South Florida Real Estate Blog by Michael Catino, Realtor

Sellers could lose momentum if they overprice listings

A shift is occurring in many housing markets. As home prices continue to rise along with mortgage rates, more potential buyers are choosing to postpone a purchase – and more home sellers are now facing competition. In many locations, sellers should no longer expect the quick sale they've seen neighbors get in the past.

The number of For Sale signs is starting to increase across the country, and unsold inventory is at a 4.4-month supply at the current sales pace. Inventories were at 1.88 million in September, up slightly from 1.86 million a year ago, according to the National Association of Realtors®' (NAR) latest housing report.

"There is a clear shift in the market with another month of rising inventory on a year-over-year basis, though seasonal factors are leading to a third straight month of declining inventory," says Lawrence Yun, NAR's chief economist. "Homes will take a bit longer to sell compared to the super-heated fast pace that we saw earlier this year."

Existing-home sales declined in September, with all four major regions of the country seeing no gains in sales activity last month, according to NAR's report. Total existing home sales – completed transactions for single-family homes, townhomes, condos, and co-ops – dropped 3.4 percent in September compared to August and are now at a seasonally adjusted annual rate of 5.15 million. Sales are down 4.1 percent from a year ago.

"This is the lowest existing home sale level since November 2015," says Yun. "Decades-high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country."

The 30-year fixed-rate mortgage has jumped from an average of 3.99 percent in 2017 to an average of 4.63 percent in September.

"Rising interest rates coupled with increasing home prices are keeping first-time buyers...

3 points to ponder before starting your kitchen remodel

The Three Big Questions of Any Kitchen Remodel

You went to the home improvement store and found some samples of tile, backsplash and counter that you really love, but that’s about as far as your planning has gone so far. That’s ok, there’s a lot to think about when you’re considering ripping out one of the most important (and complicated) rooms in your home.

Now is a great time to stop where you are and ask yourself a few very important questions.

#1. What Will It Cost, Really?

Estimating the cost of a kitchen remodel is a bit like trying to nail a runny egg to a tree: messy and tragically frustrating. This is because there are lots of parts that have to be considered. Due to the various pieces involved and their corresponding quality levels, a custom quote from a contractor is the best way to know for sure how deep you’re getting into the savings account.

However, if you’re just starting to think about a kitchen remodel, it may help to know that the national average cost for your project is $22,768. The typical price range is $12,554 to $34,104. The low end is listed at $4,000. Please note that these numbers are based on user contributions, so your mileage may vary.

The largest cost by a bit is the cabinetry. Cabinets and hardware usually make up about 30 percent of the budget. This is a great place to save some cash, especially if your cabinets are in good shape and can simply be repurposed. Adding new hardware or doors often changes the whole equation. If those cabinets absolutely gotta go, then you can use this as a good starting point for estimating your dream kitchen cost.

#2. Will I Get My Money Back If I Sell?

The short answer is no. The rare few remodeling projects will return your entire investment. You should instead consider the value you’ll get from the use of that new kitchen along with any potential resell returns down the road....

Closing table confusion: Who pays for what?

In every property transaction, there’s the fairly straightforward purchase price – and then there’s all the other sometimes-confusing costs associated with buying a home.

The Legal Hotline frequently fields calls from members with confused customers wondering exactly what they’re obligated to pay for in a transaction.

Florida Realtors’ most popular contract form, the Residential Contract for Sale and Purchase (“FR/Bar”), lays out these additional costs in paragraph 9, and they can vary depending on which party chooses the closing agent.

This article attempts to clarify one question: Who pays for what? As a practical matter, I highly recommend printing out the pages of the FR/Bar that include paragraph 9 to follow along.

Paragraph 9 covers closing costs, fees and charges associated with the transaction. Specifically, paragraph 9(a) covers costs that will be paid by a seller and 9(b) lays out the costs to be paid by a buyer.

However, upon closer examination, you can see that “who pays for what” largely depends on which box is checked in paragraph 9(c) regarding title evidence and insurance. 9(c) provides three optional boxes, one of which must be checked:

  • If the box by 9(c)(i) is checked, the seller chooses the closing agent and pays for the Owner’s Policy and Charges. The buyer pays for costs associated with the buyer’s lender, if applicable.
  • If 9(c)(ii) is checked, the buyer chooses the closing agent and pays for the Owner’s Policy and Charges, in addition to the costs associated with buyer’s lender, if any.
  • 9(c)(iii) is a regional provision for the Miami-Dade/Broward area and effectively splits the costs differently between the parties.

It’s important to note that “Owner’s Policy and Charges” is explained in paragraph 9(c) of the contract and defines those charges to be the owner’s title policy...

