April 23, 2019

Florida's housing market: Pending sales, median prices up in March

ORLANDO, Fla. – April 22, 2019 – Florida's housing market reported more pending sales, higher median prices and increased inventory (active listings) in March compared to a year ago, according to the latest housing data released by Florida Realtors®. Sales of single-family homes statewide totaled 25,013 last month, about the same level as March 2018.

"Along with low mortgage rates, the pressure on home prices is easing due to increased inventory, which is a positive trend for housing affordability and could encourage some buyers to enter the market,"says 2019 Florida Realtors President Eric Sain,

In March, statewide median sales prices for both single-family homes and condo-townhouse properties rose year-over-year for the 87th month-in-a-row. The statewide median sales price for single-family existing homes was $256,000, up 2 percent from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month'sstatewide median price for condo-townhouse units was $189,500, up 3.6 percent 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 February 2019 was $251,400, up 3.6 percent from the previous year; the national median existing condo price was $534,140; in Massachusetts, it was $377,000; in New York, it was $280,000; and in Maryland, it was $273,762.

Looking at Florida's condo-townhouse market in March, statewide closed sales totaled 10,340, down 6.1 percent compared to a year ago. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

According to Florida Realtors Chief Economist Dr. Brad O'Connor, March is typically a busy month for real estate in Florida and March 2019 was no exception.

"On a statewide basis, more homes typically go under contract in March than in any other month of the year," O'Connor says. "And compared to March of last year, new pending sales of single-family homes this March were up by 2.6 percent to a total of 31,383. In fact, this is the highest number of new pending sales we've seen in any month across the previous 11 years in which Florida Realtors has tracked this statistic.

"New pending sales in the condo and townhouse category, by the way, were also up, rising by one percent from last March's total. Of course, not all homes that go under contract end up as closed sales, but this is a pretty good sign for the market going into spring."

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.27 percent in March 2019, compared to the 4.44 percent averaged during the same month 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.

© 2019 Florida Realtors®

April 22, 2019

Central Florida cities among fastest growing in U.S.

ORLANDO, Fla. (AP) – April 19, 2019 – When it came to population growth last year, cities in central Florida grew by stadiums.

Metro Orlando grew by 60,000 residents last year, almost as large as the number of people who can fit into the city's Camping World Stadium, where college football bowl teams face off each winter.

The Tampa area grew last year by 51,000 residents, more than the number of fans who can fit into Tropicana Field, where the city's Tampa Bay Rays play baseball.

Growth from mid-2017 to mid-2018 propelled these two metropolises into the top tier of the nation's fastest growing metro areas, according to figures released Thursday by the U.S. Census Bureau.

Only Texas grew by more people than Florida last year, and the addition of tens of thousands of new residents to central Florida cities will increase the importance next election of the Interstate 4 corridor, already the swingiest part of the nation's biggest swing state. That explosive growth also helps Florida's chances of getting additional congressional seats – and presidential electors – after the 2020 census.

Orlando had the nation's fifth largest increase for metro areas in pure numbers, surpassed by only Dallas, Phoenix, Houston and Atlanta. Tampa came in at No. 9.

In Tampa, the growth was completely driven by new arrivals. Without that inbound migration, Tampa would have lost population – deaths outnumbered births by almost 900 people. About two-thirds of the new arrivals came from U.S. states.

In Orlando, that migration dynamic was flipped, with about two-thirds of the new arrivals coming from outside the 50 U.S. states. After Hurricane Maria devastated Puerto Rico in September 2017, tens of thousands of Puerto Ricans moved to the Orlando area, but Thursday's Census release didn't detail how many of Orlando's new arrivals came from the island.

About a sixth of metro Orlando's population growth last year came from the natural increase of more births than death, and the rest was fueled by migration.

The intense growth wasn't limited to large cities and included smaller metros along Interstate 4, the east-west highway that slices through the center of Florida, the nation's third most populous state with 21.3 million residents.

The Lakeland-Winter Haven area, midway between Tampa and Orlando on Interstate 4, had the nation's fourth-largest growth rate at 3.2 percent, surpassed by only Midland, Texas; Myrtle Beach, South Carolina; and St. George, Utah.

