South Florida Real Estate Blog by Michael Catino, Realtor

Fed chair explains rate hike ‘wait-and-see’ approach

Federal Reserve Chairman Jerome Powell said Friday that the healthy U.S. economy and low inflation are allowing the central bank to take a "patient, wait-and-see approach" on interest rates.

Speaking at Stanford University, Powell said the Fed is well along in its effort to normalize Fed operations by scaling back the extraordinary efforts it employed to support the economy's recovery from the Great Recession.

The Fed is trimming its sizable holdings of Treasury bonds and mortgage-backed securities. Officials are discussing a plan for wrapping up the efforts to reduce the central bank's balance sheet later this year, Powell said, adding that the plan's details should be announced soon.

The Fed's moves to reduce its balance sheet, which hit a peak of $4.5 trillion, are being watched closely by investors.

The Fed started in October 2017 reducing the balance sheet by allowing some bonds to run off as they matured. The balance sheet is now around $4 trillion, but some investors have worried that the Fed could end up driving long-term interest rates higher and harming the economy by going too far in reducing its holdings.

Some analysts have projected the Fed's balance sheet will end up being around $3.5 trillion, which would be significantly higher than the less than $1 trillion it held before the financial crisis hit in 2008.

Powell said the size of the holdings will "prove ample" to meet the Fed's needs of supplying reserves to the banking system. He said "we could be near that level later this year."

"As we feel our way cautiously to this goal, we will move transparently and predictably in order to minimize needless market disruption," Powell said.

The Fed is conducting a yearlong review of its procedures as part of its effort to update its operations in areas such as the way it communicates with the public, Powell said.

One area being examined is whether the Fed should consider altering its inflation target,...

Fed survey finds economic fallout from shutdown and tariffs

The Federal Reserve says the U.S. economy was expanding in January and February, but half the country was seeing fallout from the 35-day partial government shutdown. Some manufacturers expressed worries about weakening global demand for their products and adverse effects from President Donald Trump's trade policies.

In its latest report on economic conditions around the country, the Fed said that 10 of its 12 regions reported "slight-to-moderate growth" over the past two months. Two – Philadelphia and St. Louis – reported that conditions were "flat."

The Fed report, known as the beige book, will be used when central bank officials meet March 19-20 to consider what to do with interest rates. The expectation is that the central bank will leave rates unchanged.

The Fed raised rates four times in 2018. At its January meeting, the Fed signaled that it was hitting pause on its rate hikes in light of a slowdown in global growth and the absence of inflation pressures. Many private economists believe the Fed will keep rates on hold for a number of months, perhaps only hiking its benchmark rate once this year.

The partial government shutdown, the longest in history, had an impact around the country, the beige book found. About half of the Fed's 12 districts linked the shutdown and delayed paychecks for federal workers to "slower economic activity in some sectors including retail, auto sales, tourism, real estate, restaurants" and staffing services.

Harsh winter weather in many parts of the country was also blamed for a drop-off in consumer spending at retail establishments. Bad weather and higher interest rates held back auto sales in some areas.

The Fed report found that manufacturing activity had strengthened, although numerous manufacturers expressed concerns about weakening global demand and higher costs due to the tit-for-tat tariff war that the Trump administration began last year against China.

The report found that...

Gov. DeSantis to lawmakers: Be bold on big issues

Republican Florida Gov. Ron DeSantis gave an anti-tax, pro-environment State of the State address Tuesday, asking lawmakers to be bold as they tackle issues like education, school safety and health care.

It was as much a recap of his whirlwind first two months in office as it was a blueprint for his goals as lawmakers begin their annual 60-day session.

The governor ticked through a list of what he's already done, including securing hundreds of millions of dollars in federal aid to help Hurricane Michael recover; announcing an aggressive plan to address problems with red tide and algae; removing Broward County Sheriff Scott Israel for his handling of the Parkland high school shootings that left 17 dead; appointing three Supreme Court justices; and giving posthumous pardons to four black men accused of raping a white woman more than 70 years.

"And this is just the beginning," DeSantis told lawmakers gathered in the House chamber. "Be bold. Be bold in championing economic opportunity, be bold in protecting Florida's environment, be bold in improving education, be bold in defending the safety of our communities. Be bold, because while perfection is not attainable, if we aim high, we can achieve excellence."

DeSantis said he wants to keep building Florida's economy by keeping taxes low and reducing the regulatory burden on businesses and professional licenses.

"We need reform of our occupational licensing regime, which borders on the absurd and primarily serves to frustrate opportunities for Floridians," said DeSantis, a former Navy officer. "You can become a sniper in the U.S. Marine Corps by completing training for 79 days, which is roughly 632 hours, and yet in Florida becoming a licensed interior designer in requires 1,760 hours. You can earn jump wings by completing Army Jump School in three weeks, or about 168 hours; Florida law requires 1,200 hours to become licensed as...

