The Bosshardt Blog

Florida Friendly Landscaping and Senate Bill 2080

I was at a chapter meeting of the SunCoast CAI just the other day, and the topic of conversation was State Bill 2080 and 494: Florida First Landscaping (FFL). The new law replaces language referencing "xeriscape" because, in the words of Lisa Strange with HIllsborough County Polk County Community Association Outreach, "People thought that meant replacing your grass with rocks and cactus."

I couldn't correct her, because that's what I thought until not too long ago. They've got great training programs set up down there in Hillsborough and Polk counties for property managers, association managers, and homeowner associations to learn about the new Florida Statue. Up here in Alachua County, there is a website to direct you to our contact person, Wendy Wilber. Marion County residents can click here. Wendy says that, while the bill is somewhat vague, people should thematically "be concerned equally about water quality and water quantity." Wendy is a great resource and said that a few HOAs have contacted her with the direction of making themselves "green." She didn't think they understood the legal ramifications of SB 2080 and was worried that a lawsuit could be on the horizon for some area HOA that treads too lightly.

That being said, the bills should be a major change for many HOA' and the way they conduct their business. First, no rule or regulation can be made nor enforced against a lot owner that makes a change to his or her property that is in compliance with Florida First Landscaping. So, if you change out some grass, plants, bushes, and mulch that are in compliance with FFL, it doesn't matter what your HOA says about it. Wilber said she hopes residents will work positively with their Architectural Review Boards, commonly known as ARBs.

In all, there are nine principles of FFL that are considered improvements that cannot be hindered by your HOA:

1. Right Plan, Right Place

2. Water efficiently

3. Fertilize appropriately

4. Mulch

5. Attract Wildlife

6. Manage Yard Pests Responsibly

7. Recycle

8. Reduce Stormwater Runoff

9. Protect the Waterfront

For more details on the nine principles of a Florida Friendly Landscape, there is training available online.

Some regulatory changes to irrigation systems and contractors come along with Florida Friendly Landscape. Irrigation systems installed before 2002 used to be exempt from having an automatic rain sensor and shutoff. That exemption is gone, and any commercial fertilizer will have to have new training by January 1, 2014. Limited certification is available.

Jim Defurio, an attorney with Cianfrone and Defurio, addressed the new bill by reading a verse of poetry. He compared the bill to poetry more than law, citing that the language was vague and subjective. However, according to Defurio, HOAs should not think to ignore the new legislation, but rather adopt one of two approaches:

1. Place the burden on the lot owner. If the owner claims a violation is unenforceable under FFL, then ask the lot owner to prove it.

2. Defurio says the preferred approach is to deal with it proactively. "Times are changing; get on the train before it leaves the station. The state has serious water problems. Get training. Go to the state websites and adopt a new plan for community landscaping that is in the spirit of FFL."

This legislative change has been a long time coming for Florida. One fellow manager I spoke with in Hillsborough told me that her father told her twenty years ago that, if Florida was going to have enough good clean water, they should have a building moratorium. Twenty years later, we've built a lot of homes. Overall, this is important, positive legislation that we all need to be aware of, educate ourselves about, and understand and support the goal of having clean available water. 

The Good News and Bad News about the Gainesville Rental Home Market

Posted by Aaron Bosshardt, COO, Bosshardt Realty, 09/10/2009

 

So let's start off with the good news. It was a great turn. We rented over ninety single family rental homes in two months. The seasonality of the rental market has returned and that should represent some type of stability in the real estate markets.

What I mean by that was this time last year, there was no slow down come mid-August as has been tradition in Gainesville for the past 20 years we have been managing properties.  Our owners, for the most part, were cooperative and realistic about what to expect. We really pushed the slogan "Rent or Die" starting in late May.

As you might expect, inventories were way up this year, and that created downward pressure on rents. At one part early in the season, I tweeted about driving down University Avenue and seeing 19 For Rent signs up. A lot of those old "Rules of Thumb" about 600 per bedroom left some owners with vacant prime campus properties this season.

Harvard does a great annual report on the housing market annually. The last five pages are dedicated to the rental market. It's a great report, and to steal from them a bit, there is a bright side in all of this. It's the perfect time for federal, state, and local [okay, I added the local part] governments to take a good look at their polices.

And as you can tell, we are getting into the bad news. There is no immediate relief in site. While rents are reported as down only 0.2 percent nationally this year, the quality and costs of rental product have increased dramatically.  Things like granite, upgraded appliances, wood floors, pools, hot tubs, and security systems have become more the rule than the exception when characterizing rental properties. 

The bottom line is that single family home rentals, which represent just under 40 percent of all rentals nationally, are suffering. In our area, taxes have yet to decline, and landlords shoulder a much larger share of the tax burden. Insurance costs have abated some, but a more pressing concern is the ability to insure rental property at all.

