Category Archives: National Housing Market

Preparing to Buy an Investment Property

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Via ColdwellBanker.com… It’s hard not to hear the rumblings. Experts and talking heads repeatedly say real estate can be a lucrative investment, especially for home buyers who buy at the right price and secure affordable financing.  However, for someone who has never done it before, real estate investment can be a tricky topic. Bankrate.com offers a few tips for homeowners who think they are ready to become a real estate investor.

Determine goals

The term “real estate investor” covers a wide breadth of roles. There are people who want to be a landlord and dote over their own property’s day-to-day care and management. Others simply want to purchase the property and let someone else handle the management. Still others may be interested in fixing up run down properties and re-selling them, or starting from scratch, buying undeveloped land and building something on it. Bankrate.com reports the first-time investor may want to stick with residential investment until they become more comfortable with the concept.

Don’t be short on funds

Home buyers may want to speak to a financial advisor to see if they actually have the capital needed to invest. Whether they’re becoming a landlord or commercial investor, a home buyer needs substantial cash reserves to cover periods of time when they won’t have tenants or the market is slow, according to Bankrate.com.

As always, location, location, location

Just as they would if they were buying a home to live in, real estate investors need to focus on location. High-population areas are ideal for the home buyer-turned-landlord, since they attract renters looking for easy access to work, retail locations and public services. An ideal investment opportunity would be situated between shopping centers, schools and public transit, Bankrate.com reports. Such a property would also attract future buyers if an investor decides to sell the property down the line.

Look for an experienced real estate agent

Bankrate.com reports a home buyer considering property investment should partner with a real estate agent who knows the local investment climate and can find them a property that will bear substantial returns over time. Additionally, the investor should plan to keep a strong relationship with that real estate agent, since they could help them re-sell the property and find a new investment opportunity in the future.

 

The Joys of Home Ownership

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People enter the world of home ownership for a number of reasons, when the market is right, as a financial move or simply for a change in lifestyle needs. A recent blog posted by RealtyTimes shows a much more sentimental side to home ownership, the warm and fuzzy side that is, in fact, what draws many of us to a home…

“Owning a home allows you to put down roots, both figuratively and literally. On one hand you become part of a neighborhood and community. When you rent, neighbors come and go as quickly as leases renew. Home owners, however, tend to stay put longer.

What does this mean for you? You can develop, many times, lifelong relationships. This also means your home will see you through many of life’s important milestones.

It makes sense. Many people enter the realm of home ownership as young couples looking to build a nest. They plan on starting their own family and need room to expand and grow. These family homes will see many firsts and will be the container of countless memories. Additionally, home ownership gives families more room to entertain and this means extended family will also share in building memories.

It’s not just young families, though, that seek home ownership. Families with teenagers seek larger homes to room their growing brood. Retiring adults may wish to start a new phase and new memories, seeking out warmer climates or smaller, more manageable homes.

These little moments are what life is all about. Memories from Christmas mornings and summer vacations will fill minds for years to come.

On the other hand you literally can put down roots by planting trees and shrubs! Renters are rarely afforded the luxury of gardening. In fact, digging up the landlord’s yard is frowned upon. As a home owner you are able to create your own green oasis, including trees that will mature alongside your children and gardens that will feed your hungry pack.

There is a certain pride that comes with homeownership. This little piece of property and land is yours. There’s no one that can evict you or take it away. This security allows people to form deep attachments to both the land and home.

This pride of ownership spurs many owners to make improvements and additions, both to keep the home in working order and to make it more comfortable and usable, which in turns improves neighborhood values and overall curb appeal.

Why do people buy? They may be initially motivated by changes in circumstance, such as a new job or a new family, but they buy based on emotional responses. People want a house that can become their home, where they’ll fill it with good times and memories. Be sure to remember this sentimental side of home ownership the next time you read about stocks, bonds, and housing woes.”

 

Wall Street Journal & Forbes say it’s Time to Buy a Home

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Via The KCM Blog…

The Wall Street Journal

Last week, in an article entitled It’s Time to Buy That House, the WSJ told their subscribers:

“It’s an excellent time to buy a house, either to live in for the long term or for investment income…Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.”

In an article two weeks ago, MarketWatch.com (the on-line blog for WSJ) told their readers:

“Now could be the best time in history to buy a home.”

Forbes.com

In a report to their subscribers, Capital Economics reported that:

“The previous declines in house prices and the more recent drop in mortgage rates to record lows have created an unusual situation in which the median monthly mortgage payment is more or less the same as the median rental payment.”

Why is this important? Last week, Forbes explained to their readers:

“If rents simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don’t increase with inflation).”

