Fla. Had a Listing Shortage Pre-COVID – and It Still Does

Fla. Had a Listing Shortage Pre-COVID – and It Still Does

In 2008, Fla. had too many new homes; but in early 2020, there were too few. Even if buyer demand falls slightly, a still-low supply will likely push home prices higher.

NEW YORK – Housing prices aren’t expected to drop significantly during the COVID-19 pandemic, in part because Florida is facing a statewide housing shortage.

Florida Realtors says that builders have been cautious since the last recession. Florida Realtors chief economist Brad O’Connor says new home sales are down 30% to 40% statewide, but he says there’s a key difference between the housing market of today and the one 10 years ago.

“When we went into the great recession, builders. … all across the United States had massively overbuilt homes,” O’Connor says. However, builders learned their lesson a little too well, and now the state now has a shortage of housing.

“So let’s say the demand for housing falls, houses will still be scarce … So the prices won’t fall as much as they did last time when there were so many houses to choose from,” O’Connor explains. “We haven’t seen a bunch of people leaving their houses on the market and selling for a lower price. What they’re doing is pulling their houses off the market for a couple of months and waiting for all this craziness to go away, and then they will try to put their homes back on the market and sell for a similar value to what they have it posted for now.”

In Tallahassee, local real estate agent Hettie Spooner says there’s not enough housing under $300,000. She has seen people pull their houses off the market during the COVID-19 pandemic, but she believes it’s a temporary trend, noting that Tallahassee has a steady draw from its government offices and universities.

O’Connor agrees that the COVID-19 pandemic will have an impact on the housing market across the state – but that it will pass eventually.

Source: WUSF News (05/02/20) Gaffney, Robbie

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Important Questions to Ask a Realtor Before Selling Your Home

1. Experience & Education

  • How long have you been selling residential real estate?
  • How many homes have you sold in the past 2 years?
  • Do you have a background in finance, business or real estate?
  • What continuing education have you done in addition to your license?

2. Market Knowledge & Negotiations

  • What training have you had in valuing homes to assist me in determining the value of my home?
  • Your specific needs: Do you have a lot of experience in (e.g. condos, townhomes, single family homes, waterfront, beachfront, a specific geographical area, etc.)?
  • How common are multiple offer situations in my price range? What is your strategy for these?
  • If repairs are needed, how do you handle that?
  • If my home doesn’t appraise at purchase price, what are my options?

3. Financial Knowledge

  • Will you provide a detailed breakdown of my selling costs and estimated net proceeds I should expect at closing so that I can accurately financially plan?

4. Marketing & Showing Feedback

  • Do you have samples of your MLS listings and photos?
  • What other marketing do you do?  
  • Will you regularly provide showing feedback?  How do you do this?
  • What is your strategy for pricing and price reductions?

5. Availability

  • Is there always someone I can get a hold of for questions as well, if you’re not available?
  • Will my needs be met if you go on vacation? What is your procedure for that?

6. Help with Understanding the Selling Process

  • Do you have an outline of your process for selling a home so that I can understand how it works?
  • Who will help me track any deadlines I have and also explain what my responsibilities and action items are?

 

 

© 2019 Kitchell Group, a Florida Corporation

HOW MOVING TO A NEW HOUSE AFFECTS YOUR TAXES

Maximize your deductions – and make sure you file that partial-year return – to get the most back from Uncle Sam.

Whether you’re filing your taxes on your own, using online services or enlisting the skills of an accountant or tax preparer, the same question remains a key to your return: Did you move last year?

It’s a simple yes or no question, but the answer can lead you to a far longer list of questions, dictating how much you may owe or get back from the IRS.

Here are three scenarios that may apply to you, and what you should know to prepare for tax season.

If You Moved to a New State

It doesn’t matter if you bought a home, sold one, rented or couch-surfed, if you moved to a new state in the past year, you’ll need to file a part-year tax return. Whether you changed employers or transferred to a new location while employed with the same company, you should receive W-2 forms that provide your income information for each state you resided in during the year.

If you’re filing your own taxes, an online service like TurboTax or H&R Block’s online product can be helpful in guiding you to the right part-year return information. Lisa Greene-Lewis, a certified public accountant and TurboTax blog editor, explains that an online filing system’s question-and-answer format automates much of the process.

“It’ll ask, ‘Did you work in a different state?’ And then everything you put in for your federal return, it automatically calculates everything for your partial-year return,” says Greene-Lewis, a U.S. News contributor. If you moved for work purposes, Greene-Lewis says there’s a possibility you’ll be able to deduct moving expenses. “Anything like storage, a moving company, your travel to get to where you’re moving – that could be deductible, so you want to make sure you keep track of that information,” she says.

Moves paid for by your employer are not tax-deductible, but keep any receipts for relocation expenses on hand in case you discover they are not eligible for reimbursement and may then be considered tax-deductible. 

If You Purchased a Home

Buying a home, especially for the first time, welcomes you to the new world of property expenses, but there are also many tax benefits to owning a house.

