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Tag: Manatee County real estate

Lower your mortgage rate – it’s possible

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

Last week the big news was the escalation of mortgage rates and the prediction by the mortgage “experts” that we’re not seeing them being lowered anytime soon. This week we’ll touch on ways to maybe achieve a lower rate and help buyers get their foot in the door. There are a few strategies that could help buyers secure a lower mortgage rate now and revisit the loan down the road, but it may not be for everyone.

The first one is a temporary buydown in which a seller, or more frequently a builder, pays an upfront fee to reduce a buyer’s mortgage rate for a specified period of time. It can give a buyer, especially first-time buyers, time to ease into higher payments if they expect their personal incomes will rise in the future or if traditional mortgage rates decline. There are lenders that offer it, but typically builders use it as an incentive for home buyers instead of reducing their price.

There are a variety of temporary buydowns out there with terms that involve number of years and percentage of rate drops. However, all of the temporary buydown arrangements are based on the buyer qualifying for a mortgage based on the current mortgage rate as well as having a high credit score. If you qualify, it’s still worth it, especially in the early years of home ownership, which are always the most expensive.

Another strategy is buying discount points. Essentially what you’re doing is buying the prepaid interest at closing to reduce the size of the mortgage in return for a lower rate. The lower rate is for the life of the mortgage, which can be a substantial savings if you’re planning on living in the home for a long time.

The difficult part of buying discount points and the additional fees that are assessed is that you will require a large down payment. If you have the cash to do this, you need to determine the break-even point, which is the level you save more money than you spend. If this makes financial sense, it could be a good option.

Finally, assumable mortgages can help keep rates down if you can find one. This loan allows a seller to transfer his or her mortgage to a buyer who in turn picks up the remaining loan balance, the repayment period and other terms of the seller’s existing mortgage. All of this sounds great if the seller’s rate is considerably lower than what the buyer can secure at this time. Buyers still need quite a bit of cash to cover the difference between the loan balance and the selling price and they also need to qualify for the loan just like any other mortgage product.

There certainly are a lot of assumable mortgages out there, however, they are generally not conventional mortgages. Most if not all of these loans are government-backed or insured loans by the FHA or VA. It’s also not a simple process for either the buyer or seller and may require some legal advice for the novice.

Getting a lower mortgage interest rate in this financial environment is difficult, but if you have the means, the nerve and a little bit of luck, it could happen. In the meantime, sit tight and see what develops between now and the end of the year. The country is going through many changes and so are the mortgage markets.

Buyers losing hope

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

Tired of waiting for mortgage rates to come down? You’re not alone. Every potential buyer out there is waiting for the same thing, the problem is the Federal Reserve isn’t moving the needle, so it might be a long wait.

The Federal Reserve made no move in their last meeting in April, not up, not down. The good news is since they didn’t move rates up, it’s obvious they’re still fighting inflation, which simply refuses to budge. The stock market loved the status quo and enjoyed two big days thinking the Feds will eventually see the light and start reducing rates. Maybe yes, maybe no. Meanwhile, sellers who are desperate to sell their homes but don’t want to give up their low-interest rate mortgages are sitting back, and the buyers who were able to buy a lot more house three years ago are wondering what the heck just happened.

What happened is that in March of this year, a median-income household could afford to buy a house for no more than $416,000, assuming a 20% down payment. Three years earlier, that same household could afford a purchase price of up to $561,000, all things being equal. Then of course there are renters, 20% of them, who don’t expect to ever own a home based on a property management firm’s survey.

So, what are the experts saying? According to Forbes, Freddie Mac says mortgage rates will stay above 6.5% through this quarter. Fannie Mae is forecasting the 30-year fixed rate to average 6.6% in 2024 and 6.1% in 2025. The National Association of Realtors says rates will likely be in the 6% to 7% range for most of the year. The Mortgage Bankers Association predicts 6.7% in the second quarter and ending 2024 at 6.4%. Bank of America is anticipating a rate cut in December and is optimistic that mortgage rates will eventually drop below 7%.

There are, of course, more predictions but the common thread they all have is changing opinions from declining interest rates this year to a more modest prediction based on inflation. They also all agree that waiting to jump into the market is not a good idea. If you wait for interest rates to come down, you’ll be fighting an appreciation of values and likely won’t gain anything. Despite elevated mortgage rates, buyers can still look around for the best rate and at least move on with their lives with the option of refinancing the mortgage down the road.

Buyers, especially younger buyers and first-time buyers, may need to reevaluate what they really want. Do they want a home to build a life in or will they just be sitting in their rental and hope the Federal Reserve bails them out? And frankly, 7% is not such a terrible rate. Real estate markets have lived through, survived and even flourished with double-digit interest rates.

The best advice from economists is don’t wait. You can’t time the market and by now the buyers who have been trying to wait it out probably are well aware they may have made a bad choice. Don’t endure more pain; move forward and reorganize your life and assets to accommodate the reality.

Boomers continue to boom

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

Just when you think they’re too old to influence the smart, better-educated and computer-savvy younger generations, they raise their grey and balding heads again to remind their kids and grandkids they are still alive and influential.

