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Is Climate Change Affecting The Value Of Your Florida Home?

Terry Story, Climate Change

With Terry Story, a 30-year veteran with Keller Williams located in Boca Raton, FL

Terry Story joined us once more for our weekly round-up of everything related to the real estate market. The section began with a talk about rising water levels and how these have been impacting on real estate prices in some parts of the country. Terry noted that the biggest falls have been Ocean City, New Jersey, followed by Miami Beach. She commented that it’s not a massive problem, but nonetheless, one that has impacted on the housing market.

Rules and Regulations

A listener sent in an interesting question regarding dogs, having seemingly agreed to all regulations regarding his pet dog, but then later having been told that it wasn’t allowed due to its size. Terry observed that this is a frequent problem, with new legislation and documents being drawn up all of the time in the housing industry. Both Steve and Terry agreed that this is where a good realtor can come in handy, and also emphasized that buyers should try to get hold of all documents related to a property and make this a priority.

Property Taxes

Taxes was the next port of call…never exactly the most popular subject! Steve and Terry discussed some of the regional variations that exist in this area, with each state setting the tax rate differently. Florida is actually pretty much in the middle of the road, being ranked 26th among American states, but then property prices are also significant here. As property taxes are charged as a percentage, it means that buyers in the markets with the highest prices really get kicked in the teeth! So there is plenty for buyers to be aware of here.

Short Sales And Foreclosures

Finally, Terry also touched upon another dreaded housing topic, namely foreclosures, explaining the process involved, and also the difference between a short sale and a foreclosure. The former relates to another housing concept, negative equity, whereby there is a gulf between the value of a house and the amount left owing on the mortgage. When this is the case, and the homeowner is forced to sell for some reason, you get what is referred to as a short sale.

This situation is desperate enough in itself, but once courts and banks become involved then the race is on to sell a property before it’s taken away by the bank. This is obviously a hugely stressful situation and one that all homeowners should be looking to avoid at all costs. With this in mind, paying heed to the advice and market insight offered by Terry is definitely advisable.

So it was another enlightening segment with Terry, and we’ll look forward to catching up with her again next week.

Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

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Steve Pomeranz: It’s time for Real Estate Roundup. This is the time every single week we get together with noted real estate agent Terry Story. Terry is a 30-year veteran with the Keller Williams located in Boca Raton, Florida. Welcome back to the show, Terry.

Terry Story: Thanks for having me, Steve.

Steve Pomeranz: I was wondering whether there’s been any information about home prices and rising water levels?

Terry Story: Yeah, a lot of people ask me about the rising water level. And to me, I don’t think much of it because I don’t see it around me, but it’s always what’s around you. So, for example, what they’re claiming is that there’s been a $15.8 billion in lost home values.

Steve Pomeranz: Like reduction in prices because-

Terry Story: Correct, from 2005 to 2017 because of this. So, for example, the top cities with the biggest value decline—Ocean City, New Jersey, followed by Miami Beach, followed by Hollywood, Florida, and then Charleston, South Carolina, and then Saint Petersburg. So there is a real problem, it does exist, but it’s not-

Steve Pomeranz: It’s not actually out there in the consciousness yet, it’s really hard to see. You need a study to look at the individual statistics to tell what’s going on.

Terry Story: Correct, correct.

Steve Pomeranz: Florida has experienced the greatest relative loss of home values, 5.4 billion, New Jersey 4.5 billion, and New York, 1.3 billion. So maybe it’s a problem that’s beginning to take hold and maybe you’ll start seeing it more and more.

Terry Story: Right, right.

Steve Pomeranz: Interesting, all right, I want to ask you a question. This has to do with something that you’re very familiar with because as a realtor, you’re dealing with closings all the time.

Terry Story: Right.

Steve Pomeranz: There was a question that was posed that someone moved into a community and was provided with the set of the recorded governing documents of that community. And there was no size limit on pet dogs but this person had a large dog. And now he’s received a violation notice indicating that these dogs are not allowed. Apparently, he didn’t see the most recent documents. And he wants to know does he have to follow the current rule because he was given old documents.

Terry Story: [LAUGH] It’s kind a like I didn’t know, you couldn’t run the red light, officer. [LAUGH]

Steve Pomeranz: Yeah. [LAUGH]

Terry Story: I didn’t read that page in my test.

Steve Pomeranz: I didn’t know I could make a left turn, yeah.

Terry Story: From the right lane.

Steve Pomeranz: [LAUGH]

Terry Story: Yeah, so here’s the deal.

Steve Pomeranz: Yeah.

Terry Story: This is a very common situation. You go to sell a condo, townhome, what have you. The seller provides their agent the condo docs or governing documents. They give them to the other realtor. The realtor gives them to the buyer, and they are old. They haven’t seen an amended set in years.

Steve Pomeranz: They’re like on parchment paper. [LAUGH]

Terry Story: They’re in parchment paper. Folks, if you receive something like this, please, know that there’s probably an updated set. So as a seller, it’s highly advisable that you get an updated fresh set. Why is it so important for you as a seller? Because any time prior to closing, if there’s a document that’s missing or incorrect, it could be grounds for the buyer walking from the closing. So you don’t want that to happen. And then b, as a buyer, call the association. Make sure you got the most updated set of documents.

Steve Pomeranz: Yeah.

Terry Story: Especially when it comes to pets.

Steve Pomeranz: Especially.

Terry Story: Ugh, pets and rent rules, those are the two sticking points.

