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Thursday, December 21, 2023

Real Estate Market in Florida: More Sales and New Listings, Median Prices Up

 By Marla Martin

Florida's single-family closed sales up 4.2% YOY, median price up 3.3% ($413K). Condo sales up 0.3%, median price up 7.5% ($330K); new listings also up.

ORLANDO, Florida. – Florida’s housing market reported more new listings and higher statewide median sales prices in November compared to the previous year, according to Florida Realtors®’ latest housing data.

“November brought some welcome news for Florida homebuyers, as mortgage rates started to ease and the inventory (active listings) of for-sale properties increased statewide,” says 2023 Florida Realtors® President G. Mike McGraw, a broker-associate with LPT Realty in Orlando. “The inventory for existing single-family homes rose 13.9% last month, while the inventory for condo-townhouse units increased by 49.8%. It means more housing options are now available for buyers who may have been discouraged during previous home searches.”

Last month, closed sales of existing single-family homes statewide totaled 17,722, up 4.2% year-over-year, while existing condo-townhouse sales totaled 7,108, a slight rise of 0.3% over November 2022, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

“Lately, prospective buyers in Florida have seen an increasing number of choices in their home searches,” says Florida Realtors Chief Economist Dr. Brad O’Connor. “The number of new listings was uncharacteristically low at this time last year, but over the last couple of months, we’ve seen the level of new listings move back into the range of recent norms. New listings of single-family homes in Florida were up by 15.3% in November compared to a year ago. And over in the townhouse and condo category, new listings were up even more, rising by 25.9%.”

He adds, “With these significant increases in new listings compared to a year ago outpacing the very modest increase in sales over the same timeframe, inventory levels continued to rise in Florida. In fact, the current trajectory of inventory growth is such that we may be back at pre-pandemic levels of single-family inventory as soon as the end of the year. At this time in 2019, Florida was still experiencing a single-family inventory shortage – just not nearly as severe as what we faced after the pandemic began. Inventory gains in the condo-townhouse category last month were significant, as well.”

The statewide median sales price for single-family existing homes in November was $413,000, up 3.3% from one year earlier. For condo-townhouse units, the median price was $330,000, up 7.5% from a year earlier.

Florida had a 3.7-months’ supply of single-family existing homes last month, up 32.1% year-over-year. Meanwhile, condo-townhouse units reported a 5-months’ supply last month, up 85.2% over the Nov. 2022 level.

To see the full statewide housing activity reports, go to the Florida Realtors Newsroom and look under Latest Releases or download the November 2023 data report PDFs under Market Data.

© 2023 Florida Realtors®

Wednesday, December 20, 2023

NAR: Existing-Home Sales Grow in November, Ending Five-Month Slide

 By Amy Connolly

NAR’s chief economist says home prices keep moving higher. The median home sale price in the South was up 3.4% from last year to $351,500.

WASHINGTON – Existing-home sales grew in November, breaking a streak of five consecutive monthly declines, according to the National Association of Realtors® (NAR). Among the four major U.S. regions, sales climbed in the South and Midwest but receded in the Northeast and West. All four regions experienced year-over-year sales decreases.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – elevated 0.8% from October to a seasonally adjusted annual rate of 3.82 million in November. Year-over-year, sales fell 7.3% (down from 4.12 million in November 2022).

“The latest weakness in existing home sales still reflects the buyer bidding process in most of October when mortgage rates were at a two-decade high before the actual closings in November,” said NAR Chief Economist Lawrence Yun. “A marked turn can be expected as mortgage rates have plunged in recent weeks.”

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.95% as of Dec. 14, falling below 7% for the first time since Aug. 10. That's down from 7.03% the previous week but up from 6.31% one year ago.

Total housing inventory registered at the end of November was 1.13 million units, down 1.7% from October but up 0.9% from one year ago (1.12 million). Unsold inventory sits at a 3.5-month supply at the current sales pace, down from 3.6 months in October but up from 3.3 months in November 2022.

The median existing-home price for all housing types in November was $387,600, an increase of 4.0% from November 2022 ($372,700). All four U.S. regions posted price increases.

“Home prices keep marching higher,” Yun added. “Only a dramatic rise in supply will dampen price appreciation.”

Notable takeaways from November:

  • According to the monthly Realtors Confidence Index, properties typically remained on the market for 25 days in November, up from 23 days in October and 24 days in November 2022. Sixty-two percent of homes sold in November were on the market for less than a month.
  • About a third (31%) of November sales went to first-time homebuyers, up from 28% in October 2023 and November 2022. NAR's 2023 Profile of Home Buyers and Sellers – released on Nov. 4 – found that the annual share of first-time buyers was 32%.
  • Individual investors or second-home buyers, who make up many cash sales, purchased 18% of homes in November, up from 15% in October and 14% one year ago.
  • Distressed sales – foreclosures and short sales – represented 1% of sales in November, virtually unchanged from last month and the previous year.