For years, the prediction would be that boomers would start to sell off their big houses, flooding the market with properties. Instead, just the opposite is happening. Many aren’t even considering selling their large family homes, and for good reason.

Boomers own half of all of the $32 trillion in home equity in the country, according to a Redfin analysis of Federal Reserve data. In addition, nearly 80% of boomers own their primary residence and about a quarter own an investment property. More than half of them have retirement accounts with a median balance of $191,200, as well as 27% owning stocks and bonds outside of retirement accounts with a median amount of $201,800. These statistics come from a data scientist for the St. Louis Fed who researches wealth.

And it gets better. Not selling their properties has helped boomers accumulate a level of wealth greater than any other living generation. The median prices of existing single-family homes have increased more than tenfold since the early 1970s, when the oldest boomers were buying their first homes.

Even though boomers have a big financial incentive to stay in their homes with either no mortgage or very low-rate mortgages, some are moving on. Boomers made up 31% of home buyers, while millennials made up 38% in 2023, as reported by the National Association of Realtors. They frequently buy with cash, avoiding the higher interest rates in today’s market.

The boomers have had a major influence on the current real estate market. Mortgage rates topped 7% after the Federal Reserve’s last meeting when they held rates at their current level. That has pushed up the yield on 10-year treasuries, which mortgage rates tend to track. They also didn’t give any indication of lowering the rate any time soon based on the level of inflation, however, many economists still expect rates to decline later this year.

Even though new properties have been listed, there is a continuing low supply of homes for sale nationally. This continues to push prices higher with the national median existing-home price going up 4.8% in March from a year earlier to $393,500, as reported by the National Association of Realtors. The Manatee County median sale price for March by comparison was $498,805, 1.4% higher than last year.

Homebuyers are also confused about coming changes to the rules governing how real estate agents get paid and how this will affect their overall costs. And let’s not forget it’s a presidential election year, as well as one with several worldwide military conflicts bubbling up. All this influences home shoppers and sellers to perhaps pause until there is more clarity and less stress in the market.

The lack of boomer activity is, to a large degree, another byproduct of COVID-19, the pandemic that keeps on giving. As bad as COVID-19 was, it has worked to the advantage of boomers, increasing their equity tremendously and allowing them to refinance existing mortgages to a historic low rate.

The baby boomer generation has influenced everything that has gone on in this country since 1946, when the oldest of them were born, and they’re not going away. Whether it’s housing or the price of milk, boomers continue leaving their mark.

Cost of American dream rising

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

Owning a home of your own has been the American dream for over 75 years. It’s so embedded in our culture that it can create stress and feelings of low self-worth if you don’t own your own home. Unfortunately, that’s not about to change anytime soon.

The cost of home ownership increased so much last year that, according to a National Association of Realtors index, home ownership fell to the lowest level since 1985. The culprit here is the cost of increasing mortgage interest rates, insurance, maintenance, utility and homeowners’ association fees. Municipalities are also raising property taxes to keep up with their increasing expenses of running local government due to inflation. Even homeowners who refinanced when the rates were around 3% or 4% are still feeling the crunch, and first-time homebuyers are gradually being priced out of their own American dream.

The Labor Department reported that consumer prices rose 3.5% in March from a year earlier. The stronger-than-expected inflation data will likely prompt the Federal Reserve to hold rates at the current level for longer than expected. This could also keep mortgage rates frozen in place, further disrupting the real estate market, and keeping homeowners currently holding low-interest rate mortgages also frozen in place.

As I’m writing this, a Wall Street Journal update hit my iPhone reporting that the average rate on the standard 30-year fixed rate mortgage jumped by nearly a quarter percentage point to 7.1% based on a survey of lenders by mortgage-finance giant Freddie Mac. That is the highest level since late 2023 and the largest weekly increase in nearly a year. This is approximately double from three years ago. However, putting it in perspective, it is still a lot more affordable compared to the 1980s when rates were in double digits, ranging from 10% up to 16%.

So much of what goes on in the real estate market is dependent on unseen factors and sometimes even just a general feeling by the population that something is off. Let’s see if the March sales statistics are on or off as reported by the Realtor Association of Sarasota and Manatee:

Single-family properties closed 3.4% less than last March. The median selling price was $498,805, 1.4% higher than last year, and the average sale price was $653,281, 2.4% higher than last year. The median time to contract was 51 days compared to 46 last year, and there were 0.6% more listings than last year.

Condos closed 2.5% more than last March. The median selling price was $342,988, down 2.8%, and the average sale price was $429,893, 2.5% higher than last year. The median time to contract was 54 days compared to 23 last year and there were 14.9% more new listings than last year.

Inventory of properties is up to 4.1 months for single-family and 6.4 months for condos. Six months of available inventory is just about normal and something we haven’t seen in a long time.

The Realtor Association points out the counties have undergone significant changes throughout the first quarter of 2024. The National Association of Realtors reported the biggest monthly drop in sales in more than a year. This and other data suggest that we are transitioning towards market conditions that favor buyers including more negotiating power and an increased supply of inventory per the Realtor Association.

