoughts of a change for a while and this pandemic may have put simmering over to boiling. Stay safe.

Castles in the Sand

Preparedness for COVID-19, hurricanes not the same

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

Since the middle of March, we have been filling our freezers to overflowing and our pantries with enough paper products to grow a forest in an effort to abide by social distancing and reduce visits to the market. But starting June 1, that is all about to change because on that date through Nov. 30, our annual hurricane season is upon us.

During hurricane season we reduce what we have in our freezer and refrigerator and stock up on non-perishable goods in the event of a power outage. These two preparedness events appear to be in direct conflict with each other and to a degree they are, but this is what we’re living through at the moment.

This Florida season is predicted to be more active than normal with 16 named storms, above the average of 12.1, and eight hurricanes, above the 6.4 average. In addition, four of these hurricanes are considered to be major, somewhere between a Category 3 and a Category 5; the average is 2.7.

A weak La Nina is allowing storms to form more easily in the tropical Atlantic which is warmer than normal while the subtropical Atlantic is very warm. This analysis will be updated on June 4, so we can hope it will be better.

As always, getting your home ready for hurricane season is important. Adequate window and door coverings should be at the top of your list now. If a storm is coming your way, remove any outdoor objects which can become airborne like furniture, plants, bikes, toys and small boats. Boats that are in the water ideally should go to dry storage, but if that’s not possible, secure the vessels with double lines and extra tie downs for boats on lifts.

Mymanatee.org is a wealth of information and recommendations on what you and your family should do in the event of an oncoming hurricane. Some of the highlights on their website are disaster planning – know where your family is at all times; disaster kit – take important papers like insurance policies, licenses, passports and birth and marriage certificates; know where the emergency shelters are for your location; and, if you are responsible for a special needs person, there is a Special Needs Registry where you can be provided with transportation or assistance.

Also know what your evacuation level is in the event your home is in an area where the county is mandating an evacuation.

And something I read on the Manatee County website which I never thought about before pertains to gated communities. There are many gated communities in the county with single-family homes, villas and condos. Make sure your association maintains the proper access system code allowing EMS, fire departments and police entry to your property in the event of an emergency.

Finally, flood insurance in our waterfront communities is imperative. If you have a mortgage on your property, you will be required to purchase it as a condition of your mortgage, but even if you are not required it is something you should do. Flood insurance is administered through FEMA as part of the National Flood Insurance Program and sold through insurance agents authorized by FEMA. Remember, if there is a hurricane or tropical storm threatening our area, you cannot buy either homeowners or flood insurance during that time, so be careful with your closing date if you are purchasing a new home.

It’s been a difficult year so far and with an active hurricane season predicted, it could become even more difficult. The best you can do is keep you and your family safe, prepare your home now and clean out the freezer.

Castles in the Sand

Lockdown creativity

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

We are so living during a time when creativity can make the difference between just getting through it or getting through it with a bit of flair, and real estate purchasing is opting for the latter.

Back in mid-March just six weeks ago, I read about a couple of real estate financing startups. Since that time, the startups, as well as our lives and the lives of all real estate professionals, have changed drastically. Nevertheless, someday it will all be back, so I thought it was worth taking a look at.

Homebuyers who are unable to get traditional financing frequently lack the 20% down payment, don’t qualify based on income and assets or are being shut out of the market by cash buyers. As an alternative, one San Francisco startup created a system where buyers can put down only 10% and the company provides the rest of the purchase price in cash. A deed of trust is established, and the buyer is mandated to pay the taxes and insurance and gives the company a monthly payment used to build equity and ultimately buy out the house.

Another startup also based in San Francisco is using what was previously called “rent with an option to buy,” where an individual homeowner rents to a buyer and a portion of the rent goes towards the ultimate purchase of the home. The company buys the house, assesses a $10,000 nonrefundable fee and sets up a program of monthly payments designed to build equity even allowing for some credit if the home is not purchased.