Also:

Single-family and Condo/Co-op Sales

  • Single-family home sales increased to a seasonally adjusted annual rate of 3.41 million in November, up 0.9% from 3.38 million in October but down 7.3% from the prior year. The median existing single-family home price was $392,100 in November, up 3.5% from November 2022.
  • Existing condominium and co-op sales recorded a seasonally adjusted annual rate of 410,000 units in November, identical to October and down 6.8% from one year ago. The median existing condo price was $350,100 in November, up 8.6% from the previous year ($322,400).

Regional Breakdown

  • Existing-home sales in the South improved 4.7% from October to an annual rate of 1.77 million in November, a decline of 4.3% from the prior year. The median price in the South was $351,500, up 3.4% from last year.
  • Existing-home sales in the Northeast slipped 2.1% from October to an annual rate of 470,000 in November, down 13.0% from November 2022. The median price in the Northeast was $428,600, up 4.8% from the prior year.
  • In the Midwest, existing-home sales rose 1.1% from the previous month to an annual rate of 940,000 in November, down 8.7% from one year ago. The median price in the Midwest was $280,800, up 4.9% from November 2022.
  • In the West, existing-home sales slumped 7.2% from a month ago to an annual rate of 640,000 in November, down 8.6% from one year before. The median price in the West was $603,200, up 5.3% from November 2022.

© 2023 Florida Realtors®

Home Construction Unexpectedly Surges in November

 By Amy Connolly

The National Home Builder’s Association also said apartment and condo starts increased 6.9%.

WASHINGTON – New single-family home construction hit an unexpected high in November, bolstered by strong demand and lower interest rates, the National Association of Home Builders (NAHB) said Tuesday.

Overall housing starts increased 14.8% in November to a seasonally adjusted annual rate of 1.56 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The November reading of 1.56 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 18% to a 1.14 million seasonally adjusted annual rate. However, single-family starts are down 7.2% year-to-date. The multifamily sector, which includes apartment buildings and condos, increased 6.9% to an annualized 417,000 pace.

“Lower interest rates and a lack of resale inventory helped to provide a strong boost for new home construction in November,” said Alicia Huey, NAHB chairman. “And while these higher starts numbers are consistent with our latest builder survey, which shows a rise in builder sentiment and future sales expectations, home builders continue to contend with elevated construction and regulatory costs.”

“The single-family starts figure is remarkably strong, and we would not be surprised to see this figure revised lower or fall back slightly in the next month, given the nearly 20% rise in November,” said NAHB Chief Economist Robert Dietz. “NAHB is forecasting an approximate 4% gain for single-family starts in 2024 as mortgage rates settle lower, economic growth slows and inflation moves lower.”

On a regional and year-to-date basis, combined single-family and multifamily starts are 16.7% lower in the Northeast, 12.3% lower in the Midwest, 6.2% lower in the South and 14.3% lower in the West.

Overall permits decreased 2.5% to a 1.46 million unit annualized rate in November. Single-family permits increased 0.7% to a 976,000 unit rate. However, single-family permits are down 8.4% year-to-date. Multifamily permits decreased 8.5% to an annualized 484,000 pace.

Looking at regional permit data on a year-to-date basis, permits are 19.9% lower in the Northeast, 15.3% lower in the Midwest, 10.3% lower in the South and 12.8% lower in the West.

© 2023 Florida Realtors®

Tuesday, December 19, 2023

Deadlines Loom for Some Florida Foreign Landowners

 By Kerry Smith

The law that applies to some foreign principals who own/acquire certain Florida properties has registration deadlines. Buyers should speak to counsel about legal obligations.

TALLAHASSEE, Fla. – SB 264 – a bill passed during the 2023 session of the Florida Legislature, signed into law by Gov. Ron DeSantis, and effective on July 1, 2023 – limits and regulates the sale, purchase and ownership of certain properties in Florida by foreign principals, persons and entities described in Part III of Chapter 692, Florida Statutes.

Those foreign principals covered by the new law – associated with China (PRC), Russia, Iran, North Korea, Cuba, Venezuela and Syria – who already owned certain Florida land prior to July 1, 2023, have registration deadlines coming up, and they may face stiff penalties for missing some of those deadlines.

SB 264 also includes a registration requirement for covered foreign principals who acquire certain Florida property afterJuly 1, 2023.

Realtors, however, are not part of the registration process – and, due to the complexity of the new law, should advise their customers with questions to speak to counsel about their legal responsibilities.

Foreign principals covered by the law must register with the Florida Department of Agriculture and Consumer Affairs if the sale, ownership or acquisition involves agricultural land – and only agricultural land.

If NOT agricultural land, foreign principals covered by the law must register with the Department of Commerce for the purchase, sale, ownership and acquisition of real property if:

  • That property is within 10 miles of either a military installation or critical infrastructure (or not within 5 miles of a military installation if the statutory exception applies) OR
  • Where the purchase, sale or acquisition of any nonagricultural property is by a foreign principal associated with the PRC, as defined by the law.

Ownership of agricultural land

A foreign principal that “directly or indirectly owns or acquires agricultural land or any interest in such land in this state” before July 1, 2023, must register with the Department of Agriculture and Consumer Services by Jan. 1, 2024, except if their interest is divested by January 1, 2024.”

