Florida-only insurers weather Hurricane Idalia amid market pullback

 Florida-only insurers such as Citizens Property Insurance anticipate fewer losses from Hurricane Idalia than from previous storms in the state, even as industry experts expect further insurer pullback from the market.

Idalia plowed in to Florida's Gulf Coast on Wednesday, leaving three confirmed deaths and forcing dozens of deep-water boat rescues, but wreaking less destruction overall than feared.

While Citizens' preliminary loss projections are not yet available, the insurer projects it will receive fewer than 10,000 claims stemming from Idalia-related damage, a spokesman told Reuters. That amount is far fewer than the 68,000 claims that Citizens received after Hurricane Ian in September 2022.

"Idalia went through a very rural region of the state, missing metropolitan areas in Tampa Bay and Jacksonville," the spokesman said.

Citizens and other Florida-only insurers were expected to face claims for billions of dollars from the storm, according to a report by Moody's on Wednesday, adding to a challenging year for the industry that could result in higher premiums for customers.

In Florida, UBS estimated average insured losses of $9.36 billion with a 50% chance of losses of over $4.05 billion and a 10% likelihood of losses of $25.6 billion, based on Aug. 28 data. The wide range reflected potential changes in the storm's intensity and path.

Losses will be pushed higher by construction costs, which increased significantly during the pandemic, and a rise in demand for construction labor and materials following the hurricane, Moody's noted.

The top 10 Florida-only insurers, which provide cover to 44% of the state's homes, are more vulnerable than others given their geographic concentration, Moody's said.

Despite this, the Insurance Information Institute, an industry research group, told Reuters that insurers' "adequate levels of reinsurance" makes insurers well-capitalized to pay claims from Idalia.

"This certainly will not help with ongoing challenges to Florida's insurance market, but it could have been a lot worse," said Steve Bowen, chief science officer at reinsurer broker Gallagher Re.

Citizens, Florida's nonprofit, state-backed insurance provider that is seen as an "insurer of last resort," has been gaining market share since 2022 as primary insurers reduce their exposure to the Florida market.

"As insured values have grown, more of Florida's risk exposure has transitioned from larger nationwide insurance carriers to Citizens and smaller Florida domestic insurers, placing more strain on the state's insurance market structure," Moody's said in the note.

Regardless, some insurance firms including Farmers Insurance, Bankers Insurance and Lexington Insurance, a unit of AIG, have pulled out of Florida because of the risk of heavy losses, according to a July report in USA Today.

Farmers' exit would apply "only to policies issued through our exclusive agency distribution channel" and 70% of its Florida policies in force would not be impacted, a spokesperson told Reuters via email.

Bankers and Lexington did not immediately return requests for comment.

The top 10 U.S. homeowners insurers such as State Farm and Allstate Corp average only about 4.1% of their premiums in Florida, Moody's said.

The exit of insurers from Florida comes amid a broader pullback from the market, including from reinsurers, according to an Aug. 24 Fitch report.

"Natural catastrophe business has become largely loss-making in recent years as prices have failed to keep pace with increasingly frequent, severe and volatile weather-related losses due to climate change," Fitch said.

Insurers were hit by losses of up to $53 billion from Hurricane Ian in Florida and South Carolina last year, and industry experts expected insurers to go into bankruptcy and insurance to become less accessible in regions like Florida.

Six insurers became insolvent in 2022, and more than a dozen others either left the state or placed moratoriums on writing new business, Reuters reported in July, citing the Insurance Information Institute.

https://www.yahoo.com/news/florida-only-insurers-weather-hurricane-233436872.html

Tiny homes from $130K sparks critics: ‘This is the new affordable housing market’

 A home-construction company has raised some eyebrows online for one of its new developments.

Lennar, based in Fontainebleau, Florida, is one of the nation’s largest home developers. Most recently, it constructed a tiny house community comprised of 350-square-foot homes in San Antonio, Texas.

Known as Elm Trails, each tiny home boasts one bedroom and one bathroom with a starting price of $130,000.

“This two-story home has a smart layout that offers everything you need to live in comfort,” Lennar states on its website.

“The front door leads into an open concept kitchen, which flows effortlessly into the living area. In the back of the home is an owner’s suite which features two closets and a private bathroom. Upstairs is an open space that can be used for storage.”

Lennar’s tiny home community in San Antonio, Texas.

Lennar Corporation

However, online critics questioned whether it was enough — and enough for the price.

