April 6, 2020

DeSantis Halts Evictions, Foreclosures for 45 Days

The eviction-foreclosure hiatus went into effect April 2 due to the COVID-19 pandemic. The executive order doesn’t otherwise change Fla. law or existing agreements.

TALLAHASSEE, Fla. – On Thursday, April 2, Florida Gov. Ron DeSantis signed Executive Order 20-94 effectively halting evictions and foreclosures in the state for 45 days.

Under the Executive Order, DeSantis said he would “suspend and toll any statute” providing for “an eviction cause of action under Florida law solely as it relates to non-payment of rent by residential tenants due to the COVID-19 emergency.”

The language was similar for the 45-day foreclosure hiatus, saying it would “suspend and toll any statute providing for a mortgage foreclosure cause of action under Florida law for 45 days from the date of this Executive Order, including any extensions.”

While the order impacts evictions and foreclosures for 45 days, it does not change Florida law, nor does it relieve tenants or parties to a transaction from their obligations under existing contracts.

The order itself makes that clear, saying, “Nothing in this Executive Order shall be construed as relieving an individual from their obligation to make mortgage payments or rent payments.”

Questions regarding a specific situation? Florida Realtors Legal Hotline – and all Florida Realtors services – remain fully operational.

© 2020 Florida Realtors®

March 30, 2020

Fannie, Freddie Unveil Easy-to-Use Mortgage Help

The mortgage giants that back over half of all U.S. mortgages will allow owners to skip two mortgage payments for any reason and add them to the end-date of their loan.

WASHINGTON – Mortgage giants Fannie Mae and Freddie Mac unveiled a payment deferral option for homeowners struggling to make their mortgage payments – and deferral can be for any reason, not just troubles related to COVID-19. Homeowners could be eligible to defer two months of their mortgage payments until the end of their mortgage, depending on their circumstance.

The government-sponsored enterprises (GSEs) intended to announce the payment deferral program later this year, but they decided to roll out the program now due to the coronavirus outbreak. The payment deferral program was created for borrowers who face a short-term hardship of any kind that forces them to miss one or two months of mortgage payments. If borrowers resolve that hardship within those two months, they’re eligible to defer the two months of missed payments to the end of their loan – without having to modify their loan.

“This innovative relief solution addresses a unique hardship situation – homeowners who have resolved a short-term hardship,” Freddie Mac said in a statement about the new program. “It aims to serve those homeowners with a more affordable workout that’s between a repayment plan and a modification. This is a broad offering that is aligned with Fannie Mae … to assist more struggling homeowners.”

In recent days, the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, also has announced forbearance options for up to 12 months and mortgage relief to those facing a hardship due to the coronavirus national emergency. The FHFA has also suspended all foreclosures and evictions for at least 60 days. The aid applies to homeowners who have a loan backed by Fannie or Freddie.

Both companies have a webtool homeowners can use if they’re not sure who owns their mortgage. To learn more, visit either Fannie Mae or Freddie Mac’s website.

Posted in National News
March 26, 2020

Banks Try to Save Stunned Borrowers – and Their Own Bottom Line

Lenders were villains in 2008’s recession, but they’re stronger this time and don’t want a large roster of foreclosures on their books. As a result, they have a vested interest in helping people keep their homes this time and are rolling out a number of forgiveness and relief programs.

NEW YORK (AP) – Tarred as villains during the 2008 financial meltdown, banks of all sizes are trying to help out Americans reeling from the economic crisis caused by the coronavirus outbreak.

Banks are scrambling to put into place loan forgiveness and relief programs, working to keep their customers from panicking or falling into financial ruin. They have a vested interest preventing millions of people and businesses from defaulting on hundreds of billions of loans at once, something that would do significant damage to the banks’ own finances.

Unlike 2008, banks are not the cause of economic crisis gripping the nation. And banks now have plenty of capital on hand to handle this crisis, economists say.

But the potential for millions of their customers to default on credit cards, small business loans and mortgages means banks have to do something to protect borrowers, many of whom went from having a job or a business to nothing, sometimes in a matter of days.

Husband and wife team Shari and Larry Kaynen were forced last week to close their chain of six high-end clothing stores called Shari’s Place, based in Greenvale, N.Y. They are now working with their bank to rework their long-term debt into new terms with lower interest rates that will help their cash flow.

