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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.

The heat is on

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

The U.S. Census Bureau has released its population statistics for the year 2022 to 2023. All I can say is the heat is on in the South.

The takeaway here is that Texas and Florida’s population grew by a much larger number than any other state in the country. By now, it’s commonly accepted that the COVID-19 pandemic changed the way people live and do their jobs. Remote work has allowed many in the home labor force to relocate to more affordable living with better weather and a sense of security and freedom. This defined the state of Florida before incoming COVID escapees pushed up property values, which are only now starting to stabilize.

So, let’s dig into the actual numbers of the top three on the U.S. Census Bureau’s list of states with the highest growth.

The population of Texas on July 1, 2022 was 30,029,848. The population on July 1, 2023, was 30,503,301, an increase of 473,453 or 1.6%.

Florida, coming in second, had a population on July 1, 2022 of 22,245,521, increasing to 22,610,726 on July 1, 2023, an increase of 365,205 or 1.6%, same as Texas.

Third on the list is North Carolina, which on July 1, 2022 had a population of 10,695,965 and on July 1, 2023 had a population of 10,835,491, a growth of 139,526 or 1.3%.

The five states with the highest populations are California, Texas, Florida, New York and Pennsylvania. However, only Texas and Florida are in the top 10 of growth between 2022 and 2023. The other three all lost population during the same timeframe, with California being the biggest loser of 2023. Remember that population growth or decline has everything to do with real estate values.

Another survey by Bankrate.com analyzes the hottest metro areas in the country. Here they are in order: Gainesville, Georgia; Knoxville, Tennessee; Cape Coral-Fort Myers, Florida; Northport-Sarasota-Bradenton, Florida and Charlotte, North Carolina.

The Sarasota metro area, which also appears on the Best Places to Live list, ranks second nationally in price appreciation and 12th in population growth, but 206th in active listings.

The Fort Myers metro area ranked fifth in price appreciation and eighth in population growth, also with a lack of available listings. They too appear on one of the best places to live lists. These two South Florida regions are closely linked, sharing the same quality of life appealing to people relocating to the Sunshine State.

Bankrate also analyzed the five hottest large metro areas, placing Tampa at number three and Orlando at number five. This, among other area studies, will explain why the South added 1.4 million residents, accounting for 87% of the nation’s growth this year according to the Census Bureau.

The Census Bureau’s numbers aren’t perfect. They include everyone living within the U.S. except short-term visitors, but the number of immigrants without legal status is difficult to accurately count. The estimates are based on birth and death certificates, IRS and Medicare records and the American Community Survey. In addition, the Census Bureau released projections showing that the population is expected to continue growing slowly to approximately 2080.

You may have a love/hate feeling about our increase in population. You love the influx because they keep the property values moving up, expand the tax base and are responsible for the many new shops and restaurants in the area. But it comes with the price of increased traffic, especially getting to our outstanding beaches.

If you’re still worried about property values, remember housing density increases the price of homes, and we’ve got the density, good or bad. What we don’t have is the snow.

Enjoy life or keep waiting

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

What would you do if you had a bunch of savings and the thing you were saving for is unavailable? A lot of first-time home buyers in the country are faced with that exact problem but they’re not all making the same decisions.

The housing market nationally is not performing the way housing markets typically do. The price of housing ordinarily goes down when mortgage rates increase, but as we all know, housing values are still going up primarily because of a lack of inventory.

According to the National Association of Realtors, the sale of existing homes was down 14.6% year-over-year in October with home prices still high. This is arguably one of the worst times to buy instead of rent and many first-time buyers are postponing their weekend house-hunting expeditions in favor of enjoying life.

The worst part about this is that the deferment of house hunting is not just for a few months to see what happens with the mortgage rate or the number of homes on the market, but some buyers are talking years before they try again. So, what are these frustrated buyers doing with their inflated bank accounts? Being the Americans that we are, some of them are taking expensive vacations, others are renovating their existing homes and decorations and the more practical are increasing college funds or retirement funds.

The “we want to buy a house but can’t” savers are turning into consumers, completely setting the economists – who a year ago predicted a recession – on their heads. With oodles of cash available and the likelihood of missing the boat on building equity, they are spending on enjoying themselves, keeping the economy in positive territory. Who could blame them; fiddling with interest rates never has a good outcome.

