www.ScottSorensonRealEstate.com
GAINESVILLE, Fla. – Jan. 30, 2015 – Consumer sentiment among Floridians rose sharply to 93.3 in January – almost 6 points higher than December's reading, according to a new University of Florida (UF) monthly survey.
However, much of that increase occurred because of recent changes in how UF economists collect survey data, says Chris McCarty, director of UF's Survey Research Center in the Bureau of Economic and Business Research.
In the past, UF researchers used landline telephones to contact survey respondents since the first survey in 1985. "During those years, we minimized the changes to our methodology to maintain an index that reflects changes in consumer attitudes, rather than changes in method," McCarty says.
Today, however, only 53 percent of American households still have a landline, while 89 percent now own cell phones, according to the Center for Disease Control and Prevention. To keep up with this shift, many survey organizations have switched to a cell-phone-only policy to contact respondents. Among them is the University of Michigan, which measures consumer sentiment nationally. It made the change this month.
UF's survey methods align more closely with the Michigan index than with the Conference Board's Consumer Confidence Index that comes out on the last Tuesday of each month.
"Given the University of Michigan's shift in methodology and the start of a new year, we decided now is the time to implement it, too," McCarty says. "It is also a good time because of the relatively stable economic environment both in Florida and nationally."
A move to cell phones means "the sample of respondents more closely matches the demographics of the state," McCarty said. "In addition, we weight the results of our cell phone survey by county, age, sex and minority status, so that the results match the distribution of these same variables in the state."
The overall effect, he said, is an increase in consumer sentiment, as younger respondents are more represented.
That rise occurred in all five indexes that are used to compile a single number in UF's January survey. Respondents' overall perception that their personal finances are better now than a year ago was 78.5, while their expectations of enjoying better personal finances a year from now was 100.7.
Their confidence in U.S. economic conditions over the next year registered 95.5, while their trust in its performance over the next five years was 92.1. Survey takers' perception that now is a good time to buy major household items was 99.5.
The bureau made other changes in how it reports consumer confidence.
"To match the University of Michigan national release, we will now post our results the last Friday of the month rather than the last Tuesday, which the Conference Board – an independent, business-member and research association – uses for its consumer confidence release," McCarty says. "We are also reporting the first decimal rather than rounding the result up or down."
UF economists will also now break the index down by households making more or less than $50,000 a year, rather than using the previous figure of $30,000. The revised number more nearly matches the median income for Florida households, McCarty says.
However, a change in methodology changes only partly explains the dramatic increase in confidence this month.
"Overall, the economy has improved for most consumers and lifted consumer sentiment," McCarty says. Retail sales for the holiday season, for instance, rose 4.7 percent from 2013. Job gains and a declining labor force caused Florida's unemployment rate to dip to 5.6 percent in December, matching the U.S. unemployment figure. The median price for an existing single family home rose to $185,000 in December after a two-month decline, while interest rates remain at historically low levels. The stock market is near record highs.
Gas prices, which plummeted in January, now average just over $2 a gallon and provide a big windfall for consumers. "The last time gas prices were this low was at the end of the Great Recession in 2009 when demand for gas sank," McCarty says. UF economists anticipate gas prices will stay low, and housing prices will remain stable for the near future. They also expect the Federal Reserve to raise short-term interest rates by June, a move that will ultimately translate into higher mortgage and loan rates.
"Until then, we expect consumer sentiment to continue to rise," McCarty predicts.
Saturday, January 31, 2015
Thursday, January 22, 2015
Forecast: 2015 Fla. economy, housing market strong
ScottSorensonRealEstate.Com
ORLANDO, Fla. – Jan. 22, 2015 – "Has Florida found the secret to saving the economy?" That May 2014 headline in The Wall Street Journal shows how far the state has come since 2007 and points to a bright future in 2015, according to Florida Department of Economic Opportunity Executive Director Jesse Panuccio.
Panuccio was one of the business and economic leaders who spoke to Realtors® from across Florida Wednesday at Florida Realtors 2015 Economic Summit, which kicked off the association's Mid-Winter Business Meetings at the Renaissance Orlando Resort at SeaWorld. Other featured speakers included Ted Jones, chief economist and senior vice president for Stewart Title Guaranty Company; and Dr. Brad O'Connor, economist and director of economic research for Florida Realtors.
