49% of Rentals in Buildings With 4 or Fewer Units

Individual investors own 72% of U.S. rental properties (41% of all rental units), while corporations or partnerships own 16% of often-larger properties (37% of units.)

WASHINGTON, D.C. – Of the 48.2 million rental housing units in the U.S., almost 49% are relatively small – located in rental properties of one to four units, according to the latest Rental Housing Finance Survey (RHFS) released today by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau.

For the small rental properties, nearly 73% (14.1 million) are owned by individual investors, and one in three (7.9 million) has a mortgage.

Seth Appleton, HUD’s Assistant Secretary for Policy Development and Research, calls the RHFS “America’s premier source of data on rental housing finance and financial health.”

HUD funds the Rental Housing Finance Survey, and the Census Bureau collects data every three years to create it. It covers topics such as property configuration, ownership and management, rental income and expenses, financing, and capital improvements and expenses. The report includes summary tables for areas across the U.S.

Below are highlights from the national level findings among the 20 million rental properties, which contain 48.3 million rental units:

Rental property configuration

  • About 86% of all rental properties contain only one rental unit, and 97% of all rental properties have only one building.
  • About 36% of all rental units are in properties with only one rental unit, while about 30% of rental units are in properties with 150 or more rental units.

Ownership and management

  • About 72% of rental properties (representing 41% of all rental units) are owned by individual investors and 16% of rental properties (37% of units) are owned by limited liability corporations or partnerships. For properties with 150 or more units, 63% are owned by limited liability corporations or partnerships.
  • About 22% of small rental properties (1-4 units) are managed professionally, while 94% of properties with 150 or more units are managed professionally.

Rental income and expenses

  • The median monthly rental receipt per rental unit is $750.
  • The median monthly operating expense (not including debt service) is $325 per rental unit.

Property purchase, value, and financing

  • The median estimated market value per rental unit is $110,800.
  • The median purchase price per rental unit is $75,000 (not adjusted for inflation).
  • About 42% of all rental properties have a mortgage or similar debt. For properties with a mortgage, the median debt per rental unit is $119,000 at mortgage origination (not adjusted for inflation).

Capital expenses and improvements

  • About 78% of property owners reported making some type of capital improvement to their rental unit(s) in 2017.
  • Owners annually spend a median of $500 per rental unit on capital improvements.

© 2020 Florida Realtors®

Leon County Judge Rejects Development Law Challenge

A law made it riskier to challenge new developments by changing the way attorneys are paid, but a judge said the Dept. of Economic Opportunity isn’t the proper party to sue.

TALLAHASSEE, Fla. – A Leon County circuit judge Wednesday rejected a challenge to the constitutionality of a 2019 state law that opponents say will have a “chilling effect” on people who want to fight local development decisions.

The plaintiffs, the organization 1000 Friends of Florida and Pasco County resident Robert Howell, targeted part of the law that deals with attorney fees in disputes about whether local development orders are consistent with comprehensive growth-management plans.

Under the law, losing parties in lawsuits about development orders can be forced to pay the attorney fees of “prevailing” parties – a change that opponents say creates huge financial risks for citizens who want to challenge local government approvals of development plans. The lawsuit, in part, alleged violation of constitutional due-process and First Amendment rights.

But after hearing arguments Wednesday, Leon County Circuit Judge John Cooper said he would grant motions by the defendants, Florida Department of Economic Opportunity Executive Director Ken Lawson and Secretary of State Laurel Lee, to dismiss the case.

The Department of Economic Opportunity is the state land-planning agency, while Lee is the custodian of laws. Cooper did not delve deeply into the constitutional issues raised by the plaintiffs, but he agreed with state attorneys that Lawson and Lee and their agencies are not responsible for carrying out the law.

“In this case, I don’t see the DEO (the Department of Economic Opportunity) as being the proper party defendant because, as it relates to this statute, I have not heard articulated to me the enforcement functions that the department has related to this statute or this issue,” Cooper said.

He said a proper defendant could be a local government that has issued a development order, adding, “I think there are legitimate circumstances in which this constitutionality of the statute can be raised.”

During the arguments, 1000 Friends of Florida attorney Richard Grosso said the constitutionality of the law needs to be addressed because it leads to citizens facing the risks of paying attorney fees of local governments and potentially landowners or developers if challenges to development orders are unsuccessful.

“The gravamen of this complaint is, nobody but the wealthiest of citizens can even take that chance,” Grosso said. “1000 Friends of Florida … Mr. Howell, members of 1000 Friends, when they go to their attorneys and say, ‘We’ve got a development that’s going to impact our homes, impact our property, impact our communities, let’s bring this legal challenge,’ lawyers have to say, ‘Well, before you do that, you’ve got to know, if you don’t win, if you try to enforce the law and don’t win, you will be hit with automatic attorneys’ fees.”

The lawsuit said Howell fought a development order related to mining in Pasco County but dropped the litigation last year because of passage of the law dealing with attorney fees.

Source: News Service of Florida

Average 30-Year Mortgage Rates Rise Slightly to 3.18%

Last week’s record-breaking low for 30-year fixed-rate mortgages (3.15% – the third historical low this year) rose marginally to 3.18% this week.

BALTIMORE (AP) – Long-term mortgage rates increased slightly as the U.S. economy showed signs that the worst of the coronavirus-fueled recession may have passed.

The average interest charged on a 30-year mortgage was 3.18% this week, up from 3.15% a week ago, according to a report Thursday by mortgage buyer Freddie Mac. That average is down from 3.82% a year ago.

The economic collapse following the COVID-19 outbreak has corresponded with a decline in mortgage rates. But there are signs that the economy may have already bottomed as government data shows that applications for jobless aid – though still historically high – are steadily falling.

The average 15-year mortgage rate was unchanged from last week at 2.62%. This average has fallen from 3.28% a year ago.

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

Real Estate Leaders Speak Out Against Racism

Top RE brokerages recently contacted agents. A Keller Williams task force will work “to eliminate racial disparity.” Redfin plans a deeper analysis of company disparity.

WASHINGTON – Nationwide protests over police brutality and racism stemming from the homicide of George Floyd have prompted the real estate community to speak out.

Compass CEO and co-founder Robert Reffkin described himself as a “black man who has felt out of place his entire life.” He shared via a companywide email that he sent to employees on Sunday: “I’m heartbroken that all this pain we’re feeling, all of the energy being generated, all of the moral clarity that a moment like this creates – might still not lead to enough change.”

Gary Keller, CEO of Keller Williams, wrote a letter to agents on Monday that began: “I’d like to make one thing clear: Racism is wrong, and Keller Williams stands with the black community and wholeheartedly supports equality.” Keller said the firm will create a task force of its International Associate Leadership Council to develop recommendations for action to eliminate racial disparity within its company and the industry and vowed to help lead change within its communities.

“I will be reaching out to your regions immediately to ask for a nomination from each to join us in this critical effort,” Keller wrote. “I believe we can also set an example within the industry by committing more of ourselves to a better, and equitable future.”

Keller also urged all staff to self-reflect, listen, learn and speak up to bring about change. He urged sales associates to reach out to their local real estate boards and ensure racial equality is reflected in positions as well as to support initiatives and measures that are crucial to racial and social justice.

“I believe that the real estate community has a unique opportunity to promote healing and reform,” Keller’s letter reads.

Glenn Kelman, CEO of Redfin, also vowed to do more within his company.

“The most obvious thing is hiring and developing more people of color to positions of power,” Kelman wrote on Redfin’s blog on Sunday. “We say that we believe talent is equally distributed between people of different races, but most businesses, including Redfin, are run mostly by white people.”

Kelman says later this month the brokerage will publish its annual report on employee diversity and its diversity initiatives, and he intends to go into more detail about what’s working, what isn’t, and what’s next. He also committed to greater education within their workforce about race and real estate.

“Let’s commit as businesses and business people to serve blacks and other people of color better,” Kelman wrote. “Companies that employ hundreds or thousands may feel it’s beyond our control to stop one grocer or bank teller or broker from jumping to the wrong conclusion about a customer, and doing something racist that hurts that customer, and stains our reputation for years.”

Source: REALTOR® Magazine and “America in Crisis: Real Estate Leaders Address George Floyd Protests,” The Real Deal (June 1, 2020)

© Copyright 2020 INFORMATION INC., Bethesda, MD (301) 215-4688

Less Than 1% of Miami’s Condo Buildings Have FHA Approval

Condos and FHA loans appeal to first-time buyers, but an FHA low-downpayment loan still isn’t an option for many first-timers in many Fla. condo complexes.

MIAMI – According to a recent report by Miami Realtors, only 13 of the 9,307 condominium buildings in Miami-Dade and Broward counties were approved for Federal Housing Administration (FHA) loans, down from 29 last year.

In Florida, potential condo buyers must personally qualify for a home loan, but the condo project itself must also undergo approval for mortgage lending. Underwriters worry about the financial stability of the condo project, especially with regards to hurricane coverage, which creates a number of problems.

“If you have a partial loss,” such as for a hurricane, “you agree to (pay) out of pocket to a certain percent,” says Danielle Blake, chief of public policy for Miami Realtors. “If you have a coinsurance clause, you have to prove that there’s enough in the condo building’s reserves to cover it 100%. But in Florida, condo owners are allowed to waive reserves by a majority vote on an annual basis.”

According to Blake, many associations opt for special assessments instead of collecting monthly reserves because Florida’s elderly condo owners don’t want to invest in a reserve account – and this makes it extremely difficult for potential buyers to get an FHA loan or even a conventional loan.

Even in the few condo buildings in Miami with FHA approval, lenders still have to obtain a full condo questionnaire in order to meet FHA requirements.

The return of spot loans, which allow for single-unit FHA mortgage approvals, has not increased homeownership opportunities as dramatically as many had hoped. Renters make up more than 40% of Miami’s households, and the metro ranks as the seventh least-affordable large metro in the world.

The increasingly difficult path towards homeownership in Miami threatens the region’s long-term economic prosperity.

Industry experts say homeowner associations and condo boards should be educated about the potential impact if buyers can’t get FHA loans when unit owners decide to move out.

Source: Miami Agent Magazine (05/14/2020) Kennedy, Kerrie

© Copyright 2020 INFORMATION INC., Bethesda, MD (301) 215-4688

Should Seniors Consider a Reverse Mortgage Now?

In tough economic times, an offer to cash in home equity can sound appealing, and a reverse mortgage a good idea – but they’re not cheap or ideal for short-term needs.

NEW YORK – Reverse mortgages allow older homeowners to turn part of their home equity into tax-free cash, using a loan that doesn’t have to be paid back until they die, sell or move out.

That sounds good to a lot of seniors navigating financial fallout during the coronavirus pandemic. Stay-at-home orders may have taken away jobs needed to make ends meet, while low interest rates and a volatile stock market have endangered income from retirement savings.

A reverse mortgage could be exactly the right tool at the right time. Or it could be an expensive mistake. It’s important to understand exactly how these loans work and to explore alternatives before you commit.

Reverse mortgage basics

Most reverse mortgages are Home Equity Conversion Mortgages (HECMs), which are insured by the federal government. Borrowers must be 62 or older and have substantial home equity.

The amount you can borrow not only depends on your equity and the home’s value, it also varies based on your age, current interest rates and HECM program limits. The higher your age and the lower the prevailing interest rate, the more you can typically borrow. Currently the program will let you borrow against a maximum of $765,600 in home value.

Borrowers can get a lump sum, a line of credit or a series of regular payments. Reverse mortgages can also be used to pay off an existing mortgage or to buy a home.