America’s 19- to 29-year-olds are facing $1 trillion in debt

 The New York Federal Reserve Consumer Credit Panel reports that debt among 19- to 29-year-old Americans topped $1 trillion at the end of 2018, the highest debt exposure for young adults since late 2007.

Student loans make up the majority of the debt, followed by mortgage debt. Spending among those under age 35, however, has slowed compared to other generations, according to a University of Michigan survey.

The survey says weakened job prospects, delayed marriage, and educational debt may have played a role in their reduced spending.

Meanwhile, new mortgages among young adults today remain below levels incurred in the early 2000s, and implied debt that is 90-plus days delinquent for student loans dwarfs other loan-type categories.

At the end of 2018, auto loans were the third largest portion of debt composition in the United States, with overall consumer debt reaching a record $13.5 trillion.

Source: Bloomberg (02/25/19) Tanzi, Alexandre; Lu, Wei


Property taxes too high? They could be worse

If you think your property taxes are too high, a recent study by has data to back you up.

But it also shows that taxpayers in other states would gladly trade tax bills with you.

According to the online financial services website, Florida ranks right in the middle of the pack in "effective real property tax rate" – 26th out of the 50 states and the District of Columbia.

Residents of Hawaii have the lowest rate, while residents of New Jersey have the highest.

The "effective" tax rate, the study says, reflects the dollar amount of taxes on a house worth $193,500, the median value for a home in the U.S. as of 2017, the most recent year available, according to the Census Bureau.

Florida's tax rate of 0.98 percent would result in a bill for $1,897 on a home with that value.

A property owner in Hawaii would get a bill for only $525 while someone in New Jersey would pay nine times more – $4,725.

The owner of a median-price Florida home – $178,700 – would pay $1,752 in taxes. Not surprisingly, the bill for a median price home in Hawaii would be less – $1,529.

But the median home price in Hawaii is $563,900, more than three times the price in Florida.

The median home price in New Jersey is $321,100, a little less than twice Florida's median. The tax bill of $7,840 is more than four times higher, however.

California, commonly considered a high-tax state, actually has a lower effective tax rate than Florida – 0.77 percent.

Illinois has essentially the same median home value as Florida but a much higher effective tax rate, which translates into a $4,157 property tax bill.

Of the 25 states that have a lower median home price than Florida, 11 have a higher effective tax rate and, therefore, higher tax bills. They include Ohio...

Renters’ top priority? Finding an affordable property

What are potential tenants searching for? According to the latest survey by RentPath, most want to find a rental within the tenant's budget.

Of the 3,750 renters who responded to the online survey between 2017 and 2018, the two most significant factors they said they were looking for in a rental were price and location.

Most people said the reason for their move was to save money (37 percent) or to be closer to work (32 percent), according to an analysis on RentPath's Apartment Guide blog. Finding a place that fits their budget was also the most cited factor renters took into account in their search (44 percent), followed by location (29 percent). Price and location were also two factors renters said they were least willing to compromise on. And when conducting their search, 74 percent of renters said they most often take note of a unit's price.

The emotions associated with moving were nearly split between excited (46 percent) and stressed (44 percent), and understandably so. About half of renters said they were concerned they wouldn't find anything in their price range. Nearly three-quarters of respondents said they're moving to a place they feel a familiarity with.

In terms of lifestyle needs, 19 percent said they were seeking a pet-friendly rental, 18 percent were looking for something accessible for seniors or someone with disabilities, and 13 percent said they want something family appropriate. The most often cited "top of mind desire" among survey respondents was to have a washer/dryer in unit, followed by amenities like a gym and swimming pool. Survey respondents said they were most willing to compromise on size or square footage.

But even after signing on the dotted line of a lease, renters have some remorse. In fact, 31 percent wished they had toured more properties. Most people toured an average of three to four properties before submitting an application, and 40 percent submitted an application within the same day of touring.


Thousands of Floridians aren’t insuring their homes

When people in Florida have a mortgage, banks require them to obtain homeowners insurance to protect their investment. After the mortgage is satisfied, however, thousands of people stop paying those insurance premiums, which puts them at risk, experts say.

"It's totally crazy not to have insurance unless you are super rich and you can be self-insured but I don't think that's the case for most of us," says Victor Roldan, director of RMS.

The National Association of Insurance Commissioners says Florida had the third-highest average premium for homeowners insurance compared to other states in 2016, costing homeowners $1,918 annually. Compared to the national average, Floridians pay $726 more per year.

According to the U.S. Census Bureau, more than one out of 10 (12.8 percent) owner-occupied Florida homes don't have property insurance, and it rises to 14.4 percent in Miami – double the national average of 6.8 percent.

