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Tuesday, November 30, 2021

Rising Rents Hit Smaller Cities Hardest

 By Swapna Venugopal Ramaswamy

Remote work increased small-city demand, with two Florida ones in the top 10: St. Petersburg rents rose 56.7% for one-bedroom, Hialeah 49.2% for two.

ST. PETERSBURG, Fla. – Rents have spiked throughout the country in the last year, but smaller cities have been hit particularly hard. Topping the list for the highest rental increase for a one-bedroom apartment was Gilbert, Arizona, a town with a population of 267,000, where rent jumped 117% from September 2020 to $1,866 in September 2021, according to an analysis by Apartment Guide.

Seven of the top 10 cities that experienced the biggest surge in rents for one-bedroom apartments have populations of 300,000 or less. Other small cities in the top 10 include Spokane, Washington; St. Petersburg, Florida, Boise, Idaho; Birmingham, Alabama; Irvine, California; and Scottsdale, Arizona.

While rents continue to rise at a breakneck speed nationally, increasing by 20% from September 2020 to September 2021, renters in the top 10 cities experiencing the biggest rental hikes were shelling out at least 40% more.

Brian Carberry, senior managing editor for Apartment Guide, says the shift began during the pandemic when remote work options enabled more people to move out of larger cities.

“Smaller cities on a whole tend to not have as much inventory as larger cities, so when the competition increases, rent prices tend to go up as well,” he says.

He also said some smaller cities may be actively working to revitalize their downtowns to attract more residents, and as apartment buildings open, landlords may price them a bit higher as they are new and in popular areas. If a greater number of higher-priced rentals go on the market in an area, it will drive up average rent, he said.

Six of the cities with the biggest increases in two-bedroom rent prices year-over-year also have populations of 300,000 or less. They are Huntington Beach, California; Reno, Nevada; Hialeah, Florida; Irvine, California; Glendale, Arizona; and Scottsdale.

For example, in Huntington Beach, rents surged by 59% to $4,252 for a two-bedroom lease.

In October, shelter costs, which make up one-third of the consumer price index, increased 0.5% and are now up 3.5% year-over-year, contributing to the overall three-decade high inflation rate of 6.2% compared with a year earlier.

Rents will continue to be a persistent factor in rising inflation rates, says housing analyst Logan Mohtashami.

“We have a lot of people who weren’t able to buy a house because they’ve lost their bids in a very low inventory environment,” he says. “So you have some very well-to-do households that easily have the ability to pay these higher rent increases.”

The trend of rising rents is here to stay because millennials, the largest demographic group in the U.S., are entering their homebuying years, he says.

Rents for single-family homes rose 10.2% nationally in September, the fastest year-over-year increase in 16 years, according to a new report from CoreLogic. The rental rates for single-family units nearly quadrupled from a year ago, the report found.

“Strong job and income growth, as well as fierce competition for for-sale housing, is fueling demand for single-family rentals,” writes Molly Boesel, the principal economist for CoreLogic, who authored the report.

Miami topped the CoreLogic list with the highest year-over-year rent growth in September with an increase of 26%, followed by Phoenix at 20%.

The vacancy rates of single-family rental homes remained near 25-year lows in the third quarter of 2021, pushing annual rent growth to double digits in September.

“Rent growth should continue to be robust in the near term, especially as the labor market continues to improve,” says Boesel.

Cities with the biggest increases in one-bedroom rent prices year-over-year:

  1. Gilbert, Arizona: (+116.5%)
  2. Spokane, Washington: (+69.3%)
  3. Long Beach, California: (+66.3%)
  4. New York, New York: (+58.2%)
  5. St. Petersburg, Florida: (+56.7%)
  6. Boise, Idaho: (+49.1%)
  7. Birmingham, Alabama: (+47.3%)
  8. Irvine, California: (+46%)
  9. Santa Ana, California: (+44.5%)
  10. Scottsdale, Arizona: (+44.1%)

Cities with the biggest increases in two-bedroom rent prices year-over-year:

  1. Santa Ana, California: (+60.2%)
  2. Huntington Beach, California: (+58.5%)
  3. Reno, Nevada: (+57.9%)
  4. Hialeah, Florida: (+49.2%)
  5. Fresno, California: (+46.5%)
  6. Irvine, California: (+45.8%)
  7. New York, New York: (+43.3%)
  8. Glendale, Arizona: (+41.9%)
  9. Raleigh, North Carolina: (+39.6%)
  10. Scottsdale, Arizona: (+39.6%)

© 2021 Journal Media Group (Source: Apartment Guide)

Monday, November 29, 2021

Greater Fort Lauderdale Area Breaks Annual Home Sales Record in 2021

 Residential News » Fort Lauderdale Edition | By David Barley 

According to new data from the Miami Association of Realtors, Broward County Florida broke its record for the most annual home sales in only 10 months as October 2021 sales totals pushed the market over the old standard.

Broward County total home sales decreased 8.5% year-over-year in October 2021, from 3,241 sales to 2,967, because of lack of inventory and Covid19 comps (stats are in comparison to major rebound demand last year). Broward single-family home transactions decreased 16.3%, from 1,656 to 1,386. Broward existing condo sales decreased a negligible 0.3%, from 1,585 to 1,581.

Year-to-date, Broward has registered 34,167 existing total homes sales in 10 months, which surpasses the previous annual record of 33,891 transactions in the entire year of 2016.

"A historic home sales year for Broward County real estate and the total would be even higher if there was more inventory," Broward-MIAMI President Patrick Simm said. "Broward and Fort Lauderdale real estate offers a low-tax, pro-government market with increased access to water, beaches, an incredible downtown, shopping and more."

Broward Luxury Sales Jump as Northeast and West Coast Buyers Move to Mega Region

Broward single-family luxury ($1-million-and-up) transactions rose 20.3% year-over-year to 142 sales in October 2021. Broward existing condo luxury ($1-million-and-up) sales surged 65.4% year-over-year to 43 transactions.

