Wednesday, March 28, 2012

Investment Outlook: An Economy on the Rise

It is becoming increasingly clear that the U.S. economy is improving, creating a more favorable backdrop for residential real estate investment. Our nation’s economy is kicking into second gear; monthly job gains have exceeded 200,000 for three consecutive months, providing the necessary fuel to create modest economic growth. An improving economy translates into positive wage growth, boosting consumer confidence which in turn, boosts home buying.

Sales of existing homes registered 4.59 million annualized units in February, reflecting a housing recovery that began in mid-2011. Similarly, sales of new homes registered 313,000 annualized units in February, compared to 295,000 annualized units in July of last year. Home sales are firming as job growth has stepped up over the past half year. In addition, housing affordability remains high due to historic low mortgage rates, creating pent-up demand for homes. This provides a favorable long term outlook for future property values, creating opportunities for investors.

The current U.S. foreclosure situation has created unprecedented property acquisition opportunities. According to Realty Trac, about 800,000 properties went into the foreclosure process in 2011. I expect about 1 million residential properties will move from delinquency into REO in 2012, returning to levels experienced before the robo-signing slowdown. This should keep property values down for investors seeking discounts on foreclosures and short sales throughout most of this year. The combination of distressed property price discounts in the near term, relatively strong rent growth and improving property values (due to improving housing conditions) in the longer-term, bodes well for residential property investors.

Regionally, Florida’s housing situation represents one of the most favorable residential property investment markets in the nation. Many existing Florida homeowners possess underwater mortgages and have struggled to stay current on loan payments. This has generated a serious distress property sale situation in Florida- perhaps even worse than the dire foreclosure situations in Arizona and Nevada. In addition, Florida has a large backlog of foreclosures because the foreclosure process takes longer in Florida than it does in most other states.

Florida home values have plummeted almost 50 percent since the meteoric highs of the housing boom in the mid-2000s. Since Florida is a primary “destination” for baby boomers seeking retirement/vacation homes, the outlook for long-term property demand is favorable. Florida property values are projected to stay depressed or just modestly rise over the next year. However, when Florida’s foreclosure situation bottom’s out, relatively strong housing demand due to the state’s “destination” tag, is expected to raise home values over a longer-term investment horizon (5 years and greater).

Looking forward, the outlook for our nation’s housing markets is brighter than it has been for some time, but the housing recovery will proceed at a slow pace. The upward trend in existing and new home sales over the past six months has been modest relative to the plummet in sales between 2005 and 2009. Downside risks for housing are lessening, but high gas prices, troubles in the euro zone, and the potential for rising mortgage interest rates still muddy the outlook. In summary, 2012 offers favorable investment opportunities to investors seeking competitive annual returns (rents) and significant price gains over a longer term time horizon.

Tuesday, March 27, 2012

Valuable real estate most people overlook

By Arrol Gellner
Inman News®
March 27, 2012

Is it possible to double your home's living area without adding a single square foot?

Yes, and it's no joke. To pull it off, though, you need to change the way you think about the property right outside your home's walls. Rather than seeing it as leftover land to be prettied up with a few flower beds, consider it an integral, functioning extension of your home's interior.

The ground outside every house offers tremendous potential living space -- often several times the total square footage of the house itself. Yet more often than not, this valuable real estate is drastically underutilized. Even when a property is nominally "landscaped," it's usually treated as a static showpiece filled with cutely shaped planting beds, meandering plots of grass, and other two-dimensional treatments, none of which improve its usefulness as living space.

It's understandable why so few people make full use of their outdoor area. For one, many older homes provide only a minimal connection to the outside -- often nothing more than a front door and a back door.

Because the floors in older houses also tend to be raised off the ground a few feet, access to outdoor areas can be awkward even when more exterior doors are present. Yet even in newer homes, with more generous access to the outdoors, the surrounding property is seldom treated as a true extension of the indoor living area.

So how can you better utilize the land outside your own house?

First, conduct a survey of every ground-floor room that has the potential to access the outdoors. When I make this suggestion to clients, I'm always amazed at how few of them have ever considered converting windows to doors, even when the potential gain was staring them right in the face.

Often, this simple swap will completely transform a house, improving the traffic flow, making the rooms feel larger, bringing in more light and better views, and most importantly, enabling the full use of your outdoor areas.

