Real Estate Investors to be Active in Markets for Next Two Years

Real estate investors are likely to be three times more active than other types of homebuyers in their local markets within the next two years, according to a nationwide survey from Realtor.com operator Move Inc.

Market research firm GfK Custom Research North America conducted the survey on behalf of Move from April 11-15, 2011. The survey included telephone interviews of 1,200 U.S. adults, of which about 200 were identified as real estate investors. Data was weighted by age, sex, education, race and geographic region.

A third of real estate investors are planning to buy in the next 24 months, compared to 8.6 percent of typical homebuyers -- those planning to purchase a primary residence, vacation home or retirement property. Another 9.1 percent of typical homebuyers, and 28 percent of investors, plan to purchase between two and five years from now.

Among the investors, half plan to hold their properties for five or more years while 11 percent expect to sell within a year of purchase, according to the survey.

Some 56.5 percent of investors said the repair and maintenance of their property has not been difficult, and 42 percent plan to spend their own time and energy for that upkeep going forward.
Among the rest, 29.5 percent said they would hire a contractor for repairs and 28 percent said they would purchase move-in-ready properties. About 65.7 percent don't expect repair costs to surpass 20 percent of the property's purchase price, the survey said.

"This data suggests today's climate is hot for investing and is attracting a lot of new people that don't fit the stereotypical deal-driven flippers who buy and sell properties quickly," said Steve Berkowitz, Move CEO, in a statement.

"They're mostly entrepreneurial individuals who will make vital contributions to local communities by investing their own money and sweat equity to improve and maintain properties. These personal sacrifices made over the long run will help improve housing stocks, home values, property tax bases, and thousands of local communities."

More than half of investors, 53.5 percent, expect home prices to remain the same in the next six to 12 months. Of the rest, 23 percent expect prices to fall. About 69 percent expect it would be easier to find properties in the next six months, though 43.5 percent expect it would be harder to find bargains.

Some 41.5 percent of investors expect it would be easier to sell their properties in the next six months, the survey said.

Only 18.5 percent of investors said they will engage in an all-cash purchase, while 75.5 percent plan to combine cash and credit to purchase a property. More than half (59.5 percent) plan to put down cash but finance more than half of the purchase.

Sixteen percent plan to put down more than 50 percent in cash and finance the rest. Of the cash-only buyers, eight out of 10 expect discounts from sellers.
About 65.5 percent of investor respondents expect the financing difficulties first-time buyers are having will make it easier for them to compete for properties, according to the survey.

"The fact that most real estate investors plan on combing cash and credit for their purchases goes against the conventional wisdom that investor transactions today are mostly cash-only sales," Berkowitz said.
"This suggests they're seeing tremendous or once-in-a-lifetime opportunities and may be tapping into credit or taking out second trusts on existing properties. The data also shows they're expecting high returns to match the level of investment they're making in an arena that is new to many investors."

Most, 59 percent, of investors said they were new to investing; only 36.5 percent had experience with more than one property transaction. Nearly half (48 percent) said they expected a profit of 20 percent or more from their property investments, equal to a 4 percent annual rate of return over five years, the survey said. Another 40 percent expected a profit of 10 percent.

8 Reasons You Should Be Working With a REALTOR

Not all real estate practitioners are REALTORS®. The term REALTOR® is a registered trademark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION of REALTORS® and subscribes to its strict Code of Ethics. Here's why it pays to work with a REALTOR®.

1. Navigate a complicated process. Buying or selling a home usually requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multipage settlement statements. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes.

2. Information and opinions. REALTORS® can provide local community information on utilities, zoning, schools, and more. They’ll also be able to provide objective information about each property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

3. Help finding the best property out there. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your REALTOR® to find all available properties.

4. Negotiating skills. There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5. Property marketing power. Real estate doesn’t sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a practitioner’s contacts through previous clients, referrals, friends, and family. When a property is marketed with the help of a REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.

6. Someone who speaks the language. If you don’t know a CMA from a PUD, you can understand why it’s important to work with a professional who is immersed in the industry and knows the real estate language.

7. Experience. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. Even if you have done it before, laws and regulations change. REALTORS®, on the other hand, handle hundreds of real estate transactions over the course of their career. Having an expert on your side is critical.