Time to look at October Manatee County sales statistics reported by the Realtor Association of Sarasota and Manatee and see what’s going on locally:

Single-family homes closed 6.5% more this year compared to last. The median sale price was $479,000, down 12.8%, and the average sale price was $658,503, down 7.4%. The median time to contract was 29 days compared to 24 days last year and new listings were up 24.5%, bringing the month’s supply of available properties to 3.3 months compared to 2.8 last year.

Condos closed 7.5% more this year compared to last. The median sale price was $370,000, up 0.4%, and the average sale price was $415,591, up 7.1%. The median time to contract was 30 days compared to 22 days last year and new listings were up 28.3%, bringing the month’s supply of available properties to 3.8 months compared to 2.3 last year.

Lower sale prices for single-family properties may not look like a good thing, but since real estate numbers are always lagging, this could reflect the rapid increase in interest rates. The really good news aside from the increase in closings is the increase in inventory. Per the Association of Realtors, this is pointing to a more balanced future market, hopefully more like pre-pandemic activity.

Those of you who are not first-time buyers but buyers who would like to move up but don’t want to give up your ultra-low mortgage rate should have a little more respect for your mortgage. It’s hard to think of money you owe as an asset but if you have a fixed-rate mortgage below or around 3% you are sitting on a valuable asset. You may not see the asset in the bank, but you are wealthier for having it.

I’m of the school that you should always enjoy life but still find a way to balance that with improving your finances. All of this will return to normal someday, so don’t blow it all on a trip to Tibet to see the Dalai Lama.

Be thankful – maybe

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

This is Thanksgiving week, and in spite of or because of our current housing market, we have much to be thankful for. Not everyone in the world can live in their own home, especially in such a beautiful place. Nevertheless, we need to be vigilant because nothing is ever free.

According to Forbes, as of Nov. 16, the average 30-year home mortgage is 7.83% and the average 15-year home mortgage is 7.06%, down slightly from previous weeks. This may not sound great, but the good news is the rates are going down and are somewhat stable. In addition, the Federal Reserve did not raise rates during its last meeting and has signaled they may be holding steady for a while. The stock market heard this loud and clear and has been improving almost every day.

However, buyers who are actively looking for a new home and a new mortgage still aren’t too happy. To find a way to address the buyer’s reluctance to enter into an 8% mortgage, some lenders are offering programs that include future refinance for free. Of course, lenders are looking to fill the hole left by retreating buyers who cannot bring themselves to sign on for an almost 8% home mortgage and attract new borrowers.

But is this really a good deal for buyers? Nothing in the mortgage industry is free and signing on to what looks like a good deal may bite you down the road. Every lender has its own program with a different set of incentives that can be confusing to even astute buyers.

Usually, lenders will give some borrowers a certificate or another type of IOU that gives them access to a credit that can be used to pay for some of the costs associated with a future refinance. Other lenders may roll the future closing costs into the loan amount or waive lender fees and/or appraisal fees for a future refinance.

The average closing costs for a single-family refinance are approximately $2,500. A lender could offer a credit somewhere between $1,500 and $3,000 for a future refinancing but if the closing costs in the future are less, the difference will not be refunded to you. Also, buy now/refinance later mortgages may have higher initial fees or interest rates or come with time limits.

Since no one knows what the rates will be in the future or what your particular lender will offer down the road, you could be signing up for an unknown. Part of that unknown is whether your credit rating declines or your property value drops and you don’t qualify for a refinance.

It’s always nice to see new ideas that may be available to help buyers, but it might be more beneficial to focus on what you can afford now; don’t assume that the rates will fall in the future and allow you to take advantage of your previous credit.

Refinancing any mortgage is always an option and if interest rates do drop, you’re not tied in to one lender, you can see what the competition is offering at that time. I’m not saying there may not be some great buy now/refinance later programs out there that will be the perfect fit for your finances now, I’m just saying think about the future before you obligate yourself.

Tomorrow be thankful for your family, friends and a bounty of food. Also be thankful for American ingenuity, it makes our country special and offers options for every buyer. Happy Thanksgiving.

What is a condominium?

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

Condos are all over Florida, representing every imaginable price range. People live in them full-time, part-time or invest in them. They’re a very flexible real estate resource, but are they meant for you?

