July 6, 2020

Buyers’ Biggest Hurdle in June? Lack of Inventory

Today’s buyers have 27.4% fewer homes to choose from than they did one year ago, though in Fla. it ranges from 31.4% near Tampa to 9.4% in South Fla.

SANTA CLARA, Calif. – Buyer demand has risen thanks to record-low mortgage rates and frustration after spending time quarantined in less-than-ideal housing. As a result, sellers who enter the market find continually rising prices and, many times, competitive bids for their property.

But more sellers may be avoiding a potentially strong summer housing market, according to realtor.com’s June Monthly Housing Trends report. Economists found that housing inventory – the number of homes actively available for sale – continues to decline.

Nationally, housing inventory was down 27.4% year-to-year in June, which translates into 363,000 fewer homes listed for sale.

Some Florida metro areas have an even greater drop in inventory, but some have less. In a year-to-year comparison, four metros showed a year-to-year decline ranging from 31.4% to 9.4%:

  • Tampa-St. Petersburg-Clearwater: Inventory down 31.4%
  • Jacksonville: Down 21.8%
  • Orlando-Kissimmee-Sanford: Down 14.4%
  • Miami-Fort Lauderdale-West Palm Beach: Down 9.4%

Newly listed properties – ones that came onto the market within the past month – may suggest future improvements, and in Florida, one metro area even saw an increase. Also, every Florida metro bested the national average with rates ranging from an 18.6% decline to a 2.5% increase:

  • Tampa-St. Petersburg-Clearwater: Inventory down 18.6%
  • Orlando-Kissimmee-Sanford: Down 17.5%
  • Jacksonville: Down 0.8%
  • Miami-Fort Lauderdale-West Palm Beach: An increase of 2.5%

Nationally, the volume of newly listed properties was down 19.3% over last year – but that’s an improvement over the 44.1% and 29.4% year-over-year declines posted in April and May, respectively.

“Our June data reinforces that buyers are out in force and serious about finding a home,” says realtor.com Chief Economist Danielle Hale. But “inventory continues to decline, indicating that what is coming onto the market is selling.”

Hale says the overall real estate market has shown resilience, “but conditions vary market by market. In particular, the nation’s largest metros are seeing a better new listings trend and smaller increase in the time it takes for a home to sell, which could signal they may lead the recovery.”

© 2020 Florida Realtors®

June 30, 2020

NAR: Pending Home Sales Soar 44.3% in May

The increase broke all records since NAR started tracking the sales. At May’s 99.6, the pending sales level was about equal to those in 2001. NAR’s economist calls it a “spectacular recovery for contract signings” and shows “the resiliency of American consumers.”

WASHINGTON – Pending home sales mounted a record comeback in May, seeing encouraging contract activity after two previous months of declines brought on by the coronavirus pandemic, according to the National Association of Realtors® (NAR). Every major region recorded an increase in month-over-month pending home sales transactions – and the South also experienced a year-over-year increase in pending transactions.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – rose 44.3% to 99.6 in May, chronicling the highest month-over-month gain in the index since NAR started the series in January 2001.

While the increase broke records, however, year-over-year, contract signings fell a slight 5.1%. An index of 100 is equal to the level of contract activity in 2001.

“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” says Lawrence Yun, NAR’s chief economist. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”

“More listings are continuously appearing as the economy reopens, helping with inventory choices,” Yun says. “Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”

According to data from realtor.com, active listings were up by more than 10% in May compared to April in several metro areas.

“The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10% – even after missing the spring buying season due to the pandemic lockdown,” Yun says.

NAR now expects existing-home sales to reach 4.93 million units in 2020 and new home sales to hit 690,000.

“All figures light up in 2021 with positive GDP, employment, housing starts and home sales.” Yun says that in 2021, sales are forecast to rise to 5.35 million units for existing homes and 800,000 for new homes.

The month of May saw each of the four regional indices rise on a month-over-month basis after all were down in April 2020. The Northeast PHSI grew 44.4% to 61.5 in May, although it was still down 33.2% year-to-year. In the Midwest, the index rose 37.2% to 98.8, down 1.4% from May 2019.

