TALLAHASSEE, Fla. – The Florida Legislature wrapped up their special session on Wednesday after passing three bills.

“If you had to sum up the major outcomes of the insurance reform bill in a single sentence, it would indicate that the bill will curb the massive amounts of lawsuits that are driving up premiums, stabilize reinsurance coverage and shrink the state-backed Citizens Property Insurance Corp.,” Florida Realtors® Vice President of Public Policy Andy Gonzalez said after the session ended.

In addition to a sweeping property insurance bill, two other bills passed by lawmakers focused on disaster relief and another regarding toll relief for heavy users of Florida’s toll roads. All bills have been sent to Gov. Ron DeSantis. He is expected to sign them into law and has until Dec. 29, 2022, to do so.

Property insurance reforms

Senate Bill 2A: Gonzalez calls the reform in 2A “a huge win for the state of Florida and absolutely essential steps Florida needs to take to attract insurance and reinsurance capital back to the state.” They “tackle the root causes driving insurers away”:

• Elimination of one-way attorney fees: Insurance industry experts have long blamed lawsuits for driving up costs that lead to financial losses and higher homeowner premiums. The chief driver of the lawsuits is a provision known as “one-way” attorney fees in property-insurance cases. One-way attorney fees allow the plaintiff (policyholder) to recover attorney fees, but not the defendant (insurer). The practice incentivized unwarranted litigation.
• Elimination of Assignment of Benefits: AOB was another litigation-related cost-driver for insurers that pushed policy rates higher. Under AOB, homeowners who suffered a loss “assign” insurance benefits to a contractor that then deals directly with their insurance company.
• New temporary reinsurance program: The cost for reinsurance – essentially insurance for insurers that kicks into gear following major post-disaster losses – has risen, and those higher costs are baked into the rates homeowners pay. Property insurers generally buy reinsurance coverage on the private market and from the Florida Hurricane Catastrophe Fund, a state program. The bill adds additional levels, known as “layers,” of reinsurance funded through $1 billion from the state and premiums paid by insurers.
• Efforts to depopulate Citizens: Citizens Property Insurance – the Florida-operated “insurance of last resort” – more than doubled in size during the past two years and now has about 1.13 million policies. The larger the number of policies, the greater the risk faced by Florida taxpayers after a disaster. The bill includes new or boosted ways to move homeowners with Citizens policies back into the private market. For example, Citizens policyholders now can’t renew their coverage if they receive private-insurer coverage offers within 20% of Citizens premium costs. The bill also phases in a requirement that Citizens customers buy flood insurance, which is not included in other homeowners’ policies.
• Shortened claims filing: To reduce the number of frivolous lawsuits, the bill reduces the deadline for policyholders to report a claim under their policy from 2 years to 1 year for a new or reopened claim, and from 3 years to 18 months for a supplemental claim.
• Accelerating claims payment: Among other things, the bill amends the prompt pay laws to encourage faster claims payments. It reduces the time for insurers to 1) pay or deny the claim from 90 to 60 days, 2) review and acknowledge a claim communication from 14 days to 7 days, 3) begin an investigation from 14 days to 7 days, and 4) conduct a physical inspection from 45 days to 30 days.
• More funding for the Office of Insurance Regulation: The bill allocates $1.7 million for Florida’s Office of Insurance Regulation to investigate bad faith carriers and hire and retain the staff they need to properly regulate the industry.

For complete information, check the Florida Senate analysis posted online.

Leaders of the insurance reform efforts acknowledge that the bill likely won’t lead to immediate rate reductions for homeowners. They say it is designed, at least in part, to draw investments in the insurance market and spur competition.

Hurricane relief

Senate Bill 4A: Lawmakers passed a number of disaster relief efforts after two hurricane strikes in 2022. The bill provides:

• Tax relief for residential property rendered uninhabitable for at least 30 days through property tax refunds. It also extends property tax deadlines and discounts for owners of property destroyed or rendered uninhabitable due to Hurricane Ian or Nicole.
• $150 million for affordable-housing hurricane relief efforts. Of that money, $60 million will go to local governments to help with the repair or replacement of housing, relocation costs, housing reentry assistance and insurance deductibles; $90 million will fund the Rental Recovery Loan Program to promote development and rehabilitation of affordable housing in affected areas.
• $350 million needed to secure funding from FEMA Public Assistance Grants – the entire amount required for a one-half local match.
• $100 million to supplement the existing Beach Management Funding Assistance Program and $50 million to create the Hurricane Restoration Reimbursement Grant Program. 
• $100 million to create the Hurricane Stormwater and Wastewater Assistance Grant Program to provide financial assistance to local governments. 
• The bill also creates the Florida Emergency Management Assistance Foundation to provide assistance, funding, and support to the Department of Management services. 

