Fired–up housing market in Florida lifts firms such as Alliance Title; real–estate industry well positioned for growth as the spring home–buying season opens

Florida’s housing market wrapped up 2015 with more closed sales and higher median prices compared to the year before. Statewide closed sales of single–family homes totaled 274,769 in 2015, up 12.4 percent versus the 2014 figure, according to data from “Florida Realtors.”

So how will the Sunshine State housing market perform in 2016? That was the question on the minds of a standing–room–only crowd of some 400 Realtors at the recent 2016 Florida Real Estate Trends event in Orlando, which was part of the Florida Realtors Mid–Winter Business Meetings.

The outlook given at that event by the chief economist of Realtor.com was upbeat. The Florida market is positioned to become one of the “hottest spots in the country with rising demand, positive gains in recovery, really good fundamentals, and positive momentum.”

The Realtor.com forecast says existing home prices will appreciate 3 percent this year; existing home sales will also grow 3 percent to 5.4 million; new home sales will see a 16 percent increase to 580,000; and housing starts will grow 12 percent. Realtors should get ready for an “onslaught” of would–be buyers in the spring through summer months. Local professionals who work in or are aligned with the residential real–estate industry say they are feeling good about the prospects for growth at their businesses in the months ahead.

“We are looking forward to a good year. We’re optimistic. The agents are busy. Rates are attractive and home values are stable,” said businessman Mike Spragins, who runs the longtime firm Alliance Title Insurance Agency Inc. with partners Liz Cassella and brother Steve Spragins.

“The business climate right now in Brevard is very good,” added Cassella. “There is job growth and people are buying homes, which is great for businesses like ours.” And title insurance protects this single largest financial investment most people make. One out of every three residential real–estate transactions has an issue with the title, which is resolved by title professionals before the buyer closes, according to the Washington, D.C.–based American Land Title Association, a national trade organization.

The ALTA recently launched a new “Homebuyer Outreach Program” designed to increase consumer understanding of the benefits of title insurance. The program provides ALTA members with resources to educate homebuyers about the benefits of purchasing an owner’s policy.

An owner’s policy, which can be obtained in addition to a loan policy, remains in effect for as long as the policyholder, or their heirs, owns the property that is insured. Also, the owner’s policy covers legal expenses involved in defending the title on behalf of the homeowner.

Once a buyer and a seller agree on a home– or land– purchase transaction, a title professional begins the extensive title–search process to make sure there are no tax liens or anything else that could affect the new buyers’ rights.

Cassella said she is not only busy on the residential side of the business but also handling land transactions for customers. “I’ve done more vacant land deals so far this year than probably all of last year. It’s amazing.”

Title firms are about six months into processing transactions under the Dodd–Frank Wall Street Reform and Consumer Protection Act. The new rules integrate forms required under the Truth–in–Lending Act and the Real Estate Settlement and Procedures Act, also known as “TRID” or “Know Before You Owe.”

“TRID went into effect in late October but we really didn’t feel the impact of it until mid–November,” said Cassella. “Our industry has TRID and the medical industry has HIPAA (Health Insurance Portability and Accountability Act). It’s all about protecting the confidential information of consumers. For the title industry, the process has become more tedious and it takes more time to work on a customer file.”

“The whole title industry has changed since October,” added Steve Spragins. One of the most significant changes created by TRID was the consolidation of multiple estimates and disclosures into just two documents: the Loan Estimate and the Closing Disclosure Form.

The effects of the new rules and regulations are being felt across the real–estate industry, by mortgage lenders, Realtors, and title agencies. Banks, for example, are “struggling” to comply with TRID, according to an American Bankers Association Survey. The survey was conducted in February of this year. More than 75 percent of survey participants said loan closings are being delayed as a result of TRID. On average, those bankers reported a delay of eight days with responses ranging from one to 20 days.

“TRID has touched every aspect of what we do as a title company,” said Mike Spragins. “We had to change software and make other adjustments in our operations, but it’s a fluid situation.”

Alliance Title, with offices in Melbourne and Suntree– Viera, is gearing up for the spring home–buying season. With rates staying low for now and continued solid job growth, the spring–buying season is shaping up to be a good one.

Overall purchase demand may increase home sales in 2016 to the best year since 2007, says CoreLogic’s “Economic Outlook” for 2016. Appreciation in national home– price indexes will likely continue at a faster pace than inflation, but grow more moderately than last year.

Interest rates will gradually move higher this year. Fixed–rate mortgages will rise, perhaps up one–half of a percentage point between now and the end of 2016, reaching 4.5 percent for 30–year loans, according to CoreLogic. Even after this rise, mortgage rates will remain “historically low,” more than a full percentage point below the average rate during the Great Recession.

For 2016 and in the years to come, Realtors should look to baby–boomers and millennials for clientele, says the Realtor.com report. It points out that boomers are still a huge part of the housing market as they look to retire, relocate, or downsize, but an even bigger wave of millennials eager to become homeowners is the market’s “future driving force.”

Presently, many millennials are renters, but a new survey by Zillow says Americans can break even on a home purchase in less than two years in 70 percent of U.S. metropolitan markets, thanks to low interest rates, healthy home–value forecasts, and the relatively fast growth pace of rents in recent years.

Zillow’s “Breakeven Horizon” analysis says on average in the U.S. “you don’t need to plan on living in a home for even two years to make purchasing the home more financially advantageous that renting it over the same time period.” Among large housing markets, the Breakeven Horizon is the longest in Washington, D.C. — 4.5 years — and the shortest in Dallas — 1.3 years.

“Real–estate prices rose nicely last year in Florida and that momentum has carried over into 2016, as the housing market is faring well,” said Steve Spragins. “People are more confident in the state of the economy, I think. Realtors are telling us they are seeing multiple offers on homes. And most homes do not sit on the market very long these days.”

The statewide median sales price for single–family existing homes in January was $199,000, up 13.7 percent from the previous year, according to data from Florida Realtors. The statewide median price for townhouse– condominium properties in January was $152,000, up 10.9 percent over the year–ago figure.

The current market offers a great opportunity for sellers, who are getting nearly 94 percent (for existing home sales) of their asking price at the closing table, the report said.

January marked the 50th month in a row that statewide median sales prices for both single–family homes and townhouse–condominium properties rose year–over–year. The median is the midpoint; half the homes sold for more, half for less. “Prices are steadily rising. Home values have bounced back, like they usually do in Florida,” said Cassella.