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Tag: Louise Bolger

Selling your home gives you big tax breaks

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

April Fool’s Day is the one day a year when it’s okay to play a friendly trick on a friend. Two weeks later is April 15, Tax Day, and not a good day to play tricks, especially on the IRS.

Most people use tax consultants to prepare their annual tax returns, which, in my opinion, is a very good idea. Tax preparers are schooled in looking for that deduction you may never have thought of; and if you sold your primary home in this tax year you will have a big deduction.

Since the late 1990s, homeowners have been allowed an exemption of up to $250,000 for single filers and $500,000 for joint filers on the profits on the sale of their principal residence. For example, a married couple who bought their home for $400,000 years ago and are now selling it for $850,000 should not owe tax on the sale because their $450,000 gain is covered by the $500,000 exemption.

In order to qualify for this benefit, the seller usually must live in the home for two of the five years preceding the sale. The property must also be the owner’s primary residence, with proof such as a driver’s license, receipt of mail, utility bills, etc. In addition, the capital gains exclusion can be used multiple times throughout your lifetime but generally only once every two years.

If your profit exceeds the $250,000 or $500,000 exemption based on filing status, the remainder of the profit is subject to capital gains tax. However, the law allows the owners of the property to lower their taxes by raising their “cost basis” if they have made capital improvements to the property, thus lowering their tax liability. Capital improvements include kitchen and bath renovations, landscaping, decking and other improvements made during the ownership period. There are other fees that can be deducted to lower your cost basis, including realtor fees related to the sale of the property. 

Couples who have not filed a joint tax return prior to selling their home can still get the benefit of the deduction as long as they meet the IRS ownership and use test of two out of the last five years and file jointly for the year the home is sold.

In order to lower your cost basis and reduce your tax liability, you must be able to prove the capital improvements are legitimate. This involves good record keeping with receipts or credit card statements, but the way to be sure you’re counting every dollar is to consult a tax expert – or, if you’re in the mood, read the IRS statutes online.

There is one more way to reduce your cost basis and that’s a little-known law called “The Cohan Rule.” The Cohan Rule is a legal principle that allows taxpayers to use reasonable estimates to deduct expenses when they lack formal documentation, like receipts, to prove the expenses actually occurred. This rule originated in 1930 when the entertainer George M. Cohan brought a court case involving missing records.

Finally, I am not a CPA or a certified tax consultant. To get accurate advice, please consult one of these professionals. 

Don’t play a trick on yourself before filing your tax return, especially if you sold your primary home last year. Ask for advice, save your receipts and don’t be foolish on April Fool’s Day.

The thaw has begun

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

If you have any friends or relatives north of South Carolina and straight up to the northern environs of Maine, it’s safe to call them and say the temperatures are going up, the snow is melting, and if you listen carefully, you’ll also hear sounds of the “housing thaw.” 

On February 26, a day that will live in the hearts of all mortgage brokers and real estate agents, the mortgage interest rate fell below 6%. 

This was the first time in more than three years, and it could mark an important psychological threshold. Mortgage rates briefly topped 7% last January, but rates have steadily fallen since then. Mortgage brokers discuss the 5% rate zone as the key to getting the market moving. Buyers are starting to recognize that 3% rates aren’t going to happen again and a rate between 5% and 6% is the new norm.

In spite of the fact that economists say it’s unlikely that rates will move substantially from low 6% to high 5%, the fact that it’s moving at all may get that pool of buyers off the sidelines before all of the good properties are snapped up. If this imaginary pool of buyers doesn’t get moving, they’re risking rates going lower, creating more buyer competition and ultimately pushing home prices higher and offsetting the gain of lower rates. Now could very well be the sweet spot for buyers to buy.

Businesses that cater to home sales, like Home Depot, Lowe’s and furniture and appliance stores, are also vested in the real estate market and are watching very carefully for the next step. Any positive economic movement will create new confidence in the real estate market aimed directly at the wannabe homeowners.

Spring is traditionally the season to sell homes, giving families the ability to move over the summer, before school starts. Florida’s market is not geared so much for school enrollment, but the spring season typically generates the most contracts and closings. Part of the reason is potential buyers who are renting during the winter in Florida are looking around and making buying decisions before they leave. 

This year has been slow for both buyers and renters, so I’m anxious to see the sales statistics for April and May to determine if breaking that 6% threshold has any impact on sales.

Before I close this column out, the Bradenton Herald had a story a few weeks ago about where Manatee County transplants are moving from. In 2025, 1,332 New Yorkers exchanged their driver’s licenses in Manatee County, marking a 59% increase from pre-pandemic levels. This was the first time since 2022 that a single state topped the migration list.

Following New York, the top contributors to Manatee County’s new residents came from New Jersey, Illinois and Pennsylvania. 

Even the western states saw significant migration growth to Manatee County. Washington, Idaho and California, (with a 65% rise) are next in terms of high migration to Manatee County.

I wasn’t surprised about California, since my favorite checkout person at the Holmes Beach Publix told me that about six months ago.