Larry Kaynen said that their bank is polling all of its retail industry clients to figure out how they are going to stay in business for weeks with “zero” sales.

“This could mean a lot of ruin to a lot of small business” said Shari Kaynen. “I am not corporate America. I have millions of dollars worth of merchandise, but I still have to pay my landlord rent.”

The aid the banks provide varies in generosity depending on the bank, however. Some are just allowing customers to defer payments, meaning interest is still accumulating while in these programs. Others have instituted forbearance programs, where there will be no penalty for a customer who wants to hold off paying debts for 30 or 60 days.

Huntington Bancshares, a $100 billion bank operating mostly in the Midwest, has instituted 30-day deferral programs for any borrower who asks for help – no paperwork or questions asked – and is reaching out to customers asking if they need more time. They are extending the deferrals 30 days at a time, if necessary.

“There is a place for our industry, in this crisis, to do all we possibly can to mitigate the damage that is happening,” said Stephen Steinour, Huntington’s chairman and CEO.

The bank has even moved employees at its branches – which are operating under reduced or restricted hours to protect against virus transmission – into new roles like calling borrowers or potentially even helping customers refinance their mortgage.

The biggest banks are taking similar actions. Bank of America is allowing customers to defer payments across all of its products and is not reporting any negative activity like missed payments to the credit bureaus. So has JPMorgan Chase, Wells Fargo and Citigroup.

Smaller banks are also acting to help customers. Southern Bancorp, with roughly $1.5 billion in assets headquartered in Arkansas, is modifying loans as quickly as possible or charging only interests on loans where it can for small business borrowers or customers.

“We’re telling our folks, ‘Be safe. Be calm. We’re here to help however we can,’” said Darrin Williams, CEO of Southern Bancorp.

Banks are putting these programs in place partly because they would be facing a massive number of defaults and bad loans on their books without them – causing billions of dollars worth of paper losses to the banking sector. Bank stocks have been hit particularly hard this year as they are considered a proxy for the overall economy. The KBW Bank Index, composed of banks from across the country, is down 45% this year alone compared with the 15.5% decline of the S&P 500.

Further, the credit reporting companies like Experian and Equifax would be swamped with negative credit reporting data, which would destroy the credit scores of millions of Americans who were paying their bills on time but suddenly find themselves out of a job. That would make giving loans in the future to these impacted borrowers more difficult.

Lastly there’s the politics.

The Great Recession was caused by careless banks making too many bad loans, which ultimately required U.S. taxpayers to backstop or bail them out. The bailouts of 2008 and 2009 have not been forgotten by the industry.

While other industries like the restaurants, hotels and airlines have petitioned Washington for aid in the aftermath of the coronavirus-fueled economic meltdown, the banks have largely remained on the sidelines – asking for changes to how bank capital is measured during a crisis and other minor issues. The CEOs of the big banks went to the White House earlier this month to meet President Trump with a “we are here to help.”

While the banks are not asking for large things in this bailout bill, they know a lot is at stake. By proxy, banks would benefit from any government aid to companies because those companies would in turn continue paying their bills.

“We are in a strong financial position, and because we are doing so well, we can hopefully provide some relief,” Williams said.

While the banks are not asking for a government bailout this time, they have benefited from the recent moves by the Federal Reserve, which has slashed borrowing costs to zero and instituted bond-buying programs to help banks quickly offload high-quality assets for cash. quickly. The Federal Reserve has expanded that to include things like commercial paper, corporate debt and other assets in a way not seen since the Great Recession.

While banks are taking their own actions, state and federal regulators are also stepping in to protect borrowers.

Governor Andrew Cuomo of New York imposed a 90-day moratorium on mortgage payments if a borrower has been financially struck by the outbreak. The Department of Housing and Urban Development has imposed a 60-day moratorium on all evictions and foreclosures on all homes with a loan through the Federal Housing Administration, or FHA.

Copyright 2020 The Associated Press, Ken Sweet. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. AP Retail Writer Anne D’Innocenzio contributed to this report from New York.

