Florida Market: Listings and Median Price Up in March

 By Marla Martin

Single-family median sales prices are up 3.9% over March 2023 and new listings increased 7.7%. The condo-townhouse median prices increased 3.1%.

ORLANDO, Fla. – Florida’s housing market in March and the first quarter (1Q) of 2024 reported more new listings, higher median sales prices and increased for-sale inventory (active listings) compared to a year ago, according to Florida Realtors®’ latest housing data.

“Persistently high mortgage interest rates hovering well above 6% continue to challenge buyers in Florida, especially first-time buyers,” said 2024 Florida Realtors® President Gia Arvin, broker-owner with Matchmaker Realty in Gainesville. “While we are seeing an increase in new listings and in for-sale inventory, home sellers thinking of moving – whether it’s downsizing or needing a larger home – are also impacted by the higher rates when considering their next home purchase.

Last month, closed sales of existing single-family homes statewide totaled 23,435, down 10.4% year-over-year, while existing condo-townhouse sales totaled 9,332, down 16.6% over March 2023. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

For 1Q 2024, statewide existing single-family home sales totaled 57,326, down 3.7% from 1Q 2023, while statewide existing condo-townhouse sales totaled 22,811, down 8.5% from the same quarter a year ago.

The statewide median sales price for single-family existing homes in March was $420,600, up 3.9% 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 $330,000, up 3.1% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

“Home price growth remained fairly calm by recent standards during the month of March,” said Florida Realtors Chief Economist Dr. Brad O’Connor. “Also, more homes were listed on Florida’s multiple listing services this March than in March 2023, but the year-over-year changes were more modest than what we saw in January and February. New listings of single-family homes were up 7.7% in March, well off the pace of nearly 17% in January and over 28% in February. In the townhouse and condo category, year-over-year growth in new listings in March was 11%, compared to over 31% in January and about 30% in February.”

He noted, “This slowdown in the rate of new listing growth meant that while inventory increased from the end of February to the end of March, it increased more slowly than it did in most recent prior months. Still, in a normal market, we usually expect inventory levels to decline from the end of February to the end of March.”

For 1Q 2024, the statewide median price for single-family homes was $415,000, up 3.8% year-over-year; the statewide median price for condo-townhouse properties was $325,500, up 2.8% year-over-year.

On the supply side of the market, inventory (active listings) rose in March as well as for 1Q 2024. Single-family existing homes were at a 4.1-months’ supply while condo-townhouse properties were at a 6.6-months’ supply for both timeframes.

To see the full statewide housing activity reports, go to the Florida Realtors Newsroom and look under Latest Releases or download the March 2024 and 1Q 2024 data report PDFs under Market Data.

© 2024 Florida Realtors®

Rents Stabilizing, Affordability Challenging

 By Amber Bonefont

Researchers said rent prices nationwide are becoming more balanced. In some areas of Florida, rental costs have declined slightly.  

BOCA RATON – Rent growth in the United States has returned back to the typical yearly increase for the most part, though many households are still struggling to afford rents, according to researchers at Florida Atlantic University and two other schools.

Nationally, rents rose 3.53% year-over-year, in line with the typical rental increase usually seen in a more balanced market, February data from the Waller, Weeks and Johnson Rental Index shows.

This trend is reflected in many parts of the country. Forty-three metropolitan areas either saw year-over-year declines or rent increases of less than the current national average of 3.53%. Five metros saw rents drop: in Austin, rents declined 3% year-over-year; Cape Coral, rents declined almost 2%; San Antonio, Texas, a .54% decline; North Port, a .20% decline; and Portland, a .15% decline.

“A rental increase of between 3% and 5% is seen as normal, so these numbers suggest that the rental crisis is over in most parts of the country,” said Ken H. Johnson, Ph.D., a real estate economist with FAU’s College of Business. “In some areas in the North and Midwest, rent growth is still increasing, but the growth is nowhere near as rapid as years prior. All in all, this suggests that rent appreciation is cooling and rental markets around the country are beginning to normalize.”

