Existing-Home Sales Down 1.7% in November
BY BRAD BECKETT ON DECEMBER 23, 2019
The National Association of Realtors is reporting that existing home sales were down 1.7% in November, however both the Northeast and Midwest regions both reported growth. The median existing-home price for all housing types was $271,300, up 6.2% from November, 2018 – marking 93 straight months of year-over-year gains. Total inventory at the end of November was 1.64 million units, down approximately 7.3% from October and down 5.7% from one year ago. Total unsold inventory was at a 3.7-month supply at the current sales pace. Properties remained on the market for around 38 days in November.
Lawrence Yun, NAR’s chief economist, said the decline in sales for November is not a cause for worry. “Sales will be choppy when inventory levels are low, but the economy is otherwise performing very well with more than 2 million job gains in the past year,” said Yun.
Click here to read the full release at the National Association of Realtors.
SECURE Act Signed into Law
BY BRAD BECKETT ON DECEMBER 23, 2019
Just before slipping (slithering?) out of town for their annual Christmas break, Congress passed (and subsequently signed by the President) the $1.4 trillion Further Consolidated Appropriations Act that will fund the federal government for the rest of FY 2020. However, sneakily tucked into that measure was something that will cause investors to take notice: the SECURE Act (Setting Every Community Up for Retirement Enhancement). The bill had already passed the House back in April, 2019 but had been languishing in the Senate until it was amended into this fast-tracked funding bill. National REIA partner Equity Trust pointed out that “the bill will affect IRA Required Minimum Distributions and inherited IRAs, among other aspects.”
Indeed…Yahoo Finance has pointed out some key provisions:
- Your RMDs Will Start age Age 72, not 70 ½
- You Can Contribute to Your Traditional IRA After Age 70 ½
- You’ll Have to Pay Taxes on Inherited IRAs Sooner (eliminates stretch IRAs)
- You May See a New Annuity Option in Your 401(k)
Housing Starts & Building Permits Up in November
BY BRAD BECKETT ON DECEMBER 23, 2019
The U.S. government is reporting that privately‐owned housing starts in November were at a seasonally adjusted annual rate of 1,365,000. This figure is 3.2% above October’s revised estimate of and is 13.6% higher than November. Single‐family housing starts in November were at a rate of 938k, which is 2.4% higher than October’s revised figure. November’s rate for units in buildings with five units or more was 404k. Privately‐owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,482,000. This figure is 1.4% higher than October’s revised rate and is 11.1% higher than November, 2018. Single‐family authorizations in November were at a rate of 918k, which is 0.8% higher than October’s revised number. Authorizations of units in buildings with five units or more were at a rate of 524k in November.
Click here to read the full report at the U.S. Census Bureau.
ABODO Says One-Bedroom Rents Rise at Year-End
BY BRAD BECKETT ON DECEMBER 4, 2019
National apartment listing site ABODO recently reported that the median nationwide rent price for one-bedroom units in November was $1,078 and $1,343 for two-bedrooms. ABODO uses over 1 million listings across the United States to calculate the median 1-bedroom rent price by city, state, and nation and then track the month-over-month percentage change. To avoid small sample sizes, they restrict their analysis to cities meeting minimum population and property count thresholds. Be sure to check out their extensive city list.
Zumper's National Rent Report for December '19
BY BRAD BECKETT ON DECEMBER 3, 2019
Rental information site Zumper recently released their National Rent Report for December, 2019 showing that the median national rent for 1-bedroom apartment was $1,230 (down 0.9%) and the median two-bedroom rent was $1,465 (down 1%). Year to date, one bedroom prices are up 1.8% and two bedroom prices are up 1.7%. Zumper analyzes rental data from over 1 million active listings across the United States. Data is aggregated on a monthly basis to calculate median asking rents for the top 100 metro areas by population, providing a comprehensive view of the current state of the market. The report is based on all data available in the month prior to publication…..be sure to check out their entire list of 100 cities.
Click on the graphic to make it interactive
A Buyer's Market is Coming- What Do we Do!!?
BY LOU GIMBUTIS ON DECEMBER 12, 2019
The front page of the Mecklenburg Times recently carried the headline “U.S. will become a buyers market in 2020, according to experts.” I knew it was coming, real estate is cyclical. The “experts” guess as to when is undoubtedly better than mine, I just know that it’s coming. We need only look to the past to see that Buyer’s Markets follow Seller’s Markets as inevitably as night follows day.
However, history is no simple mirror with which to gaze upon past events, but it is an instructor of great sagacity as regards what the future may hold. From a Buyer’s market we have come, and to a Buyer’s market we shall return. Is that the time to get out of real estate investing?
