Aug. 16, 2018

Home buyers see better price fit in smaller cities

NEW YORK – Aug. 20, 2018 – A couple of years ago, freshly-minted college graduates John and Samantha Reidy crisscrossed North Carolina in search of a place to settle and buy a house.

After hitting seven cities – including bustling millennial enclaves such as Charlotte, Durham and Raleigh – they decided that nearly all of those housing markets had gotten too expensive. So they picked under-the-radar Winston-Salem.

Last year, they bought a house there for $106,000, including repairs, and plan to stay in the area for decades. John is even hoping to persuade his parents to move down from Agawam, Massachusetts.

"We have no intention of leaving," says John, 24, an athletic trainer. Besides its mix of urban amenities and laid-back pace, "Winston was a place we could afford."

The 50 percent runup in U.S. home prices since 2011 is reshuffling the pecking order of hot housing markets. While many midsize metro areas that had been affordable, up-and-coming alternatives – such as Kansas City, Missouri; Nashville, Tennessee; Raleigh; and Salt Lake City – are still coveted by buyers, but their sales are declining or increasing more slowly amid sharply rising prices and shrinking supplies.

Meanwhile, many smaller, more affordable markets – such as Boise, Idaho; Dayton, Ohio; Greenville, South Carolina; and Winston-Salem – are benefiting from an influx of new residents and home sales that continue to climb.

"Even the second-tier markets are getting a little too pricey for a lot of residents," economist Adam Kamins of Moody's Analytics says. "Home prices are not rising as rapidly in the (third-tier) markets … and if you can get a good job there you may find a better quality of life."

In second-tier metro areas – ranked 26th to 50th by population – single-family house prices increased 10 percent in the 12 months ending in the first quarter to a median of $343,000, according to Moody's figures. Sales were virtually flat last year.

In Nashville, the median home price was up 8.6 percent annually at $263,000. That came on the heels of four consecutive years of double-digit price increases, Moody's figures show. In the city and just beyond, the median home price tops $300,000. Nashville is a hotbed for tech, health care and aerospace companies, and its vibrant downtown is a millennial magnet.

But the soaring prices have taken a toll. Homeowners devote 35.1 percent of their monthly income to housing costs, up from a 27.8 percent average over the past 13 years, according to ATTOM Data Solutions. Metro area sales fell 4.3 percent in 2017 year and are down 0.5 percent so far this year.

"Things have slowed down," says Sher Powers, an area broker and president of Greater Nashville Realtors. "It's not a bad thing for the market. It can't sustain itself endlessly. There has to be some correcting. It's still a sellers' market."

Daniel Williams, 32, and his wife searched for an entry-level house for three months and lost out on three bids before finally purchasing a three-bedroom in the Antioch community. But they had to shell out $220,000 for it, well above the $180,000 they had budgeted.

"It makes me nervous," says Williams, an auto mechanic. "I've never owned a home before."

Domestic net migration – the net number of people moving into the Nashville area after accounting for those moving out – slowed to 18,700 in 2017 after topping 20,000 for two years, according to Moody's and Census Bureau data

In Kansas City, another midsize city, home prices jumped 10.3 percent last year while sales fell about 10 percent, according to Moody's. Some buyers have been priced out, but there also just aren't enough homes available.

"We put a house on the market and the same day it's going to be sold," says Andrea Sheridan, a broker and president of the Kansas City Regional Association of Realtors.

By contrast, many smaller cities have a healthier balance of supply and demand, as well as lower prices. In third-tier markets, ranked 51 to 100 by population, prices rose 6.4 percent to $246,000 in the first quarter from a year earlier – below the U.S. median of $264,000 – and sales were up about 1 percent, in line with the national average.

In Winston-Salem, home prices were up about 9 percent annually, but that followed just a 3 percent uptick over the previous two years. And the median price early this year was still a manageable $166,000. The share of monthly income needed to pay housing costs is 22.8 percent, down from a 13-year-average of 24.6 percent, ATTOM figures show.

"Slow and steady has been the Winston way," says Blake Ginther, owner of the Ginther Group Realtors. Home sales leaped 23 percent in 2016 and another 22 percent last year.

