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Tag: Manatee County real estate

Lipstick on a pig

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

At the risk of having all of Anna Maria Island and most of Manatee County mad at me, it looks like our current housing market is a bit of a pig. Pigs can be adorable, or they can be nasty, so I hope that our pig is trending to the adorable side.

The Realtor Association of Sarasota and Manatee published its year-end real estate market report a few weeks ago. Their job is to analyze the Sarasota and Manatee region and to put the best possible spin on the data.

Their position is that the market is transitioning toward a balance following the significant disruptions of the pandemic years. Certainly, there is increased time on the market and higher inventory. Nevertheless, this is a sign of normalization of the market similar to the pre-pandemic market of 2019.

They point to median sale prices being well above 2019 levels but there are still price declines from 2023. Transactions are slower with longer time to sale and longer time to contract increasing year-over-year. As we know, inventory has increased, shifting toward a more buyer-favorable market. According to the National Association of Realtors, existing home sales fell 0.7% in 2024 from the prior year.

Nationwide, U.S. existing home sales fell in 2024 to the lowest level since 1995. Much of this is due to higher interest rates, which just topped 7% a couple of weeks ago, a psychological tipping point. Higher home insurance rates all over the country and property taxes are adding to the pain of buyers, and we are yet to see the effect that the storms and fires will have on homeowner insurance.

Since the country is still trying to dig out of a recession, the weak housing market is just adding to that problem. Everyone in the real estate industry – including contractors, furniture retailers and appliance stores – is hurting. It will also have an impact on the Federal Reserve’s decision on lowering interest rates.

I’ve talked about this many times, but although to a lot of buyers 7% interest rates are incredibly high, they’re not. The real estate market has survived years with double digit rates and people still bought houses. The financial markets are very fluid and homeowners can always refinance down the road if there is a drop in rates.

One other piece of news I found that I thought was worth mentioning is California residents looking to Florida as either a temporary or permanent relocation. There has been a flurry of California transplants trickling into Florida for a while to escape high taxes, so it’s not surprising this may be increasing.

Brokers have reported a lot of inquiries from California residents who need immediate housing or some who were already interested in the Florida market and are now getting serious after the wildfires. Florida is one of the top locations the fire victims are looking at for refuge along with Texas, the Carolinas, Tennessee and Nevada.

Anna Maria Island in many ways is perfect for California residents with our beautiful beaches and many available properties to invest in. If indeed we see this activity, keep in mind these buyers are high-end buyers and are smart, so don’t overprice properties.

My usual optimistic outlook about real estate is waning a little. I’m probably suffering the same malaise as so many of us. However, after four months, it’s time to get back on the horse or the pig and move forward.

Real estate market in uncharted territory

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

Everyone likes to speculate on what the real estate trends will be going forward. The problem is we are in uncharted territory, so making predictions could be a fool’s errand.

What is it that we do know? We know we have lived through a devastating hurricane season, leaving homes all over Manatee County damaged. Anna Maria Island and other coastal communities bear the brunt of the damage but homeowners fronting the Manatee River have experienced their fair share of damage.

We also know the mortgage interest rates; the Federal Reserve lowering its rates in December did nothing to improve mortgage interest rates, just the opposite – they went up. On Jan. 17, mortgage rates rose above 7% for the average of a 30-year fixed rate mortgage for the first time since mid-2024 per Freddie Mac.

This uptick in rates was totally missed by housing executives and economists who incorrectly predicted that mortgage rates would come down. Six months ago, the prediction was that interest rates would be reduced slowly through 2025, and mortgage rates would reach the mid- to high-5% range. For our region, the combination of damaged properties and high interest rates that may also make investors take pause leaves us with a double whammy of uncertainty.

So, what’s the good news? I guess it depends on how you look at it, however, the Florida Demographic Estimating Conference predicts that Florida’s population growth will slow down. In 2024, the conference reported over 23 million in population, an increase of 1.62%. Their estimated growth rate for 2025 decreases to 1.43% and in 2026 down further to 1.33% and keeps declining. Nowhere in their estimates does it show that growth will be reversed; in fact, in 2033, Florida will likely reach well over 25 million residents.

As far as Manatee County’s position in this growth, in 2024 the population increased to just over 452,000 residents and by 2028 will potentially reach almost 485,000 residents. Looks like the slowdown won’t be an issue in Manatee County – not surprising based on the avalanche of new construction all over the county.

Let’s take a look at the December real estate statistics reported by the Realtor Association of Sarasota and Manatee:

Single-family homes in Manatee County closed 6.2% more properties this December compared to last December. The median sale price was $492,045, down 1.6%, and the average sale price was $675,263, down 2.8%. The median time to contract was 56 days compared to 35 days last year and the number of new listings was up 19.3%. The month’s supply of available properties was 4 months compared to 3.3 months last December.