There are 3.6 months of supply in luxury single-family homes; 5.8 months of supply in luxury condos. Luxury months of supply continues to trend downward for all property types, month-over-month, and year-over-year.

Low interest rates; a robust S&P 500; the appeal of stable assets in a volatile economy; homebuyers leaving tax-burdened Northeastern states to purchase in Florida (no state income tax); and work-from-home and remote-learning policies have all combined to create a robust market for luxury single-family properties.

With global vaccinations rising and unstable political situations around the world, South Florida is seeing an increase in foreign homebuyers. Global buyers are coming here for the vaccine and purchasing property.

Vaccinated foreigners were allowed to resume travel to the U.S. starting on Nov. 8 and that will lead to more international investment in South Florida - the No. 1 destination for foreign buyers. Global buyers purchase in Miami because Miami is a world-class global city with better real estate prices than other similar global cities. Foreign buyers feel at home with our incredible diversity and acceptance of all cultures.

Broward single-family homes priced between $400K to $600K decreased 6.2% year-over-year to 497 transactions in October 2021. Broward existing condo sales priced between $400K to $600K increased 90.7% to 143 transactions.

Low-Supply/High-Demand Market for Broward Real Estate

There is always a seasonal fade in inventory in the fall and winter. More inventory is expected to come to the market in 2022 as potential home sellers become more comfortable listing and showing their homes. The falling number of homeowners in mortgage forbearance will also bring about more inventory.

New listings of Broward single-family homes decreased 18.5% to 1,619 from 1,986. New listings of condominiums decreased 9.2%, from 2,207 to 2,003.

Inventory of single-family homes decreased 32.9% year-over-year in October 2021 from 3,278 active listings last year to 2,198 last month. Condominium inventory decreased 54.6% year-over-year to 3,503 from 7,720 listings during the same period in 2020.

Months' supply of inventory is down since July 2019 for single-family, reflecting strong demand. Months' supply of inventory for single-family homes decreased 44% to 1.4 months, which indicates a seller's market. Inventory for existing condominiums decreased 69.8% to 1.9 months, which indicates a seller's market. A balanced market between buyers and sellers offers between six- and nine-months supply.

Total active listings at the end of October 2021 decreased 48.2% year-over-year, from 10,998 to 5,701.

Nationally, total housing inventory at the end of October amounted to 1.25 million units, down 0.8% from September and down 12.0% from one year ago (1.42 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, equal to September's supply, and down from 2.5 months in October 2020.

Broward Homeowners' Home Equity Continues Surging as Many Pay Lower Mortgage Payments

With interest rates still at record lows, many South Florida homeowners have refinanced their home loans. So not only are many homeowners paying lower mortgage payments today; they are doing so while their wealth (home equity) has significantly increased. Home equity can be tapped for renovations, college loans and more.

Broward County single-family median prices increased 17.8% year-over-year in October 2021, increasing from $415,000 to $489,000. Existing condo median prices increased 20.6% year-over-year, from $189,000 to $227,950.

The greater share of Broward luxury sales in 2021 compared to a year ago is part of the reason for the large year-over-year increase in median prices.

Rising median prices is a trend nationwide as record-low mortgages rates and the increased availability of remote work and education has accelerated the demand for housing. Low inventory relative to high demand leads to prices rising.

Lower mortgage rates are making home purchases more affordable. According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.07 in October, up from 2.90% in September. The average commitment rate across all of 2020 was 3.11%.

Should mortgage rates resume their upward climb, home price growth is likely to slow in response. As more sellers list properties in 2021 and 2022, the increased inventory should ease the growth of median prices.

Miami remains a bargain compared to other global cities. In Miami, $1 million can net homebuyers 85 square meters of prime property, according to Knight Frank's 2021 The Wealth Report. Monaco (15 square meters), Hong Kong (23), London (31), New York (34) and Geneva (35) and others offer significantly less prime land for $1 million.

Broward Dollar Volume Totals $1.4 Billion, Showcasing Impact Housing Plays in Local Economy

While other industries struggled over the past year, housing lifted the economy nationally and locally. For every two homes sold in the U.S., one job is created. Broward dollar volume showcases the impact housing plays in the local economy.

Broward total dollar volume totaled $1.4 billion in October 2021. Single-family home dollar volume decreased a negligible 0.1% year-over-year, from $913.4 million to $912.4 million. Condo dollar volume increased 21.7% year-over-year, from $385.3 million to $468.9 million.

Broward Distressed Sales Keep Dropping, Reflecting Healthy Market

Only 0.9% of all closed residential sales in Broward were distressed last month, including REO (bank-owned properties) and short sales, compared to 1.9% in October 2020.

Total Broward distressed sales decreased 55.7% year-over-year in October 2021, from 61 to 27. Short sales and REOs accounted for 0.4% and 0.5% year-over-year, respectively, of total Broward sales in October 2021. Short sale transactions decreased 47.8% year-over-year while REOs decreased 60.5%.

Nationally, distressed sales represented less than 1% of sales in October, equal to the percentage seen a month prior and equal to October 2020.

Broward Real Estate Attracting Multiple Bids, Buyers Going Over-List Price

The median percent of original list price received for single-family homes was 99.2% in October 2021, up 1.6% from 97.6% last year. The median percent of original list price received for existing condominiums was 97.5%, up 2.3% from 95.3% last year.

The median number of days between listing and contract dates for Broward single-family home sales was 17 days, a 22.7% decrease from 22 days last year. The median time to sale for single-family homes was 59 days, a 13.2% decrease from 68 days last year.

The median number of days between the listing date and contract date for condos was 21 days, down 43.2% from 37 days. The median number of days to sale for condos was 63 days, a 19.2% decrease from 78 days.

