Real estate trends

What Is Not Covered Under Standard Homeowners Insurance?

Until it happens, most homeowners think of disasters as something that won’t happen to them. Disasters can be as minor as a tree branch falling and breaking a few windows, or as concentrated as a pinhole roof leak slowly dripping water into a residence—causing mold or other ripple effects. Sadly, too many people who experience disaster on a large or small scale may find the trauma continues when it’s time to file an insurance claim.

You need to be knowledgeable about what your Homeowner’s Insurance does and does not cover. These common held assumptions about insurance are items that are NOT covered and may require additional insurance or riders.

Wear and Tear Is Covered-Myth

Fact: Coverage typically includes damage from fire, weather and theft, not damage due to general wear and tear or neglect. As a policyholder it’s up to you to maintain your home, including making routine repairs and protecting your home from pests. If you neglect to take care of your property ( a leaky roof) you may not be covered.

You’re Insured in Case of Flood Damage, Earthquakes, Tornadoes and Hurricanes-Myth

Fact: Although some weather-related damage is generally covered, such as from hail, other storm related damage from wind or water may not be.

Floods require specific flood insurance from the Federal Government. Earthquakes might be covered, but sometimes they require additional insurance. Hurricane and tornado damage requires a separate windstorm policy. Sinkholes, mudslides and other earth movement (except in CA) requires a separate endorsement.

All Personal Belongings Are Fully Covered-Myth

Fact: Homeowners insurance typically covers furniture, clothing and other personal items, but more valuable items like jewelry and artwork may require an add-on policy. Homeowners should routinely inventory belongings to determine if policy limits meet their coverage needs.

You Have Protection Against Any Injuries That Happen at Home -Myth

Fact: Your policy’s liability coverage protects you if a guest is hurt in your home, but if a family member is injured at home, it’s normally covered by health insurance.

Home Businesses Are Part of the Package -Myth

Fact: A home business requires business insurance to cover property damage and liability; homeowners should consult with their insurance carrier or agent to be sure they’re fully covered from disasters large or small

You Can Rebuild For The Amount Of The Insurance Coverage-Myth

Fact: Unless you insured for “replacement value” you may be under insured to rebuild your home. “Ordinance of Law” exclusions may not cover to the changes to building codes and the additional costs of bringing the property up to code if damaged.

Overflows of back-ups from your sump pump, sewer or drain are covered-Myth

Fact: A standard policy does not include coverage for these issues and require a separate endorsement.

It may not seem like particularly interesting reading material, but it’s better to take the time to thoroughly understand what your insurance policy covers than to be stuck in a situation where you’re not sure when you really need it.

Filed under: Blog, Boca Raton real estate, Exclusive Buyer Agent, First Time Homebuyers, Flood Insurance, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Maintenance, Homebuyer Advice, Homeowners Insurance, Insurance Claims, Real Estate, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate by Kim Bregman
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FIRPTA Withholding – Foreign Investment in Real Property Tax Act

FIRPTA (Foreign Investment in Real Property Tax Act) Withholding is the Withholding of Tax on Dispositions of United States Real Property Interests

The disposition of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding.

FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests.

Persons purchasing U.S. real property interests (“transferee”) from foreign persons, certain purchasers’ agents, and settlement officers are required to withhold 15% of the amount realized.

Withholding is intended to ensure U.S. taxation of gains realized on disposition of such interests. The transferee/buyer is the withholding agent. If you are the transferee/buyer you must find out if the transferor is a foreign person. If the transferor is a foreign person and you fail to withhold, you may be held liable for the tax.

One of the most common exceptions to FIRPTA withholding is that the transferee (purchaser/buyer) is not required to withhold tax in a situation in which the purchaser/buyer purchases real estate for use as his home and the purchase price is not more than $300,000. However, buyers should be aware that while they may meet the withholding exemption they are still responsible for the seller’s tax liability, interest and penalties should the seller not file a US income tax return to report the sale and pay any relevant taxes.

Note to Non-Resident Buyers – If you purchase property from a non-resident seller and an exception to FIRPTA withholding does not apply then you must ensure that FIRPTA is satisfied as part of the closing. Check your settlement statement prior to closing where you should see 15% of the sales price withheld on the seller’s side of the settlement statement. Request a copy of the withholding certificate from the closing agent and, if withholding was calculated, request a copy of forms 8288, 8288-A and front and back of cancelled check. Retain these documents in a safe place along with your settlement statement and other closing documents.