On X, formerly known as Twitter, the account Wall Street Silver posted a video with the caption, “This is the new affordable housing market…These are $100,000 tiny homes, with no garages, being built in a new neighbourhood in San Antonio, Texas.”

In response, many took note of the new standards for Americans looking for alternatives to affordable housing with very little space.

“They want everybody in a box. Least amount of land possible,” one person commented.

“More like $100,000 jail cell,” another person wrote.

“The whole point of tiny homes is they are only supposed to be 30-50k max,” someone else explained.

There are options for other home layouts including a one bedroom, two-bathroom unit that occupies 660 square feet and is priced at $163,000.

The Post has reached out to Lennar for comment.

Lennar, a public company, operates across 25 states in the country including North Carolina, Texas, New Jersey and Illinois.

With assets equaled to $33.2 billion, Lennar has been in operation since 1954.

The company was even once linked to the Lehman Brothers — the now-defunct investment bank that went under during the 2008 financial crisis.

In July 1993, Lennar formed a joint venture with Lehman Brothers and Westinghouse Electric Corporation to acquire a $2 billion loan portfolio for $1.1 billion.

https://nypost.com/2023/08/30/tiny-home-development-in-texas-sparks-criticism-online/

Americans Abandon Home Insurance: An Ominous Sign In Era Of 'Bidenomics'

 In yet another ominous sign, consumers are being pushed to the financial brink, leading some to abandon homeowner insurance due to soaring premiums. Without this coverage, homeowners are left vulnerable to fires, burst pipes, theft, vandalism, and windstorms.

"Some skipping insurance say they are doing so because they can no longer afford the rising premiums," said The Wall Street Journal. New Bankrate data shows insurance on a $250,000 home jumped to $1,428 annually, up 20% from 2022. That's about a $119 monthly payment. 

Amy Bach, executive director at United Policyholders, a national nonprofit insurance consumer-advocacy group, said an increasing number of homeowners in the past several years who have no mortgage or inherited a home are abandoning insurance because they can't afford it. 

"It is a risky proposition to go without home insurance, and you need to fully understand the financial consequences if you lose your home," said Noah Damsky, a financial adviser in Los Angeles.

WSJ spoke with Larry Farinholt, who owns a 1,100-square-foot home in the Los Angeles metro area and last had home insurance a quarter century ago. He estimates a $50,000 savings, though if anything happened, such as a fire, he would be devastated:

"It would probably be financially devastating if I lost my house." 

The good news, unlike a majority of Americans who live paycheck to paycheck, Farinholt said if disaster struck, he would be able to afford a condo due to his savings.

According to a 2023 survey by the Insurance Information Institute, an industry trade group, and the reinsurer Munich Re, about 12% of US homeowners don't have homeowners insurance -- and half of them have household incomes under $40,000 per year. 

Some borrowers cannot service their mortgage debts, blaming late or missed payments on rising insurance premiums, Rick Sharga, founder and CEO of CJ Patrick, a real-estate consulting firm, said. 

Meanwhile, insurance companies have said premiums are rising because of inflation: 

"The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums," said a recent statement from Allstate explaining its decision to stop writing new policies. 

Matthew Carletti, an insurance industry analyst for JMP Securities, said the rebuilding and replacement home costs have surged between 2019 and 2022. 

Similar surges have been seen in auto insurance, citing the same reasons: rising part and labor costs. 

Homes and automobiles are becoming even more unaffordable for the working poor, forcing some into a dystopic lifestyle where they own nothing. 

And according to WEF, they'll be happy... 

https://www.zerohedge.com/personal-finance/americans-abandon-home-insurance-ominous-sign-era-bidenomics

If Supreme Court nixes NYC rent control, tenants AND landlords would be better off

In a case that promises to utterly upend New York politics — and boost the city’s housing market — the Supreme Court may soon strike down the essence of the rent-control laws.

Local politicians love nothing more than to gesture on behalf of cheaper housing, as in the City Council bill aiming to force landlords to pay broker fees on rental units, or the drive for a state law that would (in the name of limiting evictions) make rent control statewide.

This case could end the never-ending game, by gutting the core rent law.

In the process, it would end New York’s eternal housing “crisis” practically overnight — benefiting both tenants and landlords.

In May, New York landlord groups asked the court to hear their challenge to the state Rent Stabilization Law, which lets the city cap rent hikes and gives tenants a virtually ironclad right to renew their leases.

It’s led to some people renting the same unit for decades — and then passing it to a family member, caretaker or friend.