Small reductions in interest rates may not sound like they will influence buyers significantly, however, if you do the math, over a 20- or 30-year period, an eighth or a quarter of a percentage point adds up. 

The timing of this rate drop couldn’t be more perfect since demand has been growing for the past few years with low inventory and high rates. However, you will have to listen carefully to hear the cracking of the housing ice. It’s only a whisper now, but pretty soon it could be a roar.

January weather wasn’t the only thing chilly

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

One of the reasons I moved to Florida was because when I’m cold the only thing I can think about is how cold I am. I was really cold in January, but not as cold as the national real estate market, which apparently couldn’t think of anything else either.

In January, national home sales fell 8.4%, the biggest monthly decline since February 2022. Remember that what happens on a national level does not always affect local real estate trends, but there certainly is an influence, particularly when it comes to the overall financial health of the country. A little bit further in this column we’ll look at the Manatee County sales statistics for January, which will be an interesting comparison.

So, why was January so bad? Snowstorms and freezing weather all along the east coast certainly didn’t help; and neither did the erratic economic reports coming out of Washington. Which is too bad since the housing market was starting to show signs of recovery, fueled by a slight drop in mortgage interest rates. The decline came after sales rose in three of the previous four months. Even the surveyed economists were surprised, since they were predicting a much smaller decline of 4.6%.

Although December home sales rose, home prices also rose. In addition, the 30-year mortgage rates are hanging out at just above 6% and making no sign of moving, which is giving buyers another reason to sit back. Lawrence Yun Who is the chief economist for the National Board of Realtors. He indicates that improving affordability should bring buyers back to the market, but it’s not because of the public’s lack of an improving comfort level. Also, home prices continue to rise because of historic low levels of available properties, which is not improving the comfort level of potential buyers either.

In January, the national medium single-family existing home rose to $396,800, a 0.9% increase from last year. Manatee County’s median existing home price in January was $480,495, a very slight decrease from last year.

As far as mortgage rates stand, 6.1% is the current average, which is down from about 6.9% last year. Days on the market are also increasing. Therefore, many sellers are deciding to remove their property from the market rather than cut prices.

It’s time to look at the sales statistics reported by the REALTOR Association of Sarasota and Manatee: single-family homes closed 10.8% fewer properties this January compared to last. The median price was $480,495, down 0.1% from last year, and the average sale price was $647,324, down 2.3%. The median time to contract was 58 days, compared to 49 days last year, and the month’s supply of available properties was 4.6 months, with no change from last year. The bright spot was pending sales, which were up 17.4%.

Condos closed 1.7% fewer properties. The median sale price was $305,000, down 9.2%; and the average sale price was $366,887, down 10.1% from last year. The median time to contract was 65 days, compared to 60 days last year; and the month’s supply of available properties was 7.2 months, compared to eight months last year. Pending sales were also up from last year by 3.2%.

The Association of Realtors is sticking by its position that during the last several months the market has settled and everyone is adjusting to the “new normal.” 

A final word about interest rates: 6.1% is not a terrible interest rate. Yes, it’s about double what the average was in 2020, and because of that, we may have created a generation of buyers who expect artificially low interest rates. I’ve said this before, but the likelihood of seeing 3% to 4% interest rates again is about the same as me moving back to the northeast, so it’s time to jump in the market.

Castles in the Sand: Frozen in place

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

For a long time, we’ve been saying that real estate is frozen in place, but on February 2nd it was confirmed by none other than Punxsutawney Phil.

With respect to Phil, the polar vortex is what’s really causing the frigid weather we’ve been experiencing since early January. Furthermore, meteorologists are predicting that the extreme cold spell the eastern part of the country has been experiencing will be extended.

So, how does the arctic air hanging around affect the housing market? The most helpful thing that can happen is the polar vortex keeps pushing down and putting pressure on the northeastern states, driving the homeowners who have been toying with the idea of moving south to finally say, “I’ve had enough of this.” But changes in the weather are only short-term. What the country needs is some long-term permanent programs that will jump-start the housing market and give first-time buyers a foot on the property ladder. 

In an effort to achieve this, the government is looking into a variety of system changes in financing and investing to help stimulate the process and the culture of the housing market. There are ideas being thrown into the pot by the president, Congress, bankers and builders – all aimed at property affordability.

The president offered the first step in his new housing plan by taking measures to ban Wall Street firms from buying single-family homes, easing up on the competition for first-time buyers. He also announced a plan to let Americans tap into their 401(k) retirement plans for a down payment.

Next came mortgage policies, starting with a 50-year mortgage. Sounds crazy? It did to me at first, but it also sounded crazy when we started financing smartphones and long-term loans for our cars, not to mention leasing. Yes, it’s true that you will likely never pay off the 50-year mortgage, but in reality most homeowners don’t pay off a 30-year mortgage, so why not give them the opportunity to build equity and have the pride of ownership?

However, the downside of a 50-year mortgage is increasing the housing shortage even more and pushing prices higher. The same with lowering the mortgage rates: according to the AEI Housing Center analysis, if mortgage rates fall to 4.5%, for example, without an increase in housing supply, home prices would increase by one-tenth over the next three years.

