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Landlord law fails after veto from governor

TALLAHASSEE, Fla. – May 30, 2007 – Gov. Charlie Crist vetoed a bill Thursday that would have allowed landlords to charge up to two months rent if a tenant breaks the lease and leaves early – even if the unit could be filled immediately with a new tenant.

HB 1277 would have changed the current law that allows renters to move without penalty, even if it breaks a lease, providing the unit can be immediately re-leased and the landlord incurs no loss.

“While I understand that this would provide another option for landlords who manage rental property, I believe the impact on those Floridians least able to afford to pay such fees would be just too great,” Crist said in a letter to Secretary of State Kurt S. Browning, announcing the veto. “With escalating insurance and ad valorem tax cost that are passed on to renters, Florida is experiencing a lack of affordable housing for those workers critical to maintaining the state’s robust economy.”

Crist said he could not “allow legislation to become law that would add to the housing burden of these Floridians.”

© 2007 FLORIDA ASSOCIATION OF REALTORS®

 

 

Cornered condo owners opening homes to short-term tourists

MIAMI – May 30, 2007 – Sandra Stella spent most of the decade trying to profit from South Florida’s real estate boom.

But in January, the broker from Lauderdale-by-the-Sea quit looking for tenants and buyers for her 10 investment properties and began marketing them to business travelers and vacationers, instead.

Stella says it feels like boom times again.

“A house I couldn’t give away for $550,000, I’m now renting for $5,000 a week,” said Stella, who runs sandybythesea.com. “I had to figure out what was going to work.”

A glutted real estate market is spilling into the lodging sector, as recent condo buyers who had counted on flipping for a profit instead face mortgage payments and maintenance fees.

“They can’t sell them and they need an income coming,” said Linda Luft, a mortgage broker at Bluewater Realty, whose short-term rental business grew between 20 percent and 30 percent this year. “Basically, what they’re doing is telling me: ‘Please rent it. Get me anything.’”

Miamihabitat.com, which advertises weeklong stays at Icon, Bentley Bay and other new South Beach condominium towers, said that its inventory is up 40 percent this year. At rentalo.com, listings for South Florida vacation rentals soared 400 percent last year.

A rental boom

Housing sales are already down 29 percent from a year ago. And some real estate experts predict harsher times ahead for sellers, with more than 22,000 condominium units under construction in Miami alone.

That’s bound to push even more vacation rentals onto the market – and offer their owners some harsh lessons in the ups and downs of the lodging market. Stella has had to mop up beer on her waterfront rental home’s bamboo floors and clean up after spring-break tenants jimmied opened a hatch on her boat for a dockside party.

Janet Markowitz, an event planner in Atlantic City, N.J., owns two vacation units in Miami Beach’s Roney Palace with a business partner and pays Bluewater Realty a 10 percent commission to rent them. The condos post a loss each year. But Markowitz said the rental revenue has been enough to make them good real estate investments, given rising property values there.

“I figure if it pays for condo fees and taxes, I’m thrilled,” she said.

Available deals

South Florida boasts a sprawling portfolio of residential getaways, offering vacationers larger and even sometimes cheaper alternatives to the standard hotel room.

The popular vrbo.com (the letters stand for “Vacation Rentals by Owner”) recently advertised 107 South Beach locations for rent. There were 82 more listed under Miami Beach.

In Fort Lauderdale, the site offered 154 places for rent – including a “bungalow downtown” for $200 a night and a “Fort Lauderdale Penthouse Suite” for $1,800 a week.

A unit at a new condominium building in downtown Miami is going for $900 a week in June on the site. Six blocks away at the Biscayne Bay Marriott, a week’s stay during June costs $1,243, according to the reservations desk.

Size advantage

Renters of vacation homes typically sacrifice hotel amenities and service, not to mention the predictability that comes with a major lodging chain. They lose flexibility, too: Most privately owned condos and vacation homes require stays of at least a week, brokers said.

Still, private homes can steal away enough customers that hotels take notice. A recent report by Marcus & Millichap Real Estate Investment Services noted a 5 percent drop in overnight stays for Miami-Dade hotels last year, noting that “newly built and converted condos are likely eating into room demand.”

Rental homes and condos proved so popular in ski destinations that some resorts ripped down walls in rooms to provide apartment-style accommodations, said Scott Berman, a lodging analyst in Miami for PricewaterhouseCoopers.

“Families want larger units,” Berman said, making two- and three-bedroom condominiums and villas in places such as Aspen, Colo., “en vogue.”

