👋 Happy National 🐶 Dog 🐕‍🦺 Day! To those of us who have pooches in our lives, our canines are going to need just a few more 🍪 treats than we usually lavish on them.

Situation Awareness: United Property & Casualty Insurance Co. is leaving Florida’s homeowners’ insurance market. The company is leaving Texas and Louisiana too. They plan an “orderly run-off” where they simply don’t renew policies as they expire. The company was downgraded from “A” to “M” as reported a few weeks ago.

On Wednesday, the President announced forgiveness of $10,000 in student loan debt for government-backed student loans and $20,000 forgiveness for Pell Grant recipients who make less than $125,000 a year.

Why it matters: The forgiveness will cost an estimated $300 billion and cancel the student loan debt of 45% of borrowers or 20 million people, freeing up credit ability and monthly cash available for other uses.

State of play: Homeownership rates for young adults with student loan debt have declined over the past 12 years. Florida, as of 2019, had an average homeownership rate and student debt rate of 16.5%, placing it in the top 10 states where student loan debt was highest, and their homeownership rate was lowest. Another study found that 60% of millennials said that student loan debt was delaying them from buying a home.

It should follow that cancellation of the debt will free up money to improve the borrowers’ ability to save money to buy a new home, but potentially more buyers entering the market will inflate home prices. Most economists, however, feel that any inflation rate increase from the cancelation will be minimal.

The bottom line: Wiping out the student loan debt will improve these borrowers’ DTI ratios for mortgage qualification. It will leave more money in their pocket to build a down payment for a new home. It will allow them to afford ever-increasing rents.

Our thought bubble: Millennials got a raw deal, graduating from college to compete with Boomers for jobs.

  • Then came the Great Recession, preventing them from buying homes and having children at the rate the Boomers did.
  • Maybe this debt cancelation will be the jump start Millennials need to move out of their apartments and parents’ homes to start a home with a larger family of their own.
  • If so, their production could be enough to overtake the inflationary pressures their homebuying will create.

The number of new apartments coming online this year is expected to be close to 420,000 according to Bloomberg (subscription required).

Why it matters: While the supply increase is a nationwide number, it could mean that the extra supply could help alleviate record-high rents in some cities.

State of play: This is the second year in a row that the number of new apartments exceeds 400,000 units. Demand for apartments and rentals has increased in Southern cities like Miami, where many escaped from pandemic-heavy cities in the North. Soaring home prices, student debt, and rising interest rates have also hindered home purchasing, forcing more people to rent instead of buy.

The top five markets for the multi-family construction boom are NYC, Miami, Austin, Seattle, and Phoenix.

On the flip side, one of the largest hedge funds that buys single-family homes and rents them to tenants announced that they’re going to stop buying homes on September 1. Blackstone’s Home Partners of America cites rising prices and lower market demand for rentals in their decision to stop buying in 0ver 25 cities, with another 10 stopping in October. They will stop buying and renting in Lakeland, the only Florida city, in October.

The bottom line: Maybe the market for multifamily housing is taking a turn back to traditional apartments and away from the model of large hedge funds buying and then renting tens of thousands of single-family homes. This could free up affordable single-family home inventory for purchasers while renters return to more densely built apartments.

Go deeper

  1. REALTORs released their annual list of the Top 50 Hottest Zip Codes in the USA, and only one Florida city was on the list … at number 34. Realtor dot com
  2. A Baltimore couple has sued an appraiser who appraised their home at $472,000.00, only to appraise it a few months later at $750,000.00. The difference? The first time the appraiser came, the owners — a black family of five — were home. The second time the appraiser arrived, all the family pictures were hidden, and a white male friend was there to meet with the appraiser. New York Times (Subscription)
  3. The WSJ editorial board didn’t have much nice to say about Orange County’s foray into rent stabilization ordinances, calling it “housing suicide.” Wall Street Journal (Subscription) (h/t to Laurel Kellett)
  4. The best and worst states for retirement in 2022. Of course, Florida tops the list. Bankrate
  5. Even if we eventually fall into a recession, does that mean a housing crisis automatically follows? Forbes
Now that the new Elvis movie is available streaming, I’m thinking that this is an appropriate song for the day.
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PCS Posts is a blog from PCS Title President, Joe Seagle. Each edition, Joe presents details from the top of the news feed that affect our industry. This info ranges from real estate closing form changes to updated laws to trending topics. Joe breaks each idea down into manageable pieces and highlights the facts you won’t want to miss. Please subscribe to our email list for the latest blog.

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