"Things have changed quite remarkably for this state," Panuccio said. "The U.S. Census recently announced that Florida has officially become the third most populous state … about 800 people move to the state each day now. Why are they moving here? We're a destination state again – people feel they can make a future here, and that's good for Florida, the economy and the real estate industry."
Over the past year, Florida's private sector growth rate was 3.4 percent, second only to Texas among the largest states, Panuccio noted. The economic recovery has been broad-based across all industries, and job growth has been consistent across every region.
"Our labor force is growing over four times faster than the national labor force (over the past year)," he said. "Of the 10 largest states, we are the fastest-growing labor force in the country." In November 2014, Florida's unemployment rate was 5.8 percent.
Looking at the national economy as well as Florida's economic future, Ted Jones said he is "bullish on what's ahead for 2015." Why? He pointed to several current positive factors: more jobs than anytime in the history of the U.S.; 58 percent of new jobs pay more; mortgage interest rates, while rising, remain highly affordable; significant demographic demand – think millennials; and continued strong population growth.
Jobs remain key, Jones said. "There were 2.95 million total jobs added in the U.S. over the last 12 months. To beat that growth period, you'd have to go back to 1999. We created 246,000 jobs in each month of the last 12 months. Here in Florida, we expect between 2.2 to 2.4 percent total job growth in the next year. I'm trying to tell y'all you're setting yourself up for a great year next year."
Jones added that a major plus for Florida's future is that the state has the 5th best business climate in the nation, according to a recent tax comparison study conducted by the Tax Foundation.
Florida's housing sector
Florida Realtors' statewide housing data indicates that the market is now growing along "normal" trend lines, according to Dr. Brad O'Connor, meaning that the pace of sales, median sales price increases and other statistics show moderate, sustainable growth.
"For the first time in a couple of years, we're seeing new listings outpace sales," he said. "Months supply has returned to hover between 5 to 6 months, which historically we say is a 'balanced' market. In 2013, we saw rapid price increases; in 2014, we saw a return to more historic levels of 4 to 5 percent price increases. Investor participation has started to decline again, slightly. However, as house prices have gone down, rents have gone up, so some of these investment properties remain attractive to rent out."
According to O'Connor, Florida's Realtors should keep these considerations in mind for 2015:
ORLANDO, Fla. – Jan. 22, 2015 – "Has Florida found the secret to saving the economy?" That May 2014 headline in The Wall Street Journal shows how far the state has come since 2007 and points to a bright future in 2015, according to Florida Department of Economic Opportunity Executive Director Jesse Panuccio.
Panuccio was one of the business and economic leaders who spoke to Realtors® from across Florida Wednesday at Florida Realtors 2015 Economic Summit, which kicked off the association's Mid-Winter Business Meetings at the Renaissance Orlando Resort at SeaWorld. Other featured speakers included Ted Jones, chief economist and senior vice president for Stewart Title Guaranty Company; and Dr. Brad O'Connor, economist and director of economic research for Florida Realtors.
"Things have changed quite remarkably for this state," Panuccio said. "The U.S. Census recently announced that Florida has officially become the third most populous state … about 800 people move to the state each day now. Why are they moving here? We're a destination state again – people feel they can make a future here, and that's good for Florida, the economy and the real estate industry."
Over the past year, Florida's private sector growth rate was 3.4 percent, second only to Texas among the largest states, Panuccio noted. The economic recovery has been broad-based across all industries, and job growth has been consistent across every region.
"Our labor force is growing over four times faster than the national labor force (over the past year)," he said. "Of the 10 largest states, we are the fastest-growing labor force in the country." In November 2014, Florida's unemployment rate was 5.8 percent.
Looking at the national economy as well as Florida's economic future, Ted Jones said he is "bullish on what's ahead for 2015." Why? He pointed to several current positive factors: more jobs than anytime in the history of the U.S.; 58 percent of new jobs pay more; mortgage interest rates, while rising, remain highly affordable; significant demographic demand – think millennials; and continued strong population growth.