You don’t have to make payments on a reverse mortgage, even if you end up owing more than the house is worth. You can, however, wind up in foreclosure if you fall behind on property taxes, homeowners insurance or homeowners association fees.

Reverse mortgages aren’t cheap

Most of the costs are taken from your loan proceeds, so you don’t pay them out of pocket, but it’s still an expensive way to borrow. HECM loans require a 2% upfront mortgage insurance payment, plus an additional 0.5% annual charge, on top of origination costs and lenders’ fees. Any amount you borrow, including these fees and insurance, accrues interest, which means your debt grows over time.

Many borrowers don’t realize this, or that the debt can grow to the point where they may not have anything left to borrow against in an emergency or to leave to their kids, says Barbara Jones, a senior attorney for AARP Foundation.

“They don’t quite understand what compounding interest means,” Jones says. “So they don’t have the equity in their home that they thought they did.”

Look elsewhere for short-term needs

If you have a short-term need for cash, consider other options first, Jones recommends. Many low-income seniors don’t realize they qualify for the earned income tax credit, a refundable tax break that can put cash in your pocket. You also could use BenefitsCheckUp, a site run by the National Council on Aging, to see what other help you may qualify for. People of any age can ask for forbearance, or the ability to skip payments, from their mortgage company and other lenders.

Another possibility is a regular home equity loan or line of credit. This type of borrowing requires you to make payments, and lenders can freeze or lower limits on lines of credit, but the borrowing costs are much lower.

Reverse mortgages can be used as a relief valve

Although financial planners long considered reverse mortgages to be a last resort for struggling seniors, researchers in recent years found a potential use for more affluent people: as a relief valve to take the pressure off investments in bad markets. Tapping a reverse line of credit for income instead of selling beaten-down stocks gives investment portfolios a chance to recover along with the market. That can allow people to spend more with less risk of depleting their portfolios, says Wade Pfau, professor of retirement income at The American College of Financial Services.

A reverse mortgage also can provide monthly guaranteed income that isn’t dependent on stock market swings or a healthy labor market, says Steve Resch, vice president of retirement strategies at Finance of America Reverse, a reverse mortgage lender. So can an income annuity, which is an insurance product that gives you a stream of payments, typically for the rest of your life, in exchange for a lump sum.

Before you proceed with either a reverse mortgage or an annuity, you’d be smart to consult a certified financial planner or other fiduciary advisor. Most people promoting these products get paid to sell them, and you’ll want to check in with an objective advisor committed to putting your interests first.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. This column was provided to The Associated Press by the personal finance website NerdWallet. Liz Weston is a columnist at NerdWallet, a certified financial planner and author of “Your Credit Score.”

Does a Buyer or Seller Pay the Condo Quarterly Assessment?

If the closing date falls mid-quarter, the dues will generally be prorated so buyers and sellers pay only for the portion that includes their time owning a condo unit.

STUART, Fla. – Question: The board of directors in my homeowners association meets every month and provides a cursory financial report with little detail. We have requested the treasurer and board provide more information but the board responds that we can get the detail at the property management office. Does Florida law provide any redress? – G.A., Jupiter

Answer: Florida law provides that the association’s financial records are official records and accessible to homeowners or their authorized representatives. Specifically, the statute requires that the association maintain 1) accurate, itemized and detailed records of all receipts and expenditures; 2) current account and periodic statement of the account for each owner; 3) all tax returns, financial statements and financial reports, and 4) all other records that identify, measure, record or communicate financial information.

So if we assume the association is maintaining the appropriate records, the question is whether the board is required to disclose this information in considerable detail during a meeting. The answer to that question is no. The board is required to exercise its fiduciary duty which may dictate that individual board members need to inquire into financial details, but that would not necessarily translate into detailed reports at meetings during the treasurer’s report or at any other time. There is also no legal obligation for the board to provide detailed account statements for owners at meetings.

Because the financial records are official records, you can make a written request to inspect the financial records listed above and the association must make them available to you. If the association posts these records on the website as a courtesy, it is merely a courtesy and not required by Florida Statutes chapter 720 governing homeowners associations.

Question: If the assessments are payable quarterly and I sell my home in the middle of a quarter, who is responsible for payment? – A.B. Stuart

Answer: When a contract to sell a unit is executed, the closing agent will request the association complete an estoppel which discloses information relative to the transaction, including the amount of quarterly assessments and whether they are paid. If the closing date is in the middle of a quarter, the dues will generally be prorated so that you pay for the portion of the quarter that you own the unit and the buyer pays for the portion after closing. If you paid for a full quarter and close in the middle of the quarter, it will result in the buyer reimbursing you on the closing statement so that the buyer pays the post-closing portion at the closing table, which results in more money being paid to the seller at closing.

If you are talking about a special assessment, the analysis becomes much more complicated and dependent upon the assessment resolution adopted by the Board and your sales contract. Generally, a special assessment is payable by the owner as of the due date of the assessment because that is when it becomes due and payable.

Most real estate contracts, however, will specifically address this and delegate responsibility based on whether the special assessment is levied before or after the contract is fully executed. For example, the contract may specifically provide that the buyer is responsible for special assessments realized after the effective date of the contract. So the general answer is that the owner as of the due date is legally responsible, but this is often addressed in the contract between the buyer and seller.

Question: Our condominium election is fast approaching and we are worried that the election will not occur due to lack of quorum. It has been years since we have established a quorum at an annual meeting. What happens if a quorum is not reached? – S.D. Stuart

Answer: Actually, Florida law does not require a quorum in a condominium association to constitute a valid election. Specifically, Florida Statutes section 718.112 provides that “there is no quorum requirement [for an election]; however, at least 20% of the eligible voters must cast a ballot in order to have a valid election.” Thus, if your quorum is a majority and 25% of the membership has cast a ballot, you have a valid election under today’s statutes. In the event you have less than 20% participate in the election, the condominium association’s election is invalid and the prior board of directors would continue to serve.

John C. Goede Esq. is co-founder and shareholder of the law firm Goede, Adamczyk, DeBoest & Cross, PLLC. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, PLLC or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

© 2020 Journal Media Group

Fla. Moves a Step Closer to ‘Normal’ Under Phase 2 Reopening

Gov. DeSantis announced that Phase 2 of the state’s 3-step reopening plan will go into effect on Friday morning. It doesn’t change real estate services that were already deemed essential, but it could give hope to some buyers and sellers who pulled back during the pandemic.

ORLANDO, Fla. – Florida Gov. Ron DeSantis announced that Phase 2 of the state’s 3-step reopening plan will go into effect on Friday morning through Executive Order 20-139.

While none of the actions contained in this executive order impact Florida Realtors members directly, they do represent a shift towards normalcy in our communities, and will hopefully spark more real estate activity as people emerge from their homes and begin to consider the future. It doesn’t change real estate services that were already deemed essential, but it should give hope to some buyers and sellers who pulled back during the pandemic.

The changes don’t apply to the South Florida counties of Miami-Dade, Broward and Palm Beach, but the order allows some businesses in the counties to reopen “after each county seeks approval with a written request from the County Mayor or if no mayor the County Administrator.”

Under the executive order, bars, movie theaters, bowling alleys and concert halls are allowed to reopen. Most have some type of maximum occupancy requirements, along with general instructions to “maintain social distancing and sanitation protocols.”

In announcing the onset of Phase 2, DeSantis also warned that COVID-19 still remains a threat, and that “the virus isn’t gone.”

© 2020 Florida Realtors®

COVID-19 Made Social Media Marketing Even More Important

Social media can extend Realtors’ brands and promote their websites, and identifying a target market is the first step in effectively using the medium.

NEW YORK – With a large number of competitors in the market and a lot of ground to cover, real estate marketing can overwhelm some real estate professionals.

How to stand out from the crowd? Social media should be a natural extension not only of a Realtor’s brand but also their website. It’s a good venue for sharing blog posts and content hosted on their website that can maximize their number of website visitors.

Social media tools, especially paid social media marketing, can help Realtors target audiences, such as those with specific interests and demographics, subject to any restrictions under the Fair Housing Act.

Once agents have identified their target audience, they should start using social media to build trust and authority, which can be done in a number of innovative ways. For example, they can offer valuable content and focus on neighborhood data like schools, employment opportunities, or dining and entertainment options.

Real estate professionals also can use live streaming videos that showcase properties in a virtual open house or as an off-the-cuff inside peek of homes up for sale. During a video walkthrough, they should add plenty of colorful commentary to keep viewers engaged, elaborate on neighborhood details and point out unique properties of the home.

Another great way to use social media marketing for real estate business is to showcase a level of social consciousness, especially when it comes to showing an agent’s close ties to their community. These could include organizing or sponsoring local charity events and then sharing their insight on social media.

Source: Realty Biz News (02/22/2019) Shepardson, Ben

© Copyright 2020 INFORMATION INC., Bethesda, MD (301) 215-4688

How Will the Coronavirus Pandemic Transform Housing?

Beyond immediate pandemic-caused problems in the real estate industry, two other changing factors could have a long-term influence: The economy and people’s attitudes.

NEW YORK – The coronavirus pandemic is roiling the real estate market. Home sales have plummeted. Job losses have soared. Lenders have tightened mortgage requirements.

That represents the immediate fallout. But the health scare and economic shock also might leave a lasting mark on how Americans buy and sell homes. The longer the crisis drags on, the more the coronavirus could transform development patterns and buyers’ preferences. Here are five ways the pandemic’s legacy could live on even after the public health threat ebbs:

Your next home might be in the ‘burbs, not downtown

Urban living made a major comeback in recent years. In New York, San Francisco and Seattle, home prices soared and job creation surged. Sprawling Sun Belt cities such as Austin, Texas, Houston, Los Angeles, Miami and Phoenix saw construction of new high-rise apartments and condos in once-neglected downtowns.

But with COVID-19 claiming a huge toll in urban areas like New York City, density might lose some of its appeal.

“This crisis is the right moment for the world to reconsider the conventional wisdom that denser cities are better cities,” writes Joel Kotkin, a scholar specializing in urban issues at Chapman University in California.

For city dwellers cooped up in tiny apartments for weeks on end, suburban sprawl suddenly seems a viable alternative.

“People who live in the city might be looking to move back to suburbia,” says Alan Rosenbaum, chief executive of GuardHill Financial, a mortgage company based in Manhattan.

New York City has a population density of nearly 28,000 people per square mile, according to the U.S. Census Bureau, making it the nation’s most-crowded city. In the pre-pandemic boom, New York’s teeming masses were a selling point. Now, that demographic reality has pivoted from an asset to a liability.

“If you’re in a downtown high-rise, it’s hard to socially distance on the elevator, where somebody might cough or sneeze,” says housing economist Brad Hunter, managing director at RCLCO Real Estate Advisors. “On the other hand, in the suburbs, you can pull into your driveway and go straight into your house, and it’s easier to socially distance.”

A move toward telecommuting would play into that trend. If workers keep toiling from home, as they have been doing during the pandemic, rather than commuting to downtown offices, living in the suburbs makes more sense.

Some homebuyers might respond to the cocooning instinct by moving to an exurb. Buyers who don’t want wide-open spaces might opt for a compromise, trading a downtown high-rise apartment for a townhouse in a close-in suburb, says Robert Dietz, chief economist at the National Association of Home Builders.

“It gives you that sense of space you maybe don’t have in an apartment community,” Dietz says.