For a lot of people the answer is yes, but it needn’t be so. As Abraham Maslow said, “when the only tool you have is a hammer, every problem looks like a nail.” When the “bottom falls out”, I would not recommend strategies that I see in abundance today, such as overpaying, overimproving, and riding the wave of appreciation to profit. Remember the game “hot potato” some of us played as children, or even “musical chairs”? When the music stops, you do not want to be the last one standing.
But history has taught us a myriad of ways to profit from a market in which housing prices are flat or even moving downward, for those of us savvy enough to listen. One of the largest factors that will turn a strong real estate market, where houses “fly off the shelf”, to a weak one, where houses literally have birthdays on the market, is the cost and availability of mortgage funds. The vast majority of homeowners do not buy houses with cash, they shop for a payment they can afford. One of the government’s favorite tools to curb inflation (which we have seen quite a bit of in recent years) is to raise interest rates. Thus, Harry Homebuyer’s income will dictate that he buy a less expensive house, exerting a downward pressure on housing prices. When mortgage criteria (credit score, etc . . . ) become more stringent, less people can qualify. This is a massive opportunity for Investors. If interest rates are at 12%, why not take over a 5% loan “subject-to”, and sell it with owner financing for 10%? You’ve created a “spread” with the interest rates, and are normally able to command a larger down payment because you can offer better terms than a bank can, and to many people to whom a bank would offer nothing. Where there’s a will, there’s a way!
Lou Gimbutis, owner of Property Solutions, LLC, www.soldcarolina.com, has been buying and selling houses full-time since 2004, first in Michigan, then after moving to NC in 2007. He serves as Director of Education for the Metrolina Real Estate Investor’s Association.
New Homes Built w/Wells & Septic Systems
BY BRAD BECKETT ON DECEMBER 10, 2019
While not exactly a sexy subject, this is interesting from a data & public health perspective. According to research from the NAHB’s Economics analysis of the Survey of Construction (SOC), about 9% of new single-family homes started in 2018 across America were served by individual wells and more than 16% have private septic systems. The SOC classifies community or shared water supply/wells as public water rather than individual wells.
Click here to read the full report at the NAHB’s Eye on Housing.
Rent Control's Potential and Devastating Effects
BY BRAD BECKETT ON DECEMBER 9, 2019
We’ve covered this issue quite a bit over the past couple years. Now comes a new report from the National Apartment Association (NAA) that illustrates rent control’s potentially devastating effects on four major U.S. cities (Chicago, Denver, Portland Oregon, and Seattle). The NAA’s analysis hows these policies decrease housing supply, harm the condition of existing housing stock and lower property values (lowering tax revenues), limiting job growth and having a negative impact on local economies. Indeed…
“Each of these effects represent inefficient outcomes relative to allowing the market price to adjust according to supply and demand. By not allowing the market for dwellings to function properly, rent control changes the allocation of housing investment across space. Under normal conditions, rising rent levels would be met with increased building in an area, curbing long-term growth in rents. However, rent control blunts the price mechanism, causing a misallocation of housing investment both within and across metropolitan areas.”
Click here to read the full report at the National Apartments Association.
Cincinnati May Require Landlords to Accept Security Deposit Insurance
BY BRAD BECKETT ON DECEMBER 9, 2019
The City of Cincinnati is considering legislation that would require landlords to accept security deposit insurance in lieu of a security deposit. According to CBS News, the newly introduced legislation would supposedly “free renters from having to hand over a large lump sum and instead direct landlords to accept a security-deposit insurance policy as an alternative.” In addition CBS says it could make Cincinnati the first city in the nation to require their acceptance by landlords. The timing is especially interesting as Cincinnati recently enacted a series of laws making it tougher for evictions. National REIA’s Charles Tassell (who also represents the Greater Cincinnati Northern Kentucky Apartment Association) pointed out that Cincinnati has around 82k total rental units most of which are managed and owned by families. Indeed….
“A lot of the property owners take installments already because you have to work with people sometimes…But mandating those options has a lot of unintended consequences.” Said Charles Tassell, Chief Operating Officer of National REIA.
National Loan Delinquency Rate Down 6.9% from 2018
BY BRAD BECKETT ON DECEMBER 10, 2019
Black Knight’s “first look” report for October, 2019 says that there were just under 44k foreclosure starts, with the National delinquency rate falling to 3.39% in October, a nearly 7% decline from 2018. In addition, they also reported that serious delinquencies fell by 10k from September, while the number of loans in active foreclosure edged up slightly. Prepayment activity climbed another 16% in October (the highest level since May 2013) and are now up 134% year-over-year as refinancing homeowners continue to take advantage of low interest rates. Black Knight derives its data from their loan-level database representing the majority of the national mortgage market.