In many cases, building “owners” never regain control over those units, even if they want them for their own families or other purposes.

And that, the suit contends, amounts to an unconstitutional “taking” of property, in violation of the Fifth Amendment.

For years, few would’ve imagined the law — which dates to 1969 — could be overturned, even though it forces landlords alone to eat the cost for a public good (affordable housing) and essentially deprives them of their own property.

The US district court and Second Circuit Court of Appeals both dismissed the suit after it was filed in 2019.

Yet the Supremes lately have stood up for property rights, backing owners with 6-3 votes in several key cases.

In 2021, by 6-3 they struck down a decades-old California rule that forced farms to let union organizers on their land, noting that private owners have a right to exclude people from their property.

That, argue the New York plaintiffs, is a far less intrusive “taking” than New York telling a landlord he or she must offer lease-renewal at a city-dictated rent.

The plaintiffs argue that the rent control law amounts to an unconstitutional “taking” of property.

REUTERS/Evelyn Hockstein/File Photo

The Rent Stabilization Law, they argue, has had a “detrimental effect on owners and tenants alike and has been stifling New York City’s housing market for more than half a century.”

They’re right: The lucky tenants with great deals on their units, even those well-off enough to afford to pay full rent, hang on to them forever, keeping them off the market for truly needy families.

An empty nester with a three-bedroom may stay put rather than downsize, while a family of four must crowd into a one-bedroom — or leave the city altogether.

Landlords, meanwhile, don’t make upgrades or sometimes even needed repairs because the rent caps keep them from recouping their expenses.

Tens of thousands of units go vacant because landlords can’t earn back enough to bring the units up to code.

The Supremes will decide as soon as Sept. 26 whether to hear the case.

Progressive legal pundits pooh-pooh the idea of the justices striking down the law, but this high court already reversed Roe v. Wade, and six of its members are firm defenders of property rights (which those same “experts” barely deign to acknowledge).

If the court doesn’t act, the city housing market is still headed for disaster: Roughly one landlord in five is losing money now; some will start walking away from their buildings.

If the justices do stick to their principles, it’ll be a lightning bolt for local politics and the few who really win under the rent laws, but open the door to a housing market that work for landlords and the vast majority of renters.

Keep your fingers crossed.

https://nypost.com/2023/08/27/getting-rid-of-nyc-rent-control-would-benefit-tenants-and-landlords/

US housing market may be trapped in a prolonged freeze

 The U.S. housing market may be stuck in a prolonged freeze.

Fannie Mae economists projected in a revised forecast that stagnation in the housing market could last into 2024, whether the economy avoids a recession or not.

"Regardless of whether a soft landing is achieved over the coming year, we expect existing home sales to stay subdued and within a tight range," they wrote.

Existing home sales have already tumbled 2.2% in July from the previous month to an annual rate of 4.07 million units, according to new data released Tuesday by the National Association of Realtors. On an annual basis, sales of previously owned homes are down 16.6% when compared with the same time last year.

The slowdown in sales is largely due to the meteoric rise in mortgage rates, which surged to a fresh two-decade high this week. Freddie Mac reported that rates on the popular 30-year fixed mortgage surged to 7.23% this week, well above the 5.55% rate recorded one year ago and the pre-pandemic average of 3.9%. 

It marks the highest level for rates since 2001.

In addition to locking out many consumers due to affordability constraints, the spike in mortgage rates is fueling another problem in the housing market: limited supply. 

That's because sellers who locked in a low mortgage rate before the pandemic began have been reluctant to sell with rates continuing to hover near a two-decade-high, leaving few options for eager would-be buyers. 

The number of available homes on the market at the end of July was down by more than 9% from the same time last year and down 46% from the typical amount before the COVID-19 pandemic began in early 2020, according to a recent report from Realtor.com.

A house is for sale in Arlington, Virginia, July 13, 2023.  ((Photo by SAUL LOEB/AFP via Getty Images) / Getty Images)

"With an ongoing tight supply of existing homes for sale and the recent rise in 30-year fixed-rate mortgage rate to around 7%, we expect home sales in 2023 to remain near the lowest annual level since 2009," Fannie Mae economists said. 

Even if the economy skirts a recession this year, the affordability constraints in the housing market are likely to continue due to the ongoing limited supply of homes for sale, they added. 

And in the event of an economic downturn, mortgage rates may fall "somewhat," the analysis suggests, but the housing market would likely face problems from a weakening labor market and a tightening of credit conditions – in addition to increased consumer pessimism. 