Foreign Investment in Real Property Tax Act (FIRPTA) Withholding

U.S. Tax law requires that a non-resident alien who sells an interest in U.S. real property is subject to withholding, for tax purposes, of 15% of the gross sales price (i.e. $45,000 on a property with a sales price of $300,000). The withheld amount is required to be forwarded to the IRS, by the Closing Agent, within 20 days of the date of closing. These funds are held until the IRS is satisfied that all taxes due by the non-resident are paid. In order to apply for a refund you can either:-

File U.S. tax returns for each year that rental income was received, reporting all income and expenses; file a final U.S. tax return in the year following the year of sale, to report the sale and recover the balance of cleared funds. This process can take up to eighteen months depending on when, during the tax year, the property is sold.

File prior year tax returns (where required) plus an application for early release of cleared withholding on or before the date of closing. By making this submission, the 10% withholding remains with the Closing Agent whilst the IRS processes the Withholding Application and issues a Withholding Certificate for the cleared funds – usually around 90 days.

Please note that applying for and receiving a Withholding Certificate does not eliminate your requirement to file a final U.S. income tax return to report the sale transaction. In fact, when your final tax return is filed you may receive a further tax refund depending on the number of owners and length of time that the property was held.

In order to ensure a timely release of your funds it is extremely important that the following is obtained PRIOR to closing:-

Buyer’s names, address and SSNs – if U.S. Citizens

Buyer’s names, address and ITINs – if non residents

Or, if the buyers are non residents and do not have ITINs, the buyer’s completed Form W-7 (one per buyer) and authenticated copy of the picture page of their passport(s)

Without this information the Application for a Withholding Certificate and early refund will be rejected. We suggest that you request your Realtor prepare your sales contract contingent upon the buyers providing the above information.

Who’s responsible for FIRPTA withholding on the sale of U.S. property?

Foreign Investment in Real Property Tax Act (FIRPTA) was established in 1980 to ensure the withholding of estimated amount of taxes which may be due on the gain from the disposition or transfer of a U.S. real property interest from a foreign person.

If you purchase U.S. real property from a foreign individual or corporation then you are required to make sure that the seller pays any taxes due on the property. The buyer must execute or have executed the correct forms including the sellers name, address and social security number or individual taxpayer identification number. 15% of the gross sales price must be withheld and submitted to IRS or held in escrow whilst an application for reduced FIRPTA withholding is timely filed and processed.

If the buyer does not take care of the withholding and the seller is a foreign entity who leaves without paying their tax then 15% will be taken from the buyer.

Most buyers are unaware that it is their responsibility to determine if the transferor/seller is a foreign person and subject to FIRPTA withholding. In reality, the settlement agent (Title Company or Attorney) may be instructed to deduct the 15% and submit to IRS or hold in escrow whilst an application for reduced FIRPTA withholding is submitted to IRS for processing.

Filed under: 20 Blogs, Blog, Boca Raton real estate, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Foreign Home Buyers, Foreign Nationals, Home Buyer Advice, Home Buyers, Homebuyer Advice, House Closings, International Home Buyers, International investors, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate, Tax deductions by Kim Bregman
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Reasons to Buy in Florida Off Season

South Florida Real Estate for Sale

It’s cheaper, and sellers are serious!

The off season is Florida is typically the end of Easter/Passover through Thanksgiving.

Buying a home in the late Spring and Summer can be a thrifty move for homebuyers because it’s cheaper, sellers are ready, there are fewer choices, the buyer becomes the negotiator.

There’s typically less competition during the off season, which means buyers can get more bang for their buck. The four months with the lightest sales are June through September which means less competition as well.

Sellers are serious (or worn out)

Whether a house has been on the market for months or the “for sale” sign has recently appeared in the yard, sellers tend to be serious during the off season. They are usually ready to make a deal, which means that buyers have more room for negotiation.

Buyers become the center of attention

During the winter months,real estate agents, mortgage lenders, title companies and other professionals tend to be swamped, which means that clients might not always get the attention they need or want. Once the summertime arrives buyers may receive more attention from the experts and experience fewer delays and service issues.

Buyers can catch some great sales to outfit their home

If your clients are in need of appliances or other items to help maintain or furnish their new home, then they’re sure to find some good deals during this time of the year.

