Category Archives: Association News: Reprinted with permission Florida Realtors. All rights reserved

Long-term mortgage rates hit 4.2%, up for 4th week

WASHINGTON (AP) – April 25, 2019 – U.S. long-term mortgage rates rose this week for the fourth straight week, though they remain historically low as a spur to home sales in the spring buying season.

Mortgage buyer Freddie Mac says the average rate on the 30-year, fixed-rate mortgage increased to 4.20 percent from 4.17 percent last week. By contrast, a year ago the benchmark rate stood at 4.58 percent.

The average rate for 15-year, fixed-rate home loans rose this week to 3.64 percent from 3.62 percent last week.

After peaking at nearly 5 percent in November, long-term rates started trending downward, helping to boost home sales after a rocky 2018.

Despite the recent increases, lower borrowing rates and improved affordability of homes “should push housing activity higher in the coming months,” said Freddie Mac chief economist Sam Khater.

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

The average fee on 30-year fixed-rate mortgages was unchanged this week at 0.5 point.

The average fee for the 15-year mortgage also remained at 0.5 point.

The average rate for five-year adjustable-rate mortgages slipped to 3.77% from 3.78% last week. The fee rose to 0.4 point from 0.3 point.

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Assignment of benefits bill heads to governor

TALLAHASSEE, Fla. – April 25, 2019 – Homeowners win! A six-plus-year effort to pass property insurance Assignment of Benefits (AOB) reform legislation came to a close on Wednesday after the Florida Senate passed HB 7065 on a 25-14 vote. The measure still needs Gov. Ron DeSantis’ signature to become law, but he issued a statement saying he plans to sign it. Once signed, the law becomes effective on July 1, 2019.

“Florida Realtors joined the effort to bring meaningful reform to the AOB process because we recognized the growing problem for what it was – a threat to homeownership,” says 2019 Florida Realtors President Eric Sain,

AOB was designed to help property owners streamline repairs to their home by empowering them to “assign” their insurance benefits to a private contractor who would then complete the task and work directly with the homeowner’s insurance company to secure payment.

But a growing number of contractors, such as water remediation companies and roofers, have been inflating the cost of repairs and filing lawsuits if insurers refuse to pay. Rather than go through a potentially expensive court fight that could require insurers to pay all of the homeowner’s court fees, insurers often settled these claims and passed the cost off to policyholders.

What does the AOB reform bill do?

The House passed the bill April 11, and the Senate ultimately went along with the House’s plan. An example of changes in the bill:

  • Non-AOB policies: Insurers will be allowed to offer policies that don’t include, or restrict, AOB claims. A contract that does not allow a homeowner to assign benefits should cost less than one that does.
  • Limit attorney fees: Another key part of the bill would effectively limit attorney fees in AOB lawsuits filed by contractors against insurers. The fee changes, which involve a formula, would apply only to vendors assigned benefits – not lawsuits filed by policyholders, who can still have their attorney fees paid if a court agrees that the insurer owes them money.
  • AOB requirements: It must be in writing; it must include an itemized estimate; it must include a written disclosure; it must include a 14-day rescission period. Once completed, assignees have three business days to notify the insurer.
  • Homeowner protection: If a homeowner’s policy doesn’t allow AOBs yet they sign one anyway, the AOB assignee must hold policyholders harmless from all liabilities.
  • Emergency repairs: Capped at $3,000 or 1 percent of the coverage limit in a homeowner’s policy.
  • AOB assignee rules: A company holding an AOB contract must follow new rules: They must give documents to insurers when requested, answer questions under oath and agree to participate in alternative dispute resolution.
  • Pre-litigation requirements: If an AOB firm wants to file a claim against an insurer, they must inform the homeowners before filing the lawsuit.
  • Insurer requirements: If an AOB assignee plans to sue a property insurer and submits a pre-suit notification, the insurer has 10 days to respond with a settlement offer or other alternative, such as a new appraisal or other form of dispute resolution.

Will property insurance rates go down?

HB 7065 does not force private property insurers to lower prices, but most of them have cited the high cost of AOB lawsuits as a major reason for rate-hike requests. As a result of this change in the way insurers operate and their new no-AOB policy option, private-market competition should lower overall rates and benefit Florida’s homeowners.

Under the bill, Citizens Property Insurance Corp. – the state-owned “insurer of last resort” – must lower its 2019 perils rate by the amount it will save under the legislation. Citizens currently has an 8.2 percent rate-increase request filed with the state, but spokesperson Michael Peltier says that request will be recalculated and resubmitted to Florida’s Office of Insurance Regulation.

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Try the Marie Kondo method for organizing contacts

ORLANDO, Fla. – April 25, 2019 – Tidying expert Marie Kondo has sparked a fad with her methods for solving household clutter, but writer Lalaina Rabary for the Keller Williams blog says you can apply that same “KonMari” method to cleaning up your database.

Contacts can pile up over time, and a disorganized database can lose its usefulness.

“Your database is your business,” Gary Keller, CEO of Keller Williams, writes in The Millionaire Real Estate Agent. “To succeed at a high level in real estate sales, you must commit to frequent contact with a database with the intent of building close relationships.”

Try applying this KonMari method to your database cleanup:

  • Visualize: Kondo first advises her clients to close their eyes and visualize where they want to be as they tidy up. In this case, if your contacts are split between CRMs, Excel spreadsheets and more, visualize how you can get all those contacts in one place and set a specific date to do that.
  • Tidy by category, not location: Focus on finding commonalities between contacts so that you can place them into categories. “You have the ability to add a contact to as many groups as you want, and there is no limit to the number of groups you [can] create,” writes Rabary. “To really set yourself up for success, add tags to your contact so you can quickly place your contact in the appropriate group (or groups) and pull them up at the right time.”
  • Ask the joy question: Kondo’s method centers on keeping what brings you “joy” and removing what doesn’t. As you evaluate your database, you may come across a contact that does not spark joy for you, and maybe even brings a sense of dread. Remove contacts from your database when an experience with them in the past was toxic or the contact asked you to do something unethical or illegal, Rabary notes.

Source: “KonMari Your Contacts – an Epic approach to Organizing Your Database,” Keller Williams Blog (April 23, 2019)

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It’s official: AARP designates Fla. an Age-Friendly State

TALLAHASSEE, Fla. – April 24, 2019 – Florida Governor Ron DeSantis joined American Association of Retired Persons (AARP) CEO Jo Ann Jenkins to announce that Florida has been designated an Age-Friendly State, making Florida the fourth state in the nation to join the AARP Network of Age-Friendly States and Communities.

“As our state continues to grow, we must ensure that we do all that we can to meet the needs of our residents. I am proud that Florida is leading by becoming the largest state to commit to this important effort,” DeSantis said.

Florida’s designation as an Age-Friendly State demonstrates a commitment to building livable communities that enrich the lives of people of all ages. Member states develop and implement plans that address any or all of the eight Age-Friendly domains: Transportation, housing, public spaces, respect and social inclusion, civic participation and employment, social participation, community and health services, and communication and information.

In addition to state recognition, AARP already has a number of Florida communities included in their Age-Friendly list:

  • Coral Gables: Joined 2018
  • Cutler Bay: Joined 2016
  • Dunedin: Joined 2018
  • Fort Lauderdale: Joined: 2017
  • Hallandale Beach: Joined 2016
  • Hollywood: Joined: 2016
  • Lakeland: Joined 2016
  • Longwood: Joined 2016
  • Miami: Joined 2018
  • Miami-Dade County Joined: 2016
  • Miami Lakes: Joined 2018
  • Miami Shores: Joined 2018
  • New Port Richey: Joined 2018
  • Orlando: Joined 2019
  • Palmetto Bay: Joined 2017
  • Pembroke Pines: Joined 2017
  • Pinecrest: Joined 2016
  • Pinellas County: Joined 2017
  • Pompano Beach: Joined 2018
  • Sarasota County: Joined 2015
  • Satellite Beach: Joined 2016
  • St. Petersburg: Joined 2016
  • Tallahassee: Joined 2015
  • Wilton Manors: Joined: 2018
  • Winter Haven: Joined 2015

“This designation opens the way for important partnerships in many parts of state, city and county government, and in the private sector, to make Florida an even better place to live for people of every age,” said AARP Florida State Director Jeff Johnson. “For the more than 8 million Floridians age 50-plus and the 2.8 million AARP members statewide, this is a big step forward.”

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More brokerages entering the iBuying business

NEW YORK – April 24, 2019 – To compete against the growing list of firms in the iBuyer world, brokerages are entering into the race of instant offers. Keller Williams plans to launch its own iBuying service next month called Keller Offers.

Keller Offers will first launch in the Dallas-Fort Worth market, and then expand to six to eight “major” markets by the end of the year, MarketWatch reports. The company plans to devote $100 million to instant offers in 2019.

“We see iBuying as an important additional offering for our agents to offer to home sellers,” the company stated.

Unlike several other iBuying programs, Keller Offers consumers will have a fiduciary (a Keller Williams real estate agent) serving them in selling their home via the instant offer route.

“While we believe the addressable market for iBuyers represents less than 10 percent of the overall market, we do see this as an important additional option for KW agents to be able to offer their sellers,” Keller Williams spokesman Darryl Frost said in a statement. “Our goal is to minimize the cost to the consumer.”

The iBuying movement has caught the attention of the real estate industry. Wall Street has invested in millions to buoy startups in the space. The growing iBuyer firms use technology to make instant cash offers to sellers who want a quicker, more convenient sale – one that also bypasses listing the home publicly in the MLS.