8. Objective voice. A home often symbolizes family, rest, and security — it’s not just four walls and a roof. Because of this, homebuying and selling can be an emotional undertaking. And for most people, a home is the biggest purchase they’ll every make. Having a concerned, but objective, third party helps you stay focused on both the emotional and financial issues most important to you.

Hurricane Season is Only 6 days Away

GAINESVILLE, Fla. – May 26, 2011 – Hurricane season is only days away, and a University of Florida researcher says that planning is important for everyone, but especially for older adults or their caretakers.

Hurricane season begins June 1 and preparations can take a little longer and require a bit more attention to detail for older adults and their caregivers, says UF’s Linda Bobroff, a family, youth and community sciences professor who helped update a disaster preparation guide.

The guide, called Disaster Planning Tips for Older Adults, is for anyone planning for disaster, but it includes special recommendations that apply to older adults.

For example, the guide notes that everyone in hurricane-prone areas needs, ideally, a two-week supply of drinking water – one gallon per person, per day, and more if you have pets. But because older adults become dehydrated more easily, it’s a good idea to store more water than recommended. It also suggests that planners make sure the jugs aren’t too heavy, and a sanitized two-liter plastic soda bottle might be a better option than gallon jugs. Caps should be easily removed by someone with arthritis.

Everyone needs a three- to five-day nonperishable food supply, the guide says, but for older adults, dietary needs such as low sodium or high fiber foods should be considered. Smaller cans of food that can be eaten at one meal or as a snack are helpful, because older adults are more vulnerable to food-borne illness. And make sure you have a manual can opener.

It’s vital for families to talk about disaster scenarios before they happen, Bobroff says. If a family has already decided what to do in an emergency, it can save precious time that would otherwise be spent debating whether or not to go and haggling over what to bring.

“You have to talk about it,” she says. “Just knowing that if the roof blows off, or if we start to get flooded, we’re leaving – having the plan already mapped out helps.”

Carolyn Wilken, a UF associate professor emeritus, and Emily Minton, program coordinator for UF’s Elder Nutrition and Food Safety Program, also contributed to the update.

For more information on preparing for disasters, visit the Extension Disaster Education Network (EDEN).

© 2011 Florida Realtors®

A New Sign on Gulf Blvd, Or A Sign of the Times?

Housing Affordability Indicators at Highest Level in 20 years !

WASHINGTON – May 25, 2011 – Nationwide housing affordability during the first quarter of 2011 rose to its highest level in the more than 20 years it has been measured, according to National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) data released today.

The HOI indicated that 74.6 percent of all new and existing homes sold in the first quarter of 2011 were affordable to families earning the national median income of $64,400. This eclipsed the previous high of 73.9 percent set during the fourth quarter of 2010 and marked the ninth consecutive quarter that the index has been above 70 percent. Until 2009, the HOI rarely topped 65 percent and never reached 70 percent.

“With interest rates remaining at historically low levels, today’s report indicates that homeownership is within reach of more households than it has been for more than two decades,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “While this is good news for consumers, homebuyers and builders continue to confront extremely tight credit conditions, and this remains a significant obstacle to many potential home sales.”

Syracuse, N.Y., was the most affordable major housing market in the country during the first quarter of the year. In Syracuse, 94.5 percent of all homes sold were affordable to households earning the area’s median family income of $64,300.

Also ranking near the top of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pa.; Indianapolis-Carmel, Ind.; Warren-Troy-Farmington Hills, Mich.; and Toledo, Ohio.

Among smaller housing markets, the most affordable was Kokomo, Ind., where 98.6 percent of homes sold during the first quarter of 2011 were affordable to families earning a median income of $61,400. Other smaller housing markets near the top of the index included Monroe, Mich.; Cumberland, Md.-W.Va.; Elkhart-Goshen, Ind.; and Springfield, Ohio.
New York-White Plains-Wayne, N.Y.-N.J., led the nation as the least affordable major housing market during the first quarter of 2011. In New York, 24.1 percent of all homes sold during the quarter were affordable to those earning the area’s median income of $65,600. This marks the 12th consecutive quarter that the New York metropolitan division has held this position.
Other major metro areas near the bottom of the affordability index included San Francisco-San Mateo-Redwood City, Calif.; Los Angeles-Long Beach-Glendale, Calif.; Honolulu; and Santa Ana-Anaheim-Irvine, Calif., respectively.