According to Consumer Reports, it all depends on the month. In September, is furniture sale month and carpet and paint are usually on sale as well. October is a great time to purchase a lawn mower, and November tends to be the month for selecting new appliances and cookware.

Mortgage rates are at an all time low in the pas two years. Home affordability has increased this summer, but there is no telling when rates will start to rise again.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Foreign Home Buyers, Home Buyer Advice, Home Buyers, International Home Buyers, International investors, Real Estate, Real Estate Investment, real estate news, Real estate trends, Relocation, Retirement, South Florida Real Estate by Kim Bregman
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How To Invest Your IRA In Real Estate

IRA Investment Strategies

There are several advantages of using a self-directed IRA or Solo 401(k) plan to buy real estate. The first is tax deferral or tax-free growth. For example, if one purchased a piece of property with retirement funds for $80,000 and later sold the property for $300,000, the $220,000 of gain appreciation would generally be tax-deferred. Whereas, if you purchased the property using personal funds (non-retirement funds), the gain would be subject to federal income tax, and in most cases, state income tax. Second, a self-directed IRA can allow you to invest in hard assets you know and understand, such as a rental property or piece of land. Lastly, having the ability to invest in alternative assets is believed to be a good source of investment diversification.

Real Estate Investment Trusts (REITs)

If you are looking for easy transactions both in and out, REITs provide that. Many REITs are registered with the SEC and are publicly traded on a stock exchange. These are known as publicly traded REITs. Others may be registered with the SEC but are not publicly traded. These are known as non- traded REITs (also known as non-exchange traded REITs).

All REITs have their own specialties, so make sure you do your due diligence on the company. REITs are required to distribute 90% of its taxable income as dividends, so many retirees look to REITs for income.

Rental Properties

You can also invest in rental properties. You can buy distressed properties, rehabthem and rent them out or you can buy performing ones. If you decided that you want to go the distressed route you’ll have to keep a very close eye on the accounting. There are lots of rules in regards to tracking the money. You can either manage them on a daily basis or go through the process of hiring a property manager to manage it for you. This is a good way to build a passive income stream.

Turnkey Real Estate Investment

Turnkey is another viable option for SDIRA owners. Self-directed IRA (SDIRA) is another option for an IRA holder, which allows them to invest in diversified assets. To expand on “diversified assets,” this means that you aren’t restricted to stocks and bonds like most IRAs. You are able to invest in many different things. SDIRA serves as a savings account where your money can grow tax-free until you withdraw the funds, unless it is a Roth IRA. If it is a Roth IRA, the money is taxed prior to going into the account and when it is withdrawn, it is tax-free.

The owner simply transfers funds from his/her IRA or other retirement account to SDIRA. Many of them increase the amount invested with their personal contributions to the account.

A Turnkey Real Estate investment basically means that you are working with a turnkey investment company that are selling rental properties. Most of these investment properties are already rehabbed and rented out. You just need to buy the property and everything else in managed by the turnkey company. This is the best option for out-of-state investorsor someone who’s not interested in buying, rehabbing or managing the property. You’ll get the rent every month and you’ll pay a portion of that to your turnkey company for managing the properties. It is a easy hands off approach to investing in real estate.

Make sure to do your research properly in order to find the right turnkey investment company.Pay them a visit, check the property in person and invest once you’re satisfied.

You may have noticed that fix and flip is not on this list. And there is a big reason for that. The idea behind an IRA is that it is a retirement account, not a business account. If you start conducting business in your IRA, it can open you up to tax liabilities.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Foreign Home Buyers, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, International Home Buyers, International investors, Real Estate, Real Estate Investment, real estate news, Real estate trends, Retirement, Self Directed IRA, South Florida Real Estate, Tax deductions by Kim Bregman
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Online Home Decorating Resources

Online interior design services are transforming the way we access interior design help. It’s the magic combination of professional design guidance, affordable prices, plus an easy and quick process that is attractive to people everywhere. Whether you’re deciding what color to paint your living room, envisioning a different furniture layout need design assistance with a room or an entire home, these online resources can get you started.

VoiceofColor.com

Anyone who has ever considered repainting his or her home knows how overwhelming a trip to the hardware store’s paint section can be. Pittsburgh Paints offers a fun way to find the best hues for you: at The Voice of Color, you can play their 13-question ColorSense Game to find out what your signature color style is. With questions about words that inspire you, your preferred scents and favorite vacation spot, the site will come up with a personalized set of colors. They’ll then offer you palettes within your range of hues so you know which shades match, making it simple to coordinate every room of your house.