Keller Williams’ announcement follows on the heels of iBuying giant Opendoor, which launched a new initiative called Opendoor Agent Partner Program, which also adds real estate agents to the iBuyer process. Opendoor says that it wants to partner with real estate agents they can pair with buyers and sellers that choose the traditional option or if a home doesn’t fit inside Opendoor’s buy criteria.

Agents are finding ways to take advantage of an iBuyer world. Coldwell Banker, Keller Williams, Redfin and ERA are among the brokerages that have been testing their own version of an iBuyer-type program. Their programs, however, are being created to ensure that real estate agents remain at the center of the transaction, no matter which selling option a homeowner prefers.

How big a bite can iBuying take out of the market?

Dod Frasier, Opendoor’s vice president of capital markets, told MarketWatch that he does not believe instant offers will gain traction in every market. “Real estate is a big market,” Frasier says. “But we are a great option for a subset of customers.”

Source: “Sell Your Home With a REALTOR® or an Algorithm? Maybe Both.” MarketWatch (April 22, 2019)

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New realtor.com ads make fun of real estate reality TV

CHICAGO – April 24, 2019 – Realtor.com’s new ad campaign tries to show viewers that “reality TV” doesn’t always reflect reality.

The firm’s new “public reality announcement” ad spots focus on people watching reality TV in order to remind them of the big differences between the homes they’re seeing on screen and the real-life process of buying a home.

The campaign, called “Homes for the Real of Us,” was created around the idea that real people need real places to live rather than a “fantasy frequently implied in a majority of real estate advertising,” according to realtor.com.

“By poking fun at these misconceptions, our campaign reinforces that people want and need real information and expertise during their home search,” says Andrew Strickman, head of brand and chief creative for realtor.com. “Although the drama-filled lavish lifestyles of reality TV and luxury amenities of real estate shows can be really entertaining, they also create unrealistic expectations about the homebuying process.”

The campaign seeks to offer a realistic picture of a home search – not luxurious homes that the average consumer can’t afford.

The ad campaign features short video spots that will appear on HGTV, MTV, and The Food Network, as well as several digital platforms such as Instagram, Facebook, and Twitter. A sample of the ads can be viewed on the National Association of Realtors®‘ website.

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Time for a brand overhaul? Here’s how you can tell

NEW YORK – April 23, 2019 – “Your brand is the essence and soul of your company. It is every experience and interaction that your clients have with your business and the perception that they have of it,” says Laura Ure, CEO of Keenability, a marketing agency specializing in lifestyle marketing that targets the affluent buyer.

“Your brand should communicate the value you offer to your audience, and it should establish trust and credibility,” she says. “Of course, with time, it’s natural for a company to evolve; after all, clients are constantly changing.”

Ure recommends conducting a brand audit, which helps real estate firms determine whether their brand needs to be rebuilt or, alternately, whether it’s still relevant and valuable.

When conducting a brand audit, companies should consider how their brand stacks up against the competition. Are the visual brand components modern? Does the brand align with their values, mission and reputation? An audit will determine if a brand still reflects the correct message.

If firms determine that an update is wise, they should ensure they understand their brand’s purpose, vision, message, position and promise to help establish the personality of their brand and formalize their strategy. They should:

  • Analyze the market to determine what makes them different from the competition
  • Update the visual components of their brand to match their new brand strategy, going beyond just a logo redesign to include photography, colors graphic elements, etc.
  • Fortify their brand by ensuring consistency
  • Develop guidelines regarding logo usage, colors, tone and voice
  • Ensure there is marketing in place to support their rebrand
  • Get their existing client base excited before launching

Source: Inman (04/12/19) Ure, Laura

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March new-home sales pace highest since Nov. 2017

WASHINGTON – April 23, 2019 – Sales of newly built, single-family homes rose to a seasonally adjusted annual rate of 692,000 units in March after a slightly revised February report, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. It’s the highest sales pace since November 2017.

“These numbers indicate that builders who can produce housing at affordable price points will experience sales growth,” says Greg Ugalde, chairman of the National Association of Home Builders (NAHB). “However, builders are still dealing with a shortage of construction workers and buildable lots, which limits housing affordability.”

“We saw a large gain at lower price points where demand is strong,” adds NAHB Chief Economist Robert Dietz. “In March 2019, 50 percent of new home sales were priced below $300,000 compared to 39 percent in March of 2018. These are the price points that are attractive for renters seeking to become homeowners.”

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the March reading of 692,000 units is the number of homes that would sell if this pace continued for the next 12 months.

The inventory of new homes for sale was 344,000 in March, representing a 6 months’ supply. The median sales price was $302,700 with strong gains in homes sold at lower price points. The median price of a new home sale a year earlier was $335,400.

Regionally, and on a year to date basis, new home sales fell 17.6 percent in the Northeast, 8.1 percent in Midwest and 5.9 percent in the West. Sales rose 9.6 percent in the South, where 58 percent of new home sales occurred in March.

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Florida Legislature: Update for the week ending April 19

By Danielle Scoggins

TALLAHASSEE, Fla. – April 23, 2019 – Only two weeks remain before the scheduled end of the 2019 session, and week seven was a busy one.

To recap week seven: On Tuesday, our remote notaries bill, HB 409, passed the House Judiciary Committee on a 17-1 vote. Then, in that same committee, HB 721, a bill we are supporting regarding emotional support animals, passed on a 17-0 vote. Both of these bills are now headed to the House floor.

Wednesday was all about the Senate Rules Committee, which took up and passed three of our bills. First, for the first time ever in the Senate, an AOB (property insurance assignment of benefits) reform bill made it through all its committee stops, with SB 122 heading to the Senate floor on a 11-6 vote. Second, our open and expired permits bill, SB 902, is headed to the floor after a 15-0 vote. Finally, our remote notaries bill, SB 548, is headed to the floor after a 14-1 vote. What a week!

Looking ahead into this week, the budget conference is set to begin.

We also hope to report on the final passage of many of our bills. On Tuesday, the Senate is scheduled to vote on our AOB reform bill, SB 122. The House has already passed its version so it’s up to the Senate now.

Also on Tuesday, the House will be voting on our remote notaries bill, HB 409. Its Senate counterpart is already on the floor on second reading. On Wednesday, the House is set to take up HB 447, our open and expired permits bill. Its counterpart is on the floor of the Senate waiting to be scheduled.

Priority budget issues

Water quality and environmental funding
The House budget includes $607 million that will be spent on water quality, Everglades restoration and other environmental projects. The Senate budget includes $660 million for these same environmental priorities. All signs point to the final environmental spending plan landing somewhere close to the governor’s proposal of $625 million.

The overall appropriation for Everglades related projects is $360 million. A third of this money will be used to begin moving dirt on the EAA reservoir which will be used to store and clean water that is released from Lake Okeechobee and will eventually be moved south to the Everglades and on to Florida Bay. There is also a line item in the Department of Transportation budget that uses money from the DOT trust fund that will fund the remaining money needed to complete the raising of Tamiami Trail. This will be a huge step to send more water south through the Everglades and on to Florida Bay. These, and other projects, will all have positive impacts on limiting algae once they are completed.

Two other important environmental issues that deserve mentioning are red tide and septic tanks. The Senate has included $27 million for water quality improvements related to a red tide/blue green algae task force with the House including $19 million for the same project. There is also a bill that will direct funding to the Mote Marine Lab in Sarasota to study red tide. On septic, the Senate has included a straight $25 million for septic-to-sewer projects, while the House has included a dollar-for-dollar match program for these projects up to $50 million.

Housing trust funds
For the first time in more than 10 years, the Senate proposes to fully fund the State and Local Government Housing Trust Funds at $331.9 million. The House proposes to sweep $200 million from the housing funds into general revenue, spending only $123.6 million on housing. Florida TaxWatch released a report last week that analyzes the Legislature’s history of not using housing funds for their dedicated, intended purpose. Florida Realtors is urging the House to accept the Senate’s position on the housing trust funds.

Tax cuts
A final compromise on taxes appears headed for conference. Back-to-school and disaster preparedness tax holidays will likely be part of the final package, as well as a reduction in the Business Rent Tax (BRT).

The House Tax Package, HB 7123, passed the Appropriations Committee. It includes a .35 percent reduction of the BRT and two sales tax holidays.

The Senate tax bill, SB 1112 passed the Finance & Tax Committee. It would address remote sales tax collection and use the additional revenue to reduce the BRT from 5.7 percent to 3.5 percent.

Division of Real Estate
The House and Senate budgets include $500,000 for the Division of Real Estate to combat unlicensed real estate activity.

LIDAR
The House and Senate budgets include language that allows the Division of Emergency Management to continue spending the $15 million currently being used for LIDAR mapping.

Priority bills we’re watching

Stay up to date on the legislative priorities we are actively supporting this session.

