Monthly Archives: July 2020

Will New Facebook Video App Be Your Next Tool?

Would short interactive video clips set to music help you sell a house – or yourself? Facebook debuts its Instagram Reels this week – an attempt to compete with TikTok.

NEW YORK – Get ready for another social media site: In early August, Facebook will launch its own version of TikTok known as Instagram Reels. The video platform allows users to create interactive short clips set to music.

Most Realtors® use social media apps daily to communicate with clients, with the top social media outlets for professional use Facebook, LinkedIn and Instagram, according to the National Association of Realtors’ (NAR) 2020 Member Profile. Real estate pros say it’s worth their time because they get some business and inquiries from the mediums.

They can now add another social media site to the growing list. Instagram Reels seems to be similar to TikTok, which has its highest audience among teens and young adults. It’s currently being piloted in France, Germany, Brazil and India and expected to be available in the U.S. in early August, according to Facebook.

“The community in our test countries has shown so much creativity in short-form video, and we’ve heard from creators and people around the world that they’re eager to get started as well,” a Facebook spokesperson told media about the upcoming launch of Reels.

The Instagram Reels app will have several video editing features, such as countdown timers and tools to adjust the video’s speed and playback. Users will be able to create and post 15-second videos set to music or other audio, similar to TikTok. It will also connect to Instagram and allow users to share videos to their Stories or on their profiles.

Facebook is quickening its launch as TikTok continues to face increased scrutiny. India recently banned the app in June, and the Trump administration has hinted at a similar ban, citing reasons related to national security and the TikTok’s ties to China.

Snapchat has also reportedly been testing navigation similar to TikTok for its public video content, as have YouTube and smaller platforms.

Source: “Watch Out, TikTok: Facebook Launching Rival Video Editing App Called Instagram Reels,” USA Today (July 19, 2020) and “Instagram Confirms Its TikTok Rival, Reels, Will Launch in the U.S. in Early August,” Tech Crunch (July 26, 2020)

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55-Plus Market: Builder Confidence Surges in Second Quarter

The index measuring attitudes about 55-plus communities jumped 27 points to 65, according to NAHB. The index has now returned to pre-pandemic levels.

WASHINGTON – Builder confidence in the single-family 55-plus housing market bounced back in the second quarter, jumping 27 points to 65, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI).

The 55+ HMI measures two segments of the 55-plus housing market: single-family homes and multifamily condominiums. Each segment measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic).

“Low supply of existing homes and low interest rates are key factors in helping the 55-plus housing market bounce-back to where it was at the beginning of the year,” says Harry Miller III, chairman of NAHB’s 55+ Housing Industry Council.

All three index components that make up the 55-plus single-family HMI posted gains in the second quarter:

  • present sales increased 24 points to 72
  • expected sales for the next six months surged 36 points to 70
  • traffic of prospective buyers rose 28 points to 46

The 55-plus multifamily condo HMI increased 18 points to 47, and all three index components that make it up also increased:

  • present sales rose 14 points to 50
  • expected sales for the next six months increased 25 points to 52
  • traffic of prospective buyers rose 25 points to 39

All four components of the 55-plus multifamily rental market also rose in the second quarter:

  • present production increased 9 points to 56
  • expected future production rose 12 points to 54
  • present demand for existing units increased 11 points to 61
  • future expected demand posted a 15-point gain to 64

“Like the broader housing market, we are seeing the 55-plus housing market return to pre-pandemic levels,” says NAHB Chief Economist Robert Dietz. “However, challenges such as rising lumber costs and availability of skilled labor will limit a more robust recovery.”

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The Top Three Coronavirus Real Estate Myths?

A bad time to sell? Well, no. It may not seem like it to those outside the real estate industry, but buyer demand continues to outstrip seller supply. And many people are stuck in the last recession, expecting home prices to drop – but that won’t happen anytime soon.

CHICAGO – Some Americans think that high unemployment rates and news about the recession naturally lead to weakness in the housing market. But they’re wrong.

Homebuyers who enter the market may be in for a surprise, and homeowners may be missing out on top listing opportunities if they believe some common myths. Consider these two recent housing report headlines based from the National Association of Realtors®:

  • Contract Signings Make a ‘Remarkable’ Move
  • Existing-Home Sales Surge to Record Pace in June

Realtor.com listed current COVID-19-related myths:

Myth #1: It’s a bad time to sell a home

Homeowners may be skittish with unemployment so high and a pandemic raging on. How could it possibly be a good time to sell?

In reality, many buyers frantically want a place to call home, but many homeowners are choosing not to sell. New-home listings plunged 14% in early July compared to a year earlier, and total for-sale housing inventory is 32% year-to-year, according to realtor.com’s Weekly Housing Trends report for July 11.

“Given the pandemic and uncertainty it’s caused, the general sentiment [among some owners] is that now is not a good time to sell your home,” says Danielle Hale, realtor.com’s chief economist. “Yet so far, the data suggests the opposite – that buyers outnumber sellers in the housing market, which means it’s better to be a seller than a buyer.”

Homebuyers eager to purchase are creating bidding wars as they compete for limited inventory.

“Multiple offers could be fairly common over the next few months,” says Lawrence Yun, NAR’s chief economist.

Myth #2: Home prices are dropping

This myth could be a remnant of the last recession over a decade ago, but home prices are actually rising. During the first quarter of 2020, the national median price for single-family homes increased 7.7% to $274,600. “We’re seeing home prices (currently) grow faster than pre-COVID-19,” Hale says. “In fact, they are on pace with the home price growth we saw this time last year.”

Record low mortgage rates boost buying power, Yun adds, “and when combined with a lack of supply will result in higher and higher home prices.”

Myth #3: Everyone is rushing to the suburbs

Urban centers pose more challenges for social distancing during a pandemic than less densely populated areas, and there’s generally a higher interest in the suburbs right now. In May, the number of views on properties in suburban ZIP codes rose 13% – nearly double the views that listings in urban areas received, according to realtor.com research.

“We have seen homebuying demand recover faster in the suburbs and rural areas than urban areas,” Hale says. “There’s also evidence of home shoppers in cities hit early and hard by COVID-19, such as New York and Philadelphia, seeking homes in nearby smaller communities at a higher pace, like the Poconos.”

But not everyone is leaving the city. This myth may be partially centered on the wealthy, who can afford to move, but it’s not easy for everyone to pick up and move.

“This pandemic, although bad, will eventually pass,” says Karl Jacob, CEO of LoanSnap. “And when it does, are people really going to stop wanting to be in a city? I just don’t think that’s the case. Even though you can get delivery from GrubHub every night, it doesn’t mean you’re never going to want to go out to a restaurant; and if you have to drive 30 minutes to a restaurant versus being able to walk around the corner, that’s a different lifestyle.”

Source: “5 Coronavirus Real Estate Myths Everyone Thinks Are True – Debunked,” realtor.com® (July 30, 2020)

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Fair Housing: HUD Charges Landlord Over Rent Payment Timing

Previous owners allowed a disabled tenant to pay his rent after a disability check arrived, but a new owner refused. HUD calls it a “reasonable accommodation.”

WASHINGTON – According to a charge filed by the Department of Housing and Urban Development (HUD) against a Georgia landlord, a “reasonable accommodation” under the Fair Housing Act doesn’t have to be some kind of building modification. In this case it referenced only the timing of a rent payment.

HUD charged Tzadik Georgia Portfolio, LLC, and Tzadik Management Group, LLC, housing providers operating in Albany, Georgia, with discrimination. HUD alleges that the companies refused to grant a tenant with disabilities a reasonable accommodation request.

In the Georgia case, the tenant moved into the property on Jan. 31, 2008, and signed a lease that allowed the property manager to charge a penalty if rent wasn’t paid by the fifth day of the month. However, the tenant has a disability that prevents him from working, and a monthly disability check is his only source of income, so he verbally asked the original owner if he could pay his rent late without penalty – immediately after his disability check arrived – and that owner agreed.

The building was later sold, and then next owner also honored the original verbal agreement.

After a third property sale in April 2018, however, the new owner allegedly balked at the late-payment arrangement, and the tenant was charged a $100 penalty in June. The tenant explained the agreement he made with the earlier owners, but the new owner said there wasn’t anything in the files, though it waived the fee that month as a courtesy.

In July, however, the new owner added the late-payment fee and by August 6, the tenant received a notice to quit, according to HUD, saying he would be evicted if he did not pay August’s rent plus $200 in late fees. The situation continued to escalate until HUD became involved.

“HUD is committed to ensuring that individuals with disabilities are protected under the Fair Housing Act,” says HUD Principal Deputy General Counsel Michael Williams. “Providing reasonable accommodations is an essential part of a housing provider’s legal obligation to make housing available to persons with disabilities.”

HUD’s charge will be heard by a United States Administrative Law Judge. If the judge finds that discrimination has occurred, he or she may award damages to the complainant for harm caused by the discrimination. The judge may also order injunctive relief and other equitable relief, payment of attorney’s fees and fines to “vindicate the public interest.”

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RE Investment Trusts Were Prepared for a Recession

REITs – which trade like stocks that invest in real estate – learned lessons and were preparing for a new recession. As a result, they avoided the worst of the downturn.

NEW YORK – REIT (real estate investment trusts) management teams have been saying that they learned some important lessons from the global financial crisis that pushed them to shore up financial strategies and improve liquidity. Those lessons are being put to work amid mounting financial pressures emerging in the wake of COVID-19. A REIT invests in real estate but ownership is traded similar to stock trades.

“The best time to make strategic moves is before a crisis, not during it,” says Todd Kellenberger, REIT client portfolio manager at Principal Global Investors. “Many REITs took those lessons from the last downturn and made a strategic decision this cycle to strengthen balance sheets by reducing leverage, extending and staggering maturities, and ensuring that they have the liquidity and cash on hand to be opportunistic or weather the next storm.”

The listed REIT market certainly entered the economic disruption caused by the pandemic on stronger financial footing compared to the eve of the great financial crisis. The majority of companies have delevered with leverage ratios at the end of 2019 at or near their lowest level in more than two decades, and analysts tend to agree that most companies are relatively well prepared for a recession. REITs have also improved liquidity by expanding revolving credit facilities and increasing the use of unsecured debt.

At the same time, REITs are bolstered by last year’s record $109.36 billion raised in equity and debt from public capital markets, nearly double the $55.63 raised in 2018. Between 2009 and 2019, REITs raised $440 billion in equity capital.

“In most cases, we do not see a deterioration in this discipline and expect most REITs will benefit from solid balance sheets and robust liquidity near-term,” says Chris Wimmer, vice president, real estate at DBRS Morningstar. “That said, some sectors, such as lodging and discretionary retail, are feeling the economic brunt of the pandemic more than others. We view these property types as the more likely to exhaust liquidity in the near term,” he adds.

