Archive for the 'Housing Market' Category
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.
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.
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…
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.
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.
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.
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 »
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.
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:
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:
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.
Many investors frequently make the often damaging (or fatal) mistake of buying property with little to no consideration of the neighborhood and market the property is in. This can be one of the greatest mistakes an investor can make because if you buy in the wrong neighborhood or market, you’ll be stuck with the problems that come with it because of its location. Your only option may be to sell the property at a loss.
I’m currently reading Dr. Peter Linneman’s “Real Estate Finance and Investments” and it includes some great information on how to predict population growth — the number one indicator of real estate price appreciation and rent growth.
Here are some of my notes:
Classifying a neighborhood by “type”, or what many investors refer to as a “grade”, is typically nothing more than a subjective description. Although most people will have a general idea of what is being referred to, in my experience it is usually nothing more than a qualitative rather than quantitative description.
The simple fact is that the best real estate opportunities are not always found in your neighborhood or local market. You may have heard the saying, “all real state is local”. Well, with over 400 markets around the United States, some markets become more favorable than others as they transition through their individual market cycles. That means that at any given time there will be markets that offer you better opportunity in terms of cash-flow and/or appreciation potential.
There are many advantages to investing in markets that make the most sense: