Best Bets For Real Estate Investors in ’19

In 2019, most real estate investors will want to stay away from the cities with soaring prices, where they’re more likely to end up holding the bag than to strike it rich, this is according to Local Market Monitor’s Ingo Winzer in a recent essay on Forbes.com.  If the name sounds familiar, each month we hear from Winzer in his National Economic Outlook where he shares his thoughts on developments taking place in the U.S. economy.

“You can never know when a real estate bubble will burst – I happen to think it won’t happen in 2019 – but in places like San Francisco, Seattle, Miami and Denver, caution is now the order of the day. If you own property in these spots and plan to sell, don’t wait until the market has peaked. And if you’re looking for a good place to put your money, you should consider instead the 20 markets I’m listing here.”

Click here to read the full story at Forbes.com.

 

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What is an Opportunity Zone?

We have had several interesting posts about Opportunity Zones and their game-changing potential for areas all across the country.  Put simply an Opportunity Zone is an economically-distressed community where new investments, under certain conditions, are eligible for preferential tax treatment.  They were created by Tax Cuts and Jobs Act in December, 2017.   Today’s infographic from Heffler, Radetich & Saitta calls them  a new avenue for community investment that looks to spark economic recovery in targeted areas of the country, taking aim at $6.5 trillion in unrealized capital gains estimated to be in the market.  Indeed, so now you know…..Happy Friday!!!!

Hat tip to Heffler, Radetich & Saitta.

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America’s Median Home Prices by County

According to data recently illustrated by the National Association of Realtors, the price of a typical home was $235,000 in Q3 of 2018. They used data from the FHFA and American Community Survey (ACS) to calculate a median home value for 3,119 counties and county-equivalents across the United States.  Interestingly, their estimates show that 87% of counties had a lower median home value than the national level. Indeed…no go dive in.

Click on the above map to make it interactive

Click here to read the full story at the National Association of Realtors.

 

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Metros Where Flipping is Up the Most

If you’re a regular reader of our posts then you’ll know we run stories about “flipping” fairly often.  Along those lines,  a recent article on Realtor.com pointed out some interesting characteristics about the current market for flipping houses.  With the slowdown in housing market now taking place, they caution that falling home prices can eat into the ROI (return on investment) for flipping houses – even as the actual work is being performed!  So, they put pen to paper to find out where home flipping is up (and down), all across America.   They found that markets with the biggest drop in flips are areas where prices are slowing down, such as larger coastal cities where costs got ahead of what buyers can afford.  And, interestingly, the places where flips are up tend to be the smaller, more affordable areas that are getting an influx of new residents.  Indeed…

Millennials “want to move into a home that requires minimal work,” says Charles Tassell, chief operating officer at National Real Estate Investors Association. “A house that has already been rehabbed or flipped [and is priced lower than new construction]is really what they are looking for.”

Click here to read the full story on Realtor.com.

 

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SFRs are America’s Largest Source of Rental Housing

Freddie Mac

A new white paper from Freddie Mac says SFRs are the largest source of rental housing in America and they’re playing an important role in rural areas where they account for two-thirds of the rental housing stock. However, Freddie Mac says that the secondary market for SFR home loans is limited.  In addition, they point out that of the 43 million renter households ̶ in America today,  35.5 million live in urban and suburban markets and 7.5 million in rural markets.  Freddie Mac produced the white paper under their Duty to Serve plan, which aims to expand affordability and address America’s most persistent housing problems.

“Across the United States today there are nearly 43 million renter households ̶ 35.5 million live in urban and suburban markets and 7.5 million in rural markets. Typically, rental housing is thought of as apartments: high-rise and mid-rise buildings downtown, garden apartments out in the suburbs and federally subsidized housing around the country.  Indeed, over 18 million renter households live in multifamily buildings like that. But where do the other 25 million renter households live? The answer, for an overwhelming majority, is in single-family rental (SFR) homes.”