Although REITs are leaning on lessons learned in the 2008-2009 recession, management teams have been forced to adapt strategies to a highly fluid situation with a myriad of unique challenges.

“The arc of history is that the past always rhymes, it doesn’t repeat,” says Michael Knott, U.S. head of REIT research at Green Street Advisors. The last recession was a financial crisis, while the current situation is a double whammy of a public health and economic crisis. “So, it is not balance sheets and liquidity being directly under fire, it is the durability of the cash flow promised by leases,” he says. “We’ve seen unprecedented government actions and the closing down of society that is pressuring the basic concept of a lease contract and the durability of cashflows that normally provides.”

Focus on preserving liquidity

The pandemic swept through global economies with amazing speed, triggering business closures and a spike in unemployment that put REIT cash flows in jeopardy. REITs responded quickly by taking steps to maintain liquidity in order to sustain operations in a highly uncertain and still volatile climate.

Across the board, REITs have suspended earnings guidance for the rest of the year, followed by moves to tap lines of credit, suspend or reduce dividends, halt share buyback plans, reduce executive compensation, and delay cap-ex and development projects.

“In general, the collective memory of the downturn in 2008 and 2009 is still pretty fresh. So, you have seen some pretty aggressive steps being taken in terms of preserving liquidity and maximizing flexibility,” Knott says.

Specifically, companies have initiated massive drawdowns on lines of credit with some staggering numbers in some cases, notably in the lodging sector. REITs also moved quickly to make changes to their dividend payouts.

Park Hotels and Resorts Inc. (NYSE: PK) said it would suspend dividend payments following the payment of its first quarter 2020 dividend. Macerich (NYSE: MAC), meanwhile, was one of the first REITs to cut its dividend. The company announced March 16th that it would not only reduce its dividend by one-third, but also pay a majority of the remaining dividend in stock.

In response to efforts by Nareit (National Association of Real Estate Investment Trusts) to help REITs conserve capital, the Treasury Department and the Internal Revenue Service said May 4 that public REITs could use up to 90% stock to satisfy their distribution requirements through 2020.

Another strategic move has been extending lines of credit where possible. For example, Simon Property Group, Inc. (NYSE: SPG) expanded its line by $2 billion and extended it three years by pushing it out to 2025. “That is not as sensational of a headline as someone drawing down their entire line of credit, but it is a very good liquidity-preserving move,” Knott says.

For its part, Camden Property Trust (NYSE: CPT) further strengthened its liquidity position with the issuance of a 10-year, $750 million senior unsecured note. That deal represented the REIT’s largest ever bond issuance, as well as its lowest ever coupon on a bond. The deal also helped to reopen the bond market, notes Alex Jessett, CFO at Camden.

“We are very hopeful that the rest of our REIT brethren will take advantage of that, because we believe that the stronger we are as an industry, the more beneficial it is for each of us individually,” he says.

As of mid-May, Camden was sitting on about $1.5 billion in liquidity, including almost $600 million of cash and cash equivalents and no outstanding amount under its $900 million senior unsecured credit facility. Camden doesn’t have any debt maturities until 2022, when it has $100 million in January and $350 million in December.

In addition, the REIT put a temporary delay on a planned development in Plantation, Florida, where only minor site work had been completed. It made sense to temporarily delay that project out of an abundance sense of caution and with the hope that the REIT may be able to obtain some additional pricing power in construction costs in the coming months that could be beneficial, Jessett says.

REITs adopt defensive strategies

REITs across the board have moved into a more conservative “just in case” mode of cash preservation. That was especially the case at the early onset of the coronavirus in the U.S. in late February and early March, amid panic on Wall Street that was fueling uncertainty on how financial markets might hold up during the pandemic.

For those that had lines of credit, it was better to draw on that cash, because they weren’t sure if they would have the ability to do so later if they waited, Kellenberger notes. “Since then, we have seen tremendous amount of backstop from a fiscal and monetary standpoint, really ensuring that there is ample liquidity in the broader financial markets,” he says. Nonetheless, REITs have continued to execute on different strategies ranging from upsizing lines of credit to putting a freeze on new hiring.

“We run our business very conservatively and felt that it was prudent to enhance our cash position during this time of uncertainty,” says Sumit Roy, president and CEO of Realty Income Corp. (NYSE: O).

The company had raised approximately $730 million in equity in late February at favorable pricing. In addition, the REIT has taken a number of steps, including borrowing an additional $1.2 billion under its revolving credit facility and pricing a 10-year, $600 million bond issuance that put its total liquidity position at $2.9 billion as of mid-May.

“As we modeled our capital needs into the next year, we overlaid fairly draconian downside scenarios and determined it was in the best interest of our shareholders to prepare for the worst and then some, and to build our cash reserves as an insurance policy,” Roy says.

Those measures give Realty Income financial flexibility to cover potential liquidity needs in the near-term without having to rely on what could be an increasingly volatile capital markets environment, Roy notes.

One move the REIT has not made is reducing its monthly dividend, which it views as an integral part of the firm’s brand as the “monthly dividend company.” “While we do not anticipate any changes to our dividend strategy going forward, this is another financial lever available to us, although we continue to view the dividend as sacrosanct,” Roy says.

Lodging, retail bear the brunt

REITs across the board face challenges ahead with the Federal Reserve’s economic forecasts for 2020 predicting a contraction in GDP of 6.5% and an unemployment rate of 9.3%. However, the impact will be very different across property sectors and geographic regions.

Hospitality and retail cash flows have been hit hardest by the business shutdown and tenant requests for rent relief. In addition, some geographic markets have been more severely impacted by others. Additionally, economies that rely more heavily on tourism and convention business, such as Las Vegas, Orlando and San Francisco, face a tougher recovery ahead, even as businesses begin to reopen.

Lodging REITs have had to respond quickly to a freefall in occupancies and revenues. Park Hotels and Resorts, for example, moved aggressively by drawing down its entire $1.3 billion line of credit as it has more leverage on its balance sheet than its peers due to a prior MandA deal, Knott notes.

Host Hotels and Resorts, Inc. (NYSE: HST) also drew down its entire $1.5 billion line of credit and is sitting on almost $3 billion in cash, Knott says. That shows how both ends of the spectrum are taking similar steps, which points to the severity of the situation related to diminished cash flow and deep challenges facing the hotel sector, he says.

“For retail and hotels, we expect near-term cash flows to be impacted meaningfully,” Kellenberger adds. That being said, most companies have been able to draw on lines of credit or revolvers or rely on cash on hand that will allow them to go through a cash burn for an extended period of time. Other sectors that are experiencing very little rent defaults or deferrals are in a stronger cash flow position and would be able to weather a downturn or recession for an even longer period, he adds.

Many REITs in the lodging, gaming, and retail sectors have reduced or suspended dividends. “That makes sense. Those companies won’t be rewarded right now if they continue to pay cash out when they are likely to have so little coming in the door,” Kellenberger says.

Poised for opportunities

It remains to be seen how deep and how long the COVID-19-related financial crisis may last, and it is unlikely that REITs will escape the current economic challenges unscathed. Management teams will still need to operate carefully, keep close tabs on their portfolios, and execute careful strategies to deal with the impacts of the pandemic.

However, strong balance sheets will buy REITs more time in being able to weather the storm, and for some, the ability to access “dry powder” puts them in a good position to capitalize on opportunities that may arise to add value for shareholders.

“When we went out and made a conscious decision to have one of the best balance sheets in the REIT industry, it certainly wasn’t so we could congratulate ourselves on an achievement. It was because we recognized that those REITs that had the best balance sheets were the ones that were going to produce over the long period the best shareholder return,” Camden’s Jessett says. “Very strong REITs have the ability to take advantage of opportunities when others are sitting on the sidelines. So, we certainly will be looking to take advantage of opportunities out there.”

A silver lining

Camden isn’t the only REIT on the lookout for expansion opportunities. During recent video interviews with Nareit, several REIT CEOs expressed confidence that they would be in a position to expand their businesses in the wake of the coronavirus crisis.

Ramin Kamfar, chairman and CEO of Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) said the REIT is fortunate to have a “significant amount” of cash and access to capital. The REIT has already signed up one post-COVID deal and is looking at additional opportunities. “We think there’s going to be plenty of opportunities to take advantage of as we go through this downturn,” he said

Agree Realty Corp. (NYSE: ADC) increased its acquisition guidance for the year to $700-800 million at the end of April from $600-700 million. Joey Agree, president and CEO, said “we’re seeing a lot of opportunities given the dislocation we see in the market today.”

Lou Haddad, president and CEO of Armada Hoffler Properties, Inc. (NYSE: AHH), noted that this is the fifth recession the REIT has weathered. The company’s response to the crisis has been to work with tenants, conserve cash, and get ready to outperform its peers once the crisis clears. “We want to be ready to take advantage of what should be a lot of opportunities in the market come the latter part of this year and 2021,” Haddad said.

Kimco Realty Corp. (NYSE: KIM) CEO Conor Flynn said the REIT is “well-positioned” to take advantage of market dislocation, noting that the Kimco has prepared for a downturn by transforming its portfolio and prioritizing liquidity. “This time around we’re in a position to be opportunistic, recognizing that we do think there’s going to be some dislocation both from the private side and from potentially the public side,” Flynn said.

© 2020 States News Service

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The 9 Rules a Tenant Is Most Likely to Break

What goes on behind closed doors? 1 in 4 tenants makes holes in the wall, mainly from nails – and 13% secretly replace damaged furnishings, fixtures and fittings.

NEW YORK – Landlords know that not every tenant is perfect, but a study attempted to uncover which rules they break the most. On the upside, they found that the most common offenses focus on decorating and aren’t too serious.

The top offense? One in four tenants make holes in walls – often from nails. It’s most common among renters aged 25 to 34, according to the tenant survey conducted by iProperty Management.

Also, one in five renters (19%) say they’ve completely redecorated a property without their landlord’s permission.

Interior decor aside, tenants have many times hidden pets from their landlord, though more men than women committed this infraction: 16% of male renters confessed to it compared to only 10% of females, the survey found.

In addition, not all renters submit maintenance requests and wait for their landlord to do repairs. Many take matters into their own hands, which sometimes costs them a notable amount of money. Renters surveyed said they’ve spent an average of $480 on maintenance and improvements – requests usually covered by the landlord. Men tend to spend more, an average of $528, or about $100 more than women.

Broken down by age, renters aged 35 to 44 invested an average of $586 in the maintenance and improvement of their rental, more than any other age group. The fixer-uppers say they’ve paid to replace old fixtures, while 61% spent money on interior-decoration maintenance and 52% spent money on maintaining their garden.