This is a very short version of more complicated plans, and like any type of creative financing this can either fill a need for housing for individuals who don’t have the cash or qualifications, or it can be a dicey arrangement. However, it’s still nice to keep your options open.

Well now it’s time for the March sales numbers in Manatee County reported by the Realtor Association of Sarasota and Manatee comparing March of this year to March of last year:

Single-family properties are as follows: Median sale price $319,500, up 2.4%, average sale price $390,674, down 0.5%. New pending properties down 33.4%, new listings down 3.3%, pending inventory down 21.7%, active inventory down 14.1% and month’s supply of properties down 19% to 3.4 months.

Condos are as follows:  Median sale price $215,000, up 5.7%, average sale price $251,136, up 4.2%. New pending properties down 32.5%, new listings down 5.2%, pending inventory down 26%, active inventory down 3.8% and month’s supply of properties down 8.3% to 4.4 months.

The numbers are much as has been predicted since basically all business is at a standstill. Closings are still in positive territory, but they reflect transactions that have been in the pipeline for a while. Unfortunately, we can expect more of this in the months ahead.

And as a reminder, Florida is the third most populated state in the country based on July 2019 records. We make up 6.47% of the population of the United States coming in at 21.5 million and are only surpassed by California and Texas. We have passed New York state in population by 2 million and currently have the same number of congressional representatives making Florida one of the major political players. This gives me encouragement for the future of our real estate market.

As always, stay safe and be creative in these stressful times.

Castles in the Sand

Changes in the pandemic age

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

If the pandemic taught us anything, it’s how quickly everything can change, and the real estate market is no exception. We went from a blow-out real estate market, overflowing restaurants, planning high school and college graduations to hoarding toilet paper, wearing face masks and checking daily infection counts in less than a month.

What’s ahead for the real estate market, both local and national, is anyone’s guess; unfortunately, there are likely dark clouds on the horizon. With businesses closed, employees laid off and people unable to move around the country, buyers and sellers may have to take a pause. Even with continuing historically low mortgage interest rates, if a buyer can’t qualify because of job loss, it will take a toll on the health of the markets. In addition, available inventory may eventually be impacted because homeowners don’t want strangers coming into their homes and will opt not to list properties for who knows how long.

Meanwhile, homeowners who have lost jobs are struggling with impending mortgage payments, flooding their mortgage companies with requests for help. In addition, they’re having trouble getting through waiting on the phone for hours to reach a real person who may be working from home and having their own personal and technical difficulties.

The stimulus legislation says homeowners hurt by the coronavirus or its fallout can ask their mortgage servicer for a so-called forbearance. This means their monthly payments are interrupted for up to six months and an additional six months can be requested after that. They don’t have to prove they have been hurt by the coronavirus since, if the loan is backed by the government, the mortgage servicer is generally expected to grant the request. Since about 70% of U.S. mortgages are backed or insured by a federal agency like Fannie Mae, Freddie Mac or FHA, this will be a non-issue for most borrowers.

What is not specified in the law is when borrowers have to make up the missed payments. Some homeowners are assuming that they don’t have to make up the payments ever, certainly incorrect. But even when they understand this, there’s still confusion as to how the funds will be made up. The Department of Housing and Urban Development told servicers that holders of FHA mortgages can compile the missed payments into a second, interest-free home loan for borrowers to pay off after the original mortgage.

However, for Fannie Mae and Freddie Mac loans, which represent about half of the country’s mortgage market, that offer was not made. Instead, federal regulators have instructed servicers to work with borrowers and to consider letting them tack their missed payments on to the end of their loan, but are not mandating it.

Lenders, like everyone else, are operating in the dark with no way of predicting the scope or duration of the pandemic and shutdown. Economist Mark Zandi with Moody’s says as many as 30% of Americans with home loans, about 15 million households, could stop paying their loans if the economy remains closed through the summer or beyond.

Are we in for a big wave of foreclosures similar to the housing bubble bursting in 2008? Let’s hope not, but since our real estate market was so strong and so much in demand, it’s not a bad calculation to assume it will be one of the first to come back even in a big downturn. Chin up and stay safe.