Besides its affordable housing and temperate climate, the area – home to Hanesbrands clothing, tobacco giant R.J. Reynolds and BB&T bank – has used its revived downtown and growing health care industry to draw retirees and some millennials, Ginther says.

"You can be away from the city, but you can still get there in 10 minutes," says Reidy, the trainer whose three-bedroom house occupies a half-acre lot.

Domestic net migration to the area rose to 4,300 last year from 3,000 in 2016.

Now, however, some third-tier metro areas are getting pricier as they draw more residents. In Boise, a tech hub that has fast become a hip, more affordable alternative to larger cities such as Seattle and Portland, Oregon, the median house price was up 18.4 percent early this year at $255,000. In Aida County, which includes, Boise, the median was $324,000.

Yet home sales were up 23 percent in 2017 and 2 percent the first half of this year despite historically low supplies, according to Moodys and Boise Regional Realtors.

"We continue to be an attractive place," says Gary Salisbury, a local broker and president of the Realtors group.

Copyright 2018, USATODAY.com, USA TODAY, Paul Davidson

Aug. 9, 2018

Florida's housing market continues positive track in 2Q

ORLANDO, Fla. – Aug. 8, 2018 – Second-quarter 2018 saw increased sales, higher median prices and more new listings for Florida's housing market, according to the latest housing data released by Florida Realtors®. Many local markets continued to report a lack of for-sale inventory, which impacts sales and puts pressure on rising median prices. Closed sales of single-family homes statewide totaled 80,711 in 2Q 2018, up 1 percent from the 2Q 2017 figure.

"During the second quarter of 2018, Florida's economy and jobs sector continued to grow," said 2018 Florida Realtors President Christine Hansen, broker-owner with Century 21 Hansen Realty in Fort Lauderdale. "In June, the state's unemployment rate was 3.8 percent while the U.S. unemployment rate was 4.0 percent. On another positive note, Florida's 2Q 2018 homeownership rate was 65.1 percent.

"Despite tight inventory levels, it's encouraging to see that new listings for single-family homes over the quarter rose 4.9 percent year-over-year, while new condo-townhouse listings rose 3.9 percent. If that trend continues, it will hopefully help ease buyer demand and slow the pace of rising prices."

The statewide median sales price for single-family existing homes in 2Q 2018 was $256,150, up 6.7 percent from the same time a year ago, according to data from Florida Realtors Research department in partnership with local Realtor boards/associations. The statewide median price for condo-townhouse properties during the quarter was $189,900, up 8.5 percent over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Looking at Florida's condo-townhouse market, statewide closed sales totaled 34,376 during 2Q 2018, up 4.7 percent compared to 2Q 2017. The closed sales data reflected fewer short sales – and rising traditional sales – over the three-month period: Short sales for condo-townhouse properties declined 41.4 percent while short sales for single-family homes dropped 45.2 percent. Meanwhile, traditional sales for condo-townhouse units rose 6.8 percent and traditional sales for single-family homes increased 4.3 percent year-over-year. Closed sales typically occur 30 to 90 days after sales contracts are written.

"Through the second quarter, low inventory levels kept the number of single-family sales just barely ahead of last year's pace, whereas a greater selection of condos and townhouses on the market allowed for a nearly 5 percent increase in sales versus last year," said Florida Realtors Chief Economist Dr. Brad O'Connor. "Competition for existing homes remains fierce, with over half of successful single-family home sellers in the second quarter getting above 96 percent of their initial listing prices."

He added that the median time to a contract (the midpoint of the number of days it took for a property to receive a sales contract during that time) dropped during the three-month-period.

"Half of the single-family homes that sold in the second quarter were only on the market for 35 days or less, compared to 39 days or less in the same quarter last year," O'Connor said. "Among condo and townhouse sales, there was a similar-sized drop in this regard, from 50 to 44 days."

Inventory was at a 3.9-months' supply in the second quarter for single-family homes and at a 5.5-months' supply for condo-townhouse properties, according to Florida Realtors.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.54 percent for 2Q 2018, up from the 3.99 percent recorded during the same quarter a year earlier.

