Homes Sales Slow in January, but Prices Remain Hot

Blog Photo #1

After a record-setting 2015, homes sales cooled off in Southwest Florida to start the new year. But prices stayed hot, with single-family homes continuing to post double-digit gains in January in Southwest Florida.  Cape Coral land sales also grew. The stock of existing homes for sale remained low, pressuring prices but helping sellers close deals more quickly and get closer to their asking prices.

Buyers closed on 1,622 existing homes and condominiums in Southwest Florida in January, down 2.3 percent over the year. Single-family sales rose slightly in Sarasota, but were down by 5.4 percent in Manatee and by 11.6 percent in Charlotte, according to data released by the Florida Realtors trade group.

January sales often show a seasonal sales dip, reflecting fewer deals signed during the year-end holiday season. Homes sales in Southwest Florida hit a second-straight annual high in 2015, again outpacing the historic boom of the mid-2000s. But setting a third-straight record could be a challenge. Pending sales — deals signed but not yet closed — fell sharply in January, and inventory levels declined again over the year.

Home prices jumped 21.3 percent to a median $230,500 in Sarasota last month. In Manatee, the median price — half were higher, half lower — rose 10 percent to $274,900. Charlotte reported a 9 percent increase to a median $180,000.

Those price hikes did little to deter buyers. In Manatee, for example, single-family homes sold in a median 45 days, 12 days faster than last year. Sellers pocketed 95.2 percent of their original list price, up from 93.8 percent.

Condo sales were down 2.1 percent in Sarasota-Manatee last month. Buyers paid a median $192,500, nearly 9 percent more than last year. In Charlotte, condo sales climbed 35 percent over the year, on a modest volume of 77 units. Prices increased 3.9 percent to $145,000. Statewide, buyers closed on 16,529 single-family homes in January, up 2.7 percent, but condo sales fell 4.8 percent, to 6,942 units. Homes sold for a median $199,000, 13.7 percent more than last year, while condos traded for $152,000, a 10.9 percent gain.

Nationwide, home sales crept upward in January, a sign that demand for housing remains strong amid signs of slower growth across the broader economy. But U.S. buyers face the same dilemma as those in Southwest Florida including buyers of property Cape Coral: The number of listings on the market has fallen, giving them fewer choices and pushing prices to rise quickly.

Sales of existing homes rose 0.4 percent last month to a seasonally adjusted annual rate of 5.47 million, the National Association of Realtors said. The gains build on a strong 2015, when sales reached their highest level in nine years. Last year ended with a 12.1 percent surge in December sales, as new regulations had delayed closings in November.

Yet, real estate enters 2016 at a crossroads. Job growth and low mortgage rates have fueled demand and boosted home sales to levels last glimpsed in the waning months of the housing bubble that triggered the Great Recession. But fewer homes are available to purchase, causing price growth to eclipse wage grains and capping the potential for sales to rise further.

To learn more about the South Florida real estate market visit 9 Core Realty on the web!

 

What is the Difference Between Real Estate Tax and Property Tax?

Blog #2 Photo

The terms “real estate taxes” and “property taxes,” are often used to mean the same thing. The problem lies specifically with the term “property taxes.” Property taxes can refer to both “personal property taxes” and “real estate taxes.” There is a big difference, though, between what the government considers real and personal property.

Real Estate Taxes

Real estate taxes are assessed on most privately owned properties in the United States including homes sites. Some communities (remote areas of Alaska, for instance) do not impose taxes on real property. The revenue generated from real estate taxes are used to help pay for local services like road maintenance, snow removal, public schools and the operation of local government offices. Real estate taxes are calculated as a percentage of a property’s tax assessed value. Sometimes local levies that pass by majority vote are attached to real estate taxes.

Tax-Assessed Value

Properties are appraised by professional staff property appraisers in order to determine their fair market value (FMV). FMV is simply an estimate of what a property would sell for in an open market. The local government sets an assessment rate, which is a percentage of FMV. Then it calculates an assessed value. For instance, if a property is appraised at $150,000 and the local assessment rate is 70 percent, then the property’s tax-assessed value would be $105,000 (70 percent of $150,000.) The homeowner’s real estate tax is a percentage of the property’s assessed value. So if the local tax rate is 2 percent of tax-assessed value, the annual real estate tax on the above example would be $2,100 (2 percent of $105,000).