Posted in National News
March 23, 2020

Florida Realtors: Feb. Single-Family Sales Up 9.1%

Florida condo sales up 10.8% year-to-year. Statewide median price for single-family homes up 8% to $270K; condo median price up 6.7% to $200K. The spread of COVID-19 has affected everyone, says Florida Realtors Pres. Grooms, noting that exactly how Fla.’s businesses and real estate will be impacted has yet to be determined.

ORLANDO, Fla. – Florida’s housing market reported more closed sales, higher median prices, more pending sales and higher pending inventory in February 2020 compared to a year ago, according to the latest housing data released by Florida Realtors®. Sales of single-family homes statewide totaled 20,693 last month, up 9.1% from February 2019.

“February was a strong month for Florida’s housing market, continuing the trends we have seen previously, such as historically low mortgage rates and tight for-sale inventory,” says 2020 Florida Realtors President Barry Grooms, a Realtor and co-owner of Florida Suncoast Real Estate Inc. in Bradenton. “New pending sales for single-family existing homes rose 12.5% last month and new pending sales for condo-townhouse units increased 13.9%.

“Of course, with COVID-19 spreading in Florida and across the globe, all of our lives have been affected. Last week, Gov. Ron DeSantis issued a state-of-emergency declaration so that the state could more effectively gather resources and receive federal help to combat the pandemic and offer aid. We don’t yet know how Florida businesses, including the real estate industry, will be impacted. But we do know that Realtors stand with their communities and will continue to do whatever we can to help in these uncertain times. And, as experts in their local markets, Realtors continue to serve as a valued source of information for homebuyers and sellers.”

Statewide median sales prices for both single-family homes and condo-townhouse properties in February rose year-over-year for 98 months-in-a-row. The statewide median sales price for single-family existing homes was $270,000, up 8% 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 $200,000, up 6.7% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

According to the National Association of Realtors® (NAR), the national median sales price for existing single-family homes in January 2020 was $268,600, up 6.9% from the previous year; the national median existing condo price was $248,100. In California, the statewide median sales price for single-family existing homes in January was $575,160; in Massachusetts, it was $405,000; in Maryland, it was $288,000; and in New York, it was $300,000.

Looking at Florida’s condo-townhouse market in February, statewide closed sales totaled 8,842, up 10.8% from the level a year ago. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

Data shows that Florida’s housing market experienced another solid month of growth in February, according to Florida Realtors Chief Economist Dr. Brad O’Connor.

“Historically low mortgage interest rates continued to serve as the principal driver of growth in the housing market last month,” he says. “Freddie Mac reported all-time lows in February for both 30- and 15-year fixed-rate loans, checking in at 3.47% and 2.97% percent, respectively. These lower rates have helped relieve some of the pent-up demand for affordable homes caused by the housing shortage, and they also aided in a revival of demand in the upper tier of the market. Consequently, price growth has actually accelerated in recent months, including in February.”

He said that while the state’s housing market in February was strong, the biggest question now is what the future holds over the next few months.

“However, that’s impossible to know at this time, given that Florida – and the rest of the world – face the enormous challenge of fighting a global pandemic,” says O’Connor. “The emergence of the coronavirus is a perfect example of what we might call a ‘black swan’ event, which for economists means a very rare, difficult-to-predict event that originates from outside of the economic realm but imposes a massive shock to the economy. Most of our traditional forecasting tools will be rather useless in the near term until there is a better handle on our local, state, and federal governments’ plan to both combat the virus and shield the economy.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.47% in February 2020, down from the 4.37% averaged during the same month a year earlier.

To see the full statewide housing activity reports, go to Florida Realtors’ Statistics and Research section on floridarealtors.org. Realtors also have access to local market stats (password protected) on Florida Realtors’ website.

March 19, 2020

FHFA Stops Evictions, Plans for Delinquency Spikes

Homeowners facing foreclosure or eviction got a 60-day reprieve, providing Fannie Mae or Freddie Mac hold their mortgages – and FHFA is expected to take other actions if the crisis increases and causes more homeowners to lose jobs or work fewer hours.

NEW YORK – Some of the nation’s biggest mortgage lenders are already receiving calls from borrowers worried that they won’t be able to make their monthly payments due to the coronavirus pandemic, and the government and independent mortgage regulators are working on plans to ward off another foreclosure crisis.

