Trust This. Lawsuit in the OC

👋Happy Friday everybody! I’m back from a four-day relaxing stay in Asheville, and back to the e-mail grind of life. Today is both National 🥔 Potato Day and National Soft Ice Cream 🍧 Day, so I think some 🍟 french fries and an ice cream cone are an appropriate lunch.

Situation Awareness: If any of you are using the kick-out clause addendum on your listings when a buyer has too many contingencies in their contract, I’d love to hear how it’s going.

1 big thing: Here comes the lawsuit

The Florida Association of REALTORs and the Florida Apartment Association sued Orange County on Monday over the rent stabilization ordinance set to appear on November’s ballot.

Why it matters: The fact that the filing came less than a week after Commissioners voted to put the question to voters illustrates the importance of the issue to these industry groups.

At 105 pages long, the filed complaint asks for a declaratory judgment that the proposed ordinance is invalid under state statutes. It demands an injunction to prohibit the county from putting the ordinance on the ballot. And it demands a writ of quo warranto determining that the county exceeded its authority in adopting the ordinance, assuming it gets enough votes in November.

The plaintiffs argue that:

Yes, but: The bar that the county had to leap over before passing such an ordinance is pretty high under the 40-year-old statute that limits any governmental rent control measures. The “housing emergency” and “menace” elements come from that statute.

The bottom line: These associations are spending this time and money in Orange County now to send a message to other counties who may have the same idea.

Our thought bubble: They’re going to win. Tenants are going to lose. The money the county will spend to defend the suit would go a long way as incentives to developers to build affordable workforce housing.

2. Housing sinking

Almost every indicator and statistic is saying that the U.S. housing market is slowing, sellers are fretting, buyers are canceling, lenders are firing, REALTORs are struggling, and title underwriters’ revenues are flatlining.

Why it matters: The Fed’s efforts to slow down rising inflation appear to be working. Raising interest rates raises mortgage payments to amounts that buyers can’t pay.

By the numbers: Consumer confidence in the housing market dropped to its lowest level since 2011. According to Fannie Mae’s Home Purchase Sentiment Index for July, only 17% of buyers believe it is a good time to buy a home, and only 67% of sellers feel it is a good time to sell. Estimates of a 10-15% price drop are bubbling up.

Builders are halting construction as interest rates rise and more buyers sit out the market. They’re also holding back because home inventory is soaring at a record rate as the supply of homes across the US grew at a record rate in July and the number of active listings jumped 31% from last year.

Investors are still buying homes but mostly in exurbs and rural areas.

Silver linings: There are signs the market is normalizing; mortgage rates are dropping or holding steady each week, and Fannie Mae will now let lenders fund a borrower’s down payment assistance.

The bottom line: Until buyers get used to seeing a “5” rather than a “3” as the first number in their interest rate, it’s going to be a slog.

3. What passed by

If you run across an interesting or funny real estate related article, video, or podcast, please share with me by replying to this e-mail. I love giving hat tips!

4. Pic of the day

We lived in Asheville for a few years early in our careers, and it set us on our current path. I hate to disagree with Thomas Wolfe, but you can go home again.

Wonder why I’ve been humming this song since we left?

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Foreclosures are on the rise. Smart real estate professionals will prepare now for what that entails. Those who understand the process, procedures, and prohibitions in play when locating and buying properties in foreclosure will be ahead of the curve.

My colleague, Charles Castellon, is presenting a seminar on what it takes to have a “Foreclosure Mind” on September 10. Getting ahead of the curve is what it takes to get ahead in this market.

Click here for more information.

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