Condos in Manatee County closed 24.9% more properties this December compared to last year. The median sale price was $327,000, down 6.6%, and the average sale price was $361,827, down 4.3%. The median time to contract was 56 days compared to 38 days last year and the number of new listings was up 43.5%. The month’s supply of available properties was 6.9 months compared to 4.6 months last year.

More next week about what these numbers may mean and the overall yearly trends.

Uncharted territory is probably an understatement since it’s almost impossible to get a firm answer about the future other than an overall feeling that everything will come back. As always, everyone needs to make decisions based on their personal needs, uncharted or not.

Fondly remembering the 80s

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

If you loved shoulder pads, Cabbage Patch Kids and the Rubik’s Cube, you probably loved the 80s. But one thing not to love about the 80s was the home buying affordable rate, which has just been outdone this past June.

Today’s housing market is the most difficult in decades. This has been an ongoing frustration for first-time home buyers in the Gen Z and Millennial generations. Home buying affordability dropped last fall to the lowest level since September 1985, and it fell near that level again in June.

The good thing for the mid-80s buyers is they had much more housing supply. Homes became more affordable as mortgage rates fell in subsequent years, adding to the inventory. In September 1985, 72% of consumers said it was a good time to buy a home, according to the University of Michigan’s consumer sentiment survey. In June 2024, just 12% said the same.

And it gets worse. According to the National Association of Realtors’ affordability index, in January 2021, a family needed an income of $49,152 to afford the median-priced single-family home with a 20% down payment. In June 2024, just three years, the family would need an income of $110,544 to make the same purchase. Added to this is the cost of property taxes, home insurance, car insurance and a list of other expenses related to homeownership that have increased.

In addition to the affordability rate, there is the number of home sales. The existing home sales slid in 2023 to the lowest level since 1995 and have held at lower levels in the first half of 2024.

There is a group of buyers, however, who are somewhat unfazed by the affordability rate that first-time buyers are facing. And those, of course, are the wealthy. The high-end market is doing a lot better than the 30-year-olds looking for their first home. Wealth allows people to care more about having their ideal home than holding on to a 3% mortgage rate. They know they can always refinance later if the rates drop. But nonluxury buyers typically finance their purchases and are more sensitive to interest rates.

The Federal Reserve met last week and took action on interest rates for the first time in several years, cutting their rate by half a percentage. This does not always translate into lower mortgage rates, which have been going down and are now just above 6%, but it might, and it could also have a positive effect on restoring confidence in the market.

Now it’s time for the August Manatee County home sales, reported by the Realtor Association of Sarasota and Manatee. Single-family homes closed 0.2% fewer this August compared to last August. The median sale price was $494,000, down 5.9%, and the average sale price was $609,789, down 14.8%. There were 3.6% more new listings and the month’s supply of available properties was 3.9 months, up 39.3%.

Condos closed 11.2% fewer this August. The median sale price was $329,990, down 8.1%, and the average sale price was $385,931, down 2.0%. New listings were up 3.8% and the month’s supply of available properties was 5.7 months, up 7.27%.

If I were spinning, I could say it’s summer and it’s always slow, condo buyers are still cooling off in their northern homes and more new listings is a good thing. But I won’t insult your intelligence; the market is slow, and I think we have a few more months before we can get a real read on what’s going on.

No one really wants to go back to the 80s – didn’t we all hate Cabbage Patch Kids? Hopefully, an adjustment in mortgage rates will benefit non-luxury buyers and move the market up. A rising tide lifts all boats.

Will declining mortgage rates fix the market?

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

It may take more than the Federal Reserve throwing us a lower interest rate bone this month to make everyone happy. Nevertheless, when it comes to lower rates, we’ll take what we can get, but will it solve the real market problem?

Even though mortgage rates in the country are at the lowest level in more than a year (6.5% on average for a 30-year fixed rate mortgage), it may not make much of a difference for homebuyers. With record housing prices and limited inventory, a one quarter lower blip in rates for most buyers can’t make up for the higher prices and lack of inventory.

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 continues 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 lower rates, especially for a first-time borrower.

For a $500,000 mortgage, the difference between a 6.5% rate and an 8% rate is $509 a month, enough to qualify many buyers at the lower rate to be approved for financing. There is speculation that the movement for a lower rate has already been figured in and another rate cut this month may not have a big impact.

Based on the July sales statistics in Mantee County, there are 10% more single-family properties available than July of last year but only 0.4% more condos on the market. Since condos are more of a seasonal sale, it’s not surprising to have fewer available properties than single-family.

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, on business and the stock market.

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

Finally, last week we talked about the revision of broker compensations. There are any number of ways for real estate professionals to adapt to the National Association of Realtors’ new ruling and if you’re buying or selling a property, you will be exposed to a variety of opinions and operating guidelines. As always, choose a real estate company and individual you trust and are comfortable with and roll with it; eventually it will become clearer.