On Wednesday, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac (the Enterprises) to suspend foreclosures and evictions for at least 60 days due to the coronavirus national emergency. The two federally backed agencies buy loans from private banks and help keep the mortgage market liquid. Together they hold over half of all U.S. mortgages.

“As a reminder, borrowers affected by the coronavirus who are having difficulty paying their mortgage, should reach out to their mortgage servicers as soon as possible,” says FHFA Director Mark Calabria. Fannie Mae and Freddie Mac “are working with mortgage servicers to ensure that borrowers facing hardship because of the coronavirus can get assistance.”

Mortgage delinquencies currently are near record lows, but the numbers are expected to rise as a result of the current COVID-19 crisis.

Fannie Mae and Freddie Mac already have loan forbearance programs in place to help at-risk homeowners. However, those forbearance programs are usually used following some type of natural disaster, and the current situation is neither local nor momentary.

“We’re on the front end of this. We don’t know,” says Calabria. “If this goes more past the summer, certainly it’s going to call for a different set of responses.”

Right now, borrowers do not need to have been sickened by the virus to qualify, only to show financial hardship.

“You could be working somewhere, you’ve lost your job, that is a hardship that we will count. You can just be adversely impacted economically,” says Calabria. “Ultimately, whether there is a broad based suspension of mortgage payments, the White House or Congress would have to lead on that. I think that they’re moving on these issues.”

Meanwhile, there are concerns about delinquencies hitting the FHA, as the vast majority of FHA lenders are now non-banks and don’t have the same liquidity. If they offer forbearance to borrowers, their investors still need to be paid, and it’s uncertain whether non-bank lenders can handle that.

Source: CNBC (03/17/20) Olick, Diana

March 18, 2020

Millennials: The Lion’s Share of U.S. Home Buyers

However, there are notable demographic differences between older millennials (ages 30 to 39) and younger millennials (22 to 29) who have more college debt.

NEW YORK – Millennials now represent a significant majority of U.S. homebuyers, though there are notable demographic differences between older millennials (ages 30 to 39) and younger millennials (ages 22 to 29).

According to the National Association of Realtors’ (NAR) 2020 Home Buyers and Sellers Generational Trends Report, older millennials and younger millennials represent 25% and 13% of buyers, respectively, compared to Gen Xers (ages 40 to 54) who made up 23% of the market.

Student debt interfered with down payment savings for 46% of younger millennials, with a median loan balance of $26,000, and 38% of older millennials, who had a median balance of $34,000. Across nearly all age groups, debt delayed home buying by four to five years.

While buyers across all age categories cited a home purchase as a “good investment” and the desire to own as their primary reason for purchasing, older millennials were slightly less likely than other age groups to consider a home purchase as “better than stocks” and more likely to consider it merely “as good as stocks.”

Older millennials were also the most likely to be buying as married couples and paid the highest prices for homes – a median of $282,000, compared to the overall median of $257,000 across age groups – even though Gen X purchasers came to the table with the highest incomes of any demographic, a median of $110,900.

Younger millennial buyers, on the other hand, had the highest rate of purchases by unmarried couples and the lowest median purchase price of any age group, at $206,300.

Detached single-family homes represented 83% of homes bought across all demographics, with buyers of all ages also opting for a median size of three bedrooms. Silent Generation buyers (ages 74 to 94) were the only age group moving into smaller homes, going from a median of 2,100 to 1,800 square feet.

Older boomers (ages 65 to 73) made up the largest share of sellers, at 23%.

And while younger sellers were generally interested in trading up to larger spaces, boomer sellers generally purchased equivalent or smaller spaces but moved greater distances, often to be closer to family and friends.

March 13, 2020

March 2020 Buyers Can Get More than March 2019 Buyers

Assuming a $2,500 monthly mortgage budget, a buyer today can afford a home that costs $508K compared to only $457K one year ago. While home prices have gone up, today’s lower mortgage rates make it a better deal – providing buyers can find a house that’s for sale.

SEATTLE – A dramatic drop in mortgage interest rates driven largely by coronavirus fears has given homebuyers a big boost in purchasing power in recent weeks, according to an analysis by Redfin.

At a mortgage interest rate of 3.2%, a homebuyer with a $2,500 monthly mortgage budget today can afford a home that sells for $51,250 more than in March of 2019 when rates were 4.4%. Put another way, a buyer who could accord a $457,000 home in March of last year can afford a $508,000 home today.