You might be renting for a while

With paychecks shrinking and lenders making it harder to qualify for mortgages, more Americans might find homeownership has drifted out of reach.

A weak economy tends to lower homeownership rates as potential buyers opt to rent rather than take on the hefty financial commitment that accompanies buying a house.

“We’re likely to see wage declines, so the purchasing power of consumers is going to be reduced,” Dietz says.

The U.S. homeownership rate peaked during the housing frenzy leading up to the mortgage meltdown of 2008, when loans were readily available. That rate dropped sharply during the Great Recession before rebounding in recent years.

Even before the coronavirus pandemic, homebuilders were setting aside some new homes for rent, rather than for sale, in their developments. And a new breed of landlords, most notably Invitation Homes, has focused on renting suburban homes to the sort of workers who once became homeowners as soon as they got married or had kids.

Maybe you’ll want a bigger home

Before the coronavirus, most Americans slept at home and then left for work or school. They went to the gym, to the movies, to cafes and bars and restaurants.

Now, people are spending most or all of their time at home – and finding that home suddenly feels a little cramped. A home office just got a lot more important. So did space for working out and storing stuff.

New homes have been shrinking in part because desirable land has grown scarce and also because first-time homebuyers have struggled to afford the big homes that earlier generations took for granted.

“The new homebuyer of the past decade has been the millennial, and one of the things we found was that they were willing to accept a smaller home to get on the ownership ladder,” Dietz says.

If today’s desire for more personal space turns into tomorrow’s trend, buyers will flock to bigger homes, perhaps in lower-cost cities and farther-flung suburbs.

You might start shopping for a second home

For those who have the financial means, owning a second home suddenly looks more appealing. With New York City locked down, wealthy New Yorkers fled to their beach homes in the Hamptons, their cabins in the Poconos or their condos in Florida.

Owning a second home isn’t a cheap option: Mortgage rates on second homes typically cost more, and you will have to shoulder additional property taxes, homeowners insurance and maintenance costs.

In general, Dietz says, demand for second homes is strongly correlated to the stock market’s performance, an indicator that doesn’t portend a flurry of buyers for second homes. But the coronavirus crisis could override the usual forces driving the market for second homes.

In typical times, a wealthy New Yorker who wanted to flee the city could rent a vacation home, snap up an Airbnb or stay at a hotel. The pandemic closed down such options.

“It’s very hard to find rentals out in the country or at the beach,” Rosenbaum says. “People are definitely going to look for a second home.”

You’re going to rely more on tech in home buying

In recent years, real estate transactions grew more virtual. The coronavirus accelerates the trend.

Even so, a real estate transaction is the ultimate hands-on experience. Before they commit, buyers want to sniff out cat pee, listen for traffic noise and immerse themselves in the sights, smells and sounds of their potential new home.

Meanwhile, buyers and sellers typically receive reams of paperwork – state disclosure forms, contracts, mortgage documents. And the process ends at a closing table surrounded by a mountain of paperwork from the participants.

The coronavirus has disrupted business as usual. In-person tours have all but halted.

Some real estate agents already had begun offering detailed virtual tours of properties, and that marketing tactic looks likely to grow more common.

While no one expects virtual tours to replace physical walk-throughs, the paper-heavy transaction process had been poised for an overhaul. In recent years, many real estate brokers and mortgage companies had moved toward a more virtual process.

Now, industry experts say, remote transactions, electronic signatures and virtual closings are poised to take off.

© Copyright 2020 Las Vegas Business Press. All rights reserved.

Home-Improvement Projects Surged – But Will It Last?

Sales surged during stay-at-home orders, and some think they’ll plummet later in the year as a result. One wild card: Will a second COVID-19 surge create all-new demand?

LOUISVILLE, Ky. – Stuck at home in a paralyzing health crisis, people across America finally tackled long-delayed, home-improvement projects that are giving a boost to the do-it-yourself and handyman segments of the U.S. economy.

Where is the home-improvement category headed?

  1. As Americans stayed at home, the do-it-yourself and home service industries gained momentum from March through early May.
  2. The immediate forecast remains strong for do-it-yourselfers. The garden segment is exploding at most retailers.
  3. Will the momentum last through year’s end? Analysts offer mixed predictions. The biggest wild card: Will the nation endure a challenging Round 2 of infections as summer slips into fall and winter?

In Louisville, Kentucky, the COVID-19 crisis has been a completely unexpected boon for Max Daugherty’s outdoor living contractor business. New decks, patio upgrades, backyard spruce-ups – the calls are pouring in.

His crew working in Louisville is booked through August, but Daugherty is still wary of what’s around the corner for deck rebuilds and other big residential projects in an economy rocked by the pandemic. His guesses about how stay-at-home orders and restricted travel might shrink revenues were so dead wrong starting in March that he’s still inclined to play conservative now rather than expand the business.

“I prepared myself for the worst, and it was completely the opposite,” said Daugherty, owner of Max Building Designs in Charlestown, Indiana.

He’s now delivering 25 quotes a week for prospective jobs, compared with eight to 10 estimates this time last year. But “if we invest in another truck for another crew and things go bad, I’ve got an investment sitting there that’s not returning.” And he’d also face laying off workers he’d just hired on.

Such is the dilemma in the red-hot hardware, paint and home services arena around the country, as one of the world’s strangest second quarters barrels into its final month.

The pandemic has led many homeowners across the country to pounce on DIY home improvement projects during stay-home orders. And as a result, hardware, home improvement and farm supply stores – which the federal government deemed essential businesses – have seen a massive surge in demand for tools, paint, lawn and garden goods, and treated lumber.

Added to that is a higher demand for cleaning supplies, security systems, safety gear, sidewalk chalk and activity kits for youngsters, said Randy Rusk, national spokesman for Do It Best, a cooperative of hardware, lumber, and building materials stores in 50 states and more than 50 countries.

But analysts and marketing experts in the home and hardware industry are cautious. They predict a mixed bag in spending through the end of this year, dragged down by little or no construction in some states and nagging uncertainties surrounding the economic toll from the pandemic.

Smaller, in-home projects have been the bright spot in the sector. During the past two months, as unprecedented restrictions sent workers home and consigned people to work in bedrooms and at kitchen tables, the home services industry saw consumers flip their attitudes about their surroundings.

At first they were scared. Then, they began looking around their homes and decided they needed to get on projects they’d put off for years, said Larry Janesky, a Connecticut-based contractor with 300 dealers and 700 employees refurbishing attics, basements and roofs across the U.S. Basement waterproofing and refinishing projects took off in the past month or so because people realized they needed to upgrade space for a home office. Roofing also has shot up, Janesky said.

Before the outbreak, spending on home remodeling was expected to post annual growth of 3.9% by the first quarter of 2021. But the latest data rolling together, actual and forecasted impacts of the economic shutdown, have led to predictions of declines this year, with more of a drop off into 2021, according to Harvard University’s Joint Center for Housing Studies.

The uncertainty has analysts offering a mixed forecast for what will happen in the category later in the year.

“Whether confidence returns to undertake large projects could be dictated by the depth and duration of the economic and housing market decline,” wrote Wedbush analysts led by Seth Basham in a note about Home Depot, MarketWatch reported earlier in May.

Home construction, home sales and the value of existing homes could take a hit, and homeowners’ moods could play a big part, said Chris Herbert, managing director of the Harvard-based center.

It predicts more affordable metros in the Midwest and Sunbelt – including Cleveland, Cincinnati, Charlotte, Atlanta, Tampa and Phoenix – to see some gains through the year, of about 2 to 3%.

One big driver to watch is how small businesses rebound in coming months.

“If the government tells entrepreneurs to stay home, you can’t open … we’re going to have some real problems,” Janesky said. “I’m cautiously optimistic, depending on how long things drag on.”

Copyright 2020,, USA TODAY

How Can You Turn Renters into Homebuyers?

Most renters generally like the idea of homeownership but they’ve put it off or incorrectly think there’s no way that a bank would consider them for a mortgage.

NEW YORK – Most renters generally like the idea of homeownership but they’ve put it off or incorrectly think there’s no way that a bank would consider them for a mortgage.

Agents can use several strategies to turn rental clients into real estate buyers, such as educating them about the real estate market, including opportunities to purchase homes through programs offered by the VA, FHA and other entities that help first-time home buyers.

After clients rent a house, agents can offer free publications and newsletters about the real estate industry. They can also connect on social media to highlight the advantages of purchasing property over renting, such as building equity through ownership and an improved credit rating.

Agents can also offer a small housewarming gift with a business card and send holiday and birthday wishes to maintain a connection.

Because many renters continue to rent because they lack relevant resources, agents can create a webpage or pamphlet with resources for renters who want to learn more about buying a home. The site should feature local, state and government offices that might have helpful programs, along with a list of publications and websites offering tips for first-time buyers.

Agents can also connect with attorneys, builders, accountants, investors and other professionals that can provide a variety of resources to rental clients. Encourage reciprocal referrals from this network of professionals to build businesses and the community.

Some people, of course, don’t plan to become homeowners. Agents should also be familiar with the current rental market and maintain an inventory of desirable rental properties.

Source: Better Homes and Gardens Real Estate Blog (05/21/2020)

© Copyright 2020 INFORMATION INC., Bethesda, MD (301) 215-4688

Property Insurance Has Changed – and Often Costs More

A homeowner’s property insurance cost is based on a wide range of factors, including location, construction details and even the insurance company’s costs. Overall, however, a number of Fla. homeowners will see their coverage costs go up as some of those details change.

ORLANDO, Fla. – The cost of a single home’s property insurance is based on a wide range of factors, including location, construction details and even a property insurance company’s costs. Overall, however, a number of Florida homeowners will see the cost of their coverage or their shared cost for certain repairs go up as some of those details change.

With hurricane season only three days away, many homeowners will analyze their policies to see if they need to make changes. Here are some of the things they’ll find this year, in a list compiled by the South Florida Sun Sentinel:

Roof damage: Each property insurance policy is different, but insurers are generally offering less coverage for roofs over a certain age, which can be as little as 10 years. In some cases, they’ve also changed the amount of money a homeowner can expect to collect following a hailstorm or hurricane.

“You don’t get a free roof,” Jeff Grady, president and CEO of the Florida Association of Insurance Agents, to the Sun Sentinel. “The customer has to decide whether to make that claim.”

Some policies that once included “full replacement cost” for a damaged roof have started to offer “Actual Cash Value.” The former might give a homeowner with a 12-year-old roof a completely new one if it sustains covered damage; the latter will pay the homeowner only the current market value of a 12-year-old roof. The homeowner would be forced to pick up the additional cost. Not all companies have changed to “Actual Cash Value,” and some who have allow homeowners to pay an additional premium and get the “full replacement cost” coverage.

The change, in part, is a reaction to roof repair companies that would use “whole new roof” as a default assessment since insurance companies were footing the bill. In some cases they went door-to-door enticing homeowners with promises of a free roof.

Non-weather water damage: How will a policy cover water damage? It depends many times on the source of that water. In general, only a flood insurance policy covers rising water, while a property insurance policy covers falling water, such as a damage from a strong storm.

However, coverage of water damage coming from inside the house – broken dishwasher lines that soak cabinets or water lines that soak ceilings – has changed in many policies.

“Stung by increases in such water damage claims over the past decade, most insurers now limit water damage coverage to $10,000 for homes built more than 30 years ago, while some companies offer no water damage coverage at all unless policyholders pay extra, according to the Boca Raton-based Cronin Insurance Agency,” reports the Sun Sentinel article.