The Villages, the retirement community northwest of Orlando, grew by 3.1 percent, placing it at No. 6 for growth rate.

While growth is an economic driver of construction and consumption in these cities, there are also consequences, such as Orlando's and Tampa's struggle to keep up with affordable housing, officials said.

Orlando ranked No. 1 and Tampa was No. 9 among large metro areas with the most severe shortages of rental homes affordable to extremely low-income households, according to a recent study by the National Low Income Housing Coalition.

Given the traditionally low wages in tourism, Orlando's most visible industry, affordable housing is a top priority for county officials who are trying to expedite the approval process to get more reasonably priced housing built, said Olan Hill, assistant manager in the planning division of Orange County, the largest county in metro Orlando's four-county area.

"We have to create the carrot to entice developers to build more affordable housing options," Hill said.

South Florida

South Florida remained Florida's largest metro area, and one of the biggest in the nation. The area that includes Miami, Fort Lauderdale and West Palm Beach had a population of 6.2 million people, making it the seventh-largest in the United States.

Although more than 58,000 residents left South Florida last year, their flight was offset by an influx of almost 93,000 residents from abroad and a natural growth of almost 15,000 people.

Since the last decennial census in 2010, South Florida and metro Orlando have both grown by the size of a medium city. South Florida added more than 632,000 people, and metro Orlando added 439,000 people, raising its population to 2.6 million.

The Florida Keys declined by 1,600 residents last year, with most of the drop from people moving away. Hurricane Irma, in September 2017, severely damaged 4,000 homes in the Keys, and most of them belonged to the archipelago's affordable housing stock, said Helene Wetherington, Monroe County's disaster recovery director.

"I absolutely suspect that many folks simply relocated if they couldn't find alternative housing," Wetherington said.

AP Logo Copyright 2019 The Associated Press, Mike Schneider. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

April 18, 2019

More homes go solar to save money, protect environment

NEW YORK – April 17, 2019 – Over the past six years, solar energy capacity has more than doubled in 45 of the 57 largest U.S. cities, producing enough electricity to power nearly one in every 11 homes, according to an annual industry survey.

While Los Angeles and Honolulu are the leading urban areas on the study's top 10 list, researchers found that solar energy production is not just a "sun coast" phenomenon but includes cities in Indiana, Colorado and Texas.

"The difference between cities leading on solar energy and those that are lagging is effective public policy at the state and local level," said Abigail Bradford, co-author of the sixth annual report on U.S. solar energy capacity from 2013 to 2018.

A second nationwide study, released Tuesday, found that U.S. homes with solar-energy systems sold for an average of 4.1 percent more than non-solar homes.

Conducted by the real-estate firm Zillow, the research ranked 84 million homes over the past year. Zillow analysts noted that the solar-energy sales boost varied by market – 5.4 percent in New York, 4.4 percent in San Francisco and 3.6 percent in Los Angeles, for example.

"Homes with solar-energy systems often sell for more than comparable homes without solar power," Zillow senior economist Sarah Mikhitarian said in an email. "This premium is largely reflective of the future energy cost savings."

Solar still has its critics, who maintain that the energy source is intermittent – the sun does not shine every day or at night. They also contend that energy storage is expensive and can involve a manufacturing process associated with air pollution.

But its supporters argue that solar's growth is undeniable, thanks to municipal, state and federal incentive programs that include tax rebates. Those, coupled with falling prices for panels and installation, have led to an explosion in solar usage.

According to the Denver-based Environment America Research & Policy Center's six-year rankings of overall solar capacity across America, which was released last week, one-third of the cities surveyed have more than quadrupled their installed solar capacity from 2013 to 2018. The 58-page report noted a push by city officials to expand their renewable energy sectors.

"A dozen cities in our report have made commitments to use 100 percent renewable energy and many more have programs and policies that encourage residents to install solar panels," Ms. Bradford wrote.

In 2015, Hawaii committed to using 100 percent renewable energy by 2045. The capital, Honolulu, was ranked as having the most solar capacity per person, followed by San Diego, San Jose and Burlington, Vermont.