A condominium is a privately-owned individual unit within a community of other units. In general, the owner usually owns the interior of their condo and the structural components of the exterior walls. Condo owners jointly own shared common areas within the community, such as pools, garages, elevators, gyms and boat slips. Some condos are in high-rise buildings, mid-rise buildings, detached villas or semi-attached villas. In waterfront communities in Florida, you will even find condo associations of boat slips. You name it and it probably can become a condo as long as it abides by Florida condominium laws.

Condo communities are popular because they provide an easy, turn-key way of life. There is low homeowner maintenance – no lawns to mow, pools to clean or peeling paint to address. Many condo associations have secured gated entrances and some have on-site security personnel. It’s easy to make new friends and socialize if you’re new to the area. There are many affordable condo associations in Manatee County. They come in all shapes and sizes, but there are also some very high-end associations, mostly with water or beach access. Finally, condo living usually offers many amenities ranging from pools, clubhouses, barbecue areas, gyms and dog parks.

So that’s the good stuff, but what about the bad stuff? The biggest complaint about living in a condo community is the rules of the homeowner’s association. If you’re not a good, follow-the-rules kind of person, you may be in for a shock. Just about everything from trash to noise to pets to paint color to patio furniture could very well have a rule attached to it.

Also, condo associations are essentially small businesses and, in some cases, not so small. HOAs are required to maintain reserves for maintenance of the property, funded by the collection of monthly or quarterly dues. This is always the biggest cause for concern with condo owners who sometimes feel they have no real input on how much money is spent to maintain the property.

Associations are organized with an elected board of directors, and, with some limitations, they make the decisions on behalf of the community. If you don’t like what they have decided, the only thing you can do is run for the board yourself or not vote for some or all the directors at the next election. Since participating in a condo board can be tedious and time-consuming, it’s not that easy to get volunteers, so be careful what you wish for in a dispute with a board member.

Condo owners are sometimes worried about their investment since they don’t have complete control of their assets and maintenance decisions. The only thing I can say here is before you buy, go over the financials of the association as well as condo documents with a fine-tooth comb and see if this is the place for you.

I’ve written columns like this before, and I always point out that communal living is not always easy and, unless you have a “condo personality,” it may not be the right choice for you. If your neighbor isn’t quite making their trash into the trash bin and it ends up on the ground, you may not like it, but it’s one of those adjustments condo living requires. The good part is you’ll always find a friend to help you pick it up.

Castles in the Sand

Florida insurance nightmare grows

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

It’s like waking up from a bad dream and realizing it was only a dream and everything is just fine. However, the Florida insurance nightmare isn’t just a bad dream, it’s the new reality, and we keep taking hits.

The latest is Farmers Insurance Company pulling out of Florida, leaving 100,000 policyholders high and dry. They will no longer be writing policies for homeowners, auto and umbrella in the state. They point to storm risk and increased litigation forcing them to reimburse more funds than they feel comfortable doing, meaning they’re not making enough money selling insurance in the state of Florida.

We can’t do anything about the storms and unless Farmers is living in a different dimension, the state has always had the risk of storms. The litigation issue was addressed by the governor and Florida Legislature this past year hoping to reduce the number of lawsuits relative to claims.

As always, homeowners live in fear each renewal that their insurance will be canceled or will go up too much. You always have the option of shopping around before your next renewal in the event you do get canceled, but be careful.

Make sure the company or insurance broker you’re talking to is a real person. There is a National Association of Insurance Commissioners that can help you verify who you’re talking to. My advice, especially for homeowners who live near the water, is to try as hard as possible firstly not to get canceled and if you get an increase, bite the bullet and pay it before shopping for a lower rate.

You can make your home more insurable by changing things that will make the property less risky to insure. Fire alarms and security systems can get you several percentage points off your premium. Hurricane shutters, hurricane-proof windows and fire-resistant siding also will help.

But the elephant in the room in Florida is the age and condition of your roof. Be prepared to get a cancellation or requirement to replace the roof if it is anywhere over 25 years of age, even if there are no leaks and no claims against it. This is also true if you live in a condominium complex where the roofs are the responsibility of the association. Condo owners are getting hit all over the place with special assessments to replace roofs in order to get insurance.

