Category Archives: News

From Sun-Sentinel:

Florida got through 2006 and most of 2007 without a hurricane, but a Category 5 insurance storm continues churning in Tallahassee.

Just last week, Allstate Insurance Co. became the latest company compelled to turn over its books to state regulators investigating a possible scheme by Florida property insurance companies to keep prices high. With Gov. Charlie Crist by his side, Insurance Commissioner Kevin McCarty vowed vigilance in making sure homeowners get the savings they’re supposed to on their insurance bills.

As both sides continue battling, will the state’s fragile property insurance market right itself any time soon? Will rates continue to climb? McCarty sat for an interview Wednesday while in Fort Lauderdale for a meeting of the International Association of Insurance Supervisors. Portions of McCarty’s answers are paraphrased, but the quoted remarks are his exact words.

Q: What is the state of Florida’s insurance market? Where do you see it going in the next year?

A: Florida’s insurance market is at a crossroad. State-backed Citizens Property Insurance Corp. didn’t see the flood of new policies many experts predicted, new insurance companies are covering homes in the state, and insurance prices are beginning to stabilize. Homeowners have reason to be cautiously optimistic.

But this all follows significant legislative action and, more importantly, nearly two consecutive hurricane seasons without a major storm hitting Florida. And insurance companies are still retreating from coastal markets.

That’s why the rest of the country is paying close attention to Florida’s “great experiment” — the state’s decision to expand the Florida Hurricane Catastrophe Fund to offer cheaper backup catastrophe coverage to companies, with the demand that insurers pass those savings along to customers.

Without a change, the state could be in peril. For the first time in years, more people are leaving Florida than moving here, “which is an indication that families can’t afford to move to Florida or stay in Florida.

“Clearly, the construction business and the tourism business and the growth are the backbone of Florida’s economy, and we just need to do what we can to stabilize it.”

Q: The state predicted some pretty sizable savings for homeowners with January’s insurance legislation. For some, those savings didn’t materialize. What happened and what is the state doing about it?

A: Many companies — mostly insurers based in Florida that only insure homes in Florida — did meet the state’s expected savings. Citizens, the state’s biggest home insurer, had its rates frozen until 2009 and still passed along refunds. But some of the big national companies and their subsidiaries “kind of stuck their finger in the eye of the Legislature and the governor, saying, ‘We don’t really care about this program.’ They don’t want to see it succeed.”

Some companies are instead buying more private reinsurance coverage, “far in excess of what’s required by the state or from rating organizations.” Companies trying to game the system will be held accountable.

“You are required by law to pass on those savings, and you will be held in violation of Florida law, and we’ll take whatever action is necessary to ensure that those cost savings are passed on.”

Q: Is that why the state is issuing subpoenas to insurance companies?

A: There are two major reasons for the subpoenas: Take a closer look at insurance rates, and examine several “major coincidences” in rate requests by insurance companies.

Shortly after the Legislature passed its insurance bill in January, “we have the rating organizations and the reinsurers and the brokers using new modeling techniques … where they come up with much higher losses.

“We have rating agencies requiring [insurance companies] to have enormous amounts of new capital that would be crippling to any other financial marketplace.”

The insurance department served subpoenas to make sure companies are following the insurance code and anti-trust laws.

“Because if we succeed in Florida at providing a state partnership … to keep rates affordable, that frustrates the objectives of some people in the industry. They’re deeply concerned about that.”

Q: Some companies have said the department is using subpoenas to bully insurers into keeping rates low.

A: There’s no evidence to support that. For instance, State Farm settled with insurance regulators over its proposed rate reduction, but the state’s largest private insurer still must turn over all its books and records as part of the investigation into alleged collusion between the companies. If the subpoenas were simply a device to force down rates, “then our investigation with State Farm would be over. It’s simply not the case.”

“I’m not accusing any of these companies of doing anything wrong, but I’m going to tell you, there’s a constellation of issues that are out there, it makes a prudent person very suspicious why these rates haven’t come down.

“Like I said, we’ve seen a pattern of practice with regard to certain companies that is very disturbing, where they’re not passing those down, where they’re using some of the same techniques in their rate filings and using some of the same strategies to keep those rates up. Is that strategy by design or is that just by happenstance? And that’s what we’re going to get to the bottom of.”