Florida-owned Citizens Property Insurance Corp. caps water damage at $10,000, though that cap is lifted for homeowners willing to work with the contractors Citizens selects.

Rebuilding costs: Most U.S. homes (three out of five) don’t have enough insurance to cover their loss if a home is completely destroyed – about 20% less than needed, according to CoreLogic.

Determining the amount to insure can be tricky, but the first step is to make sure an insurer has the home’s proper details – the correct square footage, for example, number of bedrooms, flooring description, etc. An appraiser could help, and there are currently a number of software tools too.

“Ordinance of law” endorsement: Many Florida homes aren’t built to current – and more stringent – building codes. If it takes $2,000 to repair damage but $5,000 to bring the repaired part up to current building codes, a homeowner could get stuck paying the difference.

Many insurers offer an “ordinance or law” endorsement that, for more money, will cover any upgrades to current building codes – many times with a set limit to the extra amount insurance will pay, such as 25%.

Inflation Guard Coverage: Construction costs go up with inflation and demand, but property insurance policy payouts don’t rise with them unless a policy has “Inflation Guard Coverage.” A related option – Enhanced Replacement Coverage – assumes that the cost of raw materials could rise substantially following a major event, such as a hurricane. With “Enhanced Replacement Cost Coverage,” a policy offers more protection following a widespread disaster.

Flood insurance: Property policies don’t cover homeowners for flood, which is generally considered water rising up from the ground rather than rain falling from above.

While the National Flood Insurance Program was once the only viable flood insurer accepting by mortgage lenders, a number of Florida companies have started offering private coverage that may be accepted.

Windstorm coverage: For many homeowners, windstorm coverage – sometimes called hurricane coverage – is separate from their general policy but packaged together. However, the details vary, such as the deductible a homeowner will be expected to pay following major damage from a hurricane. In general, windstorm policies cost more if an owner opts for a low deductible.

Parametric insurance: A fence, shed or pool screening likely isn’t covered by a general property insurance policy, and parametric insurance picks up the gap. It can also cover the deductible a homeowner might be expected to pay for things like windstorm coverage.

Homeowners who want as much protection as possible – items not included so far – can probably find it. Some even cover things like the cost of a hurricane evacuation, including gas, food and lodging.

Source: Ron Hurtibise, South Florida Sun Sentinel

© 2020 Florida Realtors®

Listing Isn’t Good for Pets? 95% of Their Owners May Move On

A survey found that two-thirds of pet owners would even forego a dream home if it couldn’t easily accommodate their pets.

SANTA CLARA, Calif. – While buyers may not buy a home specifically with their pet in mind, 95% will ignore a listing if it doesn’t easily accommodate furry family members, according to a survey by

In addition, more than two-thirds of pet-owning homebuyers would forgo their perfect home if it created any kind of problem accommodating a pet.

“The results of this survey reinforce that our pets are our family and an important part of what makes a house a home,” says Nate Johnson, chief marketing officer of

The results are based on an online survey conducted in March of more than 2,000 people who planned to purchase a home in the next 12 months, and it’s fairly consistent with a similar survey done in August 2018.

Of those surveyed, 82% of the respondents identified themselves as pet owners. Dogs were the most common pet (61%), followed by cats (45%), fish (12%) and birds (9%).

Of those pet-owning homebuyers, nearly 95% said that their pets’ needs would be at least a somewhat important consideration during their home search. Approximately 84% ranked their animals’ needs “extremely important” or “very important” in their home-search (55% and 29%, respectively; less than 5% said their needs were unimportant.

The focus on pets held true regardless of a homebuyer’s age: 96% of 18- to 34-year-olds, 97% of 35- to 54-year-olds and 87% of 55+ buyers said their animal would be at least a “somewhat important” factor during their home search.

And it wasn’t just dogs and cats. While 87% of dog and cat owners said their pets’ needs were extremely important or very important during their home search, 89% of bird owners, 85% of fish owners, 80% of reptile owners, 79% of rodent owners and 74% of horse owners, indicated their pet would factor into their decision.

For two-thirds of pet-owning buyers (68%), their pets play such an important role that they’d “forgo an otherwise perfect home.” Those aged 35 to 54 were most likely to pass (72%), compared with 66% of buyers between the ages of 18 to 34 years old and 51% of those 55+. People with children (71%) felt more strongly that the home needed to accommodate their pet than people without children (59%).

Homebuyers were asked to rank the three home features they considered most important for their pets. The top five features were: A large yard (38%), any outdoor space (29%), a garage (24%), a dog run (22%), close proximity to outdoor spaces (21%) and large square footage (20%).

© 2020 Florida Realtors®

Fla. Court: Homestead Exemption OK Even if Renting Rooms

A state appeals court ruled that a Florida homeowner’s residence retained its homestead protection even if the late owner rented out three of the four bedrooms.

TALLAHASSEE, Fla. – A state appeals court ruled on Wednesday that a Florida homeowner’s residence retained its homestead protection even if the late owner rented out three of the four bedrooms.

A three-judge panel of the 2nd District Court of Appeal overturned a Pinellas County probate ruling that said 75% of the residence did not have homestead protection after the death of owner Richard James Anderson. Creditors, who had liens of $38,551 against Anderson, argued that the rented portions of the home did not retain homestead protection.

A probate judge ruled that 75% of the property was subject to the claims of creditors, rather than the entire home going to Anderson’s heirs intact.

Anderson’s son, Richard James Anderson II, appealed the probate-court decision.

The appeals court cited longstanding court rulings about the state’s homestead property laws to overturn the probate-court decision.

“Although he rented out three individual bedrooms in the home, the decedent, along with the renters, had access to the common areas of the home. Neither the common areas nor the rented bedrooms can be severed from the residence by an imaginary line, and each area is not ‘lawfully conveyable as an independent parcel,’” according to the 10-page ruling, written by Judge Darryl Casanueva and joined by judges Daniel Sleet and Samuel Salario.

“A single-family residence that constitutes homestead is typically not subject to dividing. Therefore, the renting of the three bedrooms did not eliminate the homeowner’s claim of homestead exemption to the entire property.”

Source: News Service of Florida

Mortgage Rates Hit Record Low – Third Time this Year

At 3.15%, the median 30-year, fixed-rate mortgage set another record. It’s down from last week’s 3.24% and the lowest since Freddie Mac started tracking in 1971.

WASHINGTON (AP) – Long-term U.S. mortgage rates fell this week as the key 30-year home loan marked an all-time low for the third time in the last few months since the coronavirus outbreak took hold.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year loan tumbled to 3.15% from 3.24% last week. It was the lowest level since Freddie started tracking rates in 1971. A year ago, the rate stood at 3.99%.

The average rate on the 15-year fixed-rate mortgage declined to 2.62% from 2.70% last week.

Spurred by the fall in borrowing rates, demand for home purchases by prospective buyers has rebounded from a decline of 35% in mid-April to an 8% increase as of last week, Freddie economists noted.

Sales of existing homes plunged 17.8% in April, the slowest pace since 2011, reflecting the economic damage from the virus that shut down wide swaths of business and social life. The normally busy spring homebuying season has been upended. At the same time, home prices have been rising.

Bleak economic data, meanwhile, continues to pour in. A government report Thursday showed that the U.S. economy shrank at an even faster pace in the first three months of the year than initially estimated. Economists expect a far worse outcome in the current April-June quarter.

The government also reported that 41 million Americans have applied for unemployment benefits since the outbreak intensified in March, though not all are still unemployed. An estimated 2.1 million filed for benefits last week despite the gradual reopening of businesses around the country.

In a glimmer of hope, the overall number of people currently drawing jobless benefits fell for the first time since the crisis began, from 25 million to 21 million, suggesting that some companies are starting to rehire.

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

56% of Consumers Unafraid of In-Person Real Estate Events

Survey: Most buyers seem ready to move forward with deals. In general, more people feared COVID-19’s effect on society (61%) than how it might impact them.

WASHINGTON – Despite the ongoing COVID-19 pandemic, 56% of consumers said they’d attend an open house or take a home tour without hesitation, according to the Back To Normal Barometer from research company Engagious. Additionally, nearly half of respondents to the survey say they would return to activities such as taking a cruise, attending a live sporting event, or staying at a hotel.

However, an even greater number – 61% – are concerned about the overall public health crisis and the U.S. economy, a sign that consumers are more hopeful about their personal circumstances than they are about the country in general.

“People are concerned about societal impacts rather than how [COVID-19] affects them personally,” said Jon Last, president of Sports & Leisure Research Group, a marketing research consultancy based in White Plains, N.Y., and a co-creator of the barometer. “And they feel the same about the economy.”

Engagious presented the survey findings – Back To Normal Barometer, a biweekly survey that measures consumer interest in a variety of industries and activities during the COVID-19 pandemic – to the National Association of Realtors® (NAR) last week.

The panel also asked survey respondents who weren’t ready to go to an open house yet about the conditions that would make them feel safe enough to do so again. According to Rich Thau, president of Engagious and co-creator of the barometer, they would need specific assurances, including the approval of a COVID-19 vaccine (47%) and assurances from the local health department that touring open houses would be safe (45%).

“Two things that are critical are a certificate stating that [an area] has been properly sanitized according to established protocols, and that the certificate has been issued by a local authority,” Thau said.

The real estate-related findings come from a national online survey earlier in May of 1,040 buyers and sellers. The goal was to provide insights about how consumers want to safely navigate residential real estate transactions during the COVID-19 pandemic.

Consumer safety measures

Gina Derickson, research director of Engagious, expanded on the precautions that are important to consumers: People want to know that cleaning has been done before they enter an establishment. They want to see professional cleaners rather than staff (or homeowners) working on high-touch surfaces like doorknobs and elevator buttons. And the right products and right wording are important. People prefer terms like “sanitized” and “disinfected” over “cleaned” on signage.

According to Derickson, respondents also saw a risk difference associated with open houses depending on whether they were a buyer or a seller, with the selling side viewed as having a higher risk.

Sellers, Derickson explains, are perceived as having less control over who comes into the home and the surfaces people touch. On the other hand, respondents believe that buyers can better avoid COVID-19-related dangers and have a good sense of what a clean home looks like.

But both buyers and sellers agreed on one thing: Agents are crucial in helping them navigate the open house process.

“Buyers and sellers depend on agents to inform them and enforce compliance,” Derickson said. “They want the agent to tell them what to do, and they want vetting to make sure the home is safe.”

In analyzing the survey results, Thau said real estate agents matter more than ever on both sides of the transaction: 58% of sellers and 58% of buyers say the buying and selling of real estate is an essential service, and 62% of sellers and 54% of buyers say a real estate agent’s guidance is especially valued during the pandemic.

Don’t rely completely on virtual tours

A majority of buyers and sellers say they’re comfortable with technology and conducting business on a computer, as well as taking online tours of homes, Thau said, and 55% of buyers say virtual tours are great for vetting which homes they would seriously consider purchasing – but that number dropped quite a bit when asked if a virtual tour was an acceptable substitute for an actual tour. Despite the drop, though, two out of five buyers would consider buying a home without a visit.

Thau offered tips to enhance the value of a virtual tour, such as including a tour of the neighborhood or providing written information about home improvements the seller has made. He found that 54% of buyers and 55% of sellers believe it’s important to have a real estate professional help buyers navigate virtual homebuying options.

In traditional in-person home tours, both buyers and sellers see value in precautions, such as providing sanitary wipes, limiting visitors to two to four at a time, providing hand sanitizer and requiring masks, gloves and shoe coverings. Thau also noted that buyers and sellers see hand sanitizer, sanitary wipes and visitor limitations as precautions that will need to remain in place over the long term.