Homestyler.com

Whether you want to design your dream house or experiment with redecorating the home you already have, Homestyler can help you visualize your plans. The site lets you drag and drop furniture and brand-name products (there are over 15,000 items to play around with) into your virtual home to check them out before you commit to buying. You can build the online version of your house to match the specifications of the one you own, play around with new layouts and furniture, and view the whole thing in 3D for an even more realistic picture. Get design tips from their instructional online videos as well as find inspiration from the site’s gallery of user-generated designs.

mydeco.com

Ask any interior decorator how she gets inspired and she’ll show you a mood board. Often featuring compilations of fabric swatches, furniture photos and torn-out pages of decorating magazines, mood boards are a great jumping-off point for any home decor project. However, not everyone has the time to cull all those bits and pieces. At mydeco, you can build your own mood board in just a few clicks. Search the site’s listings, which contain thousands of pieces of furniture, works of art, maps, fabric, tiles and more, then drag them onto your virtual board. You can search by color or store to find exactly what you’re looking for, or just browse your options to see what inspires. And if you fall in love with your creation, you can click on each item to purchase it.

Internet-based businesses are helping homeowners get professional design expertise and merchandise more affordably and faster than ever. The latest iteration to shake up the process is online companies that employ staff designers or freelancers with the goal of simplifying the designer-homeowner partnership and allowing the act of home furnishing to became transparent, faster, and more affordable.

Interactions with the designer can happen via email, phone, instant message, Skype, and sometimes in-person meetings. Before the homeowner signs off on a project, they are provided a floor plan or 3D rendering, which shows how to arrange the furnishings once they arrive. Since the first companies emerged in 2012, many have grown and added locations.

Here are a few online interior design firms gaining prominence.

Decorilla: This company now uses 10,000 designers across every state and reaches internationally as well. Decorilla also has an in-house staff who handle other parts of the job, such as coordinating delivery, dealing with returned goods, and managing construction. This company starts clients out with a questionnaire, but they can also search its website to pick a designer whose portfolio they like. The company offers three packages, from basic bronze for $499 for one room to gold for several rooms for $1,699, while offering clients access to highly experienced designers. Rather than providing one plan or rendering, four options are offered to clients with realistic renderings from two different designers. Each client also gets company discounts on more than 250 well-known brands such as Wayfair, Crate and Barrel, and Jonathan Adler. Many projects incorporate one-of-a-kind goods.. For those who need less help, the company offers service starting at $75 an hour.

Decorist: Based in San Francisco, with a roster of approximately 400 interior designers, the firm handles design projects online only. After filling out a questionnaire, clients pick from three packages: the Classic Design Service for $299 per room with the industry’s most ambitious up-and-coming designers; the Elite Design Service for $599 per room with a locally established designer with regional press; or the Celebrity Design Service for $1,299 per room with a nationally recognized “A-list” interior designer. What a home owner gets: two “mood boards,” the chance to chat via instant message with the designer, a final room design board and floor plan, and a detailed shopping list. Decorist’s free concierge purchasing team members handle shopping and delivery.

Homepolish: Based in New York, this firm works with freelance designers, architects, and general contractors who use the partnership to increase their exposure to new clientele and gain access to its proprietary technology and tools to run their businesses more efficiently. the company started in 2012, it has grown to a network of 1,000 professionals nationally who take on not just residential but also commercial and hospitality projects. The company also has an in-house staff of 70. Designers visit clients’ spaces but can also work by video if they live far away. Prices begin at $140 an hour with a minimum of 10 hours required; hourly rates go up to more than $300 an hour. The company touts its extensive list of trade and retail vendors, and other services such as construction management. Homepolish team members make money by time spent rather than from commissions on client purchases.