San Luis Obispo-Paso Robles, Calif., where 47.6 percent of the homes were affordable to families earning the median income of $72,500, was the least affordable of the smaller metro housing markets in the country during the first quarter. Other small metro areas ranking near the bottom included Santa Cruz-Watsonville, Calif.; Laredo, Texas; Ocean City, N.J; and Santa Barbara-Santa Maria-Goleta, Calif.

© 2011 Florida Realtors®

Housing Survey Results || 4 out of 10 moved for housing related issues

WASHINGTON – May 23, 2011 – Among those who moved between 2009 and 2010, more than four out of 10 (16.4 million or 43.7 percent) did so for housing-related reasons, such as the desire to live in a new or better home or apartment, according to data from the U.S. Census Bureau’s “Geographical Mobility: 2010.”

Among other reasons for moving, people cited family concerns (30.3 percent), such as a change in marital status, employment needs (16.4 percent) and other factors (9.5 percent).

In 2010, 37.5 million people 1 year and older changed residences in the U.S. within the past year. At 12.5 percent in 2010, the mover rate was not statistically different from 2009.

“Mover rates differ by characteristics, such as age, race, Hispanic origin, marital status, income or even whether the housing unit is owned or rented,” said David Ihrke, survey statistician in the Census Bureau’s Social, Economic and Housing Statistics Division. “Tracking mobility allows us to examine shifts in demographic trends in the population for the nation, regions and metro areas as a whole.”

In 2010, 69.3 percent of all movers stayed within the same county, 16.7 percent moved to a different county in the same state, 11.5 percent moved to a different state, and 2.5 percent moved from abroad to the U.S.

By region, people in the Northeast were the least likely to move, with a mover rate of 8.3 percent in 2010. The Northeast was followed by the Midwest (11.8 percent), the South (13.6 percent) and the West (14.7 percent). The mover rate for each region was not significantly different between 2009 and 2010.

Principal cities within metropolitan areas experienced a net loss of 2.3 million movers, while the suburbs experienced a net gain of 2.5 million movers.

Other highlights:

• Of the civilian population 16 and older who were unemployed, 19.8 percent lived in different residence one year earlier compared with 12.4 percent who were employed. Among those not in the labor force, 9.5 percent lived in a different residence one year earlier.

• Generally, people with incomes below the poverty line were more likely to move than those just above the poverty line. In 2010, 23.6 percent of people with incomes below 100 percent of the poverty line had moved within the last year compared with 16.5 percent of people with incomes between 100 and 149 percent of the poverty line.

• The black alone population had the highest mover rate (16.7 percent), followed by Hispanics (15.6 percent), Asian alone (13.9 percent) and white alone not Hispanic (10.8 percent).

© 2011 Florida Realtors®

3 Keys to Uncover Probable Property Appreciation || Value

NEW YORK – May 20, 2011 – Supplying key housing data based on ZIP code – instead of an entire geographic area – can give investor clients greater insight into short-term and long-term appreciation potential of a property and help them make more informed decisions, experts say.


Here are three key pieces of data that real estate professionals can provide to help uncover homes with the greatest probability for appreciation:

▪ Home valuations: Home valuations by ZIP code compared with the foreclosure inventory for that same ZIP code can offer insight into the health of the area’s housing market.

▪ Foreclosure inventory: A better snapshot at the employment outlook in the area can be found by evaluating the number of foreclosure homes than even the city-wide employment figures, writes Elaine Zimmerman in a recent RISMedia article. An area with less than one foreclosure per 10,000 dwellings indicates low unemployment for that ZIP code.

▪ Asking prices: Compare the asking price for foreclosures in a ZIP code to similar non-foreclosure properties in the same ZIP code. If there isn’t a more than 20 percent difference between the two, the area will recover quickly; the smaller the percentage of difference, the more quickly that ZIP code will rebound, Zimmerman notes.

Source: “How to Use Foreclosure Data to Identify Investment Opportunities,” RISMedia (May 17, 2011)

© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688

International Buyers Boost U.S. Home Sales - Big Time!!!

 

WASHINGTON – May 19, 2011 – The U.S. continues to remain a top destination for foreign buyers as international purchases surged by $16 billion this year – one of the highest increases in recent years – according to the National Association of Realtors®’ 2011 Profile of International Home Buying Activity.