Jobs remain key, Jones said. "There were 2.95 million total jobs added in the U.S. over the last 12 months. To beat that growth period, you'd have to go back to 1999. We created 246,000 jobs in each month of the last 12 months. Here in Florida, we expect between 2.2 to 2.4 percent total job growth in the next year. I'm trying to tell y'all you're setting yourself up for a great year next year."
Jones added that a major plus for Florida's future is that the state has the 5th best business climate in the nation, according to a recent tax comparison study conducted by the Tax Foundation.
Florida's housing sector
Florida Realtors' statewide housing data indicates that the market is now growing along "normal" trend lines, according to Dr. Brad O'Connor, meaning that the pace of sales, median sales price increases and other statistics show moderate, sustainable growth.
"For the first time in a couple of years, we're seeing new listings outpace sales," he said. "Months supply has returned to hover between 5 to 6 months, which historically we say is a 'balanced' market. In 2013, we saw rapid price increases; in 2014, we saw a return to more historic levels of 4 to 5 percent price increases. Investor participation has started to decline again, slightly. However, as house prices have gone down, rents have gone up, so some of these investment properties remain attractive to rent out."
According to O'Connor, Florida's Realtors should keep these considerations in mind for 2015:
- Sales growth has slowed but remains positive (expect to see about 10 percent growth)
- New listings outpaced sales enough to bring inventories back into balance
- Growth in home values has returned to historical rates
- Investor participation is starting to decline (slightly)
- New construction is back, but only in some areas
- International sales remain robust
- Shadow inventory continues to decline
Wednesday, January 21, 2015
NAHB 2015 forecast: A more robust year for housing
ScottSorensonRealEstate.Com
LAS VEGAS – Jan. 21, 2015 – A strengthening labor market, low interest rates, improving mortgage availability and growing pent-up demand will help to significantly boost single-family housing production in the year ahead and move the housing recovery to higher ground, according to economists speaking at the International Builders' Show in Las Vegas today.
Economic growth was near 4 percent for the last half of 2014 and employment gains averaged more than 250,000 per month last year, NAHB Chief Economist David Crowe said – primary factors that have helped consumer confidence jump back to pre-recession levels.
"The signs point to a more robust year for housing," Crowe said. "Household balance sheets are returning to normal levels, homeowners' equity is increasing and significant pent-up demand is rising. More than 7 million existing home sales were postponed or lost during the downturn; and while some are lost forever, we should see some catch-up."
The 2015 forecast
David Berson, chief economist at Nationwide Insurance, said the number of new household formations was far fewer in the current economic expansion than in previous recoveries.
"Given the job growth we've seen in 2014, there should have been better household formations," he said, adding that the slower pace may be because "the real acceleration in job growth has occurred just recently – in the last six months."
As the economy and job growth continue to strengthen in 2015, Berson said this will be a "significant factor to encourage people who have doubled up to move out on their own."
Moreover, he noted that the real slowdown in household formations has come from the Millennials, who have suffered disproportionately from stagnant wage growth and student debt. However, he added that this key demographic is getting older and ready to set down roots. "The leading edge are now in their young 30s," said Berson. "Homeownership desire is much higher for those who are in their 30s than those in their 20s."
A rising economy lifts housing
Freddie Mac Chief Economist Frank Nothaft also foresees a good year for housing.
"We're projecting 3 percent economic growth in 2015, which would only be the second year in the last decade that we've seen growth at that level," said Nothaft. "A stronger economy supports a rise in household formation and home buying."
Not quite as bullish as NAHB, Nothaft expects that housing starts will rise about 15 percent in 2015, and that home sales will be up 4 percent, which would be the best year for home sales since 2007. He added that nationwide home prices this year should increase about 3.5 percent to 4 percent above last year's level.
With 30-year mortgages currently running at about 3.75 percent, Nothaft called them "dirt cheap" and said he expects rates to rise this year but remain at affordable levels.
"If we see economic growth running at 3 percent at an annualized rate, the Federal Reserve should begin to push up short-term interest rates by the second half of 2015," said Nothaft. "We see mortgage rates going up to 4.5 percent on the high side at the end of this year, going from dirt cheap to cheap. Overall, affordability for buyers in most markets will be well maintained in the context of strong job and income growth."
LAS VEGAS – Jan. 21, 2015 – A strengthening labor market, low interest rates, improving mortgage availability and growing pent-up demand will help to significantly boost single-family housing production in the year ahead and move the housing recovery to higher ground, according to economists speaking at the International Builders' Show in Las Vegas today.