Castles in the Sand

Locked up in paradise

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

As I write this, outside is the first non-perfect spring Florida day in about three weeks. It just makes me more thankful for living in paradise even if we’re locked down. You can still walk out your front door, smell the fresh warm air and take a short walk or bike ride to renew your soul.

But what about the souls of the poor people caught in the limbo of a pending real estate transaction?

According to the National Association of Realtors, pending home sales rose 2.4% in February from a month earlier. Since pending sales generally predate closing by one or two months, you can assume there were a lot of pending sales in the pipeline when the coronavirus hit and business started to shut down.

So, what happens to those transactions and the buyers and sellers on either end of the transactions? There are a lot of steps in getting a home sale to the finish line. Even after a contract is negotiated and signed, you have home inspections, lender appraisals, termite inspectors and, of course, the closing.

According to the International Association of Certified Home Inspectors, many home inspecting companies are reluctant to send their staff into homes. Some are attempting to work with drive-by appraisers using exterior photos and county records, obviously slowing down that piece of the transaction. Naturally, all other inspections that may be required are facing the same stumbling block, as are bank appraisers.

Closings are another topic. Although the technology to close properties has been around for a long time, the slow-moving real estate community mostly continues to operate on paper and fax machines. You can bet that’s another system that can anticipate drastic updating in the years ahead as a result of this virus with electronic signing of documents becoming more widespread.

Now, however, the closing culture in many regions of the country is still a sit-down closing. With buyers, sellers, real estate agents and sometimes attorneys around a closing table where it can get pretty crowded, certainly not in line with CDC regulations. But committed real estate professionals are doing their best to get the properties out of limbo and into heaven by closing homes any place where they can avoid close encounters and big crowds. Not an easy and quick process, and hopefully all parties to the transactions are keeping their anxieties in check.

The Realtor Association of Sarasota and Manatee reported the following pending transactions at the end of February: Single-family homes (968 properties) up 12.3% from last year, and condos (393 properties) up 10.1% from last year. That’s a lot of transactions to get closed while navigating through a pandemic, and when the March pending statistics are available in a few weeks we’ll see where the pending numbers are.

If you’re one of the limbo dwellers, help the professionals as much as you can to get the transaction done without jeopardizing anyone’s health. There could be a good story here to pass on to the next generation when we all start laughing again.

To the people in other parts of the country who are locked down without the benefit of perfect weather and the ability to get outdoors, my thoughts are with you. As always, stay safe.

Castles in the Sand

Home is where the disinfectant is

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

By now you should be getting to know your house really well, its assets and its defects, and it sounds like you’ll have a lot more time to make those assessments. Point is your home is you and your family’s safety net. Right now, the safety net is physical protection within the shelter of your home, but at some point in the future the safety net will change to financial and there’s a lot of worry out there about property values post coronavirus.

Up until March, the U.S. housing market was headed for a hot selling season, but like many Americans, the housing market may have caught the virus as well. Mark Zandi, chief economist at Moody’s Analytics Inc., is predicting a 60% chance of the U.S. economy going into a recession this year. This will hit the housing market hard despite record-low mortgage rates of 3.29% for a fixed-rate mortgage as of the middle of March. Zandi goes on to say, “housing is being buffeted by two gale forces moving in opposite directions,” referring to low rates and a virus-fueled economic turmoil. “The question is, what’s the end result of all that? In all likelihood, the recession will trump lower rates.”

The National Association of Realtors had anticipated about 5.5 million sales of previously owned homes in 2020, up from 5.3 million a year in 2019. Now, however, they’re expecting a 10% drop in home sales in the next month to start with. Homeowners will be hesitant to put their homes on the market until the crisis is over, fearful they won’t get a good price. But if a recession does develop, others could be forced to sell, changing the inventory dynamic from a severe shortage to more available properties. Meanwhile, buyers have seen some of their down payment funds evaporating as the stock market declines, creating the potential of keeping them out of the market until they see a financial recovery.

