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Posts Tagged ‘appreciation’

What The Volatile Market Means to Real Estate Single Family Home Investors

 

The Dow closed down 588 points last Wednesday as worries of a China Slowdown permeate the business community. Even though there was some recovery in the market on Wednesday the market is still volatile. In looking at this from the prism of a single family home investor; there are pros and cons to consider.

 

On the pro side, it’s already assumed that any interest rate hike by the fed will now be postponed until things feel stable. Since it takes time for a rate hike to translate to mortgage rates, we get more time with our delightfully low mortgages. Of course, since most mortgages have yearly caps, it will take even longer (in some cases much longer) for rates to climb in a significant way.

 

Also on the pro side, people are confused as to where money should operate. The knee-jerk

What The Volatile Market Means to Real Estate Single Family Home Investors
Great advice.

reaction is to have money sit as cash (with close to zero yields). However, when people are scared of stock markets, real estate and (especially) single family homes usually become more interesting as a safe hard asset that produces income, which we tell our clients at ICG as well.

 

People may also feel this is not a bad time to pull money out of stocks and finally buy a home for themselves since they might have been planning to do it anyway – this would not be a bad time to deploy that cash, right into locking in a low rate 30-year fixed loan. This, of course, would boost real estate markets in the single family home sector.

 

On the con side, obviously what is happening is not engendering a lot of overall economic confidence and more doom-and-gloom messages are circulating. This can create an environment where people “hunker down” which will not help the housing market.

 

During our upcoming 1-Day Expo, we have invited Dr.Lawrence A. Souzato to discuss this and other important economic waves now manifesting. Don’t miss it!

 

We will also have Ralph Bunje Jr. talking about reverse and regular 1031 exchanges and how to do them right, and Charles Byrd about using Evernote for business, and total life organization and efficiency. We will have market teams from the best United States markets and lots of Q & A, networking and learning. Anyone mentioning this blog can attend for free with two guests. Just email us at info@icgre.com or call at 415-927-7504. Looking forward to seeing you!

 

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First Quarter Real Estate 1-Day Expo a Success

Between the experts, we brought in to speak in December to those that joined us for the 1-day expo we had on Saturday, March 7, 2015, attendees are feeling the momentum of this year being a record-breaker for real estate investment. In March we had fantastic speakers. We heard from Tom Anderson, one of the best-known experts on the subject of real estate investing via your IRA account. He taught us about what works and what doesn’t. There are many types of real estate we can purchase via our IRA accounts and the advantages were something you will want to learn more about if you were not there. We are considering asking Tom and our other speakers to guest blog for us, so look for that.
In concert with Tom, we had invited Roger St. Pierre to tell us about getting loans for buying real estate via our IRA accounts. Roger taught us about special NON-RECOURSE loans and how they can enable us to infuse “safe leverage” into our IRA investing. Wow. Tom, like all of our speakers, are always great at really spending the time and energy in what they deliver to educate.
Attorney Brett Lytle gave a spectacular lecture that had everyone at the edge of their seats about asset protection. Brett covered fine points and state-specific details which were of crucial importance to the attendees. Since the first wall of asset protection is good insurance, we are inviting Joyce Feldman, who has great experience insuring real estate investors, to our NEXT 1-Day Expo on Saturday, May 30th.  We have various experts under consideration who will be joining Joy.

Getting updates from the market teams was fantastic as always. Things change consistently, and to have them there every quarter to let people know what is going on is critical. I have been producing this event for over 20 years now and I still learn every time.

We had lenders discuss the ever-changing new loan programs for investors. Since loan conditions are rapidly changing these days (getting better), including loans to foreigners, we will have expert lenders at the May 30th expo as well. Just the Q&A sessions and the audience engagement were in themselves incredibly instructive. What a great day!

Looking forward to seeing you on Saturday, May 30th. To register please email us at info@icgre.com or call at 415-927-7504. Mention this blog and you can attend for free AND have your guests attend free as well.
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Price Gains Slowing; Markets May Stabilize

In a Wall Street Journal article from December 31, 2014, by Kathleen Madigan, it is mentioned that overall in the United States (as per the Case-Shiller 20 City Index) prices were up 4.6% from the previous year by the end of October 2014. The pace of growth has slowed from 4.8% in September and 10% in the first quarter. The article goes on to say this could indicate the markets are moving toward stabilization.