Overall, 28% of renters think there are too many rules for tenants, and 16% believe those rules are too strict. In addition, 33% of renters believe tenancy rules make their property feel like less of a home.

Rules most often broken by tenants

  1. Making holes in walls: 25%
  2. Redecorating: 19%
  3. Secretly replacing damaged furnishings, fixtures and fittings: 13%
  4. Keeping a pet: 12%
  5. Making a late rent payment: 10%
  6. Smoking indoors: 7%
  7. Changing locks: 6%
  8. Subletting a room or the whole property (long or short term): 5%
  9. Removing or disabling fire or carbon monoxide alarms: 4%

Source: “The Secret Lives of Tenants,” iProperty Management (2020)

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Fed Has Dim Outlook As Virus Squeezes Economy

Federal Chair Powell said the ongoing pandemic threatens a modest rebound in early summer, and that the Fed will keep interest rates near zero well into the future.

WASHINGTON (AP) – Federal Reserve Chair Jerome Powell warned Wednesday that the viral epidemic is endangering the modest economic recovery that followed a collapse in hiring and spending this spring. As a result, he said, the Fed plans to keep interest rates pinned near zero well into the future.

That faltering economy, pressured by a resurgence of the virus, has heightened the need for Congress to continue providing significant financial aid, Powell said. Members of the House and Senate are negotiating a new package but are nowhere near agreement. Senate Republicans and the White House are proposing a plan that would provide less help for unemployed Americans than they are now receiving.

Speaking at a virtual news conference after a two-day Fed meeting ended, Powell said the economy had rebounded after nearly all states lifted their broad business shutdown measures in May. But since then, he noted, as new confirmed cases have soared, measures of spending and hiring have slipped or plateaued at low levels.

“Now that the cases have spiked again, the early data … suggest that there is a slower pace of growth at least for now,” he said. “We don’t know how deep or for how long it will be.”

The economic stumble, amid the worsened viral outbreak, underscores the connection between the virus and the economy’s ability to sustain any recovery, the chairman said. This point was also highlighted in the Fed’s statement, which added a new sentence: “The path of the economy will depend significantly on the course of the virus.”

That observation was an acknowledgement that uncertainty about when the health crisis might be solved has complicated the Fed’s ability to set interest rate policy.

It’s also a point that Powell has made, in one way or another, for months as most states have succeeded only fitfully in controlling the virus and the ability of businesses to stay open. And it suggested that Powell and the Fed envision a prolonged recovery that will depend in large part on how well the U.S. can contain the pandemic.

“A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities,” Powell said.

In the meantime, he said, “We are committed to using our full range of tools to support the economy. We will continue to use these powers until we are confident we are solidly on the road to recovery.”

Yet despite its concerns, the Fed announced no new policies. It said it will also continue to buy billions of dollars in Treasury and mortgage bonds each month, which are intended to inject cash into financial markets and spur borrowing and spending.

William English, a finance professor at Yale School of Management and former top Fed official, said that Powell stressed that he wanted to see more comprehensive data, such as next week’s July jobs report, before taking further steps.

“He acknowledged the softer high frequency data but didn’t put a huge weight on it,” he said. “He took the weight off that by emphasizing the uncertainty.”

Powell also said that Congress had helped spur the modest economic recovery that occurred in May and June, when spending at retail stores and restaurants surged and employers added 7.5 million jobs. Still, that amounted to just one-third of the jobs lost in March and April.

“In a broad sense, it’s been well spent,” Powell said of the $2 trillion package Congress approved in March. That legislation provided $600 in jobless benefits a week and set up a small business lending program.

“It’s kept people in their homes, it’s kept businesses in business.”

Yet “there will be a need for more support from us, and from fiscal policy,” Powell said, referring to Congressional tax and spending powers.

Congress is in the early stages of negotiating an economic relief package that might extend several key support programs, such as the expiring $600-a-week unemployment benefit. That benefit will likely be reduced in any final legislation.

With the two parties far apart, the federal jobless benefit will likely lapse for at least several weeks for about 30 million people who are unemployed. That would likely slow consumer spending and weaken the economy.

Economists say the Fed has time to consider its next policy moves because short- and long-term rates remain historically ultra-low and aren’t restraining economic growth. Home sales have picked up after falling sharply in the spring. The housing rebound has been fueled by the lowest loan rates on record, with the average 30-year mortgage dipping below 3% this month for the first time in 50 years.

Still, with the economy struggling just to grow, small businesses across the country in serious danger and unemployment very high at 11.1%, the pressure is likely to increase on the Fed to take further steps. Few investors expect the Fed to hike interest rates for years to come. After its previous meeting last month, the Fed signaled that it expected to keep its key short-term rate near zero at least through 2022.

The Fed’s overall message that it would keep rates low indefinitely with the economy in a severe downturn was widely expected by investors, and reaction in financial markets was muted. Stocks maintained their gains, and Treasury yields held steady.

Most analysts say they think the Fed’s next move will be to provide more specific guidance about the conditions it would need to see before raising its benchmark short-term interest rate from zero.

Economists call such an approach “forward guidance,” and the Fed used it extensively after the 2008-2009 recession. Some Fed watchers expect no rate increase until 2024 at the earliest given the bleak outlook for the economy and expectations of continued ultra-low inflation. But by providing more certainty for investors about when a rate hike may occur, forward guidance can help keep longer-term rates lower than they might otherwise be.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. AP Economics Writer Martin Crutsinger contributed to this report.

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Five Ways Brokers Can Support Struggling Team Members

People react differently to a stumbling economy and pandemic shutdown, but brokers can take steps to help their at-risk agents avoid burnout and stay involved.

SAN FRANCISO – People react differently to a stumbling economy and pandemic shutdown, but brokers can take steps to help their at-risk agents avoid burnout and stay involved.

For one, they should actively check in with each agent, such as through weekly calls, even when nothing is wrong. Even if someone says they’re fine, you can know they’re struggling by watching brokerage metrics, such as when an agent doesn’t log into the company CRM for an extended period of time.

By checking the transaction management platform, brokers can see who created transaction rooms and started to fill out paperwork and who did not.

These red flags suggest someone is disengaging from the company or with real estate in general. When red flags are detected, the broker or team leader should try to have a face-to-face conversation with this person – with proper pandemic precautions – and give them their full attention. In some cases, the leader may be able to offer guidance and assistance. In other cases, the situation may be out of anyone’s control.

It might not help to push an agent to stay in real estate when they need to feed their family and bring home a reliable paycheck. Brokers should accept that not all agents will make it, and the industry drop-out rate is very high.

Source: Inman (07/16/20) Ramus, Erica

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The Return of McMansions? They Answer Pandemic Buyers’ Needs

Locked-in city buyers want more space in their new home, so a large McMansion is appealing and, to city dwellers, the small lot isn’t much of a deterrent.

NEW YORK – As the pandemic compels people to spend more time indoors, experts say home buyers are increasingly searching for larger spaces with so-called McMansions apparently back in fashion, says Sonia Hirt, dean of the University of Georgia College of Environment and Design.

“The suburban home that was so stereotypical and boring suddenly proved itself to have benefits we’ve completely forgotten about,” Hirt says.

A recent report by the National Association of Realtors® found that the median size of an existing home was 2,060 square feet prior to the coronavirus pandemic. For new homes, however, the median size was 2,291 feet, according to the National Association of Home Builders. Architects say they expect those medians to increase in the next year.

“It’s being driven by people looking for the right combination of functionality and price,” says Ken Perlman, managing principal at John Burns Real Estate Consulting. Families want more room to accommodate adult relatives who might have moved in due to the pandemic. College students and young adults also opted to move back home due to stay-at-home measures and the economic situation.

“We’re going to see another bump in multigenerational living,” says Donna Butts, executive director of Generations United. “By combining resources, they can afford a bigger house or a more comfortable lifestyle.”

Source: Realty Biz News (07/27/2020) Wheatley, Mike

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Mortgage Rates Head Below 3% for Second Time

The average 30-year, fixed-rate mortgage averaged 2.99% this week, according to Freddie Mac – only a tick above its all-time low of 2.98% set two weeks ago.

WASHINGTON (AP) – U.S. average rates on long-term mortgages declined this week, remaining near historic lows as the key 30-year loan slipped back below 3%.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year home loan eased to 2.99% from 3.01% last week. The benchmark rate hasn’t fallen below the 3% mark for 50 years. By contrast, the rate averaged 3.75% a year ago.

The average rate on the 15-year fixed-rate mortgage fell to 2.51% from 2.54% last week.

Homebuying demand continues as one of few bright spots in the economy, with the recovery stagnating and economic indicators pointing to slow growth and possible persistent high unemployment, Freddie Mac said. The government reported Thursday that the economy shrank at an alarming 33% annual rate in the April-June quarter, when the coronavirus outbreak shut down businesses and threw tens of millions out of work. It was the steepest drop in the gross domestic product in records dating to 1947.

As the virus surged in the South and West in recent weeks, many states halted plans to reopen businesses and millions of consumers have delayed any return to traveling, shopping and other normal economic activity. In yet more evidence of deepening economic pain, the government reported that more than 1.4 million laid-off Americans applied for unemployment benefits last week.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Jumbo Mortgages No Longer the Cheapest Rate in Town

A jumbo mortgage – one that’s larger than Fannie Mae or Freddie Mac will later buy – presents a higher risk to lenders. Before the pandemic, banks considered these buyers more reliable and their rates were low, but the market now favors lower-loan borrowers.

NEW YORK – According to Bankrate.com, the average rate on a 30-year jumbo mortgage hit 3.77% in mid-July – more than 0.4 percentage points above the average rate on smaller, conforming loans.

That’s a switch from convention vs. non-conventional (jumbo) mortgage rates before the pandemic hit. From mid-2015 until this spring, jumbo rates were consistently lower than, or equal to, the rates on conforming loans.

In recent years, banks have favored jumbo mortgages for their relatively low risk level, since jumbo borrowers tend to be wealthier. In March, however, the Federal Reserve agreed to buy an essentially unlimited amount of mortgage-backed securities.

“The loans that get made are those that have a ready buyer for them,” says Greg McBride, chief financial analyst at Bankrate.com. “Government-backed loans are really the only game in town.” If a lender knows that Fannie Mae or Freddie Mac will buy a conventional loan, it represents less risk. If they must keep that loan or find a non-government buyer, it represents higher risk.

In addition, jumbo loans aren’t entitled to forbearance under the CARES Act, which allows homeowners to request up to 12 months of postponed mortgage payments. However, private lenders may offer some type of forbearance option of their own.

As a result, the share of jumbo loans in forbearance stood at 10.2% in mid-July – higher than the 7.8% rate among all mortgages, according to Black Knight Inc. Some banks might be quick to grant relief on jumbo loans since they’re often holding those loans rather than selling them to investors, which leaves the banks more exposed if the loans go bad.

