South Florida Real Estate Blog by Michael Catino, Realtor

HUD publishes Opportunity Zone implementation plan

The White House Opportunity and Revitalization Council published its Implementation Plan, outlining to President Donald Trump a work plan for how the Council – chaired by U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson – will accomplish the goals specified in Executive Order 13583 of Dec. 12, 2018.

The Implementation Plan explains the various subcommittees, and describes the strategy to implement administrative reforms and initiatives that will coordinate Federal resources in economically distressed communities, including Opportunity Zones.

"Through this Plan, the 16 agencies and the Federal-State partnerships that comprise the Council will help deliver the public-sector investment and guidance that communities need to unlock the full potential of Opportunity Zones tostimulate economic development and job creation," says Carson.

In the report, the Council describes the following work streams and associated goals:

  • Economic development: Leverage federal grants and loans in a more integrated way to develop dilapidated properties and provide basic infrastructure and financial tools to attract private investment.
  • Entrepreneurship: Leverage government lending and grants to stimulate access to private capital and promote programs that assist entrepreneurs.
  • Safe neighborhoods: Combat drug addiction and the opioid crisis, reduce crime, enhance public safety and address environmental contamination obstacles to development.
  • Education and workforce development: Improve the effectiveness of K-12 and community college career and technical education and workforce development programs to better prepare workers in distressed communities for jobs.
  • Measurement: Develop robust reporting and analytics...

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

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 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...

House flipping back to pre-crisis levels

House flipping back to pre-crisis levels

Although house flipping has risen to nearly the same level as it was during the 2006 peak of the housing boom, a new CoreLogic Inc. analysis suggests that most of the current flips are less risky – and there would be less market volatility if prices decline in the next few years.

According to CoreLogic, flips accounted for about 10.6 percent of homes sold in the fourth quarter of 2018 compared with 11.3 percent in the first quarter of 2006. The 4Q 2018 percentage was the highest fourth-quarter level for flips – defined as homes that have been owned for less than two years – since CoreLogic started tracking the data two decades ago.

However, today's home flippers have significantly larger profit margins than those at the peak of the previous housing cycle, giving them more of a cushion if home prices begin to flatten or fall: They made a median economic profit of almost 23 percent in the fourth quarter compared with 9 percent in the first quarter of 2006.

In addition, the flip market currently is dominated by professionals purchasing older homes that likely need work.

CoreLogic finds that the median age of a flipped home today is 39 years – about a decade older than in 2006.

"Flippers are very different today than they were in the past," says CoreLogic deputy chief economist Ralph McLaughlin. "Even though we see hype and hysteria in popular culture, this isn't necessarily something to worry about."


First-time buyers in 2012 can now afford to move up

 When Todd and Marisa Bluth bought a $188,000 starter house in Commerce City, Colorado, in 2012, they figured it would take at least a decade to build enough equity and savings to trade up to their dream home.

Yet just four years later, they sold the 1,600-square foot unit for $284,000, allowing them to take their nearly $100,000 profit and buy a five-bedroom nearly three times the size for what seemed like a steal – $375,000 – in a more upscale neighborhood.

"I never thought the house would appreciate so quickly," Todd, 34, says. "We played the market against itself."

Since the U.S. housing recovery began in 2012, affordable homes in modest neighborhoods have notched the sharpest price increases while luxury houses in wealthy neighborhoods have had the smallest percentage gains. In other words, on average, the lower the home-price tier, the more dramatic the price increase, with mid-range homes appreciating moderately.

More room to recover

The trend is largely rooted in the fact that prices of inexpensive houses fell the steepest during the real estate crash and so had more room to recover, says economist Kwame Donaldson of Moody's Analytics.

Also, affordable, entry-level homes have been in short supply, driving up their price tags, says Issi Romem, chief economist of Trulia, a real estate research firm.