Improving access to the outdoors is also among the simplest and most cost effective of remodeling projects. As long as the new door (or doors) aren't any wider than the existing window opening, no structural changes are necessary. The section of wall below the window is simply removed and a door unit installed in its place.

If you're worried about the security of glass doors, note that they're typically more burglar resistant than the windows they replace, as building codes require the glass in doors to be tempered.

Another common objection -- the loss of wall space for furniture -- is a very modest price to pay for a vast improvement in livability.

Once you've decided on where the doors will be, consider how you'll make the transition to the garden. If the floor of your house is considerably higher than the ground outside, a deck or terrace with a number of descending levels will bring you gracefully down to ground level. If this transitional space can serve exterior doors from more than one room, all the better.

Tuesday, March 20, 2012

Home prices rise for first time in 18 months:

By Justin T. Hilley

For the first time in 18 months, home prices increased year-over-year in February, a turnaround that RE/MAX said signifies a "very active selling season."

A RE/MAX housing survey released Wednesday shows national home prices in February rose 1.1% from a year earlier and 1.4% from January to $171,881.

Of the 53 metro areas included in the survey, 24 experienced price increases from February 2011, including: Miami (20.5%), Orlando, Fla. (15.8%), Phoenix (12.5%), Tampa, Fla. (11.1%), St. Louis (9.8%) and Detroit (8.9%).

Home sales in February rose 8.7% from a year earlier, continuing a trend of eight straight months above the previous year's total. February home sales climbed 8.1% above sales in January.

Of the metros, 45 saw increases over February 2011, with 26 jumping double digits, including: Albuquerque, N.M. (46.6%), Providence, R.I. (36.7%), Raleigh, N.C. (33.8%), Boston (30.5%) and Chicago (27.5%).

“All the data is pointing to a very active spring and summer selling season this year, which is great news for a recovering housing market,” RE/MAX Chief Executive Margaret Kelly said. “As sales numbers have trended higher for several months, we have been anticipating a turnaround in home prices, and it looks like it’s finally starting.”

Analysts at Barclays Capital on Monday said the homebuilder spring selling season has "arrived strongly enough to kick-start a positive feedback loop in housing for the first time since 2005."

Properties sold in February stood on the market for an average of 103 days, the same as in January and a year earlier, according to RE/MAX findings. In the last 12 months, the average fell below 90 in only two months — 88 in both July and September.

Wednesday, March 14, 2012

Massachusetts Pending Home Sales Up for 10th Straight Month in February

3/13/2012 February single-family pending sales increase hits new record WALTHAM, Mass. – March 13, 2012 – The Massachusetts Association of REALTORS® (MAR) reported today that the number of single-family homes put under agreement in February went up again for the 10th straight month compared to the same time in 2011. Condominium pending sales were also up from the same time last year. Pending figures are a leading indicator of actual housing sales in Massachusetts for the following 2-3 months. “This was the largest year-over-year increase in pending sales since we’ve been tracking this data,” said 2012 MAR President Trisha McCarthy, broker at Keller Williams Realty in Newburyport. “Buyer confidence continues to grow and the numbers confirm what REALTOR®-members across the state have been reporting; they’re busy. If these pending sales hold together through closing, we have the potential for impressive increases in April and May closings.” The number of single-family homes put under agreement in February was up 44.2 percent compared to the same time last year (*2,335 homes in 2011 to 3,368 homes in 2012). This is the 10th straight month of year-over-year increases. This was the largest year-over-year increase since MAR has been tracking this data. Prior to the previous record in January 2012 (39.4 percent increase), the largest increase year-over-year was 32.3 percent in April 2010. On a month-to-month basis, single-family homes put under agreement went up 18.3 percent from 2,846 homes in January. The number of condos put under agreement in February was up 35.3 percent compared to February 2011 (*944 units in 2011 to 1,277 units in 2012). On a month-to-month basis, condos put under agreement were up 20 percent from 1064 units in January. About Pending Sales: The tracking of signed purchase and sales agreements (also called “pending sales”) provide reliable information about where the real estate market is heading in coming months. A pending sale or a sale “under agreement” is when the buyer and seller agree on the terms of the sale of a home and have a signed purchase and sale agreement, but have yet to close and be recorded as such. MAR is the only organization which compiles this statewide information from Multiple Listing Services each month.