Time to report the June sales statistics in Manatee County released by the Realtor Association of Sarasota and Manatee.

Single-family homes closed 17.7% more properties from last June. The median sale price was $525,000, down 4.5% from last year, and the average sale price was $678,994, down 1.7% from last year. The time to contract was 37 days compared to six days last year and the month’s supply of available properties is 2.8 months compared to 1.8 months last year.

Condos closed 12.1% more properties from last June. The median sale price was up 3.8% to $370,000, and the average sale price was up 6.6% to $471,003. The time to contract was 34 days compared to seven days last year and the month’s supply of available properties was 3.4 months compared to 1.5 months last year.

Sales are up in both areas of the residential market, keeping in mind most of these transactions were booked at least 30 days ago before the slower season really kicked in. Nevertheless, the news release from the Realtor Association states, “The residential market in Manatee County continues to thrive with strong buyer activity.”

Insurance nightmares or not, Florida is still a great state to live in. Hopefully, we’ll have a moderate storm season and improved litigation laws that will give insurers a reason to come back to Florida. That would be a happy dream

Castles in the Sand

Mortgage rates on the move

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

Residential mortgage rates barely budged in June, leveling off at the 6.5% mark the last week of May. Just when buyers were starting to exhale, thinking this may be as high as we go, the national 30-year average fixed-rate mortgage blew past that mark the first week of July. Talk about fireworks. According to Freddie Mac, rates finished the week ending July 6 at an average of 6.81%. One outlier from the Mortgage News Daily reported a 30-year fixed mortgage hit 7.22%.

If you’re thinking well, that’s not too bad, consider the poor buyer who is looking at a $400,000 mortgage and now faces an increase in monthly carrying charges over $100. This could be the breaking point for some buyers as far as qualifying.

And we’re not done yet. Housing market watchers expect mortgage rates to remain elevated amid ongoing economic uncertainty and the Federal Reserve’s rate hike war on inflation. The expectation is two more rate increases before the end of 2023. If they proceed with quarter-point increases, you do the math.

The Federal Reserve has clearly stated there is a long way to go to bring inflation back to its 2% goal. Since July 26 is their next meeting, we won’t have long to wait for an answer. Housing experts like Lawrence Yun, chief economist at the National Association of Realtors, feel the Fed has been hawkish as it regards rate increases. Yun says, “The rate hikes from earlier months have yet to exert their force at a time when inflation has already decelerated to 4% and there is no need to consider raising interest rates.” We’ll see if anyone in Washington listens to him.

Further, if you think housing inventory is down now, wait till these higher rates kick in. Sellers with mortgage rates below 3% or 4% are not motivated to sell no matter how much they want that extra bedroom or water view. Homeowners feel locked in and are remaining on the sidelines willing to wait it out. They may have a long wait.

No matter how high the rates go, however, keep in mind the real estate market has survived rates higher than we will probably be looking at by the end of the year and people were still buying houses. Eventually, buyers and sellers will have to blink and start the market rolling again.

Before I end this column, I would like to acknowledge the passing of Pat Copeland, an Island treasure and the editor of this column for The Sun for many years. She edited with a light touch, never passing judgment, simply suggesting a more concise sentence structure or precise word, and she was always right.

I was away when she passed, but was thankfully home in time to attend her memorial at Roser Church on Pine Avenue. Her family did her proud, from her young grandchildren to her well-poised and talented daughters and sons-in-law and, of course, her husband of 50 years, Doug Copeland, an Island treasure in his own right. It was an uplifting event with big smiles from all who attended, ending with a New Orleans-style second-line processional to celebrate a life well lived by a special lady.

You may not be able to influence how mortgage rates are moving, but you can keep your life moving in the right direction. In the words of Pat Copeland, “Life is a party.” Who cares what the Federal Reserve says?

Castles in the Sand

Is having two homes too much?

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

This column is all about being careful what you wish for. Some people love their childhood home and long for the day they will inherit it from their parents. Others know if they just had that beach house their life would be complete. Well, I’m here to tell you that both dreams do not come as easy as you might think.

Inheriting the family home has been a tradition in the country for a century. It made a lot of sense to children who needed the space and location where they grew up for their new families. It wasn’t uncommon for siblings to make arrangements to buy out other siblings who wanted the property and, mostly, it was a good idea and worked.