If a foreign principal registers after Jan. 31, 2024, they face fines – a civil penalty of $1,000 for each day that the registration is late and the department can place a lien against the unregistered  agricultural land for the unpaid balance of any penalties and ultimately may file a civil action for forfeiture. 

Of Note: This final rule from the Florida Department of Agriculture is still pending. However, should the current proposed rule become effective, it “will require registration for foreign principals who acquire a direct or indirect ownership interest after July 1, 2023, (through devise, or descent or because of a security interest or collection of debt) within 30 days from the effective date of the rule and, following the effective date of the rule, within 30 days after the property is acquired

Proximity to a military installation or critical infrastructure

The Florida Department of Commerce (formerly the Department of Economic Opportunity) oversees all other registration by foreign principals per SB 264.

A foreign principal that “directly or indirectly owned or acquired land or any interest in such land within 10 miles of a military installation or critical infrastructure in this state” before July 1, 2023, must register with the Department of Commerce by Dec. 31, 2023. If a foreign principal registers after Jan. 31, 2024, they face fines – a civil penalty of $1,000 for each day that the registration is late.

The statute also requires registration within 30 days of acquisition if the foreign principal acquires (by devise, descent, debt collection or by purchase that complies with the statutory exception) such property after July 1, 2023.

However, the pending Department of Commerce rules for registration state that registration for properties acquired by foreign principals shall be within 30 days from the effective date of the rule and, following the effective date of the rule, within 30 days after the property is acquired.

There is another noteworthy registration requirement that applies to foreign principals with equitable title to certain properties: The rule, should it go into effect, will also require registration with the Department of Commerce within 120 days of contract execution if a natural person is A) a foreign principal under the law (either has a current U.S. visa not limited to tourist-based travel or been granted asylum in the U.S.), B) enters into a contract to purchase one residential property, less than 2 acres (i.e. pursuant to the statutory exception, not within 5 miles of a military installation) and C) has no obligation to close within 90 days.

A civil penalty of $1,000 per day would also apply to failing to register equitable title under the proposed regulation.

Rules specific to citizens of the People’s Republic of China

In addition, the registration requirements apply to certain individuals and entities associated with the PRC. If these foreign principals associated with the PRC owned Florida agricultural property prior to July 1, 2023, registration is required with the Department of Agriculture and Consumer Affairs by Jan. 1, 2024, as described above.

If these foreign principals associated with the PRC owned Florida nonagricultural property prior to July 1, 2023, registration is required with the Department of Commerce by Dec. 31, 2023, as described above.

The registration of either one is considered late after Jan. 31, 2024. 

In addition, if a foreign principal associated with the PRC acquires Florida property either by devise, descent, enforcement of security interest, through collection of debt or if a natural person acquires a direct or indirect ownership interest per the statutory exception after July 1, 2023, the statute specifies that registration is required within 30 days of an acquisition.

Related resources and earlier stories

© 2023 Florida Realtors®

Monday, December 18, 2023

NAR Forecasts 2024 Stronger Sales Activity

 By Jessica Lautz

CHICAGO – For the first time since August, interest rates for a 30-year fixed mortgage have dropped below 7%, hitting 6.95% this week. This brings the monthly mortgage payment for a home priced at $400,000 to $2,118. This is down from a recent high this Autumn of 7.79% and yields a monthly savings of $183 and $2,196 annually for the same $400,000 home.

The Fed indicated yesterday they will hold the Fed Funds Rate steady for now and cut rates three times in 2024. This is all welcome news for potential home buyers and sellers, as mortgage interest rates will decrease. NAR forecasts that mortgage interest rates will average 6.3% in 2024.

While the lock-in effect of higher mortgage rates has stalled the real estate market in 2023, the momentum is moving in the right direction for stronger sales activity in 2024. Will it be a traditional Spring real estate market, or will it start to heat up in the Winter months as rates decline? Let’s also hope the lower mortgage interest rates translate into stronger homebuilder activity, as inventory will be needed as buyers move from the sidelines. For serious buyers, the time is now to get your financial house in order, find a Realtor® and start your research. Maybe it won’t be a new home for the holidays, but Valentine’s Day is right around the corner.

© 2023 National Association of Realtors® (NAR)

Friday, December 15, 2023

NAR’s Forecasts 4.71 million Existing-Home Sales in 2024

 Lawrence Yun also said the housing market will improve for buyers next year.

WASHINGTON – NAR Chief Economist Lawrence Yun forecasts 4.71 million existing homes will be sold, the housing market is expected to grow, and Austin, Texas, will be the top real estate market to watch in 2024 and beyond. Yun unveiled the association's forecast yesterday during NAR's fifth annual year-end Real Estate Forecast Summit: The Year Ahead.

Yun predicts home sales will begin to rise next year – by 13.5% compared to 2023, and the median home price will reach $389,500 – an increase of 0.9% from this year.

"Metro markets in southern states will likely outperform others due to faster job increases, while markets in the Midwest will experience gains from being in the most affordable region."