Finally, government officials and builders alike feel that flooding the market with new affordable housing may get first-time buyers into a home but will negatively affect the people that already have a home. The end result of this will be driving down home prices for both new construction and current homeowners.

Therefore, as you can see, there is no quick fix. Whatever happens in the real estate market affects the entire economy, so it has to be tweaked very carefully. Likewise, since all real estate is local – driven by local zoning, environmental and land-use policies – coming up with a national policy will be virtually impossible.

On February 2nd, Phil the groundhog came out of his underground home, saw his shadow and ran right back in. Since Phil is never wrong, we can look forward to six more weeks of cold, cold weather, but will it keep real estate frozen too? Only Phil knows.

Castles in the Sand: People change their minds all the time

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

Humans are notorious for changing their minds. It could be as simple as the flavor of ice cream to the color of your new car. But when you’re involved in a real estate transaction, changing your mind is a lot more serious and expensive.

A contract for the purchase of real estate, whether it’s a single-family home or a condo, is generally airtight after all the contingencies have been met. For instance, the buyer is applying for a mortgage and the seller has accepted the sale based on the buyer being approved for the mortgage stipulated in the contract.

This is usually the largest and most important contingency in a real estate contract and is the reason that sellers consider cash transactions more valuable. The buyer’s mortgage approval deadline is stated in the contract; and if it is not met, the contract is void unless the seller grants the buyer more time for approval. If this happens, it’s usually an issue of a title defect rather than financial and generally it can be resolved.

Other contingencies included in most contracts are inspections, like radon and termites. Inspections must be completed by a time certain, as stated in the contract, and if there is a failure during the inspection the buyer has the right to withdraw from the contract.

In Florida, or other states where termites are common, the seller can correct the problem and continue with the sale. However, it is not unusual for the buyer to use a minor issue in the inspection to withdraw from the contract for reasons that have nothing to do with the inspection, without even giving the seller the opportunity to correct the problem, because they just want out.

Buyers are human and are apt to change their minds right up to closing day. If a buyer wants to cancel a contract after the contingencies are satisfied, that may constitute a breach of contract, in which case the seller can return the deposit. Most contracts of sale allow the seller to retain the deposit as liquidated damages. However, it’s not uncommon for buyers go forward with litigation to recover their deposit. Obviously, settling this out of court will save both parties in the transaction stress and money. 

What happens if the buyer finds a defect with the property after closing? This is probably the biggest nightmare situation for everyone, including the brokers who may not have any money at risk but will offer suggestions and try to resolve the situation in an effort to salvage their own reputation.

Property defects discovered after the closing almost always go back to a lack of disclosure. Even if sellers say they know nothing about the problem, it’s difficult for buyers to believe, and it never ends well. I’ve heard of or read about just about any situation, from animals living in the attic or basement without the previous owner knowing to roots blocking the sewer line and not being discovered by an inspector.

Appliances that die the day after closing are difficult to blame the seller for unless the buyer can prove they knew about a problem before closing. It’s also important to coordinate the on and off dates for electricity, especially in the summer when mold forms quickly and refrigerators get warm even faster. I’ve heard about personal items like expensive jewelry left in the house hidden and forgotten, and guns taped under drawers when furniture was being conveyed with the sale.

For the most part, people are honest and are not intentionally trying to kill the contract, but an abundance of honesty and careful inspections can guarantee a smooth transaction. 

And don’t forget the emergency money on the top shelf of the kitchen cabinet on the day you move. That could stretch the bounds of honesty.

Where did my parents’ Florida go?

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

In the early ‘70s, my parents moved to the east coast of Florida, inland from Pompano Beach. They bought a brand new two-bedroom, two-bath condo overlooking the pool for about $20,000. They were in heaven to be away from the New York winters and to live in what they perceived as a “fancy” place.

In those days, Florida offered properties for all retirees in all price ranges to enjoy the sunshine and affordable living. However, things have changed a lot in Florida and it’s not your parents’ Florida anymore.

Those of us who live in Florida don’t have to be told how expenses have gone up in the last several years. Insurance, property taxes and HOA fees have all increased. Nevertheless, buyers are still coming just a little more well-heeded then in previous years. There are Florida counties where the income of people moving in from other states in 2022 surpassed that of existing residents, based on the most recent Internal Revenue Service and Census Bureau data. 

Meanwhile, middle-class Florida residents are leaving and looking for a more affordable location. The Carolinas are providing an alternative to Florida, with lower property values and a lower cost of living. 

Even mobile home communities, which were always an alternative for low-income retirees, are getting expensive. Most of them are now owned by corporations that may be buying them for investment development down the road.

The real estate developers are focusing their new construction on the high-end market with more upscale offerings. Lakewood Ranch, the master planned community in Bradenton, has properties ranging from townhouses in the $200,000 range to palatial houses listing at more than $3 million. According to Lakewood Ranch data, home sales grew from 2023 to 2025 in two price categories – $1 million-plus and below $300,000 – and decreased in the ranges in between where middle-class retirees would normally buy.