Personal Property

The IRS considers a house and the lots and land that it sits on as “non-movable” property. Barns, garages and other outbuildings also are non-movable. Personal property, however, includes items that are movable, like vehicles, livestock and furniture. The general determination of whether something is considered unmovable is if the item would be damaged if it were moved. Walls in a home would be damaged if they were moved, so the home is not considered personal property. But most objects inside the home (like furniture), would not be damaged if moved, so they are considered personal property.

Personal Property Tax

Every state imposes an annual registration tax on your vehicle through the state’s motor vehicle bureau. This is a simple type of personal property tax. In addition, some states impose a personal property tax on other possessions, particularly if the items are used for business purposes, that is, to generate revenue. For instance, you may own a seasonal bicycle rental business, and have an inventory of 20 bicycles. These items might be assessed a personal property tax, since they are used to generate income. Most states, though, usually exempt items below a certain aggregate amount; for instance, you may have $70,000 worth of personal property, but the first $50,000 worth of property is exempt. Therefore you will only pay tax on the remaining $20,000 worth of property. Personal property tax is usually calculated as a percentage of the item’s value. Check with your state’s department of taxation for local personal property tax regulations.

Mobile Homes and Exemptions

If you live in a mobile home as your primary residence, you might assume that you pay annual real estate tax on it. However, because mobile homes are movable (that is, they are not affixed to the ground like a traditional house), they are assessed a personal property tax, but not a real estate tax. Most municipalities that impose real estate and personal property taxes also offer various exemptions—for instance, for widows, disabled persons and families of combat military personnel.

To learn more about real estate and property taxes and how they affect your real estate investments, visit 9 Core Realty on the web!

Is the Party Over for REIT’s?

Blog #1 PhotoReal estate has been one of the best performing assets since President Obama took office. No, we’re not talking about regular people’s homes. The biggest gains have come from so-called real estate investment trusts — REITs for short a great way to invest in real estate.

REITs are companies that own a lot of different properties. Some REITs specialize in just one type of real estate (think apartments in Florida) while others own a bunch of different kinds of property such as hospitals, office buildings and malls. They make their money much like any landlord does — by collecting rent.

Investors have gobbled up REITs since 2009 for three reasons:

1) REITs trade like stocks. REITs give you real estate exposure a lot easier than having to buy and sell actual buildings. It’s good for diversification, which is why sophisticated investors usually have about 5% or less of their portfolio in REITs.

2) REITs win big with an economic recovery. The financial crisis that triggered the Great Recession was caused largely by mortgages gone bad. That caused real estate prices to plunge. But when the economy started recovering, real estate (especially office space and urban apartments) bounced back. REITs benefited big time.

3) REITs have high dividends. Quite a few investors, especially retirees, like to have steady income from their investments. Normally they buy bonds to get that income, but the yields on bonds have been incredibly low — think 2% to 2.5% on U.S. government bonds. REITs, meanwhile, have been returning about 4% to 6% a year in dividends.

Investors have been substituting REITs in their portfolios for bonds. It’s been a shrewd move. People have received steady dividend payments while the underlying asset has risen in value nearly as much as stocks. One look at the S&P Global REIT statistics shows nearly 140% of returns since March of 2009.

Now there’s just one big problem: The Federal Reserve. America’s central bank is signaling that it will raise interest rates, likely sometime later this year. As interest rates rise from their historic lows, so will bond yields. Suddenly investors who have been buying REITs in lieu of bonds are rethinking that decision. REITs are typically seen as more risky than bonds since REITs have a lot of the characteristics as stocks.

Prepare for the REIT market to get ugly for awhile. This year is already shaping up to be a tough one. Check out the S&P Global REIT return chart. It’s bounced all around and is currently flat — 0% return. Many of the biggest REITs — Simon Property Group (SPG), Ventas (VTR) and Health Care REIT (HCN) — are flat to down for the year.

If you look even closer, it’s evident that any time investors think the Fed is likely to raise interest rates, REIT prices fall. And then when investors think the Fed will hold off — until September or even later — on raising rates, REITs go back up.

The case for REITs: But before you write off REITs entirely, consider this: many top investment houses are advising clients to keep their REIT investments — and even add to them a bit. Wells Fargo put out a report noting that “fundamentals for REITs and the underlying commercial real estate market are quite strong.”