They went on to explain the advantages of homeownership during retirement:

“Even with a dismal 1% growth rate over 30 years, a $300,000 property would appreciate well over $100,000 giving the homeowner an additional nest egg for retirement…

At a time when retirement is becoming much more challenging, an extra $400,000 (or likely more) can make a major difference not to mention the impact of NOT having to pay a mortgage.  How much less would you have to save for retirement if you didn’t pay the mortgage?”

Here They Grow Again

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Research Confirms Vacation Rental Industry’s Rapid Rise within the Lodging Sector… more interest by travelers this year points to bright future outlook.

Via Discover Vacation Homes…

More leisure travelers enjoyed vacation home and condo rental hospitality last year than ever reported before – a respective 22 and 24 percent, even though  parts of the economy are still subdued from the effects of the Great Recession.

Bookings for professional vacation rental managers grew more than seven percent nationwide in the past six months versus the same time last year. Future predictions say this trend will continue with a more than 12 percent rise over 2010 expected in the next six month.

“Travelers are selecting vacation rentals for many reasons, from cost savings to the inherent values that allow families and friends to grow closer by enjoying quality time together underneath the same roof,” explains Alex Risser, President of the Vacation Rental Managers Association (VRMA) and its Discover Vacation Homes awareness initiative, the official public resource on vacation rental travel.

The Vacation Rental Industry is on the rise. For more information about investment opportunities, contact a Coldwell Banker Seaside Realty agent or visit Seaside Vacations for existing vacation home rentals.

 

Riding the Real Estate Roller Coaster – A brief Q&A with CEO Jim Gillespie

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The real estate market sure has resembled a roller coaster lately. It’s tough to figure out when the twist and turn is headed our way, but with the help of Coldwell Banker’s CEO Jim Gillespie we have some great insight to help us navigate the real estate roller coaster.

Below is an interview Jim recently gave offering his insights on the current loop-d-loops of the real estate market…

Coldwell Banker Communications:
Jim, on a national level the news appears to be solely “doom and gloom” for real estate. However, locally we hear many markets are business as usual. Can you explain?

Jim:
Sure. When real estate was booming, 1995-2005, people tended to get caught up in the investment value of their home and practically every market in the US was appreciating. From this, blanket statements were made about the housing industry, which is a mistake because you can’t compare apples to oranges. It’s about individual markets. Not everyone is buying the same type of home in the same area. There are many variables to consider and each market is unique in that sense.

Coldwell Banker Communications:
Are there any signs of improvement overall?

Jim:
Hopefully. Recent NAR statistics show that existing home sales were up almost 19% over last August and a recent survey from NAR found prices to be stabilizing. One key factor we look at is inventory, which has come down significantly. But what real estate professionals know is critical and should always reinforce with the public, what is happening in one market, doesn’t necessarily pertain to another market.

Coldwell Banker Communications:
Are there markets where the home prices are still plummeting?

Jim:
This all depends upon a particular area. As I mentioned, in general, the prices in many markets have stabilized. The problem areas are where there is an abundance of distressed homes. NAR reports that these homes generally sell for 15-20% less than a similar property. Therefore the overall market, when you look at median price, will be dragged down.

Coldwell Banker Communications:
In your opinion, is buying a home still a good investment with all these ups and downs we’ve been experiencing over the past couple of years?

Jim:
I get this question a lot and my answer is always yes! You have to keep in mind, people move for lifestyle reasons/changes. For those who are fortunate enough to have a job and financial stability, now is the best time to buy as a pure financial and lifestyle investment. I personally have invested in real estate and over my 36 years in the business, I consider it one of the greatest long-term investments anyone can make! Many consumers are still afraid because of the fall-out surrounding the economy and it will take time to ease those fears. All of us have an obligation to calm their fears and provide individualized counsel they so desperately need. That’s the higher calling of a Coldwell Banker agent.

Coldwell Banker Communications:
Jim, thank you for your time. Is there anything else you would like to add?

Jim:
Anytime! And yes, I would like to let our sales associates know what a great job they’re doing to help calm potential buyers’ fears. It is all about keeping them informed and educated about the home-buying process. Keep up the great work!

Shadow Inventory Drops: ‘Positive Sign for Housing’

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REALTORMag says that with residential shadow inventory on the decline, falling in July to 1.6 million units and representing a supply of five months, we could see a positive turn in the housing market.

One year ago, nationwide shadow inventory stood at 1.9 million units, marking a six-month supply. Shadow inventory is 22 percent lower than the peak reached in January 2010 of 2 million units, or 8.4 months of supply.