The influx of wealthier buyers is adding pressure to an already difficult housing market. The average home value in Florida was $372,000 in November – a decline from recent years but a significant increase from 2019 when the average was $246,000. 

Then there is the ultraluxury market in and around Miami. The insanity of this market is totally unrelated to the average person. According to Miller Samuel, an appraisal and consulting firm, there were four real estate transactions above $100 million in 2025. What would my parents think? 

Even the senior living communities in Naples, one of the super high-end housing areas in Florida, are starting at $600,000 and ranging to $9 million. So, if you’re thinking of growing old in a Florida senior care facility, you might have to reassess your plans.

The home pricing betting platforms are also getting very popular. Robinhood and Kalshi are accessible if you’re in the betting mood or just looking for another opinion on buying and selling properties. My opinion is that these platforms can be very dangerous to the average homebuyer who may be getting information based on a national trend and not applicable to their local area.

For sure, my parents would be shocked if they woke up in 2026 and saw the prices on similar two-bedroom, two-bath condos like they bought in 1973. But everything changes, and sometimes it changes too fast. If you’ve lived here for 20 years, you’re sitting pretty, but new retirees to Florida are having sticker shock.

Castles in the Sand: A flipper is more than a pet dolphin

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

If you love dolphins, all you have to do is walk along any beach on Anna Maria Island and you’re sure to see them. But these are not the “flippers” we’re talking about today. Today, we’re talking about house flippers who may not be quite as friendly.

Call it “get rich quick” or call it “house flipping,” the goal is to buy low, invest very low sums of money to clean and renovate and sell high. If you’re lucky enough to do that consistently, you’re a flipper.

It’s certainly not impossible to become a full-time flipper. In 2024, flipping accounted for 7.6% of all single-family and condo sales nationwide. Since then, there has been a decline and flippers are faced with the same lack of inventory as conventional buyers. 

The amount of risk and uncertainty in the flipping business can range from the glory at the top to the failure at the bottom of a real estate transaction.

The worst-case scenario for a flipper is not being able to flip at a price that makes sense and ends up with a reasonable profit. Now, the poor flipper has to not sell and then rent the property, which presents an entirely different set of problems, primarily reducing any potential profit. 

The trick is to identify a home with “good bones” and bad hygiene. Trashing out and cleaning may not be glamorous, but it does the trick. Add a coat of soft gray paint and you’ll be surprised how good the white appliances look when the grime is gone.

So how do you start? Research the market and understand local trends, property values and demand. Wherever you are within the distribution of this newspaper, you’re near the water, and that should be your primary goal. Unfortunately, because of last year’s storms, there have been a lot of houses that were damaged or flooded. I would laser focus on one of those if they haven’t already been snapped up.

Securing financing is next. Traditional lenders frequently hesitate to finance investment properties. Flippers love cash or short-term financing and sellers love prequalifications.

In the flipper’s bible, if there is such a thing, you’ll see something called (ARV), which stands for After Repair Value. This is the potential market value after renovations. The rule is that you should pay no more than 70% of the ARV, minus the estimated repair costs to ensure a sufficient profit margin.

Finally, just like any seller, price competitively and market effectively, preferably working with an experienced local real estate agent.

Since you don’t need a license to be a flipper, you can start immediately. But you do need to comply with all state property sales laws. Do a thorough title search, and even though you’re experienced, you may still need the advice of an engineer or home inspector. 

After last year, anyone with ownership of a property should have insurance – even if you plan on flipping quickly. If you’re lucky enough to make a profit, you will be subject to capital gains taxes since the government doesn’t give investors any capital gains relief. Forming an LLC is not required but is recommended to protect your personal assets from lawsuits that may arise on your investment property.

In the less sophisticated days of television, there was a show called “Flipper”. Flipper became the pet of two young boys who had adventures that kids on Anna Maria Island could only imagine. Flipping houses is not nearly as charming as Flipper the dolphin, but it could be lucrative if done right.

Castles in the Sand: Critical ignoring and crystal balls

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

The best thing that has happened to the real estate vocabulary in recent years is called critical ignoring. Certainly, it’s not just applicable to real estate, but by golly it works.

Critical ignoring comes from the internet, doesn’t everything, and the artificial intelligence that drives it. Essentially, it means you should take everything you read with a grain of salt or totally ignore.

When it comes to real estate statistics reported on a national level, I prefer the ignore option. It’s not that the numbers aren’t correct; they are. It’s just that real estate is all local, and what applies in downtown Boston may have zero relevance on Anna Maria Island.

There was a report I read, right around Christmas, which was extremely broad in its reporting about condo owners facing the worst market since 2012. Across the board, rising homeowner association fees due to higher insurance premiums and maintenance costs are making condominium purchases less affordable. Single-family homes also have higher maintenance and insurance costs, don’t they? Large metro areas are suffering more with a glut of supply weighing on prices.