The Waller, Weeks, and Johnson Rental Index, part of FAU’s Real Estate Initiative, measures where the average rent is in the 100 most populated metropolitan areas in the United States and compares it to where rents should be in these metros based on statistical modeling of historic rental prices. Johnson, along with fellow researchers, Shelton Weeks, Ph.D., of Florida Gulf Coast University, and Bennie Waller, Ph.D., of the University of Alabama, also measure average yearly increases, monthly increases and how much money the typical household needs to make to avoid paying more than 30% of their income toward rent.

Renters should brace themselves for a prolonged affordability crisis until incomes increase to compensate for rising rents, researchers said. Ten metropolitan areas, including South Florida, require households to make well over $100,000 to avoid paying more than 30% of their income to rent.

“Rarely do we see major dips in rent, so households should not wait for the possibility of rents to fall dramatically,” Waller said. “Incomes need to rise to match current rents so renters can no longer feel the sting of the affordability crisis.”

Until then, many households will be forced to either pair up or consume less to pay rent.

"One of the repercussions will be more density – the average number of people living in a unit,” Weeks said. “Historically, you will see more people room or live together during periods characterized by unaffordable housing, like multigenerational families living together or college roommates choosing to continue rooming together. As incomes catch up to current rent prices, density numbers will decline once again.”

© 2024 Florida Atlantic University

Florida Home Values Skyrocket

 By Jennifer Torres

The average Florida home value doubled in six years. Tampa and Miami tied for having the third-fastest price doubling among large U.S. cities.

MIAMI – The national median home price is twice what it was ten years ago. Molded by a storm of inflation, tight supply and surging demand, the average home price in the U.S. went from around $200,000 to $400,000, according to a new study from Point2.

However, in Florida, it took much less than a decade for home prices to achieve a twofold increase.

Average home values across Florida have undergone a seismic transformation, doubling in value within the short span of just six years. This surge, saw Miami’s average home price soar from around $290,000 in 2018 to the current median of $583,000. In Tampa, homes went from $213,500 in 2018 to $430,000.

For their study, analysts looked at historical data to calculate how many years it took for home prices in the 100 largest U.S. cities to double — and Tampa tied with Miami for having the third fastest price doubling among the country’s largest cities.

The trend of rapid price doubling extended to other big Florida cities, with home prices in St. Petersburg, Orlando and Jacksonville, increasing twofold in the past six to eight years.

Median home prices in St. Petersburg doubled within 6.6 years. In Orlando home prices doubled within 7.5 years — and in Jacksonville it took 7.9 years to see a twofold increase.

The research notes that, “Fluctuating mortgage rates, steep property prices, or supply deficits are no new challenges. But they have never unleashed such a rapid-fire onslaught on homebuyers in the U.S. as they have in today’s housing market.”

Orlando and Tampa also secured spots among the top 10 hottest markets in 2024, according to Zillow’s latest report, which reveals they boast a blend of swiftly selling homes on the market, an abundance of potential buyers, the expectation of stable home values and job growth relative to new construction.

Among the top 10 states attracting new construction buyers, Florida draws significant attention, with approximately one in every eight new construction buyers opting to purchase their homes in the Sunshine State. In November, the U.S. Census Bureau reported that for the year, more than 1.5 million new residential construction projects broke ground across the state — a 9.3% increase from the year prior.

But across the country, what state doubled its median home price the fastest? That would be Detroit, Michigan, where it took just 4.9 years for home prices to increase twofold. At the start of 2019, you could buy a home in the Motor City for $40,000 — but as of March 2024, the median sale price of homes there is $80,163.

Similarly, in the second-place spot, data shows that prices also doubled quickly in Spokane, Washington, where not that long ago, in March 2018, a home cost just $184,500 as compared to $371,000 today.

©2024 Advance Local Media LLC. Visit gulflive.com. Distributed by Tribune Content Agency, LLC.