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

© 2018 Florida Realtors®  

Aug. 3, 2018

Affordable housing challenge: A look at Central Florida data

ORLANDO, Fla. – Aug. 2, 2018 – Central Florida is facing a growing housing crisis as a shortage of new homes and surging demand is driving up the cost of home prices and rent, according to a two-year study of the issue that Orange County commissioners discussed Tuesday. The scope of the problem is evident in some key numbers.

30%
Affordable housing is defined nationally and in Central Florida as housing costs (mortgage or rent plus utilities) that are equal to or less than 30 percent of a household's total income. A household spending more than 30 percent of its income on housing (mortgage or rent plus utilities) is considered to be cost-burdened, according to the study. A household paying more than half its total income for housing is considered "severely cost-burdened."

230,344
The number of households considered to be cost-burdened in Orange, Seminole and Osceola counties – roughly 1 of every 3 households.

$286,000
The average cost of a house in Central Florida, according to data compiled from the U.S. Census Bureau's American Community Survey (2016).

$58,400
The regional median income in 2017, according to the U.S. Department of Housing and Urban Development. This number coupled with the average $286,000 cost of a house means a worker with a median salary will spend about 32 percent of income on housing. Among those who are "cost-burdened" are teachers, bus drivers, store cashiers and restaurant servers. The median household income in Orange County is lower, at $51,334, up from a decade low of $44,7322 in 2011.

300
The size in square feet of "micro-apartments," which include a kitchenette, small bath and a bed alcove and have been suggested as a possible solution to the shortage of urban apartments.

352,538
The number of households in Orange County, excluding Orlando. Using Census data, figures show 110,199 of those households overpay for housing.

47%
The percentage of households in Orange County that earn under $50,000. An estimated 17 percent earn less than $20,000 a year.

69,769
The estimated number of households who rent housing in Orange County and pay over 30 percent of income.

3,851
The size in square feet of the average home built in Orange County in 2017 – nearly double the size of a house built here in 1985. Single-family homes are larger and more expensive than before.

95-97%
The average occupancy of apartment complexes in Orange County, according to the Apartment Association of Greater Orlando.

4-7 %
The average annual growth in rent percentage from 2014 to 2018, according to the Apartment Association of Greater Orlando.

July 27, 2018

Average mortgage rates edge up – 30-year at 4.54%

WASHINGTON (AP) – July 26, 2018 – Long-term U.S. mortgage rates edged up slightly this week, reaching their highest levels since late June.

Mortgage buyer Freddie Mac says the average rate on 30-year, fixed-rate mortgages rose to 4.54 percent from 4.52 percent last week. Long-term loan rates have been running at their highest levels in seven years. The average benchmark 30-year rate reached a high this year of 4.66 percent on May 24. The rate stood at 3.92 percent a year ago.

The average rate on 15-year, fixed-rate loans ticked up to 4.02 percent this week from 4.00 percent last week.

Home sales haven't marked strong gains this summer despite the healthy economy and job market. Steadily rising home prices combined with higher mortgage rates "appear to be giving more prospective buyers pause," said Freddie Mac's chief economist Sam Khater.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates.

The average fee on 30-year fixed-rate mortgages rose to 0.5 point from 0.4 point last week. The fee on 15-year mortgages was unchanged at 0.4 point.

The average rate for five-year adjustable-rate mortgages held steady from last week at 3.87 percent. The fee increased to 0.4 point from 0.3 point.

AP Logo Copyright © 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

July 26, 2018

The top U.S. migration pattern? New Yorkers moving to Florida

MIAMI – July 25, 2018 – Many people are moving across state boundaries, and migration patterns are growing fairly common in some areas, according to a new analysis of census data from Porch, a home improvement resource.

In total number of relocators over the past five years, the most (33,391) moved from New York to Florida. A number of New Jersey residents also moved, and while most made a short trip across the border to Pennsylvania, 16,1981 headed to the Sunshine State – and at the same time, 12,571 Pennsylvanians headed south to Florida.