“Potential homebuyers now have an extra incentive to buy a home despite all of the economic uncertainty from the coronavirus,” says Redfin chief economist Daryl Fairweather. “And, many current homeowners now have the option to refinance their mortgages and gain some extra spending cash each month.”

Low interest rates won’t help with direct impacts of the coronavirus on the economy, like declines in tourism and service sector spending, he adds, but they’ll mitigate impacts to housing.

The boost in purchasing power won’t help buyers find a home as the for-sale inventory continues to contract, but interest savings should offset price increases seen in most metro areas if they successfully submit an accepted contract. In January, the housing supply fell 11% year-to-year, and there were fewer homes for sale than at any time since January 2013.

Despite fewer homes for sale in most markets, the share of homes for sale that were affordable on a $2,500 monthly payment nationally increased 1.9 percentage points – from 68.6% between March 4 and March 10, 2019, to 70.5% between March 2 and 8, 2020.

The markets where homebuyers are experiencing the biggest boost in the share of affordable inventory compared to a year ago were Dallas (+6.2 points), Portland, OR (+5.2 points), and Richmond, VA (+4.3 points).

“I just had a buyer who was at the top of his budget lock in a 2.99% mortgage rate and he is ecstatic at how much more flexibility his finances will have thanks to the interest rate drop,” said Portland Redfin agent Meme Loggins. “Another one of my buyers was looking at condos just a few weeks ago because he didn’t think he could afford a single-family home, but thanks to the low rates, he can now.”

Despite the drop in mortgage rates expanding the range of homes that buyers can afford, the share of affordable inventory on a $2,500 payment fell 3.6 points in Phoenix, 3.4 points in Las Vegas and 1 point in Orlando year-to-year.

March 12, 2020

Economic Calamity Feels Like 2008 – But It’s Not Even Close

Americans who went through the Great Recession see similar signs today as a pandemic slows travel and slams stocks. But while it’s unclear where this will end, the economy – and the housing market – should be strong enough to withstand a few months of stress.

NEW YORK – A plunging stock market. The widening shadow of recession. It’s beginning to feel a lot like 2008 again.

For many Americans, the stomach-churning market drops and growing recession talk of the past few weeks – triggered by the global spread of the coronavirus – are reviving memories of the 2008 financial crisis and Great Recession.

Take a breath. While the toll the infection ultimately takes on the nation isn’t clear, the economic upheaval caused by the outbreak will likely not be nearly as damaging or long-lasting as the historic downturn of 2007-09.

“A recession is not inevitable,” says Gus Faucher, chief economist of PNC Financial Services Group. “If we do get a recession, it is likely to be brief and much less severe than the Great Recession.”

For one thing, the 2008 financial crisis and recession resulted from years of deeply rooted weak spots in the economy. That’s not the case now.

“What we’re seeing is caused by something external to the economy,” Faucher says.

“It’s closer to a natural disaster,” says Kathy Bostjancic, director of U.S. Macro Investors Services at Oxford Economics.

Partly as a result, the economy’s major players – consumers, businesses and lenders – are much better positioned to withstand the blows and bounce back. Here’s a look at how today’s crisis compares with the meltdown more than a decade ago.

The cause

The Great Recession. The bruising downturn was set off by an overheated housing market. Banks and other lenders approved mortgages – including many to buyers who weren’t qualified – driving up home prices to stratospheric levels. The banks bundled the mortgages into securities and sold them to other financial institutions.

When home prices began spiraling down, millions of Americans stopped making mortgage payments and lost their homes while the banks that held the securities were pushed to the brink of bankruptcy.

Widespread layoffs in real estate, construction and banking hammered consumer spending and led to deeper job losses throughout the economy. Bank lending was virtually frozen, grinding the gears of the economy to a near halt. The problems had been simmering in the housing market and banking system for years.

Now. The coronavirus, which originated in China late last year, has sparked today’s economic hazard. There are now more than 100,000 cases worldwide, most of them in China, and the death toll has topped 4,000. In the U.S., more than 800 people have been infected and at least 28 have died.

