El Paso Investors Club

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.

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.

Local Market Monitor, a National REIA preferred vendor, recently released their National Economic Outlook for December, 2018 where they share their thoughts on developments taking place in the U.S. economy.

National Economic Outlook – December 2018

December 21, 2018
By Ingo Winzer

Because homes are so expensive, income is an important way to look at real estate markets. The disturbing fact is that average income – adjusted for inflation – has remained almost the same for the past 15 years, cycling between $29,000 and $31,000. This is the median income, half of workers make more, half make less. If that’s how much money you make, you can’t buy a home (unless, of course, there are two of you).

Another way to see income is through IRS data. 80 million tax payers make less than $50,000 a year. 25 million make more than $100,000. And 30 million are in the middle. The 80 million mostly rent, the 25 million already own a home. The 30 million are the swing vote – they may rent, they may be first-time home buyers. Their economic future will have a lot to say about real estate.

In November, total jobs were up 1.6 percent from last year. Jobs were up 2.7 percent in business services, 2.2 percent in manufacturing, 2 percent in healthcare, 1.8 percent at restaurants, and 1.4 percent in finance. Jobs in retail and government were essentially flat.

While the job situation remains adequate, home prices in some large markets are leaping higher – so much higher that the danger of local real estate bubbles is again with us. Who would have thought so just five years ago? I don’t think either a recession or a real estate bust is at hand – yet. But a soft landing for either the economy or real estate markets is always wishful thinking. And bad news for one always makes the other worse.

Don’t miss what else Ingo has to say about the economy this month.
Click Here to see his FREE 7 minute webinar. 

FORBES
2019 Real Estate Investment Preview
Written By Ingo Winzer

 

www.LocalMarketMonitor.com
info@localmarketmonitor.com
800.881.8653

About the Author: Ingo Winzer is President of Local Market Monitor, and has analyzed real estate markets for more than 20 years. His views on real estate markets are often quoted in the national press and in 2005, he warned that many housing markets were dangerously over-priced. Previously, Ingo was a founder and Executive Vice President of First Research, an industry research company that was acquired by Dun and Bradstreet in March 2007. He is a graduate of MIT and holds an MBA in Finance from Boston University. He resides in Cambridge, Massachusetts.

Click here for more information about Local Market Monitor.

According to the latest Yardi Matrix, U.S. multifamily rents fell ever so slightly in November, dropping $2 to $1,419, while year-over-year growth fell by 10 basis points to 3.1%.  In addition they point out that rents are down $3 from the peak of $1,422 in September.  The attribute the small decline to normal seasonal fluctuations.  Indeed…

“2018 is shaping up to be another solid year for the multifamily market. Rent growth for the year is 3.1%, which slightly tops our estimate—and those of most market prognosticators—coming into the year. U.S. multifamily rents have stalled in the fourth quarter, but that reflects a typical seasonal pattern.”

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

We have had a lot of stories about where people are moving to and perhaps more importantly, why and from what.  A recent article on Realtor.com says that America is going through a period of profound migration with some places losing while others are gaining – which is having an enormous impact on both of these respective areas (where they came from and going to).  To that end, the folks over at Realtor.com recently analyzed the data to find which metro areas are gaining the most residents and which ones that area seeing the biggest drain. Spoiler alert;  by and large, they’re heading south.

“Right now the numbers are showing [people moving]to the West and South, and away from the Northeast and Midwest,” says demographer Ken Gronbach of KGC Direct. “Cities where taxes are low and housing [costs are]reasonable will see a huge influx of people over the next five to 10 years.”

Cities with the biggest net gains:

1. Phoenix, AZ
2. Riverside, CA
3. Austin, TX
4. Houston, TX
5. Orlando, FL
6. Dallas, TX
7. Las Vegas, NV
8. Columbia, SC
9. Tampa, FL
10. Charlotte, SC

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

Ok…as a regular reader you know that we’ve posted a whole lot about millennials, but guess who’s coming up on their heels?  Generation Z – and they approach finances way differently than their older siblings.  Are you ready for them???  Today’s infographic from Rave Reviews shows how Generation Z is perhaps taking a more pragmatic approach to their finances. 