Honolulu Mayor Kirk Caldwell, applauded his city for "making great use of one of our most abundant resources – beautiful Hawaiian sunshine."

Beyond Hawaii, notable leaders in per capita solar capacity include Las Vegas, Indianapolis, San Antonio and Washington, D.C. In overall solar production, Los Angeles leads the nation in total installed solar capacity, as it did from 2013 to 2015 and in 2017.

The report included several policy recommendations at the municipal and state level: Chief among them is that "the soft costs" associated with installation – which include permitting, zoning and inspection processes – should be "easy, quick and affordable."

Additionally, researchers argued that state governments should transition from an electric grid reliant on large, centralized power plants to a "smart" grid where electricity is produced at thousands of more localized solar locations.

© Copyright 2019 News World Communications, Inc.

April 17, 2019

Report: ‘Underinsurance’ rampant in disaster-prone areas

NEW YORK – April 16, 2019 – An uptick in reconstruction costs in certain disaster-prone areas means many homeowners may find themselves inadequately insured for the next catastrophe.

Reconstruction costs have risen by 5.6 to 7.6 percent in some areas over the last year, according to CoreLogic's 2019 Insurance Coverage Adequacy Report. CoreLogic examined potential underinsurance issues in four regional scenarios, such as storm surge risks in the Northeast Atlantic and Gulf Coast regions; wildfire risks in California; and tornado risks in Oklahoma.

Homeowners want to make sure they're carrying the proper amount of insurance as well as the right type of coverage based on current reconstruction costs, researchers say.

"Underinsurance issues can cause financial devastation for property owners, artificially low coverage limits for insurance carriers and increased loan delinquencies," says Amy Gromowski, senior leader of analytics at CoreLogic. "Homeowners who experience natural hazard events, such as California wildfires, are often struck by personal and financial devastation, and many aren't able to rebuild their homes, which prolongs the region's recovery and often causes homeowners to default on their mortgages."

CoreLogic researchers calculated the following underinsurance figures by analyzing reconstruction costs over a two-year timespan for homes that are at very high to extreme risk of being destroyed or damaged in a natural disaster event. Some of the researchers' findings for reconstruction costs include:

Reconstruction costs in Florida increased an estimated 5.6 percent between 2016 and 2018. If 5 percent of homes with very high to extreme storm surge risk were destroyed, the reconstruction cost undervaluation would be approximately $205 million if coverage isn't current.

The state is estimated to have experienced a 5.6 percent increase in reconstruction costs between 2016 and 2018. If just 1 percent of homes at very high to extreme risk of wildfires are destroyed, the undervaluation would equate to approximately $25 million if the coverage isn't current, according to the report.

Houston has had a reconstruction cost increase of approximately 7.6 percent from 2016 to 2018. If flooding in Houston caused 5.4 percent damage to homes at very high to extreme risk, a 7.6 percent undervaluation equates to $49 million if coverage isn't current.

Oklahoma is estimated to have a 6.6 percent reconstruction cost increase from 2016 to 2018. If a severe convective storm caused 20 percent damage to only 1 percent of homes that are deemed at high risk of tornado winds, the reconstruction cost undervaluation is approximately $34 million if coverage isn't current.

Source: "2019 Insurance Coverage Adequacy Report," CoreLogic (April 2019)

© Copyright 2019 INFORMATION INC., Bethesda, MD (301) 215-4688

April 16, 2019

Buyer’s market, seller’s market or something in-between?

BOSTON – April 15, 2019 – Have we arrived at one of those rare Goldilocks moments in real estate, where the market works well for sellers and buyers, strongly favoring neither?

Maybe. Based on the latest national consumer-sentiment survey by mortgage investor Fannie Mae, American consumers appear to think so. They're more positive about the direction of the housing market than they've been in nearly a year. Growing numbers think it's a good time to sell and a good time to buy. They expect their personal financial situations will improve this year, and they believe that interest rates for home loans will continue to remain relatively affordable.

Housing and mortgage economists tend to agree. As Michael Fratantoni, chief economist of the Mortgage Bankers Association, told me: Six months ago, "I was guardedly optimistic. Now I'm just plain optimistic."