Because far fewer people are affected than in 2007-2009, the economic toll has been limited so far. The travel and tourism industry has suffered the most, with businesses canceling conferences and trade shows and consumers scrapping vacation plans. Disruptions to deliveries of manufacturing parts and retail goods from China could temporarily shut down American factories and leave store shelves empty.

As Americans avoid more public places, the virus is likely to hurt sales at restaurants, malls and other venues. There are some signs retailers are already taking a hit.

Household debt

Great Recession. Since banks freely doled out credit for mortgages, auto loans and credit cards, household debt climbed to a record 134% of gross domestic product, according to Oxford Economics and the Federal Reserve. Americans had been saving just 3.6% of their income at the end of 2007. As Americans worked down that debt, spending fell sharply.

Now. Household debt is at a historically low 96% of GDP. Households are saving about 8% of their income. All of that means they can handle a brief slump and continue spending at a reduced level.

“Consumers are in good shape,” Faucher says.

Job losses

Great Recession. Nearly 9 million Americans lost their jobs in the downturn. Unemployment more than doubled to 10%.

Now. Losses are likely to total in the thousands, with travel and tourism and manufacturing enduring much of them, Bostjancic says. The 3.5% unemployment rate, a 50-year low, could rise to 3.8% to 4.1%, says Diane Swonk, chief economist of Grant Thornton.

How long it lasts

Great Recession. With millions out of work and household and business spending decimated, the downturn lasted 18 months.

Now. Assuming the number of cases peak in the next few months and abates by summer, Swonk says any downturn is likely to last six months or so.

The economy

Great Recession. The economy contracted in five of six quarters during the slump, falling as much as 8.4% in late 2008.

Now. Most economists expect the virus to shave growth by 1 or 2 percentage points over the next couple of quarters.

The stock market

Great Recession: The stock market plummeted 57% during the crisis.

Now. The stock market hasn’t seen the same sizable drop that the broader market suffered in the depths of the financial crisis. The Standard & Poor’s 500 slid 14.9% from its Feb. 19 record through Tuesday, teetering on the brink of a bear market, or a drop of 20% from a peak.

Corporate financial health

Great Recession. Corporations had $5.8 trillion in rated debt as of March 31, 2009, according to S&P Global Ratings. Less than two-thirds, or about 65%, was investment grade, which ratings agencies determined was highly likely to be repaid.

A wide variety of companies, including financial institutions, automakers and retailers, collapsed as their revenue plunged. In the automotive sector, for example, manufacturers cut about 278,400 jobs, or about 29% of their collective workforce from January 2008 to January 2010, automakers and suppliers, according to the Bureau of Labor Statistics.

Now. Corporations had $9.3 trillion in rated debt in 2019, according to S&P Global Ratings. But a higher percentage of corporate debt today is considered to be investment grade at 72%.

That said, conditions for repayment are clearly deteriorating. “The stress has been very, very quickly accelerating,” said Sudeep Kesh, head of credit markets research for S&P Global Ratings.

The major sector most likely to fail to make payments on time, as of 2019, was the automotive industry. Another sector facing significant risk is the retail industry, where department stores, mall-based retailers and many other shops have already been struggling.

Though the oil-and-gas sector is expected to be hit hard by the sharp decline in oil prices, the industry is heading into this crisis in decent shape.

Banking regulations

Great Recession. The global financial crisis ushered in sweeping changes to how the U.S. government regulates the banking industry. The new era, which included the Dodd-Frank Act in 2010, required banks to have more cash in reserves to provide a cushion in case the financial system faced economic shocks.

In the U.S., banks with more than $100 billion in assets are required to take the Federal Reserve’s “stress tests,” a move that ensures financial firms have the capital necessary to continue operating during times of economic duress.

“We take comfort in the fact that the U.S. banking sector is very strong and healthy right now,” says Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

To be sure, banks’ profitability could be threatened in the near term if they are forced to tighten lending standards. A historic drop in bond yields recently could pressure banks further because it tends to hurt their profitability.

Now. The magnitude of the challenges the economy faces aren’t as dire as the obstacles during the Great Recession, experts say. Stocks have weathered the storm during past epidemics. Experts say, however, that it is hard to draw parallels between the markets’ swift downturn now to past crashes.

“This isn’t a financial crisis,” says Jonathan Corpina, senior managing partner at broker-dealer Meridian Equity Partners. “This is a global epidemic. This isn’t a flaw in the system that we’re uncovering like the subprime mortgage debacle.”