Broward Cash Sales 62.9% More than National Figure in October 2021

Cash sales represented 39.1% of Broward closed sales in October 2021, compared to 30.4% in October 2020. About 24% of U.S. home sales are made in cash, according to the latest NAR statistics.

The high percentage of cash buyers reflects South Florida's top position as the preeminent American real estate market for foreign buyers, who tend to purchase with all cash as well as some moving from more expensive U.S. markets who can buy more with their profits from real estate sales.

Cash sales accounted for 52.9% of all Broward existing condo sales and 23.3% of single-family transactions.

Higher Home Values Mean Higher Property Taxes

 Homebuyers who think property taxes will match the amount the seller had paid often find they’re wrong – and rising home values may might make them very wrong.

FORT LAUDERDALE, Fla. – Property values have skyrocketed across South Florida in the past year, and now we’re seeing it in our property tax bills.

The pandemic hasn’t slowed the red-hot housing market: In Broward County, home values rose 4.3% from the last year. In Palm Beach County, they increased at least 5%.

“I’m sure I don’t have to tell you that the pandemic had zero negative effect on the residential market,” said Tim Wilmath, chief appraiser for the Palm Beach County Property Appraiser’s Office. “In the past year, we have seen fairly dramatic increases in residential values.”

As property owners in Palm Beach, Broward and Miami-Dade counties see their tax bills come in, they’re seeing the increases first-hand. The money is due by March. Here are some essential tips to know as you ready to pay your property taxes this year.

You can save some money if you pay early

The values keep going up. Cities that have waterfront homes are still among the most expensive properties. Still, cities that are farther west are seeing their values rising at a higher percentage rate.

For example, records from June show values in Fort Lauderdale went up almost 7% this year, and about 6.5% in wealthy Hillsboro Beach. But values soared 11.2% in Lauderhill, 9% in West Park and 8% in North Lauderdale.

Don’t wait until the last minute to pay your property taxes: Whoever pays early can see some savings. There’s a discount for paying in November and that starts to peter out as you get closer to the deadline: You’ll see a 4% savings if you file by November, 3% in December, 2% in January and 1% in February.

There are multiple ways to pay, but be wary of an extra fee for using a credit card. For more information, you can contact your local property appraiser. County officials can help translate your tax bill. For help:

Your best bet to avoid sticker shock

Marty Kiar, Broward County’s property appraiser, regularly gets tearful calls from new homeowners who mistakenly thought they’d be paying the same amount in taxes as the person who owned a house before them.

It’s fair, surely, since the house size hasn’t changed, right? Well, no.

“I feel so bad [when the] first-time homebuyer didn’t know their property was going to get reset to market value” based on purchase price, he said. “They always think they pay what the previous owner paid.”

“Save our Homes” is a Florida law that caps the annual increase that a homesteaded property can rise in value to either 3% or the change in the National Consumer Price Index, whichever is less. That means the longer you stay in a house, and the value continues to climb, you won’t pay as much in taxes as the newbie next door. Because when you buy, the value is reset on Jan. 1 the next year based on purchase price.

Kiar recommends prospective buyers check out his agency’s online tax estimator to make sure they can afford the taxes for their new home before they buy.

“Usually the young families, they are so excited … and now have to pay more money,” he said. “I talk with these young families every day and there’s nothing we can do under the law.”

In Miami-Dade, the property appraiser’s office also has an online calculating tool and a “buyer beware” warning displayed high on its website. “When buying real estate property, do not assume property taxes will remain the same.”

Prepare to also pay more in 2022

In Broward County, Kiar correctly predicted in March that nearly everyone would pay more in taxes this year. Although there’s still another month to go to finish out 2021, he’s making the same prediction for tax bills in 2022.

“One thing definitely apparent is values, especially in residential, are going to continue to rise for tax purposes because people are paying enormous amounts of money for properties,” he said.

People are flocking from places such as California and New York, which have state income taxes, and agreeing to pay cash for property here in Florida. He added, “I feel confident there will be an increase overall.”

There wasn’t as much property that sold in 2020, but those homes that did “sold for a lot more money,” he said. “Now in 2021, we have lots of property selling for very high prices. Throughout the county, I can’t think of one place where it’s not the trend.”

By Lisa J. Huriash

© 2021 South Florida Sun-Sentinel. Visit Distributed by Tribune Content Agency, LLC 

Single-Family Rental Demand ‘Through the Roof’

 The listing shortage forced some families to rent, but many recent sellers are opting to pocket profits and wait a year or so for a calmer real estate market.

NEW YORK – Lance Butler made a tidy profit when he sold his 1,800-square-foot home in Nampa, Idaho, this year.

“If I would have held out for another three months, I probably could have gotten another $40,000 out of my house,” says Butler, who sold his $250,000 home for $410,000.

But that was not an option. Butler and his wife had just had their second child and the family needed more space. “Plus, my neighbor being a ‘jackwagon,’ I wanted out of there, too,” he says with a laugh.

But instead of buying a bigger home, the couple decided to rent a new 2,000-square-foot single-family home for $2,100 a month in Burlingame, Idaho.

The couple benefited in two ways: They stayed out of a frenzied real estate market that drove up the value of their house by 64% in two years. And they got to live maintenance-free. Everything from landscaping to small repairs around the house is managed by American Homes 4 Rent, which owns and operates the development of 74 homes.

“I don’t mind getting down and dirty,” says Butler, who works in construction. “But it was actually nice to look out and be like, ‘my yard’s been mowed, my sprinklers are taken care of and the weeds have been pulled.’ It’s just one less thing that you got to do when you get home.”

The intense competition and shortage of homes for sale have contributed to the rising popularity of the single-family rental market, spawning many built-for-rent communities. In the last five years, the number of homes built exclusively for rent has increased 30%, according to the National Association of Home Builders. They now make up 5% of new single-family homes under construction, says Robert Dietz, the chief economist at NAHB.