5 tips for choosing a home inspector

Owning a house is a never-ending adventure in investing your heart and soul into a wholly unique structure. Some homeowners have great big budgets for massive changes or enhancements to their home, others are working with a shoestring. If you’re in the second group, you can still put your mark on your house. There are plenty of ways to personalize it without spending a lot of money.

Even Simple Changes Create Huge Home Impacts

After the stress of moving is over and the dust has settled, you may start to ponder other ways to enhance your new home. When you moved in, it was pretty generic, with cream-colored walls, light brown carpet and an outside paint job that absolutely no one could find offensive. A lot of houses end up in this generic state when the owner is wanting a fast sale, but that doesn’t mean it has to stay that way!

Replace the front door. According to Remodeling Magazine’s 2018 Cost Versus Value Report, replacing your front door is one of the most value-packed changes you can make to your home. A new door not only creates a new focal point, it allows you to really get personal. These days you can special order doors in nearly any size with exquisite touches like frosted or stained glass, as well as bigger units that have full size windows on either side.

Remodeling Magazine ranked front door replacement third in cost recuperation; the best value return on the list was also a door. Consider your garage door while you’re upgrading. Like front doors, garage doors are becoming increasingly detailed, with lots of options for personalization. Because they take up so much real estate on the front of your house, a new garage door can make your home look completely different.

Choose a paint scheme with more...

The yin and yang of rising interest rates

This week's dizzying sell-offs in the financial markets have been a rude reminder that the U.S. economy is no longer relying on ultra-low interest rates to fuel growth. Borrowing costs are rising for companies, homebuyers and the U.S. government – all of which could eventually dampen economic growth.

Yet the climb in interest rates also reflects an economy that's still managing to accelerate on the energy of an expansion in its 10th year – the second-longest such streak on record. The pace of growth has picked up this year in part because of President Donald Trump's tax cuts, which have also increased the federal budget deficit and contributed to the higher rates now spreading through the economy.

For the moment, Trump blames the Federal Reserve and its gradual rate hikes for the stock market fall. Last Thursday, the Dow Jones Industrial Average tumbled 2.1 percent – or 546 points, after having sunk 831 points on Wednesday.

Fed officials last month raised their key short-term rate for the third time this year, and a fourth hike is likely before year's end.

Jerome Powell, whom Trump elevated to the Fed's chairmanship, is trying to keep inflation in check and unwind the central bank's programs that were launched to rescue the economy after the 2008 financial crisis. Much of the Fed's efforts after the crisis depended on keeping borrowing rates, for consumers and businesses, at record lows for seven years.

But Trump now sees the Fed's gradual return of rates to normal levels as disrupting the stock market and an economic boom that he argues would otherwise endure for many years.

"I think the Fed is out of control," the president told reporters last Thursday. "I think the Fed is far too stringent, and they're making a mistake and it's not right. Despite that, we're doing very well, but it's not necessary in my opinion. And I think I know about it better than they do."


How will 2 seasons of Hurricanes affect Florida Property Insurance

In just over a year, Florida has been slammed with two deadly hurricanes that claimed dozens of lives and caused upwards of $40 billion in damages.

It doesn't mean that windstorm rates will skyrocket, at least this time. Experts believe the state's insurance industry can weather the latest losses from Hurricane Michael without significant increases in premiums statewide.

Historically, major storms – or a string of them – have bankrupted the state's insurance firms and sent rates skyrocketing.

In more recent years, carriers have taken out enough of their own re-insurance to carry them through, said Jay Neal, president and CEO of the Florida Association for Insurance Reform. "Florida carriers are so well re-insured that it is highly unlikely a catastrophic event will cause a failure of an insurance company in Florida," he said. "Floridians that are insured should feel pretty good about the position they're in."

About 60 percent of the state's homeowner's policies are held by Florida companies, according to calculations by Fitch Ratings. To maintain their ratings, those firms have to buy enough re-insurance (insurance the company carries on itself) to pay for a 50-year storm and a 100-year storm, plus a little extra.

It would take a monster hurricane in a well-populated area to cause the kind of damage needed to raise rates statewide or bankrupt one of those companies, said Brian Schneider, senior director at Fitch Ratings.

"We haven't seen a level of that loss yet that would impact these companies," he said.

In 1992, the then-record-breaking $27 billion loss from Hurricane Andrew drove many companies out of the state and forced Florida to create state-owned Citizens Property Insurance, commonly known as the "insurer of last resort." Some of the smaller stragglers were wiped out by the back-to-back 2004 and 2005 hurricane seasons, when the state took multiple...

Zero-down loan program aims to expand mortgage access

A new effort is underway to raise the low homeownership rate among underserved groups of homebuyers.