Modsy: They offer service online nationwide through video and telephone calls with four design packages available: basic for $69 per room with purchases delivered in eight to 10 days; classic for $89 per room and delivery in six to eight days; premium for $199 per room and delivery of goods in four to seven days; and multiroom at $399 for up to three rooms and delivery in four to seven days. For an extra $15, home owners can have any item they already own digitally inserted into their plan to see how it will look; a substitute but similar item can be inserted for free. Plans or renderings highlight purchases with a white dot, which, when clicked, details the product information. Designers try to give clients choices in each layout, such as a sectional or sofa or different paint palettes.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home decorating, Homebuyer Advice, Real Estate, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate by Kim Bregman
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What Buyers Should Check When Buying an Older Home

Older homes often come with plenty of character and history and possibly even a lower price – but buying a home that has been around for a while can also mean that you will have to address age-related problems. These include:

· Electrical issues

Older homes could have dated wiring and electrical panels that may not be able to keep up with today’s needs, so be sure to check that that the house is up to code. Also, insulation on old wiring can pose a safety hazard, Un-renovated homes may have know and tube wiring, ROMAX or other wiring that can degrade and be a source of a fie. The lack of GFI outlets also indicated that the system is not grounded.

· Roofing

In general, roofs often need to be replaced every 15 to 20 years. Learn the last time the roof was replaced and how it was done. Some homeowners may just add new shingles on top of the old roof, which is not viewed by housing experts as the best way to replace an entire roof. Also, check for loose shingles, leaks, and the type of materials used on the roof. “A composite shingle roof will cost less to replace than a clay tile or metal roof,” “The pitch of the roof can also drive up costs – a roof that is particularly steep may be challenging to replace and repair.”

Energy prices were much lower years ago so little thought was given to insulation. You will more than likely want to improve the amount of quality of insulation in the home.

· Foundations

Older homes could have foundations that are cracked, sunken, uneven or otherwise in need of repair. A structural engineer can closely inspect a foundation and alert buyers to potentially costly problems.

· Lead paint

Older homes may have lead paint, which can lead to serious health problems. It was banned in the U.S. in 1978, but homes built before then may still have it. In fact, about 87 percent of homes built before 1940 contain lead-based paint that needs to be professionally removed.

· Plumbing

The majority of the problems with plumbing originates with the pipes. Galvanized pipes, clay or cast iron sewer lines, polybutylene piping, pipe bellies, and drains. I strongly recommend that you have the sewer system scoped with a camera as part of your home inspection process.

· Asbestos

Asbestos was commonly used in building materials. Many products are still in place today contain asbestos,” according to the Environmental Protection Agency.

There is no safe level of exposure to asbestos, according to the EPA and the Department of Health and Human Services. If the house was built prior to the 1980s, it was likely built with some asbestos-containing materials. Some include:

• Cement roofing and siding shingles

• House Insulation in homes built between 1930 and 1950

• Textured paint and in patching compounds used on wall and ceiling joints

• Artificial ashes and embers sold for use in gas-fired fireplaces

• Older products such as stove-top pads

• Walls and floors around wood burning stoves may be protected with asbestos paper, millboard, or cement sheets

• Some vinyl floor tiles, and the backing on vinyl sheet flooring and adhesives

• Hot water and steam pipes in older houses with an asbestos material or covered with an asbestos blanket or tape

• Asbestos insulation for oil and coal furnaces and door gaskets

• Boilers

• Soundproofing or decorative material

The presence of asbestos-containing materials in a home is not hazardous unless the material becomes damaged. Damaged, deteriorating, or friable asbestos that becomes dry and crumbles into a powder may release asbestos fibers into the air that can be inhaled and can pose a health risk for the residents. Professional testing is recommended to determine whether materials in your home contain asbestos.

A certified Exclusive Buyers Agent will have the resources to ensure complete and thorough inspections before you commit to buying an older home.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, Real Estate, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate, What Buyers Should Check When Buying an Older Home by Kim Bregman
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What Home Buyers Can Learn From a Seller’s Disclosure Statement

Any responsible buyer wants to know everything about the home they’re buying before signing on the dotted line. After all, this is probably the biggest purchase you will ever make, so due diligence is a must. The majority of the real estate agents in Florida are Transactional Agents and do not owe the Buyer a fiduciary duty, An Exclusive Buyer Agent does and will work for the buyer to determine all the information known about the property and advise you on inspections, permit searches, etc. Reviewing the Seller’s Disclosure is the first step in this process.

A Seller’s Disclosure in the State of Florida Is a standard form that is essentially a checklist in which a seller indicates the condition of the different features of a property, any known problems affecting the property, and any pending legal issues. This could include things like knowledge of lead-based paint, water damage, pest damage, past repairs, past insurance claims, any history of property line disputes, etc.

