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Screaming Attorneys, Peaked Housing & An Economic Hurricane - Top 3 Takeaways – June 2nd, 2022
- Florida’s property insurance reform is apparently effective. At the onset of last week’s special legislative session, I said this... The time for excuses is over. The days of half-baked measures are done. It’s time for Florida’s Legislature to fix the damn property insurance system. If at the end of this week Florida’s law allows homeowners to abuse the system by fraudulently filing insurance claims for routine maintenance and repairs, the special session will have been a failure. If anywhere near eight of ten property insurance lawsuits nationally are in Florida, it will have been a failure. If the scummy attorneys who’ve been gleefully suing Florida’s property insurance companies with impunity aren’t screaming by the end of the week, this session will have been a failure. That’s the only way to fix a system that’s 100% out of control (as was described by the CEO of Citizens). Now, by my own accounting of what passed last week, let alone those involved in the process I spoke with, the reform didn’t go as far as I would have liked or that it should have. That’s not to say it isn’t at least somewhat effective. And one of the earliest indications is what just happened. Screams. Left out of my conversation regarding the scumbag attorneys are the scummy contractors who conspire with them. That takes us to this development. Orlando based The Restoration Association of Florida and Air Quality Assessors LLC., has sued the state over the new law. Why? Among the reforms passed by the Legislature, AOB, or assignment of benefits reform. Under the reform contractors are no longer able to recover attorney’s fees if they sue an insurance company after having been assigned the benefits. This has been at the crux of Florida’s crisis. Slimy contractors which petition homeowners for unnecessary fixes, like replacing whole roofs, then suing insurance companies to get them to pay for it – along with the attorney’s fees. It’s long been an unholy alliance. That we’re seeing this legal action taken this quickly is a good sign that the biggest offenders in the state are meaningfully impacted by the new law. Now we need the courts to hold the line by upholding the law. Speaking of our homes...
- The housing market (appears to have) peaked. In May 9th's Q&A, asking if the housing market had peaked I said this... The peak of the housing boom of the early 2000’s was May 2006 in South Florida. In addition to macroeconomic conditions there’s the cyclical nature of real-estate to consider as well. The housing boom of the past couple of years as we’ve known it begins to end this month in my estimation. In other words, we’re experiencing the end of the boom right now. In the near-term, aside from what I’d expect to be growing inventory and days on market – I think we’ll begin to see a tale of two markets. A resilient luxury market driven by cash coming out of stocks and a wavering market for average homes which largely rely on buyers who’re obtaining mortgages. Outright declines in real-estate prices are rare, and it’s early to suggest that’s going to happen here – however the same analysis which led to me declaring a new housing boom at the onset of the pandemic leads to me suggesting this is the end of it. Right now. Unlike Janet Yellen I’ve not made a career out of being wrong. It appears May did represent the peak of the market. While we await the May housing numbers, in real-time days on market are rising, offers are waning and mortgage demand just hit the lowest level in four years. In the but wait there’s more category, the Federal Reserve is set to stop propping up the real-estate market by shrinking its balance sheet to the tune of $47.5 billion a month in bond holdings for the next three months before ramping up to $95 billion thereafter. Without getting into the weeds with macroeconomics – we’re going from the Fed having flooded the market with invented money via quantitative easing, to pulling money out of the market with quantitative tightening. It’s likely the peak of the housing cycle happened and began to reverse in May. The upshot is that if you’ve been wanting to buy but have been leery of doing so – the opportunities ahead will likely be better than what they’ve been of late and that takes us to the...
- Economic Hurricane. Yesterday the most influential banker in the world, JPMorgan Chase’s Jamie Dimon had this to say... You’d better brace yourself. And what for? An economic hurricane. Quoting Dimon... You know, I said there’s storm clouds but I’m going to change it… it’s a hurricane. He went on to say it’s only a matter as to if it’ll be a small one or an Andrew or Sandy. Dimon’s you’d better brace yourself comment is prudent at this point. Since January, I’ve gradually prepared you informationally for a recession. Hopefully you’re prepared as well as you can be at this point. While the start of hurricane season is always met with the obligatory preparedness stories – it’s the economic hurricane which currently represents the biggest threat and being economically prepared by not taking out new debt, paying down what you can, etc. is at least as important as any hurricane supplies.