March 12, 2020

Reinsurance Costs Going Up – Is Homeowner’s Insurance Next?

Backup coverage bought by Florida property insurance companies raised prices 10-60% since 2018, and some are expected to pass that higher cost onto homeowners.

TALLAHASSEE, Fla. – Here’s a grim note for the budget: the cost of insuring real estate is going up. Again.

A sure sign: Reinsurance companies – the ones that sell insurance to insurance companies – have increased rates between 10% to 60% for insurance companies in South Florida, local insurance experts said since 2018. Blame big losses in Hurricane Irma, Michael and Maria. That means property owners of commercial and residential real estate near the coasts will likely see their insurance rates increase.

“Insurance companies are off-setting the risk,” said Doug Jones of the nationwide, Coral Gables-based JAG Insurance. “When the cost of goods gets higher they are passing it along.”

Rates started inching up in the third quarter 2019, said Jason Landa, vice president for the South Florida branch of Aon, the London-based insurance company. Reinsurance went up by at least 1% to 5% depending on the level of risk.

“A lot of these claims take time to be paid out from the time that you assess the damage as well as the risk going forward,” Landa said. “From the time that they assess the damages and the time that the claims have gotten paid out, there’s been some lag time because renewals don’t usually come up until the following year. Most people are getting hit at the time of their renewals.”

It’s a nationwide thing, Jones said. “This is not a local problem. It is going up everywhere. But since the risk is higher here than in [some other locations], pricing is going up here more.”

Insurance experts predict that the rate increases will slow sales activity in coast communities, including Miami Beach and downtown.

For real estate investors, Jones said, “What it’s going to do is possibly affect some of the [capitalization] rates. I don’t know if it is going to be as attractive for a sale, but I believe some people are going to be restructuring their portfolios and try to find areas where they can save money in terms of maintenance and other places to try to get the cap rate back to where it was.”

But rate hikes can be ameliorated, said JAG Insurance Principal Fernando Alvarez, by bringing buildings up to code.

“If the consumer is updating their roof and making sure they have hurricane shutters, they are then applying credits to the account which in turn allows them to get a better rate,” he said.

Hurricane-proof windows and LEED-certificate will also help minimize the rate increase, Landa said.

Copyright © 2020 Miami Herald, Rebecca San Juan. Distributed by Tribune Content Agency, LLC.

March 11, 2020

More than 70% of Couples Argue when Buying or Selling

Study: 54% of buyers argued over a home’s style; 47% over must-have features. Of sellers, 69% tussled over a listing price, when to lower it or whether to accept an offer. While 85% of millennial sellers argued, however, only 54% of boomers followed suit.

SEATTLE – Buying or selling a home can signal the beginning of a new phase in a couple’s life together, but a survey conducted by Harris Polli and commissioned by Zillow found that either transaction can be fraught with conflict.

A vast majority of Americans (77%) who have gone through the home buying process with a significant other in the past decade say they argued over the process. Nearly as many Americans (71%) who sold a home say they also argued over the process, suggesting those two life events may take a toll on relationships.

Buyer disagreements

Of those who argued with a significant other during the home buying process, most (54%) disagreed over the size or style of home to buy, and nearly half (47%) disagreed over a home’s must-have features or deal breakers.

Other conflicts surfaced over the location or neighborhood to buy in (42%), the budget (37%) and whether to buy a fixer-upper (29%).

Nearly a quarter of couples feuded over their mortgage options, such as selecting the right lender or mortgage product.

Seller disagreements

A large percent of millennial sellers, aged 25 to 39, argued with a significant other over selling a home (85%) while a smaller share of baby boomer sellers, 55 years and older, argued about the home selling process (54%), indicating that life experience – and a higher likelihood of being a repeat seller – may help couples weather the tension.

Of couples who argued over the home selling process, a majority (69%) fought about at least one of three financial decisions: what price to list the home for, whether to drop the price and whether to accept an offer.

Many also argued over the following hassles of a traditional sale:

  • Whether or not to make repairs (24%)
  • Strangers walking through the home during open houses (24%)
  • Keeping the house clean for showings (23%)
  • Uncertainty over whether the house would sell or not (21%)