From FAR:

For decades, Florida buyers could typically be sorted into well-defined categories: families, retirees from up North and affluent second-home buyers from around the world, to name a few. While those buying patterns are still in place, the Florida market has changed significantly in recent years, creating new opportunities for real estate professionals seeking to enhance an overall marketing program.

Here is a closer look at three fast-evolving demographic groups that are already reshaping Florida’s buyer landscape.

Singles

Michael Pappas, president of The Keyes Co./Realtors in Miami, remembers when it was difficult for an unmarried woman to get a mortgage loan.  Nowadays, things are much better, and there’s no question that single women and men are an increasingly important part of Florida’s market,” he says.

According to the 2006 National Association of Realtors (NAR) Profile of Home Buyers and Sellers, 22 percent of homes sold in the United States during 2006 were to single females and 9 percent were to single males. In the same study, NAR reported that the average female first-time homebuyer was 34 with an annual household income of $43,300.

“Clearly, single women help drive real estate sales in this country,” says Charlie Young, senior vice president for marketing of Coldwell Banker Real Estate Corp. in Parsippany, N.J. “This group has demonstrated its clout in the real estate market and has the economic capability to gain the American dream of homeownership.”

In a recent study, “Buying For Themselves: An Analysis of Unmarried Female Home Buyers,” the Joint Center for Housing Studies at Harvard University found that about 45 percent of single women who bought homes (in all age groups from divorcees to single moms to seniors) live alone and 30 percent are single parents without another adult in the home. In contrast, 55 percent of single male buyers live alone and 20 percent with an unrelated adult. In the study, only 15 percent of men who own homes are single parents.

Why are there so many single buyers especially women? Lewis Goodkin, president of Goodkin Consulting in Miami, says that nationwide, higher salaries, delayed marriages, relationship breakups and longer lifespans are all contributing to the growth in single female buyers.

“A lot of singles, both women and men, are making good money and find that real estate is very appealing to them because of the tax savings,” he says. “Single buyers are an important factor in Florida’s second-home and investment markets, as well as in primary housing.”

And it’s important to note that single men are also buying homes in Florida, says Pam Picard, career counselor for Watson Realty in Orlando. “We’re seeing a growing trend where the single head of household is a male,” she says. “Finally, these single guys are realizing the advantages of homeownership. Rather than waiting until marriage to buy that first home, they’re buying now.”

As for selecting a home to meet their lifestyle, the singles market is highly diverse. A newly divorced mother with two young children might want an inexpensive single-family house, while a 25-year-old single man might be content with a one-bedroom condo.

In general, singles of both sexes usually prefer a smaller home that requires less maintenance, says Pappas. That could be a condominium in an urban setting, a suburban town home or a luxurious second home on the beach. “There’s no question that convenience and security are big factors,” he adds, “making a low-maintenance lifestyle in a condominium residence very appealing to many buyers.”

Retirees

For decades, many retirement-age buyers came to Florida seeking a quiet lifestyle: walking on the beach, a round of golf and shopping at the mall. Today, buyers are looking for a more active lifestyle – especially the baby boomers in their late 50s and early 60s.

“We’re seeing a larger percentage of baby boomer second-home buyers versus the standard retiree,” says Phil Wood, president and CEO of John R. Wood, Realtors in Naples. “These new buyers often have a fair amount of wealth from their own careers or significant inheritances. They’re buying upscale homes for eventual retirement, but they’ve definitely not retired yet.”

Instead, many retirees age 55 and up are launching new careers as consultants, volunteering in the community, traveling frequently and cultivating new recreational activities, from rock climbing to sky diving. Ideally, their Florida home would have the latest technology, space for a personal fitness center and lots of choices in daily activities.

“Buyers want fitness centers and seminars that provide intellectual stimulation,” says Arlene Stiepleman, a sales associate with The Keys Co./Realtors in Coral Springs. “And it’s a plus if shopping centers are close to home, so there’s less need for a car,” she says.

While some older buyers will choose communities where most residents are 55 or over, others want to live in neighborhoods filled with families and young children. “Many buyers with a dog or cat will rule out communities that have restrictions on pets,” she says.

And as with all age segments, price and value are key components of the buying decision. “Florida will continue to be the No. 1 state in the second-home/preretirement market,” says Goodkin. “But with higher land prices [and property insurance costs], especially in the coastal areas, the real depth of this market will be in Central and Northern Florida.”