Lenders have been raising credit standards for all sorts of loans since the coronavirus hit, ensuring that only the upper echelon of potential buyers could access jumbo credit. Applications for loans of at least $625,000 filed in May were down about 5% from the same time last year, according to the Mortgage Bankers Association.

Beyond the influence of the pandemic, though, jumbo-loan originations were already fluctuating. They reached $80 billion in the first quarter of 2020 – down about 22% from late 2019 but up 25% from the same time last year, said Inside Mortgage Finance.

Source: Wall Street Journal (07/27/20) McCaffery, Orla

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Negotiating repairs with an AS IS contract

A home is inspected. The buyer wants the seller to make some repairs even though it’s an AS IS contract. The seller isn’t obligated to do repairs – in fact, the seller isn’t obligated to respond to the request at all. So what do you say when a buyer asks, “What do we do now?”

ORLANDO, Fla. – One of the most popular contracts Florida Realtors has available for members is the Florida Realtors/Florida Bar “AS IS” Residential Contract for Sale and Purchase (“FR/Bar AS IS”). As the name implies, the seller listed the property “as is,” which means the seller has no obligation to make repairs.

However, many Florida Realtors Legal Hotline calls involve a buyer requesting repairs from a seller after the inspection results come in during the inspection period. While nothing prevents parties from renegotiating the terms of an existing contract, it’s important to understand the nuances and risks in doing so in order to facilitate a smooth transaction.

It’s imperative to recognize this: There is no obligation on the seller’s part to make any repairs, nor to even respond to a request for repairs.

As a buyer’s agent, it’s important to communicate this upfront with buyers because you want to have a plan in place if the seller says “no” or simply doesn’t respond. The buyer has a strong right of cancellation during the inspection period, but once that period expires, that’s it. There may be other contingencies within the contract, but the time to cancel for any reason within the buyer’s sole discretion is gone.

In some cases, a buyer hasn’t heard back from the seller, the end of his inspection period is fast approaching, and he isn’t sure what to do. In this case, your buyer must make a decision: Either stay in the deal and potentially take the property “as is” without the requested repairs or cancel before the inspection period ends.

What if a seller agrees to make repairs?

Assuming the seller does agree to a buyer’s repair request, their agreement should be written into the contract under the additional terms or as an addendum to the contract.

While it seems easy enough to jot something down, Realtors should understand the importance of the language used in this repair agreement – and they should also understand the potential liability they’re taking on if they take it upon themselves to draft this addendum.

Is the seller agreeing to fix an electrical problem? Great. But simply stating that the seller will do so is not adequately covering the parties. Far too often, calls to the Legal Hotline involve questions about the way in which the seller completed those agreed-upon repairs. But most of the time, the language used in the repair addendum didn’t address any repair standards or say what would happen if the seller didn’t make the repair at all or did it inadequately by the buyer’s standards.

The Florida Realtors contracts that obligate sellers to make repairs contain additional language regarding repair standards as well as when the repairs should be made. This language isn’t in the FR/Bar AS IS contract.

An addendum that involves many repairs, of varying degrees, likely should be drafted by an attorney to ensure appropriate language is used to protect the buyer and seller.

As stated in articles before, the language in the Florida Realtors contracts varies, and what may be in one isn’t necessarily contained in the other. Recognizing your limitations in assisting your buyer or seller is a good way to avoid running into problems later.

Meredith Caruso is Associate General Counsel for Florida Realtors

© 2020 Florida Realtors

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Dear Anne: Too Many Rules Now for an Offer of Compensation

It used to be simple, but the offer-of-compensation rules now vary depending on whether someone is a member of your MLS and/or association; whether they’re a Thompson broker; whether they’re part of MLS Advantage. And how does MLS of Choice factor into offers?

ORLANDO, Fla. – Dear Anne: I have been in real estate for a long time and it used to be a lot less complicated than it is now. All you had to do is belong to the MLS – that was it. Now it’s different story, and, quite frankly, there is confusion among the rank-and-file on how compensation works and we need answers.

Here is my laundry list of concerns I need you to address. What if…

  • They’re a member of your MLS but not your association
  • They’re a member of your MLS but no association
  • They’re a member of your MLS but an association that isn’t part of MLS Advantage
  • They’re not a member of your MLS but are a member of an association that’s part of MLS Advantage
  • They’re a Thompson broker
  • The broker is a member of the MLS but, due to MLS of Choice, the agent is not

I hope you can clear this up for all our sakes. – We Need Answers

Dear We Need Answers: Well, it looks like I have my work cut out for me. I am the first to admit times have changed and NAR’s MLS policy can be challenging. The best way to tackle this is to address each of your bullet points individually.

Warning: There is a lot of information to cover, so brace yourself for MLS policy overload.

They’re a member of your MLS but not your association

Under NAR’s Board of Choice policy, MLS participatory rights shall be available to any Realtor® (principal) or any firm comprised of Realtors irrespective of where they hold primary (or for that matter secondary) membership, subject only to their agreement to abide by any MLS rules and regulations, arbitrate disputes and pay MLS fees.

For example: If Participant Patti is a member of the Sunset Board, by virtue of being a Realtor member in another board, Patti can join the Sunset Board’s MLS. She does not have to join the board to access the MLS. If Patti is a participant in your MLS, she can offer and accept offers of compensation just like any other user. The fact that she does not hold board membership has no bearing on the unconditional offer of compensation afforded to all participants in the MLS.

They’re a member of your MLS but no association/Thompson Broker

These two subjects are one in the same, so I’m combining them. In Florida, Georgia and Alabama, local Realtor-operated MLSs must allow non-members (affectionately nicknamed Thompson Brokers) access to core MLS services: active listing information and offers of compensation.

For example, Broker Bob is not a member of a local board anywhere, and if he wants to join the MLS, he can. He can offer and accept offers of compensation. He must follow the MLS rules, pay fees, adhere to a standard of conduct, be willing to accept discipline and must submit to arbitration involving commission disputes. It is mandatory for Realtors to arbitrate with non-members who participate in the MLS.

They’re a member of your MLS but an association that isn’t part of MLS Advantage/They’re not a member of your MLS but are a member of an MLS Advantage association

Since these two focus on MLS Advantage, I believe one explanation will suffice. If your association participates in Florida Realtors MLS Advantage Service, the offer of compensation extends to you if you are the procuring cause.

If your association does not a participate in this program, the offer of compensation through MLS Advantage does not extend to you.

Take a look at Article 3 and its sidekick, Standard of Practice 3-1, because it could play a part in whether you get paid or not.

Article 3
REALTORS® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker.

Standard of Practice 3-1
REALTORS®, acting as exclusive agents or brokers of sellers/ landlords, establish the terms and conditions of offers to cooperate. Unless expressly indicated in offers to cooperate, cooperating brokers may not assume that the offer of cooperation includes an offer of compensation. Terms of compensation, if any, shall be ascertained by cooperating brokers before beginning efforts to accept the offer of cooperation.

In a nutshell, if your association does not participate in MLS Advantage or you do not participate in the listing broker’s MLS, it’s important to understand that under Article 3, the listing broker must cooperate with other brokers (member or non-member alike as long as it is in their seller’s best interest). The obligation to cooperate does not include the obligation to pay a commission.

It is the cooperating broker’s R-E-S-P-O-N-S-I-B-I-L-I-T-Y to find out if he or she is going to be compensated by the listing broker, especially if the offer of compensation is not extended through participation in the MLS or MLS Advantage.

If you’re coming into the transaction as a “lone wolf” with no ties to the listing broker through the MLS or MLS Advantage, the offer of compensation, if any, may not be the same as the offer stated in the MLS – it may be different or it may be nothing. If you do reach a compensation agreement, it’s a good idea to get it in writing.

A broker is a member of the MLS but, due to MLS of Choice, the agent is not

Finally, the last one. In 2017, NAR changed Policy Statements 7.42 and 7.43. “MLS of Choice” went into effect July 1, 2018, to give agents a choice in subscribing to any MLS in which their broker participates – but they must choose one or one will be chosen for them.

The question is: Can the broker participant be denied compensation if his agent is a subscriber in another MLS?

I believe the best response to this issue comes directly from NAR’s FAQ on MLS of Choice:

26. Do the offers of compensation expressed in the MLS apply to licensees who receive a waiver of MLS subscription fees?
The offers of compensation in the MLS are between the principal brokers of the firm, and not the licensees affiliated with the MLS Participant. The principal broker can rely on the actions of his or her affiliated licensees to claim entitlement to compensation through procuring cause. That remains unchanged for licensees who receive a waiver of subscription fees. Waived licensees are precluded from using the MLS as the source of any property information, and licensees who violate the terms of the waiver can be subject to sanctions in accordance with the waiver agreement and/or MLS rules.

To learn more about MLS of Choice, visit NAR’s website.

Unfortunately, some folks are under the impression they’re automatically entitled to compensation because they are a licensee or hold Realtor membership. Most of us know this is not how it works. A good rule of thumb is to always ask yourself: Is there a verbal offer? An offer in writing? Does the listing appear in the MLS or MLS Advantage? If there isn’t, you may end up working for free.

Anne Cockayne is Director of Local Association Services for Florida Realtors

© 2020 Florida Realtors®

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Photo Copyright Lawsuits: Agents Keep Getting Sued

You need a photo of a Gulf sunset to sell a beachfront condo. A title company you often use has a perfect photo on its website and surely wouldn’t mind if you use it – so you do. It seems innocent, but the actual photo owners are going after agents claiming copyright infringement.  

ORLANDO, Fla. – You take your own listing photos, but sometimes a webpage or flyer would pop more if you could add a single photo of a Florida beach at sunrise or a palm tree backed by a rainbow. Since you don’t like to rise before 8 a.m. and the forecast doesn’t call for rain, you do a quick Google search, find the exact picture you have in mind and use it. After all, when it comes to marketing Florida’s sunny properties, there are a million photos online, and many even look similar.

Who owns the pictures?

The problem for real estate professionals is that someone, many times a company, owns every single online image.

A bigger problem is a fundamental misunderstanding that an image readily obtainable on the internet is available for use by anyone – this isn’t true. “I found it on the internet” doesn’t mean “I have permission to use it.” In fact, this problem has become so widespread that companies are enforcing their rights, demanding that real estate professionals, among others, pay for illegally using their photos in marketing.

Cease and desist

A large and growing number of Realtors® have received demand letters from photo licensing companies, such as Getty Images, citing their illegal use of an image on their website – but a large percentage of the time, the violation is a mistake and members did not know they were doing anything wrong.