Yun expects rent prices to calm down further in 2024, which will hold down the consumer price index. He predicts foreclosure rates will stay at historically low levels in 2024, comprising less than 1% of all mortgages.

Yun forecasts the U.S. GDP will grow by 1.5%, avoiding a recession, with net new job additions slowing to 1.7 million in 2024 compared to 2.7 million in 2023, and 4.8 million in 2022. After eclipsing 8% in late 2023, he expects the 30-year fixed mortgage rate to average 6.3% and for the Fed to cut rates four times – calming inflationary conditions – in response to slower economic activity.

Yun also foresees 1.48 million housing starts in 2024, including 1.04 million single-family and 440,000 multifamily.

Top 10 Real Estate Markets with the Most Pent-Up Housing Demand in 2024

NAR identified 10 real estate markets with the most pent-up housing demand, which it expects to outperform other metro areas in 2024. In order, the markets are as follows:

  1. Austin-Round Rock-Georgetown, Texas
  2. Dallas - Fort Worth-Arlington, Texas
  3. Dayton - Kettering, Ohio
  4. Durham - Chapel Hill, N.C
  5. Harrisburg-Carlisle, Penn.
  6. Houston-The Woodlands-Sugar Land, Texas
  7. Nashville-Davidson-Murfreesboro-Franklin, Tenn.
  8. Philadelphia-Camden-Wilmington, Pennsylvania-New Jersey-Delaware-Maryland
  9. Portland-South Portland, Maine
  10. Washington-Arlington-Alexandria, D.C.-Virginia-Maryland-West Virginia

"The demand for housing will recover from falling mortgage rates and rising income," Yun said. "In addition, housing inventory is expected to rise by around 30% as more sellers begin to list after delaying selling over the past two years. The selected top 10 U.S. markets will experience faster recovery in home sales."

NAR selected the top 10 real estate markets with the most pent-up housing demand in 2024 based on how they compared to the national level on the following economic indicators: 1) more "returning" buyers; 2) lower home price appreciation; 3) more renters who can afford to buy the median-priced home; 4) more potential sellers; 5) a larger decrease in remote workers; 6) more affordable listings for first-time buyers; 7) stronger job growth; 8) faster income growth; 9) most high-earner millennial renters moving into the area; and 10) lower violent crime rate.

To read more about NAR's Markets with the Most Pent-Up Housing Demand report, click here. This and all forecast summit materials – including a video recording and Yun's presentation slides – will be available here.

© 2023 Florida Realtors®

Friday, December 1, 2023

Poll: Housing Costs a Top Concern of Florida Voters

 By Kerry Smith

A University of North Florida poll found “economy, jobs, and inflation” concerns second to “housing costs” to voters considering candidates for office in 2024.

JACKSONVILLE, Fla. – A new poll from the University of North Florida’s (UNF) Public Opinion Research Lab (PORL) asked registered voters across Florida their opinions about state and national policy issues.

Respondents were asked what they think is the most important problem facing Florida today, to which the top response was housing costs with 26%.

In a close second place is the economy, jobs and inflation with 25%. Education and immigration tied for third most important problem, with 9% each.

In a separate question, respondents were asked who or what they think is most responsible for the state of property insurance in Florida:

  • 30% believe insurance companies bear the greatest responsibility,
  • 15% place the blame on individuals and lawyers defrauding or exploiting insurance companies
  • 13% said Gov. Ron DeSantis
  • 13% cited natural disasters
  • 12% named the Florida Legislature

“In the last year, housing costs, and now property insurance, have emerged as pressing issues to Floridians,” says PORL faculty director and professor of political science Dr. Michael Binder. “Insurance companies are most responsible in the minds of these Florida voters, but there seems to be plenty of blame to go around.”

In addition to housing concerns, respondents were asked about their support for two constitutional amendments likely to appear on the ballot in 2024. One supports abortion, the other supports recreational marijuana. According to researchers, both have enough support right now to surpass the necessary 60% of voters threshold, with 62% favoring the abortion proposal and 67% supporting recreational marijuana.

© 2023 Florida Realtors®

Wednesday, November 29, 2023

1 in 3 Buyers Uses Cash – Highest Share in a Decade

 By Kerry Smith

In Florida, cash sales dropped year-to-year in only one metro: Fort Lauderdale. The percentage of cash sales ranged from 38.2% in Tampa to 49% in West Palm Beach.

SEATTLE – Just over one-third (34.1%) of U.S. home purchases in September were made in cash, up from 29.5% a year earlier and the highest share in nearly a decade, according to a report from Redfin.

In Florida, the percentage of cash sales was higher than the national average of 34.1% in all six metros included in the study, ranging from 38.2% in Tampa to 49.0% in West Palm Beach

Percentage of September cash sales by Florida metro

  • Fort Lauderdale: 40.5%, down 0.5 percentage points year-to-year
  • Jacksonville: 46.2%, up 3.2 points
  • Miami: 40.7%, up 2.0 points
  • Orlando: 40.0%, up 0.6 points
  • Tampa: 38.2%, up 0.2 points
  • West Palm Beach: 49.0%, up 0.8 points

All-cash purchases are making up a bigger piece of the homebuying pie for two major reasons. Affluent Americans who can already afford to pay cash are more apt to do so in such an expensive housing market – and higher rates are pushing other buyers to consider alternative methods that allow them to pay cash at the closing table. Elevated mortgage rates make buying a home in cash and avoiding interest altogether more attractive.