CoreLogic calculates shadow inventory by taking into account the number of distressed properties not yet listed on the multiple listing services that are more than 90 days delinquent, in foreclosure, and real estate owned by lenders.

“The steady improvement in the shadow inventory is a positive development for the housing market,” says Mark Fleming, chief economist for CoreLogic. “However, continued price declines, high levels of negative equity, and a sluggish labor market will keep the shadow supply elevated for an extended period of time.”

For more information about the Outer Banks real estate market, contact an agent at Coldwell Banker Seaside Realty.

13,780 Homes Sold Yesterday

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Photo courtesy of KCM Blog

The KCM Crew tells us…

“To all those who have declared the real estate market dead, we want you to know that over 13,780 houses sold yesterday, 13,780 will sell today and 13,780 will sell tomorrow.”

This number is the comes from information reported by the National Association of Realtors in their recent Existing Home Sales Report. In the report NAR says annualized sales now stand at 5.03 million. Divide that number by the number of days in the year and we see that more than 13,000 (on average) homes sell every day.

NAR also reported that sales had increased 7.7% over the month before and 18.6% over the year before.

“We realize that these numbers are below the record for homes sold in 2006. We also know that we may never see those numbers again (and that is probably a good thing). But to say that the current real estate market is dead or that houses are not selling is totally inaccurate. We have over 13,000 pieces of evidence to prove that.”-KCM Crew

76% of Vacation Home Owners Say Now is a Great Time to Buy

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“As you probably know, the sluggish, morose economy continues to drag down the travel industry…But there is one segment of the industry that is still showing a heartbeat:  vacation home rentals.”- SecondSheltersBlog

For this reason, 76% of vacation homeowners say that now is a great time to buy a second home. According to a recent report by HomeAway, more than 2/3 of owners with vacation homes in resort areas, where summer is the peak season, reported occupancy rates of 76% or higher.

The average weekly rental rate was $1,685 or $241 a night, compared to the average hotel room rate of $101.90 with only 68% occupancy.

“While various segments of the travel industry are experiencing a general weakness, the latest HomeAway Vacation Rental Marketplace Report shows that rentals of vacation homes clearly experienced strong results this summer, with continued strength expected as we approach the year-end holiday travel period,” says Brian Sharples, chief executive officer of HomeAway.

For more information about vacation home sales on the Outer Banks, contact one of our agents at Coldwell Banker Seaside Realty.

Luxury and Vacation Homes are Selling

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Despite the current conditions in the real estate market, the KCM Blog says that Luxury and Vacation homes are selling.

“It has been a trying time for most segments of the real estate industry. However, two areas that are showing improvement are the luxury home and vacation home markets. It seems that people in these segments are again beginning to purchase.”

KCM’s bottom line: If you are in a position to move-up to the home of your dreams or have been thinking about a vacation home for the family, now might be the time to make the move.

Contact a Coldwell Banker Seaside Realty agent for more information on Vacation Homes on the Outer Banks of North Carolina.

Consumer Confidence Driving the Economic Bus

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Jim Gillespie, CEO of Coldwell Banker Real Estate, gives us his thoughts on consumer fear and its impact on the housing recovery…

It’s all about consumer confidence.  If you didn’t think that American nerves are rattled by the recession, continued high unemployment figures and the recent Capitol Hill squabbling, you don’t have to look further than two recent reports involving housing for proof.

We are a skittish nation right now.

The National Association of Realtors reported  that the number of existing homes sold in July was down 3.5 percent from June.

And the median price was $174,000 in July which is down 4.4 percent from a year ago.  For buyers that is good news.  And there is more good news.

Freddie Mac’s weekly mortgage report showed that 30-year fixed-rate mortgages averaged 4.15 percent, the lowest EVER.

Let’s review: prices are down and mortgage rates are the best ever.  Sounds like a smart time to buy a home.  So what’s wrong?  Why aren’t people buying?

I firmly believe it’s those two words – “consumer confidence” – that is driving the economic bus right now.

I have said before and I’ll say it again.  For those with a job and financial viability, today is the smartest time in my 36 years in real estate to buy a home.

Along with the already mentioned lower prices and interest rates, most towns have quite a few homes to choose from.  And, don’t forget, affordability levels are near at their highest levels ever.

Yet many are choosing to remain renters.  The National Association of Realtors recently reported there  were 16 million renters who could afford to buy a home, up from 11 million in 2000.

And for those who aren’t ready to own, are unsure of their job status and/or not sure they want to remain in a home for at least a few years, renting is a great option.  After all, home ownership is not for everyone.

But for those who are considering buying a home, do some soul searching and decide if it’s only confidence in the economy – or lack thereof – that’s holding you back.