Pending home sales in the South increased 43.3% to an index of 125.5 in May – a 1.9% increase year-to-year. The index in the West jumped 56.2% in May to 89.2, down 2.5% from a year ago.

© 2020 Florida Realtors®

June 29, 2020

Will Your Homeowner’s Insurance Weather a Hurricane?

June 28 was National Insurance Awareness Day – a reminder for homeowners to check their current policies and coverages as the nation faces the 2020 hurricane season.

NAPLES, Fla. – This year is shaping up to be memorable in so many ways, including a predicted above-normal 2020 Atlantic hurricane season, according to forecasters with NOAA’s Climate Prediction Center, a division of the National Weather Service.

National Insurance Awareness Day was June 28 to remind people to review their insurance policies and make sure they have the coverage they need. About two-thirds of U.S. homes are under-insured, which could result in financial hardship in the event of storm damage. A study by insurance.com in 2018 learned nearly a quarter of homeowners said they’d never even read their policy.

Now is a good time to review and make sure your homeowner’s policy is robust enough to fully repair or rebuild in the event of a claim. It’s important to understand what your insurance covers and what it doesn’t. Make sure that none of your information – such as residents of the household or pets – needs to be updated. While you are at it, it is probably a good idea to look at your other insurance policies also.

Why is it so important to update your insurance policies with new information? Insurance companies can deny coverage for a loss when there is a “material misrepresentation” by the insured when procuring the policy. These material misrepresentations can be in the form of a failure to disclose a resident relative or a new pet. This can be devastating for someone who has faithfully paid their premiums for years because it may mean you have no insurance coverage for an event that destroys your home.

You should also regularly check to see if you have enough coverage – whether it is coverage for your home, coverage for the contents within your home, bodily injury coverage for your motor vehicle, or under-insured motorist coverage for your vehicle.

Here are things to consider in reviewing your homeowner’s insurance:

  • Are deductibles on your policy sustainable in the event of a claim? Will you be able to cover them if necessary?
  • Have you explored all possible discounts, such as wind mitigation certification or discounts for fire or burglar alarms, new roof or upgraded heating, plumbing or electrical systems?
  • How has your customer service experiences been with the company? Check online resources and ask friends and family to determine what insurers have a good reputation among policyholders. Responsive customer service will be important in the event of a claim.
  • Have you had a major life change, like having a baby or starting a new job? You may need to update your insurance.
  • Have you renovated or built an addition? If so, make sure your policy reflects the change in value of your home.
  • In the event you need to rebuild, does your insurance policy include any extra expenses caused by meeting building codes adopted after your home was built? You may want to add building code coverage, called building law or ordinance coverage.
  • Flood damage, which can come with a hurricane, is usually excluded on homeowner’s policies. Consider purchasing separate flood insurance. Visit FloodSmart.gov for information.
  • If you live in a condominium, what type of insurance does your homeowners association require?
  • Have you evaluated your needs by conducting a thorough home inventory of your possessions?
  • Does your policy provide enough coverage for landscaping, outdoor appliances or storage sheds?
  • Have you started a home-based business? You may need to change your coverage for business liability and equipment.

An annual insurance review can go a long way in protecting what is often your biggest investment. Make it part of your hurricane preparations.

Copyright © 2020 Florida Weekly. All rights reserved. Richard L. Purtz, managing partner of Goldstein, Buckley, Cechman, Rice & Purtz, emphasizes personal injury, wrongful death and insurance claims litigation.

Posted in National News
June 26, 2020

Mortgage Rates Tied to Last Week’s Record Low: 3.13%

The 30-year, fixed-rate mortgage didn’t change but the rest were mixed: The 15-year loan moved a bit higher to 2.59%, while the adjustable-rate loan fell to 3.08%.

MCLEAN, Va. – Mortgage rates changed little this week. According to Freddie Mac’s Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 3.13% – the same as last week’s average.

“After the Great Recession, it took more than 10 years for purchase demand to rebound to pre-recession levels – but in this crisis, it took less than ten weeks,” says Freddie Mac Chief Economist Sam Khater.

Khater things a “rebound in purchase demand partly reflects deferred sales” that were postponed during the height of the pandemic. However, he also sees “continued interest from prospective buyers looking to take advantage of the low mortgage rate environment.”