Mark Fleming, chief economist of First American Title Insurance, said, "So far in 2019, we've seen mortgage rates decline and wages rise – both trends work to boost homebuying power and fuel greater market potential for home sales."

Yet some economists warn that things are not necessarily as rosy as Fannie's consumer survey would suggest. They point to troubling signs: Total home sales on a national basis continue to decline. That pattern historically has been a leading indicator that prices could fall during the year ahead, ending years of nonstop appreciation. Plus, houses are taking longer to sell; many owners are having to cut their asking prices.

So what's really going on? Some hard facts:

  • Prices are still rising but at a slower rate than in recent years. The median home listing price hit $300,000 last month for the first time ever, a 7 percent jump over the previous year, according to Realtor.com. Fratantoni predicts price increases will moderate to an average of just 4 percent this year, 3 percent next year and 2.5 percent in 2021.
  • A notable percentage of sellers' asking prices are being reduced. In the four weeks ending March 24, prices on nearly 21 percent of all listings nationwide were cut, according to Redfin, the real estate brokerage. Just 16 percent of offers written by Redfin agents encountered bidding wars during the first three weeks of March, compared with 61 percent during the same weeks in 2018.
  • Interest rates have been a great stimulus and are key to a strong spring. Lower rates are good for buyers and good for sellers. Last fall, average rates for a fixed-rate 30-year mortgage hovered near 5 percent, according to data from investor Freddie Mac. In the first week of April, they averaged 4.08 percent. Homeowners and would-be buyers have responded enthusiastically to the lower rates, sending applications soaring by 18.6 percent during the week ending March 29 compared with the week earlier, according to the Mortgage Bankers Association.
  • Inventories of available homes for sale continue to rise, meaning more choices for shoppers, according to National Association of Realtors researcher Michael Hyman. Listings nationwide were up by 3.2 percent year-over-year in February. That's generally a good sign for buyers because it helps keep price pressures down. But homes for sale in the primary entry segment for first-time homebuyers – houses priced under $200,000 – dropped by 9 percent year-over-year, according to Realtor.com, while they grew by 11 percent in the upper price brackets over $750,000.

All this is well and good, said Issi Romem, chief economist for realty marketing site Trulia, but in reality, the housing market is in cyclical slowdown mode. Inventories of available homes may be rising, but part of the reason is that houses are staying on the market unsold for longer times in many areas. The price cuts and longer days-on-market times reveal that significant numbers of "sellers are facing greater difficulties in selling."

What that means is that the Goldilocks theory and perceptions of balance between sellers and buyers may not be quite right. Advantage: buyers.

Copyright © 2019, Richmond Times-Dispatch, Richmond, VA, Kenneth R. Harney. Kenneth R. Harney heads his own consulting firm in Chevy Chase, Md.

April 15, 2019

What makes a house a home? The answer is changing.

For some of us, home is a walk-up apartment that we share with a roommate or two. For others, it might be a house on a leafy suburban street, or a modern glass box overlooking the sea. The variations are endless. The only real universal feature is a roof over your head; everything else that distinguishes a home from mere shelter is different for each of us.

And evolving technology and lifestyles are changing what we want our homes to be.

"With so many entertainment and smart technology options at our fingertips, we find homeowners are spending more time at home. People are focusing on how they truly use a space to reflect how they live, versus what the room is 'supposed to be,'" says Kerrie Kelly, an interior design expert for the online real-estate marketplace Zillow.

For instance, she notes, dining rooms are no longer just a place to eat." Adults work from this space and kids do homework here, making a single-use room more multi-purpose," Kelly says.

"We also see 'library rooms' in lieu of formal dining rooms, with more attention to comfortable seating for taking in a variety of media. And lastly, the laundry room isn't just for washing clothes any more. Pet-washing stations are popping up more frequently instead of laundry tubs."

For city dwellers, she's noticed an increase in conversions of loft-like work spaces into living spaces.

"People are interested in living in an urban environment in order to enjoy culture without getting in the car," she says. "Easily accessible restaurants, entertainment and shopping appeals to all age groups."

The retailer IKEA surveyed people across the globe for its 2018 "Life at Home" report, and found that 1 in 4 respondents said they work more from home than ever before. Nearly 2 in 3 said they'd rather live in a small home in a great location than in a big home in a less ideal spot.