Now, however, the family home may be worth a lot more than anyone in the family anticipated. Higher mortgage rates can make it impossible or impractical for any of the heirs to maintain the property or buy it outright. In addition, tax liabilities need to be calculated by a professional to determine if or when the best time to sell is.

If keeping the family home is a viable option for the heirs, then it might be a good option to use this windfall as a second vacation or investment home. Owning a second home comes with a long list of pros and cons, just ask any owner on Anna Maria Island. But, if you’re starting with a property that is inherited, you’re at least starting at the top of the pro list.

The biggest expense in owning a second home is financing it. Financing costs are typically higher for vacation homes with higher interest rates and larger down payments generally required. Fannie Mae and Freddie Mac have also raised fees for second home loans recently. If this is an inherited home, financing is not the issue, but there are plenty of other issues.

Coastal Florida, in case you haven’t noticed, is experiencing insurance premiums that are rising with shrinking options. The closer you are to the water, the greater your risk of flooding and wind damage in a storm, especially for older homes that may not have been built to current code. It’s certainly not impossible to get insurance on older properties but insurance companies are looking for new roofs at a minimum. In fact, you don’t even need to have a waterfront home for insurance companies to require a new roof before they will write insurance or give you a deadline for when that new roof needs to be installed.

Maintenance of a second home is always an issue, especially if the owner resides several hours or several states away. Maintenance companies will maintain issues in the home and check on it regularly if no one is there, but these services all come with a price. Renting a second home certainly is an option, but at the end of the rental, the property needs to be cleaned and checked for repairs. It’s a lot of work for owners and it’s not unusual for second homeowners to decide at some point it’s too much work for the time they use the property.

The flip side of this is the income that can be realized from second homes. Just look at the rental prices on Anna Maria Island. Again, consult your tax professional if you plan to use the property for both personal and business use. Every owner’s situation is different based on their personal use, the amount that can be written off and income.

There is no one answer for everyone. Owning a beachfront property or a ski-in, ski-out chalet may be your dream. Just be careful what you wish for.

Castles in the Sand

100 years of paradise

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

Anna Maria is celebrating 100 years of providing exquisite beaches and aqua water to beachgoers and visitors. The celebration started on Memorial Day and will probably go on for several months and rightly so since the Island is something to be celebrated.

Down through the years when I interviewed new business owners or friends who moved to Anna Maria Island, I always asked how they found it. Many of them came as children to visit grandparents and always vowed to return. One drove over the Manatee Avenue bridge because she was early to visit a relative in Bradenton and couldn’t believe what she found, buying a Gulf-front piece of property the same day on a credit card. And one of my favorite stories was when a couple on vacation in their RV drove over the Cortez Bridge and turned right instead of left. They too bought a home the same day and opened a business.

My personal story happened in 1995 when I was visiting a friend in Bradenton and was taken to Anna Maria for dinner. That was the first of many visits to the Island, including the one that sent us home to sell our house. In January of 1997, my husband and I rented a beach house on the Gulf side of North Shore Drive. It turned out to be one of the best vacations I ever had and I knew then this is where I wanted to be.

To say Anna Maria Island has changed since those years would be a vast understatement and the thing that has changed the most is real estate construction and values. May sales statistics released by the Realtor Association of Sarasota and Manatee is showing our market is still moving forward.

Single-family closed properties were up 17.2% compared to May of last year. The median sale price for single-family homes was down 6.4% to $515,000 and the average selling price for single-family properties was also down by 4.1% to $686,015. The median time to contract was 32 days, compared to six days last year. Pending inventory was up by 31.8% and the month’s supply of available properties was 2.7 months, compared to last year at 1.2 months.

Condo sales were up 5% when compared to May of last year. The median sale price was up 3.4% to $382,645 and the average sale price was also up by 37.3% to $606,255. The median time to contract was 37 days, compared to 6 days last year, and pending inventory was up 8.9%. The month’s supply of available properties was 3.4 months, compared to one month last year.

Condo sales had the edge this month in both sales and selling price, which in this market could change in a heartbeat. That said, the market is starting to settle down, as stated by the press release issued by the Realtor Association.

“Sarasota-Manatee housing market begins to stabilize but remains a seller’s market,” the press release said.

