04/30/2013 Florida Realtors News

Daily Briefing: Tuesday, April 30, 2013

TODAY'S TOP STORIES

Fla. House not keen on Senate’s overhaul of Citizens

TALLAHASSEE, Fla. – April 30, 2013 – Leadership in the Florida House prefers its version of changes to Citizens Property Insurance Corp. rather than the more sweeping measure the Senate has already approved.

Through an amendment, the House on Monday replaced language in the 101-page Senate measure (SB 1770) with a narrower approach in its own bill (HB 909), absent vast portions of the bill senators approved on April 25.

Both proposals aim to reduce the number of policies in the state-backed insurer.

There are a number of differences in the House and Senate bills, but the bottom line for most homeowners is: What will it do to me? Citizens’ rates have been kept artificially low, and changes could mean higher premiums – a fear that has made many coastal lawmakers skittish.

“We’ve made a commitment to not raise rates, and we feel the Senate version would raise rates,” said Rep. Doug Holder, R-Venice, a sponsor of the House effort. “The governor has been pretty clear on his message from beginning to end that he’s not going to support anything that has any kind of perceived rate increase, and we feel that our product is a product that is suitable in all three bodies of government.”

The House is expected to vote on the bill Tuesday before sending the amended measure back to the Senate.

“The bill that we’ve amended sends it back to the Senate with no provisions that will raise rates,” said Rep. Mike Fasano, R-New Port Richey, a frequent critic of Citizens. “The consumer is protected for another year.”

The Senate bill maintains the current 10 percent cap on rate increases for existing Citizens customers, but new policyholders would have to pay “actuarially sound rates,” which could result in premiums that are twice as high as the amount a neighbor pays in some coastal areas with wind-only accounts. However, the House bill doesn’t move new customers into rates that are considered more actuarially sound.

Opponents say that charging actuarially sound rates to new customers could slow the housing recovery, and buyers could avoid some coastal areas where they would be Citizens customers.

Sen. David Simmons, R-Maitland, said he looks forward to negotiating the final bill with the House, but he also says the Senate bill won’t raise rates for current customers.

“These people who are getting the lower rates are not even paying what the other Citizens policyholders are paying,” Simmons said. “This isn’t some huge increase in rates that exist, this is simply bringing them up to parity if, in fact, someone was to purchase (a home).”

The House measure would also ban unregulated surplus insurers from a new clearinghouse created to move Citizen’s least risky policies into the private market. Unlike regulated domestic carriers, surplus insurers don’t need to have their rates approved by the Florida Office of Insurance Regulation.

The House bill also doesn’t give the governor a direct say in the selection of Citizens’ president, and it maintains the state-backed company’s exemption from bad faith litigation. Gov. Rick Scott has pushed for the creation of an inspector general to oversee daily issues within the company, following reports last year of lavish spending by executives.

Overall, the House proposal has 19 changes from the Senate bill, including the creation of an inspector general position, the clearinghouse, prohibition on coverage for new structures seaward of the coastal construction control line, and a requirement that policyholders sign a statement that acknowledges an understanding of their liability risk.

The bill doesn’t include 36 other provisions in the Senate package.

Among the differences: lifting of Citizens’ exemption from bad faith litigation; requiring all non-residential policies to be actuarially sound; reintroducing coverage for screened enclosures and carports on mobile homes with a minimum insured value of $3,000; requiring members of the Citizens board of governors to be confirmed by the Senate; and changing Citizens’ president from a board of governors’ appointment into an executive director position selected by the governor and chief financial officer.

Also, the Senate bill reduces the maximum value of property that could be covered from $1 million to $500,000 by 2019, while the House is proposing the cap be lowered to $700,000 by 2017.

Source: News Service of Florida, Jim Turner

Consumer confidence bounces back in April

NEW YORK – April 30, 2013 – The Conference Board Consumer Confidence Index increased in April, and now stands at 68.1 – a 6.2 surge from its 61.9 in March.

The Present Situation Index that measures short-term confidence increased to 60.4 from 59.2. The Expectations Index that measures attitudes about the economy six months from now improved to 73.3 from 63.7 last month.

“Consumer confidence improved in April, as consumers’ expectations about the short-term economic outlook and their income prospects improved,” says Lynn Franco, director of economic indicators at The Conference Board. “However, consumers’ confidence has been challenged several times over the past few months by such events as the fiscal cliff, the payroll tax hike and the sequester. Thus, while expectations appear to have bounced back, it is too soon to tell if confidence is actually on the mend.”