And good old Florida can never catch a break it seems. Insurance costs and hurricanes are totally spooking buyers, in addition to the Florida condo market taking a major hit since the Surfside collapse – ignoring the fact that Florida is a big state and Surfside is a tiny place. Actually, the laws put in place after Surfside have done a lot to improve condo living in Florida. In spite of all of this, condo owners have gained equity since they purchased. Go figure. 

Sorry, but most of this can be critically ignored. Floridians love condo living and that’s not changing anytime soon. Prices may go up, prices may go down, insurance is always an ongoing conversation, and the cost of maintenance will always increase. 

Now, to the crystal balls about this year’s housing market. The op-ed I read has predicted that mortgage rates will be somewhere between 5.75% and 6% this time next year. Declining rates and increased inventory should spark more home sales, especially if the overall economy perks up. Prices will flatten, but there will not be a significant decline in prices.

Real estate professionals will find themselves working for major companies, with the possibility of large brokerage or real estate holding companies attempting to acquire a prominent homebuilder.

And believe it or not, Netflix’s real estate programs, which I love, will help inspire some young people to consider real estate careers. Now that should not be critically ignored.

Time for the December sales statistics reported by the REALTOR Association of Sarasota and Manatee:

Single-family homes closed 5.6% fewer properties this December than last December. The median sale price was $491,500, down 0.1%, and the average sale price was $653,048, down 3.3%. Median time to contract was 55 days, compared to 56 days last year. The month’s supply of available properties was 4.3 months, compared to four months last year. 

Condos closed 13% more properties this year compared to last year. The median sale price was $307,500, down 6%, and the average sale price was $352,068, down 2.7%. Median time to contract was 63 days, compared to 56 days; and the month’s supply of available properties was 6.5 months, compared to 6.9 months last year.

Let’s not critically ignore these numbers. The season is just starting and it’s not critical yet. 

Castles in the Sand: Sunny-side Up

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

Last week’s column was a bit of a downer. I’m not saying it wasn’t true, only that real estate sales need a sunnier pathway in order to encourage motion, so let’s see if we can let the sun shine in.

First of all, the fact that homeowners are sitting on more home equity than at any other time in history is not necessarily a bad thing. Not everyone wants to move and many Americans are just as happy to live in their current home atop a mound of equity with a low mortgage rate and wait to retire. Not exactly torture.

Second, the ultra-low interest rates we experienced five years ago gave many homeowners the opportunity of owning a home for the first time. This action could easily come back years from now as the one single thing that turned the United States housing market around.

Finally, between the years 2003 and 2008, mortgage interest rates floated between 6.5% and 5.87%, getting close to where we are now. And guess what? People bought houses every day.

After the third time this year the feds lowered interest rates, the market is finally starting to respond. As of early December, the average 30-year fixed-rate mortgage rate was hovering at about 6.2%. On December 24th, Freddie Mac gave everyone a Christmas gift, lowering the fixed rate to an average of 6.18%.

There are, however, buyers out there who think they’re entitled to a 3% rate and will refuse to buy unless they get it. I would direct these buyers to Freddie Mac’s mortgage rate history and they’ll see rates as high as 16%, and we didn’t lose the real estate structure of the country.

The housing market has been stuck in low gear for some time now, however, home sales rose in November nationally for the third straight month. These three consecutive months of rising sales is the longest streak since December 2024. In addition, mortgage rates have been falling in recent months, boosting home buying activity. Buyers are taking advantage of the slight improvement in affordability and more would likely jump into the market if mortgage rates fall further.

Florida recorded 17,674 closed sales of existing single-family homes in November, up 3.4% over last year. Condo sales were also up 1.6% in the state, totaling 6,099 sales. Although it’s difficult to transfer the end of year trends into the next year’s spring buying season, the economists are not seeing anything in these sales numbers that give us a reason to be pessimistic as the year turns over.

There’s a lot of demand in Florida waiting to be unlocked as affordability improves – and improvements we do see, if at a snail’s pace. Florida remains a very attractive destination for out-of-staters and the only impediment in the last couple of years has been affordability. All of this offers some hope that the housing market nationally may finally show signs of life in 2026; and I predict Florida will be leading the way. 

If you’re a homeowner who is clinging to your 3% mortgage and come hell or high water you won’t give it up, you need a reality check: those rates aren’t coming back. Don’t sacrifice your family’s happiness and security because you’re frozen in place.

I thought I would end my first column of the new year on the light side. My friend who lives in New York City shared with me something she saw in the window of a liquor store while she was out for her afternoon stroll: “We don’t have flu shots, but we do have wine shots.” So, there it is, it doesn’t get any better than that … Happy New Year.

Financially irrational real estate market

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

New Year’s Eve is tradition­ally the night of hope for the new year, resolutions and good wishes. When it comes to the real estate market, 2026 isn’t promising much of a variation from the old year, but hope is eternal and humans are optimistic.

Homeowners are locked in place trapped by their low-interest rate mort­gages designed as a vaccination against recession when the pandemic hit. This is not a new topic; anyone who reads real estate news online or in the paper can find discussions practically every day about why homeowners with high equity and low mortgages won’t move.