Will the Federal Reserve move the needle on rates or will it just be more of the same old, same old? Stay tuned.

The day has arrived

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

Starting this month, the rules have changed for governing real estate commissions. We’ve been talking about this since the National Association of Realtors (NAR) voted on this change to the commission structure in March, a structure that has been in place for over 30 years.

By now, most real estate professionals have positioned their real estate wheels to work within the new regulations. They have likely also developed a dialogue to have with both buyers and sellers in this market. So, let’s go over some of the significant points.

Typically, sellers paid the agents on both sides of a transaction, selling and buying. This was a percentage stated at the time the property was listed. Sellers will still agree on a listing commission with their agent, however, now have more flexibility to decide whether to offer a commission to a buyer’s agent and what that commission will be. There is no commitment on the seller’s part to automatically offer a commission to the buyer’s agent and the buyer’s agent is free to request a commission fee at the time they present an offer. Like everything in a real estate transaction, it becomes a negotiable point.

The sticking point here is your listing agent may tell you that if you don’t offer a selling commission, selling agents won’t bring buyers to the property. There is of course some truth to that, however, if the buyer’s agent’s commission becomes part of the negotiation, then the agent has no reason not to bring buyers. Also, on popular properties, a buyer may even step up and pay their agent directly if a buyer’s commission cannot be satisfactorily negotiated.

You also need to set guidelines with your listing agent relative to their commission should they find the buyer for your property. Traditionally, when a buyer didn’t have an agent, the seller’s representative often kept the commission offered to the buyer’s agent. Again, this should be agreed upon at the beginning of the listing agreement.

So while you’re thinking about this new round of chaos, let’s go over the July sales for Manatee County published by the Realtor Association of Sarasota and Manatee.

Single-family homes closed 9.9% more properties compared to last July. The median sale price was $499,000, lower by 3.1%, and the average sale price was $661,104, up 3.0%. The median time to contract was 52 days this year compared to 29 last year. There are 10% more listings this July, making the month’s supply of available properties 3.9 months compared to 2.7 last year.

Condos closed 9.6% fewer properties this year. The median sale price was $329,000, down 6% and the average sale price was $354,404 down 8.8%. The median time to contract was 77 days this year compared to 47 last year. New listings were up 0.4% and the month’s supply of available properties was 5.6 months compared to 3.2 months last year.

Per the Realtor Association, both Sarasota and Manatee counties experienced a shift in the market in July. Median prices declined and we are experiencing longer times to sell. Basically, they feel the market is balancing out and buyers have more purchasing power.

The National Association of Realtors says it’s too soon to speculate on how the market will change and I certainly agree. Some of the early feedback around the country where agents have already started with the new regulations is that total commissions appear to have come down. Some of the commissions could be reflective of the value of the property and the level of marketing required.

It’s hard to say at this point, but we do live in a very high real estate price point environment and agent commissions could reflect that.

Real estate brats

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

One of the things I love about writing this column is that while I’m doing my research, I frequently stumble on things I never heard of and likely never would in my day-to-day life. This month I learned a new word, “brat.” Brat, of course, is not a new word; it generally refers to someone spoiled or childish. However, this version of it started with an English singer who I had never heard of either.

So, what does this have to do with real estate? If you don’t know, just ask any real estate professional who has worked with fussy buyers who have champagne taste on a beer budget. Dare I say, “brats.”

Part of the reason these buyers feel entitled is because the cost of starter homes has soared in many areas of the country to $1 million. There are more than 200 U.S. cities where buyers will find a price tag of $1 million or more on the typical starter home. The housing shortage that worsened over the pandemic has helped drive the cost of all homes to new heights.

Starter homes are generally defined as being those properties in the lowest third of home values in a given region. Currently, 237 cities in the country fall into this category with starter homes starting at $1 million. This is the most ever; five years ago, there were only 84 such cities.

Nationwide, the typical starter home is worth approximately $196,611, which is comfortably affordable for a median-income home. However, starter home values have grown 54.1% over the past five years, even more than the typical U.S. home in the same time frame, which shows 49.1% growth. This increase in value has delayed the first home purchase for many with the median age of a first-time buyer last year at 35, a year older than in 2019.

This research is from Zillow, which also gave us the names of the top five states with cities where you can find all these $1 million stater homes. The top of the list is California with 117 such cities; New York has 31 cities; New Jersey has 21 cities; and Florida and Massachusetts both have 11 cities each in this category.

Even though our property values are starting to level off, Manatee County, according to the June statistics, had single-family homes averaging $736,322. We’re definitely getting into brat territory. In general, homebuyers could have some good news after years of too much competition with an emerging balanced market. Interest rates for the first time are starting to get below 7% and builders are busy all over, adding to available properties.