According to many housing experts, the economic distress will slow home sales, and prices nationally will likely flatten or fall slightly after years of gains. There could be opportunities for buyers with more inventory, declining prices and low interest rates, nevertheless the economic prediction is the coronavirus could drive home sales down 10% in the short term.

What does all of this mean for us on Florida’s west coast? I’m still bullish on our local real estate market; we can certainly expect some adjustments after we return to a normal market but buyers still want to come to Florida from the northeast and other major metro areas, maybe even more after this is all over.

Here’s an interesting statistic I recently uncovered: In 1998, Florida’s population was approximately 14.9 million, in 2018 it was 21.3 million. In 20 years, Florida grew by over 6 million people, more than the size of many U.S. cities. Based on that, our weather, taxes and general lifestyle advantages, I see no reason to think that our state won’t be at the forefront of the coronavirus recovery.

For now, the main objective is to stay physically healthy; your financial health can be assessed down the road. So, keep the disinfectant handy, spirits up and learn to love your home and family, flaws and all. Good luck.

Castles in the Sand

April real estate fools

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

Well here we are; it’s April 1st, April Fools’ Day, and most of us are camping out in our homes while some of the best spring weather is outside our doors. Fortunately, this is Florida and you can still ride your bike, take a walk or run your boat even if the beach is closed.

We, of course, have no idea when this is going to end and what effect it will have on the economy as a whole and specifically real estate values. We can assume there will be a serious impact which is really ironic in the face of the February Manatee County sales numbers, which are spectacular. So let’s start with those numbers as reported by the Realtor Association of Sarasota & Manatee.

The number of single-family homes closed 2.8% with the median selling price up 8.9% to $325,000 and the average sale price up 4.8% to $407,940 from February last year. The median time to sale was 90 days, down 7.2% and the month’s supply of properties was only 3.4 months, down 24.4%.

Condos closed 40.1% more properties in February compared to last year. The median sale price was $210,000 up 11.1% and the average sale price was $245,303 up 7.7%. Time to sale was 39 days, down 42.6% from last February, which was 68 days. And the month’s supply of properties was 4.5 months, down 10%. An interesting side note was the number of cash buyers which was up 22.4% for single-family homes and 15.7% for condos.

It almost doesn’t need to be said that March’s numbers won’t be anywhere near February’s; if they were, believe me, no one would be happier. There are some modifications the government and the Florida Realtors’ Association are making to help homeowners and buyers and sellers.

Fannie Mae and Freddie Mac are suspending foreclosures and evictions of homeowners behind on their mortgages and at risk of losing their homes. The 60-day suspension affects about 182,000 homeowners who are in different stages of foreclosure. The Federal Housing Administration (FHA) is also suspending foreclosure actions for 60 days. In addition, borrowers affected by the coronavirus outbreak could reach out to their mortgage servicer for help in suspending payments for a period of time.

Finally, the Florida Realtors’ Association has released a new contract extension addendum that allows for time periods and dates to be extended as a result of the pandemic in the event the parties to the contract would like to extend the terms of the contract. Delays could be caused by travel restrictions, self-imposed and/or governmental required isolations, closure of offices that fund and close transactions as well as inactions of homeowners’ and condominium associations.

Some of the extension options are closing date, financing period, inspection period, title cure period, feasibility study period, due diligence period, homeowners’/condominium association approval and a provision for a loan-approved buyer should things change on the lenders’ side as a result of the pandemic.

I hope everyone is adhering to the coronavirus guidelines and not gathering in groups, staying home if you’re sick or older with underlying health issues and washing your hands on a regular basis. My personal best wishes to everyone to stay safe and healthy and be patient until our lives get back to normal.

Castles in the Sand

Million-dollar homes and curb appeal

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

Three months pass by really quickly. Just think about where you were three months ago mid-December; wrapping Christmas gifts, planning a New Year’s Eve party, getting your heating system checked for the cooler weather ahead and possibly organizing your winter guest calendar.