Economic growth was near 4 percent for the last half of 2014 and employment gains averaged more than 250,000 per month last year, NAHB Chief Economist David Crowe said – primary factors that have helped consumer confidence jump back to pre-recession levels.
"The signs point to a more robust year for housing," Crowe said. "Household balance sheets are returning to normal levels, homeowners' equity is increasing and significant pent-up demand is rising. More than 7 million existing home sales were postponed or lost during the downturn; and while some are lost forever, we should see some catch-up."
The 2015 forecast
- NAHB projects 993,000 total housing starts in 2014, up 6.7 percent from last year's total of 930,000 units.
- Single-family production is expected to rise 26 percent in 2015 to 804,000 units; but "while a good beginning, this is still well below a normal level of 1.3 to 1.4 million single-family starts," Crowe said.
- On the multifamily front, NAHB anticipates 358,000 starts in 2015 – a 2 percent increase.
- The sale of new single-family homes is expected to hit 564,000 this year, a 29.3 percent increase above last year's 436,000 in sales.
- Residential remodeling activity is expected to register a 3 percent gain.
- The ongoing housing recovery will see single-family starts steadily climb from 49 percent of normal production at the end of the third quarter of 2014 to 90 percent of normal by the end of 2016, Crowe said.
- Examining the recovery on a state level, the top 40 percent of states will be back to near normal production levels by the end of 2016, compared to the bottom 20 percent, which will still be below 75 percent.
David Berson, chief economist at Nationwide Insurance, said the number of new household formations was far fewer in the current economic expansion than in previous recoveries.
"Given the job growth we've seen in 2014, there should have been better household formations," he said, adding that the slower pace may be because "the real acceleration in job growth has occurred just recently – in the last six months."
As the economy and job growth continue to strengthen in 2015, Berson said this will be a "significant factor to encourage people who have doubled up to move out on their own."
Moreover, he noted that the real slowdown in household formations has come from the Millennials, who have suffered disproportionately from stagnant wage growth and student debt. However, he added that this key demographic is getting older and ready to set down roots. "The leading edge are now in their young 30s," said Berson. "Homeownership desire is much higher for those who are in their 30s than those in their 20s."
A rising economy lifts housing
Freddie Mac Chief Economist Frank Nothaft also foresees a good year for housing.
"We're projecting 3 percent economic growth in 2015, which would only be the second year in the last decade that we've seen growth at that level," said Nothaft. "A stronger economy supports a rise in household formation and home buying."
Not quite as bullish as NAHB, Nothaft expects that housing starts will rise about 15 percent in 2015, and that home sales will be up 4 percent, which would be the best year for home sales since 2007. He added that nationwide home prices this year should increase about 3.5 percent to 4 percent above last year's level.
With 30-year mortgages currently running at about 3.75 percent, Nothaft called them "dirt cheap" and said he expects rates to rise this year but remain at affordable levels.
"If we see economic growth running at 3 percent at an annualized rate, the Federal Reserve should begin to push up short-term interest rates by the second half of 2015," said Nothaft. "We see mortgage rates going up to 4.5 percent on the high side at the end of this year, going from dirt cheap to cheap. Overall, affordability for buyers in most markets will be well maintained in the context of strong job and income growth."
U.S. home construction up 4.4% in Dec.
ScottSorensonRealEstate.Com
WASHINGTON (AP) – Jan. 21, 2015 – Construction of new homes rebounded in December, helping to push activity for the entire year to the highest level since the peak of the housing boom nine years ago.
Builders started construction at a seasonally adjusted annual rate of 1.09 million in December, an increase of 4.4 percent from November when unusually severe weather pushed activity down a revised 4.5 percent, the Commerce Department reported Wednesday.
For all of 2014, builders started construction on 1.01 million new homes and apartments, an increase of 8.8 percent from 2013. It was the first time construction has topped 1 million since the height of the housing boom in 2005, when builders started work on 2.07 million homes. Construction activity plunged to 587,000 in 2010 and has been making a slow recovery since then.
For December, construction of single-family homes rose 7.2 percent while the smaller apartment sector, which can be volatile from month to month, fell 0.8 percent.
