Vacation Rental Listing Scams Grow

A new article at CNBC is warning vacationers to make sure the short-term rental they’re booking on popular platforms is really not a scam.

“Summer plans can quickly melt if consumers aren’t careful when they book their getaway,” New York State Attorney Letitia James wrote in a statement in issuing a recent warning about rental properties. “Vacation fraud happens every year, but there are ways to avoid it and protect yourself from getting burned.”

For example, those looking to book a rental should find it a red flag if they are asked to leave a listing platform, such as Vrbo or Airbnb, to provide payment. The scammer may ask a person to send their online payment using another platform, like Zelle, Michelle Couch-Friedman, executive director of the nonprofit consumer advocacy organization, Elliott Advocacy, told CNBC. She advises using credit credits to make a payment because there is some protection against fraud from the Fair Credit Billing Act. Also, she advises using well-known websites and staying on the platform from start to finish–from payment to deposit.

Also, she notes another red flag for a fake listing is ones that are brand new with no reviews or several reviews that repeat the same phrases. The photos may be grainy too—which could mean they were pulled as a screenshot online.

Couch-Friedman also suggests to avoid being scammed users should message the owner before they commit, using the listing site only for that correspondence.

Source: 

“That Vacation Rental Listing Could Be a Scam. These Are the Warning Signs to Look Out For,” CNBC (May 24, 2022)

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New-Home Sales Post Double-Digit Drop

Rising prices in the new-home market prompted buyers to take a step back in April. The sale of newly built, single-family homes fell 16.6% in April, dropping to their weakest pace in two years, the Department of Housing and Urban Development and the U.S. Census Bureau reported Tuesday. Rising mortgage rates are worsening affordability conditions, builders say.

New-home sales are down nearly 27% compared to a year earlier, the report shows.

“The volume of signed sales contracts significantly declined in April as the cost of purchasing a home increased in 2022 as interest rates surged higher,” says Jerry Konter, chairman of the National Association of Home Builders. “Higher construction costs fueled by rising material prices and supply-side constraints along with limited existing home inventory are pricing many potential home buyers out of the market.”

The entry-level market is experiencing the largest drops in sales, as affordability conditions particularly worsen there, builders say. A year ago, 25% of new-home sales were priced below $300,000. In April, just 10% of homes were under $300,000.

The median price of a newly built, single-family home rose 19.7% year over year. The median sales price increased to $450,600 in April. Builders said the higher costs are primarily due to surging building materials costs.

“The combination of higher prices and increased interest rates are generating a notable slowing of the housing market,” says Robert Dietz, NAHB’s chief economist. “While the nation needs additional housing, home sales are slackening as tightening monetary policy continues to put upward pressure on mortgage rates and supply chain disruptions raise construction costs.”

On a year-to-date basis, new home sales only posted an increase in the Northeast last month with a 6.5% increase. New home sales were down on a year-to-date basis by 16.8% in the Midwest, 19.3% in the South, and by 0.6% in the West.

Source: 

National Association of Home Builders

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Homeowners May Be Underinsured

Homeowners’ insurance premiums have climbed by 34% in some states, according to a new study by QuoteWizard, a site operated by LendingTree. What’s more, increases in home prices and building material costs may have made many homeowners underinsured.

The cost of rebuilding a home is about $36,000 more now than in 2020, the LendingTree study finds.

“The last two years have been a tumultuous time in nearly every aspect of life,” the QuoteWizard study says. “This is also true for homeowners insurance. There’s no way to tell exactly how many of the nation’s 85 million homeowners are currently underinsured.” But the study urges homeowners to check their policies because rising home prices and building material costs, as well as inflation, may mean owners need to recalculate the amount of coverage needed for their home.

Overall, home insurance premiums are up 2% nationwide. Idaho saw the largest increase in home insurance premiums at 34%, the study finds.

States in the Midwest and South pay the highest costs for home insurance. In Oklahoma, for example, homeowners face the highest premiums at nearly $3,800 a year, according to the study. Texas, Nebraska, and Kansas also rank among the states with the highest premiums in the country. On the other hand, Hawaii has the least expensive home insurance, with an average price of about $400 annually.

Homeowners may find that shopping around for homeowners insurance can make a big difference. The QuoteWizard study found that, depending on the insurance carrier, the same home insurance policy could vary by up to $2,000.

Source: 

“The State of Home Insurance in 2022,” QuoteWizard (2022)

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Reality TV Skew Buyers’ Perceptions

Reality TV shows may try to capture the glitz and glamor of the real estate market and what it takes to work in the profession. But Bess Freedman, CEO of Brown Harris Stevens, called the rise of reality TV shows featuring real estate “horrible” for the industry and alarming because of the image she says it portrays of brokers.

Freedman took aim at shows like Netflix’s “Selling Sunset” and Bravo’s “Million Dollar Listing” for their portrayal of the real estate industry. The hit TV series document personal dramas involved in high-end real estate transactions.