Thau also included a caution for agents in reference to in-person tours: 38% of buyers and 48% of sellers said they’d consider legal action if they contracted COVID-19 after a showing. And 29% of buyers and 41% of sellers said they’d still consider suing even if they had signed a release. However, 58% of buyers say they’re willing to waive their right to sue.

Agents expected to offer COVID-19 guidance

According to Thau, what matters the most to buyers and sellers about in-person tours is the real estate agent, who is expected to know and enforce health-related safety rules: 64% of buyers and sellers state that agents should understand state and local protocols for COVID-19 safety and provide guidance, and 63% of buyers and 64% of sellers say that if someone in the home is not following health protocols during a visit, they expect the real estate agent to address it.

Buyers and sellers also said it’s important for an agent to know how to close a real estate transaction electronically, and a majority of both indicated that agents add value to an online search. Helping buyers uncover valuable information about a property, helping them sift through online listings, and providing more in-depth pictures and videos of properties were among the ways agents could be of service to clients.

While 40% of buyers and 52% of sellers stated that they wouldn’t need to meet their real estate agent in person to buy or sell a home, they did place a premium on oral communication – 70% of buyers and 66% of sellers said they felt more comfortable talking on the phone or talking via Skype, FaceTime, Zoom or a similar app that allows face-to-face communication – much higher numbers than those who felt comfortable communicating by email or text.

What this means, Thau said, is that agents really matter during the pandemic. “Agents’ value has gone up tremendously as a result of the pandemic,” he said. “People need reassurance.” And he offered this advice: “Know the protocols, follow them, and don’t be afraid to enforce them.”

Source: National Association of Realtors®

© 2020 Florida Realtors®

NAR: April Pending Sales Drop 21.8% – Likely the Bottom

The expected drop still makes the industry pause, but NAR Economist Yun says “activity will rise as states reopen and more consumers feel comfortable about homebuying.”

WASHINGTON – Pending home sales decreased in April, making two straight months of declines thanks to the COVID-19 pandemic, according to the National Association of Realtors® (NAR). Every major region experienced a drop in month-over-month contract activity and a decline in year-over-year pending home sales transactions.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – fell 21.8% to 69.0 in April. Year-over-year, contract signings shrank 33.8%. An index of 100 is equal to the level of contract activity in 2001.

April’s pending home sales numbers reflected the greatest decline since NAR begin PHSI in January 2001.

“With nearly all states under stay-at-home orders in April, it is no surprise to see the markedly reduced activity in signing contracts for home purchases,” says Lawrence Yun, NAR’s chief economist.

However, Yun also thinks April will be the lowest point for pending contracts, while the month of May, consequently, will be the lowest point for closed sales.

“While coronavirus mitigation efforts have disrupted contract signings, the real estate industry is ‘hot’ in affordable price points with the wide prevalence of bidding wars for the limited inventory,” he says. “In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures.”

NAR’s latest Flash Survey found that 34% of Realtors said they successfully completed nearly all aspects of transactions while adhering to social distancing procedures – a sign that buyers are growing more comfortable with pandemic safety guidelines. As a result, Yun improved his last housing prediction for 2020.

“Given the surprising resiliency of the housing market in the midst of the pandemic, the outlook for the remainder of the year has been upgraded for both home sales and prices, with home sales to decline by only 11% in 2020 with the median home price projected to increase by 4%,” Yun says. “In the prior forecast, sales were expected to fall by 15% and there was no increase in home price.”

Although each of the four indices is down on a month-over-month basis, an encouraging development is that the rates of declines are lower in the Midwest, South and West, compared to the drops seen in March 2020.

The Northeast PHSI sank 48.2% to 42.6 in April, 52.6% lower than a year ago. In the Midwest, the index dropped 15.9% to 72.0 last month, down 26.0% from April 2019.

Pending home sales in the South fell 15.4% to an index of 87.6 in April, a 29.6% decrease from April 2019. The index in the West slipped 20.0% in April 2020 to 57.1, down 37.2% from a year ago.

© 2020 Florida Realtors®

‘Clean Criminal Background’ in Ads? Expect to Be Sued

Lawsuits cost a ton of money even if you prevail, and aggressive lawyers are filing lawsuits against property managers and landlords that ban all rental candidates with a criminal history. It’s not strictly illegal, but a HUD statement says it likely violates the Fair Housing Act.

ORLANDO, Fla. – While the Department of Housing and Urban Development (HUD) has federal oversight over Fair Housing Act violations, property managers and investment homeowners often have more trouble with another group – private law firms. And those private law firms are currently targeting property managers and investment homeowners that ban any potential renter with a criminal record.

The Fair Housing Act doesn’t specifically deny a landlord the right to reject an applicant based on a prior conviction; however, HUD issued a statement saying a blanket policy to deny felons can have an impact on minority populations under “disparate impact.”

Landlords who have a “no criminal background” policy – especially those who include that information in their advertising – are being sued, and when the lawyers issuing the lawsuit cite the HUD update on criminal background checks, these landlords can find themselves in a difficult – and legally expensive – position.

“Private law firms essentially test whether a property management company adheres to a memo issued by HUD (Department of Housing and Urban Development), and if in their opinion it does not, they file a lawsuit,” said Florida Realtors CEO Margy Grant last year after a single law firm filed over 48 lawsuits against property owners who had blanket no-criminal-background-check policies.

In short, a no-criminal-background policy isn’t worth the risk. Any money saved using a thorough vetting system could be lost instantly if an aggressive lawyer files a lawsuit.

“Unfortunately, it doesn’t matter if a rental policy purposely discriminates or not,” says Grant. “With HUD’s recommendations in hand, a law firm can file a lawsuit. And even if a property management company has done nothing wrong, it’s always expensive for a brokerage to defend itself in court.”

What is disparate impact?

Disparate impact is an act that may not discriminate against a single individual under the Fair Housing Act but is deemed harmful to a minority group overall. According to HUD, some minority communities have a higher percentage of members convicted of a felony, and that makes blanket policies against all felons discriminatory under the Fair Housing Act.

Things to consider when developing an in-house rental policy

  • Overall impact
    Does the policy have a disparate impact – an action that may not discriminate against a specific applicant yet still impact a group protected under the Fair Housing Act? Is there a distinct impact on a group of people because of their race or national origin, for example? HUD recognizes that this is fact specific; however, it points to several Department of Justice statistics showing that blanket denials based on criminal history have a significant impact on African Americans and Hispanics.
  • Justified policy
    A housing provider must show that its screening policy is justified, which HUD defines as “necessary to achieve a substantial, legitimate, nondiscriminatory interest.” The policy can’t be speculative or hypothetical, meaning evidence must exist that supports the screening policy. While protection of other residents’ safety and their property may be considered, the housing provider must prove, through “reliable evidence,” that the policy serves that purpose.
  • Alternatives
    Is a less discriminatory alternative available? Examples will depend on the details of the applicant’s background. However, HUD mentioned the length of time that has passed since an applicant’s conviction, a good tenant rental history before or after the conviction, and the circumstances surrounding the criminal conduct.

The National Association of Realtors® (NAR) offers additional screening information on its website.

Rental operating recommendations to avoid lawsuits

  • Create a written policy with standards on how to evaluate all individuals; evaluate each individual on a case-by-case basis.
  • Document research done and decisions made on individuals, and periodically review the information to ensure the policy is a) being followed and b) not having an unintended discriminatory effect.
  • Delay evaluating an individual’s criminal record until last – only after all financial and other qualifications have been met. This helps avoid any unintentional discriminatory effect and minimizes costs and efforts.
  • Don’t make decisions based on prior arrests that did not result in a conviction.
  • Remove application questions that ask about arrests without convictions. While a landlord may ask about prior convictions, it should be clear that each applicant is evaluated on a case-by-case basis.
  • A blanket restriction against any particular conviction or all individuals with a criminal record will likely be viewed as having a discriminatory effect, therefore evaluate each individual applicant on a case-by-case basis. Take into account mitigating and surrounding factors.
  • Do not apply criminal record policies or practices in an inconsistent manner. This may subject a housing provider to a claim of intentional discrimination.

Questions? Contact Florida Realtors Legal Hotline – a free service included with membership.

© 2020 Florida Realtors®

Fair Housing Act: Words Matter in Advertisements

It’s vital to review all advertisements, MLS entries and public-facing messages to make sure they comply with the Fair Housing Act and related laws that exist at all levels – local, state and federal. Realtors have been sued over accidental mistakes in the past.

ORLANDO, Fla. – The Fair Housing Act protects people from discrimination when renting or buying a home, getting a mortgage, seeking housing assistance or engaging in other housing-related activities. It protects against discrimination because of race, color, national origin, religion, sex, familial status or disability. There can be additional protected classes, such as sexual orientation and gender identity, which are included in the National Association of Realtors® Code of Ethics Article 10. Additionally, Realtors should be aware of any county or city rules that could add even more protected classes, such as source of income, age, or actual or perceived status as a victim of domestic violence, dating violence or stalking.

Although the Fair Housing Act and related rules cover a wide range of behaviors that could be discriminatory, one area of heightened concern for Realtors is advertising. Advertising should be written and reviewed (preferably with at least one other person for an additional perspective) to ensure nothing in an advertisement could be construed as discriminatory against a protected class. After all, in any lawsuit or complaint based on an advertisement, the published words will take center stage, with very little room for someone to argue that the message they intended to convey was not discriminatory.

As with all Fair Housing-related issues, Florida Realtors recommends all members use an abundance of caution in advertisements. As a starting point, any mention of a named protected class will very often be a problem. For example, it would look very strange indeed to see national origin or religion mentioned in a real estate advertisement.

Some organizations have taken an extra step to list specific words and phrases into red (avoid), yellow (caution), and green (acceptable) categories. Some Multiple Listing Services may also screen for specific words as a tool to ensure people stay safely on the side of caution.

These lists of words are easily discoverable by using a search engine to find links to “fair housing word and phrase list.” Although this is a good starting point to think about how to carefully phrase advertisements, the list is only a tool and should not be confused as an absolute safe harbor, which is why this article does not include its own list of words and phrases.

For example, here are a few advertisements that don’t include any words on the “avoid” or “caution” list, but still resulted in actual lawsuits filed against members in recent years:

  • “No section 8.” Although this is not a protected class at the federal level, a few sizeable local jurisdictions in Florida include source of income as a protected class. This means that, when a member in one of those jurisdictions adds “no section 8” to their advertisement, usually at the request of a landlord, they have made themselves a target of a lawsuit. To our knowledge, most lawsuits like this ended up with the agent or brokerage company paying to settle the case without going to trial.
  • “No criminal convictions.” Although criminal convictions are not a protected class by themselves, a HUD memo published April 4, 2016, titled Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions. The memo argued that aggressively screening out all criminal convictions, regardless of underlying crime and when it occurred, could be a violation of the Fair Housing Act under a disparate impact theory. The memo mentions that “Across the United States, African Americans and Hispanics are arrested, convicted, and incarcerated at rates disproportionate to their share of the general population. Consequently, criminal records-based barriers to housing are likely to have a disproportionate impact on minority home seekers.” At least one lawyer in Florida has targeted real estate licensees who are likely unaware of this HUD memo and has sued dozens of real estate companies over this issue.

