Law Office of Ryan S. Shipp, PLLC

Palm Beach County Real Estate Blog

Commercial real estate provides shield against volatility

Florida investors may be wondering what the future holds for the commercial real estate market. After decades of regular double-digit returns, it seems that, on some levels, the market has slowed down. In 2016, the returns fell below the annual average of 10.1 percent for the first time since 2008's major economic crisis. In addition, some forecasts envision 6 percent returns for 2018 and 2019.

Of course, commercial real estate is a cyclical market, and upswings and downturns are a natural part of this type of investment. However, while the returns in 2016 are lower than those in previous years, it is unlikely to point to a significant downturn that could call into question the wisdom of continued investment in real estate. In fact, a 2018 report by Colliers International points out that the industry continues to expect ongoing growth, pointing toward a positive environment for investment.

Home sales lower as prices and rates rise

New home sales dropped 7.8 percent nationally in January to 593,000 units sold when seasonally adjusted. In the South, there was a 14.2 percent drop, and that includes states such as Florida. The Northeast saw a 33.3 percent drop in sales during the month of January. These two regions account for most of the new home purchases in the country. However, sales actually rose 1 percent in the West and 15.4 percent in the Midwest.

One reason why home sales may be slowing is a lack of available inventory. This is in spite of the fact that there was an approximate six month supply of homes available in January, which was the most since July 2014. At this rate, the supply of homes is roughly in a balance with consumer demand. However, as prices increase, it may push out those who are looking to buy homes at entry level price points.

Mortgage rates may impact buying decisions

People who are considering buying a home in Florida may need to contend with higher mortgage interest rates. The average rate for a 30-year fixed-rate mortgage was 4.38 percent in mid-February, which is the highest since April 2014. Mortgage rates generally increase in step with the 10-year Treasury notes, which are also trending higher. This is because investors are seeking higher returns as inflation picks up.

Higher interest rates may be a problem for first-time buyers who may already be discouraged by increasing home prices. Prices are heading higher partially because of a lack of available homes on the market. Since 2015, housing values have increased by as much as 7 percent, which is double the increase in the average hourly wage during that time period. The average cost of a home in the fourth quarter of 2017 was $235,400 according to the National Association of Realtors.

Buying a home? Find out if an easement will affect property use.

If you are purchasing a home in Florida, you know how important it is to be certain you know as much as possible about the property you hope to buy. This can help you avoid problems, reduce complications and save you both time and money in the future. One of the things you may need to know about is the presence of an easement.

An easement could affect the way that you enjoy and use your property. It can be frustrating to learn about an easement after the purchase is complete, but you can avoid this problem by asking questions and seeking information before the closing.

Become a real estate investor in three steps

Real estate investing can be a lucrative business venture in Florida. To be successful, it takes hard work and a commitment to persevere, but the success that ensues can be rewarding both monetarily and personally.

The process of building a successful real estate investment business can be divided into three separate phases. Getting started in the business involves making the very first deal. One should study and be familiar with the market at hand rather than real estate markets in general because property values can differ greatly in different locales. The first deal is the beginning of the foundation for the business.

The potential pitfalls of buying a home together

Being married and owning a home are both large commitments for a Florida couple to undertake. However, some people seem to be more willing to take on the housing project as opposed to tackling a marriage. While buying a home may seem easier than sharing a life together, it may actually be easier to get out of a marriage if things go bad.

For instance, if there is a problem in the marriage, each person can go to their own space until the tension passes. If there is a problem with a house, it has to be addressed immediately before it becomes a larger and more expensive one. Those who want to leave a marriage may only need to file divorce papers and divide joint assets. To walk away from a house, it needs to be sold first. This may be difficult if there are serious issues that need to be fixed.

Millennials and home buying

Millennials in Florida, individuals who were born between 1981 and 2001, may list affordability as one of the main issues that determine whether they may own a home. Just 39 percent of millennials can afford the 20 percent down payment that is often necessary to obtain a mortgage. Even though there are other ways to obtain a mortgage that may not require a substantial down payment, it is important that millennials know exactly how big of a house they can afford before starting the home-buying process.

Student loans are another factor that can affect homeownership. The average student loan debt is $35,000. Eighty-three percent of individuals who do not own a home state that their student loan debt is preventing them from buying a house. It affects how much they are able to put away for a down payment and how much they can afford to pay each month for the mortgage. Student loans also raise a person's debt-to-income ratio, which has a significant role in whether he or she can qualify for a mortgage.

Avoid complications as a landlord by avoiding certain mistakes

As a Florida landlord, you know that you have certain obligation to your tenants. From addressing environmental concerns to dealing with safety issues in a prompt manner, handling matters quickly and effectively is a smart way to avoid problems and reduce the chance of legal trouble in the future.

One of the other ways you can avoid complications as a landlord is to avoid a few common mistakes that many people make. Simply because you own the rented property does not mean that you can do whatever you wish. It is prudent for all landlords to fully understand their options, obligations and rights in order to avoid the possibility of a complex legal dispute with a tenant. 

What unmarried couples should consider when buying property

Florida residents who are in a long-term relationship may find that its not uncommon for unmarried couples to buy homes together. In fact, a report from the National Association of Realtors found that 16 percent of first-time home buyers in 2017 were unmarried couples. That is the highest level since 1981. However, there are steps that may need to be taken to reduce any possible consequences should the relationship go bad.

A formal agreement should be created that addresses what happens to the property if the couple decides to end the relationship. It should also address what happens if one person dies or becomes incapacitated for any period of time. Titling a home as a joint tenancy means that a home is owned 50/50, and if one person dies, the other receives the deceased person's share of ownership.

How to find adequate housing in the current market

According to the Commerce Department, there were 667,000 new homes sold in September 2017. This surge, which was the highest figure since October 2007, could influence how Florida residents and others approach buying their next home. Newer homes are popular among those who aren't able to find affordable existing properties. However, builders are increasingly trying to create more expensive homes, which may further price out those who have a limited budget.

This doesn't mean that there aren't ways for such buyers to find homes that fit their needs and budgets. However, buyers may need to move quickly on properties that they are interested in. Getting an offer accepted may come down to where the buyer's agent works. Those who work at more reputable agencies are more likely to be taken seriously by sellers. Although buyers are urged not to spend too much time looking for hidden bargains, it may be possible to get a better price by home hunting during slower times of the year.

Law Office of Ryan S. Shipp, PLLC | 814 W. Lantana Rd., Suite 1 | Lantana, Florida 33462 | Phone: (561) 699-0399 | Map & Directions