“High mortgage rates are exacerbating inequality between people who own homes and people who don’t,” says Redfin Senior Economist Sheharyar Bokhari. “Home prices are roughly 40% higher now than before the pandemic homebuying boom, and soaring mortgage rates have made the divide even bigger by adding more to monthly payments.

“Affluent Americans are the only ones who can avoid the sting of high mortgage rates … Meanwhile, those who are sidelined by high prices and rates not only can’t afford a home now, but they’re not building wealth through homeownership for the future.”

September report takeaways

  • The typical U.S. homebuyer’s down payment was equal to 16.1% of the purchase price in September, up from 15% a year earlier, and the highest down-payment percentage since June 2022.
  • The median down payment was $60,980, up roughly 15% year-to-year and the biggest increase since June 2022.
  • FHA loans are more common than during the pandemic homebuying boom because sellers receive fewer offers – just over 15% of mortgaged home sales in September, up from 14% a year earlier.
  • 6.3% of mortgaged sales used a VA loan, down just marginally from 6.8% a year earlier.
  • 78.5 % of mortgage purchases were conventional loans, down slightly from 79.2% a year earlier.

© 2023 Florida Realtors®

FHFA: 2024 Conforming Loan Limits Rise to $766,550

 By Kerry Smith

In 2024, a conventional mortgage in most parts of Florida (except Monroe County) will have a loan limit of $766,550, an increase of $40,350 from 2023’s $726,200.

WASHINGTON – The Federal Housing Finance Agency (FHFA) announced the conforming loan limit values (CLLs) for mortgages to be purchased by Fannie Mae and Freddie Mac in 2024 – more than half of all U.S. loans.

In Florida and most of the United States, the 2024 CLL value for one-unit properties will be $766,550, an increase of $40,350 from 2023.

Limits for other types of loans – FHA, VA, Rural Housing, etc. – are generally announced later.

The Housing and Economic Recovery Act (HERA) requires FHFA to adjust the Enterprises’ baseline CLL value each year to reflect changed in the average U.S. home price, and FHFA made the announcement immediately after releasing its third quarter 2023 FHFA House Price Index (FHFA HPI) report. The 2024 increase is based on the increase in average U.S. home values over the previous four quarters.

According to FHFA’s data, house prices increased 5.56%, on average, between the third quarters of 2022 and 2023. Therefore, the baseline CLL in 2024 increases by the same percentage.

High-cost areas

For areas in which 115% of local median home values exceed the baseline – in most of Florida’s Monroe County, for example – the applicable loan limit is higher than the baseline limit. HERA also establishes the high-cost area limit, with a ceiling at 150% of the baseline limit.

The new ceiling loan limit in highest-cost areas for one-unit properties will be $1,149,825, which is 150% of $766,550.

Special statutory provisions establish different loan limits for Alaska, Hawaii, Guam and the U.S. Virgin Islands. In these areas, the baseline loan limits will be $1,149,825 for one-unit properties.

Other loan limit resources

© 2023 Florida Realtors®

Monday, November 27, 2023

Home Sales Likely to Improve in 2nd Half of 2024

 Fannie Mae researchers: Mortgage rates in 2024 will retreat from recent highs and average 6.8% by year’s end; in turn, home sales will increase modestly over the year.

WASHINGTON, D.C. – Economic growth remains likely to decelerate and ultimately result in a mild recession in 2024, followed by a return to growth in 2025, according to the November 2023 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group.

While the combination of ongoing employment gains and decelerating inflation has increased the likelihood of a soft landing, the ESR group contends that, between a likely slowdown in consumption growth stemming from an imbalance between spending and incomes and the rising real federal funds rate weighing on consumer and business activity, a downturn remains the most likely outcome.

With mortgage rates having previously neared the 8% mark, the ESR Group expects existing home sales to decline further in the near term but bottom out in early 2024.

Regardless of whether the economy manages a soft landing or enters a mild recession, the ESR Group forecasts mortgage rates in 2024 to retreat from their recent highs and average 6.8% by the fourth quarter.

As such, it expects home sales to begin to increase modestly over 2024 but to remain constrained by the likely persistence of the so-called “lock-in effect” and the low supply of homes for sale. New home sales and starts, which have remained comparatively resilient over the past year, are expected to remain so in 2024.

“The economy is now slowing from the otherwise robust first estimate of third quarter growth,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “The slowdown in employment gains has continued, and stress is growing on consumers’ ability to sustain their high levels of spending unsurprising results that we attribute to the often-lagged economic effect of monetary policy tightening.

“At the same time, housing has been and continues to be under serious affordability pressure, resulting in recessionary-level home sales activity. While many current owners with low mortgage rates will likely continue to be discouraged from listing their homes, we expect mortgage rates to trend modestly downward in 2024, which should help kickstart a gradual recovery in home sales into 2025.”