American dream or homeowner’s nightmare? Don’t lose faith, times have been better and times have been much worse, but the dream doesn’t go away.

Are mortgage rates really going down?

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

Did we ever think this day would arrive? Those in the know kept saying rates will be better next year, and this is finally next year, and by golly, it appears they were right. Since nothing is ever that easy, there are discrepancies in rate predictions but generally the arrow is pointing down.

Forbes is predicting three rate cuts this year, assuming that inflation continues to slow. The National Association of Realtors’ Chief Economist Lawrence Yun says that because high budget deficits and inflation are still not at a comfortable level, mortgage rates will likely be in the 6% to 7% range for most of the year.

The Mortgage Bankers Association is forecasting 6.1% at the end of this year and 5.5% at the end of next year. Bank of America’s head of retail lending Matt Vernon is more cautious. He says rate cuts could breathe new life into the housing market but significant drops in mortgage rates might not happen in the early months of 2024. The Fannie Mae housing forecast is that the 30-year fixed rate mortgage will average 7% in the first quarter of this year and slowly decline over the year, landing at 5.5% in the fourth quarter. There certainly are more opinions but these are some of the top players in the industry and apparently, they all are looking to decline.

As of this writing, the average rates were 7.45% for a 30-year fixed rate and 6.68% for a 15-year fixed rate. Not bad, but we’re not there yet as you can see from the above opinions, however, there are ways to obtain a better rate now.

Boosting your credit score is a surefire way to pay a lower interest rate. Just a few points can help a lot and here are tips on how to achieve this: Make an extra payment on an existing mortgage or on credit card balances, spend less than 30% of the amount of credit offered to you on credit cards and pay off your balance each month in full.

You can also reduce your mortgage rate by paying points upfront on a new mortgage. Do the math and see if out-of-pocket money now to lower your long-term rate works for you. Finally, shop around and don’t take the first offer from a lender you call.

Let’s see what our January sales in Manatee County are, as reported by the Realtor Association of Sarasota and Manatee:

Single-family homes closed 10.9% more properties compared to January of last year. The median sale price was $525,000, up 3.8% and the average sale price was $735,836, up 13.1%. The median time to contract was 35 days this January compared to 32 days last January. New listings were up 32.3% from last January and the month’s supply of available properties was 3.9 months compared to 3.2 months last year.

Condos closed 8.8% more properties compared to January of last year. The median sale price was $357,990, up 3.8%, the same as single-family homes, and the average sale price was $441,573, up 12.6%. The median time to contract was 47 days this January compared to 26 last January. New listings were up 37.9%, and the monthly supply of available properties was 5.6 months compared to 3.2 months.

The increase in listings we’re seeing points to a more balanced market that favors buyers, along with the interest rate arrows pointing down. The weather arrows, however, are starting to point up, so go to the beach and let the real estate market find its own level.

Changing tides

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

Every day I watch the tides change. Sometimes they’re low, sometimes they’re high, and every day is different. You could say almost the same thing about mortgage interest rates, but the tides for rates are starting to get lower.

Mortgage rates are ringing in the new year much lower than their near 8% peak this past fall. The 30-year fixed rate mortgage has decreased for multiple weeks with a slight uptick. However, the overall trajectory of mortgage interest rates in 2024 is expected to decrease according to the National Association of Realtors.

While mortgage interest rates ease there will be weekly shifts in the average rate, however, the National Association of Realtors is predicting that the 30-year fixed rate mortgage will average 6.3% in 2024. Between late October and mid-December 2023, the 30-year fixed rate mortgage decreased by more than a percentage point. In real money, the difference between a 6.62% rate and a 7.12% rate is $173 monthly on a $400,000 loan, enough of a difference for some buyers to qualify for a home or a better home. Lower mortgage rates are certainly welcome and will make news, but the problems of dealing with the challenges of low inventory and high home prices will not change quickly on a national basis and may continue to rise. Buyers are more optimistic but are still facing a lack of properties that are being held onto by owners with ultra-low mortgage rates.

End of year 2023 sales and December sales for Manatee County are both looking better than the national numbers. Let’s see what those statistics look like reported by the National Association of Realtors and the Realtor Association of Sarasota and Manatee.

Nationally, sales of previously owned homes dropped to the lowest in 28 years, down 19%. Manatee County single-family sales were up 7.3% and sales of condos were down 0.8%. The single-family median selling price for Manatee County in 2023 was down 2.1%, but the median selling price for condos was up 5%.

The December sales compared to December 2022 nationally for previously owned homes fell 6.2%. Manatee County’s single-family closed home sales were up 13.6% from December 2022 and the median sale price was $499,900, down 1.4%. Condos closed 25.4% fewer in December 2023 compared to the previous year, and the median sale price was $350,000, up 1.6% from December 2022.

The month’s supply for both single-family and condos is up. Single-family homes have a 3.3-month supply of properties available and condos have a 4.6-month supply of properties available.

Our area continues to outpace the national market. Manatee County appears to be stabilizing with more inventory available and is pointing to a good upcoming sales season, however, what happens overall in the country can still affect Florida.