Why keep REITs now? The reason is simple: The Fed will only raise rates when it believes the economy is thriving again. It’s a vote of confidence in America’s growth. As the economy improves, real estate typically does well too. If you buy into the growth story, REITs should still benefit as should Florida land trusts.

To learn more about REIT’s or to invest in real estate and Florida land, visit 9 Core Realty online!

SWFL a Hot Spot for International Real Estate Investors in 2015

Blog #2

International buyers accounted for $6.1 billion or 36 percent of Southwest Florida’s home sales and sales of investment land for sale in 2015, according a recent report by industry experts.

From September 2014 to August 2015, foreign buyers picked Florida above other states when buying homes.  Venezuela, Brazil, Argentina, Colombia and Canada accounted for 62 percent of those sales, according to the 2015 Profile of International Home Buyers the National Association of Realtors.

The survey covers Collier, Lee and Charlotte counties, finding that Florida leads the country with 21 percent of the nation’s foreign purchases particularly in Florida Land Sales.  Southwest Florida accounted for 36 percent of the state’s foreign sales.

Based on dollar amounts, 79 percent of international sales were in Collier, followed by 18 percent in Lee and 2.7 percent in Charlotte.

Foreign buyers in Southwest Florida tend to spend more than domestic buyers, according to the report. And 75 percent of their purchases are made with all cash.

Here is a breakdown of the top countries investing in Southwest Florida:

  1. Venezuela
  2. Brazil
  3. Argentina
  4. Colombia
  5. Canada
  6. Mexico
  7. France and Italy
  8. Ecuador
  9. Spain
  10. Russia

In Collier, Venezuela, Brazil, Argentina, Colombia, and Italy and Mexico led the list. In Lee, Canada and Venezeula, Colombia, Argentina, Brazil, and India and Russia were the biggest international buyers. And in Charlotte, Canada and Brazil were the top countries of origin for real estate buys.

If you are an international investor looking to purchase a slice of Southwest Florida real estate, visit 9 Core Realty on the web today!

 

The Top Places to Purchase Waterfront Florida Land for Sale

Blog #1

It happens every year: Right around the time we finally throw out the desiccated Christmas tree, put away the broken toys, and get back into the swing of work, we look up to find ourselves deep in the dark, dank, bone-chilling portion of winter that never seems to end. So it’s the perfect time to start the search for sandier and sunnier pastures!

It may seem counterintuitive as you’re snowblowing your front walk or drying out your socks, but now is a great time to begin thinking about buying a beachfront home and Florida land sales that you can use throughout the summer—or rent out to pay the mortgage and then some.

Buyers have more choice and more leverage in negotiations in the off-season, so even though total inventory is lower, there are far fewer buyers for what is on the market, and that gives buyers an upper hand.

And the off-season is a much better time to engage local contractors to take care of any repairs or upgrades—especially critical if you’re thinking of leasing the place out. Taking action before the peak season will ensure it can capture as much of the peak rental revenue as possible for your Florida lots and land for sale.

The housing market in Southwest Florida has been red-hot for the past few years, but Sarasota (No.1) is getting blistering.

Here’s a full list and median list prices of the hottest waterfront real estate markets in Florida:

  • Sarasota, FL: $339,000
  • Naples, FL: $479,000
  • Myrtle Beach, SC: $168,950
  • Delray Beach, FL: $248,950
  • Vero Beach, FL: $309,000
  • Miami Beach, FL: $569,000
  • Jupiter, FL: $489,000
  • Lake Worth, FL: $210,000
  • Venice, FL: $265,000
  • Palm Harbor, FL: $235,000

To learn more about the market for vacation homes in Florida, visit 9 Core Realty on the web!

Real estate outlook rosy in SWFL

Blog 2-11-16

Forget recent stock market volatility: Real estate experts say the outlook for Southwest Florida’s economic future is sunny. Strong job and population growth will spur a healthy economy and robust real estate development in every sector.

It’s time for realtors to gear up as Florida will need to add two million new jobs by the year 2030, partly to serve a population older than 65 that is projected to grow by an equal amount.

In Southwest Florida, jobs growth is already running ahead of the state. Parrish noted the Naples metro area saw 22 percent job growth over the year in July and Cape Coral-Fort Myers 20.8 percent. Both grew faster than the state as a whole, which rose 16.6 percent.