If you just want to enjoy living your life and you don’t care what anyone else thinks, you’re a brat. If you’re carefree, messy and bold, you’re a brat. If you know what “brat coded” means, you are so a brat. And if you don’t get the “brat” thing, you are so out of it. Let’s hope our buyers aren’t brats and understand the value of our area where there are still a lot of carefree people living their lives on the beach who never heard of “brat.”

Housing market the only thing frozen in August

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

If you’re one of the lucky homeowners who was able to lock into dirt-cheap mortgage rates, well done. You’re one of the winners in today’s peculiar and lopsided housing markets.

This isn’t the first time we’re talking about it and will not be the last. Nevertheless, high interest rates have had an unexpected impact on the country’s housing market. Usually, when mortgage interest goes up, home prices go down. Not this time. Home prices keep pushing up because of the lack of inventory to choose from.

It’s almost getting monotonous to keep saying it, but the fact is there was a “lock-in” effect of ultracheap mortgages secured when interest rates were low, which trapped owners in their homes. It was an unforeseen consequence of years of easy money. Are you listening, Federal Reserve?

Two-thirds of outstanding mortgages in this country have a rate of below 4%, according to Morgan Stanley. The current typical rate is 7%, so homeowners who may want to move will be paying a lot more in their monthly mortgage payments today. Hence, frozen.

The byproduct of lower home sales is the economic consequence related to purchasing a home. People normally splurge to fix up houses before putting them on the market or renovate them after they move in. This important economic category of work has dried up not only for home contractors but also for professionals handling the logistics of transactions like attorneys, appraisers and real estate and mortgage brokers.

The only light on the horizon is the Federal Reserve, which left the door open to lower rates at their September meeting. Also, they have penciled in four rate cuts by year-end 2025 with the prediction being that rates could fall to 4.1% in a year.

Builders in some parts of the country are building smaller, more affordable new homes to attract buyers looking for a lower price point. As an aside, the U.S. house size exploded by 150% between 1980 and 2018, according to Census Bureau data. In 2022, the median house size hit 2,300 square feet. Everybody likes space but maybe it’s time to reduce the footprint of homes. Do kids really need their own bedroom and playroom?

So that news is good, but what about people who really need to sell and move on? Young people on a career path need to consider where they will live and how much that will cost before interviewing for a higher position that involves relocating. Seniors who want to downsize or move closer to family are also reluctant to sell. Even if they can tap into their existing equity, the assumption is their living expenses will be high wherever they go.

As more owners stay put, the number of homes on the market has fallen. Tight supply is pushing prices higher, shrinking the pool of buyers who can afford a home and leaving buyers who can afford one thinking they are overpaying. The National Association of Realtors reports there is around a five-month supply of inventory available. This availability number should be about 62% for a healthy market. The availability for single-family homes in Manatee County as of the June sales statistic is four months.

Even if you’re feeling lucky with your financing decisions, no one wants to be in a position where they feel frozen in place. You never know what curve life will throw at you, so being frozen isn’t good for anyone.

Hot temps, cool market

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

For some reason, I’m finding this summer more uncomfortable than in past years. I considered that I’m just getting older, but I can’t believe that, or maybe reading the sales statistics every month is getting me hot under the collar.

The June nationwide and local sales statistics both came out the same day on July 23, too late for last week’s paper. The numbers are, to say the least, cool if not frigid. It’s no wonder I’m feeling the heat.

Since the national report is printed in most national newspapers you may have already seen it, but it’s my mission to make sure all my readers don’t miss anything. So, these are the nationwide numbers, and the Manatee County statistics will follow for June:

The national numbers are based on existing single-family homes. The median sale price nationally was $426,900 for June which was up 4.1% from last June. The month’s supply of available properties was 4.1 months.

Manatee County single-family home sales were down 4.1% from last June. The median sale price was $518,950, down 1.2%, and the average sale price was $736,322, up 8.4%. The median time to contract was 57 days compared to 37 days last year. The number of active listings was up 56.6% from last June and the month’s supply of available properties was 4.0 months compared to 2.8 last year.

Condos in Manatee County closed 17.2% fewer units. The median sale price was $344,495, down 6.9%, and the average sale price was $416,198, down 11.6%. The median time to contract was 73 days compared to 34 days last year, and active listings were up 72.3%. The month’s supply of active listings was 5.8 months compared to 3.4 months last year.

The National Association of Realtors reports on the nationwide statistics on their website and the Manatee County numbers are on the Realtor Association of Sarasota and Manatee’s website. As you can see, the national median sale price is considerably lower than Manatee County’s, even though they report a 4.1% increase from last June.

Manatee County shows a slowdown in the housing market, as does Sarasota. Markets are influenced by a variety of multifaceted factors – rising interest rates, economic uncertainty, seasonal factors, market saturation with available listings, buyer choices and affordability. The opinion of the Realtor Association is that there are more opportunities for buyers right now, and serious sellers need to adjust their strategies and expectations.