Copyright law is not kind, however, and ignorance of the law is no excuse. Violating the law may carry hefty statutory and civil penalties. Claiming that your website was developed by a third-party vendor who selected photos is also no excuse. If you own the website, you’re liable for the violation. Your website developer may share culpability, but regardless of who selected your site’s images, you may be liable.

Protection tips

How do you protect yourself and your business to ensure that you’re not violating someone’s copyright? First, audit your website and identify all the images you’re displaying. Where did they come from, and how do you know you have permission to use them? If you cannot confidently answer these questions, remove them until you receive confirmation of permission.

What if you already have a demand letter stating that you violated someone’s copyright? Consider consulting an attorney and double-check the image in question. Is it owned by the company demanding payment? If it is, remove it. Then make a business decision and see if you can negotiate a lower fine. Do not ignore such a letter; usually the amount demanded will increase over time.

IDX webpage images

What if a copyrighted image is on your IDX webpage? You didn’t put it there – how can you be liable?

There is a process you can institute to protect yourself from violations within your IDX feed – a “safe harbor provision” under the Digital Millennium Copyright Act (DMCA). This safe harbor provides that you, as the “service provider and/or website provider,” can take five steps to protect yourself if republishing images.

Website operator safe harbor provisions

  • Does not have actual knowledge of the infringing content
  • Is not aware of facts or circumstances from which infringement is apparent
  • Does not receive a financial benefit directly attributable to the infringing activity
  • Acts expeditiously to remove the infringing content when notified
  • Has provided a means for receiving notice of the infringing content, registered a person with the U.S. Copyright Office as the designated agent for notices about infringement, and put the agent’s name, address, phone number and email address on the website

Many agents have their own websites, and their brokers also need to ensure that each individual website is registered with the U.S. Copyright Office as well.

“The statute requires each website to register a person or entity that will receive notice of alleged infringement, referred to as a ‘DMCA /Service Provider agent,’” says Katie Johnson, general counsel and chief member experience officer of the National Association of Realtors. “The Copyright Office form is set up such that one person or entity can be the agent for multiple websites by specifically listing each website on the registration form. Therefore, to be fully compliant with the statute, you must list each of the websites for which you want to act as DMCA agent.”

The first line of defense to avoid photo copyright infringement? Take your own pictures or hire someone to take pictures for you. (If you sign a photographer contract, make sure you understand your obligations and limitations.)

If you use online images, pay the licensing fees to ensure that you comply with the law. If you work with a web developer, consider inserting language into your service agreement that indemnifies you in the event the developer provides an image that infringes on someone’s copyright.

Finally, images are not the only items that are copyrighted: writings, drawings, music, printed material and videos are also a source of risk. When using these materials, follow the same steps to protect yourself.

Your terms of use

Your website should clearly state what someone who suspects a copyright violation should do.
Here is the language that the National Association of Realtors® (NAR) uses (NAR says you’re free to update it with your specific information and use it on your site):

If you believe that your intellectual property rights have been violated by [brokerage name] or by a third party who has uploaded Content on our Site, please provide the following information to the [brokerage name]-designated copyright agent listed below:

a. A description of the copyrighted work or other intellectual property that you claim has been infringed;
b. A description of where the material that you claim is infringing is located on the Site;
c. An address, a telephone number, and an e-mail address where [brokerage name] can contact you and, if different, an email address where the alleged infringing party, if not [brokerage name], can contact you;
d. A statement that you have a good-faith belief that the use is not authorized by the copyright or other intellectual property rights owner, by its agent, or by law;
e. A statement by you under penalty of perjury that the information in your notice is accurate and that you are the copyright or intellectual property owner or are authorized to act on the owner’s behalf;
f. Your electronic or physical signature.

[Brokerage name] may request additional information before removing any infringing material. [Brokerage name] may provide the alleged infringing party with your email address so that that person can respond to your allegations.

[Brokerage name] has registered a designated agent with the Copyright Office pursuant to 17 U.S.C. 512(c). If you believe your copyright material is being used on this Site without permission, please notify the designated agent at:

[Brokerage’s Designated Agent name, address and contact information].

You can read Florida Realtors’ terms of use by clicking the link at the bottom of each webpage.

Where can you get photos?

A number of websites offer quality photos for use once you purchase a licensing agreement. Here are a few examples:

Meredith Caruso is Associate General Counsel for Florida Realtors

© 2020 Florida Realtors®

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NAR Backs White House Move to Change Environmental Policy

National policy oversees U.S. environmental permits, and NAR praised a move to ease restrictions on infrastructure projects, calling it a “win for real estate.”

WASHINGTON – For the first time in more than 40 years, the National Environmental Policy Act (NEPA) will be updated and modernized – a win for real estate, according to the National Association of REALTORS® (NAR).

The change is an attempt to accelerate NEPA environmental reviews and ensure that the U.S. can complete infrastructure projects more efficiently and affordably.

President Donald Trump and the Council on Environmental Quality announced a final rule last week. NEPA laws have often been blamed for blocking and delaying infrastructure projects, and NAR hopes the new regulations help simplify and accelerate the environmental review process for projects, including the nation’s roads and bridges.

“While uncertainty will continue to define the coming months, any action policymakers can take to inject some stability and confidence into our markets is welcomed with open arms by America’s 1.4 million Realtors,” says Vince Malta, NAR’s president. “Since NEPA was last updated four decades ago, the real estate industry has seen countless infrastructure modernization projects paralyzed by arbitrary delays and unreasonable cost increases – barriers which today are felt more heavily because of the COVID-19 pandemic. … NAR applauds the White House’s continued efforts to balance much-needed environmental protections with economic development in America.”

NAR also commended the Trump administration for its commitment to other deregulation reforms, including its work to eliminate barriers to affordable housing.

“With our nation’s economy absorbing a shock unlike any felt in nearly a century … Realtors applaud a comprehensive review of all federal regulations that could further inhibit job creation and prosperity,” Malta says. “As housing affordability continues to plague U.S. markets in spite of economic turmoil, NAR remains supportive of reforms that will eliminate unnecessary regulations, ease inventory constraints and help more people achieve the American dream of homeownership.”

The White House says that 16 pieces of deregulation legislation would soon be signed by Trump.

Source: National Association of Realtors®

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What Do Realtors Want in Congress’s Next Relief Package?

While lawmakers almost universally agree on more relief, they largely disagree on how to spend the money. To present the Realtor perspective, NAR sent a letter to House and Senate leaders. It emphasized a need for housing security, market stability, business aid and more.

WASHINGTON – While lawmakers almost universally agree on more relief, they largely disagree on how to spend the money. To present the Realtor perspective, the National Association of Realtors® (NAR) sent a letter to House and Senate leaders, Speaker Pelosi, Republican Leader McConnell, Leader Schumer and Leader McCarthy.

The letter focused on four broad categories: housing security, market stability, business aid and community durability:

Housing security

  1. Extend federal stimulus measures. The number of mortgages in forbearance is declining, which NAR calls evidence that “federal stimulus provisions such as individual direct payments, small business relief programs and expanded unemployment assistance have helped many Americans.” It asks Congress to extend these measures.
  1. NAR continues to support provisions that allow Fannie Mae, Freddie Mac, FHA, VA and USDA Rural Housing to offer forbearance to mortgage holders, plus any additional efforts that “offer homeowners income flexibility.”
  1. More help for renter households, though NAR suggests that emergency rental assistance programs pay money directly to housing providers.
  1. NAR wants “notice to vacate” CARES Act language clarified to renters financially impacted by COVID-19 – a current requirement for housing providers seeking relief.
  1. More money for housing counseling programs targeted at homeowners who used forbearance options to delay mortgage payments.

Market stability

  1. Clarify CARES Act impact on credit scores – specifically what it allows and prohibits for homeowners in forbearance. NAR says the goal is to make sure homeowners in forbearance remain creditworthy, noting that “anecdotal evidence indicates that lenders and servicers are inconsistently marking homeowners who receive or inquire about forbearance options.”
  1. Maintain access to affordable credit. NAR wants Congress to make sure lenders aren’t “raising costs for consumers seeking credit due to forbearance policies that put a financial strain on the mortgage industry.” Generally, NAR wants Congress to take steps that maintain mortgage market liquidity.
  1. More time to comment on new and proposed regulations. NAR says a nation struggling during a pandemic is overwhelmed and needs more time to prepare for major regulator overhauls.

Business permanency

  1. Create narrowly tailored liability protections, so “good faith efforts to restart businesses are not in vain.” NAR says litigation and the associated legal costs “could devastate businesses fighting to keep their doors open.” It also wants the liability protections extended to independent contractors.
  1. Forgive all Small Business Administration Loans under $150,000 – specifically the Economic Injury Disaster Loans (EIDL) and the Paycheck Protection Program (PPP) – should qualify for automatic forgiveness. NAR says this change would “provide significant relief for the smallest PPP borrowers.”
  1. Continue programs that help businesses during the pandemic and add flexibility. “Expediting forgiveness for those struggling to understand the requirements and also expanding eligibility to 501(c)(6) organizations are simple ways to enhance PPP access for more Americans,” NAR says in the letter. It also says small business shouldn’t face any significant tax liabilities.
  1. Expand unemployment to independent contractors who have only partially returned to full work. While including independent contractors – a common status for most Realtors – was welcome in the first round of aid, NAR says some members have returned to work but at a diminished level. A partial-aid unemployment option would give them much-needed support.
  1. Extend unemployment assistance measures, such as the Federal Pandemic Unemployment Compensation (FPUC). That, or other return-to-work bonuses, could offer workers (including independent contractors) a continued ability to meet their mortgage and rent obligations.
  1. Make changes to the Federal Reserve Main Street Lending Program. Calling the current program “attractive but unattainable,” NAR dislikes the current decreased loan size of $250,000 and calls the minimum employee threshold “unreasonably high.” It encourages the Federal Reserve to make the Main Street Program more accessible to more businesses, including a push to get more banks to participate.
  1. Offer more access to federal loan programs for commercial real estate. “Commercial lending has decreased significantly and commercial tenants are exiting rental agreements at extraordinary rates,” NAR says in the letter. It “urges Congress to provide additional support … through access to funds to keep workers on payroll and meet their business expenses, and prioritizing extending and enhancing loan programs to reinforce commercial business stability.”
  1. Enact nationwide remote notarizations. NAR wants a separate bill – the “Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020” (S. 3533, H.R. 6364, the SECURE Act) – passed too.

Community durability

  1. Aid to local and state governments. NAR says this will “empower targeted community responses,” to promote public safety, and also will protect homeowners if governments feel pressured to pay for their pandemic mitigation efforts by raising property taxes to make up for deficits.
  1. Extensive broadband access. Calling broadband “especially problematic in rural areas,” NAR asks Congress to invest resources in expanding the “connectivity needs of millions of Americans in rural areas and the communities that support them.”