  • Open and expired building permits
    HB 447 – Provides requirements related to open and expired permits. Current status: Placed on the special order calendar for 4/24/2019. SB 902 – Companion bill to HB 447. Current status: On Senate floor. Committee substitute text filed.
  • Assignment of benefits (AOB)
    SB 122 – Attorney Fee Awards Under Insurance Policies and Contracts. Current status: Placed on the special order calendar for 4/23/2019. HB 7065 – companion bill to SB 122. Current status: Passed by the House on a 96 – 20 vote. Awaiting Senate action on SB 122.
  • Online remote notaries
    HB 409 – Authorizes online notarizations. Current status: Placed on the special order calendar for 4/23/2019. SB 548 – Companion bill to HB 409. Current status: On second reading in the Senate.
  • Emotional support animals
    HB 721 – Provides that individual with disability who has emotional support animal is entitled to access to housing accommodation. Current status: On second reading in the House. SB 1128 – Companion bill to HB 721. Current status: On second reading in the Senate.
  • Taxation
    HB 7123 – House tax cut bill that includes a reduction of the Business Rent Tax. Current status: Passed the Appropriations Committee on an 18 – 9 vote. On second reading in the House. SB 1112 – Senate tax bill that includes a reduction of the Business Rent Tax. Current status: Passed the Finance and Tax Committee on an 8 – 0 vote. Committee substitute text filed.
  • Private property rights/vacation rentals
    SB 824 – Preempting the regulation of vacation rentals to the state. Current status: Temporarily postponed by the Innovation, Industry and Technology Committee. This committee is not scheduled to meet again. HB 987 – Companion bill to SB 824. Current status: Passed by the Commerce Committee. Senate companion bill temporarily postponed so bill will move no further.

Other bills of interest

  • Deregulation of professions and occupations
    HB 27 – Removes regulations on specified DBPR professions. Current status: On second reading on the House floor. SB 1640 – Companion bill to HB 27. Current status: On Senate floor. Committee substitute text filed.
  • Growth management
    SB 728 – Authorizing sufficiently contiguous lands located within the county or municipality which a petitioner anticipates adding to the boundaries of a new community development district to also be identified in a petition to establish the new district under certain circumstances. Current status: On Rules Committee agenda for 4/23/2019 at 2:00 p.m. HB 437 – Companion bill to SB 728. Current status: Passed the House on a 106-9 vote.
  • Homeowners’ insurance policy disclosures
    SB 380 – Revising circumstances under which insurers issuing homeowners’ insurance policies must include a specified statement relating to flood insurance with the policy documents at initial issuance and renewals. Current status: On second reading in the Senate. HB 617 – Companion bill to SB 380. Current status: Passed the House on a 113-0 vote.
  • Local tax referenda
    SB 336 – Providing that a referendum to adopt or amend a local discretionary sales surtax must be held at a general election. Current status: On Senate floor. Committee substitute text filed. HB 5 – Companion bill to SB 336. Current status: Passed House on a 69-44 vote.
  • Property development
    HB 7103 – Prohibits local governments from imposing certain requirements relating to affordable housing. Current status: Placed on the special order calendar for 4/24/2019. SB 1730 – Companion bill to HB 7103. Current status: On Rules Committee agenda for 4/23/2019 at 2:00 p.m.
  • Military affairs
    SB 620 – Prohibiting a landlord from requiring a prospective tenant who is a service member to deposit or advance more than a certain amount of funds. Current status: On Rules Committee agenda for 4/23/2019 at 2:00 p.m. HB 891 – Similar bill to SB 620. Current status: On second reading in the House.
  • Insurance
    SB 714 – Citing this act as “Omnibus Prime”; increasing the required reimbursement of loss adjustment expenses in reimbursement contracts between the State Board of Administration and property insurers under the Florida Hurricane Catastrophe Fund. Current status: On Senate floor. HB 301 – Similar bill to SB 714. Current status: Passed the House on a 114-0 vote. In messages in the Senate, awaiting action on SB 714.
  • Limitations on homestead assessments
    SB 324 – Revising the timeframe during which the accrued benefit from specified limitations on homestead property tax assessments may be transferred from a prior homestead to a new homestead. Current status: Not considered by Appropriations Committee. HB 1391 – Companion bill to SB 324. Current status: In State Affairs Committee waiting to be scheduled.
  • Homestead property tax assessments/increased portability period
    SB 326 – Proposing amendments to the State Constitution to increase the period of time during which the accrued benefit from specified limitations on homestead property tax assessments may be transferred from a prior homestead to a new homestead. Current status: Not considered by Appropriations Committee. HB 1389 – Similar bill to SB 714. Current status: In State Affairs Committee waiting to be scheduled.

All of the bills that the Public Policy Office is tracking can be found on Florida Realtors Legislative Tracker.

Danielle Scoggins is interim vice president of public policy for Florida Realtors

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Study: Consumer demand continues to be more eco-friendly

WASHINGTON – April 22, 2019 – The National Association of Realtors® (NAR) released its Sustainability 2019 Report to coincide with Earth Day, April 22. It found that consumer demand in real estate continues to trend eco-friendly.

The report is in its third iteration. It surveyed Realtors about sustainability issues in the residential and commercial real estate markets, and the preferences they’re seeing in consumers in their communities.

According to the report, 59 percent of respondents found that residential consumers were very or somewhat interested in sustainability. Seven in 10 residential and commercial agents and brokers said that promoting a property’s energy efficiency in listings is either somewhat or very valuable.

“The state of the environment is important to our members and their business practices, and the report shows that sustainability impacts consumers’ home buying decisions as well,” says NAR President John Smaby. “Realtors remain on the cutting edge of sustainability and continue to lead the conversation about energy efficiency in real estate.”

A large majority of respondents (83 percent) said that solar panels were available in their markets, and 36 percent said that solar panels increased the perceived property value. However, only 8 percent of those surveyed said that solar panels decreased the perceived amount of time a home spent on the market. Solar panels are most prevalent in the Northeast (available in 94 percent of markets) and respondents in the West were the most likely to report they increase property value (41 percent).

Twenty-five percent of brokers indicated that tiny homes – homes that are 600 square feet or less – are available in their markets, a 2 percent increase from 2018. Only 13 percent of respondents said that wind farms were available in their markets.

The transportation and commuting features that Realtors stated are very or somewhat important to their clients include: easy access to highways (82 percent), short commute times and distance to work (81 percent) and walkability (51 percent) – the same as 2018.

Forty-one percent of respondents were aware that their Multiple Listing Service (MLS), has green data fields; 14 percent were unaware. Among those that do have green data fields, 35 percent of respondents use them to promote green features, 26 percent use to promote energy information and 14 percent use to promote green certifications.

Two out of five Realtors (39 percent) said they’re comfortable or extremely comfortable talking about green features; 40 percent of respondents said they’re confident or extremely confident in their ability to connect clients with green lenders; only 6 percent said they’re not at all confident.

When asked what they consider the top market issues regarding sustainability, agents and brokers named understanding lending options for energy upgrades or solar panels (38 percent), the lack of information and materials provided to real estate professionals (32 percent) and improving the energy efficiency of existing housing stock (31 percent).

Respondents were also asked about sustainability in commercial real estate: 70 percent indicated that promoting energy efficiency in commercial listings was very or somewhat valuable. Sixteen percent said that their Commercial Information Exchange had green data fields and that those fields promote energy information and green features.

The top building features clients specified as very or somewhat important to their agents or brokers were utility/operation costs (81 percent), efficient use of lighting (67 percent) and indoor air quality (64 percent).

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NAR’s Good Neighbor Awards celebrate 20 years

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Fla.’s housing market: Pending sales, median prices up in March

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

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

In March, statewide median sales prices for both single-family homes and condo-townhouse properties rose year-over-year for the 87th month-in-a-row. The statewide median sales price for single-family existing homes was $256,000, up 2 percent from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’sstatewide median price for condo-townhouse units was $189,500, up 3.6 percent over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

According to the National Association of Realtors(NAR), the national median sales price for existing single-family homes in February 2019 was $251,400, up 3.6 percent from the previous year; the national median existing condo price was $534,140; in Massachusetts, it was $377,000; in New York, it was $280,000; and in Maryland, it was $273,762.

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

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

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

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

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

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

© 2019 Florida Realtors®

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TV shows give owners a can-do attitude about renovations

CHICAGO – April 22, 2019 – House renovation and design television programs may be prompting more buyers to shed some of their fixer-upper fears.

Nearly 60 percent of home shoppers recently surveyed said that home renovation programs have made them more optimistic about renovations, according to a new realtor.com survey of about 1,000 consumers planning to buy a home in the next 12 months.

As inventories remain tight in some markets, homebuyers are eyeing properties they once cast aside to look at them under a new lens of how they could renovate it. Nearly 60 percent of the homebuyers surveyed say they’re considering a home that needs renovation, the survey showed.

“Whether it’s seeing the project unfold in a tidy 30-minute segment, or just getting inspired by the before-and-after shots, home shoppers are turning to home renovations to make their dream home when finding one as-is turns out to be difficult,” the survey notes.

Rising home prices and a limited number of entry-level homes are pushing springtime home shoppers to consider other homes that need renovating, says Danielle Hale, realtor.com’s chief economist. “Replete with inspiration at their fingertips – like Pinterest, Instagram and various home renovation TV shows – some home shoppers are comfortable tackling home renovation jobs to find a home that balances their needs with their budget,” she says.

Buyers expect their renovations to make a big difference on the value of the home, too. Ninety-five percent of buyers said they expect some home remodeling will result in a positive return on their investment. Nearly a quarter of buyers surveyed said they expect a positive return of more than 50 percent from their remodels.

They’re willing to spend the big bucks, but is it enough?

Slightly more than half of homebuyers considering a home that needs some TLC said they are willing to spend more than $20,000 on the remodel. Twenty-eight percent are willing to spend up to $10,000, and 22 percent are willing to spend between $10,001 and $20,000. However, a kitchen remodel costs around $66,000, and even a minor kitchen remodel will cost about $22,000, according to realtor.com. A kitchen upgrade was the top home renovation project that buyers said they would consider. Other popular projects include a bathroom renovation or a hardwood flooring refinish.