We’re all hoping for a good year since the tide of real estate has an overall effect on the economy. The number of properties sold impacts the furniture business, remodeling companies and the sale of everything from paint to lawnmowers. The jobs market is also closely tied to the real estate market, not only in retail but for real estate companies and their employees.

The owner of the first real estate company I worked for once said, “If you’re gone for a week, the entire real estate market is different when you return.” That is essentially true. Properties sell, others are listed and interest rates change. The ebb and flow dictate the marketplace and always will.

Is owning a home still the American dream?

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

Last week we talked about first-time buyers who are taking a pause in their house hunting and redirecting their savings. But is this the new permanent reality in a country that includes homeownership as part of the American dream?

According to a new Wall Street Journal/NORC survey, only 36% of voters in the new survey said the American dream still holds. When this same question was asked last year by the Wall Street Journal poll, 68% said yes, almost twice the share of the new poll. In addition, half of voters in the new poll said life in America is worse than it was 50 years ago compared with 30% who said it had gotten better. But the scary outcome of this survey is that among all respondents, 18% said the American dream never held, a very sad statistic.

As reported last week as well, the National Association of Realtor’s October sales statistics fell 14.6% from last year. Manatee County’s sales of single-family homes also fell by 12.8%. This reflects the ongoing low inventory available to buy and higher interest rates. Who could blame young people when they say the American dream doesn’t exist when one of the major components of that dream is the ability to purchase homes?

Even though according to recent data inflation has eased, there is still a disconnect in the way Americans perceive the economy. Since ownership of housing isn’t measured by the Bureau of Labor statistics, the increasing cost of purchasing a home isn’t reflected in the inflation rate, however, not being able to purchase a home matters more than the price of gas or food to home buyers. Since January 2021 home prices have risen 29%, according to the Case-Schiller national home price index. In addition, mortgage rates have nearly tripled.

If you already own a house and have no reason to move, you might not care or be affected by lower sales numbers and higher interest rates. Many long-term homeowners with low mortgage rates are sitting back and enjoying seeing their equity going up, which it has consistently for the most part.

Homeownership is still viewed as achieving the American dream, as remote as it may seem to first-time buyers in this market. So far, this hasn’t lowered homeownership rates, which are higher among almost all age groups than before the pandemic, according to the Census Bureau. That could, however, change if the unaffordability of housing remains high. Mortgage rates have dropped with the easing of inflation, but they are still historically high. The consensus is that home prices will likely not fall in 2024 but level off somewhat. Since so much depends on that assumption it’s almost impossible to know what’s down the road next year.

Since I was a full-grown adult 50 years ago owning my own home, I tend to agree that at least the economic life of people now is worse than 50 years ago. That doesn’t, however, mean that all life is worse. Certainly, medical progress is better, education is more available and better, and women and minorities have more opportunities, not to mention technology, which has made all our lives better.

I believe the housing market will eventually normalize and all the first-time buyers who are booking exotic vacations will start buying again. It’s nice to have wealth, but we shouldn’t measure our happiness by it when so many other things in life are more important.

Speaking of spooky, look at those population numbers

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

Halloween is next week, so as you’re decorating your home with spooky and creepy stuff from the Dollar Store, think about the spine-chilling increase in population right here in Manatee County.

There’s a good reason why the traffic on the roads never seems to take a break and why your favorite doctors are all of a sudden working weeks out for an appointment. So far this year, the population of Manatee County is reported as 429,125. We grew by 29,420 in three years, per the U.S. Census. In April of 2010, the population was 322,833 per the U.S. Census, an increase of over 100,000 residents in not quite 13 years. Manatee County is the 15th most populated county in Florida out of 67 counties.

The above numbers, of course, do not include the scary number of visitors and part-time residents flowing into Manatee County every year. They also do not include the many thousands of residents that will be added to the county when the large construction projects are completed.

Lake Flores, Aqua by the Bay and Peninsula Bay, all on the southwest side of the county near or on the bay are already being developed or getting ready to start. The east and southeast sides of the county are exploding with plans for new subdivisions with good access to the interstate. In addition, all this construction is coming on the heels of the construction of both a new Cortez Bridge and Anna Maria Island Bridge. Are you scared yet?

Selling a property always involves disclosing anything that can be a material change to the value of the property. This usually involves structural issues not obviously observed and even appliances and air conditioning and heating systems. And, since we’re in scary season, you will be happy to know that you don’t need to disclose if your house is haunted, or if there was a murder or death in the home.

Also, there is no obligation I could find that a homeowner must disclose construction projects near the property, even if that construction could be a nuisance. Nevertheless, everything you know should be disclosed. This is not only the right thing to do, but it will also protect you as a seller from potential future lawsuits.

At least one thing that’s not haunted this Halloween is the September sales reported by the Realtor Association of Sarasota and Manatee.

Single-family homes closed 46.9% more properties than in September of last year. The median sale price was $503,495, down 2.6%, and the average sale price was $661,608, up 6.0%. The median time to contract was 29 days versus 19 days last year, and the month’s supply of available properties was 2.9 versus 2.7 last year.