But that building push hasn’t closed a big shortage in houses to buy. The U.S. has built 5.5 million fewer homes in the past 20 years compared with long-term historical levels, according to a June report by the National Association of Realtors.

The shortfall has driven prices higher, reducing affordability at a time when millennials, the largest generation group in the U.S, are approaching their first-time homebuying years. And with more employees working from home because of the pandemic, house hunters want large outdoor spaces, office rooms and gyms – wish lists that are supercharging demand for single-family homes.

Housing: A ‘resilient asset class’

The $5 trillion U.S. single-family rental market has also drawn the attention of Wall Street.

Institutional investors such as banks, pension funds and hedge funds poured $6 billion into the single-family rental segment during the first quarter of 2021. That investment marked more than half of the $10 billion committed to the space over the past three years, according to Yardi Matrix, a real estate intelligence firm. By comparison, the volume of investment in both office and retail fell by over 40% year over year during the same period.

Meanwhile, U.S. single-family rent growth increased 8.5% in July 2021, the fastest year-over-year increase in 16 years, according to the CoreLogic Single-Family Rent Index.

The interest in single-family rental homes as an investment is growing because it has proven to be a more resilient asset class than offices and hotels, says Don Walker, managing principal and chief financial officer for John Burns Real Estate Consulting.

“That was clearly demonstrated during the pandemic when many hotels had to close down because of COVID and people could not go to offices anymore,” he says, adding, “What I like about built-for-rent is that it’s providing new housing to the market, and they are newer and much more energy-efficient than the typical house that’s 30 or 40 years old.”

While close to 90% of homes are still owned by small, mom-and-pop investors, there’s been an infusion of capital targeted at the single-family rental space, says Walker.

Around 12% of new single-family construction in 2021 is dedicated to future rentals, according to John Burns Real Estate Consulting.

Walker estimates that around $30 billion will be deployed to the single-family rental sector in the next several years, with at least half of that earmarked towards existing single-family rental homes.

For homes, ‘cash is king’

The typical value of built-for-rent or the existing single-family homes investors buy up tends to fall in the $250,000 to $350,000, roughly the median U.S. home price, say experts.

That is a cause for concern, says Lawrence Yun, chief economist for the National Association of Realtors.

“High-income households would rather buy than rent. The institutional buying is for the purpose of rent and targets the low, moderate and middle-income households,” says Yun. “With the housing shortage, cash is king, and institutional buyers are preventing first-time buyers from entering the market and in a sense forcing the households to remain renters for a longer period.”

Institutional buyers will stay interested until the housing supply increases significantly, says Yun.

Ed Golding, executive director at Massachusetts Institute of Technology’s Golub Center for Finance and Policy, and former head of the Federal Housing Administration, says institutional investors play an important role in the market by improving the quality of the housing stock and increasing the supply of good quality rental housing.

Better quality housing stock

He says institutional investors typically buy homes that need repair and can leverage their operational and financing advantages to fix these properties faster and more efficiently.

And that, he believes in not such a bad thing.

“It’s good for markets in general. It’s good for people to be able to have this as an option,” he says. “It’s a drag on homeownership but it’s not a big drag.”

Golding says there is a host of issues that can be tackled to improve homeownership rates, such as providing home rehabilitation loans, expanding down-payment assistance, changing some of the underwriting practices and de-emphasizing debt-to-income ratios and constructing more entry-level homes.

Two of the largest single-family institutional buyers’ annual reports illustrate the substantial amount institutional investors spend on these renovations, according to a report Golding co-authored for the Urban Institute.

Invitation Homes, the largest single-family leasing company, indicates in its annual report that it spent $39,000 per home for up-front renovations completed during 2020. And American Homes 4 Rent, for example, notes that they typically spend between $15,000 and $30,000 to renovate an existing home acquired.

“We calculate that the typical homeowner spends $6,300 during the first year after purchasing a home,” he says.

American Homes 4 Rent was founded in 2011 after it acquired 45 homes in the aftermath of the Great Recession. It currently owns 54,785 single-family properties in 22 states. Four years ago, the company got into the business of building homes to rent and has completed 4,500 homes in 22 states.

“The demand for single-family rentals is through the roof,” says David P. Singelyn, CEO of American Homes for Rent. “We’ve been getting five applications on every home.”

The company has housing developments with 120-plus homes each nearing or under construction in the Atlanta; Charlotte, North Carolina; and Tampa, Florida, markets.

“We went to markets with high population growth, where people were moving to,” Singelyn says.

Single-family rentals now make up approximately 35% of all U.S. rentals, according to Freddie Mac.

Charles Gullotta and his wife Kathryn moved from Tarrytown, New York, to South Carolina in August.

Gullotta, who worked as an executive chef, and his wife, who worked in the dental industry, both suffered significant loss of income over the pandemic and decided to move to a less expensive and warmer place.

“All those things combined made it very difficult to maintain our lifestyle,” he says. “We had to dip into retirement accounts to stay afloat during the times when both of us were out of work.”

The couple decided to take advantage of the hot housing market and sell their house before moving down south. “We bought our home for just under $800,000 six years ago and we sold it for just over $900,000. So at least it was a plus,” he says.

Once in South Carolina, they found a four-bedroom rental house through American Homes 4 Rent for $2,250 a month in Summerville, near Charleston.

“This is such a big adjustment from New York to South Carolina that we need to really get a better idea of the surrounding areas, whether we want to be more inland or we want to be more on the coast,” he says. “We didn’t want to buy right away.”

The best part of the rental was the price, he says.

“We were spending almost $29,000 a year in taxes,” he says of Tarrytown. “And it’s just over $27,000 to rent this place for the year. And that’s including utilities, lawn care, water and trash pickup.”