According to the survey, total residential international sales in the U.S. for the year ending March 2011 equaled $82 billion, up from $66 billion in 2010. Total international sales were split evenly between non-resident foreigners and recent immigrants, while combined total domestic and international existing-home sales in the U.S. reached $1.07 trillion.

Florida had 31 percent of total international transactions this year, the most of any state. California had 12 percent, Texas had nine percent, and Arizona rounded out the top four with six percent of international transactions.

“The U.S. has always been a desirable place to own property and a profitable investment,” says NAR President Ron Phipps. “In recent years, we’ve seen more and more foreign buyers coming here to take advantage of low prices and plentiful inventory. In addition to the advantageous market conditions, Realtors in this country have a global perspective and experience in working with clients from different cultures and real estate practices, helping them bring value to their international clients.”

Historically, foreign buyers have been attracted to property ownership in the U.S. for a number of reasons. U.S. homes are generally less expensive than comparable foreign properties, homes in this country are viewed as a secure investment, and the U.S. market offers rental opportunities and long-term appreciation potential.

More recently, Realtors have noticed new factors motivating foreign buyers. Many U.S. colleges and universities have a significant number of international students, and some foreign families are purchasing U.S. properties in college areas so their child has a place to live. Another source of international demand is foreign executives temporarily working in the U.S., some of whom prefer to purchase a residence instead of renting.

“Besides the strength of the dollar and the general economic trends in the U.S., international buyers are also recognizing the benefits of homeownership in this country, especially in the case of recent immigrants,” says Phipps. “Many foreigners perceive owning a home here as an important accomplishment in their efforts to become established in this country.”

Recent international buyers came from 70 different countries, up from 53 countries in 2010. For the fourth consecutive year, Canada was the top country of origin, with 23 percent of sales to foreigners. China was second most popular, with nine percent of international sales this year. Tied for third were Mexico, the U.K. and India. Argentina and Brazil combined reported an increase in foreign sales with five percent, up from two percent in 2010. The top five countries of origin accounted for 53 percent of international transactions in 2011.

The average price paid by an international buyer was $315,000 compared to the overall U.S. average of $218,000. However, 45 percent of international purchases were under $200,000. This price segment has grown significantly over the years, most likely due to overall price declines in the U.S., as well as the strengthening of some foreign currencies.

Almost every state had at least one international transaction in the past year. The four states with the heaviest concentration of international buyer activity have remained the same over the past five years.

Foreign buyers are primarily interested in three factors when deciding where to buy in the U.S.: proximity to their home country, convenience of air transportation, climate and location. Generally, the East Coast attracts European buyers. The West Coast remains popular for Asian purchasers. Mexican buyers are traditionally attracted to the Southwestern markets. Florida is most popular among South Americans, Europeans and Canadians.

Similar to last year, 28 percent of Realtors in 2011 reported working with an international client. Fifty-five percent served at least one foreign client, while the bulk of international transactions were handled by a small percentage of Realtors. Only eight percent of members obtained 50 percent or more of their transactions from international clients.

Sixty-one percent of foreign buyers purchased a single-family home while 36 percent bought a condo/apartment or townhouse.

In addition, 62 percent of international purchases were reported as being all cash. This percentage is significantly higher than all-cash purchases for domestic buyers, mostly due to the differences in international credit reporting standards.

Financing challenges continue to be a major hurdle for international buyers, with 32 percent reporting these as their reason for not buying a home. Many Realtors reported that their foreign clients faced mortgage financing issues, as well as problems with legal, tax and immigration laws.

To download the full report, visit NAR’s website.

© 2011 Florida Realtors®

High Gas Prices Trigger Changes in Buyer Behavior

The rise in gas prices is influencing buyer decisions as they shop for a new home, causing more buyers to make short commutes and home offices a top priority, according to a new Coldwell Banker survey of more than 1,000 of its real estate professionals about buyer trends.

Seventy-five percent of the real estate professionals surveyed say the spike in gas prices is influencing their clients’ decisions on where to live. What’s more, if gas prices continue to increase, 93 percent predict that even more buyers will choose to live somewhere closer to their work.

Gas prices are topping $4 a gallon and higher, and are up about 30 percent over last year, which is starting to put a dent in many Americans’ pocketbook.

More real estate professionals also report that the rise in gas prices is prompting more buyers to look for homes that will allow them to work-from-home. Indeed, 77 percent of those surveyed say that more of their buyers are showing an interest in having a home office compared to five years ago.