Thanks to this decade’s condo-hotel boom, many South Florida hotels already boast large units with separate bedrooms. But some condo-hotel unit owners are bypassing their hotel booking systems (and hefty commissions) to seek out guests on their own. One ad on vrbo.com offering a South Beach condo-hotel suite exclaims, “Experience the Setai … at 50% Off!”

Off the tax books

Florida taxes private transient units – anything rented for six months or less – the same as hotel rooms: between 10 and 12 percent in South Florida. But collecting the revenue can be difficult.

“It’s almost impossible to go out and find every person who is renting their houses and apartments,” said Georgia Zdanowicz, who supervises tourist taxes for Broward.

And most condo buildings in South Florida prohibit short-term rentals, as do some local zoning rules – Miami Beach, for instance, doesn’t allow most single-family homes to be rented for less than six months. But policing violators can be hard.

“I haven’t seen much in the way of enforcement,” said Roberto Blanch, a condominium law attorney with Siegfried Rivera who cited short-term rentals as one of the biggest complaints from the associations he represents.

Lisa Matulis said her family enjoys living residentially while on vacation. The public relations executive from Richmond, Va., and eight other relatives are paying $5,000 to spend the week in a four-bedroom home Stella owns in Lauderdale-by-the-Sea.

The full kitchen makes mealtimes less hectic, especially with two young children in the group. And Matulis said the family especially enjoys “having our own pool – where we don’t have to fight for chairs.”

Copyright © 2007 The Miami Herald, Douglas Hanks. Distributed by McClatchy-Tribune Information Services.

 

 

 

Numbers game: No-fee mortgage not so clear-cut

ORLANDO, Fla. – May 30, 2007 – Joe Nunziata was shaken when he heard that Bank of America was offering homebuyers a “no-fee mortgage.”

“No fees. No worry. No, really,” the bank’s ad campaign proclaimed. “Relax, you’ve just found the best mortgage deal.”

Could the nation’s largest retail bank really offer people a home loan with no closing costs? That seemed to be what it was saying, said Nunziata, chief executive officer of FBC Mortgage, a small lending company in Orlando.

“If they were really going to pay every closing cost, that would effectively reshape our entire industry,” he said. “You’d be seeing a lot of ‘Gone Fishing’ signs hanging from mortgage lenders’ doors. It would put people out of business.”

Once the initial publicity subsided, the reality of the bank’s offer became clear: It would pay some, but not all, of the costs involved when you borrowed money to purchase a home. And you would pay a higher interest rate – among the highest on the market.

It is something other mortgage lenders have been doing for years: waiving certain one-time costs for borrowers while recouping those expenses with higher interest rates. High-volume residential lenders such as Countrywide and E-Loan, for example, have long offered “no-cost” home loans, with accompanying higher interest rates.

“All Bank of America is doing is emulating what’s been done by many, many other companies – manipulating the interest rate,” said William Weaver, a real-estate professor at the University of Central Florida. “Consumers have to know there’s no free lunch.”

Scrambling for customers

Still, would-be homebuyers may see an increasing number of no-fee mortgage offers and other specials as banks and lenders scramble for market share during the slump in U.S. housing.

Borrowers should shop around, compare the specifics of different offers and read the fine print.

Bank of America certainly made a splash earlier this month with the announcement of its no-fee campaign. At a time when the nation’s housing markets are in the doldrums, the bank says its home-loan applications are up 40 percent from a year ago, while branches and call centers are fielding a steady stream of inquiries.

“The response has been tremendous,” spokesman Terry Francisco said. “We think it’s a very breakthrough product.”

Here’s the skinny on Bank of America’s no-fee deal, according to Francisco:

No appraisal fee or title-insurance charges, unless the borrowers choose to purchase a policy for themselves as well as for the lender.

No administrative, application, underwriting or other lending charges – known in the real-estate industry as “junk fees.”

No requirement to buy private mortgage insurance, usually required when a buyer’s down payment amounts to less than 20 percent of the purchase price.

A guarantee that the mortgage will close within 25 days (unless the borrowers request a longer closing period).

A “walk-away” penalty of only $250 if the customer has been approved for a home loan but later chooses another lender.

Even a no-fee deal, however, has some closing costs, mostly related to taxes and the escrow fund to cover the dwelling’s insurance premium. On a $250,000 home in Florida, the state tangibles tax is $500 and documentation stamps on the mortgage would cost $875.

Higher interest rate likely

While a no-fee mortgage can save you thousands in upfront costs, you’re likely to pay a higher interest rate as a result.