But since retirees are also leaving the workforce at a quick clip, the region needs to focus on bringing young, new talent to the workforce to keep businesses humming.

Sustained job growth is also vital to the state’s economic health because nearly three-quarters of Florida’s general revenues come from sales and use taxes.  The more people at work, the more property and sales taxes are paid. Experts say that there are more jobs open in both Lee and Collier counties than there were before the housing crash. But since the region’s population is growing, too, they found the increase sustainable and a reason to be optimistic.

For those involved in construction, the recent uptick in job and population has spurred a business bonanza in Florida home sites. The downside is, contractors are scrambling to find enough skilled construction workers to build new homes. Those who build commercial properties are reaping profits, too.

Real estate is not cheap anymore and it’s not a simple game, but there are still a lot of good deals for home sites and opportunities available over the next three to four years.

To learn more about current real estate market trends visit 9 Core Realty on the web!

Why it’s Time to Buy US Real Estate, Especially in Florida

Blog 2-8-16

Oil has crashed. Stocks have, too. What investment is holding up?  Florida real estate. “Single-Family Home Prices Soar in Broward County,” according to a headline in the Miami Herald newspaper recently. But it’s not just Broward County.

Miami home prices are up 50% since 2012, according to last week’s update from the Case-Shiller 20-City Composite Home Price Index (which measures the prices of single-family homes across 20 of the country’s largest cities).  After moves like this, you might think that house prices in Florida are getting expensive. You would be wrong.

Even after these upward moves, Florida real estate looks darn attractive relative to just about anything you can do with your money.  According to a recent report from RealtyTrac, the rental yields in Florida are still incredibly high. Take a look:

Location Yield
Broward County (Fort Lauderdale) 13.1%
Duval County (Jacksonville) 13.2%
Escambia County (Pensacola) 12.8%
Tampa / St. Petersburg area 11.2%
Orange County (Orlando) 10.4%
Miami-Dade County (Miami) 9.3%

These numbers represent gross rental income not net rental income. These are “top-line” figures. But if you figure “all-in” rental expenses in the 5%-7% range (relative to the value of the house), Florida residential real estate still looks great.

To see how this applies to your own situation, we highly recommend you take a moment to look through that RealtyTrac report. It’s a report on the national situation in house rentals. In particular, zoom in on the graphs of your area. You can find out just how attractive it is to buy a rental property in your area right now.

According to the RealtyTrac charts, the value in Florida (based on rental yields) is still incredible relative to anything else you can do with your money.  This is even shown in non rental properties like Port Charlotte land. However, you can’t say the same about the California coast. According to RealtyTrac, most of the counties near the coast in California have GROSS rents in the 5% range. That is way too low.

In short, after expenses in California, you would likely end up breaking even – at best! At that point, you’d be hoping for appreciation in California to make up ALL of your real estate returns. While that has worked in the past in California, it is a dangerous game.

Our money is on the Florida coast… It’s relatively cheap. It’s desirable. Rental yields are high. There’s no supply. It’s where the majority of money is today, what bigger endorsement can we give you?

The story is bigger than Florida land sales. Relative to just about any other asset class, residential property across much of the U.S. looks pretty darn good. It offers us relatively high rewards for relatively low risks. If you’re looking for a safe place for your money, consider residential real estate in your area. A quick starting point is the numbers in the RealtyTrac report, minus 5%-7% for expenses.

To learn more about the Florida Real Estate Market visit 9 Core Realty on the web!

Southwest Florida Foreclosures Drop to 8-Year Low

Blog #2

Foreclosure activity sank to an eight-year low in Southwest Florida in 2015, as escalating values and an improved economy helped more owners hold on to their homes. Filings in Southwest Florida including on Cape Coral property have plunged more than 70 percent from their recession-era highs, although they remain above historic norms.

The area recorded 5,271 foreclosure filings last year, with one in every 76 homes — or 1.31 percent — in some form of distress, real estate researcher RealtyTrac Inc. recently report.   But that is down from the peak of 20,507 filings in 2009, and the lowest level since 2,072 were recorded prior to the financial crisis in 2007.  Still, many homeowners remain in trouble.

The region ranked 26th among the 214 largest U.S. metro areas for foreclosure filings, and Florida posted the second-highest foreclosure rate last year including foreclosed investment land for sale.  Although foreclosure activity in the market dropped 18 percent in 2015 from the previous year, similar to the national trends, the foreclosure rate in the region is still in what we consider the danger zone, with more than 1 percent of housing units with a foreclosure filing during the year.