Condos closed 48.6% more properties. The median sale price was $350,000, up 3.9%, and the average sale price was $402,480, up 0.3%. The median time to contract was 46 days versus 15 days and the month’s supply of properties was 3.3 months versus 1.9 days last year.

One interesting statistic in the September report is that cash sales are up for both single-family homes, 38.3%, and for condos, 58.3%. I suspect this has a lot to do with the high interest rates on new mortgages.

The Association of Realtors sums up the market this way, “While closed sales registered an unusually high year-over-year growth, median prices stayed relatively stable.”

Spooky or not, those are the numbers that reflect sales transactions booked during the slow summer months. We’ll see how that changes when we get into the selling season. Happy Halloween.

Making lemonade out of a lemon real estate market

Written by Monica Simpson on . Posted in Business, Castles in the Sand.

Sometimes it looks like the national real estate market and the high-interest mortgage rates are nothing but lemons. But one startup company has found a way to turn the lemons into lemonade.

Assumable mortgages are something that was not uncommon back in the more civilized real estate era. Many conventional mortgages had an assumable clause built into the mortgage, giving lenders another source of potential borrowers. Those days are long gone except for government mortgages, including VA and FHA loans, which usually still contain an assumable clause.

What is an assumable mortgage? An assumable mortgage allows sellers to transfer their mortgage loan to the buyer purchasing their home. An assumable transaction doesn’t replace an old mortgage with a new one, but instead transfers the old mortgage to the new owner. The seller is relieved of the remaining mortgage liability and the balance of the outstanding loan is subtracted from the purchase price. The buyer, of course, must come up with cash to cover the balance of the purchase price.

Roam is the name of a new real estate startup launched several weeks ago in a handful of states, including Florida, who – for a fee – will search out properties with assumable mortgages. They will handle the paperwork and work through the system and the seller’s mortgage company on behalf of both buyer and seller to facilitate the mortgage transfer and property sale. Roam’s goal is to attract lenders and investors who can place new loans for the balance of the selling price, possibly at higher rates to compensate them for holding the assumable mortgage at lower rates. It’s not for a novice but, if successful, could open more available properties for buyers.

There are always good and bad points to anything new to the marketplace. If something looks too good to be true, it may be. Some of the pros for purchasing an assumable mortgage are lower interest rates, an obvious benefit for the buyer. Having an assumable mortgage gives significantly more exposure to a seller’s property. Closing costs will be lower and no appraisal is necessary, saving more money, and the buyer is assuming less debt.

The negative side of an assumable mortgage is a larger down payment, which is fine if a buyer has a lot of home equity or cash. Buyers still need to meet the lender’s credit and income requirements, and the buyer does not have a choice of lender.

Buyers who are assuming a VA-backed mortgage won’t be entitled to another VA loan until the assumed loan is paid off. Therefore, if you are getting VA benefits you may need to wait a while to qualify for another loan.

You may also be required to carry mortgage insurance depending on the amount of loan assumed and the loan-to-value ratio.

As I pointed out, this is a balancing act and not for everyone. Assumable mortgages could work great if you’re buying from a family member. If you don’t want a federal loan and are more comfortable with a conventional mortgage, it won’t work. Sellers with an assumable mortgage who may be having a problem selling their property could benefit by using it to make their home more desirable and advantageous to buyers.

Lemons or lemonade, the yin and yang of the real estate market. Just one more thing to add to the confusion.

Market in the eye of the beholder

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

To some people, our national real estate market is downright awful, but to others, it may be the best of real estate times. It’s all in the eye of the beholder.

Don’t believe everything you read and, believe me, I read it all. Yes, it’s true that buyers, especially first-time buyers, are having a terrible time finding an affordable house. Yes, indeed, sellers aren’t moving out of their 1,200-square-foot starter house because they have a 3% mortgage. But it’s also true that sellers who want to sell are in a pretty darn good financial position and they’re as happy as can be.

Home prices were declining for five consecutive months but all of that has reversed itself quicker than the housing economists expected. The surprisingly quick recovery suggests that the residential real estate downturn is turning out to be shorter than many housing economists expected. Even if the number of sales keeps going down, sale prices are unlikely to fall significantly. In popular regions, including Florida, bidding wars are breaking out again, reliving the insanity of the 2021 market.

A byproduct of higher selling prices and fewer sales is, of course, the fear of low appraisals. If the buyer is planning on obtaining a mortgage based on the contract price the lender will be looking for a satisfactory appraisal for at least the purchase price. If the appraisal comes in too low, that will affect the loan-to-value ratio and could easily sink the transaction.

Sellers in today’s competitive market may remove the appraisal contingency from the contract. This means that no matter the amount of the appraisal, the buyer is legally bound to complete the transaction and better have the additional cash available.

Facing a low appraisal in an escalating market is not uncommon and can be a shock to buyers. Again, they will need to come up with more cash to close the gap to proceed with the transaction. Parties to the transaction like the broker and/or attorney can ask for consideration on the appraisal if they determine that one or more of the comparable properties were not valid, however, getting appraisers to change appraisals is nearly impossible.