About the ESR Group: Fannie Mae’s Economic and Strategic Research Group, led by Chief Economist Doug Duncan, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets.

Note: Opinions, analyses, estimates, forecasts, and other views of Fannie Mae’s ESR group should not be construed as indicating Fannie Mae’s business prospects or expected results, are based on a number of assumptions, and are subject to change without notice.

© Fannie Mae Economic and Strategic Research Group

Thursday, November 2, 2023

Condo Reserve Rules Push Some Toward Foreclosure

 By Anthony Man

Some fixed-income condo residents in older buildings must pay for expensive deferred-maintenance repairs as they watch their property insurance costs rise.

FORT LAUDERDALE, Fla. – The one-two punch of the post-Surfside law designed to require condominium associations to set aside sufficient reserves for structural repairs combined with Florida’s unending increases in insurance costs is threatening to produce a wave of foreclosures.

“People are going to be losing their homes. Foreclosures are increasing,” warned Broward County Commissioner Mark Bogen. “As it looks right now, there are going to be so many people unable to live in their homes.”

The concerns are coming from across Broward County.

Bogen represents northern Broward, including Wynmoor Village, the large condominium community in Coconut Creek. And in his non-elected job, as a lawyer, he does a lot of work on condo issues.

“The condos have been hit hard,” said state Rep. Robin Bartleman, who represents southwest Broward. “You can’t walk into Century Village right now without hearing” concerns.

At another condominium, in Miramar, Bartleman said residents have to pay assessments for roof work, more money for higher condominium association insurance, and assessments to increase reserves.

The ultimate result, she predicted: “We’re going to have foreclosures all across this county.”

The elected officials who discussed the issues at two workshops last week aren’t promising comprehensive fixes – especially not fixes that will produce quick, dramatic change.

As far as easing the impact of the reserve requirements on condominiums, state Sen. Jason Pizzo, chair of the Broward Legislative Delegation, was blunt: “There is not going to be a state bailout as it relates to condominiums at all. There won’t be.”

Surfside changed things

For decades, many condominiums didn’t set aside enough money to pay for future long-term maintenance costs, and the consequences were vividly illustrated by the 2021 collapse of the Champlain Towers South in Surfside in which 98 people were killed.

State law was changed in the aftermath of the disaster. “Surfside was certainly a wakeup call,” said state Rep. Chip LaMarca of Lighthouse Point.

The new law potentially means large payments to boost reserve accounts, which are equivalent to rainy-day funds to cover large, expensive repairs, and probable special assessments to fund major structural repairs. It goes into effect in 2025.

Bogen and County Commissioner Steve Geller said they’d like to see some delay in the ramping up of reserves.

Geller said some changes are needed. “But I hope that those changes would not include repeal of the law, because there really is a problem with these condominiums with their structural soundness,” he said.

Associations have often voted to waive setting aside money for reserves, something the new law prohibits for funding for projects related to structural integrity such as the roof, load bearing walls, electrical systems, plumbing, windows and foundations, among other items.

Geller recalled his time representing Hallandale Beach in the state Legislature in the 1980s and 1990s. Some residents didn’t want to pay at the time for problems they hoped would have to be addressed after they were no longer alive.

“I would go to people and say, ‘You know, you need to stop waiving your reserve….’ They would say, ‘young man, young man, I’m 77 years old. I’m not going to worry about what’s going to happen in 10 years. Let my children worry about it because they’ll own the condo then. And the problem is that we had so many people that just kept waiving and waiving and waiving.”

Geller said he’d like to see some extra time. “You can’t go from 40 years of ignoring it (and) say you must be in full compliance in five years. So I think the solution that makes sense is just to stretch out that period,” he said.

But, he added, the deadline to start saving shouldn’t be pushed off. “If you just extend it for five years, they’ll still do nothing until the fifth year.”

LaMarca said “lengthening the glide path” for repairs issues identified in a condominium’s structural reserve study “would be helpful.”

All of Broward’s elected county commissioners and state legislators are Democrats, except for LaMarca. He’s a member of the minority party in Broward and the overwhelming Republican majority that controls the state Legislature.

Other fixes

Several other steps were advocated by legislators and commissioners.

LaMarca said he expects more money to be devoted to the My Safe Florida Home program, through which the state pays for inspections and subsidies homeowners making upgrades to make them more resilient to storms. Previous funding has already been obligated, LaMarca said.

“We do need to, in my mind, put some more resources there,” he said.

Pizzo, who represents eastern Broward and northeastern Miami-Dade counties, said condominiums should be allowed to invest reserves instead of keeping them in no-interest accounts. And he said more financing options could be explored for financing structural upgrades.

Insurance

Geller and several other elected officials said they are hearing even more about the impact of ever-increasing insurance costs.

County Commissioner Hazelle Rogers said some are struggling to pay their premiums. She said some older residents who own their own homes outright after having paid off their mortgages are opting against carrying insurance.