Most likely in 2016 we will continue to see foreclosure activity decrease, and we would expect by the end of the year to see the foreclosure rate in Southwest Florida below that 1 percent threshold. The only concern we have is a pending Florida Supreme Court case involving statute of limitations when it comes to foreclosures. If the court rules in favor of banks, it could lead to another surge in foreclosure activity across the state in 2016, but we consider that a less likely scenario.

Florida totaled 159,773 properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — last year. That was down by 22.5 percent over the year and by 67 percent from the 2010 peak. Despite that improvement, the state ranked second in the U.S., with 1.77 percent of its homes — 1 in every 56 — subject to foreclosure. New Jersey topped the list at 1.91 percent.

Nationwide, one in every 122 housing units — or 0.82 percent — had at least one foreclosure filing in 2015, the second consecutive year where the foreclosure rate was under 1 percent. A total of 1.08 million filings were reported in the U.S. in 2015, down 3 percent from 2014 and by 62 percent from the 2.87 million high in 2010.

In 2015, we saw a return to normal, healthy foreclosure activity in many markets, even as banks continued to clean up some of the last vestiges of distress left over from the last housing crisis. The increase in bank repossessions that we saw for the year was evidence of this cleanup phase, which largely involves completing foreclosure on highly distressed, low-value properties.

To learn more about purchase foreclosure land or properties in SWFL visit us at 9 Core Realty on the web!

Home and Land Prices Rise in November; Four Cities Hit All-Time Highs

Blog #1

U.S. home prices increased at a faster clip in November, the gains fueled by solid hiring growth, historically low mortgage rates and a shortage of houses on the market.  The Standard & Poor’s/Case-Shiller 20-city home price index rose 5.8 percent from a year ago, up from a 5.5 percent pace in October, according to a recent report.

Home values nationwide have nearly returned to their July 2006 peak, as the real estate market has slowly recovered from the housing bust that triggered the Great Recession. But several metro areas have fully rebounded from the downturn.

Four metro areas — Dallas, Denver, San Francisco and Portland Oregon — have either matched or eclipsed their all-time highs, while Charlotte, North Carolina, is less than 1 percent below its previous high.  No Southwest Florida city is included in the Case-Shiller index, but Tampa and Miami are, showing gains of 6 percent and 8.1 percent year over year, respectively.

By another yardstick, home prices in this region also continue to climb. Data from the trade group Florida Realtors showed that buyers paid a median $253,650 for a single-family home in Sarasota-Manatee in December, a 16.4 percent increase over the year.  This increase was also seen in the ride of Florida land sales. In Charlotte County, homes traded for a median $180,000, up 21.6 percent.

Buyers crowded back into the housing market last year. Sales of existing homes rose 6.5 percent over the year to 5.26 million, according to the National Association of Realtors. More Americans have been able to purchase homes as employers have added 2.7 million jobs and borrowing costs have remained low. But the number of available listings has fallen 3.8 percent from a year ago, causing tight inventories that have fueled escalating prices.

The rising home values, limited selection and need for investment real estate could ultimately deter sales growth in 2016.

The dearth of inventory has really taken its toll on the market. Homebuyers this year are motivated but not desperate, and they refuse to overpay. Without more listings, what we’ll see are higher prices and lower sales volumes, a lousy way to start a new year for homebuyers.

The rising prices have created some affordability pressures — down payments have fallen as a share of the purchase price even as they have increased in absolute terms.

For a conventional 30-year mortgage, the average down payment was 17.46 percent of the purchase price in the October-December quarter. That is down from 17.63 percent in the prior quarter, according to a recent report by LendingTree, the online loan marketplace.

But buyers had to come up with $51,721 for their average down payment at the end of 2015, a 5.72 percent increase from the third quarter.

The challenges caused by rising home values have been offset somewhat by falling mortgage rates in recent weeks.

Mortgage buyer Freddie Mac says the average rate on a 30-year fixed-rate mortgage declined to 3.81 percent last week from 3.92 percent a week earlier. Rates have historically averaged 6 percent, meaning that interest expenses are relatively low for homebuyers.

Learn more about current SWFL real estate market trends by visiting 9 Core Realty!