Consumers’ assessment of current conditions improved moderately in April. Those saying business conditions are “good” increased to 17.2 percent from 16.4 percent, while those stating business conditions are “bad” decreased to 28.1 percent from 29.1 percent.

Consumers’ assessment of the labor market was mixed. Those claiming jobs are “plentiful” edged up to 9.8 percent from 9.5 percent, however those claiming jobs are “hard to get” increased to 37.1 percent from 35.4 percent.

Consumers were considerably more upbeat about the short-term outlook. The percentage of consumers expecting business conditions to improve over the next six months increased to 16.9 percent from 15.0 percent, while those anticipating business conditions to worsen decreased to 15.1 percent from 17.7 percent.

Consumers’ outlook for the labor market was also more positive. Those expecting more jobs in the months ahead improved to 14.2 percent from 13.0 percent, while those expecting fewer jobs decreased to 22.4 percent from 26.0 percent.

The proportion of consumers expecting their incomes to increase rose to 16.8 percent from 14.6 percent, while those expecting a decrease declined to 16.0 percent from 17.7 percent.

Nielson conducts the monthly Consumer Confidence Survey, based on a probability-design random sample, for The Conference Board. The cutoff date for the preliminary results was April 18.

© 2013 Florida Realtors®

Developers tweak designs to lure foreign buyers

MIAMI – April 30, 2013 – Foreign buyers are flocking to the U.S. to snag luxury second-homes, and developers increasingly cater to the global buyer by tweaking the design of their properties.

“New buildings and residences now have kitchens outfitted with wok burners to attract Asian buyers,” according to a Wall Street Journal report. “Others have European-style bathtubs and bidets for Western tastes. South American-inspired residences include sprawling balconies that can accommodate large extended families for dining and playing games.”

In 2012, international buyers purchased $82.5 billion in residential real estate in the U.S. – an increase from $53.4 billion in 2010, according to National Association of Realtors® (NAR) data. What’s more, international buyers spend about double the amount a typical American homebuyer spends.

“I can look at an apartment or house and almost figure out the nationality of the buyers who are there,” says Mark Zilbert, president and CEO of Miami-based Zilbert International Realty. “Whether it’s deliberate or not, [developers] are putting in a lot of features that appeal to that taste and color palette.” In Miami alone, about 60 percent of home buyers were from overseas last year, according to the Miami Association of Realtors.

Developers of twin 49-story towers are showing international models of their Miami apartments, hoping to lift sales. Before employing this strategy, 653 of the 849 apartments were unsold. However, developers realized that the majority of buyers were coming from Argentina, Venezuela and Brazil, so they decided to cater more to their tastes. The developer commissioned models that showcase designers from Venezuela, Brazil, Spain and Colombia, as well as the U.S.

“It's really about the nuance,” says Philip J. Spiegelman, who handles marketing for the developer. “Colombians may like very modern-contemporary, while the Brazilians may like something more conservatively contemporary.”

Source: “Romancing the Overseas Buyer,” The Wall Street Journal (April 18, 2013)

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CoreLogic: Foreclosure inventory down 23% in March

IRVINE, Calif. – April 30, 2013 – CoreLogic released its March National Foreclosure Report, with data on completed U.S. foreclosures and the national foreclosure inventory.

Completed foreclosures
According to CoreLogic, the U.S. had 55,000 completed foreclosures in March 2013, down from 66,000 in March 2012 – a year-over-year decrease of 16 percent.

On a month-over-month basis, completed foreclosures rose from 52,000 in February 2013 to 55,000 – an increase of 6 percent.

Completed foreclosures indicate the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 4.2 million completed foreclosures across the country. As a basis of comparison, prior to the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

Foreclosure inventory
Approximately 1.1 million homes in the U.S. were in some stage of foreclosure, known as the foreclosure inventory, in March 2013, compared to 1.5 million in March 2012 – a year-over-year decrease of 23 percent.

Month over month, the foreclosure inventory declined 1.9 percent. The foreclosure inventory in March 2013 represented 2.8 percent of all homes with a mortgage, compared to 3.5 percent in February 2013.

“In March, completed foreclosures were down 52 percent from the peak in 2010, and almost all of the top 100 major metropolitan areas have declining foreclosure rates,” said Dr. Mark Fleming, chief economist for CoreLogic. “The foreclosure rate nationally is down 23 percent relative to a year ago, signaling continued reduction in the stock of distressed assets.”