The summer months have always been the slow time in Island real estate, but don’t bet on that to continue when we’re in a seller’s market.

Anna Maria Island is so much more than its beaches; it’s a lifestyle I fear is slowly eroding just like the beach sand. If there is anything that can be done to slow this progression, I don’t know what it is. I only hope that our little paradise isn’t lost in the name of progress.

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

More fraud red flags

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

Summer is here and while you’re sitting on the beach you might not want to think about real estate fraud, but fraudsters may be thinking about you. Over the past few weeks, we’ve gone over different kinds of real estate fraud, but there’s more – lots more.

Deed fraud is something most people don’t even think about. How can someone get a lender to give them money against the equity of your home or indeed take over your identity? It might be easier than you think.

There are many identity theft monitoring subscriptions you can purchase that will alert you if there is a new credit check on your credit report or a new loan or credit card. I have one of these and it is very effective, if occasionally annoying, especially if your credit card has an unusual charge which you know about. Nevertheless, I, for one, think it’s a good investment.

The one thing that may be more difficult to be alerted about is deed fraud, another form of identity theft. Deed fraud occurs when someone steals your identity, forges your name on a deed and takes title to your home. This can be more difficult than it sounds to sort out even if you know about it quickly.

Every state has different regulations on executing a deed of sale, but a sure way to check to see if your deed has been tampered with, especially if you have reason to believe this is the case, is to search Manatee County property records. This is a simple and quick process that involves just entering your name and finding your property records. You will see immediately if the deed has been transferred to someone else just like when you sell or buy a property. It’s a nice little habit to get into once a month considering that identity theft is on the rise.

Another popular fraud is wire fraud starting with scammers checking online multiple listings. They wait for a pending sale then profile as many parties to the transaction as they can and research email addresses. When you purchase or sell a property these days, most of the transaction is done online. With so many people involved in the transaction, there is sensitive paperwork flying around the internet. It’s easy for even the most trusted person to make a mistake or not check details, leaving that up to you as the buyer or seller. Look over everything carefully, don’t just do your online signature and move on to the next page.

There are red flags to look for before you sign off and these are just a few of a long list:  deletions, corrections or other alterations; someone other than the seller is shown on the sales contract; purchase price is substantially higher or lower than current market value; date and amount of existing encumbrances appear suspicious; real estate commission is excessive; chain of title includes an unknown interested party or the buyer and seller have similar names but haven’t disclosed a relationship.

Finally, you can keep up with scams by logging on to the FBI or the Financial Fraud Enforcement Task Force websites if you are suspicious of something related to your transaction or by emails you received online. Don’t open any emails that look official unless you’re positive it’s legitimate.

There are many anti-fraud acts enacted by states and the federal government. The most well-known one is the Dodd-Frank Act enacted in July 2010 as a result of the prior financial crisis. This act places regulation of the financial industry in the hands of the government to limit risk and enhance transparency. However, don’t assume everyone involved in a real estate transaction or an existing deed is competent and honest. As a homeowner and potential homeowner, you need to be proactive.

This may not be your favorite beach reading, but it is important.

Castles in the Sand

Condominium insurance and assessments

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

Does the talk of insurance make your eyes glaze over? If it does, join the club. Insurance of all types is complex and difficult to understand but in the case of homeowner’s insurance, condominium insurance and flood insurance, it’s getting worse.

I recently learned that condominium insurance in coastal areas is skyrocketing by as much as double over last year’s renewal. This is primarily because 2022’s busy hurricane and storm season left the southwest coast of Florida with unimaginable damage. Insurance companies have left the state leaving very few options for coastal communities. This has compounded the existing problem of fraudulent lawsuits being brought against insurance companies that would not reimburse for overinflated home repairs.

Now we’re also facing increases in flood insurance based on a 2021 FEMA decision calculating policy costs. FEMA’s new method is to equitably distribute premiums across all policyholders based on the value of their properties in addition to their location. The increases will give sticker shock to everyone in both single-family homes and condos. The good news is that readjustments will be phased in over a period of 10-15 years.

The challenge specifically to condominium associations is to come up with the unexpected premium payment. Most associations will need to special assess their owners which creates a potential problem for owners who are considering selling.