Jeffrey Dungan, an international architect based in Mountain Brook, Alabama, reports that more clients want to use their homes for creative pursuits.

"There's this idea that with the increasing popularity of the Maker movement, and people turning hobbies into successful businesses – whether it's a side hustle or primary income – the home is more and more becoming a place of business," he says. "Home is the place where you can do what you love unapologetically, and as more people turn what they love to do into a business, then in a way their business becomes home."

Dungan worked on a home in Texas where the client wanted a sewing room placed right off the master suite. Other clients are also asking for dedicated spaces such as yoga and art studios.

In IKEA's report, Alison Blunt, co-director of the Centre for Studies of Home at Queen Mary University of London, says there are essentially five things that matter to people when they consider the ideal home: "Comfort, security, a sense of autonomy and ownership, and the capacity for privacy. Home at its core goes back to a sense of belonging."

A survey by the home-furnishings retailer Article in 2018 asked people what it took for them to finally call a dwelling a home. Many responders said it takes a couple of holidays, barbecues, family visits, big sporting events and game nights before they really feel "at home." So feather the proverbial nest however you like, and have fun while you do it. Then invite somebody over.

April 12, 2019

House flipping back to pre-crisis levels

NEW YORK – April 11, 2019 – Although house flipping has risen to nearly the same level as it was during the 2006 peak of the housing boom, a new CoreLogic Inc. analysis suggests that most of the current flips are less risky – and there would be less market volatility if prices decline in the next few years.

According to CoreLogic, flips accounted for about 10.6 percent of homes sold in the fourth quarter of 2018 compared with 11.3 percent in the first quarter of 2006. The 4Q 2018 percentage was the highest fourth-quarter level for flips – defined as homes that have been owned for less than two years – since CoreLogic started tracking the data two decades ago.

However, today's home flippers have significantly larger profit margins than those at the peak of the previous housing cycle, giving them more of a cushion if home prices begin to flatten or fall: They made a median economic profit of almost 23 percent in the fourth quarter compared with 9 percent in the first quarter of 2006.

In addition, the flip market currently is dominated by professionals purchasing older homes that likely need work.

CoreLogic finds that the median age of a flipped home today is 39 years – about a decade older than in 2006.

"Flippers are very different today than they were in the past," says CoreLogic deputy chief economist Ralph McLaughlin. "Even though we see hype and hysteria in popular culture, this isn't necessarily something to worry about."

April 10, 2019

Fannie Mae report: Housing sentiment surges

WASHINGTON – April 9, 2019 – The March Fannie Mae Home Purchase Sentiment Index (HPSI) jumped 5.5 points to 89.8 – its highest point since June 2018 and a reversal from last month's slight decline.

In good news for the real estate market, the index of buyers thinking it's a "good time to buy" rose (up 7 percentage points) along with the seller index that it's a "good time to sell" (up 13 percentage points).

Complementing that rise, more consumers expect interest rates to fall within the next 12 months. That component rose 7 percentage points.

"A brighter housing market outlook drove this month's increase in the HPSI – a welcome sign from consumers as we enter the spring and summer homebuying seasons," says Doug Duncan, senior vice president and chief economist at Fannie Mae. "The results further corroborate the positive effect of falling mortgage rates on affordability, which we expect will help support a rebound in home sales."

Duncan says that job confidence – while little changed from last month – remains positive, while "income growth perceptions" potentially support an uptick in housing demand. The net share of Americans who say they're not concerned about losing their job decreased 1 percentage point to 80 percent – up 9 percentage points year-to-year.

In addition, the net share of those who say their household income is significantly higher than it was 12 months ago increased 2 percentage points to 20 percent, a 3 percentage point year-to-year increase.

© 2019 Florida Realtors®

April 9, 2019

Responsible buyers with low credit get new options

BOSTON – April 8, 2019 – Here's some good news for anyone whose credit scores aren't quite as high as they'd like them to be: Three new financial tools have come to market – or soon will be available – that could give your scores a shot of adrenaline when you need it most.