Some key findings:

  • The SFR market is the single largest segment of the rental market by valuation and households served
  • The overwhelming majority of SFRs are owned and operated by individuals or very small investors
  • There is a slow-growing middle-tier investor market with further potential for growth
  • Large-scale institutional investors are a new entry into the market, but are limited to a select few firms that own approximately 1 percent of SFRs
  • Apart from these select few institutional investors with access to the capital markets, there are limited secondary market opportunities for SFR loans with middle-tier investors that would provide liquidity and stability, and there is not a uniform set of terms and credit standards for loans on SFRs
  • Freddie Mac’s pilot included both middle-tier investors and affordable homes in select large-investor portfolios and demonstrated how a secondary market infrastructure focused on SFRs affordable at 80 percent of the area median income (AMI) could be created and operated, particularly for middle-tier investors

Click here to read the full report at Freddie Mac.

 

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Mortgage Delinquencies Continue to Fall

According to the latest The CoreLogic Loan Performance Insights Report the serious delinquency rate for September 2018 fell to 1.5%, representing a 0.4 percentage point decline compared with September, 2017. CoreLogic says declining unemployment rates and rising home prices were partly responsible for this decline.  The serious delinquency rates for Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), and conventional loans were 3.7, 1.9 and 1.1 percent, respectively.  The serious delinquency rate dropped significantly for all loan types in September 2018 compared with September, 2017, representing an 11-year low.

“A closer look reveals that today’s delinquency rates are influenced by older loans. The bulk of conventional loans that were seriously delinquent were originated between 2003 and 2009…About 67 percent of the conventional loans that were seriously delinquent in September 2018 were originated between 2003 and 2009 compared to just 23 percent of seriously delinquent conventional loans originated between 2010 and 2018.”

Click here to read the full report at CoreLogic.com.

 

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Choosing the Proper Water Heater

Water heaters…those potential time-bombs in that flip you just bought or an aging old trustworthy friend in your basement.  However, if you ever need to replace one, what kind do you replace it with?  And, depending the age, they can consume an inordinate amount of energy!  So which one is best for your property?  The folks at The Home Depot put together this handy graphic to help comprehend and discover the best solution for your situation…..Happy Friday!!!

 

Hat Tip to The Home Depot.

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CoreLogic’s Economic Predictions for 2019

CoreLogic recently came out with their Outlook for the U.S. Economy and Housing Market for 2019 in which they say, among many things, that higher interest rates will affect housing and the mortgage market – especially homeowners who currently have low-rate mortgages that will be incentivized to stay in their home rather than sell, keeping the new-listings flow relatively low.  They anticipate economic growth will be about 2.4% with the unemployment rate coming in around at a 50-year low of 3.4%.

Click here to read the full report at CoreLogic.

 

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Income & Housing Cost Burdens of Owner & Rental Households

A recent “chart of the week” from the Mortgage Bankers Association illustrates the number of owner and rental households with their corresponding income and housing costs burden.  Using data from Harvard’s Joint Center for Housing Studies’ State of the Nation’s Housing Report, they show various demographic shifts between renting and owning taking place before and after the last recession.  Perhaps most interesting was a post-recession shift from owning to renting among households earning between $30k and $75k.

“The numbers tell an important story about affordability, and also about how households and the housing market interacted before, during and after the Great Recession.” 

Source: MBA and Harvard’s Joint Center for Housing Studies

Click here to see the full report at the Mortgage Bankers Association.

 

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Older Motels As Condos & Affordable Apartments

While there aren’t as many as there used to be, there are still plenty of them around – and chances are you know where some of them are.  We’re talking about the old motels that used to be a ubiquitous presence along our roadways and in our small towns.  Many of them have been torn down or replaced however a recent article on Realtor.com tells us how the older ones being turned into affordable housing in markets with tight demand.  They even say that for the homeless and disabled “these adaptive reuse projects have been a godsend.”  They do point out that in some areas there is some push back from local governments and banks. Indeed.

“Though the residential conversion of failing motels is growing, there’s still a long way to go until it catches on nationwide. Banks don’t fully understand the concept, so many of the big players are reluctant to write loans on these conversions. City zoning and local building ordinances need to be rewritten.”

Click here to read the full story at Realtor.com.

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