Regardless if a buyer wants to DIY (do it yourself) or not, it’s important that clients fully understand the benefits and setbacks that can come with taking on a home project, as opposed to hiring professionals to complete the task.

Source: realtor.com

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First-time buyers biggest stress? Affordability

CHARLOTTE, N.C. – April 17, 2019 – The biggest stressor for many of today’s first-time homebuyers is home affordability, according to a new survey by LendingTree, an online mortgage lender.

LendingTree asked Americans who plan to purchase a home within the next two years a wide-ranging series of questions about their priorities, thoughts about the market and financial profile. In addition to finding homeownership to be a top priority among millennials, the survey also suggests that the want-to-be buyers would benefit from education about the mortgage closing process.

Key findings about first-time homebuyers

  • Two out of three first-time buyers worry about the shortage of affordable homes. Most are looking for a home priced at $150,000 or less, and nearly 85 percent would consider purchasing a fixer-upper to cut costs.
  • They underestimate how long the mortgage closing process takes. Nearly half think they’ll get to the closing table in 15 to 30 days – far less than the average closing time of 43 days.
  • More than one in four first-time homebuyers have poor credit. Just 15 percent have a score of 740 or higher, and nearly two in five aren’t satisfied with their credit score. By contrast, more than 70 percent of repeat buyers are happy with their credit score.
  • Low income and a lack of savings are the top two barriers to homeownership, and finding a home within budget is the most stressful part of buying a home for almost half of first-time shoppers.
  • Almost one in four millennial buyers want to own a home before heading down the aisle, and 43 percent of first-time buyers across all age groups are single.

“Although the homeownership rate is lower among millennials than earlier generations at the same age … purchasing a home is still a significant milestone for many. However, strengthening your financial profile is crucial for those thinking of buying a home,” says Tendayi Kapfidze, chief economist at LendingTree.

“First-time buyers should prioritize strengthening their credit score and shopping around for the best mortgage rate,” she adds. “There are many programs available for those with lower scores, but buyers will save more money if they can raise their score, especially considering the potential difference in monthly mortgage payments over time.”

© 2019 Florida Realtors®

 

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How much can you save going solar? Google tells you

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‘Be inspired, leave empowered!’ – Women in Real Estate 2019

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Real estate crowdfunding going mainstream

NEW YORK – April 17, 2019 – When the first real estate crowdfunding firms launched about five years ago, they were met by plenty of skeptics. Yet the sector has continued to shake off uncertainty and win over a growing base of sponsors and investors.

“The initial stigma of crowdfunding is long gone and everyone in our industry, even the largest groups, recognize it as a viable source of capital raises,” says Stephen Cassidy, president at Denholtz Associates, a Piscataway, N.J.-based private investment company that has been in business for more than 60 years. For Denholtz, crowdfunding has proved to be a very effective way of sourcing equity.

The company completed its first crowdfunding equity raise on the CrowdStreet platform in early 2016 for a Downtown Orlando office building and now uses the online platform to source capital on three to four deals per year, raising anywhere from about $500,000 to $3 million in equity.

“It gives us access to capital partners – high-net-worth individuals and accredited investors – that are national in scope that we wouldn’t ever get a chance to know,” says Cassidy. In its most recent crowdfunding deal that closed in February, the company successfully raised nearly $3 million in equity on the CrowdStreet platform in about three weeks to finance the acquisition of an office property in Red Bank, N.J.

One of the advantages for a sponsor such as Denholtz is that it serves as a consistent, recurring source of equity, as well as a capital source that is accessible for smaller dollar amounts, under $3 million. There is a lot of liquidity in the market, but a lot of groups want to put out bigger amounts of $10 million and up, which doesn’t really match well with the smaller syndication deals, notes Cassidy.

Growing investment offerings

Crowdfunding firms appear to be doing a better job of capturing – and holding – investor interest with new investment tools and products that allow them to not only invest in one-off deals, but also build diversified portfolios of crowdfunded investments. “The last six months have been fairly significant, not just for CrowdStreet, but the evolution for sponsors to raise capital for their projects in the online channel and for investors who are becoming more aware of the opportunity,” says CrowdStreet CEO Tore Steen.

Last fall, CrowdStreet introduced its first blended portfolio option that allows investors to invest directly into a diversified portfolio of properties offered on the CrowdStreet platform. The company also launched CrowdStreet Advisors as a registered investment advisory group with licensed advisors that help accredited investors build customized real estate investment portfolios.

“I think that is another indication of where this market is evolving to,” says Steen.

Crowdfunding firms are also exploring ways to tap into what could be a lucrative Opportunity Zone marketplace and to serve as an intermediary for investors looking to roll capital gains into Opportunity Zone projects.

The Jumpstart Our Business Startups (JOBS) legislation passed in 2012 changed regulations allowing public solicitation for investment in real estate assets among accredited investors, which essentially launched the crowdfunding market for capital raising. However, the focus for most firms has been squarely on accredited investors due to the regulatory challenges of cost-effectively marketing to non-accredited investors.

“It is something that people are very interested in doing,” says Jake Fingert, a general partner at Camber Creek, a venture capital firm based in Washington D.C. The company focuses solely on investing in technologies for real estate and was an early backer of Fundrise in 2014. However, there are still questions on how to open up crowdfunding to non-accredited investors in a smart and efficient way, he adds.

Education has been key to evolution

One of the challenges to crowdfunding is that it is difficult to peel back the curtain and get an accurate picture of industry volume and growth rates. Anecdotally, established players are reporting growing momentum in terms of capital raising and investor pools. For example, CrowdStreet has raised more than $400 million on its platform since launching in 2014, including setting a record high one-month capital raise of $47 million in February.

However, there has also been some high-profile shake-out along the way. Notably, RealtyShares made headlines last fall when it announced major layoffs and a halt to new fundraising after it failed to secure additional venture capital funding to support operations. RealtyShares was one of the early entrants to the sector in 2013, and also had scaled up quickly – reportedly collecting over $870 million in investments for more than 1,100 projects.

The first phase of the crowdfunding evolution included the launch of platforms such as RealtyMogul, PeerStreet, Fundrise, RealCrowd and CrowdStreet, among others.

“One of the key evolutions that we have seen over the last few years is the move towards specialization,” says Fingert. Crowdfunding firms have started to focus on specific verticals, such as multifamily or office, or they are focusing on specific parts of the capital stack. For example, firms such as PeerStreet and AlphaFlow are focusing on sourcing investor capital specifically to finance real estate debt.

Another stepping stone in the industry’s evolution has been getting traditional lenders comfortable with transactions that use crowdfunding as part of the capital stack. Initially, lenders were worried about doing deals with non-accredited investors who might end up losing money and suing the fund. Lenders were also concerned about following with Know Your Customer (KYC) regulatory requirements and they want to know who is investing in a deal, says Cassidy.

Getting over that hurdle was an educational process. For example, Denholtz Associates treats its accredited crowdsourced investors the same as its own pool of accredited investors. They sign the same documents with the same terms, and in most cases, they also form personal relationships with those crowdfunding investors as well, notes Cassidy.

“So, I think lenders are perfectly comfortable with crowdfunding now, it’s just a matter of addressing Know Your Customer issues for them,” he says.

© 2019 Penton Media, Beth Mattson-Teig, National Real Estate Investor

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NY Fed study finds that tax reform impacts RE market

NEW YORK – April 17, 2019 – A new report from the New York Federal Reserve Bank indicates that the 2017 Tax Cuts and Jobs Act (TCJA) is partly to blame for the slowdown in the housing market because it reduced incentives to buy homes.

The law was expected to increase after-tax homeownership costs by capping the amount of mortgage debt interest, but make up for that loss by doubling Americans’ standard deduction and lowering marginal tax rates.

“Before the tax law, the incentive to purchase and even trade up was in the itemization of taxes,” says Jonathan Miller, CEO of the real-estate appraisal firm Miller Samuel. “The ‘reform’ aspect of the tax cut replaces the direct messaging long enjoyed by housing.”

According to New York Fed economists Richard Peach and Casey McQuillan, capital costs appear to have increased to 5 percent from 1 percent for homes where the amount borrowed exceeds $750,000.

“Different provisions of the TCJA combine to increase the marginal user cost of capital for homeowners, especially for higher-priced homes and homes in high-tax jurisdictions,” they say.

“This plan was introduced at the same time mortgage rates were rising, so the cause of the slowdown was less clear,” says Miller. “But today rates are now lower than they were a year ago, so the slowdown wasn’t really about rising mortgage rates.”

Source: Markets Insider (04/15/19) Heeb, Gina

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Florida Legislature: Update for the week ending April 12

By Danielle Scoggins

TALLAHASSEE, Fla. – April 16, 2019 – We have passed through week six of session and achieved some very positive milestones. First off, the House AOB bill, HB 7065, passed off the floor on a 96-20 vote! That’s awesome news, especially when you consider that its Senate companion, SB 122, only has one more committee stop to go.

There was also very good news for our open/expired permits and remote notary bills. On the open/expired permits side of things, we saw HB 447 pass the Commerce Committee on a 22-0 vote. It will now head to the House floor with its Senate companion, SB 902, having only one more committee stop. For remote notaries, SB 548 passed its second committee on a 5-0 vote. It now heads to its last committee with its House companion, HB 409, in a similar position.