Typically, a seller’s disclosure form is filled out by the seller along with their listing paperwork. When buyer’s agents go into the Multiple Listing Service (MLS) to look up potential properties for their clients, that disclosure statement should be available or can be requested from the listing agent.

I am increasingly running into situations wheretransactional brokerage firms are taking the position that since a Seller’s Disclosure is NOT required by law that are not asking the sellers of their listings to fill one out. The first line of the SPDR provides “Notice to Licensee and Seller”; the less they know, the easier it is to make a “deal”. They are relying on the fact that other transactional agents working with buyers will feel the same and not ask for a Sellers Disclosure.

Although sellers aren’t required to complete this specific SPDR form, a residential seller does have to comply with the rule established in Johnson v. Davis. In that case, the Florida Supreme Court held that “where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer.” These material facts are sometimes referred to as latent defects. In addition, in Rayner vs. Wise Realty Co. of Tallahassee, the First District Court of Appeal provided that this same disclosure requirement applies to residential properties that are being sold as is.

In cases were the listing agent does not provide a Sellers Disclosure I request that the Seller answer all my questions in writing and provide a comprehensive list of questions that encompasses everything asked on the SPDR and more.

A seller’s disclosure form is NOT a substitute for a home inspection. Remember, sellers are required to disclosure only problems they know about. Most homeowners don’t go in their attic very often, and have probably never been up on their roof, and they aren’t required to do so before filling out the disclosure. While this document can provide a lot of valuable information, the home inspection is another layer of protection for a buyer.

The importance of this disclosure statement is just one of the many reasons why it’s critical for buyers and sellers to use an Exclusive Buyer Agent ( EBA) during any real estate transaction. EBAs are up-to-date on the latest laws and regulations and are very experienced with the complex documents and paperwork. They can help walk buyers through the disclosure so they understand all aspects of the home they’re buying and recommend the appropriate home inspections ( WDO, Radon, Leak Testing, Mold, and more) to ensure that any hidden defects are found in advance of the purchase.

Filed under: Blog, contracts, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, home Inspections, Homebuyer Advice, House Closings, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate, Uncategorized by Kim Bregman
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Key Trends Home Buyers Should Watch in 2019

2019 Real Estate Market Trends

It’s a time to look ahead, to make new plans, to achieve new dreams. If those dreams include buying your own home, you should keep an eye on the ever-changing tides of the housing market. Now, markets are like the weather: You can’t entirely predict how they will act, but you can get a sense of the forces that will push things in one direction or another.

There will be more homes for sale, especially in luxury markets

There has been a tight inventory of homes for sale for several years now and homes have been hitting the market, but not enough to keep up with the demand. Nationwide, inventory actually hit its lowest level in recorded history last winter, but this year it finally started to recover. Inventory growth is expected to continue into next year, but not at a blockbuster rate—less than 7%. This is welcome news for buyers.

Affording a home will remain difficult

Life is also going to be more difficult for home buyers, because mortgage rates are expected to continue to increase, as well as home prices, so the pinch that buyers are feeling from affordability is going to continue to be a pain point moving into 2019.

Mortgage rates, now hovering around 5%, are projected to reach around 5.8% by the end of 2019. That means the monthly mortgage payment on a typical home listing will be about 8% higher next year. Meanwhile, incomes are only growing about 3% on average. That double whammy is toughest on first-time home buyers, who tend to borrow the most heavily and who don’t have any equity in a current home to draw on.

Millennials will still dominate home buying

Just a few years ago, Millennials were the new kids on the block, just barely old enough to buy their own homes. Now they’re the biggest generational group of home buyers, accounting for 45% of mortgages (compared with 17% for baby boomers and 37% for Gen Xers). Some of them are even moving on up from their starter homes.

At the time of last year’s forecast, the GOP’s proposed revision of the tax code was still being batted around Congress. While there was talk that it might discourage people from buying a home, no one really knew how it might affect the real-estate market.

This year … well, we still don’t really know. That’s because most taxpayers won’t be filing taxes under the new law until April 2019. And while some people might have a savvy tax adviser giving them a better idea of what’s in store, for many, the reality check will come in the form of a bigger tax bill—or a bigger refund.

Renters are likely to have lower tax bills, but might not be tempted to buy while affordability remains a challenge, and with the new, increased standard deduction reducing the appeal of the homeowner’s mortgage-interest deduction.