Outbound Michigan residents (8,820) and Illinois residents (7,875) also predominately headed to Florida.

In other migrations, Californians who leave likely relocate to Texas. In the past five years, an average of more than 25,000 people left California for Texas, likely drawn to the booming tech industries and lower housing costs.

As a percentage of a state's total population, however, Washington, D.C., North Dakota and Wyoming saw the highest influx of residents moving in from other states, according to the analysis. Alaska saw the most residents moving away.

Relocating most often appeals to young employees, as the study found millennials were the highest percentage of people crossing state borders.

Source: "American Migration: Exploring Where People Move Across America," Porch.com (July 2018)

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

 

July 20, 2018

TaxWatch: Florida is still a low-tax state – No. 42 out of 50

TALLAHASSEE, Fla. – July 19, 2018 – Florida retains its ranking as one of the nation's lowest-tax states, according to the latest study released by Florida TaxWatch. Out of 50 states, Florida ranks No. 42 in the average amount of money paid by residents.

Florida TaxWatch findings

  • Floridians pay an average $5,679 per person in state and local taxes
  • Residents pay an average $2,584 in state taxes – one of the least amounts nationwide. Only the residents of one other state pay less.
  • However, local tax burdens are higher. "Per Capita Local Tax Collections" ranked No. 27 nationally.
  • In the balance between state and local taxes, Florida relies more heavily on local revenue than almost all other states and is No. 2 nationwide. Local taxes account for 53.3 percent of the total.
  • With property taxes, Florida ranks a solid "average" score – No. 25. The state's per capita property tax ranking is right at the median – 25th.
  • Florida also classifies 38.7 percent of its state and local revenue as non-tax revenue (such as "fees") – the 7th largest percentage in the nation.
  • Florida relies more heavily on transaction taxes, such as general and sales taxes. They make up, 81.5 percent of all state tax collections compared to the national average of 47.2 percent.
  • Florida has the highest state and local selective sales (excise) taxes on utilities in the nation. The tax on motor fuels is No. 15; the tax on alcoholic beverages is No. 19.
  • Florida's housing sector produces significant revenue, and the state's documentary stamp taxes are rising rapidly post-recession. It collected an average of $276 per capita in 2006, $72 in 2009, and $130 per capita in 2016 – the nation's second-largest doc-tax burden.
  • Florida is one of seven states without a personal income tax. The average state relies on personal income taxes for 37.0 percent of its tax revenue.
  • Businesses pay 51.7 percent of all Florida state and local taxes – the 12th highest percentage in the nation.

The Florida TaxWatch study is posted online.

© 2018 Florida Realtors®

Posted in National News
July 17, 2018

Florida's GDP hits $1 trillion mark

ORLANDO, Fla. – July 16, 2018 – Florida's gross domestic product topped $1 trillion Friday, an economic output that would make the Sunshine State the world's 17th largest economy if it were an independent country, the state chamber said.

The milestone has been expected. University of Central Florida economic analyst Sean Snaith said the state has been strong in all areas of employment.

"This is really being driven by fundamentals," he said. "This is not just a fluke of an overheated economy."

Florida's economy has grown larger than Saudi Arabia's, Switzerland's and Argentina's, the chamber said.

The economist who authored the study pointed to growth in manufacturing. "Those [jobs] are growing faster here than the U.S. the last few years, " said Jerry Parrish, Florida Chamber Foundation chief economist.

The $1 trillion figure was calculated based on the U.S. Bureau of Economic Analysis' most recent GDP number of $984 million for the fourth quarter of 2017, and a formula that projects current statistics that have yet to be factored in by the bureau, including job growth, goods, services and other factors.

Key factors driving the state's growth that can be seen in Metro Orlando's economy include low unemployment, population growth and tourism. The broad successes in those areas make the $1 trillion figure sustainable, Snaith said.

"The near-term risk of recession is still fairly low," Snaith said. "… Momentum in the labor market, the tax cuts and jobs act, all that has been a force of adrenalin, if you will, for economic growth. Could we drop below that? It's possible, but that would be temporary. This is a mile marker on a longer-run trend as opposed to being fleeting or cyclical."