Mortgage rate snapshot

  • The 30-year fixed-rate mortgage averaged 3.13% with an average 0.8 point for the week ending June 25, 2020 – unchanged from last week. A year ago at this time, it averaged 3.73%.
  • The 15-year fixed-rate mortgage averaged 2.59% with an average 0.8 point, up slightly from last week’s 2.58%. A year ago at this time, it averaged 3.16%. 
  • The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.08% with an average 0.5 point, down slightly from last week’s 3.09%. A year ago at this time, it was 3.39%.

© 2020 Florida Realtors®

June 24, 2020

New Home Sales Rise Surprisingly Strong 16.6% in May

The seasonally adjusted annual rate was higher than analysts expected – many economists predicted a decline. It was also 12.7% higher compared to year-ago numbers.

WASHINGTON (AP) – Sales of new homes rose a surprisingly strong 16.6% in May with the reopening of major parts of the country potentially fueling activity in the housing market.

The Commerce Department reported Tuesday that sales of new single-family homes rose to a seasonally adjusted annual rate of 676,000 last month.

That was a much better performance than expected. Many economists had forecast that sales would fall in May.

The new home sales numbers come just one day after the U.S. reported a 9.7% plunge in May sales of existing homes to an annual rate of 3.91 million, the slowest pace in nearly a decade.

There are hopes that the housing slump that occurred with the virus shutdowns could be coming to an end, though the millions of jobs lost to the pandemic could impede any rebound.

Nancy Vanden Houten, lead U.S. economist with Oxford Economics, said she expected a modest recovery in sales in coming months following the big declines in the first quarter, but she still expects a decline overall this year.

“The slow recovery in the labor market will limit the upside of any rebound in the housing market,” she said.

The median price of a new home rose 4.9% to $317,900 in May after falling by 8.7% in April, a drop that was attributed to heavy discounting by builders in the midst of the coronavirus shutdowns.

The big sales rebound left activity in May 12.7% higher than a year ago.

June 23, 2020

Florida's May Housing Market Shows COVID-19 Impact, Signs of Recovery

Florida Realtors’ data: Closed sales and new listings were down year-over-year due to the virus and economic turmoil. But median prices were up and new pending sales for single-family existing homes rose 2.3% – a positive sign for recovery, notes Chief Economist O’Connor.

ORLANDO, Fla. – Florida’s housing market in May continued to reflect the economic impact of the coronavirus pandemic that shut down businesses and roiled the global economy. While the latest housing data from Florida Realtors® reported lower levels of closed sales and new listings compared to a year ago, median sales price increased and new pending sales for single-family existing homes rose 2.3% compared to a year ago – a positive sign for the housing sector, according to Florida Realtors Chief Economist Dr. Brad O’Connor.

“The most significant evidence we have of a rebound are the year-over-year changes we see for new pending sales in May,” he says. “That 2.3% increase is in significant contrast to what we saw in April, when new pending sales were about 35% lower than the previous April.”

In contrast, new pending sales of condos and townhouses last month fell by 16.8% compared to May 2019, but that’s an improvement over the April figure. O’Connor adds, “New pending condo and townhouse sales are clearly on a recovery trajectory right now, but are simply being surpassed by the more substantial recovery in single-family home new pending sales.”

“As Florida’s businesses and economy continue to reopen, it remains vital for all of us to follow the recommended health guidelines, practice social distancing and take the necessary precautions to safeguard each other and our communities,” says 2020 Florida Realtors President Barry Grooms, a Realtor and co-owner of Florida Suncoast Real Estate Inc. in Bradenton. “The pandemic has shown that having a place to call home is priceless – and all across the state, a buyer or seller can turn to a local Realtor for support, advice and expertise.”

Last month’s closed sales of single-family homes statewide dropped 36.2% year-over-year, totaling 19,622, while condo-townhouse sales declined 50.3%, for a total of 6,069. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

In May, the statewide median sales prices for both single-family homes and condo-townhouse properties rose year-over-year for 101 consecutive months. The statewide median sales price for single-family existing homes was $270,000, up 1.5% 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 $201,472, up 3.3% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Chief Economist O’Connor notes that the drop in closed sales in May wasn’t surprising, based on what the pending sales data in March and April showed. However, “the good news is that this is likely the worst of it for now,” he says. “May’s pending sales clearly show we’re recovering, it’s just that we won’t see this recovery in closed sales until a month or two from now when these deals are finalized.