The Neighborhood Assistance Corp. of America (NACA) is hosting several events across the country to help borrowers with low credit scores apply for 15- or 30-year mortgages with cheaper interest rates. One recent event in Miami drew thousands looking for a chance to get a no-downpayment, low-interest-rate mortgage. NACA officials say more than 10,000 potential borrowers have attended various NACA events in cities such as Charlotte, N.C., and Atlanta.

"The low rate of homeownership and number of mortgages for low- and moderate-income people, and for minority home buyers, is a national disgrace," NACA CEO Bruce Marks told CNBC. "There have been zero foreclosures among the loans that we've originated in the past six years." Bank of America is backing the NACA program with $10 billion in mortgage commitments.

To qualify, borrowers must go through an education session about the program, as well as counseling for budget planning, to make sure they can afford a mortgage payment. They also must submit all necessary documents, including income statements and phone bills.

The program serves only those who are buying a primary residence, not an investment property. The loans for 15- or 30-year fixed-rate mortgages are below market, at around 4.5 percent.

"That's what's going to help people who've been locked out of homeownership really become homeowners and build wealth," Marks told CNBC.

However, critics of the program worry that loans with a no-downpayment requirement could carry too much risk.But program officials say buyers have "skin in the game in a real way," meaning it's their home and an investment for their family.

"We have seen significant wins in this partnership," A.J. Barkley, senior vice president of consumer lending at Bank of America, said. "Just to be clear, when we get those loans with all the...

3 Reasons You need to get a permit

Many DIY Jobs Require a Permit

Whether you’re a trained carpenter or a DIYer that binges HGTV, there are certain kinds of home remodeling that will always require a permit. This ensures that someone is looking over your shoulder to make sure that you’re doing the work correctly.

Advanced jobs in plumbing, electrical, HVAC and other specialty fields always require a permit to ensure that the home is and will remain safe for the occupants. Other jobs, like those that involve making structural changes, may or may not need a permit. That’s usually at the discretion of the permitting body.

You’ll want to speak to your municipal planning and zoning department to determine whether or not your job needs to be permitted. Typically, getting a permit requires that you describe the work you plan to do and pay a small fee that covers, in part, the cost of having expert inspectors ensure that your worksite is safe and your repairs are done correctly.

This is Why You Need a Permit

It can be a pain to go down to P&Z (or planning and development in some areas), but it’s really worth the effort in the long run. Despite the amount of documentation these can require, depending on the complexity of your project, you’ll find that going through the process properly will force you to really think about each step in your process.

Of course, that’s just one reason to get a permit, there are plenty more, like:

1. Avoiding serious legal ramifications. In any municipality that requires permits, there’s some kind of severe punishment for not getting one.

For example, in Dallas, Texas, the...

The Truth about Zillow Zestimates

A Zestimate is Zillow’s attempt to use algorithms and publicly available data points that influence housing prices to estimate a home’s value at any given time. While this is a good idea, in concept, it’s important for buyers and sellers to realize that there’s a bit more to predicting prices than the cold, hard facts.

Often, real estate becomes a very personal and emotional buy. Two houses with the same floor plan, but different shades of brick or different trees in the front yard can have different values to the person doing the buying. That’s really what matters. Ultimately, a home is only worth what the market will bear and what a buyer will give.

The Perception Versus the Reality of Zestimates

Zestimates became popular because outside of an appraisal or comparative market analysis generated by an experienced Realtor, it can be really hard to judge whether your home is gaining or losing value. After all, no one wants to bet on a losing horse, even if they live inside that horse and it provides them with shelter from the elements and a place to make memories (must be a Trojan horse).

Unfortunately, the Zestimate has been responsible for a great deal of confusion since Zillow started using the original algorithm in 2006. Even though the algorithm has been upgraded several times since its inception, it’s not perfect. Unfortunately, people deeply enveloped in the stressful process that is buying a house sometimes become ultra focused on the numbers that Zestimates provide, treating them more as an absolute than a flexible guide.

Because most people don’t really know what goes into valuing a home, this issue of getting married to a valuation that’s not quite on the dot isn’t new. Even before Zillow, many homeowners believed that their home was worth so many dollars due to tax assessments that...

Your Guide to the Debt to Income Ratio

What is My Debt to Income Ratio?

If you’re not familiar with the term, don’t be shy, it’s one of the most common questions that first time homebuyers have when applying for a mortgage. That’s because there aren’t a lot of places where it’s obvious that your debt to income ratio is being used to determine your ability to get credit. It’s sort of figured out behind the scenes and you’re none the wiser.

At a very basic level, your debt to income ratio is simply what it sounds like, all your long term, semi-permanent debt...