The one thing for sure you weren’t doing is getting worried about something called the coronavirus, canceling vacations and stocking up on non-perishables as if it were hurricane season. But here we are and you either roll with it or, well there is nothing else to do except roll with it.

The one thing that appears to be consistent, however, is our real estate market, so in a few more paragraphs we’re going to see just what the million-dollar and over marketplace looks like. First let’s consider a few tips on how to make your house stand out from the others, whether they’re $1 million or not.

There’s a whole theory about curb appeal that most real estate professionals learn from experience. Most professionals will tell you to make your home as appealing as possible so that potential buyers will want to get out of the car and step inside. You would be surprised by the number of buyers who refuse to even take this simple step when looking at a home; usually it’s a big mistake that buyers may come to regret.

What you want to do is to never give the buyer a reason not to get out of the car. Start with the front lawn, the most basic of basics is to mow the lawn, trim the bushes, pick up the trash and the kids’ toys and paint peeling trim. Now if you’re able to get a buyer that far, consider painting the front door a special color. We live on an island, so many of our doors are tropical and fruity, but how about a red door, which means welcome in America and protects from evil spirits in China. Also, if there is any way to get your neighbors next door or across the canal to tidy up, you will be doing not only you but them a big favor.

Everyone knows that curb appeal has value, but it wasn’t till recently that we knew how much value. In a recent study in the Journal of Real Estate Finance and Economics, researchers have started analyzing that very thing. These researchers compared Google Street View photos to sales data and have determined that homes with good curb appeal sold for 7% more than similar homes. They’re also expanding this research with the hope of providing information to banks and Fannie Mae in determining value for home financing.

Well, back to the $1 million and over analysis for the months of November, December and January in the three cities on Anna Maria Island and in Cortez. The closed sales are from the Manatee County Property Appraiser’s office website and the available properties are from realtor.com at the time of this writing.

Cortez did not have any $1 million or over sales, same as last time. The City of Anna Maria had 16 ranging from $2,550,000 to $1,000,000, double from the last reporting period. The combined cities of Holmes Beach and Bradenton Beach closed 24 $1 million or over properties ranging from $5,850,000 to $1,000,000 – way more than the eight closed during the previous three months.

On the market as of this writing there are four in Cortez ranging from $1,600,000 to $1,200,000; last time there were two. The City of Anna Maria has 63 properties $1 million or over listed. The range is from $6,850,000 to $1,045,000. Out of these 11 were $3 million or more; in the last analysis, there were 59.

Finally, in the combined cities of Holmes Beach and Bradenton Beach there are 93 properties listed over $1 million, 12 between $7,995,000 and $3,100,000 and 60 between $2,995,000 and $1,044,500; last time there were 73.

I hope the next three months don’t have too many surprises and that we all stay healthy enough to prepare for hurricane season. Oh, think about that front door.

Castles in the Sand

Seller’s market?

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

We’re in a seller’s market, words that every homeowner wants to hear. But even a seller’s market needs to be handled with care and respected; it can turn on a dime on so many factors, quickly depleting your pot of gold.

A seller’s market is defined as a real estate market that has more demand than supply, and that’s certainly true all over Manatee County. As of January, there was only 3.4 month’s supply of single-family properties for sale in Manatee County – a six-month supply of available properties is generally considered a healthy real estate market. Also, to be considered a seller’s market, sales prices grow above 4% a year. As of January, single-family homes in Manatee County grew 6.6% over January of last year.

So, what’s the best way to sell your property in a seller’s market? It’s recommended that in a good seller’s market a property can be priced about 5% higher than comparable properties. But since we all know that a homeowner’s perception of a comparable property may not be what buyers see relative to condition and location, you must be careful in pricing above the market and treat it as an experiment that may not work and may need to be quickly adjusted.

Here in Manatee County, we are seeing a lot of new construction competing with resales. We’re living in a funny world where, unlike previous generations, buyers don’t want to take on projects and may pay a premium for new construction but not your home. Do whatever you can to remove objections to your property including some renovations that may not get you all your money back but could sell your property a lot faster. Emphasize features in your home that new construction may not ever have including water views and mature landscaping.