For a full analysis, refer to the Senate staff analysis of the bill posted online.

Toll relief

Senate Bill 6A: The bill directs the Florida Turnpike Enterprise (FTE) to establish a toll relief program that will be effective for one entire calendar year (Jan. 1 to Dec. 31, 2023) for all Florida toll facilities that use a Florida-issued transponder or are interoperable with the Florida Department of Transportation’s (FDOT’s) prepaid electronic transponder toll system (SunPass). The bill will:

• Provide a 50% account credit to Florida residents with an electronic prepaid toll program account, such as SunPass, who record 35 or more transactions a month. 
• Appropriate $500 million to reimburse toll facilities for issuing these credits.
• Require Florida drivers using the prepaid toll program to have an account in good stating, with the account credit posted the month after the credit is earned.

The full Senate staff analysis of the bill can be found here.

It has been quite the year. In 2022, we’ve lived through high inflation, stock market lows, housing market frenzies and ongoing Federal Reserve rate hikes. Although we don’t have a crystal ball to predict what will happen to the economy next year, we could use this year’s events as a guide: Things may continue to be rocky.

If homeownership and investing are on your 2023 goals list, here are some questions to ask yourself before whipping out your spreadsheet, money apps or notebooks.

What am I willing to sacrifice in terms of space?

Whether you have a goal of buying a new home or renting a new place next year, there’s a lot to consider. For instance, 30-year fixed mortgage rates went from an average of 3.45% in January to 6.90% in October thanks to inflation and Fed rate increases. The Fed has already raised interest rates 75 basis points four times this year. This, coupled with housing shortages, has driven the national median price of homes above $400,000 for the first time, according to the National Association of Realtors.

Homeownership may still be an attainable goal, but you might have to make some sacrifices.  You need to evaluate what you are willing to give up in space in order to own property.  You may have to gradually get to where you want, as opposed to just going straight into a single-family house.

This could mean starting off with a condo or townhouse and then using the equity from the condo to purchase your next property, Harris says.

How can I make homeownership more affordable?

Another portal to homeownership  is the Neighborhood Assistance Corporation of America, also known as NACA. It’s a mortgage program that allows working people to purchase a home with no down payment, closing costs, fees or stringent credit prerequisites.

Members can also buy their homes at a below-market interest rate. The program is currently in 28 states and the District of Columbia.

Buying a home in 2023 could also be more attainable if you’re willing to get a roomie, says Jocelyn Wright , a CFP and retirement income certified professional at PF Wealth Management Group in Bala Cynwyd, Pennsylvania. This is something she did with her sister in 2017.

“It’s not going to be forever necessarily, but this gave us the opportunity to have our own home, and we can leverage the equity and all of that going forward,” she says.

How diverse is my portfolio?

This year hasn’t been the greenest for investors – at the start of December, the S&P 500 was down more than 15% this year. The market’s volatility could understandably make investors unsure about how to move forward. Financial professionals say a diverse portfolio and taking the right amount of risk might be steps in the right direction.

Keep diversification in mind.  Diversification is when you invest in a variety of assets to manage risk and market volatility. The FTX and BlockFi collapses that happened in November are a reminder about why to avoid investing too heavily in one area.

Unfortunately, a lot of newer investors were very excited about Bitcoin, crypto, and all of that, and forgot those lessons.  You don’t put your short-term money into the market, and those rules always apply.  I consider short-term money to be cash you’ll need in 12 months to three years.

Instead of putting all of your money into the stock market, put the amount you’ll need in the near future into an emergency fund, high-yield savings accounts, a certificate of deposit or short-term fixed-income securities like Treasury bills.

How much risk can I take?

Ask yourself how much risk you’re comfortable taking. That depends a lot on your circumstances, but risk isn’t something to be afraid of when you have enough income, an emergency fund and a diverse portfolio. And risk is worth it when you invest for the long term and can reap those long-term rewards.

Younger people who are further away from retirement can and should be willing to take on more risk. 

If you haven’t started investing, or stopped investing due to money being tight, remember you can always invest at a pace that feels comfortable for you.

You have to invest and become comfortable with that, whether that’s biweekly, bimonthly or monthly.

You can always start with lower-risk investments if you want to play it safe. Some include I bonds, money market funds or Treasury-Inflation Protected Securities, also known as TIPS.

I hope you found this information useful and gave you some ideas for 2023!

Today’s housing market can feel like a dream killer. Rising mortgage rates, high home prices and a shortage of properties for sale deliver a one-two-three punch.

If you’ve been knocked out of one too many deals and need a timeout, here’s how to regroup and keep the homeownership dream alive.

Give yourself a break

Given the rise in home prices and interest rates, the monthly mortgage payment for a median-priced single-family home with a 10% down payment has jumped by about $800 since January, according to a June 2022 National Association of Realtors® press release.