Applications for building permits dropped 1.9 percent in December to 1.03 million after a 3.7 percent decline in November.
Despite the recent weakness in building permits, economists are forecasting continued gains in home construction in 2015. That optimism stems from rising employment and favorable demographics that are expected to drive future construction as more young people decide to purchase a home.
The National Association of Home Builders/Wells Fargo builder sentiment index slipped in January to a reading of 57, down from a revised reading of 58 in December. Readings above 50 indicate that more builders view sales conditions as good rather than poor.
Broader economic trends point favorably to future sales. The unemployment rate fell to 5.6 percent in December, the lowest point since 2008, as nearly 3 million jobs were created last year in the best performance since 1999.
And mortgage interest rates remain near historic lows. The 30-year fixed rate mortgage just dropped for a third consecutive week, falling to 3.66 percent, its lowest level since May 2013.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data compiled by the home builders.
WASHINGTON (AP) – Jan. 21, 2015 – Construction of new homes rebounded in December, helping to push activity for the entire year to the highest level since the peak of the housing boom nine years ago.
Builders started construction at a seasonally adjusted annual rate of 1.09 million in December, an increase of 4.4 percent from November when unusually severe weather pushed activity down a revised 4.5 percent, the Commerce Department reported Wednesday.
For all of 2014, builders started construction on 1.01 million new homes and apartments, an increase of 8.8 percent from 2013. It was the first time construction has topped 1 million since the height of the housing boom in 2005, when builders started work on 2.07 million homes. Construction activity plunged to 587,000 in 2010 and has been making a slow recovery since then.
For December, construction of single-family homes rose 7.2 percent while the smaller apartment sector, which can be volatile from month to month, fell 0.8 percent.
Applications for building permits dropped 1.9 percent in December to 1.03 million after a 3.7 percent decline in November.
Despite the recent weakness in building permits, economists are forecasting continued gains in home construction in 2015. That optimism stems from rising employment and favorable demographics that are expected to drive future construction as more young people decide to purchase a home.
The National Association of Home Builders/Wells Fargo builder sentiment index slipped in January to a reading of 57, down from a revised reading of 58 in December. Readings above 50 indicate that more builders view sales conditions as good rather than poor.
Broader economic trends point favorably to future sales. The unemployment rate fell to 5.6 percent in December, the lowest point since 2008, as nearly 3 million jobs were created last year in the best performance since 1999.
And mortgage interest rates remain near historic lows. The 30-year fixed rate mortgage just dropped for a third consecutive week, falling to 3.66 percent, its lowest level since May 2013.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data compiled by the home builders.
Friday, January 16, 2015
Luxury Market Gains Momentum in 2014
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Naples, Fla. (January 16, 2015)
- Overall closed sales for homes in every price category above $300,000
saw double digit increases in 2014. As a result, broker analysts contend that
2014 was one of the best years in Naples real estate history for closed
sales. According to the Annual 2014 Market Report released by the Naples Area
Board of REALTORS® (NABOR®), which tracks home listings and sales within
Collier County (excluding Marco Island), inventory increased 16 percent for
homes in the $2 million and above price category from 394 in 2013 to 457 in
2014. The report also showed that overall closed sales in this luxury market
price category increased 33 percent from 299 homes in 2013 to 399 homes in
2014, yet the overall median home price in this price category held steady
year over year at $2,950,000.
"Even though the report
shows that the overall inventory decreased 6 percent in 2014, it increased in
several price categories including the very high end. Interestingly however,
and as indicated by the report, prices for luxury homes held steady. There
appears to be clear indication of price stabilization," said Coco
Waldenmayer, managing broker at John R. Wood Properties.
"Yes. That's true,"
commented Cindy Carroll, SRA, with the real estate appraisal and consultancy
firm of Carroll & Carroll, Inc. "The market in general is
trending toward a balance of supply and demand and value
stabilization. Some market sectors may have reached their peak for this
economic cycle in the fall of 2014 while other areas will demonstrate
continued value growth in 2015."