“I think the new tax plan will affect mostly homeowners and home buyers in the upper parts of the distribution,” says Andrew Hanson, associate professor of economics at Marquette University in Milwaukee, WI. “Those who either own or are buying higher-priced homes are going to pay a lot more.”

The biggest change resulting from the new tax law, Hanson predicts, will be in mortgages, since people will be less inclined to take out large mortgages.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, Mortgage Information, Real Estate, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate, Tax deductions by Kim Bregman
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Why Your Mortgage Is Getting More Expensive

World events are conspiring to make it more expensive for you to borrow money to buy a house.

Mortgage rates have increased for six consecutive weeks, according to Bankrate data, bringing interest on a 30-year fixed rate loan to 4.44 percent—the highest level in 11 months—while home prices continue to rise due to a lack of available homes.

After years of tepid economic growth, inflation and wage growth recently found a groove, while the Federal Reserve’s plan to raise short-term interest rates multiple times for a consecutive year has reduced the value of government debt.

Homebuyers Should Get off the Fence

Mortgage rates are moved by the yield on 10-year Treasuries, rather than short-term rate hikes by the Fed. That’s why mortgage rates fell throughout 2017, for instance, even as the central bank raised the federal funds rate three times. Rates remain cheap, however, compared to historical prices. A 30-year fixed-rate mortgage came with an interest rate above 6 percent just before the Great Recession in 2007. Potential homeowners should get off the fence and make a bid, assuming you have an affordable home target and adequate savings, because rates are likely only heading north.

Mortgage rates are expected to climb in 2018, so it might be worth shopping for a mortgage before this long period of low rates takes a turn.

Here are several predictions from the largest housing and mortgage groups for the 30-year fixed-rate mortgage:

The Mortgage Bankers Association predicts it will rise to 4.6 percent in 2018.
The National Association of Realtors expects it be around 4.5 percent at the end of 2018.
Realtor.com says the rate will average 4.6 percent and reach 5 percent by year-end.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyers, Home Financing, Homebuyer Advice, House Closings, International Home Buyers, International investors, Mortgage Information, Mortgage Interest Deductions, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate by Kim Bregman
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Housing Starts Heating Up!

Housing Starts and consumer inflation heated up in January, but Retail Sales and Existing Home Sales stayed on the chilly side.

The Commerce Department reported that January Housing Starts jumped 9.7 percent from December to an annual rate of 1.326 million units. This was the highest level since October 2016 and up 7.3 percent from January 2017. Single-family starts, which account for the largest share of the market, rose 3.7 percent from December while multi-dwelling starts with five or more units surged 19.7 percent. Housing Starts rose in the Northeast, South and West but declined in the Midwest.

Building Permits, a sign of future construction, rose 7.4 percent from December to an annual rate of 1.396 million units. With many buyers facing inventory shortages across much of the country, this strong report regarding new home construction is a welcome sign!

The National Association of REALTORS^® reported that January Existing Home Sales declined 3.2 percent from December to an annual rate of 5.38 million units. Sales were down 4.8 percent from a year ago, the largest decline since August 2014. Low inventories of homes for sale were indeed a thorn in the side of would-be buyers with just a 3.4-month supply available at the current sales pace. A 6-month supply is considered healthy.

Retail Sales also disappointed in January, as the Commerce Department reported a 0.3 percent decrease. December’s reading was also revised downward to 0 percent from a 0.4 percent increase. The key highlight was that consumer spending wasn’t strong in recent months, and this could impact GDP expectations.

Consumer inflation edged higher in January, with an important component jumping to a 12-month high! The Consumer Price Index (CPI) rose 0.5 percent in January, just above expectations due to higher gasoline prices, the Labor Department reported. Core CPI, which strips out volatile food and energy prices, rose 0.3 percent from December. This was the largest increase in a year, boosted by rising rents.

Inflation reduces the value of fixed investments like Mortgage Bonds. This means signs of inflation can hurt Mortgage Bonds and impact the home loan rates tied to them, which is a trend we’ve seen through much of this year. Stocks have also reacted negatively to hints that inflation was on the rise because inflation brings higher rates and higher rates hurt corporate borrowing. Stocks even entered correction territory in early February, meaning a 10 percent decline from recent highs.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, House Closings, International Home Buyers, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate by Kim Bregman
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