Archives for April 2011

U.S. Housing Market Intelligence Report (April 2011)

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Categories are graded from A thru F:

Economic Growth:  C-
Economic growth trends were mixed this month, as several key metrics ticked up while others ticked down.  The employment market improved once again as year-over-year employment growth has now been positive for seven consecutive months, and unemployment now stands at its lowest level since March 2009.

In addition, retail sales improved this month, while real GDP for the fourth quarter was revised slightly higher to 3.1%. On the downside, the rate of inflation (both full and core) continues to increase, while the average length of unemployment increased to an all-time high, currently at 39 weeks.

Affordability:  D+
Affordability has rarely been better for entry-level buyers, and rarely worse for move-up and move-down buyers, who need to extract equity from their existing home.  As such, we continue to grade our overall affordability indicator at a D+.  After increasing every quarter from Q1-2009 through Q2-2010, owner equity declined for the second consecutive quarter in Q4-2010; a reflection of the continued downward pressure on home prices.

Mortgage rates remain near historical lows, and home prices have dropped from unrealistic boom levels to entirely sustainable levels, with some markets like Las Vegas well into “over-correction” territory.  Our housing-cost-to-income ratio remains low, now at 22.4%, and our JBREC Affordability index stands at a remarkable 0.0, which is the highest possible rating for affordability.  The median home price-to-income ratio has declined to 2.8, which is less than the long-term historical norm and near a level conducive to market health.

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The Return of Real Estate – Fortune Magazine

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This week’s issue of Fortune Magazine proclaims the “return of real estate”.  I didn’t think I would see an article like this from a mainstream publication so soon – especially from one of the most trusted financial magazines.  Could this mark the beginning of more good news to come?

“Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing,” writes Shawn Tully.

The article covers five trends as justification for improvement in the real estate market:

  1. The steady decline in prices which has been going on nationally since 2005 has finally hit a level where it costs less to own a house than to rent in many cities.
  2. The supply of renters has increased sharply in the recent past, which has already begun to cause rapid increases in rental rates.
  3. Home builders have held back on building new homes for several years, creating the conditions for a shortage of new homes when demand goes up just a little bit.
  4. Investors, responding to the big demand for rental units, are rapidly buying down the overhang of foreclosed homes which has dogged the market.
  5. Finally, the U.S. economy seems to be on the path to improvement, although we still struggle with high unemployment and weaker-than-normal consumer spending.

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Atlanta Investment Property with Seller Financing

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We just released our latest real estate investment opportunity in Atlanta, Georgia.  These are fully refurbished single family homes within the greater Atlanta market.  The properties are delivered tenant occupied and managed by our professional management firm.

The properties provide investors with a positive cash flow of $300 to $500 per month (assuming a 40% down payment).  They also have capitalization rates starting at 10% providing investors with solid returns.

As good as this investment is, the “kicker” is our exclusive NO qualification seller financing.

Our No Credit, Stated-Income Investment Program is a unique real estate acquisition system enabling investors who cannot or do not want to qualify for conventional financing to purchase our refurbished and rented single family properties.  By removing all the “big bank” financing restrictions, investors can purchase an unlimited number of our income properties without any credit or income qualifications.

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