NAR Economist: We’ve Never Seen Prices Rise This Fast

WASHINGTON – Just how wild is the real estate market right now? You don’t hear National Association of Realtors® (NAR) Chief Economist Lawrence Yun say this every day: “We’ve never seen price appreciation of this magnitude.”

In May, the year-to-year median home price was up almost 24%. The inventory shortage played a role, says NAR’s Yun, but affordability is squeezing some buyers out too.

It’s a sobering message in NAR’s latest home sales video, which covers the month of May, when the median home price rose nearly 24% year-over-year, from $283,500 in May 2020 to $350,300 in May 2021.

Higher prices have sidelined some house hunters waiting for more housing inventory. But buyer competition is starting to cool, which could help consumers’ prospects.

Inventory is particularly scant in price points below $300,000, Yun says. And homes that are available in those price points are quickly being bid up. For example, Indianapolis house hunter Kelly Robinson said she budgeted for a $250,000 home, but properties in her target area were selling within days and sometimes fetched $100,000 above the asking price.

“There are so many aggressive shoppers out there, and I’m not willing to compete with that,” Robinson told CNN.

Buyers fatigued

Some buyers are dropping out of the market – at least for now. Mortgage applications, a gauge of future homebuying activity, have decreased over recent weeks even as mortgage rates remain low. Home sales have dropped in recent months, too, mostly due to record-low inventory.

But housing analysts also point to buyers who are getting sticker shock from high home prices. “Clearly, sales are moving down partly due to the inventory shortage, but affordability is squeezing some buyers out of the market,” Yun told CNN. “Home buyers qualify for a mortgage based on their income, but with prices rising 20% or higher, it is simply pricing them out of the market.”

Ultra-low mortgage rates under 3% are helping to offset some of the price hikes, and many buyers don’t want to give up their shot at locking in some of the lowest borrowing costs on record.

Relief in sight?

Though bidding wars reportedly are decreasing, “it’s still a seller’s market, no doubt,” Yun says. But sellers should price their homes cautiously to remain competitive as sales decline and more inventory is added to the market over the coming months. New listings in June increased 5.5% year-over-year and were up 10.9% over the prior month, offering a sign that more listings are coming, according to realtor.com.

Yun predicts a “calmer” market emerging for the remainder of the year. The market likely will remain tipped in sellers’ favor, he says, but buyers likely will feel less pressure to rush their purchase decisions. That could be a welcome trend that encourages buyers who’ve paused their home search to resume.

Source: “Hope for Greater Inventory as Home Sales Slip Again,” REALTOR® Magazine (June 22, 2021) and “Many Homebuyers Are Dropping Out of the Market,” CNN (July 13, 2021)

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

Men Plead Guilty in Fla. to $1.3B Real Estate Fraud Scam

In S. Fla., two Calif. men pleaded guilty for their role in a $1.3 billion real estate fraud scheme that stole money from thousands of investors across the U.S.

MIAMI (AP) – Two more California men have pleaded guilty in South Florida for their roles in a $1.3 billion real estate fraud scheme that stole money from thousands of investors nationwide.

Dane Roseman, 38, and Ivan Acevedo, 44, both of Los Angeles, pleaded guilty Monday in Miami federal court to participating in a massive investment fraud scheme, in which more than 7,000 victims suffered financial losses, according to court records. Co-defendant Robert Shapiro was previously sentenced to 25 years in prison for orchestrating the scheme. Roseman and Acevedo are scheduled to be sentenced on Sept. 20.

Shapiro was the former owner, president and CEO of Woodbridge Group of Companies LLC. The company had offices employing 130 people in California, Florida, Tennessee, Colorado and Connecticut. Prosecutors say Shapiro told investors that Woodbridge held real estate loans that would pay them rates of interest between 5% and 10%. In fact, the real estate also was owned by Shapiro through 270 shell companies and did not generate the necessary money for investors. Sometimes, the properties didn’t even exist.

It became a Ponzi scheme that paid older investors with money from newer ones, court records show. Five states entered cease-and-desist orders because Woodbridge was selling unregistered securities.

