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Trust This.
By Joseph E. Seagle, Esq. ● May 13, 2022
Smart Brevity® count: 3.5 mins...898 words
Hello 👋 Only two more Mondays between now and Memorial Day 🇺🇸 But first we have to get through this Friday the 13th.
Fun Fact: the first Friday the 13th of each year is also known as “National Blame Someone Else Day.”
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1. Florida is getting an expensive rep
As I’ve written in the past, Florida is becoming one of the least affordable places in the US to live. That reputation is being more defined in rental rate and home affordability data that comes out each week.
Why it matters: Florida has historically held a reputation of being an affordable place to live, work, and retire. This has led to a steady influx of new residents moving to the state, expecting their dollars to go further than in their home states.
But the steady population growth, coupled with a housing shortage, is driving up the costs of living while wages have not kept pace, creating the reputation of being one of the least-affordable places to live.
By the numbers: Between 2011 and 2022, the average home price rose in:
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Miami: $188,000 to $489,000
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Tampa: $165,000 to $338,000
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Orlando: $138,000 to $379,000
These price increases are much higher than the rate of inflation during the same time. For instance, if housing values had only kept pace with inflation in Miami, the value would be $242,000; $212,000 in Tampa, and $177,000 in Orlando. It has caught the attention of the press and is borne out by data. As this reputation takes hold, it could persuade some to choose another state like Texas or a mid-Atlantic “half-back” state as a new home instead of Florida.
The bottom line: Florida’s home prices and rent are outpacing inflation faster than other states. Until supply catches up to demand, the state’s reputation as being super affordable will continue to deteriorate.
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2. Trending: Subject-to closings
We’re seeing more “subject-to” closings than we have in the past several years. Since the end of March, we have received at least one or two subject-to purchase contracts each week.
When interest rates rise, it is more beneficial for investors to purchase a property and keep the current mortgage in place than to purchase the property outright with a new mortgage at the current higher interest rate. Typically, they pay the seller a bit of a premium on the price to keep the seller’s favorable rate in place.
This is an expected trend. We often see the number of subject-to closings tick up whenever interest rates rise or when prices start dropping at an accelerated rate.
Our thought bubble: We are one of a handful of Central Florida title agencies that will close transactions where the buyer purchases the property without paying off the seller’s mortgage(s) on the property. While there is a risk in such transactions that the lender may accelerate their loan under the terms of the mortgage’s due-on-sale clause, investors have found great success with them. Coupling a land trust through our affiliated company, TRSTE, with a subject-to transaction provides both the buyer and seller with a level of confidence that their interests will be protected.
Pro tip: Always order a payoff estoppel, even if not paying it off at closing. We’ve discovered “hidden” mortgage modifications that drive up the actual amount due but don’t show on the seller’s monthly mortgage statement they provide.
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Institutional investors, like Invitation Homes and Main Street Renewal, have purchased tens of thousands of single-family homes and turned them into rentals. Now, HOA’s and lawmakers are taking notice and looking to curb their activities. Business Insider
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County commissioners in Orange County have been discussing rent stabilization measures in light of soaring rents. Orlando Weekly
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No more mortgages on Aisle 3 in Costco; but you might find one at Walmart. HousingWire
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Investors purchased 43% of all homes sold last year in the predominantly black zip code, 32805, worrying residents of reduced home-ownership rates and gentrification. Nine percent of the sales were to Invitation Homes and Main Street Renewal. Orlando Sentinel (paywall)
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Question received from a referral source recently:
I was wondering if quitclaim deeds in Florida have to have a reason for the transaction specified in the body/text of the quitclaim deed. I’ve seen some with and some without but I don’t know if that’s something state-specific. Is there something in FL law that requires a purpose/reason for the qcd be stated?
Answer:
There’s no requirement to include the purpose of the deed on any type of deed. However, quitclaim deeds are usually used to correct title defects, so they often include a statement that they’re being recorded to fix a title problem, and they describe what that problem was. They do this to explain to future title examiners why a typically suspect/worthless quitclaim deed was used rather than a warranty deed.
Also, they want it to be clear to the Clerk and Department of Revenue that it’s just a corrective deed or a deed a gift that is truly exempt from documentary tax.
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Our middle-aged cat, OJ, wishes everyone a Happy Friday the 13th.
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