The Basics of Home Flipping

 Potential flippers should understand the process of home flipping before jumping in. Some of the common unknowns include the tax benefits.

NEW YORK -- In recent years, home sellers have experienced record profits as the value of real estate has risen dramatically. Bankrate indicates the median home price across the United States is around $486,000. Flipping homes gained popularity prior to the spike in real estate prices, but that increase has led some novices to consider flipping more closely.

Though it's true the chances at turning a large profit are substantial in a market where high prices are the norm, potential flippers may benefit from a rundown of the practice before they decide if it's something they want to do.

What is flipping?

Flipping works when an investor purchases a property with the intention of selling the home (or business) for profit without actually using it. The basic premise of flipping is to find a property at a low price and sell it at a much higher price, typically after renovating the home. Investopedia says it is important to complete this transaction as quickly as possible to reap the greatest return on investment.

Don't underestimate the necessary investment of time and money

Many new flippers overestimate their skills and knowledge and lose money in the process. Common mistakes include thinking that a project will cost less or the home will be turned around quickly. It can take months to find the right property, and then there will be time needed to renovate. Costs involved include the initial sale, renovations, holding costs and capital gains tax when the sale goes through. All of these can eat into profits.

Limited inventory makes things tougher

It can be challenging to find a good deal as everyone seemingly wants to be in real estate these days. With fierce competition in a low-inventory market, flipping can be like finding a needle in a haystack.

Know the tax benefits vs. tax risks

According to Tresa Todd, founder of the Women's Real Estate Investors Network, flipping may be less tax-efficient in the United States than getting into investment properties. Flippers will be paying short-term capital gains instead of long-term capital gains.

According to NerdWallet, capital gains taxes are paid when one sells an asset for profit. The rate at which capital gains is taxed is based on whether you hold an asset for less than a year or longer than a year. Long-term capital gains tax rates are generally lower than short-term capital gains tax rates.

Abide by the "golden rule"

Most home flippers follow the 70% rule. This says one should pay no more than 70% of what the house's estimated ARV (after-repair value) will be, minus the cost of the repairs necessary to renovate the home, says Rocket Mortgage.

The ARV is calculated by adding the current property value plus the added value of any renovations. 

The formula boils down to: ARV x .70 - Estimated repair costs = Maximum buying price.

Flipping may seem like a good idea, but prospective flippers should fully understand the process, including the financial commitments it requires, prior to purchasing a home.

Copyright © 2024 Smokey Mountain Times, Community Newspapers, Inc. All rights reserved.

Fannie Mae: Consumers Adjust to Higher Rates

 By Amy Connolly

One economist said consumers appear to be adjusting their expectations for the housing market to better accommodate higher mortgage rates and home pricing.

WASHINGTON – While a growing number of consumers think mortgage rates will increase in the coming year, their optimism about the home buying and selling market ticked up, according to Fannie Mae’s Home Purchase Sentiment Index (HPSI).

The HPSI decreased 0.9 points in March to 71.9, its first decline since November 2023, primarily due to increased pessimism about mortgage rates. Fannie Mae said 34% of consumers believe mortgage rates will go up over the next 12 months – up from 32% last month. Twenty-nine percent believe rates will go down.

At the same time, consumer perceptions of buying and selling conditions ticked up slightly again in March. Both measures have now risen multiple months in a row.  However, only 21% of those surveyed believe that it’s a good time to buy, underscoring the continued concern about the lack of affordable housing. The full index is up 10.6 points year over year.

“The HPSI remained relatively flat in March, but we're seeing signs that consumers may be adjusting their expectations for the housing market to better accommodate the higher mortgage rate and home price environment,” said Doug Duncan, Fannie Mae senior vice president and chief economist.

"Both our 'good time to buy' and 'good time to sell' measures continued their slow upward drift this month. However, consumers took a slightly more pessimistic view on the likely direction of mortgage rates, likely reflecting the fact that actual mortgage rates have moved upward since the start of the year,” he said.