Gullotta says they are going to rent for the foreseeable future until they find something they absolutely love.

Butler, the Boise-area renter, feels the same way.

“If we’re going to purchase something, it’s got to be the forever home,” he says. “The home that my wife and I are in for the next 20 years until my two kids are grown and gone.”

Until then, he’s happy to rent.

Copyright 2021,, USA TODAY By Swapna Venugopal Ramaswamy

Wednesday, November 24, 2021

Florida TaxWatch: Climate Change More than Flooded Streets

 TALLAHASSEE, Fla. – Florida TaxWatch (FTW) released A Rising Tide Sinks All Homes: The Effects of Climate Change on Florida’s Economy, a 56-page report developed to better understand climate change’s potential costs and consequences on each of the 11 industries that comprise Florida’s economy.

“Climate change, sea level rise and the need for resiliency make for regular headlines, but what’s often missing from the narrative is the impact on our economy,” says Florida TaxWatch President and CEO Dominic M. Calabro. “The impacts of a changing climate translate into real economic repercussions. If bankers and insurers won’t secure the 40% of residential properties and 35% of commercial properties at risk of chronic flooding in Florida and they then come off property tax rolls, our communities will be impacted even when there is no rising water or storm surge in sight. If extreme heat deters outdoor recreation and tourism that drive our sales-tax-dependent economy, or if related disruptions stress supply chains or operations at airports, seaports and spaceports, billions of dollars in payroll and investments needed to support schools, roads, bridges, water and sewer systems, public safety and more will certainly be compromised.”

Calabro says, “Doing nothing is no longer an option. Making hard choices will establish Florida as a leader in this space and allow us to prepare for both the environmental and economic challenges ahead.”

According to FTW, more than 70% of Florida residents (16.1 million out of 22 million) in 2020 lived in a coastal county. By the year 2045, approximately 64,000 residential properties (valued at $26 billion) that exist in the state today will be at risk of chronic flooding from sea level rise and more frequent and severe storms, which will likely remove almost $350 million from local governments’ property tax base.

But inland communities and those connected to the sea by rivers are still vulnerable to other impacts of climate change. As temperatures rise, health risks also increase, and changes in precipitation patterns and extreme weather will impact health systems, workdays, tourism, natural structures and food supplies.

According to FTW’s report, the entire state could see climate-change-induced supply chain disruptions. It estimates those will last a month or longer are occur, on average, every 3.7 years.

Impact on Florida’s 11 key industries without mitigation efforts

  • Financial activities: By 2050, the value of private property below local high tide levels is expected to increase to $152 billion. Increased tidal flooding and more frequent and severe storms will threaten insurable property and lower asset values of mortgage-backed portfolios. The report suggest that lenders could be more reluctant to write long-term mortgages in high-risk coastal areas. The vulnerability and relative decline in home prices in high-risk census tracts could lead to 20% fewer home transactions in certain communities.
  • Leisure and hospitality: Large-scale climate events, such as major hurricanes, and gradual processes, like sea-level rise and excessive heat, could disrupt tourism. By 2050, Florida’s tourism industry could bring in $40 billion less in annual revenue without mitigating efforts in place.
  • Trade and transportation: A two-foot rise in sea level, expected by 2050, would endanger approximately 252 miles of Florida’s most high-traffic highways. When including the impact of sea level rise on smaller state and local roads, the number of flooded roads would grow by an additional 445 miles by 2040 and 1,600 miles by 2060.
  • Health services: In addition to any structural risks to infrastructure, the report suggests the mortality rate due to heat-related illness will climb anywhere from 3.8 to 5.8 people per 100,000 Floridians every year, which roughly translates to between 1,000 and 1,400 additional deaths annually by 2035.
  • Agriculture: Rising temperatures, flooding, and extreme storms threaten crops, decrease growth, and impact growing seasons and crop insurance. Higher temperatures will induce greater heat stress on livestock, negatively affecting milk and meat production, and possibly diminishing the quality of products for end consumers. The aggregate economic losses for Florida’s dairy and beef industries alone due to heat stress would be about $25.3 million annually in future years.
  • Government: As local and state government expenditures are increased to raise and repair roads, retrofit and harden water infrastructure, construct seawalls and implement other resilience measures, it can be expected that sales tax, doc stamp collections, and property-value based assessments will be compromised. By 2045, the potential loss of property tax revenues due to devalued property valuation tied to chronic tidal flooding will climb to $350 million.

Florida TaxWatch’s climate change recommendations

  • Establish a systematic and organized approach to reducing risk by raising buildings and critical infrastructure above the base flood elevations, constructing levees and seawalls, and establishing water storage reservoirs, among other structural measures.
  • Invest in the protection and restoration of natural buffers, like coral reefs, barrier islands and mangroves, to help absorb wave energy and storm surge.
  • Develop targeted strategies to reduce regional carbon dioxide emissions, including installing more solar panels and solar panel farms.
  • Promote land use and construction practices that improve resiliency, such as elevating homes and incorporating building methods and materials designed to reduce wind damage.
  • End or modify government programs and policies that encourage risky development.

© 2021 Florida Realtors® By Kerry Smith

Florida Dodges Bullet as Storm Season Set to End

TALLAHASSEE, Fla. – For the second consecutive year, the hurricane season has exhausted a list of storm names.

But with days to go before the Nov. 30 end of the season, Florida has had brushes with only three named systems – Elsa, Fred, and Mindy – that were mostly rainmakers with tropical-storm-force winds.

All things considered, the state has been relatively unscathed in the highly active storm season, allowing emergency staff in Florida – who also needed to react to wildfires and the COVID-19 pandemic – to continue addressing lingering impacts of past storms.

“We’re still working Hurricane Michael. We’re still working Hurricane Irma, Matthew, Hermine, Dorian, and so on,” said Kevin Guthrie, director of the state Division of Emergency Management. “So, yeah, it was good for us to be able to work on some of those past disasters and get them working towards closing out.”