Locally, unemployment has almost doubled in the past 12 months, and the rental market, characterized by those more likely to lose their jobs, has seen this affect rents and eviction rates. According to the Mortgage Bankers Association of America, one in five house in foreclosure are rental homes.

Locally and statewide, I hope that government can do better and take control of their budgets to help reduce what has become an unfair burden on property tax owners. They're must be many costly programs that provide no value or benefit. Renters aren't going to pay for these programs because they don't have to. At this point, there is a divergence in the free market system (what tenants will pay for) and the forced market (what property owners must pay for). What would be terrible is if the county starts cutting services that tenants and owners are willing to pay for, like fire services. The firefighters did a great letter to the editor about this.  

Well, in summary, don't let all this talk about how bad things are let you forget that owning investment property is the single best way to establish and build wealth. I don't know anybody who started with a little bit of money and made it big in the stock market, but I know wealthy investors who started with nothing but a dream and single family home purchase.

How low will Gainesville area home prices go?

Posted by Aaron Bosshardt, COO, Bosshardt Realty, 09/10/2009

Prominent prognosticator and financial guru Meredith Whitney called today for homes prices to fall another 25%. She cited unemployment and the lack of availability of credit.

Locally, we have had two issues as of late:  Prices have fallen significantly this year in our area and continue to drop. According to the National Association of Realtors, Gainesville existing home median sales prices fell just over 11 percent in 2008. The local property appraiser told me they show the number closer to 5%. Either way you look at it, it looks like our prices have a lot more room to drop when you consider what has happened in other areas of our state, such as Orlando and Tampa.

So how much room do prices have on the downside? Tough to say. When I first tried to forecast this in 2006, I felt that, during the boom, speculators (those that bought real estate for short term flips) drove investors (those that bought real estate for long term investment) out of the market.  I recently showed an investment property to a long-standing investor client of ours.  The property was a great residential rental, close to campus, and had a nice separate apartment out back. It was listed for $209,000, but the owner was seeking a quick sale around 189,000. Based on the comparable sales, that number looked good. When I ran the numbers for internal rates of returns and capitalization rates, the returns totalled about 3.5 percent. A 10-year Government Treasury pays that and obviously doesn't have near the risk. Using the old rule of thumb that investors want a "10," the suggested price came out to be $129,000 - almost 30 percent less than what the comps indicated. 

That number jives with Whitney's forecast of another 30 percent drop in prices. Other local experts I talk to seem to think we are close to the bottom. "We are there now, or close to it," said Ricky Nattiel.  That might be supported by the fact that when the final numbers for 2009 come in, we could see a number closer to 30 percent in falling prices. "Foreclosures have really hit our area hard this year. We are seeing these properties come on the market sometimes as much as 50 percent below retail value," said Nattiel.

What might keep driving prices even lower? "Buyers are definitely still in the driver's seat, and that will continue to drive prices lower. Even in distressed situations, my buyers are submitting bids well under asking price," notes Janice Grounds, a local pet lover and condominium expert. This process of submitting low offers is often called "low balling" by industry experts. Then, as Whitney mentioned, the lack of employment and credit means fewer primary home buyers, and as I've shown you, investors and speculators (if there are any left) aren't going to be buying at these prices. Property taxes continue to increase for owners this year in spite of falling prices.  A fact that hasn't slipped past the Gainesville Sun. 

Of course basic supply and demand is at work in our local market as well. "Our Inventory isn't getting any better," said Chris Handy. "For every listing on the market, there are probably two shadow listings that aren't." Handy says a shadow listing is a home that would sell if the market could absorb it, but instead the owner just doesn't market it - a fact that may be reinforced by an article the Wall Street Journal ran recently: "The Reluctant Landlord," which cites Allstate as reporting a 27% increase in conversions from primary residence to Landlord policies this year.

I asked Summer Loduca, Business Development Officer at Bosshardt Property Management, what percentage of the inquiries she gets on new management services are from owners that can't sell. "All you have to do is look at our rental bulletin to see that one third of our available rentals are also for sale. That's never been like that before. I would say half our calls are from owners who can't sell." 

It seems like there are many reasons for prices to go lower and few reasons for prices to go up. Oftentimes that is a sign that the end is near. Nonetheless, if you have a home that you can't sell, it may be time to determine whether you can afford to take the pain now, or sit on the sidelines for years to come. Every year we (property owners) think things will get better if we can just outlast the bad times. Since 2006 ,every year things have gotten worse. The people that sold in 2006 and 2007 are feeling pretty smart right now.

Are homes still being bought and sold? Yes, says Craig Wilburn, Vice President and Diamond Producer. "The market we are in right now consists of buyers that need to buy now and sellers that need to sell. If you're not in one of those two categories, it's unlikely you will buy or sell."

I'd love to hear why prices might be at the bottom or even increase if there are some counterpoints out there. The only one I can thing of is how great it is that Gator Football is in season again. There is nothing in the world that gets Gainesville to feel alive and well like the start of football season.