“With the historically low rates of the pandemic era now firmly behind us, some households appear to be moving past the hurdle of last year's sharp jump in rates, an adjustment that we think could help further thaw the housing market. We noted in our latest monthly forecast that we expect to see a gradual increase in home listings and sales transactions in the coming year. We believe this will be driven not only by those coming off the sidelines due to a rate-related recalibration, but also by households who may need to move for other life reasons,” he said.

Home Purchase Sentiment Index component highlights

• Good/bad time to buy: The percentage of respondents who say it is a good time to buy a home increased from 19% to 21%, while the percentage who say it is a bad time to buy decreased from 81% to 79%. As a result, the net share of those who say it is a good time to buy increased 4 percentage points month over month.
• Good/bad time to sell: The percentage of respondents who say it is a good time to sell a home increased from 65% to 66%, while the percentage who say it's a bad time to sell decreased from 35% to 34%. As a result, the net share of those who say it is a good time to sell increased 2 percentage points month over month.
• Home price expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 42% to 40%, while the percentage who say home prices will go down decreased from 23% to 20%. The share who thinks home prices will stay the same increased from 34% to 38%. As a result, the net share of those who say home prices will go up in the next 12 months increased 1 percentage point month over month.
• Mortgage rate expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 35% to 29%, while the percentage who expect mortgage rates to go up increased from 32% to 34%. The share who thinks mortgage rates will stay the same increased from 32% to 36%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 8 percentage points month over month.
• Job loss concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 78% to 77%, while the percentage who say they are concerned increased from 22% to 23%. As a result, the net share of those who say they are not concerned about losing their job decreased 2 percentage points month over month.
• Household income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago remained unchanged at 19%, while the percentage who say their household income is significantly lower increased from 11% to 12%. The percentage who say their household income is about the same decreased from 70% to 68%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 2 percentage points month over month.

The HPSI distills information about consumers' home purchase sentiment from Fannie Mae's National Housing Survey (NHS) into a single number. The HPSI reflects consumers' current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is constructed from answers to six NHS questions that solicit consumers' evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.

The National Housing Survey (NHS) is a monthly attitudinal survey, launched in 2010, which polls the adult general population of the United States to assess their attitudes toward owning and renting a home, purchase and rental prices, household finances and overall confidence in the economy. Each respondent is asked more than 100 questions, making the NHS one of the most detailed attitudinal longitudinal surveys of its kind, to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010).

The March 2024 National Housing Survey was conducted between March 1, 2024, and March 19, 2024.

© 2024 Florida Realtors®

Analysts: Home Insurance Crisis May Be Nearing End

 By Ron Hurtibise

Insurance insiders are optimistic about the home insurance market in Florida, saying rates are continuing to stabilize, but major hurricane could change things.

FORT LAUDERDALE, Fla. – Home insurance rates in Florida far outpaced inflation over the 18 months that ended on Dec. 31, but the rate of increase slowed in the fourth quarter of 2023 to its lowest point of the period.

And many insurance insiders are optimistic that rates will continue to stabilize this year and next, barring a big costly you-know-what.

According to an analysis by the South Florida Sun Sentinel of publicly released data by the Florida Office of Insurance Regulation, the statewide average premium to insure a single-family house increased by 23.9% – from $2,798 at the end of June 2022 to $3,466 at the end of December 2023.

But the quarter-to-quarter growth rate fell to 2.6% in the fourth quarter compared to the third quarter. That’s down from a high of 4.8% between the first and second quarters of last year.

The average statewide premium to insure a condo unit increased by 22.9% over the 18-month period, from $1,343 to $1,650. But the rate of increase similarly fell to 2.1% in the final quarter of last year after peaking at 5.9% between the first and second quarters of 2023.

Over the same 18-month period, the rate of inflation in the United States increased by 4.7%, according to data in the Bureau of Labor Statistics’ Consumer Price Index.

The Office of Insurance Regulation released the statewide quarterly data recently as required by a provision in a package of insurance reforms enacted by the state Legislature and governor in May 2022.

