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Archive for the 'Housing Market' Category


Home Prices Rise… Is a Housing Bubble Forming?

We recently reported that home prices are continuing to rise across most of the nation.  This has created concern in some pundits that a housing bubble, like we saw ten years ago, is forming again.  We want to explain why these concerns are unfounded.

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What Rental Property Investors Can Expect in 2016

The 2016 housing market is expected to be a picture of moderate but solid growth, with increasing interest rates a minimal concern.  Rental investors will particularly benefit as property appreciates, rents rise to record heights and vacancy rates fall.

The housing market is looking more and more attractive for predictable yields as equities continue on their wild ride.  “Extreme volatility in the stock market may drive more investors to invest in relatively stable assets like housing,” said Anthony Cazazian, senior VP of national sales and business development at B2R Finance.

Here are four macro trends generally agreed upon by leading housing authorities to take place in 2016.  Taken together, they make a solid case for investing in rental housing.
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Home Prices: Past, Present and Future

ClockCoreLogic released their most current Home Price Index last week. In the report, they revealed home appreciation in three categories: percentage appreciation over the last year, over the last month and projected over the next twelve months.

Here are state maps for each category:

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What’s Different about the Latest Housing Boom?

After peaking in 2006, the median U.S. house price fell about 30%, finally hitting bottom in late 2011.  Since then, house prices have rebounded strongly and are nearly back to the pre-recession peak.

However, conditions in the latest boom appear far less precarious than those in the previous episode.  The current run-up exhibits a less-pronounced increase in the house price-to-rent ratio and an outright decline in the household mortgage debt-to-income ratio—a pattern that is not suggestive of a credit-fueled bubble.

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Cities with the Biggest Rent Hikes

Families are facing much bigger rent checks this year — especially those living in cities in the South and West.

Rent prices have been rising across the country, but rents for single-family homes in these two parts of the country increased the most in the last year, according to a report from RentRange.

“The biggest increases were in the areas where the [housing] market was most depressed,” said CEO Wally Charnoff.

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How To Predict and Prepare for Another Market Crash

As you have probably heard, China seems to be on the edge of a significant crash.  This has prompted questions of how to predict and prepare for the next real estate market crash in the US.  We’ve had a couple of suggestions that tracking NODs (Notice of Default – the first step in the foreclosure process) would be a good indication.  We have no crystal balls but here are our thoughts.

There is probably no single, reliable technique for predicting the next real estate market crash because each crash has a different cause.  More than once we’ve been asked if tracking NODs would be a good predictor of a coming crash.  I believe tracking NODs will tell you what has already happened as opposed to what is going to happen.

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Rental Crisis in the US

There are more renters now than in the history of the United States.  Unfortunately, we’re also in “the worst rental affordability crisis that this country has ever known,” per the U.S. Secretary of Housing and Urban Development.  That’s a bad combination.

Let’s take a look at what happened…

 

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When To Buy Investment Real Estate

When people ask, “Is it still a good idea to buy real estate now?”, there are often two underlying problems.  First, is a loss of direction.  Second, “The Stock Market Mentality.”  Put simply, in the stock market, timing is all important.  If you don’t sell today, tomorrow your stock may be worth 50% less.  If you don’t buy today, tomorrow it may cost 50% more.  Fun, adventure and excitement.  Keep away from it.

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Do Zillow Zestimates Mislead Real Estate Investors?

We know Zestimates aren’t exactly accurate, but new real estate investors rely on those numbers all too often.

Zillow states on its website that it is a “useful starting point” to assist home-buyers with valuing real estate properties.  Some real estate investors say that though Zillow is indeed a data resource, it can mislead investors about the real value.

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Economic Impact of Every Home Sold  [INFOGRAPHIC]

Every time a property is sold, the surrounding economy gets a boost.  Local businesses and industries benefit at every stage of the process from the sale to post-sale purchases.  These include aspects like home construction costs, real estate brokerage, mortgage lending and title insurance.

Hawaii leads the way with a $177,000 boost to their local economy.  The national average is $57,500.

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Tenants Find it Cheaper to Rent Than to Buy

In most areas of the country, homeownership costs more than renting.  Many economists with calculators claim the opposite, but the calculations and conclusions are often highly misleading.  As is often the case, the devil is in the details.

We recently reviewed one highly publicized calculation that owning was cheaper than renting in almost all markets.  That calculation had a number of outdated assumptions, including: Read more »

Rent Inflation Shows No Signs of Letting Up

Landlords keep cranking up rents, with annual increases far outpacing price growth elsewhere in the economy, according to recent data released this summer.

Rents in May were up 3.5% from a year earlier, while a gauge for overall consumer prices showed no growth according to the U.S. Labor Department.

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7 Steps for Picking a Strong Real Estate Market (Part 2)

In part one of 7 Steps for Picking a Strong Real Estate Market we discussed the first four litmus tests required for investing in a suitable market.  In this second part we will cover the last three tests to consider as part of your investment due diligence:

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7 Steps for Picking a Strong Real Estate Market (Part 1)

A rental property is only valuable to you if there is a person willing and able to use your property and pay you rent.  If you buy a house standing by itself in the middle of a desert, your prospects of finding a paying tenant are poor.  You want a hassle-free cash-flow property near lots of well paid people.  Those people want to live near their jobs and the amenities they enjoy.

For a property to be a suitable, it must be located in a market that passes the following litmus tests:

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Rental Growth Where You Least Expect It

Take a drive through the urban portion of any major city and you will likely see cranes and construction crews dotting the landscape, building what appears to be an endless supply of apartment units.  Your eyes are not deceiving you.  Construction in 24 of the top 27 apartment markets in the country has eclipsed 24-year historical averages.

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