For our vacation rental bills, we had a mixed outcome. On the positive side, HB 987 passed its last committee, the Commerce Committee, on a 13-11 vote. The advocacy efforts of our members and strong support from the committee’s chair, Representative Mike La Rosa, are what made this possible. Unfortunately, the Senate Innovation, Industry and Technology Committee temporarily postponed SB 824. This makes the passage of SB 824 unlikely as this committee is not set to meet again this session.

Moving into week seven, mark your calendars for April 17 at 2:00 p.m. This is when the Senate Rules committee plans to take up three of our priority bills. That’s right, open/expired permits, AOB and remote notaries are all on the agenda, and it’s the last committee stop for each of these bills. Suffice it to say, this is a very important committee meeting. Additionally, our House remote notaries bill will be heard on April 16 at 1:30 p.m. This is also the last stop for this bill in the House.

Priority budget issues

Senate Appropriations Chairman Rob Bradley has indicated that budget conferences with the House could begin by April 22. The below information is where our budget priorities currently stand.

Water quality and environmental funding
The House budget includes $607 million that will be spent on water quality, Everglades Restoration and other environmental projects. The Senate budget includes $660 million for these same environmental priorities. All signs point to the final environmental spending plan landing somewhere close to the governor’s proposal of $625 million.

The overall appropriation for Everglades related projects is $360 million. A third of this money will be used to begin moving dirt on the EAA reservoir, which will be used to store and clean water that is released from Lake Okeechobee and will eventually be moved south to the Everglades and on to Florida Bay. There is also a line item in the Department of Transportation budget that uses money from the DOT trust fund that will fund the remaining money needed to complete the raising of Tamiami Trail. This will be a huge step to send more water south through the Everglades and on to Florida Bay. These, and other projects, will all have positive impacts on limiting algae once they are completed.

Two other important environmental issues that deserve mentioning are red tide and septic tanks. The Senate has included $27 million for water quality improvements related to a red tide/blue green algae task force with the House including $19 million for the same project. There is also a bill that will direct funding to the Mote Marine Lab in Sarasota to study red tide. On septic, the Senate has included a straight $25 million for septic-to-sewer projects, while the House has included a dollar-for-dollar match program for these projects up to $50 million.

Housing Trust Funds
For the first time in more than 10 years, the Senate proposes to fully fund the State and Local Government Housing Trust Funds at $331.9 million. The House proposes to sweep $200 million from the housing funds into general revenue, spending only $123.6 million on housing. Florida TaxWatch released a report this week that analyzes the Legislature’s history of not using housing funds for their dedicated, intended purpose. Florida Realtors® is urging the House to accept the Senate’s position on the housing trust funds.

Tax cuts
The House Ways & Means Committee approved a $161 million tax cut package this past week. The bill, HB 7123, contains a Business Rent Tax reduction (.35 percent rate cut). It also proposes hurricane and back to school sales tax holidays, and a few other non-tax cut provisions.

Division of Real Estate
The House and Senate budgets include $500,000 for the Division of Real Estate to combat unlicensed real estate activity.

LIDAR
The House and Senate budgets include language that allows the Division of Emergency Management to continue spending the $15 million currently being used for LIDAR mapping.

Priority bills we’re watching

Private property rights/vacation rentals
SB 824 – Preempting the regulation of vacation rentals to the state. Current status: Temporarily postponed by the Innovation, Industry and Technology Committee. This committee is not scheduled to meet again. HB 987 – Companion bill to SB 824. Current status: Passed by the Commerce Committee. Senate companion bill temporarily postponed, so bill will move no further.

Open and expired building permits
HB 447 – Provides requirements related to open and expired permits.

Current status: Passed by the Commerce Committee on a 22 – 0 vote. Now heads to House floor. SB 902 – Companion bill to HB 447. Current status: On Rules Committee agenda for 4/17/2019 at 2:00 p.m.

Assignment of benefits (AOB)
SB 122 – Attorney Fee Awards Under Insurance Policies and Contracts. Current status: On Rules Committee agenda for 4/17/2019 at 2:00 p.m. HB 7065 – companion bill to SB 122. Current status: Passed by the House on a 96-20 vote. Awaiting Senate action on SB 122.

Online remote notaries
HB 409 – Authorizes online notarizations. Current status: On Judiciary Committee agenda for 4/16/2019 at 1:30 p.m. SB 548 – Companion bill to HB 409. Current status: Passed Government Oversight and Accountability Committee on a 5-0 vote. On Rules Committee agenda for 4/17/2019 at 2:00 p.m.

Emotional support animals
HB 721 – Provides that individual with disability who has emotional support animal is entitled to access to housing accommodation. Current status: On Judiciary Committee agenda for 4/16/2019 at 1:30 p.m. SB 1128 – Companion bill to HB 721. Current status: On second reading in the Senate.

Taxation
HB 7123 – House tax cut bill that includes a reduction of the Business Rent Tax. Current status: On Appropriations Committee agenda for 4/16/2019 at 10:00 a.m. SB 1112 – Senate tax bill that includes a reduction of the Business Rent Tax. Current status: On Finance and Tax Committee agenda for 4/16/2019 at 1:00 p.m.

Other bills of interest

Deregulation of professions and occupations
HB 27 – Removes regulations on specified DBPR professions. Current status: On second reading on the House floor. SB 1640 – Companion bill to HB 27. Current status: In Appropriations Committee waiting to be placed on agenda.

Growth management
SB 728 – Authorizing sufficiently contiguous lands located within the county or municipality which a petitioner anticipates adding to the boundaries of a new community development district to also be identified in a petition to establish the new district under certain circumstances. Current status: In Rules Committee waiting to be placed on the agenda. HB 437 – Companion bill to SB 728. Current status: Placed on the special order calendar for 4/17/2019.

Homeowners’ insurance policy disclosures
SB 380 – Revising circumstances under which insurers issuing homeowners’ insurance policies must include a specified statement relating to flood insurance with the policy documents at initial issuance and renewals. Current status: On Rules Committee agenda for 4/17/2019 at 2:00 p.m. HB 617 – Companion bill to SB 380. Current status: Placed on special order calendar.

Local tax referenda
SB 336 – Providing that a referendum to adopt or amend a local discretionary sales surtax must be held at a general election. Current status: On Rules Committee agenda for 4/17/2019 at 2:00 p.m. HB 5 – Companion bill to SB 336. Current status: Passed House on a 69-44 vote.

Property development
HB 7103 – Prohibits local governments from imposing certain requirements relating to affordable housing. Current status: Committee substitute text filed. SB 1730 – Companion bill to HB 7103. Current status: In Rules Committee waiting to be placed on agenda.

Military affairs
SB 620 – Prohibiting a landlord from requiring a prospective tenant who is a service member to deposit or advance more than a certain amount of funds. Current status: In Rules Committee waiting to be placed on agenda. HB 891 – Similar bill to SB 620. Current status: In State Affairs Committee waiting to be placed on agenda.

Insurance
HB 891 – Citing this act as “Omnibus Prime”; increasing the required reimbursement of loss adjustment expenses in reimbursement contracts between the State Board of Administration and property insurers under the Florida Hurricane Catastrophe Fund. Current status: On Rules Committee agenda for 4/17/2019 at 2:00 p.m. HB 301 – Similar bill to SB 714. Current status: Placed on special order calendar.

All of the bills that the Public Policy Office is tracking can be found on our Legislative Tracker.

Danielle Scoggins is interim vice president of public policy for Florida Realtors

© 2019 Florida Realtors®

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How to make a million dollars in real estate investing

NEW YORK – April 16, 2019 – Christina Stembel didn’t just bend the traditional business model for flower companies; she snipped it in half.

Stembel grew up on a farm in Bremen, Ind. (population 4,500), so it’s tempting to say that she founded Farmgirl Flowers to get back to her roots. But the real inspiration for her business came while she was working as an event planner near San Francisco in the mid 2000s. Tasked with cutting expenses, Stembel, now 41, looked for ways to reduce the costs of floral arrangements, which she thought were overpriced and underwhelming. She started ordering directly from local growers, which led her down a rabbit hole of research into the business of flowers. She concluded that the e-commerce side of the industry was ripe for disruption because a lot of people – particularly young people – weren’t satisfied with the floral arrangements available online.

“Younger consumers were purchasing far less often than previous generations, for the same reason I hated sending my mom flowers – they didn’t like what was out there,” she says. “You spend an hour sorting through options on websites to find the least ugly option, which shouldn’t be the thing you say about flowers.”

Stembel’s idea: Instead of adopting the model of the big flower companies’ websites, which offer everything from red roses to Asiatic lilies, she would sell only one arrangement that changes daily, based on what’s in season. Stembel launched Farmgirl Flowers in 2010 with $49,000 in savings. In 2015, the company started taking orders outside the Bay Area, relying primarily on social media and word of mouth to drive traffic to its website.

Last year, annual revenues topped $23 million. Stembel now has more than 100 employees – including on-staff bicycle and car couriers who deliver locally – and plans to establish six distribution centers throughout the U.S., which will expand the business and reduce shipping costs.

The most-successful entrepreneurs scale up with an eye toward selling to a larger company, and that’s what Stembel envisions for her enterprise. Right now, she’s investing most of her money in the business (she pays herself $50,000 a year and lives in a one-bedroom apartment with her husband, Neil) so she can expand as quickly as possible over the next five years or so. At that point, she’d like to sell the company and use the proceeds, along with everything she’s learned, to launch another venture.

Taking a great idea or a special skill and parlaying it into a successful business is only one route to riches. Among the people featured here, one couple earned their first million by buying rental properties, and another amassed seven figures – and retired early – through a combination of saving and smart investing.