The Federal Reserve has given some indication that interest rates could be falling before the end of the year, which should remove part of the interest rate negative. And with the end of summer and hurricane season, there could also be some pressure lifted off sellers. A real estate broker recently told me when the first snowfall happens in the north, that’s when you start to see the market moving.

Whatever statistics show, it’s still a moment in time, or at least a month in time, and could change next month. Our economy and national conversation is a moving target and could and likely will change with the next news cycle. Therefore, there’s no reason to get hot under the collar. October is just around the corner and I’m not getting older.

Appraisals an art form

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

The last time I did a column about property appraisals was almost four years ago in the middle of the COVID-19 pandemic when the real estate market was all over the place and a fair appraisal was difficult to achieve. Fast forward to 2024 and things haven’t changed that much. An accurate appraisal is still difficult for some of the same reasons.

In 2020, property values were soaring as a result of people relocating to Florida during COVID and inventory was scarce. We still have some of that going on with values up and inventory low, although the inventory aspect is beginning to level off.

Whether you are buying a new home, refinancing your existing home loan, or selling your home, it’s important to assess the value of the property. A buyer’s lender uses an appraisal not only to assess the value of the property but also to determine such things as your interest rate and required down payment.

The property appraiser is only looking at the value of the property. Whether or not a buyer personally qualifies for the mortgage being applied for is secondary to the value of the property. However, the appraiser’s final value determination has a very profound effect on the mortgage being approved. For example, if the appraisal comes in short it will dictate the amount of mortgage the buyer will be approved for. In this case, the lender may ask for additional funds as a down payment from the buyer or ask the buyer to renegotiate the sale price, lowering the amount of the required mortgage. This is why the job of an independent appraiser is so important.

The appraisal fee is billed to the buyer and becomes part of their closing costs. The buyer is also entitled to a copy of the appraisal, which should be reviewed by the buyer for accuracy. Although appraisers are professionals who generally stand by their final analysis, they can make mistakes in square footage, lot size, updates, omissions and other provable details that could influence the property’s value.

In addition, one of the biggest disagreements on property appraisals is the comparable properties the appraiser has used to support the value. Since appraisers rarely go into a property for sale or one that has just closed, they can only decide by driving by and reading listing information. If you feel the value is incorrect and the appraiser will not make an adjustment, there are government resources where a complaint can be filed, especially if this is preventing the mortgage from being approved.

According to the National Association of Realtors, a critical issue impacting appraisals is appraiser shortages, similar to so many other job-related shortages businesses are experiencing. There are stringent educational requirements and regulations that add to the ability to recruit more appraisers. However, I recently read that appraisers are among the highest-paying trade jobs this year with a median income of over $64,000. I have met many appraisers and, in my opinion, it is a very nice career, especially if you have an interest in the real estate market, have a friendly personality and are computer savvy.

Appraisers are mandated to develop a report that is impartial, objective and represents an independent opinion of the value of the property. This is why home appraisals have always been more of an art than a science, now more than ever.

The three-month sofa

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

Tomorrow is July 4, a festive day for the country and Anna Maria Island, where small-town vibes and celebrations still happen. Flags flying, parades, fireworks and barbecues will be on full display, but what about the display of your home if you’re planning on selling it soon? This is where you may want to talk about home staging.

Reading about home staging reminded me of my three-month sofa. When we were selling our New York home and moving to Florida our family room sofa was, you might say, a little odorous. It had barely survived the puppyhood of our dog and there was no way I was embarrassing myself and Duffy in front of the real estate community.

The problem was quickly resolved at one of the discount furniture stores where the furniture was up on racks. When the salesman asked us what we were looking for, I said a three-month sofa. He got it and two days later Duffy’s puppy mistakes were history, and I could boast that we were leaving a brand-new sofa.

Sorry if this was a little long-winded, but the point is don’t have anything nasty in your house when you sell because, believe me, that’s the only thing the buyer will remember. Buyers will also wonder what else in the property has not been maintained if something as simple as a sofa is trashed.

My sofa saga was an easy and inexpensive fix, but homeowners go to great lengths to make their homes presentable for sale. Home staging has gone from catering to high-end properties to sellers in all price ranges who are starting to understand the value of appearances. Requests to hire home staging companies have increased 10% in the first quarter of this year alone and the average cost to stage a home rose 10% to $1,816 compared with the year before the pandemic per Thumbtack, an online service professional platform.

Similar to all professions, staging has a menu of options for homeowners ranging from a one-day consultation to help declutter to a 60-day contract involving new high-end furniture. According to the National Association of Realtors, Realtors can personally stage the home for a minimal fee of around $400.

