By Joseph E. Seagle, Esq.
ud83dudc4b Happy Friday! Today is National Endangered Species Day. My favorite formerly-endangered species in Central Florida is the beloved ud83euddad manatee. If you havenu2019t visited a local spring lately, today is a great day to see a manatee.
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Situation Awareness: Hudreds of Florida real estate lawyers, including yours truly, are attending the Fund Assembly today to get our CLE credits and learn the latest changes in real estate title laws. So if youu2019re having trouble getting information about a pending closing, this could be why. Fear not, weu2019ll return to the office on Monday refreshed and better educated.
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1 big thing: OK, Boomer u2026 sell yournhouse?
Photo: James Hose, Jr.
The Boomer Generation (those born between 1946 and 1964) is the second largest living generation in the U.S., behind the Millennial Generation. But theyu2019re the largest generation of home buyers.
Why it matters: Boomers are also the largest living generation of home sellers, providing a potential middle road in the housing supply chain between new home construction and existing home sales.
How it works:
- Boomers are unfettered by a mortgage on their current home, having paid them off.
- They can live anywhere they prefer, seeking out the lowest-cost areas to maximize their retirement funds.
- Likewise, with the equity they have in their homes, they can often sell their existing home and have plenty of money to buy a smaller home with fewer maintenance demands.
- And they donu2019t need a mortgage for that purchase, so interest rates are irrelevant.
Mortgage rates have increased by five points in the past 14 months. Over 50% of homeowners have little incentive to sell because they refinanced into low rates before the increases started.
- As such 82% of homeowners feel u201clocked intou201d their homes because of their current mortgage rate versus what theyu2019d face in a new purchase.
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- Boomers, most with no mortgage, arenu2019t locked into anything and are free to sell and move, opening up a potential supply of homes for other buyers, and a stream of customers for REALTORs who understand what this generation wants in a new home.
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Yes, but: Baby Boomer mortality rates are estimated to have little effect on housing supply.
More than 4 million existing homes for sale annually over the next decade will come from the aging and mortality of older homeowners.
As of 2019, Boomers owned 32 million homes in the U.S.
Boomers downsizing often compete with Millennials, looking for a home that would be the downsized Boomeru2019s home but a starter home for the Millennial.
The bottom line: Boomersu2019 mortality and aging may not generate enough available homes for sale. But downsizing could add to the number of available homes, helping Millennials and other generations to upsize. But robust new construction numbers will be the primary driver of lower prices.
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2. Prices continue to rise
Illustration: Dall-E
Almost 70% of all metro areas saw home price gains in the first quarter, while 31% u2014 the largest number in decades u2014 saw price declines.
Why it matters: While there is no national housing market because all real estate is local, it helps to watch the national overall numbers on a macro level to indicate where the overall economy could be heading.
By the numbers: Over the past quarter,
- Mortgage rates ranged between 6.1% and 6.7%
- The median price of an existing single-family residence dropped by 0.2% to $371,200.00. In the previous quarter, it had increased by 4% year-over-year.
- Housing affordability improved a bit. The monthly mortgage payment was $1,859, a 5.5% decrease from the previous quarter.
Yes, but: Thatu2019s a jump of 33.1% ($462) from Q1 2022.
- Homeowners spent 24.5% of their income on mortgage payments, up from 19.5% last year at the same time.
- Mortgages are considered to be unaffordable if payments exceed 25% of the borroweru2019s income.
State of play: Inventory is still down 40% less than what it was in Q1 2019, a year before the pandemic began, and housing construction starts tumbled last month suggesting that thereu2019s not near-term solution to the lack of inventory.
What theyu2019re saying: With inventory down, multiple offers are not unheard of on affordable homes, especially in the South where sales are stronger than in other parts of the country. Therefore, these price declines are expected to be u201cshort-lived.u201d
Go deeper: National Association of REALTORsu00a0
3. Catch up fast
- Orlando was one of Americau2019s fastest-growing metros in 2022. Orlando Sentinel
- Big companies not returning to big office buildings arenu2019t just hurting their big landlords. Itu2019s also hurting the small businesses that grew up to serve the office workers. NPR
- A Cape Coral title agent was sentenced to 46 months in federal prison last week. US Attorneyu2019s Office
4. Pic of the day
Disney announced that itu2019s closing its Star Wars: Galactic Starcruiser Hotel and Experience at the end of September. Still, this modern version of u201cR2-JEEP2u201d charging nearby at the Hilton Signia Hotel parking garage will turn heads long after the Starcruiser goes into dry dock.
We hope you found this helpful u2014 any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.
Have an idea or issue to share? Email us. Be on the lookout for our next issue! ud83dudc4b