If you’re selling an empty property, consider staging or at the very least virtually staging which will provide photos online showing how the home looks with furniture. This may not beat new construction decorator models, but it will give you an edge with other resales.

Nationally and locally, sale prices are picking up as inventory stays tight. The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, reported that for November there was a 3.5% increase over a 12-month period. The growth continues in their analysis in December with the average home prices going up 3.8% during the previous 12-month period.

The housing market has been expected to be boosted by mortgage rates being at their lowest level in half a century. However, although sale prices are going up, sales numbers are going down. Inventory is limited and buyers are not moving forward because they can’t find what they want and/or the price points are too high. According to the National Association of Realtors, the housing inventory level was the lowest for January since 1999. Existing home sales fell 1.3% in January compared with December according to the National Association of Realtors.

Until this market gets into a more normal area, we’re stuck with a seller’s market, not always a good thing. So, no matter how low the inventory goes, buyers aren’t fools and won’t pay way above market value just because they don’t have a lot to choose from. They’ll sit out the market, continue living with mom and dad or rent.

Don’t you be a fool and take the market for granted. Protect your pot of gold – it may not always be there.

Castles in the Sand

The greying of the mortgage market

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

As we age, there are physical restrictions on what we can achieve. Tennis may be more difficult, so we switch to pickleball; jogging is a knee killer but walking works; sleeping eight hours straight may be for teenagers but napping after lunch is one of life’s pleasures. Same with finance, adjustments may have to be made, but not totally discounted.

Federal law states under the Equal Credit Opportunity Act that discrimination in the mortgage market on the basis of age is forbidden. So, it basically doesn’t matter how old you are, in theory you can obtain a mortgage. However, the stumbling block is that most people when they’re retired have a reduction in their stream of income. This is particularly a problem for one spouse when the other passes away and their income is diminished because of reduced Social Security and/or pension income.

Nevertheless, there are programs available with more on the way where seniors can tap into their financial portfolios and combine that with other income to qualify. Typically, borrowers qualify based on monthly fixed income, pensions, Social Security, and dividend and interest withdrawals. If that isn’t enough, lenders are recommending setting up a monthly distribution from an IRA or 401(k) account. Fannie Mae rules only require lenders to calculate loans based on at least three years of monthly distributions from retirement accounts.

Finally, there is a method called “asset depreciation” that can be used to qualify, which does not require a monthly distribution but is based on a formula that assumes a monthly distribution. The formula varies with the lender but is based on a percentage of the borrower’s total portfolio being divided by the months in the term of the loan and qualifies borrowers on that basis.

The key to obtaining financing for older borrowers who may have assets but a lower income stream is to work with a mortgage broker experienced in loans for retirees. My guess is that should be a pretty easy thing to do in Florida, and these mortgage brokers may find individual lenders with programs more lenient for retirees.

Whatever your age all homeowners and future homeowners will be happy with the year-end real estate statistics from the Realtor Association of Sarasota and Manatee:

Single-family homes were up in all areas from last year. Closed sales were up 6.6%; median sale price was $316,000, up 5.2%; average sale price was $395,044, up 3.7%; month’s supply of available properties was 3.4 months, down 14.6% from last year. The year ended with 3.5% more pending sales than last year.

Condo sales were up in every area except the number of closed sales, which was down 6.1%. However, the year ended with 17.1% more pending sales for condos, so there is a lot in the pipeline that did not close in 2019. The other numbers are median sale price, $200,000, up 5%; average sale price was $241,331, up 3.4%; and the month’s supply of inventory was 3.6 months, down 10%.

Our biggest problem continues to be the lack of inventory, a seller’s market on steroids.

Age may be a state of mind, but a super good real estate market is a fact of life, and the fact is we’re in a real estate state of mind.

Castles in the Sand

Let’s all just take a breath

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

How would you feel lounging on your deck overlooking the shining waters of the Gulf of Mexico and reading this headline: “As seas rise, your coastal home in Florida could lose value by 15% by 2030?” In mid-January, that’s just what the Miami Herald had in their paper and it only got worse when you read the copy.