Goodkin points out that baby boom buyers fall into three distinct categories, based on their income and savings patterns. About 20 percent are affluent buyers who can afford luxury homes in prime locations. Another 20 percent are financially comfortable, but aren’t looking to upgrade their current lifestyle. Some buyers in this category will actually be “down-buying” – purchasing a smaller home than they can afford, with the expectation that they will be living longer and need to stretch their savings.

The largest group of boomers, though, will face financial challenges in their retirement years, Goodkin says. In general, they have limited savings and their current home is usually their largest asset. “Cost factors are the most important consideration to this segment,” he says. “Some will be moving from high-cost to lower-cost areas in Florida; others will be downsizing from their current home. For the most part, these boomers will be looking to get the most bang for the buck.”

Young Adults

Tired of living with parents or sharing an apartment with roommates, more Floridians in their late 20s and early 30s are buying their first homes. These Generation Y, or Millennial, adults make up a fast-growing segment of the Florida market.

“We’re seeing a new wave of young adult buyers,” says Pappas. “In many ways, they’re better equipped than any other generation. They use technology to research homes and neighborhoods and understand the value of ownership.”

Across the country, recent college graduates and young professionals are buying houses and condominiums. Data from the 2006 U.S. Census Bureau indicate that 42 percent of people ages 25-29 are already homeowners. And buyers in their 20s and 30s account for more than 50 percent of new-home purchases, according to the American Housing Survey conducted by the U.S. Commerce Department.

However, Goodkin cautions that many of those buyers were able to take advantage of flexible mortgage loans as well as parental financial support when making their purchases – two factors that have changed in the past year.

“Many graduates were able to take advantage of what I call GIL-financing from generous in-laws,” says Goodkin. “Many parents took out loans on their own homes to help their kids get into a condo. That source of funding will be more limited because of today’s more restrictive credit climate.”

As for lifestyle, the Gen Y buyers often want to be in an urban setting that offers camaraderie and opportunities for socializing with other young adults. “They don’t mind the hubbub of a downtown, beachfront or college community,” Goodkin says.

Pam Picard, a career counselor for Watson Realty in Orlando, says Gen Y buyers are usually interested in smaller homes or condos, compared with their baby boomer parents. “They tend not to be homebodies,” she says. “They would rather be sitting on a sofa in the local coffee bar working on their laptop, where it’s easy for friends to stop by. And, generally, they’re more interested in condos and town homes, because they don’t want the maintenance responsibilities, like mowing the lawn, that come with a single-family home.”

From Florida Association of Realtors:

Realogy Corp. announced today that it has entered into a long-term agreement to license the Better Homes and Gardens® Real Estate brand from Meredith Corporation, a leading media and marketing company. Realogy intends to build a new international residential real estate franchise company using the Better Homes and Gardens Real Estate brand name. Currently, Realogy operates CENTURY 21, Coldwell Banker, Coldwell Banker Commercial, The Corcoran Group, ERA, Sotheby’s International Realty, NRT Incorporated, Cartus and Title Resource Group.

“We are very pleased to add Better Homes and Gardens Real Estate to our family of real estate companies,” says Richard A. Smith, Realogy’s vice chairman and president. “Looking more broadly, this agreement demonstrates our confidence in the long-term strength of the housing market, particularly in the U.S., and the favorable demographic factors that will continue to drive homeownership and household growth during the years and decades to come.”

The licensing agreement between Realogy and Meredith is for a 50-year term, with a renewal option for another 50 years. Financial terms of the transaction were not disclosed, and the transaction is not expected to have an immediate material impact on Realogy’s financial results. Meredith will receive ongoing license fees based upon the royalties that Realogy earns from franchising the Better Homes and Gardens Real Estate brand. Meredith, owner of an 85-million name consumer database, will offer Realogy selected database services.

Realogy plans a July 1, 2008, launch of the Better Homes and Gardens Real Estate franchise system and will engage in various pre-launch activities in the interim.

“Better Homes and Gardens Real Estate is a highly strategic addition to Realogy’s premier portfolio of real estate franchise holdings, a brand that comes with well-established equity and one that we expect will compete well in the marketplace,” says Smith.

The Better Homes and Gardens name launched in 1924 when Meredith first published the magazine under that masthead. Today, the magazine has a circulation of 7.6 million and a readership of nearly 40 million. In 1978, Meredith launched the former Better Homes and Gardens Real Estate service, which it owned and operated for 20 years. Meredith sold its real estate business in 1998 while retaining ownership of the Better Homes and Gardens Real Estate brand name.