There are millions of homeowners who are wealthier on paper than at any time in history. They have record equity, incredi­able low interest rates and many with homes that have appreciated by double digits in only a few years.

So, what’s the problem? You would think they would be running to their local broker to list their home and cash in. The problem is, per Realtor.com, for these owners to buy a typical home in today’s market would require an estimated payment of more than 73% than they currently pay. For most that’s a non-starter; even if they can afford the extra payment, the physiological effect won’t let them budge.

When mortgage rates started falling, almost overnight, to as low as 3%, demand surged for the lower rate to refinance or to purchase. Buyers saw a pathway to purchase their first home or move up home because with lower rates the monthly carrying costs took a nose­dive resulting in more people qualifying for higher mortgages.

With buyers coming out of the wood­work, it didn’t take long for the inventory to get snapped up, pushing prices upward. Builders were attracting buyers so fast the supply chain could not keep up the labor, supplies and zoning changes necessary to meet the overwhelming response.

All of this competition pushed prices up so far that values surged by 25% to 40% in some markets.

Needless to say, homeowners were celebrating their new equity and looking down the road at long-term stability. But if it’s too good to be true, it usually is, and it didn’t take long for inflation to take over, forcing the Feds to move rates in the opposite direction. Within 18 months mortgage rates more than doubled, passing over the 7% mark. This dried up the refinance market and buyers were having trouble living with the shortage of inventory and higher priced properties, along with a doubling of interest rates.

The real estate market froze, but not because of a lack of homes alone. It froze because those who owned homes couldn’t justify leaving them. This is completely the opposite of a healthy market. A healthy market should encourage mobility, opening up space for new home buyers, keeping the cycle going.

The real estate structure needs some creative ideas and one of them is portable and assumable mortgages. At one point we had a fair number of assumable mortgages, but that market is rarely offered anymore. Portable mortgages exist in other countries and would certainly open up the mobility of properties. Also, incentives to downsize, like tax credits and closing cost incentives, could also unlock homes. Whatever it is, someone should take the lead on this, whether it’s lenders or political office holders.

Paying more for less is not in the American DNA so it may take a long time to release millions of homeowners from the mortgage trap.

Happy New Year and best wishes for a prosperous year.

For sale: Haunted house

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

Every year I try and write a light column at the end of October about disclosure of what I’ll call “stigma­tized properties.” Last year, I skipped this topic for about three weeks since most of us were in the middle of flood and hurricane cleanup and there was nothing funny about any of it. This year, however, is a totally different story and with a little bit of luck, next year we won’t have any hurricanes to write about – so on to the paranormal.

In most U.S. states, sellers are not legally required to disclose alleged paranormal activity unless they have a history of marketing the property as haunted. However, some states like New York, New Jersey and Massachu­setts have specific laws, and a seller’s disclosure is mandatory if asked directly, since failing to answer truth­fully can have legal consequences. In addition, some states may require disclosure for certain types of deaths, like murder or suicide, regardless of paranormal claims.

The best way to handle a property that may be stigmatized or has a repu­tation for being haunted is to answer a buyer’s question truthfully to the best of your knowledge and ability. Stigma­tized properties can impact their value and could lead to a lower sale price even if there is no proof of paranormal activity, so just like everything else in your home, honesty is the best policy. Also, if you have any concern about paranormal activity in your home or a home you’re interested in buying, check the state’s disclosure laws.

But what about Florida laws regard­ing paranormal activity? Florida does not require sellers to disclose para­normal activity in a home. Florida law mandates the disclosure of “material facts” that affect a property’s value, but it does not consider hauntings, deaths or crimes as material facts legally requiring disclosure. Buyers who may be concerned about such issues must talk to sellers directly, and sellers should be transparent about what they know, if anything, on this topic.

In addition to paranormal activity, Florida law does not require sellers to disclose deaths at the property, in­cluding homicide or suicide. Crimes committed on or near the property also do not need to be disclosed. And nearby sexual offenders do not need to be disclosed. This information is available to buyers by checking public databases or asking their attorney to do so.

Basically, Florida requires disclosure of material defects like roofs, electri­cal systems, appliances, consistent flooding, hidden mold and a variety of other material defects that could affect the value of a property.

Paranormal activity, no matter how much it may be a reality to some people, is not considered a material de­fect by the state of Florida. And if some of those crazy Northeastern states want to make laws about paranormal activity in properties for sale or include it on their disclosure forms, well, best I don’t comment on their decisions.

I think it would be a great year to dress up for Halloween and enjoy the fantasy of the holiday. If you happen to see a ghost or poltergeist, just remember they’re not a material defect, no matter how real they look. Always answer questions about your home truthfully and you’ll be fine. Happy Halloween.

Mortgage rates: How did we get here?

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

On Sept. 17, when the Feds lowered the benchmark rate, I thought, about time. Although the ¼ point reduction wasn’t enough to bring buyers out of the closet, it was the Feds’ promise of two more rate reductions before the end of the year that for a fleeting moment put a smile on my face, but maybe a bit too soon.