“For 17 consecutive months, foreclosures have declined year over year across the U.S.,” said Anand Nallathambi, president and CEO of CoreLogic. “Although we still have more than a million homes in some stage of foreclosure, this trend, combined with rising home prices, is another signal of a gradually improving housing market.”

March 2013 highlights

The five states with the highest number of completed foreclosures for the 12 months ending in March 2013 were: Florida (103,000), California (83,000), Michigan (70,000), Texas (53,000) and Georgia (48,000). These five states account for almost half of all completed foreclosures nationally.
The five states with the lowest number of completed foreclosures for the 12 months ending in March 2013 were: South Dakota (81), District of Columbia (101), Hawaii (421), North Dakota (487) and West Virginia (554).
The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (9.7 percent), New Jersey (7.3 percent), New York (5.0 percent), Maine (4.4 percent) and Illinois (4.4 percent).
The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Wyoming (0.5 percent), Alaska (0.7 percent), North Dakota (0.7 percent), Nebraska (0.9 percent) and Montana (0.9 percent).

Feb. home prices up 9.3% – most in almost 7 years

WASHINGTON (AP) – April 30, 2013 – U.S. home prices rose 9.3 percent in February compared with a year ago, the most in nearly seven years. The gains were driven by a growing number of buyers who bid on a limited supply of homes.

The Standard & Poor’s/Case-Shiller 20-city home price index increased from an 8.1 percent year-over-year gain in January. And annual prices rose in February in all 20 cities for the second month in a row.

Phoenix led all cities with an annual gain of 23 percent in February. Prices jumped nearly 19 percent in San Francisco. In Las Vegas, home prices increased 17.6 percent, and in Atlanta they rose 16.5 percent.

Eleven of the 20 cities reported price gains in February compared with January. Those monthly numbers are not seasonally adjusted and reflect the slower winter buying period.

The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The February figures are the latest available.

Steady hiring and near-record low mortgage rates are driving up demand, helping sustain the housing recovery that began last year. Buyer traffic was 25 percent higher in March than it was a year ago, according to the National Association of Realtors.

At the same time, prices are surging because buyers have fewer homes to bid on. The number of homes available for sale has fallen nearly 17 percent in the past year to 1.93 million, the Realtors’ group said last week. At the current sales pace, that supply would be exhausted in 4.7 months, below the 6 months that is typical in healthier markets.

Home prices nationwide are still about 30 percent below their peak reached at the height of the housing bubble in August 2006. They are only back to where they were in the fall of 2003.

Stan Humphries, chief economist at Zillow, a real estate data provider, cautioned that the national figures are being skewed by sharp rebounds in cities hit hard during the housing bust, including Las Vegas and Phoenix. Investors are helping drive up prices in those cities.

“This report needs to start being taken with a grain of salt,” Humphries said. “The appreciation rates we’re currently seeing … are not broadly reflective of what’s happening in the national housing market right now.”

Steady home price gains can help drive the housing recovery. Higher home prices encourage more people to buy before prices rise further. They can also entice more homeowners to sell by making them more confident they’ll get a good price. In addition, higher prices raise the equity people have in their homes, which makes selling more profitable.

But many homeowners still owe more on their mortgages than their homes are worth. That can make it difficult to sell.

Higher home values can also help the economy. They increase homeowners’ wealth, which encourages more spending. Consumer spending drives 70 percent of economic growth.

Sales of previously occupied homes leveled off over the winter but may increase in the coming months. A measure of signed contracts to buy homes rose to a three-year high in March.

Homebuilders are also starting work on more new homes and apartments. That creates more construction jobs. Builders started work on more than 1 million homes at an annual rate in March. That’s the first time the pace has topped that threshold in nearly 5 years.

Copyright © 2013 The Associated Press, Christopher S. Rugaber, AP economics writer.

Despite hurdles, Cuba real estate market buzzing

HAVANA – April 30, 2013 – In some ways, Yosuan Crespo’s real estate office resembles any you might find in New York, London or Tokyo. There are slick posters of hot properties hanging from the ceiling, a steady stream of hopeful buyers and sellers and a constant clack of computer keys.

But Crespo’s headquarters in central Havana’s trendy Vedado neighborhood is actually somebody else’s breezy front porch. The computer’s only connection to the Internet is a creaky dial-up link, and Crespo is careful to say he’s not operating as a broker, since the job is still technically illegal.