Time to look at Manatee County’s August sales as reported by the Realtor Association of Sarasota and Manatee for the month of August:

Single-family homes closed 6.9% more than last August. The median sale price was $525,000, the same as last August. The average sale price was $715,711, up 9.2% from last year. The median time to contract was 33 days, compared to 13 days last year. The month’s supply of properties was 2.8 months, compared to 2.5 last year.

Condos closed 0.8% less than last August. The median sale price was $358,990, up 1.8% from last year. The average sale price was $393,727, down 2.6% from last year. The median time to contract was 50 days, compared to 13 last year. The month’s supply of properties was 3.3 months, compared to 1.8 months.

The Realtor Association feels that our prices are steady, and Florida is enduring in its desirability among out-of-staters. The fact that new listings and pending inventory are up for both single-family and condos is encouraging. Single-family had 8.6% new listings and 8.4% pending inventory. Condos had 18% new listings and pending inventory at 16.1%.

My eye beholds further adjustments, not a downturn, and once buyers get comfortable with 7.5% interest rates, they will forget all about the 3% their friends have. This is the way the economy rolls; it can’t be timed, it can only be faced head-on.

Castles in the Sand

Higher rates here to stay

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

On Aug. 17, mortgage interest rates spiked to 7.09%, the highest in years per Freddie Mac. A lot of this has to do with the 10-year treasury yield, which hit its highest level since 2008 on the same day. Since mortgage rates tend to move somewhat with the 10-year treasury, rates went up combined with the Fed’s ongoing attempt to tame inflation.

Last year when rates started going up, except with a brief decline at the end of 2022, the consensus was that the higher cost to borrow would be temporary. Now, however, eight months later, all players in the real estate market are adjusting to the idea that higher rates are either here to stay or at least will be around for a long time.

So, what does that mean to the average home buyer? Essentially it means it’s time to get off the bench and make a commitment since things aren’t changing any time soon. That, of course, is easy for me to say but the truth is buyers are finding it is the hardest thing to accomplish even after they adjust to higher rates.

The lack of inventory all across the country is pushing prices up to a level many buyers can’t afford. After all, if you had a 3% or 4% mortgage, would you sell your home and move on to something else unless you absolutely had to? Probably not, and that is the log jam in the real estate market. About 60% of the country has mortgages below 4% and even homeowners who missed the absolute bottom are still ahead of the curve by at least 2 percentage points.

Buyers need to understand there is no crystal ball and even the real estate gurus called it wrong with their temporary thinking. Now is the time buyers have to bite the bullet by downsizing their expectations and being flexible. Not all of your children need their own bathroom or even their own bedroom, and you can prepare dinner in a kitchen without a quartz island; millions of people do.

Look at the additional expense of a higher mortgage from a monthly payment perspective. When you break it down into financial pieces, it may not be as intimidating, kind of like upgrading your iPhone. Don’t ask what it costs, just what it will cost monthly.

Let’s look at Manatee County’s July sales statistics reported by the Realtor Association of Sarasota & Manatee:

Single-family homes closed 10.1% more properties this July compared to last July. However, the median sale price of $515,000 was down by 1.2% and the average sale price of $641,991 was also down by 6.9%. The median time to contract was 29 days this July compared to 9 days last year and the month’s supply of properties was 2.7 months, about the same as last year.

Condo sales were down 8.0%, the median sale price was $389,500, down 0.4% from last year and the average sale price was $523,922, down 2.5%. The median time to contract was 36 days this year compared to 10 days last year, and the month’s supply of properties was 3.4 months compared to 1.6 months last year.

The Association of Realtors states, “Despite higher interest rates, the housing market in Sarasota and Manatee counties stays strong due to low supply and continued demand with relatively stable prices.”

A lot of what’s going on in other parts of the country does not aways apply to Florida, which tends to march to its own drummer. All real estate markets are local, and all states have different economic challenges. Sales are taking longer to book, but overall, Manatee County is hanging in there.

Castles in the Sand

It can’t hurt to ask

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

In certain parts of the world, the marketplace is designed for negotiation. Don’t ever offer full price and don’t ever accept the first negotiation are two commonly employed strategies. It’s a culture that was pretty common in this country in generations past. Now it’s rare to purchase a car, an appliance or bike for your child and not pay the asking price.

Even purchasing a home during the past several years has almost lost the art of negotiation with values going crazy and offers being accepted at or well over full price. With the market stabilizing, buyers and sellers are starting to negotiate offers again, but there are other areas in the process of home buying where savings can be achieved. It never hurts to ask.

So, as a buyer or seller, you negotiated the accepted price of a home, but don’t think you’re done. I bet there are a few things you never thought of. They say a good negotiation is when both parties to the transaction come away thinking they left something on the table. Every property comes with stuff. It may be stuff that the buyer wants and the seller can’t take with them, making this a good starting place for negotiations.

