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Tag: home equity

El Niño and your equity

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

If you live on the coast anywhere in Florida and you own real property, whether it is your primary residence, second home or investment property, the hurricane season is when homeowners collectively hold their breath. The equity in these properties is likely to be your largest asset, and for six months of the year your equity is a sitting duck.

The fact that we’re being told that the Atlantic hurricane season is expected to be below normal due to competing factors doesn’t make me feel substantially relaxed. El Niño is expected to develop and intensify during the hurricane season, while ocean temperatures in the Atlantic are expected to be slightly warmer than normal and trade winds are likely weaker than average. So, fewer hurricanes, probably more rain, and the danger of taking our eye off the ball.

NOAA (the National Weather Service) is predicting a below-normal hurricane season, with eight to 14 named storms. Three to six storms are forecast to become hurricanes and one to three storms could be major hurricanes. Remember, the Atlantic basin covers the eastern seaboard from as far north as Massachusetts to the southern tip of Florida and up the Gulf Coast of Florida. It’s a big territory for one of the one to three major hurricanes to hit, but we never know where it will decide to cause havoc to our property.

Us veterans of hurricane season all know about an evacuation plan and a place to meet if you become separated from your family members. We know about having food, medications, first-aid kits, flashlights, batteries, radios, cash and a change of clothes. We know fresh drinking water is something we frequently take for granted, but if the water pumps stop working in a big storm, you need to prepare ahead. Fill plastic water bottles for drinking, fill the tub for washing and empty the refrigerator of perishables, especially uncooked meat.

However, there are items we sometimes overlook. You won’t forget the baby’s formula or the puppy’s kibble, but you might overlook your property deed as proof of ownership.

Your safe-deposit box or go bag should also include your birth certificates and marriage certificate, passports, Social Security cards, medical insurance cards, wills, one or two tax returns, property insurance policies, automobile insurance policies, a copy of your driver’s license and the name of a contact at your financial company. If you have a folder for home improvements, grab that as well. You’ll be glad you did if your new kitchen is flooded.

And don’t dismiss the importance of having pictures or videos of your properties. If you have more than one property, you need to do this well ahead of an oncoming storm.

This might sound like a lot to do when evacuating, especially if you’re getting your property ready and getting the kids organized, but it is crucial in the event of property loss. I know we’re two months into the hurricane season, but I felt a little reminder can’t hurt as we approach the typically busy hurricane months.

Don’t get too comfortable with NOAA’s 55% chance of a below-normal season, as they may not be doing us a favor. I’m not impressed with mountains: the Rockies are beautiful and the Grand Canyon is spectacular, but I would not want to live there. Nevertheless, this time of year I wonder why between June 1 and November 30 we live where we do. Be prepared, protect your equity and exhale on November 30, when hurricane season ends.

Castles in the Sand

A home’s equity is sometimes subjective

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

Are you familiar with the expression, “The happiest days of a boat owner’s life are the day he buys the boat and the day he sells it”? It’s not unlike homeownership. The happiest day is the day you walk into your new home deed in hand and the worst day is the one when your real estate broker tells you it’s not worth what you thought.

Last week we talked about the national real estate market cooling off in terms of the number of sales and selling price. We also are beginning to see some signs of this on Anna Maria Island with an overall leveling off of our recent outstanding market. It’s not necessarily a bad thing in a go-go market to take a pause and attract new buyers into the circle, but first homeowners need to readjust their expectations.

Freddie Mac’s chief economist coined the phrase mental recession, not a real recession only the perception of a recession. The danger of the mental recession is that it challenges your mental equity.

We all know that the definition of equity is the difference between the value of the asset (your home) and the value of the liability (your mortgage). Even though you won’t find mental equity in Webster’s Dictionary, all real estate professionals know exactly what it means. Essentially, it’s the value of a property in the homeowner’s mind and only in his mind. Whereas, the actual value of the property is based on comparable sales, location and the climate of the real estate market at the time. Frequently, these two values can be light years apart. Get the picture?

The point I’m trying to make is that real estate markets are dynamic. They’re always in flux, and buyers and especially sellers need to understand that last year’s values may not be this year’s values. Don’t get too comfortable with the mental equity because it can change in a heartbeat for both good and bad.

If you’re a buyer, Valentine’s Day was last week. Don’t fall in love based on previous sales until you’re sure the market will hold. If you’re a seller, turn the reality check button on in your brain and don’t turn down any offers no matter what your brain is telling you. Mental equity is not your friend; don’t get too cozy with it.

All of that said, we are just starting the busy selling season, which continues until about April or May when visitors and potential new residents feel comfortable enough to make an offer on available properties. And based on recent census numbers, there should be plenty of them. As previously stated, Florida’s population increased by 322,000 residents last year alone and is the second fastest growing state in the country.

However, some of those wanting to relocate to Florida could be faced with a slowing market where they’re coming from, particularly big city areas in the Northeast and Midwest who will be most affected by 2018’s change in federal tax deduction.

Everyone needs to keep their options open and flexible. Don’t allow your mental equity to make you mental and make sure that your first day of homeownership is indeed one of the happiest days of your life.

More Castles in the Sand:

Why is the housing market declining?

Selling your home – it should show like a model

Sunshine State population growth