Roseman and Acevedo both worked as sales managers for Woodbridge, officials said. They sold securities and trained and supervised Woodbridge internal sales agents who sold Woodbridge securities. Using high-pressure sales tactics, Shapiro, Roseman, Acevedo and others marketed and promoted these investments as low-risk, safe, simple and conservative.

Authorities say the scam operated from at least July 2012 to December 2017, when the company filed for bankruptcy and defaulted on its obligations to investors.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Real Estate Guru?

This was my First Blog in 2015. So much has happened in 6 years, but I’m still your Real Estate Guru.

This is my Blog:  Mike Lafferty – The Real Estate Guru.  What’s a Real Estate Guru you ask? First lets start with the definition of Guru.

noun gu·ru \ˈgu̇r-(ˌ)ü, ˈgü-(ˌ)rü also gə-ˈrü\

  • a religious teacher and spiritual guide in Hinduism
  • a teacher or guide that you trust
  • a person who has a lot of experience in or knowledge about a particular subject

I qualify for two of the three definitions.  I’ll let you figure out which two.

Now, even if a person qualifies for the title of Guru it still takes some confidence (arrogance) to tell others you’re a GURU. Or does it?  Do a quick google search for Real Estate Guru and 16,000 results come up.  Even better do a quick search for Real Estate Expert and 180,000 results come up.   All you have to do is look at Facebook or Twitter or any social media and you will see every Realtor is an expert in Luxury Property or beach front property.  Nobody ever says they are an expert in the everyday average middle class property, which most of us are.  Did you know that once an individual passes the state test and gets a license they are deemed an expert in real estate.  Then you have the coaches.  Real Estate Sales associates pay big money to have these Real Estate Coaching Guru’s tell them everything they all ready know, but they are a Coaching Guru and thus can set high fees for their knowledge.

If you spend any time watching the many 24/7 news channels they frequently have Real Estate experts on telling us what the market is like, but the best is when they have on the Real Estate Guru’s.  The funny thing is these “Guru’s” don’t say any more than the experts and most time say what is learned in Real Estate 101.  I think it’s the hair that makes them a Guru.

I’ve sold real estate for 11 years now.  I’ve been the broker/owner of The Lafferty Group Real Estate for 8 years and brokered close to 600 deals.  I’m a past president of My Local Realtors association and a licensed real estate instructor.  I have a Finance degree from The University of Florida and I don’t take myself very seriously.  This blog will be sarcastic most of the time with some important real estate information sprinkled in to help anyone that reads it.

So, with all that, this is my blog and I am now your – Real Estate Guru

Listings Increase

Big one day jump in Residential Listing in Indian River County MLS from 449 to 470. Still very low, but we will watch the trend closely.

Click this link to see Trends: https://docs.google.com/spreadsheets/d/e/2PACX-1vS8FiByc8pS9Wl6taRUqD7sG8cGhcQIEZN1NnzBIcRj5DK3QnqUKhLAQ9x_2n6xZ25uMEtMRX3Tpbgh/pubchart?oid=329629950&format=interactive

Why not. Will any of these buyers live to pay it off?

40-Year FHA, VA Home Loans Coming in October?

By Kerry Smith

Ginnie Mae – the funding arm behind FHA and VA loans – created a new “pool type” to secure “modified loans with terms up to 40 years.” It’s essentially the funding groundwork to release a new type of 40-year loan that Ginnie Mae expects to start offering in October.

WASHINGTON, DC – Ginnie Mae announced the creation of a new pool type to support the securitization of modified loans with terms up to 40 years – essentially the groundwork that must be done before offering 40-year home loans to the public, though these are earmarked for homeowners at risk of losing their home.

The current max for pool types is 30-year loans. This new product – to be known as Pool Type C-ET – will allow lenders who service Ginnie Mae programs to offer a loan modification with a lower payment, albeit one that takes longer for the homeowner to pay off.