Since an interpretation of what may be considered discriminatory is more a concept than a yes/no pre-made list, there is also a healthy amount of gray area. If you find yourself unsure of whether a phrase like “within walking distance of the beach,” or “no students” could be discriminatory (both phrases land on the “caution” list for many organizations), Florida Realtors members are welcome to call the Florida Realtors Legal Hotline to discuss a specific topic in more detail. We will almost certainly err on the side of caution as we discuss these issues.

Hopefully, members calling about their own advertisements before they are published will discover that there’s an objective, non-discriminatory way to describe the property that avoids the issue altogether and results in a safer advertisement that honors both the letter and spirit of the law.

Joel Maxson is Associate General Counsel for Florida Realtors

© 2020 Florida Realtors®

Violations Increase During Stay at Home Order

Noting an “increase in violations and tempers” during the COVID-19 pandemic, a condo board wants to boost its enforcement powers and fine unit owners who break the rules. But details count. Any new enforcement process might create more problems than it solves.

NAPLES, Fla. – Question: Many of our residents have been spending more time at home due to COVID-19, and the result has been an increase in violations and tempers. We have seen an increase in architectural violations without application, noise disturbances, smoking violations and complaints by neighbors against neighbors.

We have never fined an owner before but want to implement a process. Can the board levy a fine at a regular board meeting? – R.T., Marco Island

Answer: The short answer to your question is that board action is required at some point in the process, but a board vote at a regular meeting is not enough, by itself, to properly levy a fine.

Both the condominium and homeowners associations (HOA) statutes provide little guidance on how to levy and enforce a fine. The few procedural requirements in the statutes have changed over the years and although there are some helpful judicial decisions on fining, there are still many uncertainties.

The biggest issue is due process. Neither the rules of civil procedure nor the rules of evidence apply to condominium or HOA fines, so the question is whether your process provides the owner with due process in light of the limited statutory framework and any specific requirements in your governing documents.

At a broad level, the statute provides that fines and suspensions may not be imposed without providing at least 14 days’ notice and an opportunity for hearing before an independent committee. This phrase has been debated in the legal community for a long time. We believe the statute first requires the board to conduct a vote at a board meeting with normal notice (48 hours under the statute) and the board must vote to impose a fine. At this meeting, the board should vote to determine the amount of the fine per day and the number of separate violations or the number of days of a continuing violation.

Then, the association should provide the offending owner with a specific notice of the date, time and location of the hearing with the independent committee. The condominium statute provides that the committee must consist of “at least three members appointed by the board who are not officers, directors, or employees of the association, or the spouse, parent, child, brother, or sister of an officer, director, or employee.” At the hearing, the committee considers all of the evidence, allows the owner to present and challenge evidence, and the committee then votes to approve or reject the fine or suspension approved by the board. If approved, the fine is due and payable within five days.

There is simply not enough space in this article to fully discuss the process, so the discussion should not end here. Your covenants may impose specific notice requirements. Your community may simply not be able to find volunteers to serve on the committee. Your community may want to find a way to streamline the process so that the board does not need to vote on every single fine, and there are some ways to accomplish this. Your community should also discuss how the hearing itself is conducted and whether the process provides an owner with an adequate opportunity to defend himself or herself.

At the end of the day, a fine should not be imposed without providing due process, and there is no playbook for how to provide minimum or full due process in this context. When you discuss your process, you should also consider that your attorney may need to file suit to collect an unpaid fine or enforce a suspension, and thus any shortcomings in due process may be scrutinized.

As a result, you should work with your legal counsel to discuss your governing documents, the statutory framework, any previously adopted procedures or resolutions, and how to best pursue fines and suspensions in light of the virus epidemic.

Question: Our board met with our attorney to discuss a pending lawsuit and the meeting was closed to owners. As a result, we did not think it necessary to post a notice, but we are being challenged by a resident on this point. Is notice required even though owners may not attend? – P.N., Naples

Answer: Section 718.112 of the Condominium Act provides: “notwithstanding any other law, the requirement that board meetings and committee meetings be open to the unit owners does not apply to a) meetings between the board or a committee and the association’s attorney, with respect to proposed or pending litigation, if the meeting is held for the purpose of seeking or rendering legal advice; or b) board meetings held for the purpose of discussing personnel matters.

The above statute provides that these two types of board meetings can be closed (executive session) meetings and not open to the unit owners. This makes sense because the attorney-client privilege extends to the board, officers and other necessary individuals involved in the litigation process, and the attorney cannot effectively explain the strengths and weaknesses of litigation in a non-privileged setting. It is also important to note that the adverse party may be a unit owner and these sensitive discussions cannot be held in the presence of the party suing you.

The statute does not, however, state that other notice requirements do not apply to these meetings. As a result, we believe that closed board meetings must still be noticed, and this generally requires 48 hours’ posted notice and you must follow any specific notice requirements to individual directors. The agenda should state that the meeting is closed to unit owners but should nevertheless disclose the date, time and location of the board meeting.

The follow up question here typically concerns the minutes. Yes, you must still keep minutes of board meetings that are closed meetings. Those meetings should include motions and votes and other information you believe necessary. For example, if the board votes to authorize settlement within a specific range of dollar amounts, the individual signing the settlement agreement should certainly want to rely on written minutes reflecting that the settlement amount falls within the board-approved limits. Those minutes, however, are confidential and exempt from owner access for the pendency of the litigation.

Attorney John C. Goede is a shareholder in the law firm of Goede, Adamczyk, DeBoest & Cross.

© 2020 Journal Media Group

Dear Anne: Don’t Use an Offer to Increase Your Bottom Line

Realtor A’s listing excited Realtor B – just what his clients want. But after Realtor B scheduled a showing, he said the commission in the MLS wasn’t high enough. After failing to convince Realtor A, he then included a higher commission in the contract. That’s wrong – right?

Dear Anne: I received a showing request from “Buyer’s Agent Earl” the minute I entered my listing into the MLS. He said the property was ideal for his buyers.

After I confirmed the showing appointment, however, he asked if I could come up on the commission. He only works for a specific percentage and nothing less will do.

I told Earl the seller and I discussed the commission at length when I took the listing, and he made it clear he only wanted to pay X% to a cooperating agent and nothing more. But I did not tell Earl that the seller was being realistic: He believed that the final sales price wouldn’t be ideal because the property needs work, and a buyer would need money to make the repairs.

To be honest, my commission was less than preferable too, but a sale is a sale in my book.

As it turned out, Earl’s buyers saw a diamond in the rough and put in an offer within the price range we anticipated. What we did not anticipate was the terms of the offer: It stated that the listing broker would pay Earl a commission that was higher than offered in the MLS.

My seller went ballistic. He curtly reminded me he would not pay anything more than what was offered in the MLS. I explained he could counter the offer, remove the terms asking for a higher commission, and the commission would remain as stated in the MLS – and he did.

So next, Earl sent me a scathing email demanding that we pay up, saying his buyers would walk if we didn’t honor the terms in the contract.

The buyer walked alright – right into my office and I sold them the property. Now I want to take him to the Board for his underhanded tactics. And by the way, I paid old Earl the commission offered in the MLS because I believe it was the right thing to do even though I know I have grounds to argue procuring cause. Signed, Irritated with Earl

Dear Irritated: It’s possible an ethics hearing panel may find Earl in violation of the Code of Ethics. Why? Article 16 comes to mind, more specifically Standard of Practice 16-16, which says, Realtors shall not use the terms of an offer to attempt to modify the listing broker’s offer of compensation or make the submission of an executed offer contingent on the listing broker’s agreement to modify the offer of compensation.

Earl’s attempt to modify your offer of compensation could get him into hot water.

If Earl wanted to increase his bottom line, he had several options. He did start out on the right foot by asking if it’s possible to increase his commission before he showed the property. There is nothing unethical about asking the listing broker for a raise at this stage of the game.

Alternatively, Earl could ask the buyer to pay the difference in commission. If that failed, he could refer the buyer to another agent if he did not want to accept a commission that fell below his bottom line. He could then move on to a new sale and collect a referral fee.

There is another option, and this may sound familiar but it is different: The buyer can ask the seller in the terms of the contract to increase the commission as a concession. And no, I am not contradicting myself. It’s important to point out that the sales contract is between the buyer and the seller. And once again, the seller reserves the right counter back and remove the concession.

To be clear, the buyer is not asking the listing broker to modify the offer of compensation – he is asking the seller to kick in the additional funds as a concession to the actual sale of the property.

But what if Earl talks the buyer into this? Is it unethical?

In my opinion, no, because the obligation under the Code of Ethics is on Earl not to attempt to modify the listing broker’s offer of compensation. Ultimately, the buyer makes the decision to ask for the concession and sign the purchase agreement. I expect many may disagree; but, in the end, it is not my decision to make, the decision rests with a panel of Earl’s peers.

The final option is for Earl to accept the offer of commission as it stands, get paid and move on. The route he chose backfired. If he does go to hearing and is found in violation, his bottom line may take another hit if he gets fined. If you ask me, lesson learned.

Have an ethics or rules question? Email us at with “Dear Anne” in the subject line.

Anne Cockayne is Director of Local Association Services for Florida Realtors

© 2020 Florida Realtors®

Creating Contracts? You Must Literally Cross T’s and Dot I’s

The goal in a transaction is to proceed smoothly to closing. Speedbumps occasionally arise – but don’t create speedbumps on your own. A smooth process starts with careful attention to the contract, filling in all necessary blanks, and checking all appropriate boxes.

ORLANDO, Fla. – Everyone involved in a real estate transaction can agree that successfully closing the deal is the ultimate goal. And you start to achieve that goal by making sure to double check the contract, line by line, to make sure something isn’t missed … or added by the other side!

An integral part of the contract process is paying attention to each line of the contract – particularly any line that must have a box checked, may have default provisions or can contain additional information. The good news is that if you are using a Florida Realtors’ contract, the line numbers that contain an asterisk next to them easily guide you to those parts of the contract. The presence of an asterisk indicates that a blank may need to be filled out or a box may need to be checked.

Here is the tricky part: Do ALL blanks in the contract have to be filled out? Do ALL boxes need to be checked?

Here comes your favorite answer: It depends. Regardless, it likely serves your customer well for you to check, then double-check, portions of the contract to make sure that your buyer and/or seller are satisfied with what is there. Does the default timeframe for an inspection work for your buyer, for example?

Some sections of the contract don’t have default provisions, i.e., “if left blank, then 15 days.” Is a box that is required to be checked appropriately checked? Was additional information added by a party in a blank that may affect the other party?  For more examples of contract sections that can cause problems, refer to “What if someone fails to completely fill out a contract?” published in 2019.

Recent calls to the Florida Realtors’ Legal Hotline indicate a trend – additional information being added to paragraph 9 of the Florida Realtors/Florida Bar Residential Contract for Sale and Purchase (“FR/Bar”). This paragraph of the FR/Bar contract discusses closing costs of the parties, among other things. One line of that section also lists “Other” and allows a party to add potential costs to a party’s closing costs.

Calls to the Hotline reflect that this section is often overlooked, resulting in an unhappy consumer facing additional closing costs. The main example we’ve heard is a buyer adding a credit for buyer’s closing costs under the seller’s closing costs section.

More than likely, this oversight is due to a quick skimming of the document without taking the cautionary time to review each line. So again, check, then re-check, the lines of each contract that passes through your hands in each transaction that you handle.

While time-consuming, I would like to think that the parties would rather be out of additional minutes of their day rather than out of additional money from their pockets.