Virtual staging is currently the cost-cutting option, using software to show what the space could look like at a cost of approximately $100 a room. This could, however, backfire when the buyer is disappointed that the sleek color-coordinated look is not actually in the home when they tour it.

Is it worth the money? Most real estate professionals say yes, it is and that staging a home increased the volume of offers between 1% to 5%. It’s also a built-in way to get ready to move when all your stuff and personal things get stored away.

There are a couple of downsides to staging. The obvious is the cost, but staging can also delay a home getting on the market until the staging is completed. And it may not be as comfortable having to live in a staged home, especially if the selling process continues to take longer.

While you’re watching the fireworks be thankful for our freedoms. The freedom to discuss anything you want to and the freedom to control your assets. Your home is likely your largest investment and this country gives you the freedom to do with it as you like. Not every country in the world lives with that creed; we are among the very fortunate. Happy Independence Day.

Home sales and hurricanes

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

This is one of those times when I just want to put my head in the sand or at least lay on top of it and totally zone out. The weather is hot, hot, hot, the real estate market is cold, cold, cold and the threat of hurricanes is breathing fire down on us. Let’s start with the hurricanes.

Every hurricane prediction is in agreement that this will be an above-average season in the Atlantic Basin. The one I always look for is the Colorado State University forecast because I love that we’re getting our hurricane forecast from a landlocked mountain state. Nevertheless, their prediction is for 23 named storms, 11 hurricanes and five major hurricanes.

Before you put your head in the sand along with mine, remember that the Eastern Seaboard coastline is very long from as far north as Massachusetts to the southern tip of Florida and around into the Gulf of Mexico. My point is the hurricanes have a lot of area to choose from, but as they say, it only takes one and you have to be ready.

Anyone reading this lives either on the water or close enough to it that will require knowing your evacuation route, including emergency shelters and/or hotels or friends and relatives to evacuate to.

Get your three days’ worth of supplies for each family member where it is easily accessible. Nonperishable food, water, medications, first aid kit, flashlights, batteries, radio, cash, some clothing and important documents.

Secure your property, hopefully not the day before a storm is due, but how about right now? Window and door protections are at the top of the list.

Put away any outdoor projectiles, chairs, tables, toys, tree branches. If you have a garage, use it or move your vehicles to a more protected area. Get a backup power source, a generator, if you can arrange that. Turn off utilities, especially gas, and if you evacuate, leave your refrigerator and freezer free of raw meat or anything else that will go bad and damage your refrigerator if the power is off for several days.

Getting ready for hurricanes is one thing, getting ready for the real estate market is another thing. Let’s see what the May sales statistics show, released by the Realtor Association of Sarasota and Manatee:

Single-family homes closed 0.2% fewer properties than last May. The median sale price was $525,000, 1.9% lower than last year, and the average sale price was $709,406, up 3.4%. The median time to contract was 45 days compared to 32 days last year and there were 24.8% more new listings. The month’s supply of available inventory is 4.1 months compared to 2.7 months last year.

Condos closed 25.8% fewer properties compared to last year. The median sale price was $361,495, 5.5% lower, and the average sale price was $412,368, 32% lower than last year. The median time to contract was 56 days compared to 37 days last May, and new listings were down 5.3%. The month’s supply of available listings is 6.3 months compared to 3.4 months.

As you can see, the report of fewer sales and generally increased inventory is shifting the market to a potential buyer’s market. Condos are feeling the effects more than single-family, I believe partly because of the summer season, where potential buyers for winter condo retreats has declined. We’ll have to wait until the fall to see if this is the case; in the meantime, the condo market may continue to decline the further we get into hurricane season and warmer weather.

Meanwhile, be prepared for storms, stay alert and enjoy the warm Gulf waters.

Roofs: Need I say more?

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

It’s Florida, it’s hurricane season and your insurer is taking a good look at the most important thing over your head, and it’s not your favorite baseball cap.

It used to be that a roof needed to be replaced every 20 to 30 years, sometimes even 40 years depending on where you live and the material of your roof. Well, we live in Florida and it’s probably the worst environment for roofs in the country if you’re not including states north of Massachusetts where purchasing a snow broom and a variety of snow shovels are the norm.

To complicate the weather issues, we also have insurance issues which thankfully are starting to work themselves out. After a rising number of homeowners had their insurance policies canceled or their insurers refused to offer them coverage simply due to the age of their roofs, the Florida Legislature implemented new roof requirements for homeowners’ insurance in Florida in May of 2022. It’s not perfect, but the legislation has helped many homeowners.

According to the Tampa Bay Times: “Companies would be blocked from denying coverage because of a roof’s age if the roof is less than 15 years old. And for roofs that are older than 15 years, insurers would have to allow an insurance agent or homeowner to have an inspection on the roof’s condition before refusing coverage. If the inspections show the roof has five or more years of useful life left, the insurance company could not reject coverage simply because of age.”