Gas prices also seem to be spiking a renewed interest in urban living. More than half of real estate professionals surveyed say they are seeing more buyers wanting to target homes in urban areas compared to five years ago, citing shorter commute times, being able to walk to more places, and being near public transportation as the most likely reasons for the urban-area migration.

More buyers are also choosing homes closer to shops and services due to the increase in gas prices, according to the survey.
Source: “Coldwell Banker Real Estate Survey Finds Spike in Gas Prices Is Impacting Where Home Buyers Choose to Live,” MarketWire (May 18, 2011) and “In Consumer Behavior, Signs of Gas Price Pinch,” The New York Times (May 17, 2011)

Freddie Launches Summer Promotion on Foreclosures

MCLEAN, Va. – May 18, 2011 – HomeSteps, the real estate sales unit of Freddie Mac, launched a nationwide sales promotion for its inventory of foreclosed homes.

The HomeSteps Summer Sales Promotion offers up to 3.5 percent for the buyer’s closing costs and a $1,200 selling agent bonus for initial offers received May 16 – July 31, 2011, and escrows that are closed on or before Sept. 30, 2011. This offer is valid only on HomeSteps homes sold to owner-occupant buyers.

A two-year Home Protect limited home warranty that covers electrical, plumbing, air conditioning, heating and other major systems and appliances is offered on some eligible HomeSteps homes. Home Protect also provides discounts of up to 30 percent on the purchase of appliances, though terms, conditions and limitations apply and not all homes or borrowers will qualify. For details, see www.HomeSteps.com/smartbuy.

For HomeSteps Summer Sales Promotion details and conditions, visit http://www.homesteps.com/.
© 2011 Florida Realtors®

Florida Home Sales UP || Condo Sales UP || 1st Q 2011

ORLANDO, Fla. – May 10, 2011 – Florida’s existing home and existing condo sales rose in first quarter 2011 compared to the same period a year earlier, according to the latest housing statistics from Florida Realtors®. Existing home sales increased 13 percent in 1Q 2011 with a total of 44,531 homes sold statewide; during the same period the year before, a total of 39,406 homes changed hands according to Florida Realtors. Statewide sales of existing condos in the first quarter rose 29 percent compared to the year-ago sales figure.

The statewide existing-home median sales price was $123,600 for the three-month period; in 1Q 2010, it was $131,100 for a decrease of 6 percent. Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in 1Q 2011 compared to the same three-month-period a year earlier, while 18 of the MSAs showed gains in condo sales, according to Florida Realtors.

Looking at Florida’s housing sector in the first quarter of 2011, Dr. Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness, pointed out that the recovery is gaining strength. “Florida Realtors’ first quarter report shows sales picking up significant momentum after decelerating in the fourth quarter of last year, though prices are continuing to slip,” Snaith said. “The labor market recovery is just starting to blossom – once it is in full bloom it will provide some needed curb appeal for Florida’s struggling housing market by creating a new pool of qualified buyers and preventing other homeowners from falling victim to foreclosure.

“Distressed properties are proving to be an ongoing complication in the healing process of Florida’s housing market,” he added. “The foreclosure moratorium and Florida’s overburdened court system have slowed the process of handling foreclosures. Until these properties can move through this process, complete recovery will be difficult to attain.”

In the year-to-year quarterly comparison for existing condo sales, 23,375 units sold statewide in the first quarter compared to 18,170 units in 1Q 2010 for a 29 percent increase. The statewide existing-condo median sales price was $80,700 in 1Q 2011; a year earlier, it was $96,100 for a decrease of 16 percent. Sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes, according to the National Association of Realtors® (NAR). The median is a typical market price where half the homes sold for more, half for less.
Low mortgage rates continued to be available during the first quarter of the year. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 4.85 percent in 1Q 2011; one year earlier, it averaged 5.0 percent.
© 2011 Florida Realtors®

Housing Indicator Numbers

Florida existing home sales (month-to-year comparison) +12%

Florida existing condo sales (month-to-year comparison) +24%

Florida existing home median price $126,300

Florida existing condo median price $84,300

Florida consumer confidence 72

National existing home sales (month-to-month, all housing types) +3.7%

National existing home median price $159,600

National mortgage rates 4.78%

Home Improvement Costs InfoGraphic || Room by Room

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Source: Fixr Remodeling Cost Guides