For a third year, Florida can chalk up the outcome of the six-month season to luck or the fate of wobbles. The 2021 hurricane season officially ends on Dec. 1.

“The storm season that happened last year in Louisiana, if you would have taken that track and moved it a number of miles to the east, then we would have had in that exact same path, you would have had major landfalling hurricanes into Jacksonville, the Panhandle, and South Florida in the exact same year,” Guthrie said.

Quoting National Hurricane Center Director Ken Graham, Guthrie added, “Wobbles matter. Little wobbles matter.”

This year was the sixth consecutive above-average storm season and came after Florida suffered historic strikes from Irma in 2017 and Michael in 2018. But this year is essentially the third consecutive season without a hurricane directly causing massive damage to Florida. And there were opportunities, with much warmer than average sea-surface temperatures in the subtropical Atlantic, along with an enhanced west Africa monsoon and weak upper-level winds that contribute to easier hurricane formations.

“It only takes one big storm to cause problems in the state of Florida,” Guthrie said. “This is not going to be the norm. We are Florida. We get hit by hurricanes. It is going to happen.”

The Atlantic saw 21 named storms, the third-most active season on record. That included seven hurricanes and four reaching Category 3 strength.

When Ana formed on May 22, forecasters recorded the seventh consecutive year in which a system emerged before the June 1 designated start of the season.

Elsa made landfall in Taylor County after dropping from hurricane to tropical-storm strength in early July. Tropical Storm Fred made landfall near Cape San Blas in the Panhandle with maximum sustained winds around 65 mph in mid-August. Tropical Storm Mindy found the Panhandle’s St. Vincent Island on Sept. 9.

With earlier and more active seasons seemingly becoming the norm, state lawmakers also might readjust efforts to help people prepare. Sen. Joe Gruters, R-Sarasota, has proposed a measure (SB 808) that for the first time would split up what has been a sales tax “holiday” at the beginning of the storm season to help people stockpile disaster supplies.

Under Gruters’ proposal, which will be considered during the 2022 legislative session, tax breaks on supplies such as tarps, batteries, radios and portable generators would be offered from June 2 through June 6 and from Sept. 8 through Sept. 12.

Source: News Service of Florida

Tuesday, November 23, 2021

Florida Market: Median Prices Up, Amid Low Oct. Inventory

 By Marla Martin

Florida Realtors’ data: Demand, low inventory impact prices. Single-family home median sale price up 17.7% to $358,950, condo median price up 17.6% to $260,000.

ORLANDO, FL – Florida’s housing market showed higher median prices, more cash sales and tight inventory levels in October compared to a year ago, according to Florida Realtors® latest housing data.

“In markets across the state, the for-sale inventory continues at low levels, and that puts pressure on prices and also impacts closed sales – some buyers may have paused their home search for now,” says 2021 Florida Realtors President Cheryl Lambert, broker-owner with Only Way Realty Citrus in Inverness. “Last month, the median time to a contract was 12 days for single-family homes and 15 days for condo-townhouse properties.” The median time to contract is the midpoint of the number of days it took for a property to receive a sales contract during that time.

The statewide median sales price for single-family existing homes in October was $358,950, up 17.7% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units was $260,000, up 17.6% over October 2020. The median is the midpoint; half the homes sold for more, half for less.

However, closed sales of single-family homes statewide last month totaled 27,628, down 6.8% year-over-year, while existing condo-townhouse sales totaled 11,433, down 5.6% from October 2020. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

“In 2020, Florida’s housing market had perhaps the best second half of any year in recent memory,” says Erica Plemmons, Florida Realtors economist and director of housing statistics. “Part of this was due to the shifting spring buying season: The onset of the COVID-19 pandemic pushed a lot of sales that would have occurred in spring, back into the late summer and fall. But other factors were at play as well, including record-low mortgage rates, changes in consumers’ housing preferences, and the demand pressure from continued movement of millennials into their prime home-buying years.”

Here in the second half of 2021, the Florida housing market still has many of these demand drivers in place. So, while sales were down year-over-year, she explained that “if we compare this October’s home sales to two years ago, before the pandemic, they were up over 18%. Similarly, condo and townhouse sales, while down 5.6% year-over-year, were still up 23% compared to October 2019.”

In a continuing trend over the past few months, the share of closed sales that were cash purchases rose last month compared to the previous year. In October, single-family existing home sales paid in cash increased by 25.4% year-over-year, while cash sales of condo-townhouse units rose by 6.5%.

On the supply side of the market, new listings and inventory (active listings) remained restricted last month.

“Low inventory levels continue to hold back the market,” says Plemmons. “At the end of October, single-family inventory (active listings) was 29.9% lower than it was a year ago, while condo and townhouse inventory was down 54% year-over-year.”

Single-family existing homes were at a low 1.3-months’ supply in October, while condo-townhouse properties were at a 1.6-months’ supply.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.07% last month, up from the 2.83% averaged during October 2020.

To see the full statewide housing activity reports, go to Florida Realtors Tools and Resources. Realtors also have access to local market data (password protected) through Florida Realtors SunStats resource.

© 2021 Florida Realtors®

Monday, November 22, 2021

What Will Infrastructure Bill Do for Florida?

 By Kerry Smith

The new law is controversial, but one element – a big investment in broadband for rural areas – could open up areas of Florida to buyers who no longer commute to work.

WASHINGTON – On Monday, Nov. 15, President Biden signed the Bipartisan Infrastructure Law in law, a $1.2 trillion infrastructure spending package approved by a bipartisan group of lawmakers in Congress.

Transportation historically leads development, and South Florida’s growth can be traced to Henry Flagler’s new railroad. While money slated for road repair will theoretically ease commutes and repair roadways, the law’s commitment to expanded broadband technology may subtly change Florida’s housing market by boosting demand for rural areas and small towns that don’t currently have strong internet access.

