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Trust This.
By Joseph E. Seagle, Esq. ● Apr 08, 2022
Smart Brevity® count: 3.5 mins...863 words
🏝️☀️🌴 On my first vacation in over two years, my biggest anxiety has been that sand could get in my drink. Bigger issues will come next week when I return to the office, but — for now — let’s see what’s happening in Florida real estate this week.
BTW, 👏 thanks to everyone who wrote to me about last week’s Post (low appraisals and high rents). Always happy to get feedback and more insight into what’s happening.
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1 Big Thing: Overvalued metro areas? Florida is 6 of 10
The latest CoreLogic Market Conditions Indicator lists six Florida metro areas in the top 10 most overvalued US metro areas.
Why it matters: The latest annual price appreciation means that homes in most Florida metro areas are overvalued compared to the areas’ local household incomes, putting these areas at risk of price declines over the next year.
By the numbers: Since February 2022, home price values have increased nationwide by an average of 20%, after surging 15% the previous 12 months. Florida prices surged the most at 29.1% in the past year.
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Destin, Homosassa Springs, Punta Gorda, Naples, Cape Coral, and North Port are all in the top 10 most-overvalued metros, with the first two taking the top two spots on the list.
The risk is that, when local incomes are too low compared to home values, then values will (must?) come down to be affordable. Couple overvaluation with higher interest rates, and the worry is that prices will come down sooner and more steeply than preferred, shocking the area.
Yes, but: Many, including CoreLogic, think the risk of price declines is low. Their analysts predict prices won’t decline; instead, they’ll not rise as much or as fast. Instead of continuing heated increases at 20% clips, a 5% rise by next February is more likely, according to them.
Our thought bubble: Florida and other Sunbelt states like Texas and Arizona, aren’t reliant on employed locals, buying homes. Instead, retirees with pensions or other retirement income, relocate to these states, able to pay cash at premium prices for the weather and low/no income taxes. Conversely, this means that those who are here, working, and earning low wages, will be harder pressed to buy a home in these metro areas.
Go deeper: Read the CoreLogic reports for more details.
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Several major deadlines are approaching for Florida property and business owners.
Why it matters: Miss them, and pay dearly for it.
Deadlines not to miss:
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Real property taxes - these were due a few days ago on April 1 to only have a penalty of 3% of the amount due. If not paid by May 31, a tax lien will arise, meaning even more expenses added to the bill on top of the penalty. Don’t pay by June 1, and expect a tax certificate (even worse).
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Business Annual Reports - File online by May 1 at 11:59 pm or face a $400 penalty.
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Federal Taxes - We get a few extra days, until April 18, to file our federal tax returns or request an extension to avoid late-filing penalties.
Our thought bubble: As land trustees through TRSTE, we see many property owners who forget that they have Florida real estate held in land trusts and forget to pay their real property taxes. As registered agents for many Florida companies, invariably many clients forget to file their annual reports. Regardless of how you hold property, or who acts as a registered agent for your Florida company, ultimately you are responsible for knowing the deadlines and paying the government its dues. Don’t forget.
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The Labor Force Participation Rate edged up to 62.4% in March, the highest it’s been since pre-pandemic March 2020. That’s a hefty jump from the 2021 monthly average of 61.5%. This pushed the unemployment rate down to 3.6% nationwide.
Why it matters: Many working-age people sat on the sidelines during 2020 and 2021, living off savings, stimulus funds, or learning new skills. Now, they’re roaring back to work, helping to relieve some labor shortages in key markets.
The bottom line: PCS, and many of our fellow title agencies and lawyers, had seen a dearth of applications and resumes of experienced workers since March 2021.
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We, like many others, were not immune to the Great Resignation.
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In January, we saw a major uptick in experienced and talented applicants who fit with our passion for helping people aspire to a better life.
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Recent hires will increase our capacity and footprint, improving customer service, efficiency and speed.
We can’t wait to introduce these new faces to readers in future Posts.
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Assuming my ✈️ flight makes it back to Orlando on Saturday, be on the lookout for our next issue! 👋 In the meantime, here’s a bunch of Gen-X’ers dancing awkwardly to Billy Ocean’s redux of his ’80s classic.
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