Florida has been adding $2.7 billion to its GDP each day on average, the Chamber said in its release.

At the start of 2008, the state's GDP stood at $757 billion adjusted for inflation, according to BEA. It dropped to $715 billion by the third quarter of 2009 but has since risen steadily. The $1 trillion projection would represent a 39.86 percent increase.

The Chamber cited unemployment lower than the national average and other factors driving the growth.

"… Florida continues to break visitation records, and our state is continuing to diversify its economy," its release said.

© 2018 The Orlando Sentinel (Orlando, Fla.), Bill Zimmerman. Distributed by Tribune Content Agency, LLC.

July 16, 2018

Renters spend almost 6.5 years saving for 20% downpayment

MIAMI – July 13, 2018 – Renters in expensive California markets can expect to spend more than two decades saving for a 20 percent downpayment on a median valued home, but Florida buyers can do so in about one-third the time.

Nationwide, renters can expect to spend nearly six and a half years saving for a 20 percent down payment on a home, according to a new HotPads analysis. The median home value in the U.S. is $216,000, which means a 20 percent downpayment would be $43,200. If a renter making the median income saves 20 percent of their income each month – as financial experts recommend – they would have enough for a downpayment in 77 months, which is nearly six and a half years.

However, in the three Florida cities included in the study – Miami, Orlando and Tampa – renters must spend more than 6.5 years. It takes longest in Miami (11 years, 5 months) compared to Tampa (6 years, 11 months) and Orlando (8 years, 2 months).

The study looked at the median amount a city’s residents spend on rent, the median value of homes, and the share of income residents spend each month on housing. In calculating a time for downpayment savings, they assumed that households can save 20 percent of their monthly income.

Florida cities

Miami: Residents currently spend 50.1 percent of their income on housing and have a median annual income of $47,398. With a median rent of $2,000 per month and $271,000 median home value, it would take Miami residents 11 years and 5 months to save 20 percent ($47,938) toward a home. However, it would only take them 2 years to save enough for a 3.5 percent downpayment, which is offered by FHA and some private banks.

Orlando: Residents spend 39.2% of their monthly income on housing and have a median annual income of $45,431. With a median rent of $1,485 and median home value of $225,000, it would talk Orlando residents 8 years and 2 months to save for a 20 percent ($45,431) downpayment.  However, a 3.5 percent downpayment takes only 1 year and 6 months.

Tampa: Residents spend 36.8 percent of their monthly income on housing and have a median annual income of $47,140. With a median rent of $1,445 and median home value of $203,700, it would take Tampa residents 6 years and 11 months to save a 20 percent ($47,140) downpayment. However a 3.5 percent downpayment would take only 1 year and 3 months.

Nationally, the median rent is $1,480 per month, up 2.5 percent from a year ago. Experts recommend spending no more than 30 percent of income on housing expenses, but the typical U.S. renter spends 34 percent of their income on housing.

In the country’s most expensive housing markets like San Jose, Los Angeles and San Diego, it could take renters 22 years to save up a 20 percent downpayment on the median home, assuming they can afford to set aside 20 percent of their income each month – and renters in these markets spend more than 55 percent of their income on rent.

Meanwhile, it will take a typical renter in Pittsburgh, Cleveland, Detroit and Indianapolis less than four and a half years to save a 20 percent downpayment. Renters in these markets spend 30 percent or less of their income on housing, making it easier for them to save.

“Home prices are outpacing incomes in many of the country’s largest markets, which makes saving for a home more difficult,” says Joshua Clark, economist at HotPads. “On top of that, the current generation of first-time buyers is dealing with unprecedented levels of student debt, making the downpayment a major factor keeping young renters out of the housing market even though many young people say they have ambitions to buy. While some high earners may manage to save more than the recommended 20 percent of their income or may have the good fortune of windfalls such as family assistance, inheritance or large bonuses, most young adults struggle to save. Sustained increases in home values and rents suggest that lower downpayments may become more popular as first-time buyers continue to be pinched on both sides of the market.”