Buyers looking for single
family homes in 2015 will be pleased, as the report indicated a 3 percent
increase in inventory of single family homes from 2,260 in 2013 to 2,321 in
2014. As noted by Rick Fioretti, NABOR® President Elect and Broker Associate
with Berkshire Hathaway Home Services Florida Realty, this may be due to
what the industry calls a "sleeping inventory," or sellers who were
unaware of the market's improvement and upon exploring their options with a
REALTOR® decided to place their home on the market for sale.
While closed sales stood firm
at a 3 percent increase for condominiums in 2014, inventory in the
condominium market did not fare as well as single family home inventory in
2014. The report indicated a 14 percent decrease in condominium inventory
from 2,354 in 2013 to 2,030 in 2014. The only price category that experienced
an increase in inventory was the $300,000 to $500,000 price category. It
increased 13 percent from 408 condominiums in 2013 to 462 condominiums in
2014. Broker analysts indicate that this increase in inventory may be due, in
part, to bracket creep, which is what happens when a home's value increases to
a point that it surpasses its current category's threshold and advances into
the price category above it. The fact that inventory for condominiums in the
$300,000 and below price category decreased 23 percent is further evidence of
the bracket creep.
The NABOR® Annual 2014 Market
Report provides comparisons of single-family home and condominium sales (via
the Southwest Florida MLS), price ranges, and geographic segmentation and
includes an overall market summary. The NABOR® Annual 2014 sales statistics are
presented in chart format, including these overall (single-family and
condominium) findings:
As noted by Bill Coffey, Broker
Manager of Amerivest Realty Naples, the gain in Naples housing market's
momentum is evident when you compare quarterly sales activity for 2014.
Closed sales increased 5 percent in the first quarter, but then fell 4 and 11
percent respectively during the second and third quarters. But in the fourth
quarter, sales jumped 9 percent. This increase is a welcome sign and
indicates consumer confidence in the Naples area housing market.
Industry predictions of a
self-correcting housing market have come true. A return to a balanced housing
market can be seen in the NABOR® Annual 2014 Market Report because, even
though sales increased by double digits for homes above $300,000, the median home
price did not shift substantially.
To view the entire report, visit www.NaplesArea.com
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Move to Florida for warm weather, better tax conditions - Here's How!!
www.ScottSorensonRealEstate.Com
MIAMI – Jan. 15, 2015 – Atlantic Trust, a private wealth management division of CIBC, advises clients to move to Florida to save on taxes.
"Florida has no individual income tax, so many of our clients who live in states that have a high state income tax consider moving to Florida in order to avoid that level of taxation," says Linda Beerman, chief fiduciary officer for Atlantic Trust. "Florida has long been a popular destination for clients who are retirees because there is no state estate tax as well."
One of the issues individuals can face is continued income tax assessments from their former state even though they've moved away. Therefore, it's important for people who relocated to Florida to establish conclusively that they have changed their domicile.
Proof isn't the same as establishing residency, which simply requires having a presence as an inhabitant of a particular place, Beerman says. Someone establishing a domicile not only lives there, but he or she also demonstrates an intent to make that place a fixed and permanent home.
"Individuals can have several residences – that is, different homes in different states – but you can only have one domicile," Beerman says.
To establish that intent, individuals should spend sufficient time in their new "home" state, register to vote, move some tangible property, become involved in a local church or community activities, and change their address.
MIAMI – Jan. 15, 2015 – Atlantic Trust, a private wealth management division of CIBC, advises clients to move to Florida to save on taxes.
"Florida has no individual income tax, so many of our clients who live in states that have a high state income tax consider moving to Florida in order to avoid that level of taxation," says Linda Beerman, chief fiduciary officer for Atlantic Trust. "Florida has long been a popular destination for clients who are retirees because there is no state estate tax as well."
One of the issues individuals can face is continued income tax assessments from their former state even though they've moved away. Therefore, it's important for people who relocated to Florida to establish conclusively that they have changed their domicile.
Proof isn't the same as establishing residency, which simply requires having a presence as an inhabitant of a particular place, Beerman says. Someone establishing a domicile not only lives there, but he or she also demonstrates an intent to make that place a fixed and permanent home.
"Individuals can have several residences – that is, different homes in different states – but you can only have one domicile," Beerman says.
To establish that intent, individuals should spend sufficient time in their new "home" state, register to vote, move some tangible property, become involved in a local church or community activities, and change their address.
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