Furniture is always negotiable even if the seller was planning on taking it. Furniture is expensive to move and, unless there are some valuable pieces, it may not make sense to hire a mover or shipper to relocate it. This is the time when the buyer can evaluate whether the furnishings have value and negotiate an offer to purchase. Not having to furnish a home can mean really big savings. Many homes in Florida come “turnkey” furnished and this can be a financial asset, especially for a second home purchase.

Everyone reading this lives on or near the water. What floats on the water? Boats. If the seller owns a boat and is moving to Colorado, it’s possible to take it off their hands, especially if the buyer was planning on buying one. This is a win-win for all parties. It’s the same with cars. Shipping a car that might be a few years old may not be cost-effective for a seller and buyers may be looking for another vehicle for their second home or their upcoming teenager’s driver’s license.

There are other ways to reduce expenses when purchasing a property, including negotiating with moving companies that are starting to see a reduction in activity. Try three different moving companies and see what the spread is. Moving companies also have other services like packing and unpacking which, if you ask, you can sometimes get a nice upgrade for not much more money.

As we know, mortgage rates have been fluctuating. Don’t be shy about negotiating origination fees, underwriting and loan application fees. Even the rate can be negotiated, just make sure the lender isn’t adding fees in the form of points to a negotiated interest rate. According to Freddie Mac, between 2010 and 2021, borrowers who applied with two different lenders reduced their mortgage rate by an average of 0.10%.

Sellers generally pay the broker commission on the sale of a property. Remember that realtor commissions are not regulated and can be negotiated as well. That said, I generally don’t like sellers negotiating realtor commissions since I think it can hurt the marketability of the property.

Good negotiating is an art. If you develop the skill to think creatively, you’ll be surprised how much money you can save. My mother grew up in the never pay full-price generation. Sometimes this was embarrassing, but most of the time she was right.

Castles in the Sand

Too good to give up

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

According to Lawrence Yen, whom I quote frequently, “It’s a unique market condition.”

Coming from the chief economist for the National Association of Realtors, this is saying something considering all of the other unique markets we’ve lived through. This particular unique market is the continuation of a lack of inventory even though sales are down in most areas of the country including many parts of Florida, as well as ours.

The problem is that a large portion of homeowners in the country don’t want to sell. This group may actually want to sell and move on to a larger family home or retire to a smaller home, but they feel they are locked into very low-rate mortgages. The “golden handcuffs” homeowners find themselves locked into are keeping the supply of homes for sale unusually low.

The lack of properties is not the first time this has happened. The sub-prime mortgage crisis slowed things down, as did COVID-19 when buyers rushed to snap up larger homes when remote work and school necessitated more family space.

So, what happens when supplies go down or at least don’t go significantly up? Supply and demand kicks in and prices go up. A healthy housing market is traditionally described as having four to six months’ supply of homes. Right now, Manatee County is at 2.7 months for single-family homes.

However, builders are getting a boost from the lack of resales and are starting to build again now that the supply chain is improving. And home improvement contractors are also benefiting since those homeowners who are staying put are expanding and remodeling.

According to the mortgage data firm Black Knight, as of March 31, nearly two-thirds of primary mortgages had an interest rate below 4%. In addition, about 73% of primary mortgages have fixed rates for 30 years; these mortgages are “golden” and something homeowners won’t easily give up. Current mortgage rates are approximately in the mid-6% range and have fortunately been steady for a while.

The April sales statistics for Manatee County were released at the end of last week so it’s time to report what the Realtor Association of Sarasota and Manatee published.

Single-family homes in Manatee County hit a record median sale price of $570,000, 10.7% more than in April last year. This surpasses the previous record for median home prices, meaning so far, our local market continues to be strong relative to the country as a whole. Here’s the rest of the story.

Single-family homes closed with 4.3% fewer properties from April of last year. The median sales price was $570,000, up 10.7% from last April, and the average sale price was $735,779, up 0.9%. The median time to contract was 28 days versus five days last year. New pending sales were up 30.2% and the month’s supply of properties was 2.7 months.

Condos closed 15.8% fewer properties from April of last year. The median sales price was $380,795, up 8.8%, and the average sale price was $452,160, up 12.9%. The median time to contract was 27 days versus five days last year. New pending sales were up 4% and the month’s supply of properties was 3.5 months.

One of the advantageous side effects of this unique market is the fact that in spite of inflation and job layoffs, the housing market and housing prices may stay strong nationally. Not great news for marginal buyers or first-time buyers, but buyers with equity from a previous home and income to cover the additional mortgage rates will keep things afloat.

Unique can be a good or a bad thing; either way, we’re still struggling with a lack of inventory.

Castles in the Sand

Packing up the wealth

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

Pity the poor governors of some of the large metropolitan areas in the Northeast, West and Mid-west. Specifically, New York and Illinois, where their mostly wealthy and upper-middle-class residents are packing their bags and their money and heading to other states where they think they will be more appreciated.

The IRS’s adjusted gross income statistics show a startling pattern of migration within the United States; two of the most astounding states are Illinois and New York. The IRS data shows a net 105,000 people left Illinois in 2021, costing the state approximately $10.9 billion in adjusted gross income. That’s up from $8.5 billion in 2020 and $6 billion in 2019. New York’s income loss increased to $24.5 billion in 2021 from $19.5 billion in 2020, and $9 billion in 2019. In addition, California lost $29.1 billion in 2021, more than triple what it did in 2019.