Once the pool has been established, a 40-year home loan’s use and terms would be set by the groups that rely on Ginnie Mae for funding. Those include:

  • The Federal Housing Administration (FHA, which is under the Department of Housing and Urban Development, or HUD)
  • Office of Public and Indian Housing (PIH, which is also under HUD)
  • Department of Veterans Affairs (VA)
  • U.S. Department of Agriculture (USDA) Rural Development

“It’s important that Ginnie Mae issuers have secondary market liquidity for options that our agency partners determine are appropriate for supporting homeowners in distress,” says Michael Drayne, Ginnie Mae’s Acting Executive Vice President. “Because an extended term up to 40 years can be a powerful tool in reducing monthly payment obligations with the goal of home retention, we have begun work to make this security product available.”

Highlights of the new C-ET pool type

  • It would be a “Custom” pool, having a single loan and $25,000 minimum pool size
  • Eligible collateral will consist of p modified loans whose original terms are greater than 361 months and less than or equal to 480 months
  • All modifications after a mortgage’s origination must be occasioned by default or reasonably foreseeable default
  • There won’t be restrictions on loan amounts, as long as the eligible collateral otherwise meets the requirements set forth by the participating agency.

“The challenges of the last year require meaningful solutions to help keep people in their homes,” says Alanna McCargo, HUD senior advisor to Secretary Marcia Fudge. “As interest rates rise, this 40-year feature will enable more payment reduction options to help homeowners.”

Ginnie Mae expects that the new pool type to be ready by October, although actual use depends on authorization of extended term modifications by FHA, VA, USDA and PIH.

Ginnie Mae is a wholly-owned government corporation that attracts global capital in support of homeownership for veterans and millions of homeowners. It’s the only mortgage-backed security to carry the explicit full faith and credit of the United States government.

© 2021 Florida Realtors®

U.S. Supreme Court: CDC Lacks Eviction-Ban Authority

However, the CDC previously said a July 31 extension would be the last, and the court will keep the ban in place for the “orderly distribution of … rental assistance funds.”

By Kerry Smith

WASHINGTON – The U.S. Supreme Court ruled that the Centers for Disease Control and Prevention (CDC) lacked authority to implement a blanket, nationwide eviction moratorium in a case brought by the Georgia and Alabama Associations of Realtors®.

The CDC recently extended the ban to July 31, 2021, though, and the court also agreed to keep the ban in place until then. The ruling, however, means that there won’t be a surprise extension again in the waning months of July.

National Association of Realtors® (NAR) President Charlie Oppler called it a victory in a statement, even though the ban will continue for another month. Beyond the ending date, he said it gives property owners “absolute clarity from our federal court system regarding property rights in America to avoid similar financial harm in the future.”

Oppler also called for governments to immediately get $50 billion in rental relief into the hands of landlords and property owners.

The Supreme Court voted 5-4. Justice Brett Kavanaugh offered a brief concurring opinion with the majority, even though he agreed that the CDC exceeded its authority; however, he also signed off on the current July 31 deadline and allowed it to stand because it will “allow for additional and more orderly distribution of the congressionally appropriated rental assistance funds.”

According to Kavanaugh, “clear and specific congressional authorization would be necessary for the CDC to extend the moratorium past July 31.”

The Realtor associations turned to the Supreme Court in June after a federal district judge ruled that the CDC eviction ban was illegal. That judge, however, issued a stay on the ruling while the government appealed the decision. The Realtors were now asking the Supreme Court to uphold the district judge’s ruling and cancel the stay, so that evictions would again be allowed.

© 2021 Florida Realtors®

Remote Work Losing Luster as Employers Call People Back

What’s the future for office space? Employees are being called back to the office, but the new office-home balance likely won’t be clear until the end of the summer.

By David Lyons

FORT LAUDERDALE, Fla. – After months of keeping employees at home to dodge COVID-19, companies in South Florida are concluding that the best place for most of their workers is back at the office.

The pandemic proved that people don’t need to sit in the office full time, but many South Florida employers are bringing people back on at least flexible schedules, shattering the illusion of a workplace revolution that leaves most people signing on from home.