Understandably, in Florida, there is likely to be more price appreciation, as the state as a whole reflects the recession effect due to the ultra-slow judicial foreclosure periods. All in all, however, it’s definitely time to look to the stable markets with great economies and low unemployment. It is time for the classic long term hold of houses, where the tenant pays off the (very low) fixed-rate mortgage while inflation keeps eroding it.

No doubt newer homes will figure more prominently in 2015. The classic investment thesis holds strong in 2015 with an extra HUGE bonus: super low interest rates are still here – but many think they will vanish in the coming years.
Happy New Year!
Below is the article in its entirety for your review:

SLOWING PRICE GAINS SUGGEST STABLER MARKET

By Kathleen Madigan (WSJ)
Updated Dec. 31, 2014 12:41 a.m. ET

Yearly growth in home prices across the U.S. continued to moderate early in the fourth quarter, suggesting the housing market may be settling into a more sustainable recovery.

Prices nationwide increased 4.6% in the year ended in October, according to the Standard & Poor’s/Case-Shiller home-price report released Tuesday. That was down from 4.8% in September and a far cry from the 10%-plus gains in the first quarter. A 20-city measure more closely followed by economists increased 4.5% over the year in October, also down sharply from double-digit gains earlier in the year.

Demand for housing has slowed significantly in recent months despite stronger job growth, a rebound in consumer confidence and falling gasoline prices, which puts more money into consumers’ pockets. Sales of both new and existing homes fell in November. Yet the slowing trend is a positive for the 2015 housing outlook, say economists who follow the industry.

Price appreciation of about 5% is close to a sweet spot where more buyers are able to purchase a home and current owners accumulate housing wealth, but the market avoids a price bubble that could trigger a financial crisis, as happened in 2007.

“It’s a healthier market because first-time buyers feel more comfortable about coming in,” said Bill Banfield, vice president of capital markets at mortgage lender Quicken Loans, adding that the industry needs more first-time buyers to buy smaller homes that allow existing owners to move up into new construction or to an existing house that better suits their needs.

For 2014, however, first-time buyers accounted for only 29% of existing-home sales, according to data from the National Association of Realtors, much less than the historical norm of 40% for sales of primary residences.

Economists at IHS Global Insight agree slower price appreciation is positive for the housing outlook. “Home appreciation at a reasonable pace makes homeownership an attainable dream,” said Stephanie Karol, a U.S. economist at IHS Global. A repeat of the double-digit growth seen in early 2014 “would risk producing a bubble,” she said.

But just as each real-estate market is local, she pointed out the Case-Shiller price index of 20 cities masks the individual pricing experience going on across the country.

“Prices are rising fastest in cities such as San Francisco where geographic or legal constraints limit new construction,” Ms. Karol said. Cities with fewer zoning laws and more space—such as Charlotte, N.C., and Phoenix—are seeing smaller price gains.

Still, the average home-price gain of about 5% is good, she said, and IHS Global is upbeat about home demand and prices in 2015. The forecasting firm projects home prices, as measured by an index compiled by the Federal Housing Finance Agency, will increase 5% over the course of next year and sales of new and existing homes will average 5.92 million, up from 2014’s current pace of about 5.3 million.

Here is a link to the Wall Street Journal U.S. Housing Market Tracker:

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Historic Decline in HomeOwnership affects Economy, Bodes well For Investors

In a Wall Street Journal article from March 27, 2017, by Laura Kusisto, as well as in a few blog entries on WSJ, the point is made that homeownership in the US is at a historic low. At 63.7% homeownership, it is the lowest such number for the past 48 years!
The reasons given for it include more strict lending practices following the recession. Perhaps another issue is that the recession is still fresh enough to have taken the belief away that your home will “always appreciate “ in value and will serve not only as a residence but as a major lifelong investment. Some people may no longer think so.
Add to that the natural desire of people to be free to move at will, and we have only 63.7% of homeowners in the US as of the 4th quarter of 2016.
As investors, of course, we are quite familiar with the powerful financial effect owning houses can have on our future, especially if we finance them with the incomprehensible 30-year fixed loans still available, and at still super low rates.
Having 63.7% homeownership percentage means, of course, that a full 36.3% of the population are renters! That is about 117,000,000 people!
Those of us who know the value and power of investing in houses and holding them as rentals can only look at this statistic as a positive – obviously, these renters need a place to rent and we will have a larger renter pool available for our homes. Sure some single people may want to rent an apartment, but families usually prefer renting a single-family home.
Coupling this data regarding the highest number of renters available to us in nearly 50 years, with the still-low interest rates available on 30-year fixed rate loans, means this is an excellent time to stock up on single-family homes as investments.
Interest rates are on the way up. The fed keeps reminding us they will continue to raise rates. Having a period of such low rates (despite the small “Trump Bump” we experienced recently), makes it a special time to buy and hold.
If you are under the FNMA allotted 10 loans per person (20 per married couple if they buy separately), it is high time for you to go out there and purchase brand-new single-family homes in good areas, finance them using these great 30-year fixed rate loans, which will never ever keep up with inflation (thus they will get eroded by inflation as to their real dollar value). The homes will be managed by local property managers we use ourselves in the various cities in which we invest.
We will discuss this as well as many other important topics for investors, at our quarterly ICG 1-Day Expo near the San Francisco Airport on Saturday, May 20th. We will have experts lecturing on important topics, lenders, market teams from the best markets in the U.S., and lots of Q&A, networking, and learning. Just send us an email at info@icgre.com. Just put in in the subject line, “Saw your blog on homeownership” and list your name and those of your guests. We will confirm!  See you on May 20th. 
 