All Florida-domiciled insurers are required to submit reports that includes total numbers of policies, total premiums paid, and total value of insured property for each type of policy they sell. The data used in the Sun Sentinel analysis was derived by dividing the total number of policies into the total premium for both houses and condos.

A statewide average premium doesn’t necessarily reflect reality in South Florida, where insurance costs have outpaced the rest of the state for years. And the average premium is likely higher than what homeowners in northern, inland counties pay.

But it’s the best measure available for comparison, since insurers several years ago began shielding their county-level premium data from public view by declaring it a “trade secret.”

Dulce Suarez-Resnick, vice president of NCF Insurance Associates in Miami, said participants at last month’s Florida Insurance Market Summit in Orlando voiced confidence that we’ve weathered the storm.

They believe that after increasing slightly this year, rates will begin stabilizing or begin decreasing next year as a result of lower litigation rates, price competition among new carriers entering the Florida market, and lower costs for reinsurance – that’s insurance that insurers buy to make sure they can pay all claims after a catastrophe.

“We’re getting really excited about rate relief, but it could all change by one thing – a major hurricane hitting,” she said.

As usual, insurers and their customers will approach this summer’s hurricane season with wary eyes. A powerful and destructive storm, if it hit a major population center, would raise insurer costs and make hoped-for rate cuts less likely, Suarez-Resnick said.

Forecasters with Accuweather and Colorado State University are calling for a much-busier-than-normal hurricane season, thanks to record warm sea-surface temperatures in the Atlantic Ocean and a rapidly developing La Niña event, which reduces wind shear and creates favorable conditions for storm development in the Atlantic.

More insurers enter market

The slowing of the rate increase in the fourth quarter was just one of several developments that have given insurers and consumers reason to be optimistic.

Eight new insurance companies have been approved by the Office of Insurance Regulation to enter the state’s insurance market. They are Ovation Home Insurance Exchange, Manatee Insurance Exchange, Condo Owners Reciprocal Exchange, Orange Insurance Exchange, Orion180 Select Insurance Company, Orion180 Insurance Company, Mainsail Insurance Company, and Tailrow Insurance Company.

Ovation Home Insurance Exchange, the newest company, was created by the same company that owns Florida Peninsula and Edison. It’s being built with “separate and dedicated capital” says Stacey Giulianti, chief legal officer at Florida Peninsula.

“It stands on its own, so it’s a separate pool of capital to be put at risk,” Giulianti said. The company will also introduce “a new algorithm to select and rate policies, which is more granular than (what’s used by) Florida Peninsula or Edison.”

The new algorithm “will allow us to more precisely charge customers an appropriate – and in most cases less expensive – policy premium,” he said.

Insurers are back in black

Florida-domiciled insurers reported making a profit last year for the first time since 2016.

Marketing intelligence company S&P Global announced the result last month, crediting the turnaround to investment income, a mild hurricane year, and tort reforms that took effect in March 2023.

While the top 50 companies also posted an underwriting loss for the eighth straight year, the combined loss of $190.8 million was much lower than losses of nearly $1.8 billion in 2022 and $1.52 billion in 2021, S&P Global noted.

State-owned Citizens Property Insurance Corp. posted a net income of $746 million compared to a $2.2 billion loss in 2022, and its combined ratio – a measure of profitability – improved from 202.4% to 59.4%. Insurers regard a 100% combined ratio as a break-even point, with profitability improving the further the number declines below 100%.

Citizens has successfully used depopulation to decrease its policy count from 1.4 million in September 2023 to 1.17 million by the end of February.

Reduced litigation costs

A Sun Sentinel analysis in January showed that the number of lawsuits filed against the state’s top 25 insurers fell by 13.2% between 2022 and 2023 – from 44,550 to 38,678.

Jerry Theodorou, policy director, finance, insurance and trade for R Street Institute, a center-right-aligned think tank that supports “free markets and limited, effective government,” published an essay on Thursday proclaiming that “the situation is much better” for Florida’s beleaguered insurance market.

