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👋 Happy Friday! 😀 700+ Florida real estate attorneys, including yours truly, are locked away in ball
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Trust This.
By Joseph E. Seagle, Esq. ● Jun 17, 2022
Smart Brevity® count: 4 mins...1014 words
👋 Happy Friday! 😀 700+ Florida real estate attorneys, including yours truly, are locked away in ballrooms today at The Fund Assembly, our annual 3-day devotion to the education of all things real estate law.
Breaking: Metro Orlando foreclosure filings are almost back up to pre-pandemic levels. OBJ (subscription)
What we’re seeing: more pending foreclosures in our title searches, and subject-to closings cranking up as mortgage interest rates rise. Let us know if you’d like more information on how we do Subject-To closings.
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1. Big Deal: New single-family homes are filling demand
The top 10 metro areas with the most new single-family homes being constructed are located in the Sun Belt. Orlando is number 8 on that list and number 4 on the list for new multi-family construction.
Why it matters: As new homes are constructed, they fulfill the booming demand, stabilizing and lowering asking prices or rents.
Single-family and multi-family building permits are up from pre-pandemic numbers in most U.S. metropolitan areas, ameliorating the affordability crisis. For instance, new construction in Minneapolis helped to reduce rents in April.
By the numbers: Almost all metropolitan areas with more than 1 million residents issued more single-family building permits per capita in the first quarter of 2022 than they did on average from 2010 through 2019. Building permits are a leading indicator of the number of new homes that are in line to be built in the near future (typically starting within six months of the permit being issued). This is coupled with a growing inventory of existing homes. Now that lumber prices have fallen to around $600 per thousand board feet compared to their high of over $1,700 per thousand, we expect them to fall further, encouraging more construction starts. Finally, Orlando homes listed for sale jumped by 44.2% in May over April’s numbers, showing that the supply is opening up.
The bottom line: During and after the Great Recession of 2007-2012, housing construction practically halted because overbuilding had helped fuel that recession.
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It never recovered.
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The current shortage of housing would not have happened in the past two years had construction continued at a healthy pace.
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New construction, coupled with higher interest rates, is bringing supply in line with demand, cooling price and rent inflation.
Go deeper: Redfin | News
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2. Big landlords, building to rent
Wall Street is getting into the residential landlord business, building subdivisions with hundreds of homes that aren’t for sale; they’re for rent.
Why it matters: Large subdivisions of single-family homes that are all for rent by the same landlord help alleviate the housing supply shortage, helping to lower pressures to raise rents. They also give tenants a choice other than apartments.
By the numbers: Homes specifically built for rent are 5% of the housing market which is almost twice the usual 2.7% with 13,000 new homes starting as rentals in the first quarter of this year. That’s a 63% increase over last year.
One of the largest builders of rental-home subdivisions is American Homes 4 Rent.
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It has built over 100 rental-only subdivisions over the past five years.
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Each subdivision typically has over 200 homes.
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Additionally, the company purchases single-family homes and rents them out.
What's next: In 2020, the company announced it would be building a 220-home subdivision of rentals in St. Cloud. Since then, its website has been updated to include conceptual plans for no less than eight such subdivisions from Leesburg to Sanford, to St. Cloud, and areas in between.
Tenant approval criteria are similar to other commercial landlords: tenants’ total household income must equal at least three times the rent; no open bankruptcies, and the credit score will determine the amount of the security deposit.
The bottom line: With remote work now more prevalent, tenants want large yards and more space provided by single-family homes that multi-family apartments typically don’t have. A subdivision full of homes owned by the same landlord would be maintained. Landlords have a vested interest in maintaining their rentals. Time will tell whether these assumptions bear out over time.
Go deeper: CNBC
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In addition to new construction, housing inventory overall grew 8% in May for the first time since June 2019. Realtor Research
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By the numbers: 1.3 million residential properties are sitting vacant, representing 1 in every 76 homes. 7,569 of them are considered to be “zombie” foreclosures where a homeowner was served with a foreclosure notice and abandoned the home before being legally required to do so. The number of properties in some stage of the foreclosure process is up 15.9% since last year. DSNews
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Social media and real estate agents. Top real estate agents use social media to build their brand, share thoughts, and — of course — sell properties. Are the days of bus stop bench ads over? Forbes
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Ready to buy a house? Just wait a few weeks (or months). Based on how prices are stabilizing and listings are increasing, it may be better to wait it out while the market softens if you’re in the market for a new home. Bloomberg
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Translating real estate jargon. “One-of-a-kind” could mean that the carpet looks like Barney was shot in the living room. Lifehacker
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Forcing landlords to disclose utility costs. It doesn’t exist now, but should tenants have a right to know how much they’ll be paying for electricity in addition to rent? MarketWatch
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Before the speakers took the stage yesterday at the 2022 Fund Assembly, there were still a lot of open seats. On Friday, over 700 Florida real estate lawyers and paralegals are expected to attend, staring at their laptops, phones and pads, working on their closings, as the speakers teach.
When you just can’t break away, this song plays on repeat in my head, all day long.
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We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.
Be on the lookout for our next issue! 👋
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