Essentially, the legislation aimed to improve conditions for both homeowners and insurers. While insurers could no longer drop homeowners simply because of the age of their roof, they also received financial protection to cover their own losses. This reduced the likelihood of unnecessary roof replacements when repairs would be sufficient, lowering homeowner premiums and costs to insurers.

In addition, insurance companies can now offer policies that pay out the actual cash value for roofs over 10 years old rather than the cost of a full replacement. Homeowners can now opt to buy a policy with a stated value limit for roof coverage and lower payments based on a schedule for roofs over 10 years old subject to an inspection.

And while we’re talking inspections, any roof inspection should be performed by a certified roof inspector, not by a contractor who may have an interest in installing a new roof. Inspectors can be found on certification organizations’ websites such as the National Roof Certification & Inspection Association.

A homeowner’s situation with their insurer is one problem facing them today. The other issue is buyers who want to know that they’re buying a secure and preferably new roof so they don’t have any insurance issues. It frequently comes up in negotiations, especially if a potential buyer hires a roof inspector. If you have an older roof, even if you haven’t experienced any leaks, be prepared to get pushback from buyers.

Finally, the type of roof you have is key to longevity. Metal roofs can last for 50 years. Concrete or clay tiles also last up to 50 years. Wood is more vulnerable and even the old standby asphalt shingles are also vulnerable to Florida’s weather. How insurance companies treat roofs that have a long life even if they are over 15 years old is going to be on a case-by-case basis.

Do what you can to keep the most important thing over your head in good shape by keeping up with repairs and adding roof straps or clips. At least you’ll be safer in a storm even if your insurance company isn’t happy.

Reinsurance causing rate hikes

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

I know, not more talk about insurance, especially a week after the beginning of hurricane season. But if the Wall Street Journal can put it on their front page, I can report it.

Reinsurance is apparently the reason for the increase in insurance rates around the country. And if you don’t know what reinsurance is, like it or not, I’m going to tell you.

Simply, as if anything related to insurance is simple, reinsurance is insurance for insurers. Reinsurance lets insurers sell policies in vulnerable areas without the risk of being wiped out by a single disaster. The reinsurance market is a global entity that spreads the risk globally, allowing local insurance companies to provide insurance in risky areas, like Florida.

According to the Wall Street Journal, the reinsurance market is unregulated and is one of the major drivers of the high cost of property coverage across the country. Last year this came to a head after the reinsurance companies suffered a sharp drop in profits and started raising rates and cutting coverage at the start of last year.

This, of course, has had consumer advocates complaining that reinsurer profits have come at the expense of homeowners. The advocates have called for a federal reinsurance program, similar to the national flood insurance program, to protect consumers from unrestrained cost increases. The reinsurance industry says they’re the wrong target and are only responding to the increase in losses in the home insurance industry.

Wherever the blame lies, at least in Florida there is a round of reinsurance renewals currently underway, as well as in other high-risk states, that will help determine whether more premium increases are in the future. Interestingly, insurance brokers who are tracking a round of reinsurance policy renewals in June say they expect premiums to stay fairly level in Florida; we can only hope. However, there is some new money coming into the industry which may help to lower prices assuming this year’s hurricane season is overstated even though this year’s prediction is calling for the largest number of major hurricanes ever forecasted.

Since everything related to insurance influences the real estate market, the increased cost of reinsurance will be affecting the availability of home insurance. If there isn’t insurance available or the cost of the insurance is unreachable for buyers, it will slow the real estate market. Nevertheless, Lisa Miller, a Florida-based insurance adviser, indicates the 2024 reinsurance costs are going to be better.

We don’t usually talk specifically about reinsurance since the cost of it has always been built into our insurance company’s overall costs. But it is now becoming an issue on its own and hopefully will help explain to the average homeowner why insurance has gone up and what the future may hold.

The good news for us is across the country, approved home insurance rates are higher in Texas, Louisiana, Washington state and several more states than in Florida. The West, including California, is exposed to wildfires and the Midwest, tornadoes, both of which can be just as or more devastating than hurricanes.

I guess what I’m saying is there are no risk-free places to live, but some reasonable legislation or big brains should get together and see what can be done for the average homeowner. Think that will ever happen?

Reverse mortgage loans explained

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

Anyone who considers themselves a senior, which I certainly do, at some point will probably have considered a reverse mortgage. It’s not a conventional mortgage designed for the majority of home purchasers but rather a vehicle for senior homeowners to tap into their home equity.

What exactly is home equity? Home equity is the amount of your home that you actually own. Specifically, the equity is the difference between what your home is worth and what you owe your lender or lenders. Don’t confuse it with “mental equity,” which is a term sometimes used in real estate where sellers think they know what their property is worth.