That’s huge.

It’s OK to hit pause if you’re frazzled to the point that you can’t think clearly or are simply priced out.

“If it doesn’t feel right to you … step away and give yourself some breathing room,” says Catalina Franco-Cicero, a certified financial planner with Tobias Financial Advisors in Plantation, Florida. “It’s OK to do that.”

But stepping back doesn’t mean giving up.

“One thing we tell people with any goal that you have is that there’s a big difference between ‘no’ and ‘not yet,’” says Nathaniel Moore, a certified financial planner and president of Agape Planning Partners in Fresno, California.

Strengthen your finances

View the break as an opportunity to get your finances in even better shape.

Use a mortgage calculator to estimate a monthly mortgage payment, including estimated property taxes and home insurance. Then add utilities plus 20% of the monthly mortgage for unexpected maintenance and repairs, Moore suggests. Subtract your rent payment from that amount and set aside the rest in a high-yield savings account.

“That way, if and when you can get in the home, you don’t have sticker shock or you’re not house-rich and cash-poor because you didn’t account for the other expenses,” Moore says.

He likens the transition to a relay race. “You want to have a smooth baton handoff, from the ‘renter you’ to the ‘homeowner you.’ If you’re not ready to walk in that house and afford the ancillary costs of living there, that’s when the baton fumbles and drops,” he says. “You want to get to the place where the rental person is running at the same speed as the homeownership person so when the baton is handed off it’s a smooth transition.”

When you’re ready to buy, you can add that extra money you’ve socked away to your down payment, which will help you make stronger offers and may qualify you for better mortgage rates.

“Nobody can truly predict interest rates nor inflation, nor the appreciation rate of homes in a relatively short period of time,” Eric Lefkowitz, president and chief operating officer of Motto Mortgage Mint in San Diego, said via email. “But we can be certain that buyers should be saving for strong down payment options. This will ensure they can get the best available interest rate when the time comes.”

Pay down debt

Paying down credit cards and other debt will improve two measurements: your credit score and your debt-to-income ratio, or DTI. Both are key factors that lenders consider when deciding whether you qualify and at what rate.

A good DTI – the percentage of gross monthly income that goes toward debt – is generally under 36%. The lower the better.

Your credit score is based in part on credit utilization, the percentage of available credit used. Shrinking your debt will lower credit utilization and help your score. Meanwhile, keep making on-time payments to preserve good credit.

“It’s going to give you a better mortgage rate and more options,” says Deb Gillard, a real estate agent with RE/MAX Venture in Owatonna, Minnesota.

Avoid optional big expenses

Resist the temptation to vent your frustration in a spending splurge, whether it’s running up a credit card balance or buying a new car when the old one suffices.

“That’s the last thing you want to do when you’re taking this pause,” Gillard says.

Another enticement may be to move to a nicer apartment. But stay put if you can, advises real estate broker Peggy Pratt, who leads the Pratt Properties Team of Century 21 North East in the Boston area. Paying the security deposit and other moving expenses could cut into savings for a down payment.

Reevaluate your wants and needs

This is a good time to look at the big picture.

“People need to do some soul searching to say, ‘What am I looking for in a home?’” Moore says.

Given home prices and mortgage rates, you may need to adjust your filters. You may need to shop for homes in a different neighborhood or buy something smaller than originally imagined. If the aim is to buy a starter home, build equity and upgrade in a few years, then that flexibility may pay off.

“Homeownership is a step-by-step opportunity,” Lefkowitz said. “You are not committing to stay in a home forever.”

If you could work elsewhere, another option you might consider is relocating to a less-expensive housing market, Franco-Cicero says. That’s a big decision. Taking a pause can give you time to research the quality of life and cost of living in other locations and weigh whether you want to live somewhere else.

Keep in touch with your agent, lender

Besides fine-tuning finances and reevaluating goals, keep in touch with experts you trust who can watch the market and bring you back in when you’re ready, Lefkowitz said. “This includes a strong Realtor and mortgage professional,” he said. “Together, that partnership can keep the buyers’ best interest top of mind and be ready to pounce on an excellent property when it becomes available.”

Let them know if you can make a bigger down payment, for instance. Keep your agent updated on when you might be ready to jump back into the market and the types of homes and areas you’re willing to consider.

Pratt says she counsels clients to maintain realistic expectations and not give up.

“Hang in there,” she says. “Something will come.”

In the early part of the 20th Century, American humorist Will Rogers was quoted as saying, “Buy land. They ain’t making any more of the stuff.”

Real estate can be a wonderful investment, but buying property isn’t as simple as Will Rogers led people to believe. Investing in certain kinds of real estate can be a financial mistake. Let’s consider eight of the worst types of real estate to invest in.