"We therefore do not anticipate a meaningful recovery in existing home sales over our forecast horizon under any of the more likely scenarios," Fannie Mae said.

Although there is growing optimism that the economy will avert a recession, Fannie Mae economists still expect to see a downturn in 2024, with real GDP sliding 0.2% year over year by the fourth quarter. 

https://www.foxbusiness.com/economy/the-us-housing-market-may-be-trapped-prolonged-freeze

Centaline says mainland China unit has 'huge' unpaid developers' commissions

 Centaline Property has said its mainland China unit is owed a huge amount of unpaid commissions and so it cannot pay employees their commissions, responding to reports of delayed payments to the unit by developers including the embattled Evergrande.

Centaline's statement comes as a deepening housing market crisis, rising risk of default and a faltering economy are dragging property developers and agents into commission arrears.

The Hong Kong property agency's mainland arm, Centaline Property Agency (Shenzhen), has not recovered some commission fees as property developers grapple with the debt crisis and liquidity crunch, Centaline said in a statement on Friday.

"The current amount of unpaid commissions from developers and agents is huge and Centaline Property is not in a position to advance them to its employees," the company said.

It did not give a figure for the unpaid commissions but the Securities Times state news outlet reported on Aug. 21 that commission owed to the Shenzhen subsidiary had reached more than 1 billion yuan ($137.19 million).

The Shenzhen unit has paid fixed salaries up to July, Centaline said, adding that all of units were operating normally and it would not withdraw from the mainland China market.

Centaline said it had set up a team to handle overdue payments and it would prioritise the settlement of corresponding commissions with employees once funds are recovered.

Liu Tianyang, who is leading the team, earlier told the Securities Times that some developers had used housing to offset commissions, but that often resulted in a loss of revenue for the Shenzhen property agency.

He said the company was operating under major pressure and the payment of commissions due to employees would lead to more difficulties for it.

https://www.marketscreener.com/news/latest/Centaline-says-mainland-China-unit-has-huge-unpaid-developers-commissions--44704488/

Zillow Offers 1% Down Payment to Lure Struggling Homebuyers

 Zillow Group Inc. is offering mortgages with just a 1% down payment as it tries to attract house hunters facing the most-unaffordable market in almost four decades.

The 1% down payment program is even lower than Freddie Mac’s best of 3%, with Zillow offering to pay 2% of the down payment at closing, according to a statement Thursday.

It comes after mortgage rates in the US hit a 22-year high Thursday, further squeezing would-be homebuyers. The average for a 30-year, fixed loan was 7.23%, the highest since May 2001 and up from 7.09% last week, Freddie Mac said in a statement Thursday.

The 1% offering comes as Zillow looks to grow its customer base and may “even the playing field with larger competitors,” Bloomberg Intelligence said, but it will likely hurt margins and paying 2% at closing could prove costly in the long term.

Zillow is offering the new program in Arizona first before expanding to other markets. The company shuttered a similarly ambitious foray into home flipping in 2021 after steep losses.

https://finance.yahoo.com/news/zillow-offers-1-down-payment-194600522.html

7 Important Rental Property Preventative Maintenance Steps

 A survey shows 64 percent of respondents said their landlord was slow to make repairs, while more than one-third of respondents said that repairs were done badly, according to a survey of more than 1,000 tenants by the legal document company Legal Templates.

While getting the call for needed repairs can be a challenge, keeping up with preventative maintenance tasks is a fantastic way to keep the property up to par while keeping tenants happy. From checking in on the roof to pest control and beyond, here are just seven simple rental property maintenance steps that are beneficial in the long run.

No. 1 – Regularly cleaning out the gutters

Keeping the gutters cleaned and well-maintained can further prevent serious water damage to your rental and its foundation, thus making it a simple task worth setting time aside for.

According to The Spruce, regularly cleaning gutters maintains water flow from the roof to the ground (and as such, away from the house). While getting the ladder out and carefully removing any debris from the gutters is one way to get the job done, The Spruce highlights other ways to do so. Vacuuming the leaves from the gutters is just one option (which will require a 2-½-inch gutter cleaning accessory kit ‘specifically designed for wet/dry vacuums’), which will allow you to clean the gutters while standing on the ground.

However, it’s noted that this method isn’t the best option for wet leaves, in which case another route would involve blowing the leaves from the gutter with a pressure washer.