“This is not who we are,” Freedman said in remarks at The Real Deal’s NYC Showcase + Forum last week, as quoted by CNBC. “We want to make sure that we maintain the integrity of our business.” Freedman says some of the reality shows make it look like female agents show up in “gala gowns to open houses.”

Reality stars fired back at the comments. Ryan Serhant, who stars in “Million Dollar Listing New York,” said traditional real estate agents need to embrace the media and technology. “The old way of selling real estate has completely changed,” Serhant said on stage in response, as quoted by CNBC. Serhant, founder of the Serhant brokerage in New York City, trains agents to produce videos, boost their social media followers, and grow their personal brands. His brokerage netted more than $2 billion in sales in 2021.

Read more about the exchange at CNBC.com.

Source: 

“Reality TV Shows Based on Real Estate Are ‘Horrible’ for the Industry, Says Brokerage CEO,” CNBC (May 19, 2022)©National Association of REALTORS®Reprinted with permission

Fixed-Rate Mortgages Dip but ARMs Rise

The 30-year fixed-rate mortgage fell slightly this week, a temporary retreat after weeks of steady increases. The 30-year fixed-rate mortgage averaged 5.25%, Freddie Mac reports. Rates dropped following the 10-year Treasury yield trend this week. Last week’s average was 5.30%.

“Economic uncertainty is causing mortgage rate volatility,” says Sam Khater, Freddie Mac’s chief economist. “As a result, purchase demand is waning, and homebuilder sentiment has dropped to the lowest level in nearly two years. Builders are also dealing with rising costs, meaning this posture is likely to continue.”

NAR’s Yun: ‘The Market Is Quite Unusual’

Freddie Mac reports the following national averages with mortgage rates for the week ending May 19:

• 30-year fixed-rate mortgages: averaged 5.25%, with an average 0.9 point, dropping from last week’s 5.30% average. Last year at this time, 30-year rates averaged 3%.
• 15-year fixed-rate mortgages: averaged 4.43%, with an average 0.9 point, falling from last week’s 4.48% average. A year ago, 15-year rates averaged 2.29%.
• 5-year adjustable-rate mortgages: averaged 4.08%, with an average 0.2 point, rising from last week’s 3.98% average. A year ago, 5-year ARMs averaged 2.59%.

Freddie Mac reports commitment rates along with average points to better reflect the total upfront cost of obtaining the mortgage. Source: Freddie Mac and “Instant Reaction: Mortgage Rates, May 19, 2022,” National Association of REALTORS® Economists’ Outlook blog

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A Swimming Pool Isn’t Always a Goldmine

Pools can be a selling point for some homes—but sometimes they can be a detriment. Many American homeowners may find owning a pool a little too risky and expensive, according to a new survey from ValuePenguin, an insurance resource.

More than one in 10 Americans who have a pool on their property now say it’s not worth the trouble. Their biggest gripes are the expense and liability; homeowners say they spend nearly $1,500 a year to maintain their pool. Safety around the pool—such as from slipping and falling on the pool deck—is also a big concern. Thirty-two percent of pool owners say a safety-related incident has happened at their pool.

“It’s important to identify potential liabilities and make necessary improvements to your pool,” says Divya Sangameshwar, ValuePenguin’s Home Insurance research analyst. “Alarms, for instance, will notify homeowners if someone is trying to access their pool unauthorized, or if a child or pet fell into the pool, and allow them to render aid in a timely manner.”

Source: “As Summer Approaches, 17% of Americans Don’t Know How to Swim, While Almost 40% Wouldn’t Feel Comfortable Saving a Struggling Swimmer,” ValuePenguin (May 16, 2022)

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Home Builders Feel Less Confident

Builder confidence posted a significant drop in May as affordability challenges dimmed expectations. The National Association of Home Builders/Wells Fargo Housing Market Index, which measures builder sentiment, fell in May for the fifth consecutive month and dropped to its lowest reading since June 2020.

Rising mortgage rates and higher building costs are taking most of the blame. Building material costs are up 19% compared to a year ago, the National Association of Home Builders reports. Buyers are concerned by borrowing costs—the 30-year fixed-rate mortgage averaged 5.3% last week, up 2.94% from a year ago, according to Freddie Mac. The monthly mortgage payment has increased by about $520 since the first week of January, when rates averaged 3.2%, according to a recent blog post at the National Association of REALTORS®.

Entry-level and first-time buyers who do not have another home to leverage for a new home may be feeling the impact of rising costs the most, builders say.

Home builder sentiment dropped across the board in May on measures of current single-family home sales, sales expectations for the next six months, and prospective buyer traffic.

“The housing market is facing growing challenges,” says Robert Dietz, chief economist of the National Association of Home Builders. “Based on current affordability conditions, less than 50% of new- and existing-home sales are affordable for a typical family.” Source: “Builder Confidence Plunges on Rising Interest Rates, Growing Affordability Woes,” National Association of Home Builders’ Eye on Housing blog (May 17, 2022) and National Association of Home Builders

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Many home sellers are making a profit on their sale. But if that profit is high enough, they may be on the hook for capital gains taxes.

