From floridarealtors.org
What events changed Florida’s real estate industry in 2016?
In a state that often defies the national norm, the year proved to be another step forward in the long post-Great Recession recovery.
Florida Realtors News editors selected the following as 2016’s most influential issues:
Home inventory? What inventory?
The real estate industry always faces challenges and 2016 might have been the best year ever except for one thing: Realtors didn’t have enough homes to sell.
Almost every economic indicator suggested that recession remnants had disappeared.
In November, Case-Shiller declared home prices surpassed their pre-recession peak and statistics compiled by Florida Realtors research department found a steep decline in foreclosures.
The final piece of any economic rebound — wage growth — appeared surprisingly strong by December and unemployment dropped to a seven-year low.
A continued economic uptick and new demand from baby boomers and millennials may, however, make 2017 real estate’s “best year ever” — providing more current homeowners decide it’s time to sell.
Foreclosures? What foreclosures?
Foreclosed homes have been a noticeable part of many Florida housing markets for the past few years.
However, a decline in the listing inventory coupled with a foreclosure drop, made these bank-owned properties more expensive as selling prices came closer and closer to fair market value.
In 2016, Florida led the nation in foreclosures for a few months, but by October it dropped to No. 6, according to ATTOM (formerly RealtyTrac).
The trend should continue in 2017, though with a slight increase possible thanks to an October ruling by the Florida Supreme Court that freed lenders to foreclose on some homes previously protected by a five-year statute of limitations.
Mortgage rate confusion
At the end of 2015, mortgage experts predicted that rates would go higher in 2016 — the third year in a row for a “prepare now for higher rates” forecast.
It was also the third year in a row experts were wrong.
Pundits predict a rate increase yet again for 2017, but they might be right this time.
Rates have risen about a half point since the presidential election and a few inflation signs convinced the Federal Reserve to raise short-term interest rates in December and propose potentially three more increases this year.
The Fed rate only has an indirect impact on fixed-rate mortgages, however.
What will happen in 2017? It remains to be seen, but fence-sitting buyers should probably act quickly if they hope to secure rates that remain relatively low.
The low-down on mortgages
Before the Great Recession, mortgages were easy to get; during the recession, only buyers with stellar credit reports had a chance.
As the nation continues to recover, the 3 percent down payment mortgage is becoming more common thanks to changes made by Fannie Mae and Freddie Mac in late 2015.
And as competition heats up, some lenders have started offering even better terms this year.
Quicken, for example, announced a 1 percent down payment mortgage loan last summer and other lenders trying to attract customers have started flirting with loans that require no money down.
Condos in play again
A massive housing bill signed by President Barack Obama in August made it easier for first-timers to buy an affordable condominium using FHA financing — a change especially important in condo-heavy Florida.
Under H.R. 3700, the FHA’s recertification process will be “substantially less burdensome,” and FHA’s owner-occupancy requirement will drop from 50 percent to 35 percent.
The bill also requires FHA to replace an existing policy on transfer fees with a less-restrictive model. The change, while immediate, will take time to work through the system.
However, it should not only help first-timers get a home, it could also enable existing condo owners to sell and move up.
Insurance issues tied to plumbing
Property insurance costs have been a thorn in many Florida homeowners’ sides.
State-owned Citizens said in October that current costs are largely South Florida’s fault due to a rash of claims for water damage caused by broken pipes — and private insurers quickly agreed.
While 2016 broke an 11-year hiatus for hurricanes hitting Florida, the cost to insurers was relatively small ($824 million in insured losses).
But Citizens and private insurers say property coverage costs will go down only if the Florida Legislature makes it harder for homeowners to “assign benefits” to a contractor and enacts tougher rules to regulate the way owners repair homes after a water pipe leak.
The Great Wall of China
By the fall of 2016, the Chinese spent more money investing outside their home country than any other nation, bumping the U.S. from the top position, according to JLL’s International Capital Group.
And for the fourth year in a row, the National Association of Realtors’ annual survey found the dollar volume of Chinese real estate purchases ($27.3 billion) exceeded all other countries and was more than triple Canadian purchases (No. 2 at $8.9 million).
For some Canadians, the “buy a Florida home” trend reversed a bit in 2016 when a favorable monetary exchange rate convinced some homeowners that it was the ideal time to sell and cash out.
Hacking, scams and lies
In 2017, buyers could get virtually mugged in their own homes as thieves scammed unsuspecting Americans in new and creative ways.
One big scam in 2017 was especially chilling for the real estate market.
Scammers would steal a Realtor or title agent’s email password, monitor their account and communications with a buyer, and, at the last minute, use that account to email payment information about their pending home purchase — bogus information that deposited money in the scammer’s account.
In addition, other scams — such as the Craigslist scam in which thieves steal listing data and photos and attach a fake agent’s name –– continued.
Everyone who conducts business online must remain vigilant.
Drones finally go legit
In June, the Federal Aviation Administration finalized rules for the business use of drones.
Before then, Realtors who used drones for listing photography either did so illegally, had a pilot’s license or hired a private vendor.
Under the new rules, however, drone use went from almost impossible to merely difficult.
The final rule, which became effective in late August, requires operators to have a remote pilot certificate, follow rules on maximum height, stick to flight paths without people below and more.
Many Realtors think aerial photography in listing videos gives them a marketing edge and drone use in real estate is expected to expand.
Florida Realtors celebrates centennial
The state association hit a milestone in 2016: Realtors have now officially been helping Florida buyers and sellers for 100 years.
To celebrate, Florida Realtors hired big name talent (Jay Leno) for its annual convention, noted milestone events in publications (Florida Realtor magazine and Florida Realtors News), and logged record attendance at Florida Realtors Convention & Trade Expo and August’s REBarCamp, among other special events.
A three-dimensional art piece, The Sun and the Sea, was created to commemorate the first 100 years and is displayed in Florida Realtors’ office lobby in Orlando.