Borrowers who have been waiting for relief from high rates might have to keep waiting. Just to be clear, mortgage rates aren’t set by the Fed, so unfortunately, don’t bet on any major drops soon. For a brief moment in time, the average rate on a standard, 30-year, fixed-rate mortgage drifted down to 6.26%. This was the lowest level in nearly a year, then a week later edged back up to 6.3%. Now we’re hearing that it’s not expected to change much going forward.

The Mortgage Bankers Association recently estimated that mortgage rates would actually increase to 6.5% by the end of the year – what? Why is this happening? While anxious homebuyers are watching the Fed, what they should be watching is the bond market and treasuries in particular.

The big boys on Wall Street are watch­ing the long-term bond yields, which have been drifting lower for several reasons. Among them is the expectation that the Fed will soon start cutting interest rates but also raise the risks of a recession. One big reason that home loan rates have been high in recent years is that banks have been buying fewer mortgage bonds. I don’t know about you, but my head just exploded.

Meanwhile the average homebuyer just wants to get their life moving again. This is what you get when half the country refinances to a 2-3% mortgage – housing gridlock.

There’s an interesting story I read in early September about the danger of having an ultra-low-rate mortgage, so here goes: Once upon a time, there lived a nice young couple with two adorable little girls close to the beach in Florida. Even though their life seemed like a fairy tale, it wasn’t, and they decided to divorce. Sad as this was, their story became sadder still when they realized they couldn’t sell their home and afford to live separately near their children. And this is where it got complicated.

This couple, like many others in the country, took advantage of rock bottom mortgage rates in 2020 at roughly 2%. This was, of course, a good financial plan at the time, however, now that they are divorced, they are experiencing the “lock-in effect.” Basically, homeowners staying in place and not moving because they don’t want to give up their low interest mortgage creates a complicated lifestyle for the couples and the children. This couple has decided to both live on the same property, he in what they call the “beach bungalow” and she in a 19-foot Airstream trailer in their yard. Both have access to both properties, and the children are traded back and forth. And other ex-spouses are also finding a way to keep their mortgage by leaving the kids living in the house with the parents rotating in and out.

With the interest rates still high and the shortage of homes pushing prices up, it looks like couples like these will have this fractured living arrangement for a while. It’s a sad state of affairs when the only reason you talk to your ex-spouse is because you have a 2% mortgage. How on Earth did we get here?

What are capital gains?

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

I’m always surprised when I talk to people who have owned a home for maybe decades but have no clue what their tax responsibility will be if they sell that property. No one wants to think about giving money to the federal government so they don’t, but not preparing for the day you sell your home could be one of the biggest mistakes of your financial life.

Let’s start with what exactly a capital gain is. Capital gains is a tax on the profit you make from an asset such as stocks, real estate or other investments. For the purpose of this column, we’re going to talk about capital gains on real estate. Since not all real estate is created equal, it’s important to define your real estate holding, with the most standard ones being a primary home, secondary home or investment property.

Secondary homes and investment properties are best discussed with tax preparers who specialize in this area. However, most of us own a home that we live in, called our primary residence, and the federal government has tax exclusions available to homeowners when they sell their primary home. This doesn’t mean you should not seek out professional advice.

Since 1997, homeowners can reduce taxes on the sale of their primary prop­erty that you have owned for two out of the five years leading up to the sale. The IRS allows single taxpayers to exclude $250,000 of gain and married taxpayers filing jointly to exclude $500,000. According to LendingTree, American households are sitting on $34.5 trillion in home equity in the first quarter of 2025. A good portion of these funds will be faced with tax bills upon sale of the property, so it’s vital that homeowners understand their potential tax liability.

There is a way to further reduce the capital gains on your primary home by adjusting the basis of your home. Your home’s basis is generally calculated by adding the cost of capital improvements to the price you paid when you acquired your home. For instance, if you replaced your roof or remodeled your kitchen, those costs are considered capital improvements, and should be added to the price you paid for your house, thus reducing your capital gains liability.

There are two other ways to reduce your capitals gains liability but they will only appeal to a small percentage of homeowners. If you can afford to finance the sale of your home, that will save you capital gains. Or converting your property to a business property will give you the ability to dispose of the property via a 1031 like-kind exchange at a future date.

There is an act introduced by Rep. Marjorie Taylor Greene identified as “No Tax on Home Sales Act” (HR 4327). The bill aims to eliminate federal capital gains taxes on the sale of primary residences. Keep in mind if you reside in a state that has state capital gains requirements, you would still be responsible for paying capital gains based on your state’s requirement. States like Florida without a state tax will pay no capital gains on the sale of a primary home. President Donald Trump has taken an interest in this bill, which his administration considered in July.

Study up on capital gains if you’re within a few years of selling your primary home. Hopefully, you kept all of the receipts that would be considered a capital improvement, and start thinking about the capital gains you may be heading for.