Meredith Caruso is Associate General Counsel for Florida Realtors

© 2020 Florida Realtors®

Landlords Get Creative to Maximize Rent Collections

Some tenants can’t cover all their expenses right now, and a few landlords are giving them a reason to make “pay the rent” a higher priority as they make hard decisions.

NEW YORK – The COVID-19 pandemic has sent unemployment skyrocketing, but many landlords are finding ways to keep collecting rent payments. Some offer flexible payback terms, gift cards or other incentives to try to get tenants to pay rent and avoid forbearance if they’re able to.

For tenants that still have some amount of income, these landlords are making “pay the rent” a higher priority if residents are making difficult financial decisions.

Ellie Perlman’s company Blue Lake Capital LLC has 2,000 rental units across the country, and she recently told how her company has been able to collect more than 96% of rents during April and May, while the portion of property owners successfully collecting rent nationwide hovers around 69%.

Perlman said that they offered early-bird discounts to those who paid rent during March – a $50 discount if residents paid for April rent by March 30 and $100 for paying May’s rent during March. About 20% of their tenants took advantage of the discount.

Blue Lake Capital also offered tenants flexible payment plans. Perlman shared one scenario as an example: If a resident paid $600 of their $1,000 rent and had four months left on the lease, then Blue Lake Capital would increase the tenant’s rent by $100 per month for the remaining four months of their lease.

They also allowed residents who became unemployed during the pandemic to use their security deposits to pay rent, but Perlman said that carries some risks. “The challenge is that you also can’t expose yourself to an unnecessary risk of releasing the security deposit,” she wrote. “To mitigate that risk, allow residents to sign up for security deposit insurance, which basically replaces the one-time security deposit with monthly payments of $5 to $10.”

In some cases, Perlman also tried to incentivize renters by sending Walmart gift cards to every tenant who impacted by the coronavirus.

“Not only did we feel that was our way to give back, but we were also hoping that our residents would feel more inclined to pay rents when they became in a better position to do so,” she wrote. “It worked – kindness still goes a long way.”

Source: “Seven Proven Tactics to Maximize Rent Collections During a Crisis,” (May 18, 2020)

© Copyright 2020 INFORMATION INC., Bethesda, MD (301) 215-4688

Loan Forbearance Advice: Assume Nothing, Check Everything

Most lenders admit to mass confusion when new forbearance options came out; ones that both service and/or own loans could offer borrowers completely different options.

EVANSVILLE, Ind. – Aaron Rodenberg thought, I gotta get ahead of this thing. It was toward the end of March. Shutdown orders shrouded several states as COVID-19 barreled across the country.

The Evansville, Indiana, resident runs his own one-man construction outfit – kitchen and bathroom remodels, mostly, and he knew coronavirus would affect his business. If people were losing their jobs, they wouldn’t have money lying around to fix up their homes.

To be proactive, he applied for a mortgage forbearance through his bank, Fifth Third. He never heard whether he was approved or not, so he put next month’s payment into his checking account.

A few weeks later, something weird happened.

“I got a piece of mail (saying) my mortgage payment was overdue,” he said. “I thought, ‘well that’s ridiculous.’” The payment was always auto-deducted, and the money still waited in his account. But there had been some confusion.

Turns out, Rodenberg had been approved for a forbearance. He just wasn’t notified. A Fifth Third associate told him over the phone it was for six months.

But because he’d seen horror stories online, he asked an important question: When this forbearance ends, he said, am I going to owe all the missed payments at once? In one lump sum?

Yes, the associate said.

Luckily, that person was mistaken – but only partly.

Rodenberg and others who apply for forbearances won’t necessarily owe all the money as soon as the forbearance ends. That’s a huge relief, of course. A lump payment of thousands of dollars would shred the finances of anyone who lives month-to-month. If we had piles of extra cash, we wouldn’t be applying for forbearances in the first place.

But it is one repayment option for the millions of Americans who seek mortgage relief as they lose their jobs or battle back-breaking hospital bills amid a pandemic that has hurled traditional American life into the garbage.

According to a column from the Washington Post’s Michelle Singletary, scores of borrowers who applied for forbearances through the federal CARES Act were recently told their deferred payments would be due as soon as their forbearance ended. That was wrong, and the government is clambering to fix the problem.

Fifth Third spokeswoman Carrie Hagovsky said her bank offers customers three choices once a forbearance ends: the lump-sum route; a repayment plan that would run concurrently with your normal payments; or the possibility of a loan modification that would tack the missed payments onto the end of your mortgage.

Fifth Third lays out those options online.

“We’re definitely not going to push anybody into a situation where they would have to repay (immediately),” she said. She claimed Fifth Third has tried to provide borrowers with as much information as possible, and she implored anyone with concerns to contact the bank immediately.

But she did admit there was some scrambling at the onset of the pandemic. Any bank or credit union employee will tell you that. Around the time Rodenberg applied, private institutions and the federal government alike hustled to figure out how to offer relief to homeowners during an unprecedented disaster.

It’s that communication lapse that worries Rodenberg.

He eventually spoke with a second Fifth Third employee who told him his forbearance had been for three months – not six. And, despite what the first person said, he learned a lump-sum repayment wasn’t the default option.

Eventually, he canceled the forbearance.

“I wasn’t even thinking about it in terms of myself. I started thinking about it in terms of people who have actually lost their jobs, who are making no money. Who aren’t able to go to work,” he said.

He wondered: how would a lump sum repayment help anyone?

Know your terms

If you apply for a forbearance, you need to be rock-solid about the terms. Depending on your institution, and even what type of mortgage you have, the stipulations could differ wildly.

Take Old National Bank. According to Chief Credit Administration Officer Denny Villines, ONB is offering mortgage deferrals. If someone is having a hard time paying, they can push their payments for 90 days. When the lull ends, the missed payments get glued to the back-end of the loan, and the customer can apply for an additional 90 days if their situation hasn’t improved.

“(But) it is important to note that Old National Bank is also a mortgage servicer, which means that we service loans for investors like Fannie Mae and Freddie Mac,” he said. “These are loans that Old National does not own. When we get a deferral or forbearance request on an investor loan, we must follow their guidelines, which may be different from ours.

“For example, some investors will call for all deferred payments to be made once the deferral period has ended.”

Because we’re talking about federally backed financial institutions – patron saints of needless complexity who would make even Rube Goldberg roll his eyes – none of those guidelines are uniform.

The Consumer Financial Protection Bureau’s website does its best to lay out stipulations for warring agencies such as FHA, USDA and others. Sometimes you can extend your loans and sometimes you can’t. Sometimes you have to pay everything back at once and other times you don’t.

The CFPB says anyone with a federally-backed loan should talk to their agencies directly. But if you’ve ever dealt with a giant bureaucracy like that, you know extracting information from them is about as easy as swiping a bear cub from an angry grizzly. The best place to start may be the bank or credit union through which you got the loan in the first place.

Be careful and advocate for yourself. Once this disaster is over, you don’t want to battle another one.

© 2020 Journal Media Group

Hurricane Season Collides with Coronavirus on Monday

Fla.’s disaster managers modified hurricane plans for evacuations, shelters and relief crews. More people, for example, may be encouraged to stay home during the storm.

TALLAHASSEE, Fla. – With the six-month Atlantic hurricane season starting Monday, emergency-management officials have changed how Florida will respond to storms as they grapple with the coronavirus pandemic.

Disaster managers, already working long days because of the pandemic, have modified hurricane plans on issues such as evacuations, shelters and conditions for relief crews because of the virus.

“You know it’s not usual that we’ve been in the (Emergency Operations Center) for three months doing planning before hurricane season, (but) that’s going to give us a leg up in a lot of ways because we’ve been thinking about it day in and day out here,” says Florida Division of Emergency Management Director Jared Moskowitz.

The hope is always for an inactive hurricane season, but forecast models aren’t crafted for comfort.

“We’ll have to see what the season does,” Moskowitz says. “They say it’s going to be an active season. Remember, we had 18 named storms last year. And we almost got (Hurricane) Dorian. So, you know, we’ll just have to see what it brings us.”

Arthur, which threatened the Carolinas as a tropical storm this month, started checking off the list of storm names for the 2020 season, which will last on the calendar from Monday through Nov. 30. Then came Tropical Storm Bertha, which formed off the Carolinas on Wednesday.

Last week, the National Oceanic and Atmospheric Administration (NOAA) became the latest organization to forecast an above-active hurricane season, with 13 to 19 named storms, of which six to 10 should reach hurricane status. The range is consistent with other forecasters that presume a La Nina weather pattern rushing warm water into the Atlantic.

In its forecast, NOAA also pointed to warmer-than-average sea surface temperatures in the tropical Atlantic Ocean and Caribbean Sea, reduced vertical wind shear, weaker tropical Atlantic trade winds and an enhanced west African monsoon wind system. All are factors for above-average storm activity.

“Similar conditions have been producing more active seasons since the current high-activity era began in 1995,” a NOAA news release said.

Mixing the forecasts with the virus, the state has created a reserve of 10 million face masks, 1 million face shields, and 5 million gloves.

The approach to shelters and evacuations also will be different.

“We’ve been always telling people to leave. Now, potentially, county emergency managers will be saying, ‘Know your home, know your (flood) zone,’” Moskowitz says. “So, if you live in a surge zone, yes, you’ll still have to get out. But if your house was a new construction. It’s built to code and we get a Category 1 or Category 2 storm, perhaps they’ll decide that the safest place for you to be is in your home. So, the issue is shelter in place. That’s clearly different.”

People who go to shelters are less likely to be crowded into single large rooms. Caps will be placed, maybe 50 people to a shelter, or evacuees could be spread across complexes such as schools, where each classroom could be used by five to 10 people. Another possibility is that people could find themselves filling hotels that would otherwise be low on occupancy.

“We’ve developed an app that hotels can sign up,” Moskowitz says. “We have 200 hotels so far signed up to do non-congregate sheltering. So instead of going to a shelter, you’d be assigned potentially to go to a hotel.”

Additionally, utility officials told regulators this month that plans are underway to establish more staging areas to reduce crowds of relief workers who would be needed to restore electricity after storms. Also, the utilities plan to shift to single-serve packaging of food and revamp sleeping arrangements for restoration crews that could require single occupancy in hotels or a need for more smaller sleeper vehicles.

They also cautioned that post-storm recovery assistance from utility crews based in other states might not be as large as in past years, as each state deals with issues related to the coronavirus.

Florida’s emergency-management division has also been taking internal steps to ward off its own disaster fatigue.

“We’re making sure that we’re rotating people on and off on weekends to give them time off with their families,” Moskowitz says. “Obviously, we’re boosting morale around here. We’re letting people bring their dogs to work. Because, look, mental health is an important aspect of what we do around here. We’ve been working 18-hour days since the beginning of March.”

Source: News Service of Florida

Short-term Rentals Down Amid Pandemic Some owners may be pivoting to longer-term, seasonal rentals. In the 100 largest metro areas, furnished and seasonal rentals are up 21% since Feb.  

PORTLAND, Ore. – All the travel we’re not doing because of COVID-19, for business or pleasure, has hit the market for short-term rentals pretty hard. Airbnb announced this month it’s laying off a quarter of its workforce – almost 2,000 people – and its long-awaited IPO may be on hold until next year.

Meanwhile, a new report suggests some owners of those properties may be pivoting to longer-term, seasonal rentals. In the 100 largest metro areas, furnished and seasonal rentals are up 21 percent since the end of February.

Kimberly Kent is an art broker, painter and former Airbnb host in Portland, Oregon. In March, she started renting her two studio apartments to traveling nurses for one- to three-month stays.