Prior to the reforms that took effect in 2022 and 2023, insurers were caught under “mountains of unmerited litigation,” Theodorou wrote.

A large percentage of litigated claims was among several factors that triggered liquidation proceedings against three insurers in the 2022-2023 budget year, according to the most recent annual report of the Florida Department of Financial Services’ Division of Liquidation and Rehabilitation.

In preliminary insolvency reports by the division, litigation was also mentioned as a contributing factor that led to the liquidations of Southern Fidelity Insurance Company in June 2022 and United Property and Casualty Insurance Company in February 2023.

S&P Global’s report stated that spending on legal defense costs by Florida insurers as a percentage of premium fell from 8.4% in 2022 to 3.1% in 2023, he said. That’s still higher than the overall industry average of 1.2% but a significant drop nonetheless, Theodorou wrote.

Lower rate hikes – and some reductions

Rate change requests for the upcoming year have been minimal so far compared to recent years – except for condo unit coverage.

Florida Peninsula plans to seek approval from the Office of Insurance Regulation for a 2% statewide average rate decrease, Giulianti said.

Slide Insurance Company is seeking a 0.5% decrease in the average rate it charges to insure single-family houses.

Florida Family is seeking an average 0.5% decrease across its line that includes houses, condo units and rentals, effective Aug. 1.

Castle Key Indemnity, the Florida-based company owned by Allstate, has requested no change in rates for all homeowner policies, effective Aug. 4. But that comes on the heels of a 54% rate hike for condos that was requested a year ago and took effect in May of last year.

Kyle Ulrich, president and CEO of the Florida Association of Independent Insurance Agents, said, “Agents are seeing positive trends relating to pricing and coverage.” But he noted “those trends vary depending on geographic location.”

Still, some carriers so far have requested increases this year as they prepare to enter hurricane season.

They include Vault Reciprocal Exchange (10.4% for single family houses and 8.4% for condo units); Tower Hill Insurance Exchange (7.4% for single-family houses); and Homesite Insurance Company (average 2.3% for entire line).

Several rate hike requests for coverage of condo units are notably higher than those for houses.

Slide requested a 7% increase for condo units, which took effect on March 26. Nationwide Mutual’s 13.1% rate hike request for condo units is much higher than its 0.6% increase sought for houses.

First Protective is seeking a 9.9% increase for condo coverage and a 1.0% hike for houses.

And four companies owned by Chubb – Great Northern, Vigilant, Pacific Indemnity and Federal Insurance Company – are asking for a 30.7% increase to cover condo units and no increase for insurance covering houses.

The requests come on the heels of similar increases for coverage of condo buildings. Costs for that coverage have been rising as a result of laws enacted to prevent another catastrophe such as the collapse of the 12-story Champlain Towers South building in Surfside in June 2021.

Agent says rate hikes lower in South Florida

South Florida homeowners who experienced annual insurance price increases of 25% to 30% over the last few years are looking at more modest rate hikes of 15% to 17% this year, Suarez-Resnick said.

“That’s still a big hit for people in Miami-Dade, Broward and the Keys who are paying $6,000 to $7,000 a year,” she said.

Overall, though, reinsurance rates declined in January and February and are expected to decline again by the time insurers make their hurricane season reinsurance buys, Suarez-Resnick said.

George Attard, CEO of Asia Pacific for Aon’s Reinsurance Solutions, told the website Reinsurance News in late March that the reinsurance market heads into hurricane season offering “adequate capacity for property casualty risks and enhanced pricing competition.”

A reduction in reinsurance costs, triggered by a decline in litigation and a mild year for hurricanes in 2023, will help to stabilize or even reduce homeowner insurance rates next year – if nature cooperates and spares us the cost and heartbreak of a major hurricane, Suarez-Resnick said.

“That’s one thing we can’t control – Mother Nature,” she said.

© 2024 South Florida Sun-Sentinel. Distributed by Tribune Content Agency, LLC.