State Rep. Patricia Williams, who represents the north-central part of the county, said she, too, is hearing mostly about insurance.

“I get emails after emails every day,” citing one mother of five who said she did not know what she would do after receiving a bill for a 300% premium increase. “At this point, all I can say is we’re working on it.”

The insurance industry and the Legislature have asserted that excessive litigation in Florida is a major factor in driving up insurance premiums. The Legislature responded by restricting people’s rights to sue their insurance companies, but it’s unclear if that will result in any reduction in the rapid increases in premiums.

Pizzo said is unlikely. He said Citizen Insurance Co., the state-backed insurer of last resort, has 1.4 million policies, and 22,000 open litigation cases, which is about 1.7%. He said the notion that litigation is driving insurance premiums is part of a narrative that is “just proving not to be true.”

Combined effects and fixed incomes

Bartleman said the higher condominium costs coming as insurance prices are going up is squeezing many people, especially older people on fixed incomes. Many, she said, can’t afford an extra $100 or $200 a month.

“If you didn’t have the (cost of the reserve) that would be fine. But now put the insurance crisis on top of that and then put having to replace your roofs because you can’t get insurance without replacing our roofs, it’s crippling and we’re going to have foreclosures all over this county.”

The complications could have a ripple effect for the broader South Florida economy, Deerfield Beach Commissioner Tood Drosky, president of the Broward League of Cities, said in a separate workshop with state lawmakers.

“I’ve had residents that have moved to Deerfield Beach from outside the state and they love it here. And they say ‘I didn’t realize it was going to go up so fast and I’m almost regretting coming to Florida,” Drosky said.

“I don’t want that to happen, but we’re going to price out those that have moved here and made Florida their home and the middle class that has been here that we’re going to somehow going to squeeze out and move to other parts of the state.”

State Rep. Daryl Campbell, who represents a central Broward district that straddles Interstate 95, said the outcome for others is potentially even worse. As housing and insurance costs escalate, he said some people are losing their homes and have no place to go.

Campbell said “homelessness is not looking like how we typically would have it in our mind, where you’re panhandling on the side of the road. Homelessness is looking like five, 10 cars outside of one home or apartment complex or couch surfing or even people sleeping in their cars in Walmart parking lot.”

© 2023 South Florida Sun-Sentinel. Visit sun-sentinel.com. Distributed by Tribune Content Agency, LLC. Information from Sun Sentinel archives was used in this report.

Citizens Insurance to Transfer 125,000 Policies

 Four private insurance companies received state approval to move policies, though the actual number will likely be lower. Slide will take the most – up to 75,000.

TALLAHASSEE, Fla. – On Tuesday, Florida regulators approved proposals by four insurance companies to take as many as 125,000 policies from Citizens Property Insurance Corp., the state “insurer of last resort,” in January. The number of policies that shift from Citizens to the private insurers likely will be lower than the approved totals.

Insurance Commissioner Michael Yaworsky signed the four orders, part of what is known as a “depopulation” program aimed at shrinking Citizens.

According to information posted on the Florida Office of Insurance Regulation website, the orders allow:

  • Slide Insurance Co. to assume as many as 75,000 policies from Citizens
  • Florida Peninsula Insurance Co. to assume as many as 30,000 policies
  • Edison Insurance Co. to assume as many as 10,000 policies
  • US Coastal Property & Casualty Insurance Co. to assume as many as 10,000 policies

State leaders have long sought to move policies from Citizens into the private market, in part because of concerns about financial risks if a major hurricane or multiple hurricanes hit Florida. Under Citizens, all Florida residents share in the risk should a major event occur.

Citizens saw explosive growth during the past three years as many insurers dropped customers and raised rates because of financial problems.

As of Friday, Citizens had 1.331 million policies, according to its website – but that number is down from 1.412 million earlier in October because five private insurers assumed 99,773 Citizens policies in mid-October as part of the depopulation program.

Regulators also approved a series of proposals by private insurers to take out additional policies in November and December.

© 2023 The News Service of Florida. All rights reserved.

Friday, October 27, 2023

Short ‘Days on Market’ Shifts to the North

 By Kerry Smith

Albany, N.Y., homes went under contract in 8 days in Sept., followed by Rochester (9) and Grand Rapids, Mich. (9). In 8 Florida metros, it ranged from 25-58 days.

SEATTLE – The U.S. supply-demand balance for real estate has shifted over the past year. In Albany, N.Y., the typical home sold in September went under contract in just eight days, making it the fastest market in the country, according to a report from Redfin. Next came Rochester, N.Y. (9), Grand Rapids, Mich., (9) Buffalo, N.Y. (11), San Jose, Calif. (12) and Seattle (12).

In all eight Florida metros included in the study, time-on-market grew year-to-year, with a low in Tampa of 25 days and a high in West Palm Beach of 58 days.