“Nobody has that full crystal ball,” said Jenni Morejon, president and CEO of the Fort Lauderdale’s Downtown Development Authority. “Human beings are creatures of habit, and the notion that people will never go back to the office – that is probably a lot of hype and hysteria.”

She believes the real question is the degree to which workers are burned out “from remote working full time.”

A national survey of 185 companies by CBRE, a real estate service firm, suggests that managements now see the office as a better means of supporting collaborative work than relying on remote communications.

The firm’s Spring 2021 Occupier Survey found 41% of companies interviewed intend to return to steady office use in the third quarter of this year, while 20% are targeting the fourth quarter. Another 23% said their workers have already returned to their places of employment.

“Multiple factors support this sentiment, including the ongoing rebound of the U.S. economy and companies’ realization that they need to retain more office space than they previously thought,” said Julie Whelan, CBRE’s head of occupier research.

Some observers think companies have no choice but to recall most workers because clients are restless about the services they’re receiving.

“The biggest user of office space in South Florida tends to be banks, investment shops, wealth management companies, law firms and real estate companies,” said Stephen Bittel, chairman of the real estate services firm Terranova. “We tend not to have large corporate users here. Those service firms had businesses that are well designed to work from home.”

“They congratulated themselves” for cutting expenses through remote work, he said. But the cuts may have boomeranged for some.

“They have spent no money on travel and client entertainment, and have not replaced employees and support staff,” Bittel said. “They think they’ve bottled lightning for a moment. The flip side is that clients and customers are screaming about the incredibly slow pace of transactions getting completed.”

While many acknowledge that remote work demonstrated the benefits of technology, there is a strong belief that communication and training are better done in person. That includes people who are learning on the job.

Isabella Guttuso is a student intern from the University of Florida at EDSA of Fort Lauderdale, a decades-old architectural firm. She insists that human interaction is important for growth and for learning how to collaborate with other adults in the workplace. She is studying landscape architecture and believes it’s unlikely she’d pick up the nuances of the business via Zoom.

“I’m trying to learn and get my feet wet,” she said. “I definitely needed that interpersonal experience. We’re constantly sketching and working together and getting people’s feedback in that way. I feel like even for people not in the design field, that sense of community you get from the workplace is so important.”

Training is better done in person, agreed Brandon Isner, associate research director for Florida with CBRE. Technology can accomplish only so much.

“When people come into the office everyone is so glad to see each other,” he said, “Technology is great, and I love Zoom. That said, that human element cannot be replicated by Zoom. That’s eventually what’s going to win out.”

Firms heading back to the office

During the pandemic, the benefits of remote work depended on the industry. While harder to pull off in hospitality and leisure, which relies heavily on personal contacts with customers, professional service firms found an easier path.

“Allowing employers to work remotely on a wholesale basis will in some situations be driven by the industry,” said Denise Heekin, a labor and employment lawyer and Broward County resident who manages the Miami law office of Bryant, Miller, Olive P.A.

“Certainly, technology has made it a lot easier for attorneys to work from home and staff to work from home, and certainly it’s nice to have that option,” she said.

The firm allowed employees to work at home except for one person who staffed the office.

“We just recently went back to having each person come in at least twice a week, and we rotate that,” Heekin said. “We have papers and files and documents that may not all be on our computers, We will need a brick-and-mortar footprint.”

Some believe it will take until the end of summer before most South Florida employers settle on where their employees should land as managements try to figure out a new normal while COVID-19 variants lurk in the background.

One upshot could be smaller spaces for some companies that conclude that portions of their work forces can continue spending some of their workweeks at home.

At the same time, office spaces that remain empty are likely to be snapped up by out-of-state companies seeking new homes for their headquarters or regional operations.

“I do think we will have a reduced footprint in South Florida and around the country,’ said Siri Terjeson, professor of entrepreneurship at Florida Atlantic University’s College of Business. “But the good news is more and more companies are relocating to South Florida. That’s your silver lining.”

Some companies will reduce spaces “because you don’t need people in the office eight hours a day, five days a week,” she said.