Seniors who are 62 or over can apply for a reverse mortgage, releasing some of the equity in their property. With property values increasing in the past three to four years, seniors who have owned their homes for a long time are considering reverse mortgages with an eye to staying in their homes. Homeowners are still responsible for paying property taxes, insurance and maintenance; however, the repayment of the loan is deferred until the homeowner dies, sells or moves out of the home.

In addition to being 62 or over to qualify, you also need to have enough equity in your home. The loan works by making payments to the borrower based on a percentage of the equity that has been built up in the home. The factors that determine the loan amount include your age, the value of your home, the interest rate and the FHA mortgage limit, $1,089,300 as of this writing.

The obvious benefit is that you can continue to live in your home and retain the title. The proceeds of the loan are generally tax-free cash, so you can use the money as you see fit for improvements and everyday living expenses. You choose the disbursement option; lump sum, monthly payout, quarterly, etc.

The primary drawback of reverse mortgages is that the loans are generally more expensive than other financial products. The balance of the loan increases over time as does the interest on the loan and the fees associated with the loan, eating into any home equity that is left.

If this is something that you might consider, the first thing you should do is attend a counseling session from a licensed third-party counseling agency. The Department of Housing and Urban Development (HUD) maintains a list of counselors available in Florida.

Next, research and identify companies that specialize in reverse mortgages. Factors to look for when evaluating companies are years in business, number of products offered, customer service availability, state licensing, Better Business Bureau (BBB) ratings and the inclusion of a mobile application. Once you have found a company you’re comfortable with, discuss what options may be available to you as far as qualification, timeline and any other questions you may have.

When the application is completed, the process is similar to a traditional mortgage application. The loan will go to an underwriter and appraiser and once approved, a distribution is made.

No matter what age you are, it’s tempting to look at all the equity you have in your home and convert it into a “piggy bank.” Like any loan where you reduce your equity, whether it’s a home equity loan, refinancing your current mortgage or a reverse mortgage, always remember that the funds you withdraw are real money and analyze what the effect of that could have on your future. Get professional advice and good luck.

Everyone’s talking about home prices

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

I challenge you to enter a room with at least four adult homeowners and not hear the conversation eventually gravitating to the price of homes.

Some of the conversation centers on fear that what their home is worth is just a moment in time and will completely disappear, others think they caused the high value of their home because they’re so smart and others probably think who cares, I’ll worry about it when it’s time to sell. Wherever you are in this conversation, the effect of home prices will have a major influence on your future.

According to a recent analysis by ResiClub of the Case-Shiller National Home Price Index, home prices have surged 47.1% since the start of 2020, easily outstripping the gains seen in recent decades. By comparison, home prices in the 1990s and 2010s grew a respective 30.1% and 44.7%.

In addition, home price growth so far this decade is on the verge of surpassing all the growth seen in the 2000s. During that period, housing prices skyrocketed 47.3%, including an 80% spike before the 2007 housing market crash.

There are several driving forces behind the spike in prices. Some of the reasons are underbuilding because of a rapid rise in mortgage rates and expensive construction materials. Available home supply remains down 34.3% from the typical amount before the COVID-19 pandemic in early 2020. Remember these are national profiles; what happens locally and especially in Florida does not always follow the national trend.

All of this is complicated by sellers who are locked into record-low mortgage rates and are reluctant to sell, further limiting the available supply of properties. Currently, about 80% of mortgage holders have a rate below 5%. That’s a lot of people who don’t want to move.

Nevertheless, prices continue to increase and, per the National Association of Realtors, the median single-family home price grew 5% from a year ago. This increase was confirmed in 93% of the metro areas in the country during the first quarter.

Two of the fastest-growing markets in the country, Texas and Florida, may be starting to see a softening of prices. Again, all real estate is local, so let’s see what the April sales statistics for Manatee County reported by the Realtor Association of Sarasota and Manatee look like.

Single-family homes closed 3.5% more properties compared to last year and condos closed 7.8% more properties compared to last year. Keep in mind these are lagging numbers for contracts probably written a couple of months before.

The median sale price for single-family homes was $530,000, down 7.0%, and the median sale price for condos was $352,420, down 7.5%. The average sale price for single-family homes was $718,603, down 2.3%, and the average sale price for condos was $435,292, down 3.7%.

The median time to contract for single-family homes was 44 days compared to 28 days last year, and for condos, it was almost the same at 44 days this year compared to 27 last year. New listings are up for both single-family at 17.1% and condos at 24.2%. Finally, the months’ supply of available properties is up to 3.9 months for single-family and 6.3 months for condos.

You don’t have to be a mathematician to see that inventory has surged, resulting in a more competitive market and longer selling periods. Selling prices are already down and could be further impacted because of the additional competition.

The best way to discuss what your homes are worth among friends is probably not to. No one gets the credit for it and no one will get the blame if prices start to level off. I’m with the guy who says, “I’ll worry about it when it’s time to sell.”