NAR posted a copy of the letter to Congress on its website.

© 2020 Florida Realtors®

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RE Investing: Where to Put Money in an Unpredictable World?

A sponsor is like an orchestra conductor for real estate projects and investors, and success today requires an ability to adapt to changing real estate landscapes.

NEW YORK – One question that real estate investors often ponder is, what does it mean to be a good sponsor? At first glance, it seems that a good sponsor is one who can identify profitable projects and complete these projects in a way that is mutually beneficial to both themselves and their investors.

But this answer, while true, is similar to saying that ‘good food’ is what makes a good meal – if a firm wants to put itself in a position where it can successfully complete profitable projects, it will need to have some guiding virtues to help push itself forward.

There are countless virtues investors in a syndicate want to see including experience, track record, integrity, compatibility, forward-thinking and connectedness. But perhaps more importantly than anything else, a successful sponsor will need to have the ability to adapt to an ever-changing real estate landscape. This is something that was especially apparent in 2008, amidst an almost unprecedented change in the real estate market, and the need for adaptability has also proven itself to be unrelenting amidst the entirety of the COVID-19 outbreak.

As harsh as Darwin’s “adapt or die” philosophy might sound, it is a reality that directly affects firms involved in seemingly every speculative market in existence.

As we are quickly beginning to discover, the market for office space – at least during a pandemic – has proven itself to generate even more uncertainty than the housing market and many other property markets. After all, the need for housing – of some kind – is as old as human civilization itself, whereas the need for office space is something that can fluctuate, depending on the state of the economy and the state of society as a whole.

For example, as a consequence of the unexpected COVID-19 outbreak, workers around the world shifted their work from an office setting to a home setting. Even as some people have begun returning to work, many have discovered that they prefer working from home and that they can do their job just as well (and in some cases, better) from home as they could in their old office.

Suppose that even 12% of former office workers do not return to their original place of employment as this study by Gensler suggests. Even with this rather conservative assumption, this still represents an apparent 12% shift in long-term demand for office space and is not something that can easily be ignored. This sudden challenge, once again, is something that is calling for office owners to think on their feet and quickly adapt.

Changing markets, changing strategies

As some office owners are quickly discovering, succeeding in the current climate requires firms to modify their value proposition. For example, rather than focusing on the uncertain future demand for office space – as inflexible firms might be tempted to do – a firm that is willing to think outside the box and focus proactively on the positives is much more likely to be successful.

For example, shifting to office settings where each employee might require more individual space (as COVID-19 has demanded), and by addressing concerns that tenants have head-on by creating safer and better sanitized office settings, are all ways that firms can get ahead and benefit themselves, their tenants and their investors while their competitors sit stationary and indecisive.

One example of a firm that has experienced this sort of success has been Feldman Equities, an office owner with more than 4 million sq. ft. under management in Tampa, Florida, and who is a GowerCrowd client. Until the pandemic took hold, Feldman’s competitive edge was to focus on creating more office settings by blending work and life into a single location with amenities such as food courts, communal “chill zones” with Wi-Fi, bright well-lit lobbies and expansive gyms; now they focus on safety and hygiene.

By seeing opportunity in the wake of chaos, Feldman has accelerated their efforts to capture market share from other operators in the market. While it may be true that there could be a decline of 12% in demand as that percentage of workers stays at home post COVID-19, or that that may be counterbalanced by the demand for more space per person in offices as a result of the pandemic, what Feldman understands is that a competitive advantage can be gained from the uncertainty.

Spending hundreds of thousands of dollars portfolio wide, Feldman has installed UV light and ionization systems to sanitize the heating, ventilation and air conditioning systems within his buildings. They have installed sanitization stations throughout buildings and provide face masks at no charge to tenants.

“My M.O. has always been that when we go into recessions, we have to outdo our competitions and take market share,” Larry told me in a recent strategy call. “With everybody in panic mode, this is our chance to take market share. A lot of people go into fear and apathy in a situation like this.”

If this year has taught us one thing, it is that all markets have become unavoidably uncertain. But rather than fleeing from risk, it is crucial that we develop an ability and the virtues needed to embrace it. Adaptability, by nature, is a universal virtue because no matter what might happen, those who are adaptable will be able to rise to the occasion. While there are few constants in this world of ours, perhaps paradoxically, the need to adapt to change will always remain at the forefront.

© 2020 Penton Media, National Real Estate Investor. Adam Gower, Ph.D., is an authority in content marketing and online communications for the real estate industry.

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Effective Ads Include a Strong Call-to-Action

You need leads to stay in business, and some of those leads should come from ads. While the ad content and design must be compelling, a call-to-action seals the deal.

NEW YORK – Real estate agents need leads to remain in business, so it’s important to effectively write ads with compelling calls to action to generate more leads.

A call-to-action must motivate a reader to make contact, and it does that by including something their target audience finds worthwhile.

They could offer a free market report, ebook, newsletter, webinar or something else of value to get readers to share their contact information. The offer should be available for a limited time, and readers should understand that the free offer will help them and improve their lives.

It’s also important for their message to be straightforward, given people’s busy lives and short attention spans. There should be no doubt what the reader is expected to do next, using language like, “Act now to get a free market report.”

Some agents even offer monthly home buyer classes, sharing useful information and establishing a rapport with attendees. An in-person event, properly staged to achieve social distancing during the pandemic, makes it more likely that these contacts will become clients when they’re ready to buy.

Among other things, agents should tailor their message to the platform they’re posting on, such as punchy statements and fast updates on Twitter, and video tours on YouTube. Ads should also speak to the demographic they want to reach.

In addition, ads should include a link to their agency contact page to make communication easy; ensure the ad copy, design, and on-page placement are strategically combined to attract attention without annoying people; and craft several calls to action since not all customers will consider a single type of call-to-action appealing.

Source: Better Homes and Gardens Real Estate Blog (01/23/2019)

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Americans with Disabilities Act (ADA) Turns 30 Years Old

The civil rights act signed on July 26, 1990, created new requirements for building owners who were now required to make them accessible for people with disabilities.

WASHINGTON – When President George H.W. Bush signed the landmark Americans with Disabilities Act (ADA) into law on July 26, 1990, he specifically mentioned Lisa Carl, a young woman with cerebral palsy.

Two years before joining the president for that signing ceremony, Carl had gone to a movie theater in her town, and the manager had refused to admit her because of her disability and use of a wheelchair. The manager reportedly said, “I don’t want her in here, and I don’t have to let her in.”

“Lisa Carl … now will always be admitted to her hometown theater,” Bush said at the ceremony. Thanks to the law Bush signed, behavior like the theater manager’s has been illegal in America for 30 years.

The ADA, one of the world’s most comprehensive pieces of civil rights legislation, functions as an equal opportunity law for 40 million Americans by protecting three groups of people: those with physical or mental impairments that substantially limit one or more major life activities, those with a history of such an impairment or those who are perceived by others to have an impairment.

ADA outlaws discrimination in all areas of public life, ensuring that the rights of people with disabilities will be respected and enabling full participation in society – by working, going to school, using public and private transportation, voting, buying goods and services or accessing public places.

The 1990 law made all of that more possible by striking down physical, or architectural, barriers from most buildings and facilities. It mandates that restaurants, grocery stores, schools and theaters be made accessible. It also covers most modes of transportation, such as trains, ferries and buses.

“Before the ADA, about 40% of buses in America were accessible to someone in a wheelchair,” says David Capozzi, director of the U.S. Access Board, a federal agency that supports people with disabilities. “Today, 100% of buses in America are accessible.”

Bipartisan support played a crucial role in passing the ADA. Then-Senators Bob Dole (R-Kansas), David Durenberger (R-Minnesota) and Orrin Hatch (R-Utah) were important advocates of the legislation as were then-Senators Tom Harkin (D-Iowa) and the late Ted Kennedy (D-Massachusetts).

In the House of Representatives, Representative Tony Coelho (D-California) led the movement, with Representative Steny Hoyer (D-Maryland) taking over after Coelho stepped down.

People with disabilities played a big role in getting the law enacted. Disability organizations documented personal stories of discrimination. People with disabilities and their advocacy groups testified before Congress. So did members of the legislative and executive branches of both the federal and state levels of the government.

Amendments to the ADA since its passage cover places like playgrounds, amusement parks, swimming pools and mini golf courses. The law compels companies to make medical diagnostic equipment – such as exam tables, dentist chairs, X-Ray machines – accessible to minimize the transfer distance between such furniture and someone in a wheelchair.

What led to the ADA and how it works

At times, progressive laws in the U.S. are passed by states – often referred to as laboratories of democracy – before the Congress considers them. At other times, as in the case of the disabilities laws, Congress passes narrow measures that first apply to federal government workers only. As such small experiments succeed, they boost the chances for broader legislation.

Before the ADA passed, the Architectural Barriers Act of 1968 mandated that buildings designed and constructed by the federal government be accessible to people with disabilities. Section 504 of the Rehabilitation Act of 1973 prohibited discrimination against people with disabilities in federally funded programs.

The Education of All Handicapped Children Act of 1975 (later renamed the Individuals with Disabilities Education Act) granted children with disabilities the right to a free, appropriate public education, in the least restrictive environment. The Fair Housing Act of 1968 was extended in 1988 to protect people with disabilities from discrimination in that area.

But Capozzi says there were no protections against discrimination for people with disabilities in the private sector or guarantees that all state and local government buildings or programs would be made accessible.

The ADA – inspired by the landmark Civil Rights Act of 1964, which outlaws discrimination based on race, color, religion, sex and national origin – brought wider protections. “It’s not just a paper tiger,” Capozzi says of the ADA. “It’s both very comprehensive but also has a pretty vigorous enforcement mechanism.”

If anyone believes they have been discriminated against, they can file a federal complaint with the U.S. Department of Justice and, depending on state law, a complaint or lawsuit in the state. Guilty defendants typically must make an accommodation or rectify an employment issue and, in some cases, must pay penalties.

“The ADA is a dramatic renewal not only for those with disabilities but for all of us, because along with the precious privilege of being an American comes a sacred duty to ensure that every other American’s rights are also guaranteed,” Bush said at the signing ceremony.

© 2020 ShareAmerica Provided by SyndiGate Media Inc. (Syndigate.info).

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Low-Income Borrowers Less Likely to Understand Credit Scores

Annual credit score survey: The people most likely to need credit – those making $25K and less – have the weakest understanding on how credit scores work.

WASHINGTON – The tenth annual credit score survey, released today by the Consumer Federation of America (CFA) and VantageScore Solutions, LLC, shows that low-income households are most likely to apply for credit in the next 12 months – but they’re also most likely to know less about credit scores than households with higher incomes.