The Herald outlined two new reports that calculated how much of an impact climate change will have on Florida’s real estate. One report from the international consulting giant McKinsey Global predicted that Florida homes subject to the risk of flooding could lose 5-15% of their value in the next decade, and by 2050 that could increase to 15-35%. The second report from the Miami-Dade-focused report from Jupiter Intelligence said their researchers found that moderate flooding of about one foot will affect nearly double the number of homes by 2050.

Both reports are talking about a relatively new topic in the financial world called “climate risk” and it explains all the ways that the warming world will influence the global financial systems. Florida, particularly south Florida, appears to be the guinea pig for the rest of the country’s coastal communities.

Essentially, the major issues are insurance, mortgages and potential buyers. Anyone who lives within spitting distance of the water lives with insurance anxiety a good part of the time. These studies contend that as climate change affects rising sea levels and consequently flooding, insurance premiums will go up as will premiums for hurricane coverage and windstorm insurance. The National Flood Insurance Program, which has been the topic of a lot of speculation during the past several years, is redesigning its rates to better reflect risk next year. Currently, Florida represents 35% of all policies held by The National Flood Insurance Program.

Mortgages may be more expensive to get once banks realize that a home facing the prospect of going underwater isn’t a sound investment, or totally decline to issue mortgages on these properties. And finally, will these studies and subsequent reporting scare buyers away from purchasing in coastal communities? It’s not a stretch to assume that local budgets could be affected as municipalities attempt to gear up for additional expenses associated with more flooding. Speculators have even suggested a negative coming market shift in coastal properties as climate change affects real estate to be as bad as the mortgage crisis a decade ago.

What I think is that everyone needs to take a breath. Yes, there could be a change to the real estate market for coastal properties, but do we really know when and how severe that will be? Comparing it to the mortgage bubble crisis 10 years ago is really just someone’s opinion. Should buyers not buy waterfront property based on these early reports? Maybe if you have zero tolerance for risk in your life. If that’s the case, better not invest in property at all because who knows, based on a lot of recent reports, beings from other solar systems may be visiting us and who knows what their agenda is. In addition, not all coastal areas are created equal; some are more at risk than others and a little research will help buyers determine that.

So be careful what you read. It may all come true, but right now I don’t care who you are, no one really knows what property values will be in 2050. Just go to the beach and enjoy.

Castles in the Sand

Broken record analysis

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

It seems like every other week or so I’m writing about the influx of new residents to Florida from high tax areas of the country. Forgive me if I sound like a broken record, but I’m not the only one reporting on this phenomenon; it’s all over the news, so here we go again.

Let’s start with a book I recently read a comprehensive review of; it’s called “Bubble in The Sun” by Christopher Knowlton and the name alone should run shivers down your spine since anything related to real estate should not have the word “bubble” in it ever again. Nevertheless, the 1920s Florida land boom created a bubble that the author maintains led to the 1929 crash of the stock market. The market crash also led to the end of the development frenzy in Florida and millions of jobs.

He states that in 1925 alone, an estimated 2.5 million people arrived in Florida looking for jobs in the building trades. In addition, just regular working-class people – as many as 18 million – risked their money by investing in Florida real estate, being promised a piece of land and a way of life.

What strikes me about this book is that at this point in time, Florida is experiencing a real estate boom again and a substantial influx of new residents, only this time it’s for a different reason. According to the U.S. Census Bureau, in 2018 approximately 587,300 Florida residents were residents of another state 12 months earlier. Texas was right behind Florida at approximately 564,000 residents. And remember, this does not include homeowners who may have purchased a second home in Florida but have not become Florida residents – yet.

Without overstating the obvious, the reason for this migration is taxes, taxes, taxes. As we all know, Florida has no income tax or estate tax and lower property taxes than most of the high tax Northeastern states.