  • If you purchased a home in 2017, the prorated mortgage interest for up to $1.2 million of debt is deductible – and that remains the case for future filings. But if you purchased a home in 2018 or after, your future deduction is limited to interest on mortgage debt up to $750,000, following the passing of the Tax Cuts and Jobs Act in December 2017.
  • Prorated real estate taxes from the point of purchase and loan origination fees – or “points” – are also tax-deductible. Though starting with your filing for the 2018 calendar year, the property tax deduction is limited to $10,000.
  • If you purchased your home with a mortgage, one key piece of paperwork you’ll need is the 1098 form you receive from your mortgage company, explains Nate Rigney, a senior tax research analyst at The Tax Institute at H&R Block. “The form 1098 should report deductible mortgage interest, points if the buyer paid any deductible points and real estate taxes paid out of escrow. It should also show mortgage insurance premiums, which if paid in 2016, are also deductible,” Rigney says.
  • If you purchased your home with cash, you won’t receive a 1098 form and won’t have mortgage interest or loan origination fees to report on your taxes. But real estate taxes are still deductible. “Instead of being paid through escrow and being reported on a 1098, [homebuyers will] just have to keep the receipt from the tax assessment to prove they are paying their real estate taxes,” Rigney says.
  • Other important pieces of paperwork for new homeowners when it’s time to file taxes are the closing statement, drawn up by an attorney or title insurance company, and the Closing Disclosure, which is legally required to be provided by the lender to the buyer at least three days before closing. Both forms clearly explain the financial details of the deal, including dollar amounts paid by both parties, the mortgage interest rate and any points paid, allowing for you or your tax preparer to easily find the necessary numbers to report to the IRS for potential deductions. The Closing Disclosure is one of two forms that replaced the HUD-1 Statement in 2015, similarly laying out the details of the transaction that, for an accountant, makes deciphering the different costs much easier, says Bret Hodgdon, a partner at Davis & Hodgdon Associates CPAs in the Burlington, Vermont, area.
  • If you refinanced your mortgage, you can similarly deduct points paid at the time of refinancing, Hodgdon says, though it’s typically in smaller portions over the duration of the loan rather than all at once.

If You Sold a Home

Selling a home doesn’t come with all the mortgage-related deductions for your return, but in most cases you can keep the profit from the sale tax-free.

  • A profit of up to $250,000 for individuals and $500,000 for couples filing jointly does not have to be reported to the IRS as long as you primarily lived in the residence for at least two of the last five years.
  • In addition to keeping the closing settlement for your records, you should also keep evidence of any major home improvements you’ve done on the property. A roof replacement or new floors, for example, may be used to subtract from the total profit as expenses incurred for the home. “[Homeowners] need to add that to the cost of their home when they sell,” Greene-Lewis says.
  • Unless you offloaded a multimillion-dollar home, property values rarely increase significantly enough that the $250,000 or $500,000 exclusion is applicable to the typical home seller. Hodgdon notes he sees home values averaging about $350,000 with clients, and at that price point “to have your home more than double is not likely.”
  • Even in scenarios where you didn’t live in the home for the required time period, Hodgdon notes that factors outside your control, such as a job transfer or illness that required you to move, may allow you to avoid paying taxes on a portion of that profit. “You might be able to get half of the exclusion based on unforeseen circumstances,” Hodgdon says.

Source: US News & World Report, https://realestate.usnews.com/real-estate/articles/how-moving-to-a-new-home-affects-your-taxes

 

WHY YOU SHOULD SELL YOUR HOME IN 2019

Housing markets may not be as hot as previous years, but selling now could be your best bet.

Homeowners looking to sell should consider 2019 a prime opportunity to cash in. (Getty Images)

Few people are predicting that 2019 will be a record-breaking year for home prices. But relatively speaking, 2019 might be the best time for you to put your house on the market. Especially if you’re on the fence about selling this year or next, Nick Ron, CEO of House Buyers of America, recommends going with the devil you know rather than the devil you don’t. “I think it’ll be better than 2020 and 2021 – who knows what’s going to happen in those years,” Ron says.

Housing Market Expectations in 2019

New Buyers Are Still Entering the Market

As interest rates rise, some buyers will hesitate to make an offer on a home or apply for a mortgage, so be ready to see occasional drops in buyer activity. And if your house is at the higher end of the price range in your market, you should expect less buyer interest than before. Ron notes the combination of rising mortgage rates and home prices exceeding buyers’ budgets are what has caused the slowing of homebuyer activity in recent months.

But with available housing inventory remaining low, even with rising interest rates, buyers who are ready to make a purchase will still shop for homes. The biggest wave of new homebuyers will be among millennials, who are mostly first-time buyers. In a Harris Poll survey of 2,000 U.S. adults commissioned by real estate information company Trulia, more than one-fifth of Americans between ages 18 and 34 said they plan to buy a home within the next 12 months. Already, millennials make up the largest share of homebuyers at 36 percent, according to the National Association of Realtors, which released the number in March 2018.

The bottom line: While houses may sit on the market for a few more days on average compared with 2017 when the market was white-hot, buyers remain active and it’s still possible to profit from your home sale.

