Page 11 - Boca Club News - May '22

Boca Club News, Page 11
Legal: Real Estate Gone Wild

By Michael J Posner, Esq., a partner Interest rates started the year at an average of 3.45% payment and a monthly mortgage cost of $2,665.46. This is an
in Ward, Damon, Posner, Pheterson & for thirty-year fixed rate loans. As inflation reached a 40- increase of over $880 per month for the same home just four
Bleau, P.L. a mid-sized real estate and year high, interest rates for mortgages began to ratchet up, months later. Assuming an additional cost of $500 per month
business-oriented law firm serving all passing 4% in February and 5% in March 2022 (the highest to cover taxes and insurance, that $500,000 home in January
of South Florida, with three offices in since 2011). For a few days in April 2022, rates spiked over 2022 would require a gross family annual income of slightly
Palm Beach County. They specialize 6% and as I write this the averaged fixed rate mortgage is over $80,000 to qualify for a conforming mortgage. In order
in real estate law and can assist at 5.3%. to buy that same home today, the gross family annual income
sellers and purchaser with closing This means that a $500,000 home purchased with 20% would now have to be $113,000–an increase of $33,000 in
and financing of residential and down would have cost only $1,785.03 per month on January just four months.
commercial real estate including remote closings. They can be 1st, 2022 for principal and interest. At current rates, this same Adding to the cost of homeownership is the ever-
reached at (561) 594-1452 or at mjposner@warddamon.com. house will now cost $2,221.22 a month for principal and increasing cost of home insurance. Several Florida insurance
A few months ago, I made predictions about the 2022 interest, an increase of over $436.00 per month. companies have already left the market in 2022, reducing the
real estate market. These predictions included estimates The ever-increasing cost of mortgages would normally number of available insurers and forcing more people to the
regarding mortgage rates, prices of residential real reduce the demand for housing. However, demand appears to state’s insurer of last resort, Citizens Property Insurance. The
property and rental rates. It turns out that my predictions continue to remain strong while supply of available housing average insurance policy from 2021 to 2022 increased over
were not bold enough as the real estate market for the remains low. This supply and demand imbalance has led 30%, and in the past five years the cost has increased by over
second quarter of 2022 had started with several unenviable to higher prices for those available homes. I predicted a 100%. Last year alone, Florida insurance companies claimed
statistics. continued increase in the price of homes in the 5% to 10% they lost over $1.2 billion on homeowners’ insurance claims.
I predicted that interest rates would rise, a prediction range over 2022. Instead, we have seen a 20% increase in An attempt to pass insurance reform by the Florida
that I have made for several years. I felt that long-term the cost of homes just over the first quarter of 2022. legislature failed in the last legislative session. Florida Gov.
interest rates in the mid to high two percent and low to That dream house for sale on January 1st, 2022 at Ron DeSantis just announced that he will call a special
middle three percent were not sustainable. I anticipated $500,000 is now being sold for $600,000 with multiple session of the legislature to address rising property insurance
rates rising from a low of 2.5% for thirty-year fixed rate bidders competing for the same house. To buy this house rates in the state. This special session will attempt to address
mortgages to the 3.5% to 4.5% range. now instead of January means an additional $20,000 down various issues which are blamed for the rising insurance rates,
including fraudulent claims and lawsuits, the requirement
for roof replacement instead of repair, and possibly caps on
EXPLorE MIAMI annual increases.

Finally, I predicted higher rental rates in 2022, expecting
a 7% to 10% increase for the year. Like my other predictions,
Explore Miami with Alliant Transport. in many locations the increases already exceeded 20% just
Make a day or evening of it at the Biltmore Hotel, in the first quarter of 2022. In Miami, rental rates rose an
We AIM To Please Bass Museum, Contemporary Arts. Stroll along astounding 38% for the first quarter of 2022. Many families
“SULLY” Brickell Road, see what’s happening in the new are simply being priced out of the rental market, but with the
continued influx of families to Florida from out of the state
Miami or a Skyline Cruise. Dine, shop, sightsee and
Driven in Class and Comfort enjoy we’re driving! Go to an exotic restaurant such the demand for rental properties will remain high.
At Reasonable Rates as Sexy Fish, Fratelli Milano, or a nice Given the higher cost of homes, loans and insurance it
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PBI Airports of 2022. I expect continued high prices as many investors
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A LLIA n T 561-716-0926 Text or call Alliant Transport at 561-716-0926 ownership, allowing continued profit for these investors.
TrAnSPorT Text or Call for Service However, I question the sustainability of this market if costs
continue to soar out-of-control.