Doesn’t produce income

Drive down any main street in small-town America and you’ll find dozens of empty storefronts available for lease or for sale. Some of these retail spaces have been vacant for years. They may have held thriving businesses at one time – but then the mall opened on the outskirts of town, or the big box store offered cheaper prices. These main street businesses may have survived the mall or Walmart, but they couldn’t see their way through the Great Recession, the competition of online retailers or the shut-downs of COVID-19.

It may be tempting to think, “Look at that store building. The price is so cheap. Let’s buy it and maybe we can sell it in a few years at a nice profit!” But that store building may have been vacant since 1995. If it couldn’t be sold and used then as a retail establishment, what makes you think you’ll be able to sell it at a profit today?

Negative cash flow

Tied in with a lack of income is a negative cash flow for a piece of property that’s for sale. If you wouldn’t buy real estate that doesn’t produce income, why would you buy a property that costs more to maintain than what it brings in? Do you know how to spell M-O-N-E-Y- P-I-T?

Too extravagant

What if the house that you want to buy and then rent out is as fancy as a mansion of the 1%? If a family could afford the monthly rental payment of such a home, why wouldn’t they just buy it for themselves? You don’t want to purchase a house for a rental property that’s as fancy as George Vanderbilt’s Biltmore House (Yes, I’m being sarcastic). Those who could afford the high rent could also afford to purchase their own home. And there you sit with an empty house. And no income.

Too expensive

Just ask any hard-working middle-class American family – it’s no fun having more money going out than what’s coming in. It’s always a good idea to follow the 28% rule – although some call it the 25% rule and others refer to it as the 30% rule. It simply means that a household shouldn’t spend more than 28% (or 25% or 30%) of its gross monthly income on total household expenses.

Housing developments

Throughout the United States there are defunct housing developments that never quite made it. The developers may have even improved the land by adding sewer, water and electrical utilities. They may have even put in curbs and gutters, as well as street pavement. But there are no houses (maybe one or two if they got lucky). There are no businesses. Chances are these developers went bankrupt.

It seems like the majority of such failed developments are located in states like Arkansas, Arizona and New Mexico, but every state has them. Probably the most egregious example of such a failed endeavor was the I-30 Condo Scandal of Garland, Texas (a suburb of Dallas) in the 1980s. If you drove east out of Dallas on I-30 at that time, you undoubtedly passed acres of half-built condominiums and empty cement slabs. The developer, Danny Faulker, ended up in jail with a 20-year sentence, but only served 4 because he suffered from terminal cancer. This debacle helped precipitate the Savings and Loan crisis of the late 1980s and cost taxpayers close to $1 billion.

Real estate purchased only for appreciation

Astute investors who have a pulse on future trends have sometimes made oodles of money by purchasing undeveloped land with the goal of selling it when prices increased. An example of doing this successfully can be found in the area just east of Lake Sammamish in the Seattle area. In the 1970s and earlier, this area from the lake to the Cascades was rural, with few homes and a handful of small towns.

But once Microsoft moved into Redmond, there was a building boom and that area is now filled with exclusive neighborhoods. In 2019, Sammamish, Washington was considered the richest city in America. Those who owned parcels of this undeveloped land prior to the Sammamish building boom came out like bandits.

But there are just as many – or even more – purchasers of undeveloped land who have lost everything. They purchased raw real estate at the wrong place and at the wrong time. Unless you have experience successfully predicting the future growth and development of an area, this is probably an investment strategy to stay away from.

Vacation timeshares

Timeshare property has been around since 1969. The average cost of a timeshare today is $22,942 with an average annual maintenance fee of around $1,000. There’s also the stressful experience of dealing with pushy salesmen or the difficulty of trying to get out of a timeshare contract.

Is all that worth it for a week in a vacation condo? Why not just vacation at a beach hotel, at the time and location that best fits your schedule and your interests?

The nicest house in a neighborhood

You’re shopping for a house to invest in or to live in yourself. A beautiful five-bedroom two-story goes up for sale in a neighborhood of three-bedroom bungalows. Not only does the house have room for a large family, but there’s also a built-in swimming pool in the backyard! The price seems decent for the square footage of the house, but because of its size, it’s more expensive than other homes for sale in the neighborhood.

Such a purchase may be tempting, but think about it – will this property appreciate in value compared to the other homes in the area? Remember, too, that there are no promises the rest of the neighborhood will improve. When the time comes to sell your beautiful five-bedroom two-story with its built-in swimming pool, will potential buyers want to live in a neighborhood of bungalows?

Bottom line

Investing in real estate can be both economically and personally rewarding. It’s important, however, to be aware of the pitfalls, and to understand that there are several types of real estate that you should probably stay away from. Will Rogers was right when he opined about land – “They ain’t making any more of the stuff.” But keep your eyes open and use your head so your purchase can be beneficial to your economic well-being.