 

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Appreciation Rates Slow Across the US

Multiple sources report slower appreciation rates in the U.S. overall, year-over-year. The amounts vary from an average of a mere 2.6% all the way to 6%.
It’s hard to attribute that much importance to such general overall numbers. However, the U.S. is not one real estate market but a few HUNDRED local sub-markets. The state of Florida continues its march upwards in the aftermath of the recession and the price improvement that followed. Due to the much slower judicial foreclosure process in and due to the strain on the state’s court system, there are still numerous foreclosures that started as far back as 2008 and are not resolved. This creates a steady “diet” of freshly foreclosed homes, adding to the supply equation and mitigating super-fast rises like we have seen in Arizona and Nevada.

The FL numbers should be superior to the average U.S. numbers reported.  In addition, stable markets are becoming more popular. Texas is becoming a sellers’ market and Oklahoma City is attractive due to its stability, low unemployment rate (reportedly 3.8%), VERY low property taxes and the newly-found reserves of oil & gas; reportedly 3.5 times that of the reserves in North Dakota.
We will discuss this, as well as the ever-changing lending landscape (for the better that is), 1031 exchanges and year-end tax strategies at our upcoming 1-Day Expo on Saturday, December 6th from 9 to 5 p.m. near the San Francisco Airport (click here for details).
Mention this blog and you can attend free with up to two free guests (just email us at info@icgre.com). As always, there’s lots of learning, networking, extensive Q&A’s and meeting the market teams. This time, Dallas will be present in the new markets. Looking forward to seeing you there and Happy Holidays.
 
Appreciation Rates for year end must attend for real estate investors!
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Appreciation Rates Grind to a Halt

As you may have seen in the media lately, most of the best-appreciating markets have seen a significant slow-down in the appreciation rate. Even more accurately, I get news from our teams in the field that this is the case. You can see it in some of the fastest appreciating markets like Phoenix, and even in Las Vegas (despite the upwards pull of the inventory-suffocating SB321 which came into effect on 10/1/2013 and is a very strong pull on home prices).
 
Many other fast-appreciating markets are also leveling off. California markets and even some Florida markets have eased up some in the past couple of months. One obvious reason is seasonal – this is traditionally the slowest period of any year. However the rising interest rates have been keeping some would-be buyers at bay, and the prices themselves, having become higher – have put other buyers off. Some investors are starting to feel that they missed the boat in places like Phoenix due to the 70% gain it displayed in the past two years.
 
Well even in Phoenix, after a 70% gain in prices and now on a “respite” from appreciation, the prices are not that much above construction costs. Builders are still struggling to beat the prices of existing homes, and the intrinsic value is excellent. The same holds true in Las Vegas. Florida was already an excellent value (recall we discussed the judicial foreclosure process in FL slowing down market absorption of foreclosed homes, thus damping supply shortages somewhat) and now is poised to produce even better deals. It is not hard to buy a FL property in Jacksonville or Orlando/Tampa for substantially less than construction costs.
 
For investors, there is good news in what is happening. Our limited “window of opportunity” seems to be extending more. It is an excellent time to pounce on attractive Single Family Homes. We will discuss this and lots of other relevant and important new market data at our 1-Day Expo THIS SATURDAY! We invite you to attend (free for you and associates if you mention this blog – just email us at info@icgre.com)We will also have an OBAMACARE expert to guide us through the maze, and outstanding expert speakers in addition to lenders, and market teams straight from the trenches. 
 
Looking forward to seeing you there!

 

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