What these success stories have in common is passion, patience and persistence – and a vision for what their wealth can achieve. Money may not buy happiness, but having more of it gives you the freedom to make choices that can bring satisfaction, whether that means buying your dream home, escaping the 9-to-5 grind or giving generously to charity.

The real estate investors

As a student paying his way through college at Eastern Kentucky University, Jason Rector got tired of paying rent.

“Every time I wrote the rent check, the landlord’s net worth was going up, and mine was going down,” he says. That motivated Rector to buy his first house. It was 2006 – before the housing crash – but properties in Richmond, Ky., were affordable. He bought a three-bedroom, two-bathroom home for $117,000 with a $4,100 downpayment, using savings from the mowing business he ran while in high school.

Rector finished the basement himself, adding two more bedrooms and another bathroom, and invited four friends to rent from him. That paid his mortgage and expenses while he lived rent-free.

The next summer, he bought a second house for $135,000. His younger brothers, who followed him to college at Eastern Kentucky, lived in and managed the houses after Rector returned to his hometown, Champaign, Ill., in 2008.

Back home, Rector began his career as a firefighter, but he had caught the real estate bug, and he kept buying. Today, Rector, 34, owns and manages 93 rental properties, with an eight-figure total value.

Rector says his wife, Lisa, 33, is a big key to his success. She’s a real estate agent with Keller Williams and a top agent in her market. She helps find properties they can buy for 10 percent to 20 percent below market value – mostly apartment houses and single-family homes near the campus of the University of Illinois. The homes may be torn up or dated. Or they could be foreclosures or short sales. Lisa negotiates the deals, and Jason improves the properties.

Jason says that since the downpayment on the first house, he hasn’t put a cent of his own money into the business. When he’s ready to buy, he taps his line of credit to pay the purchase price plus the cost of renovation. When he rents out the property, he takes the lease to the bank and the banker orders a new appraisal. Based on the new value of the property and anticipated rental income, Jason takes out a new, 15-year commercial mortgage. He uses the loan proceeds to replenish the line of credit and pays down the loan with the rent he collects.

Investing for the long haul: The Rectors keep properties for at least five to 10 years. Jason will sell if he can find a buyer willing to pay more than market value or if he can cash in on home-price appreciation to buy a larger property with more units.

“My approach to real estate investing isn’t get-rich-quick,” he says.

Jason, who still works 52 hours a week as a firefighter and recently launched a construction company, used to manage and maintain the properties himself, and he says he never evicted a tenant. Now he employs 20 people as well as his two brothers and his mother. “I get to do the fun stuff, focusing on acquisitions and starting new businesses,” he says.

“I’ve learned that to be successful, you must have a why, and the bigger the why, the more successful you can be,” says Jason. Jason’s work as a firefighter gives him the opportunity to make someone’s day better, he says. The couple give 10 percent of their income to their church, they’re active in the local United Way, and they’re founding a nonprofit to pursue community mentorship and international aid.

“The more money we make, the more we can give away,” says Jason.

The Rectors live comfortably but don’t need a “crazy, fancy lifestyle,” Jason says. In 2018, they bought a lake house that they share with family and a new group of guests each weekend. They gave each of their two children a rental property on their first birthdays, and as the kids get older, they’ll help manage the property. When the children reach college age, they can use their houses to generate money for school, income or seed money to start their own businesses.

How to make money in real estate

Since the bottom of the housing market in 2012, median home prices nationally have risen by 53 percent, according to Clear Capital, a provider of real estate data and analysis. Is it too late to make money in real estate investing? Not if you find a property selling for a discount and manage it well. Real estate investors offer some key strategies:

  1. Location, location… Look for properties in economically stable neighborhoods where you can expect long-term price appreciation and a large, consistent pool of prospective tenants. That’s often at the entry level of the market.
  2. Run the numbers. Look for cash flow – rent minus all expenses, including any management fee and a reserve fund in case of vacancies – of a few hundred dollars a month. Or you might be content to break even each month and wait for the home to appreciate. Use BiggerPockets.com’s Rental Property Calculator to assess a property’s potential.
  3. If you don’t have the skills and time to manage a property, or it’s in another city, you’ll need to hire a property management company. You can expect to pay a monthly fee of the rent you receive, plus a separate leasing fee, which varies from one-half to a full month’s rent.
  4. Use other people’s money. Ideally, you’ll put down as little of your own money as you can, borrow the rest and charge enough rent to pay the loan. You’ll pay more for a mortgage on an investment property than you would for your own home. The requirements you must meet to get a mortgage on a rental property vary depending on whether you intend to live on-site and on who is backing the mortgage (Fannie Mae, Freddie Mac, FHA or VA). If you have enough equity in your current home, you could take out a home-equity line of credit against it to buy the property.
  5. Learn the business. When Jason Rector started out, he says, he read like crazy about real estate investing, went to conferences and took a lot of successful people to lunch. Check out BiggerPockets.com, an online real estate networking and information resource, and consider joining a local real estate investor club or association (search for one on the National Real Estate Investors Association website).

The financial planner

Jennifer Myers may have picked one of the worst times in recent history to launch her financial-planning business. Myers, 47, started SageVest Wealth Management in 2007, just as the U.S. was on the verge of an economic meltdown. “People were scared of advisers and the market in general, let alone working with a relatively new and small company,” she says. Clients who signed on with her needed a lot of hand-holding to get through what was an extremely harrowing time.

Myers says her business began to grow as the economy recovered and investments she made during the downturn paid off. When she started her firm, in McLean, Va., she had about $40 million in assets from clients she brought with her from a wealth management firm; today, she manages about $200 million. She’s a fee-only planner who charges between 0.5 percent and 1 percent of assets for financial planning and investment management. As her business has grown, she’s been able to hire two other financial advisers and a director of client services, and she is preparing to add another adviser to her team.

Myers, a certified financial planner, put herself through college and earned an MBA from George Washington University, in Washington, D.C. She worked as a partner with a wealth management firm for 10 years before launching her own business, and during that time, she saved about half of her income. “That allowed me to get through a lean period,” she says.

She attributes much of her success to her focus on developing long-term relationships with her clients, helping them with everything from making large charitable gifts to paying for a child’s stem-cell treatment. Too often, she says, financial-planning firms are more interested in generating new business – and assets under management – than working with the clients they already have.

Myers has also had to learn how to turn challenges into opportunities. Financial planning has long been a male-dominated business, and Myers sometimes had a hard time getting people to take her seriously when she launched her firm. But she also found that many women are more comfortable working with a female planner. “More women are making the financial decisions in the household,” she says. “They want someone who understands them and how they think.”

Giving back: In 2017, Myers launched SageVestKids, a free financial-literacy site for children ages 3 to 18. Her goal is to help the next generation learn good money management skills. “We have a financial crisis of people not being prepared for retirement,” she says.

The growth of Myers’s business has allowed her to fulfill some of her lifelong goals. As a single mother, she was able to adopt two children – her daughter, age 4, and her son, who is 19 months old. She has provided financial assistance to her extended family. Plus, she had the resources to recover from a financial hit that would have bankrupted many families. In 2015, she and her newly adopted daughter had to move out of their home in Northern Virginia after mold in the basement ceiling made them seriously ill. After paying thousands of dollars for mold removal – which wasn’t covered by insurance – she sold the house and bought a home closer to her office.

Her advice to aspiring business owners? You’ll probably be married to your job, so make sure you have the time to make the commitment. Have enough financial resources to get through the tough times, along with a Plan B in case your business plan doesn’t work out.

How to start a business

Launching a successful business can make you a millionaire, but the path to wealth will take dedication and hard work.

  1. Create a business plan. It should outline the type of business you want to launch, your competitive strategies and your goals. Also include the company’s organizational structure, start-up costs, projections for sales and profits, and a break-even analysis. You can find more information about creating a business plan at the Small Business Administration website.
  2. Find the money. Your business plan will help you figure out how much money you’ll need to launch your venture. If you need to borrow and can’t get a traditional bank loan, consider a Small Business Administration loan. These are loans issued by banks but guaranteed by the SBA, which reduces the lender’s risk. To find lenders that offer SBA-guaranteed loans, go to www.sba.gov/funding-programs/loans/lender-match.
  3. Ask for advice. Don’t overlook sources of free help from veteran entrepreneurs. Your alma mater’s alumni network is one potential source of mentors. You can also get advice from 10,000 small-business volunteers through Score, a small-business nonprofit supported by the SBA. Score also offers free business tools and free or low-cost workshops across the U.S.
  4. Take advantage of tax breaks. Starting in 2018, small-business owners, sole proprietors, freelancers and people with side gigs can deduct up to 20 percent of their qualified business income – net income after they’ve claimed business deductions – before they calculate their tax bill.

If your total taxable income – which includes interest and dividends, as well as income reported on Form W-2 if you also have a regular job – is less than $160,700 on an individual return or $321,400 on a joint return, you can deduct 20 percent of your qualified business income no matter what type of business you’re in. Once your qualified business income exceeds those levels, however, the tax break may shrink or disappear.

For example, in an effort to prevent affluent professionals, such as doctors and lawyers, from gaming the system, Congress created a higher standard for professionals who provide personal services. For these business owners, the deduction phases out once 2019 total taxable income exceeds $160,700, or $321,400 for married couples, and disappears once taxable income tops $210,700 for singles and $421,400 for couples.