The unusual dynamic is allowing homeowners like the Bluths to move up to their "forever homes" more rapidly. It's also helping many low- and moderate-income Americans amass wealth that can improve their lifestyles or bolster their nest eggs. But first-time buyers looking to get into the market now may be squeezed out.

The Bluths, who had a daughter when they lived in their first house, needed to move because another child was on the way, and they've since had a third. "It would have been getting pretty crowded," Todd, an attorney, says.

With a combined income of about $70,000,...

When is a closing agent not an escrow agent?

 In completing one of the Florida Realtors contracts, there are spaces for the escrow agent's information, including name, address, and telephone number. Not only is this information required per 61J2 14.008(2)(b) of the Florida Administrative Code, aka your FREC rules, but it lets the buyer know where to place the deposit once due under the contract.

Separate and apart from that section of a contract, there is another section that addresses who chooses the closing agent.

The key: These are two separate roles.

Pragmatically, however, the same entity usually performs both functions – and that's why the escrow vs. closing agent issue becomes confusing – and an assumption those roles are interchangeable isn't a good one.

An example of what can go wrong

Let's say the buyer wants his attorney to hold the deposit and has put the attorney's information in the appropriate escrow-agent spot in the contract. The seller wants to choose the closing agent and has checked the corresponding box for him to do so.

The contract says the deposit is due three days after the effective date, and the buyer sends the money to his attorney as specified in the contract. The seller, however, contacts the title company to confirm the deposit and is told that the buyer's money isn't there. The upset seller contacts the buyer and asks where the funds are. The buyer tells the seller that they were sent to his attorney, per the contract.

The seller is upset. He believes the money should be with the title company he chose as the closing agent. Is the buyer in default? Can the seller demand the funds be placed immediately with the title company?

In short, the answer to both questions is no. Of course, the buyer needs to make sure the deposit is sent to the closing agent in an appropriate amount of time before closing, but the buyer isn't in default. If the seller wanted to have the money with his chosen closing agent, he...

HUD: Failure to protect abused spouse is sex discrimination

The U.S. Department of Housing and Urban Development (HUD) announced that it approved a Conciliation/Voluntary Compliance Agreement between the owners of a Sunnyvale, California, apartment complex and a single mother of two who is a domestic violence survivor.

The agreement settles claims alleging that Essex Property Trust, Inc., and Essex Portfolio, L.P., discriminated against the woman based on her sex when they refused to remove her then-husband from her lease after she obtained a restraining order against him.

According to HUD, the Fair Housing Act prohibits housing discrimination based on sex, and this is an example of sex discrimination.

The case came to HUD's attention when a single mother filed a complaint alleging that the manager of her apartment building discriminated against her because of her sex when she refused to remove the woman's then-husband from the lease and change her locks, even after she had obtained a restraining order against him.

The woman alleged that the property manager ultimately agreed to change the locks but told the woman that her then-husband could still have a copy of the new key upon request. As a result, the woman claims that she moved out of her apartment due to concern for her safety. Even though the owners deny that they discriminated against the woman and do not admit guilt, they agreed to resolve the complaint.

Under the terms of the agreement, Essex Property Trust, Inc. will pay the woman $20,000.

In addition, Essex Property Trust and Essex Portfolio will implement a domestic violence policy at its more than 240 residential properties that addresses the safety and housing needs of tenants who experience domestic violence, and distribute the policy to employees and agents. The agreement also requires that the owners' regional manager and on-site property manager participate in fair housing training.

"Survivors of abuse shouldn't be victimized by having their housing rights violated," says...

Bank of America offers $10K to lower-income buyers

Bank of America (BofA) announced on Tuesday the rollout of a new $5 billion affordable homeownership initiative that includes downpayment or closing cost help for low- to moderate-income and multicultural homebuyers. The program will launch in the second quarter of this year.

BofA says the program should help more than 20,000 individuals and families over the next five years move toward homeownership.

Bank of America's Neighborhood Solutions program includes a downpayment and closing cost assistance option, as well as low-downpayment mortgages and grants that can be applied to non-recurring closing costs.

