January 2020 Newsletter

Florida: #1 Welcoming State

According to a study conducted by LendingTree.com, in 2016, new residents were responsible for $30.2 billion coming into Florida. Of that, 72% were new residents over the age of 54. Looking at household income, 85% of the state’s growth in 2016 was attributed to people who earned more than $100,000 annually.

We are seeing first-hand the highest percentage of affluent buyers go to Florida. Several factors have come together between lifestyle, great value (and) quality of living combined with the boost from tax reform.
Shahab Karmely, CEO of KAR Properties in Miami

Buyers have huge purchasing power and pay fewer taxes for the rest of their lives, so they think, why not move there?… I’m seeing more people moving here from California… It’s definitely become an emerging market for us. Since the taxes are extremely high there, Florida is perfect if you like the casual beach lifestyle.
Noam Ziv, Boca Raton Developer of the ELAD Group

Over the last few months, we have noticed a significant increase in buyers from the Northeast and Midwest… While historically, many purchases in South Florida were vacation homes or investment properties, now more than ever we are seeing buyers relocate to become full-time South Florida residents. Similarly, many of the buyers are relocating their businesses as part of the relocation.
Jay Parker , CEO of Douglas Elliman Florida

A year or two ago, New York buyers were coming here to avoid state income tax… Now we see them coming for the truly good value they get when they trade New York for South Florida.
Chuck Luciano, Compass
This means a dramatic increase in the competition for your home. The “sweet spot” for sellers is winter, because (in addition to increased competition) there will be an increase in new construction homes. New building permits are up about 7% over this time last year.

Buyers looking for their home, have faced the headwinds of tight inventory, and a competitive market this year… While lower mortgage rates and the arrival of Fall promised a reprieve, conditions continue to tighten as demand remains strong.
George Ratiu, Senior Economist at realtor.com
We didn’t have a momentum going into 2019. Remember that interest rates skyrocketed at the end of the year in 2018 and that cut any momentum going into the new year. We’re doing a reverse this time. The industry is building momentum right now and we’re going into 2020 very strongly.

Total sales for the first nine months of 2019 (527,000) were 7.2% higher than the comparable total for 2018 (491,000). We expect sales volume to continue to trend up slightly in the coming months as more new homes are built.
National Association of Homebuilders

#1 Reason to Sell this Winter

The number one reason to not wait until the spring is that the supply of homes for sale increases substantially, which would lower the demand for your home. Most homes come to the market in April, May, and June. So, if you are waiting for next spring’s buyer’s market, just keep in mind that is what your neighbors are waiting on, too.
 

Mortgage Loans

For the first time since 2008, the number of unconventional mortgages peaked at 3% in 2018. But, no need to fret, because they were actually trending at 39% in 2006. Most of today’s mortgage loans are only slightly unconventional, compared to those that caused the 2008 crisis. Lenders are still required to make their best effort to determine the loans can be repaid. Unconventional mortgage underwriters offset the risk of the loan by often requiring larger down payments in an effort to offset a high debt-to-income ratio, lack of documentation, or interest only situations. Mortgage loans that trigger negative amortization are no longer out there. Interest only loans are largely for wealthier people who can put down a large payment.