“When people’s leases are up for renewal they will dial back the space,” she added.

The volume of companies seeking office space is on the rise, said Ken Krasnow, vice chairman of institutional investor services at Colliers International, the real estate services firm.

“Six months ago, at the height of the pandemic, there was a real thought of ‘do people need to go back to the office in total?” ‘he said. “What we’ve heard from our clients is the number of companies looking for space has exponentially increased in the last 30 to 60 days. You talk to office brokers out there and they’ll tell you there are a lot of tours.”

The theme is an important sales point for commercial real estate brokers who have clients with space to lease.

“Across the board, whether companies are adopting more flexible office schedules or not – the space itself is being viewed as a place to support a company’s ability to attract and retain talent,” said Tere Blanca, CEO of Miami-based Blanca Commercial Real Estate, which represents large commercial landlords in Broward County.

Locally, the demand for space from companies seeking to relocate is on the rise, brokers say,

A unique market

From Miami to West Palm Beach, analysts say, the office market is unlike any other in the country, with more new tenants signing leases,

“Miami and South Florida are a bit of an outlier,” said Isner of CBRE. “No one’s concerned about our office market right now. We’ve seen an unprecedented amount of new interest in this market.”

Isner has seen heavy leasing activity by new tenants in West Palm Beach, Boca Raton, Plantation and Fort Lauderdale. “They’re signing leases and they’re expanding,” he said.

Interior design firms are getting a lift.

“We’ve seen a major impact in our industry all the way around in the last six months or so,” said Brianna Brown, president and CEO of Fine Line Furniture and Accessories in Coral Gables.

“We’re seen a huge increase in professionals wanting to reopen their businesses, or we have an influx of corporations coming from other places in the U.S.,” she said. “They know and they understand how people feel about returning to work. They’re really trying to alter their atmospheres. Some people want to jump back in. For those [employees] who are hesitant, they’re trying to make it a better environment to appease them.”

In downtown Fort Lauderdale, which has seen a building boom of high rises designed for office, retail and apartment living, economic development advocates argue the city’s business district will remain attractive as a center for work.

“I think downtown Fort Lauderdale is going to be well-positioned” as a place for more companies to set up shop, said Morejon, at the Downtown Development Authority. “There’s this sense of community and place as opposed to suburban office parks where you’re back to driving to the parking lot and walking into the building.”

The city’s leasing rates are cheaper than its counterparts, which is another incentive to move downtown, she said.

Christina Stine Jolley, a vice president of Blanca Commercial Real Estate in Fort Lauderdale, said the 35-floor The Main Las Olas, a new 1.4 million-square-foot, mixed-use office, residential and retail community, is leasing up quickly.

“Over 50% of that activity is from out of the [local] market,” she said. Two professional service firms from New York each signed for between 8,000 to 10,000 square feet. She declined to identify them.

“We’re over 50% leased right now,” Stine Jolley said. “If we close every deal we are negotiating, we would only have two floors left.”

Allure of suburbia

Outside the city limits, brokers and employers see advantages operating in the suburbs, where people don’t have to jostle each other in crowded elevators and battle downtown traffic.

“It seems like there is a reevaluation taking place of the need to be in an urban center,” asserted Jonathan Calderon, director at Gibraltar Realty & Management. His firm represents Monarch Gardens in Miramar, which offers nearly 100,000 square feet of office and retail space.

“This whole [pandemic] experience has proved how people can work outside of the office, but on a human level there is a desire to collaborate in person and not have appointment-driven dialogues with your peers,” he said.

How companies choose to reconfigure workspaces “will come down to the resourcefulness and empathy of each individual company,” he said. “Those companies that want a smaller footprint will undoubtedly have an easier go of it than somebody occupying an entire floor plate.”

© 2021 South Florida Sun-Sentinel. Visit sun-sentinel.com. Distributed by Tribune Content Agency, LLC.

HUD to Bring Back Stronger Discrimination Rules

HUD wants to restore a 2013 rule that focused on “disparate impact,” which is an analysis of a practice’s outcome even if the practice itself isn’t discriminatory.