All three tools come from well-established players: FICO, developer of the ubiquitous FICO score; Experian, one of the national credit bureaus; and CreditXpert, a financial technology company whose products are used extensively in the mortgage arena.

FICO's Ultra score is expected to be widely available from lenders this summer. It raises scores by importing data from your checking, banking, savings and money-market accounts into your credit report when calculating your score. If you have some savings, maintain your bank accounts over time and avoid negative balances, you'll likely get a higher score.

Seven out of 10 consumers who exhibit good banking and savings behavior should see increased scores using Ultra, according to FICO.

Experian's new Boost option, introduced in March and now becoming available nationwide, offers another score-enhancement approach. It imports your on-time utilities and telecom payments and includes positive data into your score calculations, raising scores in the majority of cases.

According to Experian, three-quarters of consumers with scores below 680 saw an increase in their scores from Boost.

The new Wayfinder, from CreditXpert, is different. Working with their loan officer, borrowers select a target credit score they'd like to achieve to qualify for a loan or get the best interest rate and terms possible. The Wayfinder software then runs dozens of scenarios to get the borrower that score within a designated time period by taking steps to modify accounts in their credit reports.

Say you have a 640 score but need at least a 680 to get a lower interest rate. Your loan officer plugs your 680 target into the software, and the program delivers specific steps you can take to achieve that score within days or weeks. Plans might call for a partial paydown of one or more accounts that are needlessly depressing your current score.

But since you may not want to spend the money, Wayfinder offers alternatives that won't cost as much but might take a month or more to complete. Score improvements average around 27 to 30 points but have ranged as high as 179 points, according to CreditXpert.

All three of these tools could be practical if you find yourself in a score pinch. You simply need to ask your loan officer about them.

But Fico's Ultra and Experian's Boost come with a crucial handicap for anyone seeking a home mortgage: Under current regulatory restrictions, the two biggest sources of mortgage money cannot accept the FICO scores they produce.

Fannie Mae and Freddie Mac both confirmed to me that at least for the time being, their underwriting systems don't permit either UltraFICO or Boost. Both can be used for most other credit purposes using Experian credit reports, such as applying for credit cards or auto loans – but not for mortgages destined for purchase by Fannie or Freddie.

Wayfinder, by contrast, is designed for the mortgage market. The higher scores it leads to are acceptable because they reflect credit report changes that can be incorporated into scoring models that Fannie and Freddie have used for years. So if you're seeking a mortgage and need a higher score, Wayfinder is worth mentioning to your loan officer.

Another key fact you should know about Wayfinder: It's not free. It costs about $15 to $18 if you want to run it on your files at each of the big three credit bureaus. Plus, it typically involves "rapid rescoring" of your credit reports by a vendor working with your loan officer, and that can cost an additional $75 to $150.

But if the process lands you a loan that costs thousands less over the years, the small upfront expense should be worth it.

Copyright © 2019, Richmond Times-Dispatch, Richmond, VA, Kenneth R. Harney. Kenneth R. Harney heads his own consulting firm in Chevy Chase, Md.

April 8, 2019

Mortgages more likely now for self-employed clients

WASHINGTON – April 5, 2019 – The two largest sources of mortgage money in the United States want self-employed loan shoppers to know that their chances of getting a home loan approved have increased.

Fannie Mae and Freddie Mac rolled out automated underwriting technology changes for lenders that take a lot of the guesswork and risk out of the approval process when the self-employed apply for a mortgage loan.

Lenders have been reluctant to approve loans for the self-employed because, in part, it's expensive, time-consuming and labor-intensive to gather and analyze the paperwork needed to verify income and gauge risk. It's much easier and profitable for them to process applications from wage or salaried employees who get a W-2 issued by their employer.

But this new technology, incorporated into the companies' automated underwriting systems, enables lenders to analyze a self-employed applicant's paperwork quickly and accurately, and they can come to a decision in a fraction of the time it used to take – and with far less speculation involved.

The process potentially increases efficiency so much that even small community banks in rural areas can find it cost-effective to consider loan applications that they might have passed on before.

Source: Fannie Mae and Freddie Mac

© Copyright 2019 INFORMATION INC., Bethesda, MD (301) 215-4688