“Overall, housing demand continues to be driven by record-low mortgage rates that show no signs of rising significantly any time soon. June could be a very strong month for sales given the high levels of pent-up demand that has likely been released in recent weeks. Credit remains tight, but there is some evidence that it’s loosened up a bit compared to where we were in April, as lenders have adjusted to the situation and incorporated new information about the performance of the economy. Lenders continue to face an enormous volume of applications, however, both for purchases and refinancings, which is affecting their ability to accommodate the demand we’re seeing.”

Ultimately, what happens next with the COVID-19 pandemic will affect the long-run outlook for housing in Florida and elsewhere in the U.S., O’Connor says.

“Most of the official economic forecasts from both public- and private-sector economists as of late bake in an assumption that there will not be a major resurgence of the virus this year, which means we should consider those figures cautiously,” he says. “A large second wave of this pandemic is the greatest threat to the housing market and greater economy right now, so it’s important that we all continue to do our part to limit the spread – especially as we continue to try to reopen the economy.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.23% in May 2020, down from the 4.07% averaged during the same month a year earlier.

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

© 2020 Florida Realtors®

June 22, 2020

Recovery Report: Some Cities Topping Pre-Pandemic Home Sales

According to realtor.com’s new weekly report, 8 U.S. cities with robust tech sectors have seen more than a full rebound. In Fla., Jacksonville ranks No. 11 nationally.

SANTA CLARA, Calif. – Local markets with strong tech job creation pre-COVID are bouncing back more quickly than others, according to realtor.com’s Weekly Housing Recovery Report for last week (June 13). Five tech hubs – Denver, Boston, Seattle, San Francisco and San Diego – are seeing real estate markets stronger than they were back in January 2020. The rest of the nation’s cities continue to see a slower real estate market than they did earlier in the year.

In Florida, Jacksonville rises highest on the recovery list at No. 11 nationally, with the market down 0.60% based on the realtor.com index in which a score of 100 is considered the standard for the pre-pandemic real estate market.

“As the market heads into the summer, growth in online home searches and asking prices (on listings advertised on realtor.com’s website) has surpassed pre-COVID levels, but movement in supply and time on market remains well below seasonal pace,” says Javier Vivas, director of economic research for realtor.com.

“But locally the story is much more nuanced,” he adds. “Markets with stronger job creation pre-COVID are proving to have the crucial edge for real estate activity, particularly those with a strong technology sector. As more tech companies weather the storm, the stable jobs and incomes they offer will continue to power demand for homes in these areas, enabling home sales to bounce back faster than the rest of the country this summer.”

The realtor.com Housing Market Recovery Index for the week ending June 13 reached 90.0 nationwide, indicating that the U.S. market is about halfway recovered based on January 2020 levels. This week’s reading was up 1.2 points over the prior week and 10.0 points below the January trend baseline.

An additional four markets have crossed the recovery index benchmark this week – Seattle, Rochester, N.Y., Las Vegas and Los Angeles – taking the total number of markets above their January baseline to eight. Denver (index 107.6), Boston (index 106.7), San Francisco (index 104.5) and San Diego. (index 104.5) had already surpassed January 2020 levels and remain among those leading the recovery.

Florida metro recovery rankings – Recovery Index (base of 100) – Week-to-week change

11. Jacksonville – 97.4 – down 0.60% from last week

13. Miami-Fort Lauderdale-West Palm Beach – 97.2 – up 1.60% from last week

36. Tampa-St. Petersburg-Clearwater – 90.9 – up 1% from last week

42. Orlando-Kissimmee-Sanford – 87.7 – down 1.10% from last week

© 2020 Florida Realtors®

June 19, 2020

Mortgage Rates Again Hit New Record Low – 3.13%

Last week, the average 30-year mortgage rate was 3.21%. The latest weekly FRM rate of 3.13% is the lowest recorded since Freddie Mac started tracking them in 1971.