BofA says it also plans to form strategic partnerships with real estate professionals and a national network of affordable housing nonprofit partners. The goal is to offer homebuyer education and counseling help to low- to moderate-income and multicultural homebuyers hoping to become homeowners.

Through the bank's new downpayment and closing cost program, the bank will give eligible borrowers up to $10,000 to be used toward their downpayment or closing costs when they get a Freddie Mac Home Possible mortgage.

Eligible borrowers could also qualify for a lender credit up to $7,500 that could be used toward nonrecurring closing costs, such as title insurance and recording fees, or to permanently buy down the interest rate. The funds don't require repayment.

The bank also announced the Affordable Loan Solution mortgage – a fixed-rate loan for low- and moderate-income borrowers with a competitive rate, a downpayment as low as 3 percent and no required mortgage insurance. The majority of these loans go to first-time home buyers, the bank said.


45% of millennials hope to skip over a ‘starter home’

Young adults have waited longer than past generations to jump into homeownership. And, as they wait, that have apparently ratcheted up their expectations over what that first home will look like for when they finally take the plunge.

Almost half the millennials surveyed (45 percent) say they expect their first home to be their "dream home," according to a new survey of 2,000 millennials between the ages of 22 and 37, released by Northshore Fireplace.

Millennials are willing to move to a different area to get this piece of their American dream, too: 65 percent say they're willing to relocate to find a home they can afford, and 41 percent say they're willing to move to a different state.

But can millennials actually afford their dream home first time out? Half of millennials surveyed say they have only $2,000 or less saved for a downpayment. And they believe their first home will cost $218,152 (average), even though the median cost of an existing home in the U.S. is $249,500, according to the National Association of Realtors' (NAR) housing report for February.

In a separate study by, a home improvement website, millennial buyers were the most likely compared to other generations to pay more for must-have amenities. Many of the amenities they most sought out related to convenience or comfort, such as a private backyard or patio (they're willing to pay $7,009 more for a home with one); a swimming pool (they'd pay $6,346 more for one); central air conditioning and heating ($6,194); and solar panels ($5,469), according to the survey.

Some millennials may be willing to wait until they can afford their dream home. Their top fears delaying a home purchase are:

  • Burden of paying a mortgage (41 percent)
  • Unforeseen maintenance issues with the home (35 percent)
  • Being locked into one location by buying (17 percent)
  • Upkeep of the home (7 percent).

Source: "First-Time Millennial Home Buyers," Northshore...

Daily Blog 4-1-19

The Florida House and Florida Senate rolled out proposed budgets for the next fiscal year, and the two versions must now be reconciled through the budget negotiation process and, once finalized and approved, sent to Gov. Ron DeSantis for his signature.

The budget impacts a number of priority Realtor issues because it controls the Tallahassee purse strings. If a bill passes authorizing a property purchase, for example, it won’t do much good unless the Florida Legislature also puts money into the budget to make it happen.

Many of the budget proposals out of both chambers are good for Florida’s Realtors, though more work needs to be done as the budgets are reconciled. Included in the initial budget numbers are spending proposals for two top legislative priorities: water quality and affordable housing.

“These are just the first proposals in a lengthy and complicated negotiation process, so the numbers are likely to change,” says Florida Realtors President Eric Sain. “But we are encouraged by some of what we are seeing and will continue to work hard to make our voice heard on all of our priorities.”

Top budget items

  • Water quality
    The House proposed a $607 million budget that will be spent on water quality, Everglades restoration and other environmental projects. The Senate proposed $660 million for the same environmental priorities. The initial budget numbers are encouraging and provide some indication that the final environmental spending plan will be very close to DeSantis’ proposal of $625 million.
  • Affordable housing
    The Senate proposed full funding of the state’s affordable housing trust funds – approximately $331 million – while the House proposes $123 million. The Senate’s proposal matches up with the governor’s call for full funding, but the House falls well short of that goal. Florida Realtors...