Hat tip to RaveReviews.com

Over the past few years we’ve had several stories about HELOC loans (home equity lines of credit) and their potential expiration creating havoc in the housing market among current homeowners.  However, as Keeping Current Matters points out, as we’ve experienced strong price appreciation over the last last 6 years they show that homeowners are being much more responsible with their home equity this time around.  After all, according to data, over 48% of all single-family homes in the country have over 50% equity.  What a difference indeed.

“When real estate values began to surge last decade, people started using their homes as personal ATMs. Homeowners would refinance their houses and convert their equity into instant cash (known as “cash-out” refinances). Because homes were appreciating so rapidly, many homeowners tapped into their equity multiple times….This left homeowners with little-or-no equity left in their homes, so when prices started to fall many homeowners found their houses in a negative equity situation…”

Click here to read the full story on Keeping Current Matters.

The U.S. Department of Housing and Urban Development recently announced that HUD Secretary Ben Carson will be chairing a new council, composed of 13 federal agencies, that will engage with all levels of government on ways to better use taxpayer dollars to revitalize low-income communities.  It will work to improve revitalization efforts by streamlining, coordinating, and targeting existing Federal programs to economically distressed areas, including Opportunity Zones.  The committee, known as the White House Opportunity and Revitalization Council was formed via an Executive Order from President Donald J. Trump.

Charles Tassell, Chief Operating Officer of National REIA, said “In an effort to help streamline reinvestment in America, President Trump has asked Secretary Carson to lead a 13 department team in focusing up to $6T in untapped equity that could rejuvenate impoverished areas through Opportunity Zone tax incentives!  Unlike previous zones, the idea behind the Opportunity Zones is to unleash market forces and private money into areas desperately in need of jobs, housing, and business investments…by 2026.  If you aren’t looking into these areas now, you are missing out on the ground floor growth potential!”

The information below is from a HUD release dated 12/12/18:

SECRETARY CARSON TO LEAD WHITE HOUSE
OPPORTUNITY AND REVITALIZATION COUNCIL

CREATING OPPORTUNITY FOR ALL: President Trump is encouraging investment to create opportunity in distressed communities. 

• President Trump today is signing an Executive Order establishing the White House Opportunity and Revitalization Council.
• • The Council will be chaired by Ben Carson, Secretary of Housing and Urban Development, and comprised of 13 Federal agencies.
• The Council will engage with all levels of government on ways to better use tax payer dollars to revitalize low-income communities.
• The Council will improve revitalization efforts by streamlining, coordinating, and targeting existing Federal programs to economically distressed areas, including Opportunity Zones.
• • Lack of coordination and targeting has led to cumbersome applications, program waste, and ineffective benefits.
• The Council will consider legislative proposals and undertake regulatory reform to remove barriers to revitalization efforts.
• The Council will present the President with a number of reports identifying and recommending ways to encourage investment in economically distressed communities.

ENCOURAGING INVESTMENT: Opportunity Zones will spur private investment to revitalize hurting communities and unleash their economic potential.

• In 2017, President Trump signed the Tax Cuts and Jobs Act, which established Opportunity Zones to incentivize long-term investments in low-income communities across the country.
• These incentives offer capital gains tax relief to investors for new investment in designated Opportunity Zones.
• Opportunity Zones are anticipated to spur $100 billion in private capital investment.
• Incentivizing investment in low-income communities fosters economic revitalization and job creation and promotes sustainable economic growth across the Nation.

LIFTING UP COMMUNITIES: Opportunity Zones help drive economic growth and lift up communities that have been left behind.

• Opportunity Zones are a powerful vehicle for bringing economic growth and job creation to the American communities that need them the most.
• • On average, the median family income in an Opportunity Zone is 37% below the state median.
• • The average poverty rate in an Opportunity Zone is 32%, compared to the national rate of 17%.
• • There are approximately are approximately 760,000 persons living in public housing within Opportunity Zones.

• 8,761 communities in all 50 States, the District of Columbia, and 5 Territories have been designated as Opportunity Zones.
• • Nearly 35 million Americans live in communities designated as Opportunity Zones.

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Click here to read the media advisory at HUD.gov.