A baffling, sometimes bizarre real estate market has emerged in the year and a half since President Raul Castro legalized private home sales on this Communist-run island for the first time in five decades.

While trade in homes is now legal, the people who bring buyers together with sellers are not. The government has yet to make good on promises to legitimize brokers, most of whom still operate in the shadows.

It’s a story that has been typical of Castro’s economic reforms, which often have left little space for the sort of middlemen and other services that help markets work.

The Cuban leader also has legalized a used car market, but not the right to open a business that sells them. And while reforms have sparked an explosion of private restaurants and cafes across Cuba, the government has yet to give them access to wholesalers that could keep them better supplied.

Crespo gets around the broker ban by operating as a licensed computer programmer and photographer, helping clients list their properties on Web portals, producing the for-sale posters that hang in his office and offering digital photo services for sellers. He says he doesn’t charge commissions.

Crespo’s listed fees are just a few dollars, but he’s found himself in major demand. He estimates 30 to 40 customers a day wander into his porch-side business, called EspacioCuba. He says his service has 2,500 current listings and has helped sell about 250 properties since it opened in January.

“Right now we are very pleased,” said Crespo, a smartly dressed 28-year-old computer scientist with close-cropped hair, but he added that the market would benefit if the government made brokering legal.

The market also still lacks a workable mortgage system, an easy means of advertising potential sales and, most important, a middle class with resources to buy.

Yet sales are humming, with some 45,000 homes changing hands in the first eight months after Castro legalized the real estate market in November 2011, according to the most recent statistics from the government.

Prices for the choicest properties are staggeringly high: One of Crespo’s Havana listings offers the top floor of a three-bedroom, three-bathroom colonial-style house with a marble staircase and a graceful, blue-pillared porch for $250,000 – a fortune in a country where salaries average around $20 a month.

Exiles, economists and several informal brokers say much of the money is coming from abroad, some of it in under-the-table deals that lack legal protection and run counter to Cuba’s ban on foreigners owning property.

In South Florida, home to the largest Cuban exile community, stories abound of people buying homes for family still on the island, or using relatives as fronts for their own purchases.

“I am aware of a number of people who have purchased property in Cuba,” said Carlos Saladrigas, co-chairman of the Cuba Study Group, which advocates for closer ties between the U.S. and Cuba as a way to promote democracy.

“And (there are) many others who are financing small businesses in Cuba owned by their relatives,” he said.

Cuban law says only permanent residents are eligible to buy property, so any transactions involving outsiders are taking place through proxies. Sometimes the cash is wired to Cuba. At other times, money changes hands in overseas accounts.

A Cuban economist who is well versed in the real estate market agreed that the presence of foreign funds is “significant,” though exact figures don’t exist. He spoke on condition of anonymity because he was not authorized to speak to journalists.

Maria Isabel Alfonso, a Cuban exile who teaches at St. Joseph’s College in New York, said many recent Cuban emigres left for economic rather than political reasons, and buying property is one way for them to maintain ties to the island.

“For many years I have been trying to overcome that feeling of having lost the connection with Cuba,” she said.

There are more practical motivations for people who haven’t left the island. Divorced couples have been forced to remain under one roof for years, and multiple generations commonly cram together under one roof. The ability to buy and sell gives everyone more options.

When office worker Milu Selis needed her own space, she and a relative sold their place in Vedado, and each bought a smaller apartment.

“This greatly eases the problem of dividing,” she said. “It makes life easier.”

Selis and others say it has been surprisingly easy to navigate the bureaucracy, with title transfers taking place in days and a 4 percent tax levied on both buyers and sellers.

Some warn that potential buyers should be wary because Cuba’s real estate market is far from transparent. They say buying in somebody else’s name with no legal protection is inherently risky, especially since many buildings are in severe disrepair. And while Havana’s stately mansions are still drawing big money, prices for less tantalizing properties are starting to stagnate or drop, they say.

“It’s a very, very young, imperfect market and it’s going to be very difficult as a result to get real supply and demand there,” said Joseph Scarpaci, a marketing professor at West Virginia’s West Liberty University who studies Cuba.

Copyright © 2013 The Associated Press, Peter Orsi. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Associated Press writers Andrea Rodriguez and Paul Haven in Havana and Christine Armario in Miami contributed to this report.