Florida metro – Median days on market – year-to-year change

  1. West Palm Beach – 58 days, 8 days longer year-to-year
  2. Miami – 51 days, no change year-to-year
  3. Fort Lauderdale – 51 days, 5 days longer year-to-year
  4. Jacksonville – 44 days, 8 days longer year-to-year
  5. Cape Coral – 43 days, 19 days longer year-to-year
  6. North Port – 42 days, 18 days longer year-to-year
  7. Orlando – 26 days, 5 days longer year-to-year
  8. Tampa – 25 days, 5 days longer year-to-year

Four of the six fastest turnaround markets have median home sale prices well below the national level of $412,081 – one reason homes in those metros are getting snatched up so quickly.

The typical home that sold in Rochester last month went for $235,000, making it the 4th most affordable metro in the nation. Buffalo ranked No. 8, with a median sale price of $255,000, and Albany and Grand Rapids ranked 21st and 24th, with median sale prices of $310,000 and $320,000, respectively based on a list of U.S. metropolitan areas with populations of at least 750,000.

“You might not think of Rochester as a hotspot, but people are still flocking into our area and supply remains very low,” says Kimberly Hogue, a Rochester Redfin agent. “Especially for someone coming with a big-city budget, paying $400,000 for a beautiful single-family home in a desirable neighborhood is a no brainer, and there just aren’t enough to go around. Even with mortgage rates near 8%, homes here are still affordable.”

The situation is a bit different in nearby Buffalo, according to local Redfin agent James Strzalkowski, who has observed signs that the market is beginning to slow.

“Buffalo was promoted for years as an affordable city with so much to offer, including cheaper labor, but our local economy is changing. Home prices and the general cost of living are catching up to other parts of the country,” he says. “We have a housing shortage in part because people can’t afford to move, but homes that are listed are starting to sit for longer and see price drops as mortgage rates rise and inflation impacts our city.”

Slowest markets in the U.S.

In New Orleans, the typical September home went under contract in 70 days, making it the slowest market in the country. Next came Honolulu (62), Austin, Texas (59), West Palm Beach, (58), McAllen, Texas (53) and Charleston, S.C. (53).

Homes in most of those markets have historically taken longer to sell than the typical U.S. home, but the outlier is Austin, where homes historically sold faster. Austin exploded in popularity during the pandemic as scores of remote workers moved in from expensive coastal cities to take advantage of the area’s relatively affordable housing. In turn, home prices skyrocketed, and many homebuyers were priced out.

© 2023 Florida Realtors®

Wednesday, October 25, 2023

Survey: Bleak News for Remote Workers

 By Todd Campbell

Remote work, the viable pandemic option, is now a workplace perk for many people – but more and more employers are requiring a return to the office.

NEW YORK – Covid-era alternative work solutions have come under fire as businesses increasingly deploy a carrot-and-stick approach to convincing employees to return to offices.

Technology titan Meta Platforms (META), which owns Facebook, threatened poor performance reviews if workers failed to attend offices three times weekly. JP Morgan Chase (JPM) CEO Jamie Dimon recently suggested workers uncomfortable with returning to offices should look for employment elsewhere.

Workers don’t like the idea of giving up the flexibility afforded by remote work, but a recent survey shows that these workers may face an uphill battle if they hope to continue working from home.

Remote work loses its luster

Companies big and small rushed to offer flexible alternative work schedules like remote and hybrid work during Covid. Remote work quickly became a key benefit used to fill jobs created by those who took early retirement and newly created positions in response to demand growth fueled by easy-money policies.

Remote work initially appeared to be a win/win for companies and employees. It allowed businesses to source job candidates nationally rather than locally and sometimes save money by closing expensive offices. Meanwhile, workers could live in the suburbs rather than crowded cities and save money by eliminating expensive childcare costs.

Unfortunately, the love affair with remote work has soured over the past year.

Businesses, from technology to financial services, have rolled back remote work, citing a need for increased collaboration and greater productivity. Many companies have likely sought to reduce the number of remote workers as part of layoff plans or to fill otherwise vacant office spaces.

Businesses are winning the return-to-office battle

Worker surveys suggest employees prefer remote work. However, they’re losing the battle with employers demanding more office face time.

The Census Bureau’s latest Household Pulse Survey shows remote work has reached a new post-pandemic low, with declines seen in all 50 states, reports Bloomberg.

The survey showed that fewer than 26% of households include someone who works remotely at least one day weekly. That’s a significant drop-off from the high of 37% in 2021. A total of 31 states had remote work rates above 33% at the peak. Now, only seven states exceed that hurdle.

States with the highest percentages of remote workers are typically Democratic states, mainly on the east and west coasts. Middle America and the South boast some of the lowest rates of remote work.

There’s also a more significant push for a return to office (RTO) in major metro markets where office building valuations are tumbling because of empty offices. During its recent quarterly conference call, Goldman Sachs (GS) told investors that it reduced valuations on office properties in its portfolio by 50%.

The impact of lower valuations on financial companies could contribute to the stricter return to office demands. Big banks like JP Morgan have been among the most vocal in demanding RTO, and they’re also heavily exposed to commercial real estate.

For instance, in addition to loans held on commercial properties, JP Morgan is building a new multibillion-dollar headquarters in New York City.

© Copyright 2023, Longview News-Journal, Longview, TX