Source: NBC Miami (02/25/19) Masihy, Myriam; Esquivel, Sandra


U.S. consumer confidence surges higher in Feb.

The Conference Board Consumer Confidence Index increased in February following a decline in January. The Index now stands at 131.4, an almost 10-point increase from January's 121.7.

The Present Situation Index – consumers' assessment of current business and labor market conditions – improved, moving from 170.2 to 173.5.

The Expectations Index – consumers' outlook for income, business and labor market conditions six months from now– increased from 89.4 last month to 103.4 this month.

"Consumer confidence rebounded in February, following three months of consecutive declines," says Lynn Franco, senior director of economic indicators at The Conference Board. "The Present Situation Index improved, as consumers continue to view both business and labor market conditions favorably. Expectations, which had been negatively impacted in recent months by financial market volatility and the government shutdown, recovered in February. Looking ahead, consumers expect the economy to continue expanding."

Franco says that The Conference Board's economic forecasts, however, peg the pace of economic expansion to moderate in 2019.

Current conditions
Consumers' appraisal of current conditions improved moderately in February. Those stating business conditions are "good" increased from 36.4 percent to 41.2 percent, while those saying business conditions are "bad" was unchanged at 10.8 percent.

Consumers' assessment of the labor market was mixed. Those stating jobs are "plentiful" decreased slightly from 46.7 percent to 46.1 percent, but those claiming jobs are "hard to get" also decreased, from 12.6 percent to 11.8 percent.

Future conditions
Consumers' optimism about the short-term future rebounded in February. The percentage of consumers expecting business conditions to improve over the next six months increased from 16.3 percent to 19.7 percent; those expecting business conditions will...

Housing issues may be major focus of 2020 election

 In the race for the White House, housing seldom gets much attention – but that could be about to change.

As California and other states face dramatically rising rents and home prices, three of the top Democratic contenders in 2020 – Sens. Kamala Harris, Cory Booker and Elizabeth Warren – have already introduced major proposals in the Senate that would reshape affordable housing in America.

"We've already seen more attention on housing and affordable housing policy in these first few weeks and months than we have in entire presidential campaigns in the past," said Diane Yentel, president and CEO of the National Low Income Housing Coalition. She called the candidates' plans more ambitious than any housing policies adopted by the federal government in "generations."

The proposals – which include renter tax credits, ramped up federal funding for housing construction, and controversial moves to reform local zoning – would also cost tens of billions of dollars, the latest examples of 2020 hopefuls embracing ideas from the left.

Here's how the candidates' plans would work and what they would mean for Californians:

Giving renters a helping hand

Federal tax law has long favored homeownership, doling out deductions for mortgage interest and property taxes. Harris and Booker's plans would give renters a piece of the pie, guaranteeing tax credits for those spending more than 30 percent of their income on rent (including utilities). More than half of California renters pay at least that much, according to a Harvard University study, the highest rate in the country after Florida.

Under Booker's bill, the Housing, Opportunity, Mobility and Equity (HOME) Act, those cost-burdened renters would get a tax credit for the difference between 30 percent of their income and the rent they're paying, up to the area fair market rent.

"We've gotten to a point in America where you...

How has housing improved since the Great Recession?

LendingTree analyzed the 50 largest U.S. metropolitan areas in the U.S. to see how housing prices, income and unemployment rates have recovered the most since the height of the Great Recession – and where values are still struggling. The analysis compares the latest available housing values to 2009.

When the real estate bubble burst in late 2008, many Americans saw their home values fall drastically, but a lot has changed in the 10 years since. Though the rapid ascent of home prices increases is starting to slow, they already exceed 2006 highs.

Key findings

  • On average, median home values have increased by nearly $50,000 across the 50 largest metros in the United States since 2009, likely due to increasing incomes and falling unemployment rates.
  • Hartford, Conn., Chicago, Virginia Beach, Va., and Baltimore are the only metros in the study where median housing prices have fallen since 2009. On average, these areas have seen home prices fall nearly $6,700. A lack of strong employment opportunities and out-of-state migration might play a role.
  • California housing markets – San Jose, San Francisco and Los Angeles – have recovered the most since 2009. Each of area has seen average housing prices climb by six-digit figures, with an average increase of $243,600, likely due the prevalence of high-paying jobs brought by tech companies like Google and Apple.
  • Unemployment rates have fallen an average of 4.7 percentage points in the nation’s 50 largest metros – every metro included in LendingTree’s study. Detroit’s drop of nearly 10 percentage points is the largest in the nation; Houston’s 1.7 percentage point decrease is the smallest.
  • The median household income in the surveyed metros has increased by an average $11,344 since 2009. San Antonio was the only metro where the median household income fell.

Florida cities included in the study