The supersavers

Tim and Amy Rutherford of Parker, Colo., have long been good savers. Tim, 52, who spent his career in telecommunications equipment sales, started maxing out his 401(k) with his first job out of college and invested in taxable accounts as well. Amy, 50, who worked in sales for media companies, regularly socked away her commissions, which some years amounted to half her base salary or more.

The Rutherfords, who married in 2008, say they always spent less than they earned – typically $200,000 a year, depending on commissions. Then, after a trip to London and Paris in 2014, they promised themselves they would take their savings to a whole new level. The vacation was rushed and interrupted by work e-mails and worries about sales quotas. “We had to hustle back to work with jet lag,” says Amy. After that, their goal was to achieve financial freedom so they could retire in their mid-fifties.

Based on their spending at the time, the Rutherfords estimated they would need $120,000 a year to live on in retirement. That would require them to amass a $3 million nest egg. “Having this end goal really changed our spending,” says Amy. In 2015, they got rid of their biggest expense: a 6,000-square-foot house. They moved into an 1,800-square-foot townhouse they had been renting out. “We fell prey to lifestyle inflation,” says Tim. “We bought nicer cars. We bought a bigger house.”

They also began to question each purchase, asking whether it was necessary or could be achieved more cheaply. For instance, instead of buying season tickets to the theater, they volunteer there and see shows for free. They dine out less and have become better cooks. They say they now live very comfortably on $36,000 a year.

Reaching retirement: The Rutherfords kept a monthly tally of their net worth to see if they were meeting their retirement savings target. Decades of saving had brought them close to a seven-figure nest egg, but their switch to a more frugal lifestyle allowed them to accelerate their savings. (Tim, who has three children from a previous marriage, has also set aside money in a 529 college-savings plan to help with tuition bills if they choose to go to college.)

The Rutherfords figured that they no longer needed $3 million to maintain their lifestyle in retirement and could retire years ahead of schedule. Amy retired in April 2015. Tim left his full-time job the same year, although he remained as a part-time consultant with his employer until June 2017.

They live on savings, interest, dividends and capital gains from their taxable accounts instead of tapping tax-deferred accounts that carry penalties for early withdrawals. Their biggest expense is insurance – health, auto and home – which accounts for 20 percent of their annual spending.

All the cost-cutting has not curtailed their traveling, which ignited their desire to retire early in the first place. Last year, they spent 107 days traveling – about half of that time in Europe – and often kept costs down through one of their favorite travel hacks: house-sitting. In exchange for a free place to stay, the Rutherfords watch the residence – and often the pet – of a homeowner who is away. (They find housesitting gigs on the site trustedhousesitters.com.)

The couple have launched a blog and a YouTube vlog – both called GoWithLess – to teach others how to do what they’ve done. Tim says it’s difficult to persuade others to accept a supersaver lifestyle until they’ve bought, say, fancy cars or a big house and come to realize they don’t need them.

The Rutherfords aren’t done downsizing. They plan to sell their two cars and townhouse so that next year they can travel the world.

How to save a million

Some of us are naturally big savers; others need to work at saving until it becomes a habit. If you’re in the latter category, here are some tips to help you sock away more money.

  1. Set a goal – or two. Having something to aim for will keep you motivated to save. But the goal shouldn’t be some arbitrary number. Rather, envision your goal – say, retiring early to the Caribbean – and then calculate the numbers you need to make it happen. Be realistic. Just like with a diet, if your savings target is too ambitious and requires too much sacrifice, you likely won’t stick with it.
  2. Know where your money goes. Tracking where your paycheck goes will make it easier to find ways to cut expenses. Consider using a free budgeting tool, such as Mint.com or PersonalCapital.com.
  3. Pay off high-cost debt. It’s tough to build up savings if you’re being dragged down by high-interest-rate debt, such as credit cards at 18 percent annual interest. In fact, paying off this financial albatross should be one of your goals.
  4. Automate your savings. In addition to having 401(k) contributions deducted automatically from your paychecks, arrange to have money transferred regularly from your bank account into a Roth IRA or investment account with low-cost mutual funds or exchange-traded funds. Most employers with a 401(k) will match workers’ contributions, usually up to 3 percent of pay. Make sure you contribute enough to get this free money, although your goal is to max out annual contributions. The contribution limits are $19,000 in 2019, or $25,000 if you’re 50 or older.
  5. Seek support. Reformed spenders may find themselves out of sync with old friends. But thanks to social media, supersavers have many avenues to connect with each other. A good place to find like-minded savers is the r/financial independence online community on Reddit, which has close to 530,000 subscribers.

How to invest the right way

The decade-long bull market in stocks has helped increase the number of millionaire households in the U.S. to nearly 7.7 million, or about 6.2 percent of total U.S. households. That means they hold $1 million or more in investable assets, excluding the value of real estate, employer-sponsored retirement plans and business partnerships.

No doubt some of those millionaires hit the jackpot in a hot stock or two. But too many investors over the years have learned that you can easily go bust investing in what you think is the “next big thing.” A more reliable way to amass an investing fortune is to follow a few tried-and-true rules for building a healthy portfolio. Among them:

  1. Start early. Time and compounding interest are an investor’s best friends. Assuming an 8 percent annualized return on his or her portfolio, a 20-year-old could amass $1 million by age 67 by investing a little over $2,000 a year. A 40-year-old earning the same return could invest $10,000 a year and still wouldn’t crack a million by retirement age.
  2. Cut costs. You can’t control how your investments will perform, but you can control what you pay for them. Over the course of decades, paying a fraction of a percentage point more in fees can chisel thousands from the value you end up with. Assess your portfolio and jettison expensive mutual funds in favor of cheaper options. Vanguard Total Stock Market ETF (VTI, $145), a member of the Kiplinger ETF 20, the list of our favorite exchange-traded funds, tracks the performance of the entire U.S. stock market and charges just 0.04 percent of assets.
  3. Diversify. Don’t put all your (nest) eggs in one basket. Spreading your assets among different types of investments increases your portfolio’s chances of withstanding sharp drops in one corner of the market or another. Owning a mix of stocks, bonds and cash may cause your portfolio to lag when stocks are going gangbusters, but you’ll hold up better when stocks slide. When Standard & Poor’s 500-stock index plummeted 37 percent in 2008, the average balanced mutual fund with 50 percent to 70 percent of assets in stocks and the rest in bonds and cash surrendered only 27.5 percent. A good choice is Vanguard Wellington (VWELX). A member of the Kiplinger 25, it’s among our favorite actively managed funds.
  4. Focus on dividends. Those quarterly payouts count. From 1930 through the end of 2017, reinvested dividends contributed 42 percent, on average, to the total return of the S&P 500. To boost your exposure to dividend-paying stocks, consider Kiplinger ETF 20 member Schwab U.S. Dividend Equity (SCHD, $52), which yields 3.1 percent.

Is $1 million enough to retire?

At the end of the fourth quarter of 2018, Fidelity Investments reported that 133,800 of the retirement accounts it manages had a balance of $1 million or more. That’s only a small percentage of the company’s accounts, but the number of 401(k) millionaires has been rising steadily, and these savers are often seen as role models for workers who dream of a financially carefree retirement.

The reality, though, is that $1 million isn’t what it used to be, and in some cases, it may fall short of the amount you’ll need to finance your preferred lifestyle in retirement. If you follow the 4 percent withdrawal rule – which is designed to ensure you won’t run out of money – a $1 million balance will allow you to take out $40,000 the first year, then adjust annually to account for inflation (see Make Your Money Last Through Retirement). Whether that will be enough (or more than you’ll need) depends on a host of factors, including whether you have a pension and how much you’ll receive in Social Security benefits. Remember, too, that you’ll have to pay federal income taxes on every dollar you take out of a 401(k) or other tax-deferred account. Your state may take a bite out of your withdrawals, too.

When calculating how much you’ll need, it’s critical to get a handle on your living expenses in retirement. One common rule of thumb is that you should plan on replacing 70 percent to 80 percent of your preretirement paycheck with withdrawals from your portfolio, Social Security and other income (such as a pension). But some baby boomers who want to travel and engage in other pursuits spend more than 100 percent of their preretirement income during the first few years, says Dennis Nolte, a certified financial planner in Winter Park, Fla. “If you’ve been looking forward to this date for 30 years, you’re not going to stay at home,” he says.

Even if you do plan to stay home, health care expenses could consume a large portion of your savings. Fidelity Investments estimates that a 65-year-old couple will need $280,000, on average, to cover health care and other expenses in retirement. Your expenses will depend on your health and the likelihood that you’ll need long-term care (see How to Afford Long-Term Care).

Whether $1 million is too much or too little, it’s a worthwhile goal – and it’s not out of reach if you start early. If you save $325 a month starting at age 25 and earn an average annual return of 8 percent, you’ll have more than $1 million by the time you’re 65. If you wait until age 30, you’ll need to set aside $500 a month to reach a million.

Copyright © 2019 The Kiplinger Washington Editors: Sandra Block, senior editor, Kiplinger’s Personal Finance; Eileen Ambrose, senior editor, and Pat Mertz Esswein, associate editor

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Report: ‘Underinsurance’ rampant in disaster-prone areas

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

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

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

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

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

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

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

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

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

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

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NAR tool a clearinghouse for Realtor safety threats

CHICAGO – April 16, 2019 – One third of real estate professionals say they’ve faced some type of safety threat in the field, according to the National Association of Realtors®‘ (NAR) latest Member Safety Report.

In response to recent incidents, NAR says it’s made it easier for members to alert each other of dangerous incidents. The Realtor Safety Network, which NAR launched last month, enables individual Realtors or associations to submit incident reports online.