By Kerry Smith

WASHINGTON – Calling it the “the latest step HUD is taking to fulfill its duty to ensure more fair and equitable housing,” Marcia Fudge, Secretary of the U.S. Department of Housing and Urban Development (HUD), announced that a rule on “disparate impact” would be changed, following publication in the Federal Register as “a notice of proposed rulemaking.” Once published, a 60-day comment period will follow.

Disparate impact is a type of discrimination prohibited under the Fair Housing Act, but identifying that discrimination requires a look at overall results to a group of people who are protected under the Act. Individual behaviors that create broad disparate-impact discrimination are not, by themselves, necessarily discriminatory. HUD refers to it as the “systemic racism” component of fair housing.

The proposed rule would rescind a 2020 update that eased some of the nation’s disparate-impact rules and restore original rules created in 2013. HUD calls the 2013 rule more consistent with decades of case law, and says it would work better to fix remedial problems and “eradicate unnecessary discriminatory practices from the housing market.”

“We must acknowledge that discrimination in housing continues today, and that individuals, including people of color and those with disabilities, continue to be denied equal access to rental housing and homeownership,” says Fudge in HUD’s media release. “It is a new day at HUD and our department is working to lift barriers to housing and promote diverse, inclusive communities across the country.”

According to HUD, disparate impact has been used to challenge policies that unnecessarily exclude people from housing opportunities, including zoning requirements, lending and property insurance policies, and criminal records policies.

Under the 2013 rule that HUD plans to restore, officials say the discriminatory effects framework was fairly straightforward: a policy that had a discriminatory effect on a protected class was unlawful if it did not serve a substantial, legitimate, nondiscriminatory interest, or if a less discriminatory alternative could also serve that interest. In the announcement, HUD says that the 2020 rule added “new pleading requirements, new proof requirements and new defenses, all of which made it harder to establish that a policy violates the Fair Housing Act.”

© 2021 Florida Realtors®

Listings Skyrocket!

Just kidding. Listings are still at an all time low of 440 residential listings in Indian River County with demand continuing to be very high.

Click link to see the chart showing listings, under contract, sold and absorption rate.

https://docs.google.com/spreadsheets/d/e/2PACX-1vS8FiByc8pS9Wl

I’ve been saying this for months now.

Fannie Mae ‘Meaningfully Downgrades’ 2021 Home Sales Forecast

Citing new-home supply problems and tight inventory, Fannie’s latest forecast calls for a 4.2% uptick in 2021 home sales – a cut from 6.3% predicted a month ago.

WASHINGTON – Fannie Mae decided this month that listings shortages and constraints on home builders hurt home sales and push up home prices and rents. It says the situation could fuel inflation and compel the Federal Reserve to adopt a more aggressive monetary policy stance, according to the latest monthly forecast by economists with Fannie Mae’s Economic and Strategic Research Group.

The economists say they “meaningfully downgraded” their forecast for second- and third-quarter home sales, “largely due to the ongoing lack of available listings and a softening pace of new construction due to supply constraints affecting home builders.”

In May, they predicted that home sales would rise by 6.3% in 2021 to 6.868 million homes, but they now forecast that 2021 sales will grow by a more modest 4.2% to 6.732 million. Recent declines in pending home sales and purchase mortgage applications “have been more pronounced than we previously expected,” Fannie Mae researchers say.

Rather than 16.3% growth in new home sales, Fannie Mae now estimates that builders will sell 919,000 new homes in 2021, up 11.8% from a year ago. Sales of existing single-family homes, condos, and co-ops are now predicted to grow by 3.1% to 5.81 million, instead of 4.8% as projected in May.

Fannie Mae also anticipates that single-family housing starts will fall by 3.7% next year to 1.15 million because of labor scarcity and a lack of buildable lots.

In addition, Fannie Mae isn’t expecting a notable increase in listings after the foreclosure moratorium ends, “in part due to large gains in homeowner equity this past year – but we anticipate some homes will be put on the market for sale.”

Source: Inman (06/16/21) Carter, Matt