Capital gains taxes kick in when profits exceed $250,000 for single sellers or $500,000 for married couples who file together.

As home prices have soared, longtime homeowners may be more likely to see a tax bill.

“It’s become a huge part of the conversation now,” John Schultz, a certified public accountant and partner at Genske, Mulder & Co. in Ontario, Calif., told CNBC. Profits from the sale of a home are considered capital gains, but the rate at which they are taxed depends on the filer’s taxable income. The current rates are 0%, 15%, and 20%, CNBC reports.

Many rules affect the rate. For example, sellers must own and use the home as their primary residence for two of the five years preceding the sale, but those two years don’t have to be consecutive.

Some homeowners are converting a rental property to a primary residence for two years to get a partial exclusion. Certain home improvements can also affect the rate, Schultz told CNBC. For example, home additions, patios, swimming pools, or other improvements may qualify for exclusions if they can be shown to add value. Homeowners will need to keep detailed records.

CNBC recently highlighted other considerations for homeowners who are selling at a profit and are at risk of facing a steep tax bill. Source: “How to Sidestep a Tax Bomb When Selling Your Home,” CNBC (May 17, 2022)

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Top Commercial Real Estate Markets

Florida has five of the hottest commercial real estate metro markets in the first quarter: Orlando, Miami, Palm Beach Fort Lauderdale, and Fort Myers, according to new research from the National Association of REALTORS®.

NAR’s Commercial Real Estate Market Conditions Index is calculated by factoring in 25 variables that reflect a metro area’s economic conditions, demographics, and employment, such as job growth, wage increases, and population growth, as well as market conditions on vacancy rates, absorption, rent growth, cap rates, and more.

Overall, the South boasts the most booming commercial markets, with 11 of the top markets.

NAR’s index identified the following 16 markets as the hottest in commercial real estate in the first quarter. (Learn more about each of these markets at NAR’s Economists’ Outlook blog.)

• Orlando-Kissimmee-Sanford, Fla.
• Miami-Miami Beach-Kendall, Fla.
• West Palm Beach-Boca Raton-Delray Beach, Fla.
• Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla.
• Fort Myers, Fla.
• Savannah, Ga.
• Austin, Texas
• Boston-Cambridge-Nashua, Mass.
• Riverside-San Bernardino-Ontario (Inland Empire), Calif.
• Atlanta-Sandy Springs-Roswell, Ga.
• Asheville, N.C.
• Las Vegas-Henderson-Paradise, Nev.
• Bend-Redmond, Ore.
• Charleston-North Charleston, S.C.
• Nashville-Davidson-Murfreesboro-Franklin, Tenn.
• Provo-Orem, Utah

 “First Quarter 2022 Commercial Real Estate Metro Market Reports: Florida Has Top 5 Hottest Markets,” National Association of REALTORS® Economists’ Outlook blog (May 11, 2022)

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Rental Costs Squeeze College Grads

College grads are getting ready to start their careers, but they’re finding soaring rental costs could quickly zap away most of their newly earned paychecks.

In 2020, the average starting salary for college graduates was about $55,000, up more than 14% about a decade ago, according to the National Association of Colleges and Employers’ most recent complete data.

But rents are rising faster than paychecks. The median apartment rent has jumped more than 16% in the past year alone. Rents are up 28% since January 2017, according to Apartment List data.

“That’s pretty astronomical rent growth,’ Chris Salviati, a housing economist at Apartment List, told The Wall Street Journal. “When we’re talking about recent grads entering the market right now, in many cases these are folks who are going to be struggling more than those who graduated just a couple years ago.”

Financial advisers often suggest that consumers not spend more than 30% of their monthly income on rent. But in many places, college grads find that nearly impossible. For example, in the Nashville metro area, the median rental price for a one-bedroom apartment is $1,264, which on a $55,000 salary means rent takes up 28% of pretax earnings, The Wall Street Journal reports. Apartment List cites 20 large metros that are much more expensive than Nashville.

Many renters also are now facing increased competition for rental units as demand outstrips supply in many large markets. Read more: Renters Facing Bidding Wars

Many college grads may turn to living with roommates to try to lower costs. The housemate-finding platform Roomster has seen roommate queries jump about 40% over one year in cities like Nashville, Tenn.; Austin, Texas; and Atlanta, The Wall Street Journal reports.

But even with a roommate, renters also must show property owners that they can afford the rent. Property owners often want to see cash savings, lengthy and stable work histories, and previous work experience, which new college grads typically lack, The Wall Street Journal reports. Some renters may be asked to have a guarantor, a person who will agree to take responsibility for lease obligations in case the renter is unable to pay. Source: “The Biggest Problem for Recent College Grads: A Surge in Rent Prices,” The Wall Street Journal (May 13, 2022) [Log-in required.]

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