In some cases, NAR, based on information logged into the Safety Network, may decide to issue a national alert to all members – or it might decide to share information with impacted local and state Realtor associations. NAR will issue alerts via social media using hashtag #RealtorSafetyNetwork if a threat warrants national attention.

According to NAR, alerts will be issued in situations when a Realtor or a Realtor’s immediate family member goes missing, an association name is being used fraudulently to dupe consumers, or a physical threat to Realtors is deemed important enough to warrant national attention.

In addition to issuing warnings, however, NAR says the goal of the Realtor Safety Network is to educate members about common dangers in the field, including meeting unfamiliar clients and selling vacant properties. It was “created to enable the National Association of Realtors to gather information about potential safety issues, share the information with the local and state association, and, when appropriate, issue alerts to members and AEs via social media,” NAR says.

Source: REALTOR® Safety Network and “Answers for Ashley: Police Hope New Tool Solves Ashley Okland Murder,” KCCI.com (April 8, 2019)

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

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

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

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

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

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

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

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

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

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

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

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Fla. Senate bill would end state’s condo dispute program

TALLAHASSEE, Fla. – April 15, 2019 – A proposal moving through the Legislature would eliminate an inexpensive statewide condo mediation program in favor of dramatically more costly private mediation and court jurisdiction to settle disputes between residents and their condo boards.

The amendment drafted by the Real Property Section of the Florida Bar and introduced by the bill’s sponsor, Sen. Joe Gruters, R-Sarasota, will be heard before the Senate Innovation, Industry and Technology Committee at 1:30 p.m. Wednesday.

The House version received unanimous favorable votes by two committees and is likely to be scheduled for a floor vote in the next two weeks.

The Legislature created the Arbitration Section of the Division of Condominiums, Timeshares and Mobile Homes under the Department of Business and Professional Regulation to reduce the cost and time involved in settling disputes between unit owners and condo associations.

Terri Jones, one of the six attorneys who work for the program, called the amendment a “sneak attack” on condo unit owners and the arbitration program in a letter she sent to Gruters.

“Admittedly, this is my job, but this bill will do a lot of harm to condominium owners in the state,” Jones said.

She told the Democrat Tuesday afternoon she was fired by General Counsel Ray Treadwell for attempting for a week to meet with DBPR Secretary Halsey Beshears to discuss the proposal.

Treadwell told her that her services as a senior attorney were no longer needed.

Her dismissal was “based on internal conduct that she committed today,” DBPR spokeswoman Maegan Wynn said. “It was not due to her advocacy for or against pending legislation.”

Currently, residents who have a dispute with their association board pay only a $50 filing fee, while condo associations pay a $200 fee for election and recall arbitration. Private mediation can cost the unit owner $300 to $500 an hour.

Each arbitrator has over 20 years of legal experience, and the condo owners pay a $4 fee for their service. The arbitration section has been performing this alternative dispute resolution function for nearly 30 years.

Under the proposed law, the unit owners would have to pay a private mediator half of his or her hourly rate, and the association would pay the other half. If there is no resolution, the unit owner would have to pay a $400 court filing fee and wait for the court to schedule their case.

Tres Holton, managing partner/ government affairs with The Holton Group, said the measure had good things in it, including greater transparency of records, term limits and ethics reform. But terminating the arbitration program is “a worm in an otherwise good reform bill,” he said.

The arbitration board is a tremendous asset for residents who can’t hire expensive lawyers to fight rogue or runaway condo boards, he said.

“We have all heard of them and many have experienced them,” Holton said. “The DBPR oversight has been a backstop, an affordable option for both the residents and responsible boards. Forcing residents and boards into costly legal battles in court will benefit attorneys, not residents.”

© 2019 Journal Media Group, Jeffrey Schweers

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HUD wants to know how it can improve Opportunity Zones

WASHINGTON – April 15, 2019 – The U.S. Department of Housing and Urban Development (HUD) issued a Request for Information (RFI) that seeks public input on how it can use its existing authorities to maximize the beneficial impact of Opportunity Zones for residents and their communities.

The RFI gives the public a chance to provide recommendations regarding the use of public and private investments in economically distressed communities, including qualified Opportunity Zones. Responses to this RFI must be submitted electronically to www.regulations.gov.

“Opportunity Zones present tremendous promise for America’s distressed communities,” says HUD Secretary Ben Carson. “Through this request, we’re looking to better understand how HUD can better tailor its policies and help Opportunity Zones create more positive economic outcomes for the millions of Americans that live in these areas.”

Through the RFI, HUD seeks the following information:

  • How should HUD use its existing authorities to maximize the beneficial impact of public and private investments in urban and economically distressed communities?
  • Should HUD create an information portal – and, if so, what information should it include?
  • How should HUD prioritize support for urban and economically distressed areas in its grants, financing and other assistance?
  • What types of technical assistance should HUD offer?
  • How can HUD ensure that Opportunity Zone residents, businesses and community organizations benefit from the influx of investment?
  • How should HUD evaluate the impact of Opportunity Zones on communities?
  • What type of HUD-stakeholder interactions would maximize success?
  • How might Qualified Opportunity Fund investments support the goal of ending homelessness?
  • Are there any other aspects of Opportunity Zones that should be considered even if not directly addressed in the RFI?

Opportunity Zones were created under the 2017 Tax Cuts and Jobs Act to stimulate long-term investments in low-income communities by offering capital gains tax relief to those who invest in these areas. HUD expects the program to move $100 billion in private capital investment into Opportunity Zones.

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‘If you’re not here, you’re falling behind’ – Realtor Dara Khoyi

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Most first-timers now consider homes that need renovation

SANTA CLARA, Calif. – April 15, 2019 – Nearly 60 percent of all spring home shoppers are considering a home that needs renovating, as rising home prices and limited entry-level inventory continue to be a hurdle, according to realtor.com’s spring home buyer survey.

Just over half of those considering a TLC home are willing to spend more than $20,000 on the renovation, and the vast majority of them – 95 percent – are optimistic they would get a positive return on their renovation investment.

“The combination of rising home prices and limited entry-level homes for sale is prompting many home shoppers to consider homes that need renovating,” says Danielle Hale, realtor.com’s chief economist. “Replete with inspiration at their fingertips – like Pinterest, Instagram, and various home renovation TV shows – some home shoppers are comfortable tackling home renovation jobs to find a home that balances their needs with their budget.”

According to the survey, roughly three out of five home shoppers under 55 years-old are considering a home this spring that needs renovating. Middle-aged shoppers, 35-54 years-old, were the most likely to consider a home that needs renovating, at 65 percent. Middle-aged shoppers are more likely to be current homeowners and their experience with maintaining and improving their existing home may give them the confidence to tackle renovations, especially when motivated by trying to find a home that fits their needs within their budget.

Just 59 percent of younger home shoppers, aged 18-34 years-old, are considering a home that needs some renovation. Less than a third of buyers older than 55 years-old would consider a home that needs renovations.

Slightly over half of spring home shoppers considering a fixer-upper (51 percent) are willing to spend more than $20,000 on their home renovation;28 percent are willing to spend up to $10,000; and 22 percent are willing to spend between $10,001 and $20,000.

According to realtor.com data, a major kitchen remodel will cost around $66,000, while a minor remodel will cost around $22,000. Similarly, an upscale bathroom remodel will cost you around $64,000, while a midrange bathroom remodel runs about $20,000.

While home renovations can be costly, home shoppers are optimistic they will get a positive return on their investment. According to the survey, 95 percent of home shoppers considering a home that needs renovations expect a positive return of some sort, while 24 percent expect a positive return of more than 50 percent.

A kitchen upgrade was the No.1 home renovation chosen by nearly 30 percent of respondents who were considering homes that need renovations. A kitchen upgrade was followed by a bathroom renovation at 26 percent, and new wood flooring at 20 percent. Eighteen percent considered a hardwood flooring refinish, and the same share considered a complete overhaul kitchen renovation.

Among spring home shoppers considering a home in need of renovation, nearly 60 percent said home renovation television has made them more optimistic regarding home renovations, according to realtor.com’s survey. Whether it’s seeing the project unfold in a tidy 30-minute segment, or just getting inspired by the before and after shots, home shoppers are turning to home renovations to make their dream home when finding one as-is turns out to be difficult.

Realtor.com conducted the online survey through Toluna Research in March, consisting of 1,015 respondents planning to purchase a home in the next 12 months.

© 2019 Florida Realtors®

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Want to be a luxury agent? This might be the ideal time

NEW YORK – April 15, 2019 – Real estate professionals interested in luxury real estate specialization might find that it’s a good time to do so.

Wealth is on the rise, reaching $8.5 trillion, and significant portions of that wealth are being inherited or transferred through real estate holdings. Data from The Institute for Luxury Home Marketing reveals that real estate was the only asset class to see a significant increase in high-net-worth asset allocation in from 2017 to 2018.

Bottom line: Agents entering the luxury real estate market now will have a larger client pool and larger budgets to work with.

Moreover, international buyers are ready to take the plunge. The institute reports that sales to international buyers totaled $121 billion from April 2017 to March 2018 with a total of 266,800 properties. About 72 percent of non-resident foreign buyers also purchase homes in cash and don’t have to wait for lender approvals.

Luxury real estate continues to be a growing segment of the real estate market, with the number of sales above $1 million increasing 6 percent in the last year. However, agents should be aware that these properties have longer selling times, more demanding clients, strong competition from other agents in the niche and greater transaction complexity.

Source: RISMedia (04/10/19) Hartley, Diane

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