What stories impacted Florida real estate the most in 2011? Our guess is it depends on your perspective; were you a buyer or a seller? Did you lose your job or find a new one, were you looking for a rental or did you need a place to locate your existing or new business? All these scenarios were impacted one way or another in 2011. So, let’s take a look back at just what occurred and see if any will continue into 2012.
The following review includes excerpts from a summation of the top stories that was put together by the Florida Realtors Association along with our own views and some of our blog posts from a Southwest Florida perspective.
- Florida real estate – the buying opportunity of a generation. Or two or three…without a doubt and at the top of the list is 2011 was a great time to buy a Florida property. It wasn’t the easiest time if you needed a mortgage or tried to strike a deal on a short sale, but selling prices hit the bottom in many areas and early on, buyers had a wide selection from which to choose. In addition, mortgage rates hit a record low of 3.91% and many properties sold for a fraction of their value as compared to the height of the market craziness back in 2006. Investors and foreign buyers were snapping up bargains left and right and at least here in SW Florida, the builders are back with new construction options in force. Overall sales have had three back to back to back records for the largest numbers of yearly sales in the history of the state and the foreclosures have fallen well below half of what they used to be at their peak. So, our guess is in another couple of years, folks will back on 2011 as one of the best times in recorded history to buy a home in Florida. The question remains though – on where things will go as we move into 2012. Again, our guess is the opportunity will remain good although your choices will be more limited as inventories have fallen pretty dramatically. And, if you wait until later in the year, the likelihood exists you will be paying somewhat more for the property you choose.
- The economy is rebounding, slowly but surely…the Florida economy remained sluggish as unemployment rates stayed uncomfortably high in most areas; but, across the board, the state is beginning to show signs of recovery. Most of the recent economic indicators are suggesting brighter days ahead. Floridians’ consumer confidence is rising and the employment picture has turned more positive, especially in the more resort type areas. While we still have a ways to go to hit “normal,” 2012 is looking to be better than 2011.
- The Commercial market is better than you might think…Florida investors increasingly want to buy office, retail and industrial properties, says Cynthia Shelton, Florida Realtors’ 2009 president and a director at Colliers International in Orlando. Vacancy rates, while still high, have stabilized, along with rental rates. Core assets (essential to businesses) are selling and lenders, including the life insurance companies, are lending again. Banks are more realistic about prices for distressed properties, and 2012 should see the entry of more commercial tenants.
- Florida Legislature: We got Amendment 4 and scrapped the cap…Florida Realtors had a number of victories in the 2011 Florida Legislature, but none as important as a constitutional amendment voters will consider in November 2012, and none so hard-fought as a law to “scrap the cap” on Florida’s affordable housing trust funds. Amendment 4, if approved, will create a property tax increase cap of 5% each year on non-homesteaded (non-resident) real estate, down from the current 10% cap. It will also give some first-time homebuyers a property tax break that decreases over time. In 2012, Florida Realtors will roll out its “Yes on 4″ campaign. In the “scrap the cap” victory, the Florida Legislature agreed to allow all doc stamp taxes earmarked for the affordable housing Trust Fund to actually go into the fund.
- Property insurance continues its bumpy ride…lawmakers continue to wrestle with a question that has been around for years: Should property insurance be affordable or available? If affordable, a major storm could bankrupt the state. If widely available, the cost could drive buyers away and hurt current homeowners. Citizens Property Insurance, the state-owned insurer, sits squarely in the middle of the debate since it covers most of the high-risk properties and, should a major storm hit, would force all Floridians to help pay for damages. To attract private insurers to the state and cut down on the number of owners under Citizens, Gov. Scott and lawmakers made changes. Sinkhole coverage became optional and much more expensive. Citizens dropped about 7,500 coastal homes in early December, and policy costs and rules are set to become even stricter in 2012. The uneasy balance between affordable or available insurance shifted a bit closer to the “available” side of things.
- Florida Realtors Association adds new research department…Florida Realtors Industry and Data Analysis Department (IDA) opened for business in June 2011. Designed to provide practical information for association members, Chief Economist Dr. John Tuccillo says the “department will help Realtors in Florida deal more effectively with increasingly educated consumers.” The services provided by IDA include current analyses of Florida’s real estate market and support for Florida Realtors’ public policy efforts in Tallahassee.
- HAMP, HARP, TARP and Foreclosure Mediation did little to help at-risk homeowners…falling home values and risky mortgages caused more Florida owners to face foreclosure. The government created, and modified a number of programs slated to help owners keep their homes, but most applied only to about half of those in trouble – owners who had mortgages held by Fannie Mae or Freddie Mac. Even then, however the carrots held out by HAMP, HARP, TARP and others didn’t entice lenders that feared principal cuts and long-term changes. The issue led to some strategic defaults – foreclosures where investors could afford to pay but walked away as a financial decision – court backups, and a system that allowed some non-paying owners to live in a home for over two years before authorities finally foreclosed. Everyone pretty much expects the problem to improve but unfortunately continue in 2012.
Florida Supreme Court Ends Mandatory Foreclosure Mediation Program
HARP Plan Changes Just More Government Insanity
FHA Waiver of 90 Day Anti-Flipping Regulations Extended Through 2012
Fannie and Freddie Announce Foreclosure Guidelines
- Should regulaters slow the recovery to avoid another crisis…U.S. regulators have conflicting goals: Speed the recovery but, at the same time, take steps to make sure it never happens again. Unfortunately, they haven’t figured out how to do both. While the federal government has tried to spark home sales through a number of programs (see No. 7 above), it has also created obstacles to homeownership by boosting mortgage rules, tightening appraisal standards and restricting the amount homeowners can deduct from federal taxes. A key concern of Realtors heading into 2012 is the qualified residential mortgage (QRM) rule – a minimum standard that mortgage loans must meet before Fannie Mae or Freddie Mac will consider buying them. Some lawmakers have suggested a 20% down payment, a high standard that will force many buyers to wait years before they can afford homeownership. The discussion will continue in 2012 and most likely not be resolved until after the November election.
- Social media and networking gain more acceptance…new technology no longer surprises Realtors, who have been inundated with cutting edge solutions that now allow them to post videos, track complete transactions stored in a “cloud,” sign contracts without actually signing anything and politely ask their phone to look up information. Social networking was once the realm of early-adopters, and Realtors sold it to clients as “look what I can do for you.” Now, Facebook, Twitter, YouTube and other social networking sites are standards in the real estate business.
- Real Estate has definitely changed since the boom went bust…the skills needed to sell Florida real estate have changed dramatically. Agents spend a lot more time talking to banks, trying to find out what’s happening with a client’s short sale; asking what paperwork they need to file (or re-file); and understanding new laws that oversee what they can do – and can’t do – when working with short-sale sellers. Foreclosures are only a little better, especially with all the multiple-offer situations. Everyone involved in the process has had to learn to accept disappointment – sales that fall apart at the last minute for a multitude of reasons; appraisals that came in lower than expected; lenders backed up and unable to perform in a timely manner and last but not least, clients who want a bargain below any reasonable expectations of possibility.
Hopefully 2012 will be better year than 2011, especially with the declines in the numbers of short sales and foreclosures. The real test for most everyone will come when prices start to rise in earnest as they are sure to do in our opinion.
Gulf Coast Associates, Realtors
Bonita Springs, Florida
Specializing in Luxury Florida Real Estate for Sale