According to a release from Florida Rep. Charlie Crist, $100 million from an approved $65 billion will go to Florida. He estimates that will help 700,000 Floridians gain high-speed broadband access.

According to Crist, Florida money from the infrastructure bill will include:

Nearly $16 billion in state formula funds for highways, bridges, and transit, including:

  • $13.1 billion for highways
  • $245 million for bridge replacement and repairs
  • $2.6 billion for public transit
  • $1.2 billion for airports
  • $1.6 billion in state revolving formula funds to improve water infrastructure
  • $26 million to protect against wildfires
  • $29 million to protect against cyberattacks
  • Access to $3.5 billion in national funding for weatherization upgrades

Florida is also eligible for $12.5 billion in competitive, discretionary funds through the Bridge Investment Program for economically important bridges and $16 billion in competitive, discretionary funds for major projects too large or complex for traditional transportation funding programs.

Nationwide, the bill authorizes:

  • $39 billion in new spending to modernize public transit and improve accessibility
  • $25 billion to repair and upgrade airports
  • $17 billion for ports and waterways to ease shipping congestion
  • $55 billion for clean drinking water and wastewater infrastructure, including $15 billion for lead pipe replacement; $10 billion to address PFAS (polyfluoroalkyl) chemicals, and $23.4 billion for Clean Water State Revolving Fund and Safe Drinking Water State Revolving Fund programs
  • $7.5 billion to build out a national network of electric vehicle chargers
  • $198 million for EV (electric vehicle) charging
  • $50 billion to protect infrastructure from hurricanes, floods, extreme heat, wildfires, and cyberattacks

© 2021 Florida Realtors®

Tuesday, November 16, 2021

NAR Economist Yun: Housing Market May Normalize in 2022

 By Kerry Smith

Forecasts always include caveats that may upend predictions, but NAR’s Lawrence Yun says the market is hot right now – and he sees more of the same in 2022. While next year’s sales may not surpass 2021 numbers, he expects a banner year compared to those before the pandemic.

SAN DIEGO – The outlook for the residential real estate market, which performed exceptionally well during the height of the pandemic, continues to be promising, according to NAR Chief Economist Lawrence Yun, speaking during the National Association of Realtors® (NAR) convention.

“All markets are seeing strong conditions and home sales are the best they have been in 15 years, Yun said. “The housing sector’s success will continue – but I don’t expect next year’s performance to exceed this year’s.”

An unknown, he said, is how remote work opportunities will play out in the future, and he advised the industry to keep that in mind.

“We are only in the first innings of work-from-home options,” Yun said. “People have not fully digested the work-from-home-flexibility model yet in determining home size and locational choice.”

Even though there may be a decline in sales in 2022, Yun still forecasts that home sales will outdo pre-pandemic levels. His prediction, he noted, is based on an anticipation of more inventory in the coming months. That supply will be generated, in part, from new housing construction – already underway – as well as from the conclusion of the mortgage forbearance program, which in turn will cause a number of homeowners to sell.

“With more housing inventory to hit the market, the intense multiple offers will start to ease,” Yun said. “Home prices will continue to rise but at a slower pace.”

The job market struggled during the pandemic but turned a corner and continues to make incremental progress, Yun said. Since the nation emerged from lockdown, 18 million jobs have been created. At 4.6%, the unemployment rate implies the U.S. economy should be back to normal – however, the country still faces an employment shortage, he added. There are 4 million fewer jobs now than the number before COVID-19.

Forecasts for 2022 depends a bit on U.S. location. Some areas of the nation are thriving and fully recovered, Yun said – places like Idaho and Utah. Both states currently having more jobs now than at the beginning of the pandemic.

While real estate has thrived, Yun says signs suggest that a more normal and predictable market is on the horizon. Home sales surged over the past year in an uncharacteristic manner, with many receiving multiple bids after only being on the market for a short period. However, the 2022 housing sector will settle down, though at above pre-pandemic levels.

Yun projected that mortgage rates, currently at 3.0%, will increase to 3.7% in the coming months, a rise he attributes to persistent high inflation. Home prices rose by 12% on average in 2020 and 2021, while inflation rose 3%.

“Rising rents will continue to place upward pressures on inflation,” he said. “Nevertheless, real estate is a great hedge against inflation.”

© 2021 Florida Realtors®

First Time Ever: Inflation Soars as Mortgage Rates Plunge

 By Jeff Lazerson

The last time inflation rose as mortgage rates fell? Never. But the world is awash with cash, and that holds down mortgage rates, says Wells Fargo senior economist.

NEW YORK – Contradiction? Kerfuffle? Chaos?

Freddie Mac’s 30-year fixed plunged 11 basis points to 2.98% last week, even as the nation’s inflation rate jumped to 6.2%.

When was the last time this happened? Exactly never.

Traditionally, mortgage rates move up with inflation, says Richard Green, director of USC’s Lusk Center for Real Estate.

“This has happened at no other time in history,” Green said. “We are living in a world of uncertainty.”

The yield for the 10-year Treasury Inflation-Protected Securities, or TIPS, was at an all-time low price of negative .57, Green observed. TIPS are indexed to inflation to protect investors from a decline in the purchasing power of their money, according to Investopedia.

This is the lowest Freddie’s rates have been since Sept. 23.

It’s important to note Freddie’s 30-year weekly rate survey was completed prior to the Labor Department’s Wednesday inflation announcement, and rates could bounce back up. For example, the 10-year Treasury rate – which the 30-year fixed closely follows – jumped 10 basis points to 1.56% after the Labor Department’s announcement.

So, how did mortgage rates manage to go down again with price inflation all around us?