Steve Pomeranz: And pickup trucks.

Terry Story: And pickup trucks, oh, my gosh, the pickup trucks.

Steve Pomeranz: Yeah, yeah.

Terry Story: So-

Steve Pomeranz: Okay, I mean, it’s common sense, but it’s something that could be easily overlooked. There’s so many things to pay attention to.

Terry Story: That’s right.

Steve Pomeranz: During our closing, and that’s why a realtor will bring that to your attention. I think that’s a good point right there.

Terry Story: Yes.

Steve Pomeranz: Okay, so we’re looking at an article that says, are property taxes too high? And the answer is yes, but they could be worse. If you think your property taxes are too high, a recent study by wallethub.com has data to back you up. But it also shows that taxpayers and other states would gladly trade tax bills with you and we have got some-

Terry Story: Yes.

Steve Pomeranz: Stats here to help support this. Florida is 26th out of 50 states and the District of Columbia when it comes to what’s called the effective real property tax rate. So that’s kind of the percentage that you pay.

Terry Story: Right.

Steve Pomeranz: Per dollar value.

Terry Story: We’re in the middle.

Steve Pomeranz: We’re in the middle, okay. We kind of know that a lot of states have much higher tax rates. For example, you would think that Hawaii would have a higher tax rate and, of course, New Jersey. What else does this say?

Terry Story: Well, what’s interesting about those states is they have actually a lower tax rate, but the value of their properties are so much higher. So when you multiply it out,

Steve Pomeranz: Yeah.

Terry Story: That’s why they’re paying exorbitantly more in their taxes.

Steve Pomeranz: So the effective tax rate for Florida could be 1%.

Terry Story: Yep.

Steve Pomeranz: But the average house could be 300,000.

Terry Story: Correct.

Steve Pomeranz: Right?

Terry Story: Where in Hawaii it…

Steve Pomeranz: Where in Hawaii it’s a half of 1%, but 800,000 is the price of the house.

Terry Story: It’s the starter home. [LAUGH] Right.

Steve Pomeranz: Yeah, so they actually have some stats here. So, with the Florida tax rate using a house worth 193,500, that’s just a kind of a median value in 2017. The Florida tax rate was 0.98%, which results in a bill of $1,897. Hawaii, a property owner in Hawaii would only get a bill for $525. And someone in New Jersey would pay nine times more, $4,725.

Terry Story: Yeah, it’s crazy.

Steve Pomeranz: Now, but the median home price in Hawaii is $563,000. So you’re going to be paying more than three times the actual tax. So that’s really the issue.

Terry Story: Yep, yep.

Steve Pomeranz: So prices are not as high as in other areas of the country. Tax rates relative to the price of the home may be higher, the percentage tax, interesting idea there.

Terry Story: Yeah, see, I didn’t know we were ranked around 26 out of the 50 states. So that’s kind of exciting, we’re in the middle.

Steve Pomeranz: Yeah, in the middle.

Terry Story: So we’re expensive, but we’re not-

Steve Pomeranz: Right, average.

Terry Story: We’re just average.

Steve Pomeranz: Average, average, you don’t want to be average.

Terry Story: Florida, average, Florida.

Steve Pomeranz: [LAUGH] All right, I want to ask you a question as to whether-

Terry Story: Kinda like my SAT scores, oh, sorry.

Steve Pomeranz: [LAUGH] Stop for a second, please? I was wondering with the economy so good, are you seeing any rise in foreclosures?

Terry Story: Steve, I saw one, actually, I say saw one, I’m actually almost involved in one. I haven’t seen a short sale in a long, long time.

Steve Pomeranz: Yeah.

Terry Story: And one of my listings-

Steve Pomeranz: Well, define a short sale.

Terry Story: So a short sale is when you’re upside down. In other words, you owe more than the house is worth.

Steve Pomeranz: Okay, so you’re going to sell it, and you’re not going to be able to pay off the mortgage.

Terry Story: Correct.

Steve Pomeranz: And that money is going to have to come from somewhere.

Terry Story: From somewhere, so if you have money, it’s going to come out of your pocket.

Steve Pomeranz: Yeah.

Terry Story: If you don’t have money, then you’re going to go to the bank and say, I beg for forgiveness. Please write this off, which I don’t know that they’re going to do anymore.

Steve Pomeranz: Yeah.

Terry Story: They did in the heyday. So the bottom line is kind of-

Steve Pomeranz: But you start to pay taxes on that?

Terry Story: Yeah, yes.

Steve Pomeranz: If the bank does that, you’re going to get a surprise.

Terry Story: You’re going to pay, correct.

Steve Pomeranz: That’s right.

Terry Story: And so it’s kind of like a pre-foreclosure, it’s what you see first before it goes to foreclosure. Foreclosures are happening a lot quicker when they drop the gauntlet.

Steve Pomeranz: At the courthouse, so to speak.

Terry Story: Right, exactly, so I really haven’t seen much, this is my first.

Steve Pomeranz: So this may go, so it’s a race between you and the bank now. You’re trying to sell the property first before the bank.

Terry Story: Correct, before the bank says-

Steve Pomeranz: Takes it over.

Terry Story: Takes it over, exactly, yep.

Steve Pomeranz: Okay, all right, interesting stuff. My guest, as always, is Terry Story, a 30-year-veteran with Keller Williams located in Boca Raton, Florida, and can be found at terrystory.com. Thanks, Terry.

Terry Story: Thanks for having me, Steve.