The phone survey of 1,001 representative Americans showed that 20% of households with incomes below $25,000 – but only 13% of those with incomes of at least $75,000 – intended to apply for credit in the next 12 months.

Survey takers asked credit-score related questions to gauge a borrower’s knowledge:

Percent of people, by income, who understood these credit-score concepts

  • Mortgage lenders use credit scores – 95% ($75K+ incomes) – 75% ($25K and below incomes)
  • Credit card issuers use credit scores – 92% – 76%
  • Personal bankruptcy influences scores – 92% – 72%
  • High credit card balances influence scores – 92% – 76%
  • Keeping low card balances can raise scores – 77% – 68%
  • Consumers have more than one credit score – 74% – 43%
  • 700 is usually a good credit score – 83% – 69%
  • CFPB best agency for filing a complaint – 86% – 66%

“At least one-quarter of low-income consumers lack the knowledge to help them raise low credit scores,” says Stephen Brobeck, a CFA Senior Fellow. “This lack of awareness could limit their access to credit or subject them to higher costs.”.

Low-income consumers are more likely than high-income consumers to consider their knowledge of credit scores to be fair or poor – 58% vs. 37%. Probably one reason for this perceived lack of knowledge, as well as less actual knowledge, is that low-income consumers are much less likely to have obtained or received any of their credit scores in the past 12 months – 32% vs. 59% for high-income consumers.

CFA and VantageScore developed and co-sponsor an interactive website, CreditScoreQuiz.org, that consumers can use to test their knowledge of credit scores. The website includes a 12-question quiz, available in both English and Spanish.

While low-income consumers had the least amount of knowledge about credit scores, a large number of all consumers still lack important basic knowledge:

  • Only 22% know that on a $20,000, 60-month auto loan, a borrower with a low credit score would likely pay more than $5,000 in interest compared to a borrower with a high score. Low scores may qualify borrowers for subprime auto loans only, with annual interest rates frequently exceeding 20%.
  • Only 33% know that a credit score typically measures the risk of not repaying a loan. 14% think that it measures knowledge or attitude toward consumer credit.
  • Only 50% know that an electric company can use credit scores to determine the amount of a required deposit.
  • 48% think that a person’s age is a factor used to calculate a credit score. However, only one’s use of credit actually influences their score.
  • 42% think that credit repair companies are always or usually helpful in correcting any credit report errors or taking other measures to improve one’s credit score. But most experts say these companies tend to charge relatively high fees to do something consumers could do for free.

The Consumer Federation of America is an association of more than 250 non-profit consumer groups that, since 1968, has sought to advance the consumer interest through research, education, and advocacy. VantageScore Solutions, initially developed by America’s three national credit reporting companies (CRCs) – Equifax, Experian, and TransUnion – is the independently managed company behind the VantageScore credit scoring model.

© 2020 Florida Realtors®

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Millennials Expected to Stoke Demand for Housing

From pent-up demand to aging and finances, the stars appear aligned to make this decade a hot time to see millennial homebuyers jump into the market.

MIAMI – According to the sixth annual First American Homeownership Progress Index, millennials are expected to lead a rising demand for homes across the country. The index measures how a variety of lifestyle, societal and economic factors influence homeownership rates over time at national, state and market levels.

Market forces have delayed millennial homeownership but demand among the demographic remains strong.

“Millennials are the largest generational group in the history of the U.S., and that’s not the only thing that differentiates them from their generational predecessor,” says First American Chief Economist Mark Fleming. “Millennials are more diverse, more educated and have historically chosen to delay critical lifestyle triggers to buying a first home, including getting married and having children, in favor of furthering their educations.”

The report finds that homeownership among millennials rose three percentage points in 2019, outpacing the gains of both Generation X (1.7%) and baby boomers (0.8%).

“It’s clear that as millennials form households and begin to make lifestyle decisions, such as getting married and starting families, they are increasingly choosing homeownership over renting. … Despite the pandemic-driven economic downturn in 2020, millennials are still aging, in large numbers, into the key lifestyle decisions that increase the likelihood of homeownership. This year, the largest section of millennials will turn 30, entering their prime homeownership years.”

The report shows that homeownership demand in Florida was flat in 2019 at 0.0%, although in Miami, demand was slightly higher at 0.6% year over year.

Source: Miami Agent Magazine (07/06/2020) Kennedy, Kerrie

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The Downside to Low Mortgage Rates? Tight Inventory

Homeowners with rock-bottom mortgage rates move less to avoid losing their great financing – but it could make today’s listing inventory problem a decade-long event.

CHICAGO – Record low mortgage rates can save buyers money when financing a home purchase – but those rock-bottom rates may make it more difficult for first-time buyers in the future.

First-time home buyers face fierce competition due to listing shortages, a trend that hasn’t eased due to the pandemic or recession.

But as the economy eventually recovers and mortgage rates rise again, today’s buyers or refinancers may be tempted to hold onto their properties longer. That, in turn, could hurt future first-time buyers in their search for starter homes if their current owners decide not to sell.

If “rates move up and you want to trade up to a bigger home, you not only have to pay more for the bigger home, but you would also have to pay more to borrow money,” says Danielle Hale, realtor.com’s chief economist. “That starts to make it less appealing to trade up.” As a result, “there could be fewer entry-level properties for resale. It creates a scarcity of homes for first-time buyers.”

For the week ending July 16, the 30-year fixed-rate mortgage dipped to a record low average of 2.98%, Freddie Mac reports. Those who snag rates that low may face a “locked in” situation, which was considered one factor that prevented homeowners from moving in the recent past. When looking at rates and home listings from 2013 to 2018, Black Knight found that homeowners with low fixed-interest rates were the least likely to list their homes for sale.

“Prior to the pandemic, we did see homeowners’ mobility trending lower over the last few years,” says Joel Kan, an economist with the Mortgage Bankers Association. “We’d also seen an increase in home improvement spending. Low rates could play a part in this increased homeowner tenure.”

Source: “Low Mortgage Rates Could Hurt First-Time Home Buyers for Years,” realtor.com® (July 16, 2020)

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RE Q&A: Can Landlords Keep Uncooperating Tenants’ Deposits?

A departing tenant says her landlord gives little notice before showings and sends potential tenants alone. Can he keep a deposit by claiming she doesn’t cooperate?

FORT LAUDERDALE, Fla. – Question: I am currently renting, and our lease is up at the end of the month. Our landlord is looking for the next tenant and wants to show the home to potential renters.

Unfortunately, he often gives us very little notice and does not come with the prospects, so I must show them around the house to ensure security. We asked that he either go with them or send his real estate agent, but he said he could not. We are worried about our deposit if we do not comply. What are our rights? – Anna

Answer: A tenant must consent to reasonable requests from the landlord to enter the home to inspect the property or show it to potential renters. Your landlord is allowed to take care of his property and to find new people to live there.

At the same time, your landlord is required to fulfill your lease and let you enjoy your rental with minimal hassle or disruption.

Your landlord or his agent must accompany the prospective tenants, and you would be justified to send away an unaccompanied prospect who shows up at your door unannounced.

The law requires reasonable cooperation, not unfailing compliance. This means that if you have to be somewhere else, you can ask the landlord to reschedule at a better time. You should also be reasonable and let your landlord find his next tenant.

Like most relationships, the key to exiting your lease without issues is good communication and a willingness to cooperate.

Either way, your landlord cannot keep your security deposit due to this situation.

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.

© 2020 Sun Sentinel (Fort Lauderdale, Fla.). Distributed by Tribune Content Agency, LLC.

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Fla. Homeowners, Renters Get $75M in Housing Aid

The Fla. Housing Finance Corp. will send the first round of federal funds for coronavirus-related housing relief to individual counties and cities for distribution. Altogether, $120M will go to renters and homeowners hurt by the pandemic “through no fault of their own.”

APOPKA, Fla. – The Florida Housing Finance Corporation (FHFC) Board of Directors unanimously approved $75 million to assist Floridians who need rental and mortgage assistance due to the COVID-19 pandemic, according to Gov. Governor Ron DeSantis.

The money is part of the federal government’s Coronavirus Aid, Relief and Economic Security Act (CARES Act). The $75 million is the first release of funding, and DeSantis said the total amount will eventually be $120 million, with additional money going to other pandemic-affected organizations, such as local governments. Florida’s counties will oversee distribution once FHFC sends the money.

“The COVID-19 pandemic has caused profound disruption to families throughout the state,” says DeSantis. “It is my hope that these funds and the rest of the $250 million will provide some level of relief to individuals who – through no fault of their own – are now having difficulty making ends meet.”

A full list of the allocations is posted on Florida’s government website.

“As Floridians continue to struggle with the negative economic impacts of COVID-19, (FHFC) remains committed to providing renters and homeowners with housing assistance,” says Trey Price, executive director of FHFC. “We are proud to stand with the governor to ensure affordable housing remains a top priority, and that families have the necessary assistance to remain in their homes during these difficult times.”

Homeowners and renters can apply for the following assistance through a local State Housing Initiatives Partnership (SHIP) Program housing office:

  • Rental and mortgage assistance payments for persons who experienced a hardship
  • Emergency repair
  • Rehabilitation and new construction related specifically to a need caused by COVID-19

FHFC encourages homeowners and renters impacted by the pandemic to visit its website for more information. It also offers a toll-free “Coronavirus Relief Fund for Impacted Homeowners and Renters Information Line” at 888.362.7885 from 9 a.m. to 7 p.m. weekdays.

© 2020 Florida Realtors®

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‘Dated Homes’ No Longer a Deal Killer?

Potential sellers may not need their home in showroom condition. A dearth of for-sale homes has convinced many buyers to reconsider homes they might have once rejected.

NEW YORK TIMES – The COVID-19 pandemic has prompted many Americans to rethink their home and priorities, nudging some of them to leave city abodes in favor of the suburbs and more space.

With a limited number of homes for sale, however, many sellers are fielding competitive offers and seeing bidding wars. As a result, buyers hoping to move quickly may make greater compromises in their preferences than they were just a few months ago.

“Sellers are realizing the sudden new demand – it’s like catching lightning in a bottle,” says Jaime Sneddon, a broker with William Pitt Sotheby’s International Realty in New Canaan, Conn.

The New York Times recently called out five trends stemming from the coronavirus pandemic that are changing suburban real estate, notably that some buyers may be getting less picky when faced with limited housing choices. Move-in ready homes are still in high demand, but buyers may not be as quick to dismiss listings that need a little more TLC – at least not as quick as they were before the pandemic.

“Younger buyers have really not wanted to take on renovation projects, so if a house wasn’t move-in ready, it would take longer to sell and would sell at a discount,” says Jeffrey Otteau, president of the Otteau Group. “It still has an effect on the selling price of a home, but the need for work is no longer an impediment to sale.”