The Florida condominium rider requires a seller of a condominium to make the following representation: “Seller represents that seller is not aware of any special or other assessment that has been levied by the association or that has been an item on the agenda or reported in the minutes of the association within 12 months prior to the effective date of a contract for sale.” This is a mouthful, but it’s pretty clear language. The problem is when does a “potential” assessment need to be disclosed?

Like any other disclosure when selling property, always err on the side of caution and disclose everything. For instance, possible disclosures could include if an improvement that could lead to a future assessment is in the minutes from a previous meeting or on an agenda for an upcoming meeting, if there is any indication that an improvement could lead to a future assessment included in any mailing to any unit owner or even if a conversation with a board member indicates the possibility of an assessment.

Anything that even has a hint of a special assessment needs to be disclosed to a potential buyer to protect the seller from future liability. On the other hand, if a seller truly had no knowledge of the possibility of an assessment and it was never discussed at a meeting or was never an agenda item, the seller is likely protected from post-closing liability.

As far as insurance increases, there is a glimmer of hope. The lawsuits against insurers have been somewhat addressed by the Florida Legislature putting in place tort reform starting next year. Hopefully, this will encourage insurers to return to Florida’s enormous marketplace, creating some competition with the benefit of leveling premium costs.

We live in litigious times in a state surrounded by water and prone to hurricanes. Sure, it’s the price we pay for living in what most of us feel is a little bit of paradise. Nevertheless, stay on top of all the insurance issues and what your obligation is for disclosure with a clear eye.

Castles in the Sand

Fraud by any other name is still fraud

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

For many of us who hold Florida real estate licenses in the state, you will be renewing this year. Renewal is pretty easy, it’s a 14-hour open book test and a state fee. Every renewal period addresses different aspects of real estate and this year one of the modules, as they’re called, addresses fraud in real estate transactions, specifically in real estate financing. So, I’m sharing some of what I’ve learned with you.

Mortgage fraud manifests in many ways, so many that it’s impossible to review every law-breaking scheme creative fraudsters come up with, however, mortgage fraud is at the top of the list. Any misstatement, misrepresentation or omission of information that lenders relied upon to fund the purchase of a property is considered fraud.

An outright lie by a homeowner or their broker relative to a structural defect for example, is fraud. Likewise, fraud can also be the omission of a material fact that involves the structure of a property, like not disclosing that you have a leak in the bedroom from the roof and simply painted over the stain. This all goes back to the seller’s disclosure obligation as we discussed several weeks ago.

An anxious seller may also commit fraud by improving the financial position of a marginal buyer by offering them cash, enhancing their ability to qualify for a mortgage. Any money exchanged between a buyer and seller without the knowledge of a mortgage lender that affects the value of the property could be viewed as fraud. This isn’t to say that a buyer can’t offer their furniture for sale to a seller for a dollar amount separate from the purchase price.

Anyone who has applied for a mortgage since 2010 wonders why their lender is putting them through financial hoops and asking all kinds of questions, requiring a variety of documents to prove who you are and a signature on multiple disclosure forms. The answer is that in the wake of the financial crisis, The Dodd-Frank Act was enacted in 2010 and added a whole new level of regulations affecting the financial industry. Nevertheless, there is still room for fraud.

Probably the most frequent fraud by buyers is not being truthful about their income and/or their other financial obligations. Income that cannot be verified because of self-employment or being paid off the books is a red flag for lender underwriters. Likewise, not disclosing what your actual monthly debt obligation is and getting away with it is fraud and punishable by the law. Fortunately, lenders will pull a credit report and, most of the time, will know if you have more than one mortgage on your current property, a car loan or credit cards you have not disclosed.

Also, lender applications will ask what the intended use of a property is. If the buyer is intending to set up the property as an income rental but does not disclose this to the lender, this too is fraud. Buyers who are intending fraud may also misrepresent the value of the property in order to qualify for a larger mortgage. This is where property appraisers come in. The majority are honest, but when a dishonest appraiser works with a dishonest buyer they can produce a fraudulent appraisal. This particular fraud was not uncommon in the run up of the financial crisis where loans were placed on properties because of fraudulent appraisals and/or misrepresentations of buyer qualifications.

Where there’s money there’s fraud and I’m saving a few other frauds for another week. Be careful out there. There’s always someone out to get your money. You need to outsmart them.

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.