Finally, meaningful declining mortgage rates

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

The Federal Reserve finally graced us with a lower interest rate bone on Sept. 16 that should make everyone happy. The reason this ¼ point reduction is important is that the Federal Reserve all but promised two more rate reductions before the end of the year.

Nevertheless, there are homeowners with low-rate mortgages who are still reluctant to sell and move on as much as they may want to. A quarter point or even a half point is just not enough encouragement for them to give up a once-in-a-lifetime 3% mortgage. So, the market may continue to be locked up with prices still pushing up for those properties that come on the market, and there aren’t too many of them.

However, there are still benefits to modest lower rates, especially for a first-time borrower, enough to qualify many buyers at the lower rate to be approved for financing. Here on Anna Maria Island and all of the other coastal communities in the area, including our neighbor, Cortez, buyers in these areas are less affected by mortgage rates. Therefore, the market for high-end properties will be less influenced by mortgage rates than by the overall economy.

Many if not most high-end buyers are all cash and even if they decide on a mortgage to free up more cash, they will likely not decide on buying because of a quarter or even a half point reduction. They’re eyeing the health of the general economy and the position of the lawmakers, particularly in Congress, to business and the stock market.

Nevertheless, a healthy real estate market generally is good for all of the real estate market. There is a trickle-up effect of a robust lower-end market positively impacting all price points in the marketplace.

August may be one of the slowest real estate months of the year, but sales are made nonetheless. These are the sales statistics for August reported by the Real­tor Association of Sarasota and Manatee:

Single family homes closed 5.7% more properties this year compared to last August. The median sale price was $467,640, down 5.3%, and the average sale price was $665,577, up 9.1%. The median time to sale was 101 days compared to 103 days last year, and the new pending sales were up 16.7%. The month’s supply of available properties was 4.6 months compared to 3.9 months compared to last year.

Condos closed 7.0% fewer properties this year compared to last year. The median sale price was $291,250, down 11.7%, and the average sale price was $354,958, with 8% fewer properties compared to last year. Median time to sale was 120 days this year compared to 139 days last year. New pending sales were 213 sales compared to 175 sales last year. The month’s supply of available properties was 6.4 months compared to 5.7 months last year.

According to the Realtor As­sociation, there is modest growth and stability in the single-family market, with the condo market down. Single family homes continue to be competi­tive, and the condo market is becom­ing more and more buyer friendly.

Will the Federal Reserve move the needle on more rates as indicated or will it just be more of the same old same old? The outcome is evolving, so stay tuned.

Mortgage fraud and hurricanes

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

You might not think that mortgage fraud and hurricanes have much in common. But if you get caught in a mortgage fraud, it could end up being the biggest hurricane you’ve ever seen.

There have been several stories recently in the news about mortgage fraud. This has been a long-running issue in the housing industry and now the Justice Department is getting serious about investigating.

But what is mortgage fraud? Mortgage fraud or mortgage scams are committed when someone who is involved in the process of obtaining a mortgage loan from a lender is deliberately deceitful and fraudulently misrepresents information that the lender relies upon when they agree to fund, insure and/or mortgage the property.

Frequently there is more than one party to a mortgage fraud or scam, among them, buyers or sellers of residen­tial property; buyers or sellers of com­mercial property; property investors; real estate agents; closing attorneys; property appraisers; escrow agents; home repair companies; and mortgage brokers.

Since mortgage rates have increased, buyers are motivated to get the best rate possible. Lenders typically offer better terms on mortgage rates for a primary residence with a higher mortgage ratio for a primary residence rather than a second home. For example, the down payment for a primary residence can be as low as 3% to 5%, compared to 10% to 20% for a second home and even higher for investment properties.

Many homeowners commit mortgage fraud simply to ensure they are able to purchase the property they want, by misrepresenting, omitting or otherwise telling lies about their financial infor­mation to qualify for a loan.

A term called “asset rental” becomes mortgage fraud when an applicant for a loan rents assets from another person or entity. Borrowing these as­sets is meant to inflate the borrower’s worth just long enough for them to be approved for the loan. Once approved, the assets are returned to whomever or from wherever they were received.

Inflating appraisals is another fraud common in an increasing equity market. The appraisal is inflated to make the property value appear more than it actu­ally is, tricking the lender into approving a larger mortgage than appropriate.

We are dead center in hurricane season and in Cortez where I live, we have had more than our share of hurricanes and flooding since last year. The fishing village and businesses along Cortez Road including Slicker’s and Foxy’s in particu­lar have suffered. Now that they are back in business, let’s hope they won’t be hit again. We need small businesses and the restaurants in the village to continue the way of life that makes this area unique and rare in Florida.

On a personal note, the condos where I live on the Cortez peninsula also experienced 4 feet of water in the first event and multiple tornadoes in the second event. We lost about half our landscaping and had over five units that incurred so much damage they were unlivable for months. The expense to rebuild mostly came out of resident’s personal funds or as­sociation funds. Another reminder to homeowners is that insurance rarely covers all storm related repairs.

No one wants to live through that again, so stay safe and be smart.