Interest Rates Are Still Low-ish

Mortgage interest rates have been on a bit of a bumpy road over the last few months. Interest rates for a 30-year, fixed-rate mortgage reached their highest level in over seven years in November 2018, when they hit 4.94 percent, according to Freddie Mac. As of the end of February 2019, however, interest rates are down slightly to 4.35 percent, according to the mortgage loan company. While it’s reasonable to expect mortgage rates to continue to climb gradually throughout the next year, they’ll remain much lower than the historic high of more than 18 percent in 1981.

It’s important to keep in mind that while mortgage rates tend to mirror the Fed’s interest rate activity, mortgage rates are based on the market in that moment, your financial status and the property you’re looking to purchase.

Just because the Fed raises rates at one meeting doesn’t mean mortgage rates will follow that exact pattern. “Not every Fed increase is passing on (to) a mortgage rate,” says John Pataky, executive vice president and chief consumer and commercial banking executive at TIAA Bank.

A sudden leap in mortgage interest rates is unlikely in 2019, though Pataky notes that you should be ready to see rates continue to climb. “We do expect over the next 12 months that mortgage rates will continue to drift higher,” he says.

If you’re looking to get the lowest interest rate possible on your next house, try to make a deal sooner rather than later.

You Have High Equity

Homeowners who bought during the recession or shortly after benefited from historically low interest rates and, up until around 2015, lower home prices that were still in recovery mode. If you fall into that category, your home equity has risen with nearly every mortgage payment, each renovation you made to the house and all the other houses on the block that sold for a higher price.

The higher your equity in your home, the more you net from the sale, which can easily go toward the down payment on your next house. The larger your down payment, the better you look to lenders and the lower your interest rate will be, and the less likely you’ll need to increase monthly payments with private mortgage insurance.

Selling in 2019 vs. 2020

If not selling your home in 2019 means putting your house on the market in 2020, the sooner option is the best one. In a survey of 100 U.S. real estate experts and economists by real estate information company Zillow, released in May, almost half expect the next recession to occur in 2020. Another 14 percent believe the recession will hold out until 2021, while 24 percent of panelists expect the recession earlier – sometime in 2019. Whether you believe the recession is imminent or a long way off, current real estate patterns indicate a sudden upswing in activity or prices is unlikely in the near future. Real estate markets tend to operate on a cycle of their own, the length of which varies by market but can be between 10 and 16 years total and flow from a seller’s market to a buyer’s market with a period of balance in between.

“It doesn’t look like there’s anything on the horizon that’s going to cause a big spike in home prices or increase demand dramatically,” Ron says.

Source: US News & World Report, https://realestate.usnews.com/real-estate/articles/why-you-should-sell-your-home

Important Questions to Ask Before Hiring a Buyer Agent

1. Experience

  • How long have you been selling residential real estate?
  • How many buyer transactions have you closed in the past 2 years?
  • What was the ratio of buyers versus sellers (do you specialize in one or the other or both)?

2. Education

  • What is your educational background? Do you have any formal education in finance, business or real estate?
  • What continuing education have you done in addition to your license?

3. Financial Knowledge

  • What training have you had in valuing homes to assist me in determining what price to offer on a home I want?
  • Will you provide a detailed breakdown of my buying costs, estimated monthly payment and the cash I need to close so that I can accurately financially plan?
  • How accurate are your estimates for closing costs? Do you review this regularly to make sure appraisal, inspection, HOA costs are accurate (comparing actual closing statements to your estimates)?

4. Market Knowledge

  • Do you regularly tour new construction and resale listings? Do you regularly tour new construction and resale listings?
  • Your specific needs: Do you have a lot of experience in (e.g. condos, townhomes, single family homes, waterfront, beachfront, a specific geographical area, etc.)?
  • Can you help me narrow down homes that are in a specific school district or identify non-HOA communities?
  • Do you know what areas are declining, improving? Is Tampa Bay declining, stable or improving? Why?
  • How common are multiple offer situations in my price range? What is your strategy for these?

5. Availability

  • If I want to see a home ASAP due to fearing of losing it, can you accommodate that need?
  • Do you have a team of agents or a back-up agent who can help me if you already have appts. that day? How does that work?
  • Is there always someone I can get a hold of for questions as well, if you’re not available?
  • Will my needs be met if you go on vacation? What is your procedure for that?

6. Help with Understanding the Buying Process

  • Do you have an outline of your process for buying a home so that I can understand how it works?
  • Who will help me track any deadlines I have and also explain what my responsibilities and action items are?

7. New Construction

  • How many new construction homes have you sold?
  • Do you regularly tour new construction neighborhoods?
  • What services do you provide for your clients?
    1. Do you attend design/architect and finish selection appts.?
    2. Do you attend new construction inspections? If so, what inspections were they?
    3. Do you attend the builder orientation appt. and final walk-through?
    4. Do you attend the closing?  Do builders discount their home prices?
  • What incentives have you been able to negotiate for your clients?
  • What issues have come up and how did you resolve those to the benefit of your clients?
  • What happens if the home is not built to the specs we agreed to?

 

© 2019 Kitchell Group, a Florida Corporation