Bank of America’s 30-year, fixed-rate, “no fee” mortgage loan for customers with good credit, for example, was 6.8 percent on May 23, according to Bankrate.com, the consumer-finance research site. The market average that day was 6.3 percent, and some lenders were offering rates as low as 5.8 percent.

On a $250,000 mortgage, a customer’s monthly payment would have been about $82 more with the Bank of America no-fee deal – or nearly $30,000 over the life of the loan – compared with a loan based on the 6.3 percent market average.

Few people, however, stay in a home that long. If you expect to keep a house for only a few years, you still might want to consider loans that waive most of the upfront fees – if you can afford the higher monthly payment.

“I’ve heard about Bank of America’s deal, and it sounds basically like a good one,” said Jim Gudinas, a Lake Mary resident and retired lobbyist for AAA. “But in any deals like that, it’s a case of pay now or pay later.”

Francisco, the Bank of America spokesman, disputed the notion that the bank was recapturing lost fees by boosting the interest rate on its no-fee mortgages.

“We don’t roll fees into the interest rate,” Francisco said. “We feel our rates are very competitive, but we’re not the lowest out there. And that was true before this program started. But we believe we offer more convenience and other advantages to customers than other lenders, even if their rates are lower.”

But that explanation skirts the question of why Bank of America’s mortgage rates were higher than its competitors in the first place, said Weaver, the UCF professor.

“That simply says to me they were overcharging you before,” he said. “Now they’re overcharging you a little less.”

Sacrificing profits?

The more-likely explanation is that the bank realized it needed to be more competitive in the mortgage-loan business, even if it meant giving up some fee income, Weaver said. Despite being the nation’s largest retail bank, Bank of America trails Wells Fargo, Countrywide, Washington Mutual and several others in terms of the amount of residential lending it does, he said.

Whether a lender is offering a no-fee, no-cost or low-cost deal, consumers must do their homework, said Bill Primo, owner of Aloma Title Co. in Winter Park.

“Whatever these programs offer, the consumer has to be diligent in looking at the bottom line,” Primo said. “They have to compare apples to apples. They have to be good shoppers and realize what they’re getting into.”

Copyright © 2007 The Orlando Sentinel, Richard Burnett. Distributed by McClatchy-Tribune Information Services.

 

 

Florida economist predicts housing ready to recover

ORLANDO, Fla. – May 31, 2007 – A top Florida economist has declared the housing slump a done deal. “It will take another 18 months or so before closing volumes reach more normal levels, but the worst is behind us,” says Hank Fishkind.

Fishkind says the turn-around is important to everyone, attributing housing troubles to the recent 75 percent drop in GDP (gross domestic product). The current 1.3 percent rate is down from the historic 4 percent pace, but Fishkind says that dropoff would go away completely when housing simply returns to normal levels.

 “With (the number of home) starts below (the number of) closings, the inventory of new but unsold homes is slowly being absorbed,” says Fishkind. “Sales of existing homes are the best leading indicator for national housing markets. April sales were off sharply, falling below 6 million at an annual rate. At these levels it will take 8.4 months to sell all the homes that are for sale. However, prices remain stable. And the sales levels, while down this month, were up sharply earlier in the year.

“What all of this means, is that we have seen the worst for housing markets,” Fishkind says.

 

 

Housing market good for reality TV

CHICAGO – May 29, 2007 – A slump in U.S. home sales doesn’t mean a slump in the housing reality shows, as cable TV has at least two dozen shows on the art of the real estate deal.

Interest in all aspects of real estate – whether the market is hot or cool – is thriving, the Chicago Tribune reported Monday.

“Even with the slowing housing market, it doesn’t take away people’s interest,” said Frances Berwick, executive vice president of programming and production for Bravo, which has two titles in the works. “If anything, it makes people slightly more crazy about following it.”

The latest entry is “Secrets that Sell,” which premiered this month, a spin-off of “Designed to Sell,” which debuted in 2004.

Advertising observers told the Tribune real estate shows are somewhat immune from changes in the marketplace.

“The programs are somewhat marketproof,” Miraj Parikh of StarLink Worldwide, a Chicago advertising firm said to the newspaper. When housing sales were sky high, viewers watched to learn how many multiple offers the seller got, he said.

“In a marketplace like we’re in right now, maybe it’s harder to sell your house,” he said in the Tribune article, so the viewer is “using these programs as a benchmark of whether the market is good again.”

Copyright © 2007 by United Press International