“We were getting about $100 a night originally with Airbnb. And what we’re getting with these folks now is $1,200 a month,” Kent said.

That’s less than half what she made when fully booked on Airbnb. It wasn’t just the coronavirus; a saturated market also played a role.

But as short-term bookings have dried up during the pandemic, new data from the listing site® suggests a lot of hosts may be shifting to longer-term rentals. Tourism hotspots like Nashville, Tennessee; Austin, Texas; Orlando, Florida; and Las Vegas have seen the biggest increases.

George Ratiu, senior economist at, said for many owners facing mortgage bills, “a slightly longer-term rental is a viable alternative, in the sense to bridge the gap between the lack of demand right now and a possible rebound later.”

But is there enough demand for those slightly longer-term rentals? Joshua Clark, an economist at Zillow, said a lot of renters may want more flexibility.

“If I’m a renter right now, and I’m seeing all the chaos going on in employment, I don’t know how long this thing’s gonna last,” Clark said. “I may not want to sign up for a full-year lease.”

And then there are all the people, especially in crowded cities, who may be looking to escape to the beach or the country.

Vi Nguyen, CEO of Homads – a marketplace for medium-term rentals – said with many employers allowing remote work, “employees are thinking, ‘Hey, I don’t actually even have to be here. I can have something a little bit more enjoyable, right?’ “

Not to be left out, Airbnb says more of its hosts are booking longer term, too, and offering discounts for stays of a month or more.

Copyright © 2020 APM, Marketplace, Amy Scott. All rights reserved.

City Dwellers Headed to the Suburbs After Pandemic? Maybe?

It’s too soon to tell, but suburban living with more open space, bigger lawns and room to stretch out could lure current urbanites to move in the wake of COVID-19.

CHICAGO – Since the first week in March, when I started writing nonstop about the coronavirus, not a day goes by that I don’t look outside my home office window and thank my lucky stars I live in the suburbs.

You’re likely thinking that as well, right?

We may be lumped in with Chicago and Cook County as far as the governor’s four-region/five-stage plan for reopening the state is concerned. But all you have to do is review the data that gets cited so frequently to realize we are doing a lot better out here (per capita and otherwise) against COVID-19 than the more densely populated zip codes of the region.

And that could be good news for property values in the area. I don’t own a crystal ball and have no expertise in real estate. (Although I did work my butt off to learn all that math in order to get my Realtor’s license a thousand years ago.) I am, however, going to rely on common sense to suggest city dwellers may just start looking toward the suburbs, with more open space, bigger lawns and room to stretch out in the wake of this pandemic that’s propelled social distancing and sheltering-in-place into a virtual tie for 2020 phrase of the year.

New York City is already seeing it, according to a recent article in the New York Times that featured one man moving from Manhattan to Long Island because “the balance of nature in the city has become so different.”

Seriously. It just makes sense. The more dense an area, the harder it is to stay away from that highly-contagious new virus that has driven us out of jobs, into our houses and behind those homemade masks.

In addition to the safety issue, there’s the new work-from-home phenomena that’s only picked up steam the last three months. Companies are already noting productivity levels have not slipped as employees shelter in place. So there’s likely to be more freedom from the boss to skip the commute and work from the kitchen table or attic office even after rules have been lifted and we can start moving about freely again.

And there’s no question some of the charm of city-living – the hustle and bustle, quaint shops and cozy but crowded restaurants – could be dramatically reduced in the post-pandemic new world.

Kathy Brothers, whose Aurora Keller Williams office spent Thursday driving around to area grocery and hardware stores, lauding their front-line workers and passing out food to them, is a big fan of the suburbs since she moved to the Fox Valley more than 20 years ago.

“I wouldn’t live anywhere else,” she proclaimed proudly. And she’s trying to convince those die-hard city folks to give this community a try, as well, by purchasing ads in the city touting local properties.

Density and new rules because of the coronavirus, she agreed, “could cause a transformation.”

As president of Realtor Association of the Fox Valley, Paul Kempa was even more emphatic. “Without a doubt this will help us in the suburbs,” said the broker with Realty One Group Excel.

While a lot of sellers are cautious, postponing putting their houses on the market and waiting to see if a second wave is coming, “there’s no doubt interest in growing in Kane County,” he said.

“We are starting to see it happen. People see this as having their own sanctuary, their own office, a nice yard,” Kempa said. “We are just putting together a marketing piece and are already getting a ton of phone calls because of it.”

Long-time Fox Valley Realtor Linda Pilmer also confirmed “it’s been on our radar.”

One thing city dwellers thinking about purchasing in the suburbs may have, however, “is sticker shock” from the property taxes that are three times higher here. Still, housing prices are certainly cheaper. And even before COVID-19, people have started to see the advantage of Aurora and the Fox Valley, which is 45-60 minutes from major airports and other city amenities, she noted, while also offering a less hectic pace of life that might be even more alluring now.

One attorney she works with had his adult children, all apartment dwellers, move back home with him after the governor’s shelter-in-place order, Pilmer told me, and all have developed renewed appreciation for the open space and friendliness of suburban living.

Whether or not that brings the grown kids home permanently remains to be seen. “If Chicago people lease, they might start looking out here when their leases are up,” she said. “People don’t move every year so we may be seeing the effect in the next five years.”

When I checked in with commercial real estate broker Brian Dolan to ask about my theory, he’d just gotten off a Zoom meeting with a group of brokers. And “the subject of a resurgence,” he said, “definitely came up.”

There’s been “a trend going this way anyway … with less officer workers,” Dolan pointed out. “From a logistical standpoint alone, the ‘burbs make more sense” after the pandemic. “Buildings in Chicago are 30-40-50 stories tall … how are you going to deal with elevators? Have two people get on at a time?”

Kempa, too, is seeing signs of a rebound.

Home showings are back up to normal compared to April when “everyone was huddled up,” he said. “The last couple of weeks people seem to be saying, ‘Let’s get on with our lives.'”

Copyright © 2020, The Beacon News, Denise Crosby. All rights reserved.

U.S. Long-Term Mortgage Rates Ease; 30-Year at 3.24%

It’s the 4th straight week that the 30-year home loan stayed below 3.30%; the average rate on the 15-year fixed-rate mortgage slipped to 2.70%.

WASHINGTON (AP) – Long-term U.S. mortgage rates eased this week in a housing market battered by the shutdown spurred by the coronavirus pandemic. Rates hovered near all-time lows as the benchmark 30-year home loan stayed below 3.30% for the fourth straight week.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year loan declined to 3.24% from 3.28% last week. A year ago, the rate stood at 4.06%.

The average rate on the 15-year fixed-rate mortgage slipped to 2.70% from 2.72% last week.

Sales of existing homes plunged 17.8% in April to a 4.33 million rate, the slowest pace since 2011, the National Association of Realtors reported Thursday. The normally busy spring homebuying season has been upended. At the same time, however, home prices have been rising.

Bleak data, meanwhile, continues to pour in showing the economic damage from the virus that shut down wide swaths of business and social life. The government reported Thursday that the number of Americans filing for unemployment benefits because of the pandemic has surged to nearly 39 million since widespread shutdowns began two months ago.

The continuing stream of heavy job cuts reflects an economy that is sinking into the worst recession since the Great Depression of the 1930s. The nonpartisan Congressional Budget Office estimated this week that the economy is shrinking at a 38% annual rate in the April-June quarter. That would be by far the sharpest quarterly contraction on record.

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Homebuilders Climb Even as Housing Outlook Remains Cloudy

As builders reported quarterly results, many said business was going great until mid-March, when the coronavirus shutdowns began. But several also say business started to improve by mid-April.

LOS ANGELES (AP) – The U.S. economy and housing market had set homebuilders up for a strong 2020. That was before the efforts to stem the spread of the coronavirus pandemic knocked the economy into a skid, dimmed consumer confidence and left a record number of Americans unemployed.

The housing market stalled in March as many would-be buyers held off on purchases. Sales of newly built and previously occupied U.S. homes fell sharply. Home construction slowed. The April data out so far shows the housing slowdown continued last month.

And yet, you wouldn’t know it by looking at homebuilder stocks. While shares in most of the builders are still in the red for the year, the majority of them have notched big gains so far this month that eclipse those of the S&P 500 by a wide margin. An S&P index of homebuilders is up 12.5% in May, versus a 1.4% gain for the broad-market S&P 500 index.

In recent weeks, as builders reported quarterly results, many have said business was going great until mid-March, when the coronavirus shutdowns began. But several also noted that business started to improve by mid-April and has continued to do so into May, said Carl Reichardt, a homebuilding analyst with BTIG.

“The critical question is how much of the improvement we’ve seen was simply the release of pent-up demand from the period of time of four weeks in mid-March to mid-April when business was frozen,” Reichardt said. “It’s hard to answer that question right now.”

The builders that have tended to weather the coronavirus slowdown better have been those, such as D.R. Horton and Lennar, that sell lower-priced homes for the entry level segment of the market, especially in the Southeast, and those that build ready-to-sell homes, rather than the built-to-order model, Reichardt said.

The housing market appeared set to extend a solid run-up in sales that began last fall as mortgage rates headed lower. The inventory of U.S. homes for sale had dwindled to the lowest level in more than a decade and a solid job market and low unemployment rate combined with more millennials entering their 30s led economists to forecast strong demand for housing this year.

Homebuilders were in prime position to capitalize on these trends heading into the spring homebuying season, aided by another pullback in mortgage rates. The average rate on a 30-year, fixed-rate mortgage has gradually fallen from an already low 3.72% the first week of January to 3.24% this week.

Sales of new homes jumped 7.5% in January then fell 4.6% the next month. By March, however, the economic fallout from the coronavirus pandemic knocked the housing market activity into a skid.

New homes sales sank 15.4% in March as mounting job losses and mandates to shelter in place in many cities put off many would-be buyers. April figures are out next week, and analysts estimate sales skidded 15.5% last month. Housing starts, another barometer for housing and builders, plunged 22.3% in March and cratered 30.2% last month, the lowest level in five years.

The National Association of Realtors said Thursday that sales of previously occupied U.S. homes, a far larger slice of the market than newly built homes, slid to a seasonally adjusted annual rate of 4.33 million units in April, the slowest pace since September 2011.

A forecast issued earlier this month by Zillow economists calls for U.S. home sales to decline as much as 60% this spring and take through the end of the year to recover. Another forecast, this one from Haus, a lender that co-invests with buyers as an alternative to traditional mortgages, projects the number of completed new homes largely declining well into 2021.

While states have begun to relax stay-at-home mandates and are clearing the way for businesses that were shut down to reopen, some economists predict U.S. economic growth could take years to fully bounce back. And many expect the unemployment rate to come down slowly over the next couple of years.

“The key, of course, is employment, meaning housing’s big rebound year is looking more as if it occurs in 2021,” Steven Blitz, chief U.S. economist at TS Lombard, wrote in a report this week. “Beyond that, and unlike the expansion just ended, housing will be back as a critical driver of growth.”

Still, even if a sluggish economic and job market recovery ends up delaying some would-be buyers from purchasing a home, the housing market remains largely favorable for big builders.

In addition to low mortgage rates and rising home prices, builders benefit from the chronically thin inventory of homes for sale nationwide, a trend that’s intensified during the pandemic as the pace of new construction slowed and as homebound sellers pulled their homes off the market. The number of previously occupied homes for sale nationally fell to a record-low last month, which drove the median sales price up over 7%.

Copyright © 2020 The Associated Press, Alex Veiga, AP business writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.