Anyone moving to Florida from New York, New Jersey or Connecticut, to name a few, will benefit from a more advantageous tax situation, but high-income individuals will naturally profit the most from changing their residence to Florida. In addition, high-end real estate in Florida is benefiting big time from this influx of the wealthy. According to Realtor.com, in November 2019, the average price of a luxury listing in Florida was $1,649,380. This is up 8.6% from the same time in 2018.

Now it’s time to see what’s happening in Manatee County real estate based on the December statistics from the Realtor Association of Sarasota and Manatee.

December is a funny month for real estate in Florida. Closings reflect purchases in October and November before season. The approaching holidays can slow things down or people may want to close before the end of the year for tax purposes. Whatever the mixed bag of December is, this December was pretty much a blowout.

Single-family homes closed 24.9% more than last December; the median sale price was $325,000, 5.2% higher than last year, and the average sale price was $420,878, 10.7% higher than last year.

Condos closed 4.9% more properties; median sale price was $195,500, 2.9% higher than last year and the average sale price was $241,196, up 1.9%.

Single-family homes are selling within 90 days, about the same as last year, but condos are selling in 88 days this year, down 8.3%. Month’s supply of properties keeps dropping for both single family and condos; 3.5 months for single family, down 14.6%, and 3.6 months for condos, down 10%.

It looks like the broken record continues in Manatee County with homes appreciating and inventory low. Based on December, I predict the new resident broken record is going to continue for a long time to come – here’s hoping.

Castles in the Sand

Happy new real estate year

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

Getting through all of the Christmas presents, dinners and travel has probably made you not want to face another holiday much less another financial year with its ups and downs. But if you live in a condominium complex, this is the time when many associations are getting ready to send their members notification of their monthly, quarterly or annual fees for the new year.

Florida law allows for two types of reserve funding for associations. One is the pooled method and one is the straight-line method. Florida condominium regulations have always required associations using the straight-line method to establish reserves specifically for particular items. This calculation uses a formula that divides the cost of replacing that item by the number of useful years that item has left, minus the reserve funds on hand for that item. Per Florida law, each separate reserve can only be used for that particular reserve item unless a majority of the members vote to amend it.

Several years ago, a different method of reserve funding was introduced and accepted through an amendment to the state’s administrative rules called the “pooled” method. Under the pooling or cash flow method, each reserve item is still separately funded, but the money is put into one account. In theory, the money should be available when needed, with a lower contribution than required using the straight-line method. Since it can be a complicated calculation, the schedule should be prepared by an accountant or reserve consultant. A pooled reserve fund can then be used for any reserve item as the need arises, creating more flexibility for the board which most associations see as the main benefit. The downside of course, is proper and diligent oversight of the pooled reserves.

Going into the new year not only do condo boards have to review their positions, all financial markets need to as well and most of them are up. And if we’re talking real estate there aren’t too many downs there either with the market continuing to stretch into new and higher territory. The November sales statistics for Manatee County as provided by the Realtor Association of Sarasota and Manatee are looking good.

Single-family homes during November this year compared to last year closed 10.9% more properties. The median sale price, half above/half below, increased 2.1% to $319,995 and the average sale price increased 2.2% to $388,513. The median time to contract which is really the measure by which how quickly a property sells was down 14% in November to 43 days. So, if this trend continues, single-family homes on average can expect to be in contract within 43 days of placing the property on the market. The month’s supply of available properties continues to drop leaving November with only 3.5 months of inventory.

Condo closed sales were down by 19% but their median time to contract was also down 32.6% with an average of 31 days to contract. Supply of available properties is also down to 3.7 months – to me, these numbers appear to be linked. As far as sale prices, median sale price was up 11.4% to $207,750 and the average sale price was up 13.4% to $255,855.

The biggest challenge to our real estate market continues to be the lack of inventory. Now that the selling season is underway, we’ll see if that number moves in December.

I know it’s New Year’s and you may not want your head to be flooded with this stuff right now, but if you live in a condo, save this column; it may come in handy when you’re more clear-headed. Happy New Year!