For many buyers, a house that needs some kind of work represents a tradeoff. But they may now be willing to accept a dated kitchen or bath in order to get something else on their wish list, like a swimming pool, according to Cyd Hamer, a real estate professional in William Pitt Sotheby’s Westport office in New York.

Ann Hance, an associate broker with Daniel Gale Sotheby’s International Realty in Manhasset, N.Y., says she listed a dated three-bedroom colonial for $1.599 million on June 12. “It’s a house that needs work,” she acknowledges. “It’s got a great backyard and nicely scaled rooms, but it needs updating.”

Hance says she received seven offers that weekend and the home is set to close for “substantially more than the list price – and it’s all cash … This wasn’t the case in 2019.”

Source: “5 Ways the Coronavirus Has Changed Suburban Real Estate,” The New York Times (July 17, 2020)

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Buyers Waiting for Prices to Come Down Will Be Disappointed

Some buyers were waiting for the next recession, thinking home prices would fall again – but recessions aren’t created equal. The latest downturn exposed those myths.

NEW YORK – The current economic downtown has been odd in so many ways. Why shouldn’t it expose some economic myths and misconceptions as unreliable, if not outright untrue?

When it comes to understanding the relationships involving home prices, bank deposits, interest rates and unemployment, many disconnects arise. Here are a few:

High unemployment and home prices

You might think that as the nation’s unemployment rate has spiked during this social-distancing recession, that would put pressure on home prices, forcing some owners to miss payments and discouraging buyers.

So far, that hasn’t been apparent. Home prices were up 2.5% on average this year through April, according to S&P CoreLogic Case-Shiller.

Low interest rates, which make homes more affordable, are one factor supporting prices. Also, stimulus and other government payments have enabled millions of Americans to meet their obligations. Plus, the economic slump has lasted only about four months so far, so the full impact may not have been felt yet. If the economy recovers strongly from here, negative housing fallout might not materialize in a big way.

Still, it does seem like the other shoe could drop. Fitch Ratings, the credit-rating agency, currently sees home prices nationally as 6.1% overvalued based on recent price increases, heightened unemployment and the possibility of lower incomes and rents. Values are most frothy in Nevada, Idaho, North Dakota, Texas and Arizona, Fitch said.

The degree to which housing might become more overvalued depends on the future path of unemployment and personal incomes, said Suzanne Mistretta, a Fitch senior director.

The company sees the U.S. unemployment rate easing to 7.8% next year from an average 10.3% in 2020. Though not approaching overvaluation levels of 20%-plus from 2005 to 2007, housing still could reach its highest level of overvaluation in a decade, Fitch warned.

Federal deficits and interest rates

Many people used to assume widening federal deficits would exert a crowding-out effect, pushing interest rates higher as the supply of debt mushroomed and private savings were siphoned from other investments. Few people seem to be focused on this connection anymore, given that interest rates keep dropping while Washington’s borrowing needs continue unabated.

One explanation for why the link doesn’t seem to work is the lack of inflation, as inflation and long-term interest rates tend to move together.

Another is the preference among investors for owning government bonds, which carry high credit ratings, during periods of heightened uncertainty. When things get tough, investors get nervous. They snap up government bonds with preservation of capital, not yield, as the primary goal.

As the Tax Foundation noted in a 2016 report, some economists had been suggesting that budget deficits reduce economic growth by boosting interest rates and diverting private saving toward the purchase of government debt. But in practice, “It has been hard to find an empirical link between deficits and increased interest rates or reduced investment,” the group concluded.

Rates are even lower, and deficits higher, today.

Low yields and deposit accounts

You would think that with bank deposit accounts, money-market mutual funds and other risk-averse instruments yielding next to nothing, investors would be ready to move their money elsewhere. But so far, millions of people are willing to accept virtually no yield so long as their assets remain safe.

Bank deposits spiked by $1.2 trillion in the first quarter, the most recent figure tracked by the Federal Deposit Insurance Corp. That was nearly four times the size of any other quarterly deposit gain over the past decade. Americans also have been flocking to money-market funds and other risk-averse instruments. Money-fund assets are up more than $1 trillion so far this year, reports Money Fund Intelligence newsletter.

It’s not like risky stock-market investments have been faring all that poorly. The broad market was up roughly 43% from its recent low in late March through July 9. But for a lot of people, safety reigns supreme – and they’re willing to pay a price for it, in low returns.

College graduates and layoffs

Before the recession, the vast majority of people with bachelor’s degrees who wanted jobs could get them. As recently as March, the national unemployment rate for college graduates was 2.5%. That was well below comparable figures for less-educated Americans, such as the 4.4% rate for people with only a high school diploma.

College graduates also typically earn more – $1,248 a week on average for holders of bachelor’s degrees only, compared with $746 for those with a high school diploma only, according to a May update by the Bureau of Labor Statistics.

However, that picture has changed a bit amid this coronavirus-induced economic slump. The unemployment rate for college grads more than tripled overnight to 8.4% in April and 7.4% in May before easing to 6.9% in June, according to the Department of Labor.

That’s still well below comparable rates for less-educated groups, such as the 12.1% June unemployment rate for high-school graduates. (The department also tracks workers based on whether they have some high school attainment and some college.)

Still, it lays to rest, at least temporarily, the notion that college graduates are immune from layoffs or other career bumps, especially amid an economic backdrop as strange as this one has been.

Saving money during recessions

You might think now would be a tough time to save money. During recessions and other periods of high unemployment, more people are financially stressed, the reasoning goes. It would be the time for many individuals to lean on their savings to help make ends meet.

That might be the case for a lot of people, but it certainly doesn’t tell the whole story. The nation’s savings rate often has climbed during recessions, and while real-time numbers aren’t available yet, that could be the case again.

Part of this might reflect a reluctance or lack of opportunity to spend money. Think how much you have saved in recent months by eating at home rather than at restaurants, not taking vacations and so on. Perhaps many people also are making a genuine effort to get their budgets under control by putting off various types of spending.

It’s not just individuals, either. A March survey of corporate finance officers conducted by the Association for Financial Professionals noted the largest increase in three years of businesses holding short-term investments at banks.

Copyright 2020, USATODAY.com, USA TODAY

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Are She-Sheds Becoming the New Home Office?

A pandemic-led demand for home office space inspired some homeowners to convert their upscale sheds into offices, with “daily commute” now a walk across the yard.

NEW YORK – As remote working grows more common, homeowners are trying to carve out more space, indoors and out, for a dedicated home office. And, in some cases, homeowners are taking their office outside. According to a report from The New York Times, the backyard home office is a growing trend.

Some homeowners took inspiration from the “man cave” and “she shed” trend and built shed-style home offices. The company Studio Shed, for example, sells prefabricated panels that can be shipped, built and assembled in a backyard to create a 100-square-foot home office.

James Wilson of Oakland, Calif., works in finance and his wife Meg Wilson, as a nurse practitioner who treats patients online via telehealth, and they built a shed to use as a private backyard office. It took a little over four weeks from the time they ordered their office-shed until completion, and it cost about $31,000.

Several companies are touting backyard solutions, like Kanga Room Systems (units start around $5,000 for an 80-square-foot kit the buyer assembles) and Modern Shed.

Studio Shed officials say they’ve doubled sales over the last year. In April alone, their sales were four times higher year-to-year. The company’s units start at $10,000.

The Modern Shed says they’ve noticed orders drastically increasing as well. “We’ve always offered this very simple solution because you don’t need to tear up an existing house, and you can just add it to your backyard,” says Ryan Grey Smith, founder of Modern Shed. “It’s this little structure where you can feel like you’re working miles away, even though you’re only 30 feet away.”

While a backyard office-shed isn’t an option for many people, space-constrained homeowners are actively looking for workspace solutions. For some, it’s even been a motivation to move. A recent survey of real estate agents conducted by HomeLight suggests that a designated home office will likely be the most desirable or important feature for homebuyers in a post-pandemic era.

Source: “Your New Home Office May Be in the Backyard,” The New York Times (July 14, 2020)

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Developers Adding Telehealth as a Community Amenity

Condos and apartments have always competed over included amenities, and some are now adding healthcare into the mix as a new benefit of residency.

MIAMI – Developers in South Florida agree – more home buyers will want new construction with wellness components due to the pandemic. One home builder is turning to telemedicine to meet the anticipated demand.

The Coral Gables-based single-family home developer CC Homes, a Codina-Carr company, hired Baptist Health to provide a telehealth service for buyers in its Canarias at Downtown Doral project and future new construction. Each household can undergo routine health checks with a primary care physician using their TytoCare kit. Each kit brings an exam camera, thermometer and adapters to check the ears, heart, lungs and throat. CC Homes will provide a year’s worth of Baptist’s Care on Demand for each buyer.

“We are all focused on the pandemic,” said Jim Carr, founder and principal of CC Homes and chairman of the board at Baptist Health. “You can’t say one factor sells houses. It’s all the little things that add up that help sells homes. This is just one of those little things.”

The first phase of Canarias – a development with a total of 343 single-family homes and 52 townhouses – was completed in late 2019. Homes start at $550,000 with a 5,000-square-foot layout, including three bedrooms and three bathrooms. Two hundred units are sold and TytoCare kits were delivered to those buyers in December. The kits – compatible with multiple telehealth services – is a hit with buyers, Carr said.

“The efficiency and quality of home health is great for the consumer,” he said.

CC Homes will provide TytoCare kits with Baptist’s Care on Demand for its Maple Ridge project in Ave Maria, which is being completed in phases, and future developments, Carr said. The firm has a total 1,200 units in the pipeline for projects across Broward, including Davie, Cooper City, Miramar and Sunrise.

Besides TytoCare kits, amenities are being modified in these projects to accommodate for social distancing, including clubs and gyms.

“There was a focus on the urban centers [prior to the pandemic]. Now there’s a focus on the suburban markets. No one wants to be in a tower,” Carr said.

It is the second real estate development for Baptist this year. Belmont Village Senior Living is working with the healthcare provider for its Coral Gables development. There may be other real estate-related partnerships, said Lissette Egues by email, the vice president of Baptist Outpatient Services.

“We are always looking for innovative ways to expand access to healthcare. Aside from real estate developers, we have partnered with employers, hotels and senior living communities. The pandemic has shown the importance of leveraging technology to keep our community safe and healthy,” she said.

Other developers are either moving forward with or adding wellness components to their projects since the pandemic, including Royal Palm Companies. The development firm is adding a medical center on the ground floor of its Legacy Hotel & Residences.

“Now,” said Egues by email, “we are moving into a new era, where making healthcare part of the home experience – giving homeowners the ability to connect to local healthcare providers instantly – is a non-negotiable.”

© 2020 Miami Herald. Distributed by Tribune Content Agency, LLC.

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