By comparison, the lowest tax states kept adding income even during the COVID-19 pandemic. Florida, a state with zero income tax, gained $39.2 billion, up from $23.7 billion in 2020, and $17.1 billion in 2019. The states that contributed the most to Florida’s billion-dollar bonuses were New York, Illinois, New Jersey and California. Florida certainly isn’t alone – many other low-tax states like Texas, Arizona and Nevada have also benefited from this wealth migration. In addition, Florida and other low-tax states led the country in job growth. Florida’s employment grew 4.5% over the past year and Illinois’ gain was 2.2%.

As great as Florida’s wealth gain is, we have dropped out of the Emerging Housing Markets Index compiled by Realtor.com. Although Florida regions have typically been in the top 10, in some of our smaller and growing areas they are not within the top 10 on this most recent index. This is the good and the bad of being a very popular state. Everything becomes more expensive and housing costs, as we all know, are not nearly as affordable in Florida as they once were.

The first quarter index indicates that buyers demand affordable homes and most of these are in the small Midwest cities. The top-ranking area is Lafayette, Indiana and the 10th ranking is the Manchester-Nashua, New Hampshire region. The index ranks the 300 biggest metro areas in the United States. In addition to housing market indicators, the index incorporates economic and lifestyle data. Real estate taxes, unemployment, wages, commute time and small business loans are all factored in.

Finally, I would be remiss not to point out that as of May 1, Fannie Mae and Freddie Mac, the quasi-government agency that controls and insures most of the residential mortgage financing in the country, has changed some of the agency’s mortgage pricing.

The new rules add fees for many borrowers with high credit ratings and large down payments and use them to reduce the cost of borrowing for those with lesser credit ratings and smaller down payments. There is a formula that factors in the borrower’s credit rating and the down payment, but the spirit of the change is to support lower-income homebuyers who, in the opinion of the Federal Housing Finance Agency that regulates Fannie Mae and Freddie Mac, have the “financial capacity to sustain a mortgage.” Congress is naturally taking a look at this new fee schedule and comparing it to the subprime debacle prior to the 2006-07 financial meltdown.

Next time one of the high-tax states evacuees move in next door, greet them and their bags of money. Florida has indisputably changed from when my parents moved here in the 70s and I’m pretty sure they would think it’s a good thing. My father always said Florida has the best roads in the country. He should see the traffic now.

Castles in the Sand

One country, two housing markets

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

The trend has been obvious for a while, east coast versus west coast with COVID-19 accelerating the movement. In fact, the March sales statistics are still showing that home prices are declining the most in the western part of the country.

Since the 1990s, the western part of the country, particularly California and Washington, enjoyed a steady run up of growth because of the technology industry. Now the areas most closely associated with the tech industry have the fastest falling home prices.

The eastern part of the country is still attracting companies, adding jobs and keeping the real estate market thriving. Florida in general, including Orlando, Miami, Tampa and other southern markets, is in the lead. However, even northern east coast areas like Connecticut are attracting families who have decided cities may not be the place to raise a family.

According to Black Knight, a research strategy company, this geographical diversity is very unusual and possibly unprecedented. Housing analysts say they have never seen anything quite like this where the division between east and west is so stark.

The National Association of Realtors reports that home sales fell across the country in March. Existing home sales decreased 2.4% in March from the prior month and 22% from a year earlier. Manatee County’s single-family properties had a 4.4% increase in sales in March compared to the previous year, the first year-over-year increase in sales since February of last year.

The market’s slowdown is starting to affect prices, which have fallen on an annual basis for two consecutive months for the first time in 11 years nationally. The national median existing home price in March was down 0.9% to $375,700. Manatee County’s median single-family home prices were also down by 6.3% to $491,988.

There is no doubt that Manatee County as a whole may be more valuable than the national market, but we are also experiencing longer times to sell and a downturn in values. However, the number of pending properties has gone up in Manatee by 7.9% compared to our surrounding areas. And the month’s supply of inventory continues to increase for both condos and single-family homes by triple digits.

The national housing market is still battling the increase in rising mortgage rates, high home prices and low inventory. In addition, a cooling economy with high inflation and the prospect of recession in the next year is keeping some buyers on the sidelines. Home prices are rising or at least stabilizing in regions where jobs are being added and housing is relatively affordable with the more expensive areas of the country adjusting to lower prices.

I recently read a United States Census Bureau report on Manatee County that will make everyone understand all the traffic we’ve all been complaining about and all the irritating construction. Manatee County has increased its population by 29,420 during the past three years, not including 2023. Since 2010, the population has increased by 106,292 and, as of the end of 2022, is 429,125, over 100,000 people in 12 years. Why do I think this is just the beginning?

Is it possible that we’ve hit the bottom and the only way now is up? Maybe, we can certainly strive for that. It is certain that the market is not as competitive as it was last year and even though inventory is still historically low, it is steadily increasing.