The world is awash with cash, which is holding down mortgage rates, said Mark Vitner, senior economist at Wells Fargo Bank. “The U.S. government has spent $5.4 trillion since the beginning of the pandemic. The Fed has added $4.3 trillion to its balance sheet. (U.S. households) have $2.3 trillion in excess savings. And the U.S. acts as an anchor, pulling in money from overseas as (investment returns) are so low overseas.”

Inflation pressures are demand-driven, experts say. As we return to normalcy, consumers want goods, but the shelves are empty. Experts differ, however, as to whether this is transitory inflation or whether this is going to be around for a long time.

When COVID-19 hit, the world sort of stopped. And it wasn’t just manufacturing.

“States haven’t issued truck driver’s licenses in the last few years,” said Ted Tozer, a senior fellow at the Milken Institute of Housing Policy and former Ginnie Mae president for seven years under President Barack Obama. “The supply chain problem is like a traffic jam trying to get flowing again.”

Vitner thinks we are currently at the peak of supply disruption, although supply issues “will dog the economy until the middle of the decade,” he said.

The number of workers in the supply chain may improve to about 3 million jobs over the next six months, said Tendayi Kapfidze, U.S. Bank’s head of economic analysis. He pointed to a recent report that the U.S. labor force grew by 500,000 jobs.

Will mortgage rates continue to stay under control or will they go up, up, and away with inflation trends?

“It would not be an absurd notion to think rates might fall a little bit,” said Jacob Channel, senior economist at Lending Tree. But rates eventually will go back up. Channel sees mortgage rates rising to the 3-4% range next year.

Tozer thinks there’s a delicate dance ahead as the Federal Reserve starts tapering its pandemic-era bond-buying program. The Fed has been purchasing $120 billion of treasury bonds per month, including $40 billion in mortgage securities.

“The key is how much tapering will trigger higher rates,” said Tozer. The next question is how will government borrowing affect inflation? “Deficit spending could trigger mortgage rates to go up.”

Will you lose your ginormous run-up in home appreciation? Will home prices pop?

Mortgage underwriting standards remain stringent since the Great Recession and the mortgage meltdown days.

“Credit underwriting has been so strict it’s hard to see a bubble,” said Vitner.

What’s the next shoe to drop?

“It’s really murky right now,” Kapfidze said.

© Copyright 2021 Press-Telegram. Jeff Lazerson is a mortgage broker.

Monday, November 8, 2021

The inventory for homes smaller than 1,400-square feet has hit a 50-year low

 Baby Boomer Challenge: Find a Home for Downsizing

The inventory for homes smaller than 1,400-square feet has hit a 50-year low – and it’s the same record-low inventory eyed by many first-time buyers.

NEW YORK – Too much yard, too much cleaning? Older homebuyers shopping for a smaller home that’s easier to maintain struggle to find enough possibilities in today’s housing market. It makes downsizing increasingly difficult.

Housing inventories for homes up to 1,400 square feet have fallen to a 50-year low, according to Freddie Mac, even as a growing number of young couples and aging seniors are competing for them. Price growth has been highest for smaller, less expensive homes, says Len Kiefer, deputy chief economist at Freddie Mac.

With so few homes available in that category, baby boomers may have to change their expectations when downsizing.

“We have a housing shortage,” Lawrence Yun, chief economist at the National Association of Realtors®, told The Wall Street Journal. “Clearly from the age patterns, young people want to upsize, and the older generation is looking to downsize, but not greatly – only 100 or 200 square feet smaller than where they’d been living.”

About 28% of real estate transactions in 2020 were for people looking to downsize, Yun says. Most of those transactions were for buyers aged 55 or older. However, some baby boomers choose to age in place and retrofit their current homes so they can stay there longer.

Higher costs could also mean more seniors carry mortgage debts. The number of older homeowners with debt increased from 33.2% in 2007 to 55.4% in 2019, and most of the increase is attributed to mortgage debt, according to the Urban Institute.

Source: “As Boomers Downsize, Competition Grows for Simpler – but Not Always Smaller – Homes,” The Wall Street Journal (Oct. 31, 2021) [Log-in required.]

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

Friday, November 5, 2021

States where residents don't want to leave: Florida is #3

NEW YORK – Of Americans who moved during the pandemic, 85% opted to move within their state, according to a new analysis from LendingTree, which evaluated mortgage loan data from March 1, 2020, to Sept. 21, 2021, to learn pandemic moving patterns.

Texas had the highest percentage of residents looking to stay in the state, followed by Oklahoma and Florida. 

On the other hand, New York had the highest percentage of residents who left the state.

The LendingTree study also identified Florida as a top destination for out-of-state movers: More than a third (36%) of state-to-state movers preferred relocating to Florida.

“Florida is the favorite out-of-state destination for mortgage shoppers in 18 of the 50 states,” LendingTree researchers say in the study. “The Sunshine State has a long history of bringing in visitors and new residents, particularly retirees, thanks to a mix of affordable housing, no state income tax, and sunny weather.”

Percentage of a state’s movers who opted for a new state that also had Florida as their most preferred destination:

  1. Texas: 6.67% of movers relocated to a new state
  2. Georgia: 8.88%
  3. Michigan: 9.07%
  4. Ohio: 90.49%
  5. Alabama: 9.69%
  6. Maine: 9.77%
  7. Kentucky: 10.46%
  8. Indiana: 10.58%
  9. Wisconsin: 10.90%
  10. Missouri: 10.95%
  11. Tennessee: 12.21%
  12. Iowa: 12.87%
  13. Illinois: 15.65%
  14. South Dakota: 16.49%
  15. Connecticut: 16.99%
  16. Maryland: 18.59%
  17. New Jersey: 19.71%
  18. Vermont: 20.01%

Source: “The States Homeowners Have Moved To – and Stayed in – During the COVID-19 Pandemic,” LendingTree (Nov. 2, 2021)

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688