WASHINGTON (AP) – Long-term U.S. mortgage rates fell this week as the benchmark 30-year home loan reached a new all-time low.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the key 30-year loan declined to 3.13% from 3.21% last week. It was the lowest level since Freddie began tracking average rates in 1971. A year ago, the rate stood at 3.84%.

The average rate on the 15-year fixed-rate mortgage eased to 2.58% from 2.62%.

In recent weeks, signs have pointed to the economy appearing to be slowly recovering from the devastation of the coronavirus pandemic, with more businesses partially reopening. The housing market has shown strength and robust homebuying demand, but it may be difficult to sustain because of the tight supply of homes available for sale, said Freddie Mac chief economist Sam Khater.

The outlook for the economy and housing will be affected by prospects for a vaccine for the virus and government relief measures and policies, Khater noted.

The government reported Thursday that about 1.5 million laid-off workers applied for U.S. unemployment benefits last week, a historically high number, even as the economy increasingly reopens and employers bring some people back to work. The latest figure marked the 11th straight weekly decline in applications since they peaked at nearly 7 million in March.

June 18, 2020

New-Home Starts Rebound 4.3% After Steep Decline

New-home construction bounced back from early pandemic lows, though it’s 23.2% below May 2019 numbers. But building permits, a predictor of future growth, surged 14.4%.

WASHINGTON (AP) – U.S. home construction rebounded 4.3% in May after steep declines caused by shutdowns due to the coronavirus.

The Commerce Department reported Wednesday that new homes were started at a seasonally adjusted annual rate of 974,000 last month after steep declines in April and March. Compared with last year, however, construction activity remains 23.2% below last year’s pace.

Home builders are hoping that as the nation re-opens, housing will post a strong recovery, helped by super-low mortgage rates. Industry analysts caution that the fledgling rebound could be derailed if infections spike again, causing potential buyers to put off looking for a new home.

Hot spots are popping up in regions of the country where building activity is increasing, but not in the South, where housing starts slid.

Applications for building permits, a good indication of future activity, rose a sizable 14.4% in May to an annual rate of 1.22 million units.

The report showed that construction of new single-family homes was up 5.4% while construction of apartments with five units or more increased 16.9%.

Construction was up a huge 69.8% in the West and 12.8% in the Northeast but housing starts fell 16% in the South, the biggest market for home construction, and were down 1.5% in the Midwest.

The National Association of Home Builders/Wells Fargo survey of builder confidence released Tuesday showed a record jump of 21 points in June to a reading of 58. Any reading above 50 indicates a positive market.

However, analysts cautioned that the rebound in housing may not come as quickly as the industry is hoping.

“We look for strong demand, improving homebuilder confidence and an ongoing shortage of supply to support growth in housing starts over the rest of the year, but we still expect starts to be down on average across 2020 overall,” said Nancy Vanden Houten, lead U.S. financial economist at Oxford Economics.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

June 17, 2020

Builder Confidence Surges in June – Housing Rebound Underway

NAHB’s builder confidence index plummeted for two months but surged 21 points in June. Any score above 50 is considered positive territory; this month it rose to 58.

WASHINGTON – Builder confidence in the market for newly-built single-family homes jumped 21 points to 58 in June, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

NAHB calls it “a sign that housing stands poised to lead a post-pandemic economic recovery.” Since any reading above 50 indicates a positive market, the index has returned to positive territory.

“As the nation reopens, housing is well-positioned to lead the economy forward,” says NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, N.J. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising. And buyer traffic more than doubled in one month even as builders report growing online and phone inquiries stemming from the outbreak.”

“Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market,” says NAHB Chief Economist Robert Dietz. “Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods. At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”

All the HMI indices posted gains in June. The HMI index gauging current sales conditions jumped 21 points to 63, the component measuring sales expectations in the next six months rose 22 points to 68, and the measure charting traffic of prospective buyers rose 22 points to 43.

Looking at the monthly average regional HMI scores, the Northeast rose 31 points to 48, the South jumped 20 points to 62, the Midwest posted a 19-point gain to 51 and the West rose 22 points to 66.

The NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

© 2020 Florida Realtors®