In 2017, about 29 percent of first-time buyers put down between 3 and 9 percent on their home purchase.

© 2018 Florida Realtors®

July 9, 2018

Real estate Q&A: Looking for your dream house? Here’s help!

FORT LAUDERDALE, Fla. – July 6, 2018 – Question: We have been having trouble finding our dream home. The few homes we have seen have been snatched up before we could even make up our mind, or the seller has shot us down. We want the perfect home for our family but don't know what to do! — Amelia and Kelly

Answer: We are in the middle of a hot seller's market, and this can make it more difficult for buyers to find the home of their dreams.

Since interest rates on home loans are still reasonable, I can understand why you feel it is a good time to buy. Because it is a hot market, the best way to find a home for your family is to be prepared.

First, understand that the whole concept of a perfect home is a myth! The reality is that you need a home in good repair, at the right price and in the best location for your family. Understand that the "perfect" home is really the perfect home for you. Make a list of the features that are most important to you _ be it a garage, large closets, proximity to good schools, etc. _ and try to find a home that checks as many of those boxes as possible.

When looking at the house, remember that selling a house can be as emotional as buying one. Do not make the mistake of telling the seller how you are going to tear out the wallpaper they love or want to renovate their kitchen. Remember that you are going to need them to agree to sell the house to you.

Once you find the home, you are going to want to make your offer as attractive as possible. Have your financing pre-approved and be willing to make a realistic down payment. If your lender can close your loan quickly, that is a big plus. Have your home inspector set up and ready to go, your insurance agent in place, and your closing attorney chosen.

Once your seller is on board with selling you their home, do not get too excited. Well, getting excited is a good thing, actually, but not so excited that you rush in and make a mistake. Make sure you understand the contract you are signing, and if you have questions, get them answered. Pay close attention to all of the deadlines in your contract, especially the inspection and financing deadlines, and if your loan falls through or the inspections shows large problems, cancel the deal in time to get your deposit back.

Fortunately, most transactions where the buyer is well-prepared and organized fly through without a hitch. Happy hunting!

About the writer: Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He practices real estate, business litigation and contract law from his office in Sunrise, Fla. He is the chairman of the Real Estate Section of the Broward County Bar Association and is a co-host of the weekly radio show Legal News and Review. He frequently consults on general real estate matters and trends in Florida with various companies across the nation.

Copyright © 2018 Sun Sentinel (Fort Lauderdale, Fla.), Gary M. Singer. Distributed by Tribune Content Agency, LLC.

July 3, 2018

Freddie Mac to nix full appraisals for some condo loans

MCLEAN, Va. – June 29, 2018 – Freddie Mac announced that consumers buying a condo or refinancing an existing condo mortgage may now be eligible for its automated appraisal waiver.

Originally launched in 2017 for single-family home loans, Freddie's automated collateral evaluation (ACE) appraisal waiver allows eligible condo borrowers to save money if the lender decides that a traditional appraisal isn't needed. Freddie says that could save buyers approximately $500 in fees and allow them to close 7-10 days faster.

"We continue to see the share of condo loans we purchase increase, especially among first-time homebuyers," says David Lowman, executive vice president of Freddie Mac's Single-Family business. "ACE for condos will help increase the efficiency of the mortgage origination process, offer greater certainty, and help save our clients, and their customers, time and money."

ACE assesses the need for a traditional appraisal by "leveraging proprietary models and using data from multiple listing services (MLSs) and public records as well as a wealth of historical home values to determine collateral risks," according to Freddie Mac.

To find out if a condominium property is eligible for an ACE waiver, lenders must submit loan data through Loan Product Advisor, Freddie Mac's automated underwriting system. If ACE determines that the estimated value or purchase price of the condo is acceptable, the lender may receive immediate representation and warranty relief related to the value, condition and marketability of the property upon delivery of the loan to Freddie Mac.

However, lenders and borrowers always have the choice to either proceed with an ACE appraisal waiver or obtain a traditional appraisal.

ACE for condominium purchases and refinances will be available after July 16, 2018.

More information about Loan Advisor Suite is available online.