No. 2 – Inspecting the roof

When looking to further prevent leaks and ensure that the rental is able to withstand the elements, regularly checking in on the roof will allow you to be in-the-know and up to date on its condition.

According to Build Magazine, it’s important to inspect the roof once every three months, “looking for signs of wear and tear such as broken or missing shingles, cracks in the flashing, or loose nails.” Looking for moss or algae growth is another thing to look out for, as they can cause damage to your roof over time.

Build Magazine later goes on to stress the importance of having your roof inspected by a professional each year, which will help greatly in identifying problems “before they become major issues.”

No. 3 – Preventing leaks

Leaks in the home can bring a variety of issues to the table, from water damage to mold.

In addition to the cost involved, there’s no question that preventative rental property maintenance steps are key in preventing leaks and subsequent issues. In addition to keeping up with roof maintenance to prevent leaks, keeping drains clear and pipes up to date are further ways to prevent leaks.

Recognizing telltale signs of leaks when doing an inspection is another way to prevent further damage — according to one Forbes Home post, these signs include damp, dark spots on the floor, wall, ceiling and pipes, while leaks can come from several sources, such as toilets, sinks, washing machines, dishwasher, and the like.

In the case of water damage, addressing the matter as quickly as possible is imperative.

This is largely due to the fact that the longer materials are wet, the more extensive the damage can be — wood can warp, carpet can delaminate, etc. The presence of mold can also become a health and safety issue as well. While shutting off the water and fixing the issue that caused the water damage are the first steps, the water damage restoration process involves several steps to address the situation properly.

From removing any standing water using specialized pumps to removing damaged materials, involving a professional water damage restoration service is ideal in going about the matter properly and with the right tools.

No. 4 – Keeping pests at bay

About 2.9 million reported sightings of both roaches and rodents in their homes, according to the 2019 American Housing Survey (AHS).

While a variety of factors can create a pest problem (such as a dirty kitchen), keeping up with regular pest control and maintenance can be a great way to ensure that pests are kept at bay. According to RentPrep.com, preventative pest control should be done at least seasonally by landlords.

Hiring pest control professionals is a great way to go about the matter stress-free, with pest prevention treatments often involving “spraying around the exterior of the house, looking for signs of infestation, and treating the baseboards inside,” highlights RentPrep.

No. 5 – Appliance maintenance

Maintaining a home’s appliances will not only keep them running smoothly, but will ensure they last longer, too.

In addition to checking in on the air conditioning and heating system, one Apartment Therapy post highlights the value of draining the hot water heater. “Minerals in your water will build up over time at the bottom of your tank, which also causes the tank to work harder, which often causes the hot water heater to fail, causing water damage,” explains John Bodrozic, co-founder of HomeZada, a digital home management site.

Bodrozic goes on to advise draining your tank from the bottom at least once a year (to get the sediment out) before refilling it.

No. 6 – Smart landscaping techniques

Regarding situations where landscaping responsibilities fall on the landlord, there are a variety of preventative maintenance tasks that can keep the lawn healthy and presentable.

In addition to taking advantage of low-maintenance plants, regularly pruning trees is a great way to care for the landscape as well as the property as a whole. “Pruning will help ensure the tree stays healthy by increasing airflow and light penetration.

By pruning the tree, you will also remove dead, damaged, and dying branches,” The Spruce points out, going on to note that this can work to remove hazards to people and structures around the plant. For example, a tree’s branches can scratch the siding of a home, not to mention create issues when it comes to potentially blocking gutters or preventing proper drainage.

No. 7 – Rental Property Maintenance Steps – Safety first 

A comprehensive checklist is a great way to keep track of maintenance tasks, especially when it comes to important safety maintenance such as testing the smoke alarms, carbon monoxide detectors, fire extinguishers, etc.

If you have multiple rental properties to keep up with, streamlining maintenance can be a great way to keep things up to date and lasting longer.

For example, one Zillow post highlights the value that automation can have. “Consider investing in fixtures with long battery lives or automatic features, like exterior motion lights, programmable thermostats, a bathroom fan connected to the light switch to prevent mold, or small solar lights to brighten a pathway.”

Making repairs to a property can be a stressful endeavor, though taking on preventative maintenance is a great way to keep future repairs to a minimum while improving the tenants’ stay.

From keeping up with appliances and pests to checking up on the roof, there are a variety of tasks that are well worth the effort and time in these rental property maintenance steps.

https://www.american-apartment-owners-association.org/property-management/7-important-rental-property-preventative-maintenance-steps/